author: HARDY, District Judge.

text:
    METRO DATA SYSTEMS, INC., an Arizona corporation, Plaintiff, v. DURANGO SYSTEMS, INC., a foreign corporation, Defendant. DURANGO SYSTEMS, INC., a California corporation, Counterclaimant, v. METRO DATA SYSTEMS, INC., an Arizona corporation, Counterdefendant.
    No. CIV 83-398 PHX CLH.
    United States District Court, D. Arizona.
    Nov. 5, 1984.
    Donald W. Powell, Claudia J. Kroman, Phoenix, Ariz., for plaintiff.
    Deana S. Peck, E. Jeffrey Walsh, Phoenix, Ariz., Denis R. Salmon, Patricia M. Lucas, San Francisco, Cal., for defendant.
   MEMORANDUM OPINION AND ORDER

HARDY, District Judge.

Defendant, the prevailing party in this removal action, has applied for an award of attorneys’ fees in the amount of $53,878.90 and for expenses totaling $2,142.36. An award is appropriate, but the amount requested is unreasonable. $38,000 will be awarded.

In fixing the amount to be awarded, the Court has followed the guidelines set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.1974) and adopted by the Ninth Circuit in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 69-70 (9th Cir.1975), cert. denied, 425 U.S. 951 (1976), to the extent that the guidelines are applicable. It has also relied on the guidance provided by Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). See also Schweiger v. China Doll Restaurant, Inc. 138 Ariz. 183, 673 P.2d 927 (Ct.App.1988).

A party seeking an award of attorney’s fees has the burden of establishing “by clear and convincing evidence the time and effort claimed and [showing] that the time expended was necessary to achieve the results obtained.” See Hensley, 103 S.Ct. at 1943 (Burger, C.J., concurring).

“The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.” Id. at 1939. “[T]he party who seeks payment must keep records in sufficient detail that a neutral judge can make a fair evaluation of the time expended, the nature and need for the service, and the reasonable fees to be allowed.” Id. at p. 1943 (Burger, C.J., concurring).

In Georgia Highway Express the Fifth Circuit stated the approach to be taken by a trial judge in fixing attorney’s fees:

“The trial judge should weigh the hours claimed against his own knowledge, experience, and expertise of the time required to complete similar activities. If more than one attorney is involved, the possibility of duplication of effort along with the proper utilization of time should be scrutinized____ It is appropriate to distinguish between legal work, in the strict sense, and investigation, clerical work, compilation of facts and statistics and other work which can often be accomplished by non-lawyers but which a lawyer may do because he has no other help available. Such non-legal work may command a lesser rate. Its dollar value is not enhanced just because a lawyer does it. Johnson v. Georgia Highway Express, Inc.” (488 F.2d at p. 717)

Defendant deployed a little army of thirteen lawyers (five in San Francisco, eight in Phoenix), three paralegals and one law clerk to defend against plaintiff's claims and to counterattack by counterclaiming. Through July 2, 1984, they logged a total of 626.50 hours. The application for attorneys’ fees is supported by an “itemized schedulé and description” of services performed in behalf of the defendant,- which are taken from the time records of the two law firms.

It is frequently difficult to determine how much time was spent on any one task because many of the time records combine distinct activities. For example there is an entry for June 27, 1983, in which 1.7 hours is logged for “telephone conference ... re: Answer and Counterclaim; finalize Answer and Counterclaim; correspondence-... re: finalize Answer and Counterclaim.” This entry does not provide the Court with any guidance as to how much time was actually devoted to finalizing the pleading, to the telephone conference and to the correspondence.

Terms used to describe services raise questions. There are no less than 95 time entries in which a lawyer reviewed something. In most instances “review” appears to be merely a synonym for “read,” a less impressive term. After all, anyone can read, but it takes a lawyer to review. In other instances, it appears that the review was more than simply a reading and may have been a study or consideration.

An even more amorphous term is “analysis.” The Phoenix lawyers are great on analysis. There are no less than 15 time entries for analysis. Some are for “review and analysis.” An entry for November 10, 1983, logs five hours for “analysis of respondeat superior theory; analysis of fraud claims.” One has difficulty picturing what this lawyer was doing during these five hours of analysis. The term is not synonymous with research; when the lawyer engaged in research, he said so. Perhaps analysis is equivalent to pondering — “to weigh mentally; think deeply about; consider carefully.” Webster’s New World Dictionary. When the Court attempts to envision a lawyer engaged in five hours of analysis, Rodin’s “The Thinker” comes to mind.

Defendant is a California corporation. It is regularly represented by the San Francisco law firm. When this action was commenced, that firm retained the Phoenix law firm to represent the defendant in defending the action. The time records indicate considerable duplication of effort. Phoenix counsel appear to have done little without a discussion with San Francisco counsel over the telephone. There were no less than 58 telephone conferences of Phoenix and San Francisco lawyers. Obviously, with the client in California, it would frequently be necessary for Phoenix counsel to confer with San Francisco counsel in order to obtain information, and credit has been given for the time spent in such conferences. Other telephone conferences involved discussions of procedure or strategy. The time spent on those conferences has been discounted. Once the Phoenix firm was entrusted with the defense of the action, anything done by the San Francisco firm in formulating a defense strategy was essentially duplicative.

The foregoing instances of duplication are mentioned only as examples and are not intended to be exhaustive.

Some of the times logged by lawyers for the same telephone conference, call into question the accuracy of the time records. For example, in one instance a lawyer logged 0.20 hour, while his counterpart logged one hour; in another, one lawyer logged 0.65 hour and his counterpart logged 1.80 hours. The accuracy of time records is further called into question by one lawyer’s claim to have logged 18.9 hours in one day. To have accomplished this, he would have had to have been in his office from 5:06 in the morning until midnight, without taking any time for meals, to relieve himself or to do anything else.

There were numerous billings that the Court considers excessive. The previously mentioned 18.9 hours logged by one lawyer in one day is almost ipso facto excessive. The times recorded for legal research and drafting appear excessive, particularly when consideration is given to the fact that there really was no merit to plaintiff’s claims.

For example, a lawyer logged 14.8 hours in legal research relating to plaintiff’s fraud claims and another 8.2 hours in “research and drafting]” the portion of the motion to dismiss or for summary judgment that attacked plaintiff’s fraud claims. The common law fraud claim was clearly defective, because it alleged a promissory representation and plaintiff could not produce any evidence that defendant had no intention to perform when the representation was made. Similarly, plaintiff’s consumer fraud claim could not stand because there was no sale by defendant to plaintiff, but only a license. The expenditure of 14.8 hours to determine these two elementary principles of law is unreasonable.

The preparation of answers to plaintiff’s interrogatories represented in large part excessive legal work, not so much because of the time involved, but because time spent in investigation and compilation of facts could have been accomplished by a paralegal. A San Francisco lawyer spent about 7.5 hours in gathering information and drafting answers to plaintiff’s interrogatories. His work product was then sent to Phoenix where a lawyer spent about 18 hours drafting answers to the interrogatories. When he had completed his work, another lawyer, a partner, then spent 3 hours revising and finalizing the interrogatory answers. The Court treats the partner’s 3 hours as the only legal work involved; the other work could have been performed by a paralegal.

A law clerk logged 3.2 hours for “research re: procedural requirements for Answer and Counterclaim,” for which $144 is claimed. A lawyer who finds it necessary to assign a law clerk to research that question probably should not be involved in litigation. In any event, the procedural requirements for answer and counterclaim are concisely set forth in Rules 7 through 13 of the Federal Rules of Civil Procedure and certainly do not require 3.2 hours of anyone’s time for research.

A paralegal spent 13 hours in the preparation of a case notebook for oral argument, for which $455 is claimed. A quick count indicates that plaintiff cited about 32 cases in its memoranda and defendant cited 18 cases in its response, a total of 50 cases. It is difficult to believe that a paralegal would have to spend more than three hours in obtaining cases from the library, photocopying them and inserting them into a notebook.

The sum of $510 is claimed for the six hours spent by an associate in preparing for oral argument in opposition to a motion to amend. One wonders if he was attempting to memorize his memorandum of points and authorities. The argument in behalf of both sides could not have consumed more than half an hour, and was probably considerably less.

A partner who assisted in the preparation for oral argument and who also attended the argument, recorded 2.2 hours for which $330 is claimed. On the basis of observations of the frequent presence at oral argument of more than one lawyer of a law firm, the Court has long suspected that the client is being billed for the presence of all the lawyers even though only one presents the argument. The partner’s presence at the oral argument in this case tends to confirm the suspicion. Notwithstanding the many hours of preparation for argument in opposition to the motion to amend and the attendance of a partner at oral argument, the motion was granted.

A paralegal logged 15.5 hours drafting the application for attorney’s fees. Since a lawyer also spent 19.5 hours redrafting the application, the Court suspects that the paralegal’s role was to prepare the schedule and description of services from the time records. The Court assumes that these records are on a computer and can be readily retrieved. The real time would be involved in listing the services in chronological order. One questions that this task would consume 15 hours.

The claim for $53,878.90 as attorney’s fees indicates a gross lack of billing judgment by defendant’s attorneys. Counsel owed a duty not only to the Court but to their own client to make a good faith effort to exclude hours that were excessive, redundant, or otherwise unnecessary. They have failed to do so.

Finally, defendant seeks an award of $2,142.31 for “expenses related to rendition of legal services.” They consist of the costs of telephone calls, telecopying, Federal Express, Lexis research, photocopies, and binding. The statutory authority to award “a reasonable attorney’s fee” includes the authority to award reasonable out-of-pocket expenses incurred by the attorney that are normally charged to the client in the course of providing legal services. See Thornberry v. Delta Air Lines, Inc., 676 F.2d 1240, 1244-45 (9th Cir.1982). Such expenses must have been “reasonably and necessarily incurred in the clients [sic] interest.” Cantrell v. Vickers, 524 F.Supp. 312, 319 (N.D.Miss.1981).

Defendant’s attorneys have not shown that the claimed expenses were charged to the client. They have not shown the necessity of sending papers by Federal Express or by telecopying, or of photocopying costs of $1,370.60. The Court recognizes that modern law firms use photocopies rather than carbon copies. However, assuming that the cost of photocopying is twenty cents per page, counsel for the defendant made 6,853 photocopies. There is no showing that so many were necessary.

IT IS ORDERED awarding attorney’s fees to defendant in the sum of $38,000.


source: Caselaw Access Project

author: LATCHUM, Senior District Judge.

license: Public Domain

text:
    NITTO BOSEKI CO., LTD., Plaintiff, v. OWENS-CORNING FIBERGLAS CORP., Defendant.
    Civ. A. No. 83-870-JLL.
    United States District Court, D. Delaware.
    Nov. 6, 1984.
    Roderick R. McKelvie of Ashby, McKelvie & Geddes, Wilmington, Del., Barry E. Bretschneider and Charles A. Wendel of Wegner & Bretschneider, Washington, D.C., of counsel, for plaintiff.
    Douglas E. Whitney of Morris, Nichols, Arsht & Tunnell, Wilmington, Del., Hiram P. Settle of Hiram P. Settle, P.C., Washington, D.C., and Paul N. Kokulis of Cushman, Darby & Cushman, Washington, D.C., of counsel, for defendant.
   MEMORANDUM OPINION

LATCHUM, Senior District Judge.

This suit was brought pursuant to 35 U.S.C. § 146 for review of a decision of the Board of Patent Interferences (“Board”). Briefly stated, the contest is over priority of invention of a method and apparatus for making glass fibers. The plaintiff, owner of a patent for the method and apparatus, and the defendant, the owner of a competing patent application, were both dissatisfied with the Board’s decision which split the award of priority on the three counts in interference. The plaintiff timely filed this action, seeking reversal of that part of the Board’s decision which awarded priority to defendant on Count 1 (Docket Item [“D.I.”] 1), to which the defendant responded with an answer seeking affirmance of that award and a counterclaim for, inter alia, a reversal of that part of the Board’s decision which awarded priority on Counts 2 and 3 to the plaintiff. (D.I. 5.) The plaintiff’s reply to defendant’s counterclaims also includes a counterclaim which demands that, in the event the Court rules adversely to the plaintiff on the issue of priority, the Court nevertheless declared that the defendant is not entitled to a patent on the invention because of “[the defendant’s] failure to comply with the conditions of patentability set forth in Chapters 10 and 11 of Title 35, United States Code.” (D.I. 29 at 3.)

Defendant’s motion to dismiss will be granted with leave given to the plaintiff to amend its counterclaim in the manner hereinafter indicated.

Rule 8(a), Fed.R.Civ.P., reads in pertinent part:

A pleading which sets forth a claim for relief, whether an original claim, counterclaim, cross-claim, or third-party claim, shall contain ... (2) a short and plain statement of the claim showing the pleader is entitled to relief____

This means that the short and plain statement of the claim must give the opposing party fair notice of what the claim is and the grounds upon which it rests. Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957) (emphasis supplied).

Plaintiff’s counterclaim in toto reads:

In the event that the Court enter judgment against Plaintiff on either Plaintiffs complaint or any of Defendant’s Counterclaims, Plaintiff states:
Claims 24, 25 and 35 of Defendant’s Application Serial No. 649,955, which correspond to the Counts in Interference No. 100,382, are not patentable to Defendant for failure to comply with the conditions for patentability set forth in Chapters 10 and 11 of Title 35 United States Code.

(D.I. 29 at 3.)

While admittedly plaintiff’s stated counterclaim is short, it is far too expansive to give the defendant or the Court a fair idea of the claims or the legal basis on which such claims are based. This rule is particularly applicable to § 146 review proceedings because the matters which may be raised and considered on review are limited.

The first such limitation is found in the well-settled doctrine that a civil action brought under 35 U.S.C. § 146 is essentially a proceeding to review the action of the Board in an interference proceeding denying priority of invention to a party dissatisfied with the Board’s decision on priority. While in form a § 146 proceeding is a trial de novo, the review proceeding is ordinarily subject to the general rule of estoppel applicable to proceedings for review of administrative agency action. Thus, the consideration of issues ancillary to priority is limited to those issues which were raised before and decided by the Board in the interference proceedings. See Standard Oil Co. v. Montedison, 540 F.2d 611, 616 (3d Cir.1976), and cases cited at notes 7 and 8. While the Court is under the impression from the prior proceedings in this case that all the claims which were ancillary to priority and considered by the Board are already at issue in this case, nevertheless, there may be issues ancillary to priority which were considered by the Board and of which this Court is unaware. If there are any such issues or claims, they may be asserted in plaintiff’s amended counterclaim' but they must be alleged with sufficient specificity to inform the defendant and this Court of the precise basis for such claims.

A second limitation exists with respect to pleading patentability of invention. If the Court determines that the defendant-applicant should be awarded priority of invention, then, under the doctrine of Hill v. Wooster, 132 U.S. 693, 10 S.Ct. 228, 33 L.Ed. 502 (1890), this Court must rule on the patentability of that invention before ordering the Commissioner of Patents to issue a patent to the defendant-applicant. As this Court understands Hill v. Wooster, supra, in order for it to determine the “patentability of the invention” it need only determine whether the invention is novel, useful and nonobvious. Hill v. Wooster, 132 U.S. at 700-701, 10 S.Ct. at 230-231. The Court is .not required in a § 146 proceeding to determine on all possible grounds the “validity of the patent” which it orders to be issued. Of course, patentability and validity are two closely related subjects in the field of patent law. Patent-ability, however, refers to the invention in question while validity has reference to an issued patent. Naturally, a patent should not issue unless it covers a patentable invention, that is, it must be novel, useful and nonobvious, but the fact that a patent covers a patentable invention does not necessarily mean that the patent will be valid. An issued patent may be invalid for any number of technical reasons. Thus, the validity of an issued patent should ordinarily be determined in a direct patent infringement action or a declaratory judgment suit where the parties would be expected to “develop a full investigation of validity on all available grounds.” See Sanford v. Kepner, 344 U.S. 13, 15, 73 S.Ct. 75, 76, 97 L.Ed. 12 (1952). On the other hand, this Court could make a determination of the patentability of an invention in favor of an applicant based upon the records generated in the PTO and before the Board.

This distinction between the patentability of an invention and the validity of a patent has not always been recognized in § 146 cases. This Court, in its prior opinion in this matter, 589 F.Supp. at 532, may have contributed to this confusion by the use of the words “validity of the invention” when it meant “patentability of the invention.” Thus, any amended counterclaim that may be filed by the plaintiff may only raise questions of novelty, usefulness and nonobviousness — i.e., patentability of defendant-applicant’s invention.

In allowing the plaintiff to file an amended counterclaim raising the patentability of the defendant-applicant’s invention, however, the Court is not now ruling upon the appropriateness of such a counterclaim because, after all, a patent has already been issued to the plaintiff on claims which comprise the counts in interference. Whether the plaintiff in this proceeding may challenge the patentability (novelty, usefulness and nonobviousness) of defendant’s similar invention appears questionable. See Sanford v. Kepner, 344 U.S. at 15-16, 73 S.Ct. at 76-77. In any event, this matter will be reserved for a later time if it becomes material.

An order will be entered in accordance with this Memorandum Opinion.

      . 35 U.S.C. § 146 provides, in part:
      Civil action in case of interference.
      Any party to an interference dissatisfied with the decision of the board of patent interferences on the question of priority, may have remedy by civil action, if commenced within such time after such decision, not less than sixty days, as the Commissioner appoints or as provided in section 141 of this title, unless he has appealed to the United States Court of Customs and Patent Appeals, and such appeal is pending or has been decided. In such suits the record in the Patent Office shall be admitted on motion of either party under the terms and conditions as to costs, expenses, and the further cross-examination of the witnesses as the court imposes, without prejudice to the right of the parties to take further testimony. The testimony and exhibits of the record in the Patent Office when admitted shall have the same effect as if originally taken and produced in the suit.
      Such suit may be instituted against the party in interest as shown by the records of the Patent Office at the time of the decision cornplained of, but any party in interest may become a party to the action.

      . The factual background of this case was recounted in a previously published opinion, 589 F.Supp. 527, 528-29 (1984), and need not be fully repeated here.

      . U.S. Patent No. 3,905,790. (D.I. 1, Ex. A.)

      . U.S. Patent Application Serial No. 649,955. (D.I. 1, Ex. B.)

      . The plaintiff's counterclaim also includes requests for judgment on the issue of priority and dismissal of defendant’s counterclaims. (D.I. 23 at 3.) The former request is simply a restatement of plaintiff's original claim in its complaint and will not be ruled upon at this time; the latter request is apparently one for the Court to reverse its decision in Nitto Boseki Co., Ltd. v. Owens-Corning Fiberglas Corp., 589 F.Supp. 527 (D.Del.1984), and the order entered in accordance therewith on June 20, 1984 (D.I. 22) in this case and, because no reason for doing so has been offered, that request will be denied.

      . This issue would have to be determined by the Court whether or not raised in plaintiff’s amended counterclaim under the holding of Hill v. Wooster if the Court decides to award priority to the defendant-applicant. For instance, suppose the Court awarded priority to the defendant-applicant and the plaintiff for one reason or another loses interest in the case and takes no further part in this litigation, the Court would still have to determine whether the defendant-applicant's invention was novel, useful and non-obvious and this decision could be made on the record before the Board and the PTO. On the other hand, if this Court were required to determine validity of the patent in order to order it to issue on all possible grounds without an adversary, it would be impossible for the Court to make such a determination any more than a Patent Examiner could.


author: SHABAZ, District Judge.

text:
    Merle C. ENGSBERG, Plaintiff, v. TOWN OF MILFORD, David Vandre and Gilbert Schaefer, Defendants and Third-Party Plaintiffs, v. EMPLOYERS MUTUAL CASUALTY COMPANY, INC., an Iowa corporation, and Tower Insurance Company, Inc., a Wisconsin corporation, Third-Party Defendants.
    No. 84-C-259-S.
    United States District Court, W.D. Wisconsin.
    Nov. 7, 1984.

      Terrence S. Hawkins, Pox Law Offices, Madison, Wis., for plaintiff.
    Thomas J. Basting, Brennan, Steil, Ryan, Basting & MacDougall, Janesville, Wis., for Town of Milford and David Vandre.
    Thomas R. Schrimpf, Kluwin, Dunphy & Hankin, Milwaukee, Wis., for Town of Milford and Tower Ins. Co., Inc.
    Eugene Gehl, Brynelson, Herrick, Gehl & Bucaida, Madison, Wis., for Employers Mut.
    John M. Moore, Bell, Metzner & Gierhart, Madison, Wis., for Gilbert Schaefer.
   MEMORANDUM AND ORDER

SHABAZ, District Judge.

Third-party defendants Employers Mutual Casualty Company, Inc. and Tower Insurance Company, Inc.' have moved for summary judgment in the action brought against them by third-party plaintiffs Town of Milford and David Vandre for indemnification and breach of their separate contractual duties to defend against the primary lawsuit. The motion of Employer’s Mutual is granted, while the motion of Tower Insurance is granted in part and denied in part.

Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is appropriate when, after both parties have had the opportunity to submit evidence in support of their respective positions and the Court has viewed such evidence in the light most favorable to the non-movant, there remains no genuine issue of material fact in the case. Cedillo v. Int’l Ass’n of Bridge & Structural Iron Workers et al., 603 F.2d 7, 9 (7th Cir.1979).

The Court finds the following as facts for the purpose of deciding the motions:

FACTS

1. Third-party plaintiff Town of Milford is a municipality in Jefferson County, Wisconsin.

2. Third-party plaintiff David Vandre is an adult resident of the State of Wisconsin who at all times relevant to this action was employed as the Constable of the Town of Milford.

3. Third-party defendant Tower Insurance Company, Inc. is a Wisconsin corporation having its home office in Milwaukee, Wisconsin, and is engaged in the business of issuing policies of liability insurance.

4. Third-party defendant Employers Mutual Casualty Co., Inc. is an Iowa corporation, having its home office in Des Moines, Iowa, and is engaged in the business of issuing policies of liability insurance.

5. The third-party plaintiffs are defendants in a § 1983 action brought by one Merle C. Engsberg, in which Engsberg alleges that on April 25, 1982 defendant Vandre pried loose a board in a shed in which Engsberg kept five dogs belonging to him and shot the dogs with a rifle, killing four instantly. He alleges that Vandre acted “intentionally or with a willful, wanton, or reckless disregard for the plaintiffs constitutional rights in destroying his five dogs, and thereby deprived him of his rights under the Fourth, Fifth and Fourteenth Amendments to the United States Constitution. Amended Complaint, ¶¶ 17, 20 and 22.

6. As a result of his acts, Vandre was convicted on his plea of guilty of cruelty to animals contrary to Wis.Stats. § 948.02. Amended Complaint, ¶ 15.

7. In addition, Engsberg alleges that “the Town of Milford, through its officers and agents, acted intentionally or with a willful, wanton or reckless disregard for plaintiffs constitutional rights in its reckless selection, training and supervision of the defendant Vandre in his capacity as Town Constable,” or in the alternative “was grossly negligent in its selection, training and supervision of the defendant Vandre in his capacity as Town Constable.” Amended Complaint, ¶¶ 25 and 26.

8. Plaintiff Engsberg further alleges that he suffered acute emotional distress and pecuniary loss as a result of the third-party plaintiffs’ conduct, and seeks compensatory and punitive damages. Amended Complaint, ¶¶ 17 and 27.

9. Third-party defendants Tower Insurance and Employers Mutual Casualty had each issued a policy of liability insurance to the Town of Milford that was in effect on April 25, 1982.

10. Employers Mutual Casualty’s policy contained the following exclusion:

This insurance does not apply to and the company shall not be liable to make any payment in connection with any claim made or suit brought against the Insured:
* * * * * *
(f) for any damages, direct or consequential,
1. arising from a wrongful act resulting in, or
2. arising from a wrongful act from which no damages would have resulted except for the occurrence of bodily injury, sickness, disease, or death, or from damage to any tangible property including use thereof;

11. Tower Insurance’s policy contained the following language descriptive óf coverage:

A. COMPREHENSIVE GENERAL LIABILITY INSURANCE.
I. Coverage — Bodily Injury and Property Damage Liability.
The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies, caused by an occurrence, and the Company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the Company shall not be obligated to pay any claim or judgment or to- defend any suit after the applicable limit of the Company's liability has been exhausted by payment of judgments or sesttlements (sic).
B. “Bodily injury” means bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom.
C. “Property damage” means (1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, . or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.
D. “Occurrence” means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.

Both the Town of Milford and Vandre are insureds under the policy.

12. On April 18, 1984 and April 19, 1984 Vandre and the Town of Milford tendered their defense against the Engsberg complaint to Employers Mutual Casualty and Tower Insurance, respectively.

13. Employers Mutual Casualty rejected the third-party plaintiffs’ tender of defense, while Tower Insurance accepted the defense of the Town in part under a reservation of rights, agreeing to defend the Town only on the negligence claims against it and retaining an attorney to so defend the Town on those claims.

14. On July 13,1984 third-party defendants the Town of Milford and Vandre impleaded the insurance companies for both indemnification and damages from breach of their separate contractual duties to defend.

OPINION

“To determine whether an insurer is obligated to assume defense of a third-party suit, it is necessary to.determine whether the complaint alleges facts which, if proven, would give rise to liability covered under the terms and conditions of the policy.” Sola Basic Industries, Inc. v. U.S. Fidelity, 90 Wis.2d 641, 280 N.W.2d 211, 213 (1979) citing Grieb v. Citizens Casualty Company of New York, 33 Wis.2d 552, 148 N.W.2d 103 (1967).

The operative language in the Town of Milford’s insurance policy with Employers Mutual is the exclusion from coverage of “any claims ... brought ... for any damages, direct or consequential, 1. arising from a Wrongful Act resulting in [damage to any tangible property] ... or 2. arising from a Wrongful Act from which no damages would have resulted except for the occurrence of ... damage to any tangible property.”

As noted above, plaintiff Engsberg’s claim is that the destruction of his five dogs constituted both a deprivation of property without due-process in violation of the Fourteenth Amendment and also an improper seizure under the Fourth Amendment, entitling him to receive compensatory damages for pecuniary loss and emotional distress. Certainly, the damages sought by Engsberg arise from the alleged destruction of his dogs, a wrongful act resulting in damage to tangible property. Moreover, his damage claims would be nonexistent had the damage to tangible property not occurred. Thus, there is no sense in which that claim does not fall under the plain language of the policy exclusion.

The averments of Town of Milford Clerk Thomas A. Miller that he as a member of the Milford Town Board understood and expected that the Employees Mutual policy would insure' the Town against claims arising from damage to tangible property are immaterial. The third-party complaint alleges coverage under the policy, not coverage under a modified policy or implied-in-law coverage arising from an insurance agent’s misrepresentation. Furthermore, even if the third-party complaint contained such allegations, Miller’s personal opinion as to the coverage offered would be insufficient to create a genuine issue of material fact in light of the relatively clear terms of the policy. Because the complaint could not give rise to Employers Mutual’s duty to indemnify the Town or Vandre, Employers Mutual has no duty to defend.

Contrary to third-party plaintiffs’ assertion, the holding of Handal v. American Farmers Mutual Casualty Co., 79 Wis.2d 67, 255 N.W.2d 903 (1977) is inapplicable here. That case merely stands for the proposition that an ambiguity in a modification of an insurance policy should be construed in favor of coverage when that construction would coincide with the reasonable expectations of the insured.

Regarding the Tower Insurance policy, the operative language is the' definition of occurrence:

D. “Occurrence” means an accident ... which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.

Under the terms of the policy quoted in paragraph 11 of the facts, damages must have been caused by an occurrence before the insurance company would become legally obligated to pay an insured.

Against third-party plaintiff Vandre, plaintiff Engsberg has alleged constitutional torts which may or may not have been intentional arising from what can only be described as intentional though perhaps arguably privileged conduct, Vandre’s use of a rifle to destroy Engsberg’s dogs. Because Vandre’s conduct resulting in Engsberg’s property damage was intentional, there is no sense in which his conduct precipitated an occurrence the results of which could be covered under the policy issued by Tower Insurance.

Against third-party plaintiff Town of Milford, plaintiff Engsberg has alleged the same constitutional torts as alleged against Vandre, but contends that those torts arose out of property damage that was intended by the Town or, in the alternative, that the damage was caused by the Town’s gross negligence in failing to supervise Vandre. Clearly, the allegations of gross negligence, if proved, fall within the coverage of the policy as leading to an occurrence and Tower’s duty to defend the Town is thereby triggered.

The only remaining question is the scope of Tower’s duty to defend. Tower maintains that it need only defend the Town against the negligence allegations. In support, it cites Chief Judge Crabb’s decision in American Motorists v. Trane Co., 544 F.Supp. 669 (W.D.Wis.1982), affirmed 718 F.2d 845 (7th Cir.1983). Tower misapprehends the meaning of American Motorists.

American Motorists involved four claims brought against Trane Company by a customer who was dissatisfied with a particular Trane component that had been or would be installed in four geographically dispersed natural gas liquification plants. Trane’s insurers failed to accept its tender of defense and one brought a declaratory action for determination of its duty to defend. In the meantime, Trane settled the claims. In analyzing each insurer’s obligation to indemnify Trane for the costs of the settlement and to reimburse it for defense costs, Judge Crabb looked at each claim separately. That approach made eminent good sense, because although the claims were based on identical theories of recovery, each involved different facts.

As a practical matter, however, apportioning the responsibility for defense against a lawsuit involving several factually different claims according to policy coverage is a great deal easier than apportioning such responsibility when the lawsuit alleges one set of elemental facts and seeks recovery under several different theories, some that may allow recovery under a policy and others that may not. Moveover, while apportionment may be a logical solution retrospectively, when the merits of the lawsuit have been disposed of through settlement or otherwise, apportionment may be well-nigh impossible prospectively when defense against an action based on several theories of recovery and/or factually distinct claims must be coordinated. American Motorists says nothing about apportionment in such a situation and in fact holds to the general rule that when an insurer is potentially liable for indemnification based on some allegations in the complaint, the duty to defend against the entire claim is triggered:

I conclude that the Pritchard complaint alleged damages for which there was potential coverage under the American Motorists policy. In these circumstances American Motorists had a duty to defend Trane, even though not all of the Pritchard allegations were within American Motorists’ coverage. Crawford v. Ranger Insurance Co., 653 F.2d 1248, 1253 (9th Cir.1981); Babcock & Wilcox Co. v. Parsons Corp., 430 F.2d 531, 537 (8th Cir.1970).

American Motorists, 544 F.Supp. at 695. See also, Colton v. Swain, 527 F.2d 296, 304 (7th Cir.1975) (applying Illinois law).

Furthermore, when an insurer accepts a tender of defense from its insured under a reservation of rights indicating that it will indemnify the insured under some outcomes but not others, it becomes in the insurer’s interest to promote outcomes under which it will not be liable for indemnification, an interest that conflicts with the interests of its insured. In these circumstances it would be especially detrimental to the insured’s overall ability to defend against the action to allow the insurer to fragment the defense in fulfilling its contractual duty to defend.

Therefore, because some of the allegations of Engsberg’s complaint against the Town of Milford fall within the coverage of its policy with Tower Insurance and because apportionment of responsibility for the defense is neither practical nor desirable, Tower Insurance has the duty to defend the entire action against the town.

Accordingly,

ORDER

IT IS ORDERED that the motion for summary judgment of third-party defendant Employers Mutual Casualty Company, Inc. is GRANTED, and that judgment be entered in its favor and against third-party plaintiffs David Vandre and Town of Milford with costs.

IT IS FURTHER ORDERED that the motion for summary judgment of third-party defendant Tower Insurance Company, Inc. is GRANTED as to its duty to defend and indemnify third-party plaintiff David Vandre, and is DENIED in all other respects.


author: THOMAS F. HOGAN, District Judge.

text:
    T.I.M.E.-DC, INC., Plaintiff, v. I.A.M. NATIONAL PENSION FUND, Defendant.
    Civ. A. No. 84-3068.
    United States District Court, District of Columbia.
    Nov. 7, 1984.

      Carl L. Taylor, Donald E. Scott, Washington, D.C., John L. Watson, Denver, Colo., for plaintiff.
    Robert T. Osgood, I.A.M. Nat. Pension pund, Washington, D.C., for defendant,
   MEMORANDUM OPINION

THOMAS F. HOGAN, District Judge.

The plaintiff in this action; T.I.M.E.-DC, Inc. (“TIME-DC”/“TIME”), is a nationwide trucking firm. The defendant, I.A.M. National Pension Fund (the “Machinists’ Fund”/the “Fund”), is a multiemployer pension plan fund within the meaning of the Multiemployer Pension Plans Amendment Act of 1980 (the “Multiemployer Act”/the “MPPAA”), 29 U.S.C. §§ 1002(37)(A), 1301(a)(3) (1983). TIME-DC filed the complaint in this action for declaratory and injunctive relief against the Machinists’ Fund as the result of the Fund’s assertion of “withdrawal liability” against TIME-DC under the provisions of the Multiemployer Act. Ultimately, the plaintiff seeks a declaration that it is involved in an on-going labor dispute with the International Association of Machinists and Aerospace Workers (the “Machinists’Vthe “Union”), excepting it from withdrawal liability, and an injunction enjoining the Fund from prosecuting, enforcing or collecting any claim for withdrawal liability against TIME.

This case is presently before the Court on plaintiff’s motion for a preliminary injunction. Upon consideration of the plaintiff’s motion, the defendant’s opposition thereto, the stipulated factual record submitted by the parties, counsel’s oral argument on the motion, and the Court’s discussion in open court, the Court concludes that plaintiff’s motion for a preliminary.injunction should be granted insofar as enjoining defendants from pursuing its withdrawal liability assessment of September 14, 1984 against TIME.

Background: The Multiemployer Act

The first comprehensive framework for federal regulation of private pension plans was the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1381. Under ERISA those plans must exist under written instruments, with plan assets held in trust under the direction and control of one or more fiduciaries. Id. §§ 1002-03.

In 1980 Congress enacted the Multiemployer Act to amend ERISA with respect to multiemployer pension plans. Multi-employer plans, as distinguished from single employer plans, are those maintained pursuant to one or more collective bargaining agreements, covering the employees of two or more employers. Employers participating in multiemployer plans normally contribute to the fund at rates specified in the collective bargaining agreement. See The Washington Star Company v. International Typographical Union Negotiated Pension Plan, 729 F.2d 1502, 1504 (D.C.Cir.1984).

Under the Multiemployer Act, the trustees of a multiemployer plan are charged with the duty of quantifying and collecting “withdrawal liability” from an employer who partially or completely withdraws from the plan. See 29 U.S.C. §§ 1382, 1399 (1983). These withdrawal liability provisions were enacted by Congress to protect the security of workers covered by multiemployer plans from the deprivation of anticipated retirement benefits. Washington Star, 729 F.2d at 1504-05. Under the MPPAA an employer who withdraws from a multiemployer plan incurs a noncontractual liability to the fund, constituting the withdrawing employer’s share of the plan’s total vested unfunded benefits. Id. at 1505. Thus, withdrawal liability in effect serves as a penalty for withdrawing from the plan, exacted because the remaining participants may incur liability for the withdrawing employer’s workers. T.I.M.E.-DC, Inc. v. Trucking Employees of North Jersey Welfare Fund, 560 F.Supp. 294, 297 (E.D.N.Y.1983).

Under the terms of the MPPAA, an employer may be deemed to have completely withdrawn from participation in the plan, thereby incurring withdrawal liability, when the employer

(1) permanently ceases to have an obligation to contribute under the plan, or
(2) permanently ceases all covered operations under the plan.

29 U.S.C. § 1383(a).

However, the MPPAA also sets forth an exception to withdrawal liability where an employer is engaged in a labor dispute with its employees. Specifically, the Act provides:

Notwithstanding any other provision of this part, an employer shall not be considered to have withdrawn from a plan solely because—
(2) an employer suspends contributions under the plan during a labor dispute involving its employees.

29 U.S.C. § 1398.

The present action involves a determination of the applicability of this labor disputes exception to withdrawal liability to the operations of the plaintiff, TIME-DC.

Statement of Facts

A. The TIME-DC/Machinists Labor Dispute

For decades TIME-DC has operated its interstate trucking business under union contracts. Prior to April 1, 1982, TIME’S-employees were principally covered by successive nationwide collective bargaining agreements with the International Brotherhood of Teamsters, Chauffeurs, Ware-housemen and Helpers of America (the Teamsters). Its mechanics, however, were covered prior to April 1, 1982 by separate regional collective bargaining agreements with local Machinists organizations.

In 1979 and 1980 TIME-DC began experiencing a severe business decline, attributable primarily to the 1978 federal deregulation of the trucking industry and the resulting competition with non-union carriers. Consequently, in 1981 TIME withdrew from multiemployer bargaining with both the Teamsters and the Machinists and endeavored to bargain directly with the Unions for economic relief.

TIME-DC’s efforts at individual negotiations with the Teamsters proved unsuccessful. At midnight on March 31, 1982, the date of the expiration of the existing collective bargaining agreement, the Teamsters struck TIME upon the company’s failure to sign the new nationwide agreement.

Prior to the Teamsters’ strike TIME-DC was also making efforts to negotiate economic relief with the Machinists. However, in March 1982, Machinists working in the company’s western states operations, the “Western Machinists,” whose collective bargaining agreement also expired on March 31, 1982, rejected the company’s initial contract proposal. Thereafter, before subsequent negotiations on another proposal could begin, the Teamsters initiated their strike of March 31, 1982, and the Western Machinists joined in striking TIME-DC at midnight that night.

Aside from the Western Machinists-, other regional Machinists’ organizations whose collective bargaining agreements had not yet expired, as well as the Oklahoma City Machinists whose collective bargaining agreement also expired March 31, 1982, continued to work in the early days of the Teamsters strike. Eventually, however, the operation of TIME’S nationwide commodities division, the division in which all of the Machinists worked, was suspended by the Teamsters’ strike. There was, therefore, no work for the non-striking Machinists to perform, and the remaining Machinists were laid off. Shortly thereafter, the remaining Machinists’ collective bargaining agreements with TIME-DC also expired.

On May 17, 1982, the striking Western Machinists made an unconditional offer to return to work. According to TIME’S Vice President, a representative of the Machinists indicated that the purpose of this offer was merely to qualify the Western Machinists for unemployment compensation while the Teamsters strike continued. (Williamson Aff. at ¶ 27.) Regardless of the Machinists’ motivation, given that the Teamsters strike continued, there was still no work for the Western Machinists, as there was none for the Machinists throughout the company’s general commodities division. Therefore, the company did not recall any Machinists at that time.

By letter dated August 18, 1982, the Teamsters’ Union offered to return its employees to work at TIME-DC without a contract. Negotiations on this offer continued until November due to TIME’S efforts to get the Teamsters to agree not to resume their strike after the company reopened its general commodities operation. After obtaining a commitment from the Teamsters that they would not strike for a period of time equal to the length of the strike to date, TIME-DC began reopening its western general commodities operation in December, 1982 at wage rates and other terms specified by the company.

In November, TIME had informed the Western Machinists that, because the Teamsters were willing to return to work without a new collective bargaining agreement, the company also wished to begin recalling Machinists on the same terms. On November 22, 1982, the Western Machinists responded, however, that any recall of their members had to be on the terms of the expired 1979-1982 contract, terms unacceptable to the company.

In mid-January of 1983 TIME tendered to the Western Machinists a written “final offer” to enter into an interim agreement. On March 1, 1983 the Western Machinists rejected the interim contract offer, again asserting that they would withhold services on terms other than the expired collective bargaining agreement. Therefore, in light of the failure of the Machinists to return to work after the Teamsters returned to work in December, 1982, TIME-DC-gave its mechanic work to independent contractors.

In August of 1983 the company again attempted to recall Machinists, offering work to eighteen machinists on its seniority list for Los Angeles and Seattle. None of these Machinists returned to work at TIME-DC.

In September 1983 TIME-DC hired one new union mechanic for its Los Angeles terminal. This mechanic was terminated in early 1984, however, because he was not regarded as sufficiently skilled to do the work.

Since the Western Machinists’ rejection of TIME-DC’s interim contract offer on March 1, 1983, there apparently have not been any substantive contract negotiations between TIME and the Western Machinists. However, the Union has never formally notified TIME that it no longer represents the Machinists or has otherwise “walked away from the strike.”

B. Pension Fund’s Assessment of Withdrawal Liability

Several of the collective bargaining agreements between TIME-DC and various regional Machinists’ organizations that expired in 1982 provided for contributions by TIME to a Multiemployer Pension Plan sponsored by the defendant, I.A.M. National Pension Fund. Specifically, Western Machinists at TIME-DC’s Los Angeles and Phoenix facilities, and Machinists at TIME’S Oklahoma City and Buffalo facilities are covered by two plans maintained by the defendant fund. Plan “A” covered the Western and Oklahoma City Machinists while Plan “B” covered one Machinist in the Buffalo, New York facility. Only Plan “A” is at issue in the present action.

At all times pertinent to this ease, the director of the Fund has been Alan W. Skolnick. On June 30, 1983 Skolnick, without approval of the Board of Trustees, and lacking any independent investigation of the facts, sent TIME-DC a letter stating that the company had incurred withdrawal liability with respect to Plan “A” under the Multiemployer Act, asserting that TIME had ceased all covered operations under the plan as of March 27, 1982. On September 7, 1983, Skolnick sent TIME another notice of withdrawal liability, asserting that TIME had ceased all covered operations under the Plan as of June 27, 1982. Thereafter, on September 23, 1983 the Fund sent TIME a demand for withdrawal liability of $449,955, due in quarterly payments of $54,749 beginning October 20, 1983.

TIME-DC informed the Fund on October 20, 1983 that it regarded itself as falling under the, “labor disputes” exception to withdrawal liability under the Multiemployer Act, and that the company had not gone out of business. TIME further informed the Machinists’ Fund that one Teamster Pension Fund had already been enjoined from asserting withdrawal liability against TIME under the labor disputes exception, enclosing a copy of Judge McLaughlin’s decision in TIME-DC, Inc. v. Trucking Employers of North Jersey Welfare Fund, Inc., 560 F.Supp. 294 (E.D.N.Y.1983). TIME also informed the Machinists’ Fund that it had sued a second Teamster Pension Fund in New York to enjoin its withdrawal liability demand under the labor disputes exception.

At a meeting of the Machinists’ Fund’s Trustees on November 2, 1983 a motion was adopted to defer the assessment of withdrawal liability until the Trustees’ January 1984 meeting pending further investigation of TIME-DC’s status by Trustee Stanley Jensen. By letter dated November 21, 1983 Jensen forwarded to Skolnick a copy of a letter, dated November 19, 1983, from Wally Wright, the Grand Lodge Representative of the Machinists. Wright’s letter indicated that TIME-DC was presently employing' the one mechanic at its Los Angeles facility for which it was making contributions to the Machinists’ Fund.

At the January 25, 1984 meeting of the Fund’s Trustees, it was decided that no further action to assess withdrawal liability against TIME-DC would be taken at that time.

On June 27, 1984, another Trustees’ meeting was held, and TIME-DC’s status was again considered. According to the materials prepared by Fund Director Skolnick for the meeting, the Trustees were to consider two questions regarding TIME-DC: (1) Was TIME-DC subject to withdrawal liability? and (2) If so, when? The materials also stated that the one mechanic working in the Los Angeles facility was terminated in February 1984.

Fund Director Skolnick’s notes of the June 1984 Trustees meeting suggest that the Fund regarded TIME-DC as having incurred withdrawal liability as of February 2, 1983 in light of a perceived impasse between the Union and the company. Trustee Eugene Glover testified, however, that the Trustees agreed to assess withdrawal liability against. TIME because there was no collective bargaining agreement between TIME and the Union, and the Union no longer represented TIME’S employees or otherwise had a relationship with the company. Glover also doubted that the Trustees found February 1983 to be the date TIME incurred this liability, but could not state what date he believed was established.

In any event, on September 14, 1984 the Fund formally renewed its withdrawal liability demand against TIME-DC by letter, asserting that the Company incurred withdrawal liability as of March and April 1982 by having ceased participation in the Plan, thereby reactivating the demand of $449,-955.00 that the fund had held in abeyance since November 7, 1983. The September 14, 1984 letter demanded the first quarterly payment of $54,749 by September 29, 1984. That deadline was subsequently extended to October 6, 1984. On October 2, 1984 the plaintiff instituted this action.

Discussion

This case constitutes the third time that TIME-DC has sought a preliminary injunction against a multiemployer pension plan as the result of an assessment of withdrawal liability. Both of the previous cases involved TIME’S efforts to obtain such an injunction against Teamster pension plans. In T.I.M.E.-DC, Inc. v. Trucking Employees of North Jersey Welfare Fund, (the “North Jersey Fund” case), 560 F.Supp. 294 (E.D.N.Y.1983), the court found that the defendant pension fund had improperly assessed withdrawal liability against TIME based on the representation of a local Teamster union official that TIME-DC had ceased operations at its Brooklyn terminal. Id. at 303. The court held in North Jersey Fund that the Fund had an obligation to undertake an independent investigation of the facts before assessing withdrawal liability in order to determine whether TIME fit within the labor disputes exception. Id. The court also found in North Jersey Fund that the labor dispute between TIME and the Teamsters continued, despite the fact that the Teamsters had returned to work, because there was still no new contract between the parties resolving the labor controversy. Id.

Likewise, in T.I.M.E.-DC, Inc. v. New York State Teamsters Conference Pension and Retirement Fund (the “New York Fund” case), 580 F.Supp. 621 (N.D.N.Y.1984), the court also held that the pension fund had improperly assessed withdrawal liability in light of the labor disputes exception. Id. at 630-31. In doing so, the Court rejected defendant’s contention that the labor disputes exception was no longer applicable because TIME and the Teamsters had reached an impasse in negotiations. Id. at 629. Instead, the court held in New York Fund that even if TIME and the Teamsters had reached an impasse, that did not signal the end of the labor dispute, but was merely another stage in the dispute. Id.

Although the North Jersey Fund and New York Fund cases are instructive in construing the labor disputes exception to withdrawal liability, because the present case involves TIME’S relationships with the Machinists rather than the Teamsters, thisCourt must independently examine the facts and circumstances to determine whether a.preliminary injunction should issue.

Four factors must be weighed by this Court in considering a motion for preliminary injunction:

1) Has the petitioner made a strong showing that it is likely to prevail on the merits of its appeal? ...
2) Has petitioner shown that without such relief it will be irreparably injured? —
3) Would the issuance of an ... [injunction] harm other parties interested in the proceedings? ...

4) Where lies the public interest? ... Virginia Petroleum Jobbers Assoc. v. FPC, 259 F.2d 921, 925 (D.C.Cir.1958). See also e.g., National Association of Farm Workers v. Marshall, 628 F.2d 604, 613 (D.C.Cir.1980) (quoting Virginia Petroleum ). With respect to the motion for preliminary injunction in this action, both parties have emphasized the first two factors set forth above — TIME-DC’s ultimate likelihood of success on the merits, and the risk of irreparable harm, or lack thereof, to TIME if the injunction is not issued.

(1) Likelihood of Success on the Merits

As set forth above, the labor dispute exception of the Multiemployer Act states that an employer shall not be considered to have withdrawn from a pension plan, and hence have incurred withdrawal liability under the Act, if the employer merely “suspends contributions under the plan during a labor dispute involving its employees.” 29 U.S.C. § 1398 (1983). In the present case, the defendant Machinists’ Fund’s September 14, 1984 assessment of withdrawal liability against TIME-DC asserted that such liability arose as of March and April of 1982. These dates, however, are those associated with the expiration of TIME’S collective bargaining agreements with the Teamsters and the Western Machinists, and the initiation of strikes by those unions against TIME. The defendant’s Proposed Findings of Fact and Conclusions of Law in Opposition to Plaintiff’s Motion for a Preliminary Injunction clearly recognizes the initiation of the strike by the Western Machinists on March 31, 1982. Id. at ¶ 4. Moreover, defendants concede that although the Machinists formally called off the strike on May 17, 1982, subsequent negotiations on a new collective bargaining agreement between TIME and the Machinists were unsuccessful, and the Machinists in fact failed to return to work when TIME resumed operations in December 1982. Id. at ¶ 5.

Despite the defendant’s concession of the existence of a labor dispute at least to the extent outlined above, the defendant nevertheless attempts to defend the position that TIME-DC incurred withdrawal liability as of March and April 1982. The defendant asserts “To be sure, such a [labor] dispute at one point existed, but has long since ended.” Defendant’s Memorandum in Opposition to Plaintiff’s Motion for a Preliminary Injunction, at 10. The defendant, therefore, adopts the paradoxical argument that a labor dispute in fact existed, but that the labor disputes exception to withdrawal liability is nevertheless wholly inapplicable to the case at hand. The defendant argues that its assessment of withdrawal liability, asserted to have been incurred as of March and April 1982, was the result of the Trustees’ policy that withdrawal liability arises as of the date of the expiration of a contributing employer’s collective bargaining agreement with the union if the employer does not reach a new collective bargaining agreement within the next twelve months, unless a strike is underway. Id. at 5.

The Court concludes that the defendant’s September 14, 1984 assessment of withdrawal liability against TIME under this “policy,” asserting that TIME incurred such liability as of March and April 1982, completely failed to give proper consideration to the labor disputes exception to withdrawal liability. Under the longstanding definition embodied in the National Labor Relations Act, a labor dispute is “any controversy concerning terms, tenure or conditions of employment.” 29 U.S.C. § 152(9) (1983). As recognized by Judge Miner in the New York Fund case, this definition of a labor dispute is equally applicable to the Multiemployer Act. 580 F.Supp. at 627. A labor dispute clearly exists where there is an on-going strike. Such a strike exists even in the absence of “active picketing,” and is instead any “conceded stoppage of work.” See 29 U.S.C. § 142(2) (1983). Moreover, as Judge Miner held in the New York Fund case, even an impasse in negotiations does not signal the end of a labor dispute. 580 F.Supp. at 629.

Under any definition of a labor dispute set forth above, it is clear that as of March and April 1982 TIME-DC was involved in a labor dispute with the Western Machinists. Therefore, in asserting that TIME incurred withdrawal liability at that time, the defendants failed to give proper consideration to the existence of a labor dispute between TIME and the Machinists. Accordingly, the plaintiff has made more than a substantial showing of success on the merits with respect to enjoining the defendant from enforcing its withdrawal liability demand of September 14, 1984.

The Court expresses no opinion at this stage of the proceeding as to whether the labor dispute between TIME and the Western Machinists is presently ongoing, recognizing a distinction between the current status of the Teamsters, presently working without a contract, and the Machinists. The Court finds, however, that the defendant has not yet considered facts upon which it could conclude that the labor dispute between TIME and the Machinists has ended. To the extent that Fund Director Skolniek’s notes of the June 27, 1984 Trustees meeting may be construed as reflecting the Trustees’ intention to assess withdrawal liability against TIME on the basis of a perceived impasse in negotiations between TIME and the Western Machinists, this Court concurs with Judge Miner’s assertion in New York Fund that, as “merely a stage in the labor dispute, there is simply no talismanic significance to the presence of an ‘impasse.’ ” 580 F.Supp. at 629.

Furthermore, even if the Trustees had in fact, as Trustee Glover testified, decided to assess’ withdrawal liability based on their conclusion that the Union had abandoned the company’s workers, this also may not alone support an assertion of withdrawal liability. Plaintiff concedes that if the Union “walks away from the shop” the labor dispute may in fact be regarded as over. However, the record in this action to date contains no evidence upon which the Trustees could conclude that the Machinists Union has abandoned the labor dispute.

In the North Jersey Fund case, Judge McLaughlin stated:

A Fund that seeks to assert withdrawal liability against an employer claiming to fit within the labor dispute exception, has, at minimum, a duty to undertake an inquiry of the factual circumstances. This rule is derived from the long-established requirement that pension funds act independently of the interests of both management and labor.

560 F.Supp. at 303. Implicit in Judge McLaughlin’s holding is the understanding that, in reviewing- the facts, the pension fund has an obligation to make a good faith determination of whether, as a matter of law, a labor dispute continues to exist between the parties. Therefore, this Court finds that the defendant Fund’s September 14, 1984 assessment of withdrawal liability against TIME-DC was, on the facts before the Trustees, clearly erroneous under the labor disputes exception to the Multiemployer Act. Furthermore, in considering any future assessment of withdrawal liability against TIME-DC, the defendant is statutorily bound by the Multiemployer Act to determine whether the labor dispute between TIME and the Machinists has ended, and if so, at what point in time. In doing so, the Fund must be guided by the discussions of labor disputes in this Court’s decision, as well as the New York Fund and North Jersey Fund cases, and other appropriate sources.

(2) Irreparable Harm

Even given the impropriety of defendant’s assessment of withdrawal liability, defendant contends that plaintiff is not entitled to a preliminary injunction because it has failed to establish that it will be irreparably injured in the absence of such an injunction. The Fund asserts that, in the absence of an injunction, TIME can commence arbitration under the Act of the withdrawal assessment. See 29 U.S.C. § 1401(a). Furthermore, the Fund argues that, even if TIME failed to invoke the statute’s arbitration procedures, and the Fund accelerated the entire amount of withdrawal liability, plus accrued interest from the missed payment date, see 29 U.S.C. § 1399(c)(3) & (5), the Fund would still have to institute a collection suit in which TIME could defend on the merits.

This Court is persuaded, however, that the plaintiff has carried its burden of establishing that it will suffer irreparable injury if the defendant is not enjoined from pursuing its withdrawal liability claims. As stated by Judge McLaughlin in North Jersey Fund:

Irreparable injury would occur if defendant were permitted to pursue withdrawal liability against plaintiff. Plaintiff has lost its customer base during the protracted strike, and will be unlikely to regain them in the face of a claim for withdrawal liability. Such as claim, whether valid or not, sends a signal to people in the industry that the company in question is out of business.

560 F.Supp. at 304 (emphasis added). See also New York Fund, 580 F.Supp. at 631 (“threats of diminished consumer confidence and elimination of business opportunities are clearly consequences constituting irreparable harm”).

Furthermore, as also noted by Judge McLaughlin, this harm would exist even if plaintiff invoked the statute’s arbitration procedure since the Multiemployer Act makes a fund’s determination of withdrawal liability presumptively correct in arbitration. North Jersey Fund, 560 F.Supp. at 304. See also 29 U.S.C. § 1401(a)(3)(A) (1983).

Defendant asserts that the findings in North Jersey Fund and New York Fund as to the potential impact of an assessment of withdrawal liability on TIME’S ability to rebuild its customer base cannot be adopted by this Court because those findings were made months ago, and TIME’S business stability has substantially improved since then. Nevertheless, the affidavit of TIME’S Vice President, W. Frank Williamson, asserts that TIME continues to struggle to reestablish its reopened general commodities operations. (Affidavit of W. Frank Williamson, at ¶ 62.) As in the New York Fund case, the defendant has failed to present evidence controverting the testimony of Mr. Williamson that TIME-DC’s renewed trucking operations remain vulnerable to the “false signal” sent by an improper assessment of withdrawal liability. See New York Fund, 580 F.Supp. at 631.

Plaintiff also asserts that it is threatened with irreparable harm by the fact that TIME could face similar improper assertions of withdrawal liability from 27 other pension funds. TIME asserts that the total potential liability to all twenty-seven funds is approximately $30 million, and would force TIME into bankruptcy in six months. Affidavit of Eugene K. Anderson at ¶ ¶ 15-17. The Court finds, however, that only seven of these 27 funds are Machínists’, as opposed to Teamsters’, funds, and could thus logically equate themselves with the defendant in this case. The plaintiffs have failed to present evidence of the severity of the potential financial impact of the seven Machinists funds assessing withdrawal liability against TIME-DC. Nevertheless, even the improper assertion of withdrawal liability by other funds, whether Machinist or Teamster, sparked by the defendant’s success on this motion, would severely compound the “false signal” that TIME-DC had gone out of business, severely affecting its relationship with customers and competitors. Therefore, the Court finds that the risk of irreparable harm to TIME merits the issuance of a preliminary injunction.

(3) & (4) Hardship to Others and the Public Interest

Finally, the Court finds that the interest of the defendant and/or the interest of the public in the present case do not tip the scales away from TIME-DC. As discussed above, TIME-DC has gone beyond showing a substantial likelihood of success on the merits. The plaintiff has demonstrated that the defendant’s September 14, 1984 assessment of withdrawal liability was clearly erroneous under the labor disputes exception in holding that TIME incurred withdrawal liability as of March and April 1982. Furthermore, the defendant has made no assertion of harm it would suffer as the result of the issuance of the injunction.

Finally, with respect to the public interest, the Court finds that although the public has a strong interest in the financial stability and independence of multiemployer pension plans, the public’s overwhelming interest is in assuring that the fiduciaries of such plans make well informed impartial decisions within their statutory guidelines.

Under all of the factors discussed above, therefore, the Court finds that plaintiff is entitled to a preliminary injunction with respect to the defendant’s September 14, 1984 assessment of withdrawal liability. Accordingly, pending a determination on the merits of this action, defendant is hereby enjoined from taking any action to enforce its demand of September 14, 1984 under the withdrawal liability provisions of 29 U.S.C. §§ 1381-1405 (1983) against plaintiff, including any effort to:

(i) prosecute, enforce, collect, or accelerate the amount of withdrawal liability claimed;
(ii) declare that plaintiff is in default of its obligations or has waived any procedures under the Multiemployer Act;
(iii) compel or commence any dispute with plaintiff concerning the claim.

Furthermore, the parties shall file with the Court within 15 days from the date of this decision memoranda addressing whether they will enter into a consent permanent injunction with respect to the September 14, 1984 assessment, or why the Court should not enter a permanent injunction on this matter under Rule 65(a)(2) of the Federal Rules of Civil Procedure.

      . In lieu of presenting witnesses, the parties submitted a stipulated factual record for purposes of the preliminary injunction motion. This stipulated record consists of: the affidavit of W. Frank Williamson, Senior Vice President of TIME-DC; the affidavit of Eugene K. Anderson, Vice President of Finance, Secretary and Treasurer of TIME-DC; the deposition of Alan K. Skolnick, Director of the Fund; the depositions of Eugene Glover and George Poulin, Fund Trustees; the deposition of Allison Beck, a representative of the Machinists Union; and documents produced by the Union and the Fund during discovery.

      . The Western Machinists include those employed at TIME-DC’s locations in Los Angeles, San Francisco, Portland, Seattle, Phoenix and Denver.

      . TIME’S last collective bargaining agreement with the Chicago Machinists and the Buffalo Machinists expired on April 30, 1982, while its last agreement with the St. Louis Machinists expired on June 30, 1982.

      . The Court also rejects defendant's assertion that plaintiff must make a two part showing under the labor disputes exception that (1) payments to the plan were merely suspended, not permanently ceased, and (2) they were suspended because of a labor dispute. See 29 U.S.C. § 1398. The defendant asserts that TIME cannot be regarded as having merely suspended contributions in light of the passage of time since the collective bargaining agreement expired. The Court finds, however, that under a fair reading of the statute an employer’s failure to make contributions during an on-going labor dispute is to be characterized as a suspension rather than a termination of payments. Furthermore, even if defendant’s position had merit, clearly TIME-DC did not permanently cease making contributions as of March and April 1982. As defendant’s own records reflect, TIME-DC made contributions after April 1982 for the one mechanic it had working at its Los Angeles facility. Despite the defendant’s efforts to assert that these were not "meaningful” contributions, the fact remains that TIME did not permanently cease making all contributions as of March and April 1982.