author: LONGOBARDI, District Judge.

text:
    Wendy W. WISE, Plaintiff, v. KIDDER PEABODY & CO., INCORPORATED, a Delaware corporation, and William H. McCoy, II, Defendants.
    Civ. A. No. 84-89 LON.
    United States District Court, D. Delaware.
    Oct. 31, 1984.

      Edward M. McNally, Morris, James, Hitchens & Williams, Wilmington, Del., for plaintiff.
    Roderick R. McKelvie, Ashby, McKelvie & Geddes, Wilmington, Del., for defendants.
   OPINION

LONGOBARDI, District Judge.

This case is a securities action in which the Plaintiff, Wendy W. Wise (“Mrs. Wise”), alleges that the Defendants, Kidder Peabody & Co., Incorporated (“Kidder Peabody”), and its broker, William H. McCoy, II (“McCoy”), are liable for violations of section 10(b), of the Securities Exchange Act of 1934, 15 U.S.C. § 78j and Delaware law. Jurisdiction arises under 15 U.S.C. § 78aa.

The ease is presently before the Court upon the Defendants’ motion for summary judgment on the securities act claim and, in the alternative, Defendants’ motion to compel arbitration. Because relevant facts remain in dispute, the summary judgment motion is denied. The motion to compel arbitration is also denied.

Background

In her complaint, Mrs. Wise alleges that during the period from June, 1981, through the Spring of 1982, McCoy, a Kidder Peabody broker, fraudulently induced her to purchase Puritan Fashions (“Puritan”) stock. Wise alleges that McCoy violated section 10(b) of the Exchange Act by making three statements without reasonable basis in fact: (1) that Puritan’s stock would increase in price from approximately $20 per share to approximately $32 per share; (2) that Puritan was about to announce a merger; and (3) that a source close to Puritan’s president had confirmed the merger. As far as the Court can determine from the record, the facts which led to these allegations are as follows.

McCoy began working as Mrs. Wise’s broker in early 1980 when she decided to seek professional advice concerning a portfolio of securities she had inherited. McCoy was chosen at the suggestion of Mrs. Wise’s husband, Alex, with whom McCoy had been friends for a number of years. Initially, McCoy made some adjustments in the holdings consistent with Mrs. Wise’s desire to change the portfolio to achieve “modest capital appreciation with income.”

The events in question began on June 12, 1981, over a year after McCoy had begun work for Mrs. Wise. On that afternoon, he telephoned Alex Wise to recommend that Mrs. Wise purchase Puritan Fashions securities. Mr. Wise accepted the recommendation and on his instruction McCoy then purchased 500 shares of Puritan at 21% for Mrs. Wise’s account. The next day McCoy attended a cocktail party at the Wises’ and spoke with Mrs. Wise about the Puritan stock. On Monday, he bought an additional 1,000 shares of Puritan for Mrs. Wise’s account. These purchases on June 12 and June 15, 1981, made Puritan the largest single security in her portfolio in terms of the number of shares and in the amount of cash investment. In addition, the purchase was on margin and required Mrs. Wise to borrow over $35,000 to make the transaction.

Unfortunately, the Puritan investment did not turn out as the Wises had hoped. After the initial purchase, the stock began a downward slide and by July of 1981, had fallen over 5 points. When the stock rose slightly in August, Mr. Wise decided to “cover his losses” by selling a large amount of Columbia Gas stock and buying an additional 500 shares of Puritan. After that purchase, the stock hovered between 16 and 19 for a few months and, in November, the Wises bought an additional 1,000 shares at 15/s in order to “average down.” This purchase was not recommended by McCoy.

By June of 1982, the stock had declined to 11%. At that point, the Wises gave up on the investment and decided to tender the stock in response to a debenture offer which had been made by the company in February. On July 21, Mrs. Wise sold 2,000 shares at $8 a share and on July 23, sold the balance of the stock at $8.25 a share. She received May, 1997 debentures with a face value of $15,300 at 16%. The debentures were sold in the fall. The loss on the Puritan holdings totaled $33,000.

Summary Judgment

The Defendants have moved for summary judgment on the Wises’ federal claim. Rule 56(c) of the Federal Rules of Civil Procedure provides that, upon motion of a party, summary judgment shall be rendered if the record indicates there is no issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In determining whether summary judgment is appropriate, all the evidence and the reasonable inferences to be drawn therefrom must be viewed in the light most favorable to the party opposing the motion. 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). Where an issue of fact is not susceptible to direct evidence but may be resolved by drawing an inference from, circumstantial evidence, the court may not draw an inference favorable to the moving party unless no other inference is possible. Peterson v. Lehigh Valley Dist. Council, 676 F.2d 81, 84 (3d Cir.1982). Thus, issues relating to the mental state of a person, always a matter of inferences, are usually decisions for the jury and are rarely decided on summary judgment. Poller v. Columbia Broadcasting, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962).

Despite this difficult standard, the Defendants state they are entitled to summary judgment on two grounds. They assert that the facts demonstrate McCoy did not act with the scienter necessary to sustain a 10b-5 claim and, even if the necessary scienter could be established, Mrs. Wise’s recovery is barred by the doctrine of in pari delicto.

The elements necessary to prevail on a Rule 10b-5 claim include knowledge by the defendants, intent to defraud (scienter), misrepresentation or nondisclosure, materiality of the facts and, in some instances, reliance by the plaintiff. Thomas v. Duralite Co., Inc., 524 F.2d 577, 583 (3d Cir.1975); Seiler v. E.F. Hutton & Co., Inc., 584 F.Supp. 607, 611 (D.N.J.1984). Exactly what may constitute the scienter necessary for liability under section 10(b) has evolved considerably in recent years. In Ernst & Ernst v. Hochfelder, 425 U.S. 185, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976), the Supreme Court suggested that recklessness could be enough for liability in a section 10(b) action, yet left the question open for review.

[T]he term “scienter” refers to a mental state embracing intent to deceive, manipulate, or defraud. In certain .areas of the law recklessness is considered to be a form of intentional conduct for purposes of imposing liability for some act. We need not address here the question whether, in some circumstances, reckless behavior is sufficient for civil liability under § 10(b) and Rule 10b-5.

425 U.S. at 194 n. 12, 96 S.Ct. at 1381 n. 12.

Since Hochfelder, the Third Circuit and other Courts of Appeals have concluded that reckless conduct is actionable under section 10(b). McLean v. Alexander, 599 F.2d 1190 (3d Cir.1979). In McLean, the Third Circuit specifically defined the standard of recklessness to be applied.

[Rjeckless conduct may be defined as ... highly unreasonable [conduct] involving not merely simple, or even inexcusable negligence, but an extreme departure from the standards of ordinary care, and which presents a danger of misleading buyers or sellers that is either known to the defendant or is so obvious that the actor must have been aware of it.

Id. at 1197, quoting Sundstrand Corp. v. Sun Chemical Corp., 553 F.2d 1033, 1044 (7th Cir.), cert. denied, 434 U.S. 875, 98 S.Ct. 224, 54 L.Ed.2d 155 (1977). Clearly, negligence cannot serve as a substitute for scienter. An individual may be liable for reckless conduct, however, where the conduct presents an obvious danger of misleading buyers of which he should have been aware. Id.

Whether an individual’s actions meet the McLean standard is difficult to determine on summary judgment. Intent is a question of fact involving so many intangible factors that it is not easily resolved as a matter of law. Prochaska v. Marcoux, 632 F.2d 848, 851 (10th Cir.1980), cert. denied, 451 U.S. 984, 101 S.Ct. 2316, 68 L.Ed.2d 841 (1981). In this case, the fact finder must examine the bases upon which McCoy made his recommendation to purchase Puritan stock in order to determine whether his statements were so obviously misleading as to create liability under section 10(b). The depositions indicate a serious factual dispute as to what McCoy relied upon in making his recommendation. Mr. and Mrs. Wise have testified that they believe he relied upon inside information. On the other hand, McCoy has testified that he never had an inside source nor did he ever represent that he had such a source to either of the Wises.

In light of this dispute, the Court finds it impossible to determine as a matter of law that McCoy’s recommendation was obviously misleading. A jury could find that the Defendant had acted reasonably and had done nothing to mislead the Plaintiff. On the other hand, a jury could conclude that McCoy made statements with no basis in fact and misled the Plaintiff or that he acted so recklessly that he knew or should have known Mrs. Wise would have been misled. The resolution of such factual disputes are best left to a fuller development and resolution at trial. Thus, the Defendants’ first ground for summary judgment is denied.

Regardless of any factual disputes, the Defendants argue they are entitled to summary judgment because the Plaintiff is barred from recovery by the doctrine of in pari delicto. The defense of in pari delicto may be invoked by a defendant when the party seeking relief is involved in the wrongdoing. Proper application of the doctrine requires that the guilt of the parties be approximately equal. Tarasi v. Pittsburgh Nat. Bank, 555 F.2d 1152 (3d Cir. 1977). In this case, the Defendant claims that if he is guilty of wrongdoing, Mrs. Wise is as guilty as he since she purchased the stock in the belief that he had privileged inside information.

In asserting that in pari delicto should prohibit the Plaintiff’s recovery, the Defendants rely upon Tarasi v. Pittsburgh Nat. Bank, 555 F.2d 1152. In Tarasi, the Third Circuit held that a tippee is barred from bringing suit against a tipper who had allegedly supplied false information when the tippee willingly committed illegal acts by using the information. As the Plaintiff points out, however, the Tarasí opinion must be reevaluated in light of two subsequent Supreme Court opinions on insider trading liability, Chiarella v. United States, 445 U.S. 222, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980), and Dirks v. S.E.C., 463 U.S. 646, 103 S.Ct. 3255, 77 L.Ed.2d 911 (1983). In Chiarella, the Court held that a financial printer who gained information about a takeover bid from documents delivered to him to be printed and then bought stock without disclosing the information was not liable under section 10(b) of the Act. The Court found that section 10(b) liability is premised upon an initial duty to the shareholders. The printer had no such duty.

No duty could arise from petitioner’s relationship with the sellers of the target company’s securities, for petitioner had no prior dealings with them. He was not their agent, he was not a fiduciary, he was not a person in whom the sellers had placed their trust and confidence. He was, in fact, a complete stranger who dealt with the sellers only through impersonal market transactions.

Id. 445 U.S. at 232-33, 100 S.Ct. at 1117. Thus, section 10(b) is not always violated whenever any individual uses non-public market information in buying stocks. Id.

In Dirks, the Court held that absent a duty owed to the stockholders by the insider, a tippee does not violate the insider trading laws. “[T]he test is whether the insider personally will benefit, directly or indirectly, from his disclosure. Absent some personal gain, there has been no breach of duty to stockholders. And absent a breach by the insider, there is no derivative breach.” 103 S.Ct. at 3265. (Emphasis added).

The Dirks standard must be applied to determine the liability of tippees (or remote tippees as we have in the present case). Schick v. Steiger, 583 F.Supp. 841, 874 (E.D.Mich.1984). Application of that standard in this case clearly indicates that in pari delicto cannot apply as a matter of law. The existence of a corporate insider in this case has not even been demonstrated. Thus, applying the Dirks standard, it is clearly impossible to make any determination as to the liability of the remote tippee where the duty of the insider has not been established. Since no initial breach of an insider’s duty has been shown, Wendy Wise, as a remote tippee, has not violated the securities laws and cannot be barred from recovery by in pari delicto. Id. The Defendants’ second ground for summary judgment is also denied.

Motion to Compel Arbitration

The complaint alleges federal Securities Act violations and contains a number of pendent state claims alleging violations of Delaware law. The Defendants have moved to stay the proceedings on the state claims until after the federal claims have been resolved and at that time have the state claims submitted to arbitration.

The motion to compel arbitration arises from a customer’s agreement executed between Wendy Wise and Kidder Peabody. The agreement contained an arbitration clause which stated in part:

Any controversy arising out of or relating to accounts or transactions with or for the undersigned or to this agreement or the breach thereof shall be settled by arbitration in accordance with the rules of either the American Arbitration Association or the New York Stock Exchange as the undersigned may elect. If the undersigned does not make such election be [sic] registered mail addressed to you at your main office in New York City within five days after demand by you that such election be made, then you may make such election. Judgment upon any award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

Assuming the customer’s agreement to be a valid contract, this provision must be enforced by the courts pursuant to Section Two of the United States Arbitration Act: “A written provision in any ... contract ... involving commerce to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for a revocation of any contract.” 9 U.S.C. § 2 (1976). There are, however, a few well recognized exceptions to this general policy. In particular, the Supreme Court has held that violations of the Securities Act of 1933 are not subject to arbitration. Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953). In Wilko, the Court found that the protective nature of the Securities Act outweighs the policies promoted by arbitration.

[Congress] has enacted the Securities Act to protect the rights of investors and has forbidden a waiver of any of those rights. Recognizing the advantages that prior agreements for arbitration may provide for the solution of commercial controversies, we decide that the intention of Congress concerning the sale of securities is better carried out by holding invalid such an agreement for arbitration of issues arising under the act.

Wilko, 346 U.S. at 438, 74 S.Ct. at 188-89 (footnotes omitted).

Since the Wilko decision, courts have been faced with the problem of what to do when arbitrable claims are joined with claims not subject to arbitration. There is no evidence that Congress considered this issue in enacting the Arbitration Act. Cunningham v. Dean Witter Reynolds, Inc., 550 F.Supp. 578, 583 (E.D.Cal.1982). Nor has the Third Circuit given any guidance on this problem. Thus, it is necessary to weigh the policies of the Arbitration Act and the Exchange Act in light of the facts presented in order to determine whether enforcement of the arbitration clause is proper in this case.

The Defendants argue that the Arbitration Clause must be enforced and the state claims stayed pending resolution of the Exchange Act claim and then arbitrated in the usual manner. The Plaintiff urges the Court to evaluate the extent to which the federal and state claims are factually “intertwined” before separating the claims and, if the degree of factual similarity is substantial, to consolidate all claims to be heard in federal court. The Plaintiffs approach, known as the doctrine of “intertwining”, originated in the Fifth Circuit in Sibley v. Tandy Corp., 543 F.2d 540 (5th Cir.1976), cert. denied, 434 U.S. 824, 98 S.Ct. 71, 54 L.Ed.2d 82 (1977), and has been adopted in two other circuits. Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d 1023 (11th Cir.1982); Byrd v. Dean Witter Reynolds, Inc., 726 F.2d 552 (9th Cir.), cert. granted, — U.S.-, 104 S.Ct. 3509, 82 L.Ed.2d 818 (1984).

In Miley v. Oppenheimer & Co., Inc., 637 F.2d 318 (5th Cir.1981), the Fifth Circuit discussed the reasons for consolidating federal and state claims into one when the facts are inseparably intertwined.

In Sibley, Judge Godbold noted that “when it is impractical if not impossible to separate out non-arbitrable from arbitrable contract claims, a court should deny arbitration in order to preserve its exclusive jurisdiction over federal securities act claims.” Additionally, the court in Sibley noted that arbitration should not be ordered where “[a]n arbitrator making a decision on the common law claims would [be] impelled to review the same facts needed to establish the plaintiffs securities law claim.”

637 F.2d at 335 (citations omitted).

Admittedly, Judge Godbold’s first concern, that of preserving federal jurisdiction, is not as important in a case such as this where the Defendants ask that the state claims be stayed pending resolution of the federal causes of action. However, the second concern, that two forums may end up reviewing the same facts if state claims are arbitrated, is a most compelling reason to adopt the doctrine of intertwining. Efficiency must always be a concern of the courts and, when a procedure promotes efficiency at little or no expense to the parties, it should be utilized.

It is decidedly more efficient to hear both state and federal claims in one forum when the facts behind all the claims are substantially similar. Indeed, to do otherwise would “frustrate the purpose of the Arbitration Act, i.e., fast, inexpensive dispute resolution.” Byrd v. Dean Witter Reynolds, Inc., 726 F.2d at 554. When a suit involving the same factual issues is split into two separate proceedings, the expressed congressional policy of saving time and expense in litigation is defeated. Cunningham, 550 F.Supp. at 584.

Ironically, in rejecting the intertwining doctrine in Dickinson v. Heinold Securities, Inc., 661 F.2d 638 (7th Cir.1981), the Seventh Circuit determined that intertwining did not give appropriate weight to the federal policies embodied in the Arbitration Act. Id. at 645. However, a close examination of those policies reveals that efficiency was the Act’s ultimate goal. The Senate Report on the Act states: “The desires to avoid the delay and expense of litigation persists. The desire grows with time and as delays and expense increase.” Cunningham v. Dean Witter Reynolds, Inc., 550 F.Supp. at 584, quoting S.Rep. No. 536, 68th Cong., 1st Session, 3 (1924). Thus, the policy behind the arbitration act is advanced, not defeated, when efficiency is served.

Inefficiency is not the only concern if state claims are separated for arbitration proceedings. As the Fifth Circuit pointed out in Miley v. Oppenheimer & Co., Inc., 637 F.2d at 336-37, arbitration creates incentives for plaintiffs to drop one set of claims in order to speed collection on the judgment. If state proceedings are stayed, the plaintiff could be forced to endure a long arbitration procedure before recovery even though the fact finder has already concluded that federal securities laws have been violated. Indeed, as Judge Godbold speculated in Miley, a plaintiff might choose to abandon his state claim in order to immediately collect judgment upon conclusion of his federal trial, thereby undercutting the purpose of pendent jurisdiction. Id., accord, 550 F.Supp. at 584 n. 7.

This Court chooses to apply the doctrine of intertwining in this case. Indeed, this case is the perfect example of a situation where the claims should not be argued in two separate forums. “When arbitrable and nonarbitrable claims are ‘inextricably intertwined’ ... the district court should deny arbitration ____” Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d at 1026. In making the determination as to what extent the claims are intertwined, the Court must ask whether it has been presented with a single recitation of fact as the source of all the alleged claims. Sawyer v. Raymond, James & Associates, Inc., 642 F.2d 791, 793 (5th Cir.1981).

In this case, the Court is faced with a single recitation of fact. All of the claims as pleaded derive from essentially the same set of alleged wrongful acts by the Defendants. An arbitrator hearing the state claims would have to consider the same evidence as the federal court and would have to determine many of the same factual and legal questions. Thus, any severance and partial arbitration in this case would be inefficient and duplicative.

For the foregoing reasons, the Defendants’ motion to compel arbitration is denied.

      . It should be noted that although the stocks which are the subject of this lawsuit were owned by Wendy Wise, her husband, Alex Wise, was involved in the management of her portfolio.

      . Unlike the Wilko claims which arose under the Securities Act of 1933, the claims in this case arise under section 10(b) of the 1934 Securities Exchange Act. However, the acts are similar in purpose and courts have consistently held that agreements to arbitrate claims arising under section 10(b) of the 1934 Act are also unenforceable. See, e.g., Sibley v. Tandy Corp., 543 F.2d 540, 543 (5th Cir.1976), cert. denied, 434 U.S. 824, 98 S.Ct. 71, 54 L.Ed.2d 82 (1977); Greater Continental Corporation v. Schechter, 422 F.2d 1100, 1103 (2d Cir.1970).

      . The Plaintiff cites Ayres v. Merrill, Lynch, Pierce, Fenner & Smith, 538 F.2d 532 (3d Cir. 1976), as evidence that the Third Circuit would apply the doctrine of intertwining. That is not so. The issue in Ayres was whether an arbitration agreement applied to allegations of security fraud. The Third Circuit simply applied the proposition accepted by both the Plaintiff and Defendants in this case that allegations of section 10(b) violations are not subject to arbitration. The Court did not decide whether state claims should be stayed pending resolution of the securities claims.

      . The Court acknowledges that efficiency may be achieved through arbitration because of the special technical expertise of the arbitrators. Dickinson, 661 F.2d at 646. However, that is not necessarily true in the mixed claims situation faced here. A federal court trial followed by arbitration indicates that any technical issues would arise first at trial, preempting any application of expertise by the arbitrator. Moreover, it is not clear that technical expertise is necessary in this case involving the sort of fraud claim that courts regularly decide without experts. See, Cunningham v. Dean Witter Reynolds, Inc., 550 F.Supp. 578, 585 (E.D.Cal.1982).


source: Caselaw Access Project

author: CAFFREY, Chief Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff, v. Yacoub NAKHOUL, Antonious Tannous, and Milad El-DeBeib, Defendants.
    Crim. No. 84-217-C.
    United States District Court, D. Massachusetts.
    Oct. 31, 1984.

      Sydney E. Hanlon, U.S. Atty., for plaintiff.
    Walter B. Prince, Brown & Prince, Boston, Mass., for Mahomud Rawwad.
    Philip Nessralla, Brockton, Mass., John C. McBride, Boston, Mass., for Assad Abou-Saada.
    Karnig Boyaiian, Boston, Mass., for Mi-lad El-DeBeib.
    Jonathan Shapiro, Stern & Shapiro, Boston, Mass., for Yacoub Nakhoul.
    Nicholas Abraham, Daniel Sherwood, Boston, Mass., for Antonious Tannous.
    Francis Dimento, Dimento & Sullivan, Boston, Mass., for Yacoub Fayad.
   MEMORANDUM RE: MOTIONS TO SUPPRESS

CAFFREY, Chief Judge.

Defendants Yacoub Nakhoul, Milad El-DeBeib, and Antonious Tannous have been indicted for conspiracy to possess heroin with intent to distribute (21 U.S.C. § 846). The case is now before the Court on motions to suppress the post-arrest statements of these three defendants.

Defendant Nakhoul

It is uncontroverted that Yacoub Nakhoul was arrested in Cambridge, Massachusetts, shortly after 4:00 p.m. on May 31, 1984. He was then transported to Drug Enforcement Administration (“DEA”) headquarters in Boston in a government vehicle operated by DEA Agent Venizelos. Customs agent MacDonald was present in the vehicle, as well as Milad El-Debeib, who was also under arrest. Upon arrival at DEA headquarters Nakhoul was placed in a holding cell and subsequently questioned by DEA agents Murphy and Reilley. Nakhoul’s motion to suppress challenges the admissibility of post arrest statements made both in the government vehicle immediately following arrest and later at DEA headquarters.

At the suppression hearing Agent Venizelos testified that he advised Nakhoul of certain rights by reading them aloud from a card entitled “DEA form 13A” while he, Nakhoul, MacDonald and El-Debeib were seated in the vehicle at the arrest scene. Agent Venizelos produced and read this card in court: the rights as recited are adequate to satisfy the requirements of Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966).

Venizelos further testified that after he read each portion of the Miranda warnings he paused and asked Nakhoul if he understood. According to Agent Venizelos, Nakhoul responded affirmatively each time by nodding his head or saying “yes.” Agent MacDonald corroborated Venizelos testimony, saying that he also had asked Nakhoul if he understood his rights, and had received an affirmative response. Neither agent claimed that Nakhoul made an express waiver of his right to remain silent or his right to an attorney.

Both agents testified that they had conversation with Nakhoul, conducted entirely in English. Venizelos testified that Nakhoul, together with El-DeBeib, gave him advice as to the best route back to Boston. MacDonald testified that he asked Nakhoul what he was doing at the Holiday Inn, and that Nakhoul responded that he went there to have El-DeBeib look at a broken taxi meter. Despite the minor inconsistencies in the agents’ testimony brought out on cross examination, I find that their testimony is credible as to the advisal of rights and the occurrence of conversations in the vehicle.

Upon arrival at DEA headquarters, Nakhoul was placed in a holding cell prior to questioning by agents Reilley and Murphy. Agent Venizelos’ testified that approximately one hour elapsed between the time he advised Nakhoul of his rights and the time Agents Reilley and Murphy entered the cell, and Agent MacDonald said that the time elapsed was 45 minutes to one hour. Agent Reilley, however, testified that as much as an hour and a half may have passed between the time of arrest and the interrogation. Given Officer Venizelos’ own testimony that the arrests took 10-15 minutes at the scene, and that the ride from Cambridge took 35-40 minutes, I find that Agent Reilley’s estimate of the time is more credible.

Agent Reilley described the holding cell as a small room with no windows, a heavy door, and a bench for the prisoner to sit on. He and Agent Murphy entered the cell, did not advise Nakhoul of his Miranda rights, and proceeded to question him. Both agents testified that Nakhoul was visibly upset and wept during questioning.

Again, the questioning was conducted entirely in English. At one point during the interrogation Agent Murphy told Nakhoul that he did not believe him, and later told Nakhoul that it would be in his benefit to cooperate. According to Murphy, both he and Reilley asked a series of questions of Nakhoul.

At issue in Defendant Nakhoul’s motion is the adequacy of the Miranda warning. It is well established that the failure of questioning officers to obtain an explicit waiver of rights does not necessarily require suppression of post-arrest statements. North Carolina v. Butler, 441 U.S. 369, 99 S.Ct. 1755, 60 L.Ed.2d 286 (1979). While silence alone does not constitute waiver, silence coupled with an understanding of one’s rights and a course of conduct indicating waiver permits the conclusion that waiver has occurred. Id. at 373, 99 S.Ct. at 1757. There is, of course, a heavy burden on the government to “demonstrate that the defendant knowingly and intelligently waived his privilege against self-incrimination and his right to ... counsel.” Miranda v. Arizona, 384 U.S. 436, 475, 86 S.Ct. 1602, 1628, 16 L.Ed.2d 694 (1966), citing Escobedo v. Illinois, 378 U.S. 478, 490 n. 14, 84 S.Ct. 1758, 1764 n. 14, 12 L.Ed.2d 977 (1964). To determine whether a valid waiver has been obtained, a court should consider all the circumstances surrounding the interrogation, including the defendants’ age, experience, education, background, and intelligence. E.g. Fare v. Michael, 442 U.S. 707, 725, 99 S.Ct. 2560, 2572, 61 L.Ed.2d 197 (1979).

Here, there was credible testimony that Defendant Nakhoul was a cab driver who gave the arresting agents advice as to travel routes between Cambridge and Boston. From this one may infer that Nakhoul is an adult capable of passing a drivers test and conducting business with his passengers. In addition, four agents testified that they had conversation with Nakhoul in English, and that he gave responsive answers to their questions. Nakhoul also indicated, when asked, that he understood his rights. In this respect, the case before the court differs from Tague v. Louisiana, 444 U.S. 469, 100 S.Ct. 652, 62 L.Ed.2d 622 (1980), where the prosecution failed to introduce any evidence that the defendant acknowledged understanding of his rights. On the evidence presented, I rule that defendant Nakhoul was informed of his rights, understood them, and was capable of waiver.

Aside from that degree of coercion inherent in any arrest, the conduct of officers Benizelos and MacDonald was neither threatening nor overbearing. In fact, from the agents’ testimony that Nakhoul gave them road directions, it appears that the atmosphere in the vehicle was congenial. As noted, there was no express waiver of rights by Nakhoul. He merely acknowledged his understanding and then answered questions. On the other hand, he did not invoke his right to an attorney or his right to remain silent. Contra United States v. Christian, 571 F.2d 64 (1st Cir. 1978), United States v. Montgomery, 714 U.S. 201 (1st Cir.1983). Therefore, in accordance with Butler, I find that defendant Nakhoul’s conduct indicates that he knowingly and intelligently waived his rights, and that defendant’s motion to suppress be denied as to statements made to agents Venizelos and MacDonald in the vehicle. United States v. Velasquez, 626 F.2d 314 (3rd Cir.1980), United States v. Stark, 609 F.2d 271 (6th Cir.1979).

Upon arrival at the DEA headquarters, however, the circumstances of the interrogation changed. The defendant was locked up, alone, in a small windowless room for a period of time and then questioned by two unfamiliar agents. It is significant that agents Reilley and Murphy did not give Miranda warnings themselves and were not present when agent Venizelos gave the warnings some time earlier. Defendant Nakhoul may not have realized that he could assert his rights with the agents who questioned him in the cell, particularly in the light of his changed circumstances. Furthermore, agents Reilley and Murphy used a more aggressive style of interrogation than Nakhoul had experienced earlier. This is not per se offensive to Fifth Amendment rights, but may be a factor in determining whether Nakhoul’s conduct indicated that he effectively waived those rights. Fare v. Michael, 442 U.S. at 727, 99 S.Ct. at 2573. The government’s contention of waiver is further undercut by testimony that Nakhoul was upset, frightened, and weeping during the interrogations.

Butler teaches that a subject’s background should be considered when applying this “totality of circumstances” test. 441 U.S. at 373, 99 S.Ct. at 1757. Nakhoul is a Lebanese national living in this country. It is reasonable to infer that his understanding of American law, customs, and constitutional rights may be limited. The government has overcome this inference as to conversations which took place in the vehicle through a showing that Nakhoul’s rights were read to him, and that he acknowledged his understanding of those rights. There has been no showing that Nakhoul understood that those same rights could be asserted during questioning by any law enforcement officer. In other words, warnings adequate to dispell the coercion inherent in the first custodial situation were not sufficient in light of the changed circumstances at the DEA office. Consequently, I rule that those statements made by defendant Nakhoul at the DEA office be suppressed.

Defendant Tannous

Antonious Tannous was arrested on Memorial Drive in Cambridge, Massachusetts by Agent Connolly of DEA and Customs Agents Protentis and Madden. Tan-nous was placed in a government vehicle operated by Agent Protentis in which Agent Madden was also a passenger. At issue in defendant Tannous’ motion is the admissibility of statements made during the ride to Boston and later at DEA headquarters with the assistance of a translator.

Agent Protentis testified that while in the car Agent Madden gave Tannous the required Miranda warnings, that Madden paused after each warning, and that Tan-nous indicated his understanding of each right. That the rights were, in fact, read to Tannous is undisputed. Rather, the issue centers on Tannous’ understanding of the rights read to him, premised on his claimed unfamiliarity with English and low intelligence.

Defendant Tannous himself took the witness stand, testifying at first through an interpreter supplied by defense counsel. Tannous’ testimony was replete with evasive and unresponsive answers despite repetition of the questions by two interpreters. Significantly, he was particularly uncooperative where the questions called for answers unfavorable to him, thereby discrediting his claims of inferior intelligence.

One line of questioning was particularly telling. On direct examination, Tannous first testified that he did not understand anything that was said by the agents in the ear. On cross, he admitted telling the agents that he was going to pick up his daughter, that he was from Lebanon, and that he had a green card. When asked if this conversation took place in English or Arabic, Tannous engaged in a colloquy with the interpreter. The court ordered another interpreter sworn and the question put to Tannous again. Tannous repeatedly failed to answer the question, then reverted to his original testimony that he had told the agents nothing.

Agent Protentis, on the other hand, testified that he had substantial conversation with Tannous, ranging from discussion of events relevant to the case to common back ailments. He further testified that Tan-nous said “he wanted to tell the truth” when the agents began questioning. All of this conversation took place in English. Upon consideration of the conflicting testimony and the demeanor of the witnesses, I find that defendant Tannous’ testimony is not credible, and that he has an adequate understanding of English to comprehend the Miranda warnings. It is, of course, troublesome that the agents retained an interpreter upon arrival at DEA headquarters. In other circumstances this fact alone might raise an inference that the subject did not understand English. Here, however, I find that there is convincing evidence that Tannous had a substantial understanding of the language. That the agents may have been over-cautious or merely wished to facilitate communication does not outweight this evidence. I further find that his conduct indicates a knowing and intelligent waiver of these rights. Accordingly, I rule that the defendants motion to suppress statements made in the vehicle to Agents Madden and Protentis be denied.

At DEA headquarters, the agents obtained the assistance of Mr. Sami Odeh, an independent consultant to the State Department as interpreter of Arabic. Odeh testified that he translated the Miranda warnings from a form into two dialects of Arabic: the classical dialect spoken in Egypt and the colloquial Lebanese dialect. He further testified that Tannous said he understood each right. When Tannous asked if he had to answer questions, Odeh told him, “It is up to you whether to answer or not.” Subsequently, Tannous signed the waiver of rights form and proceeded to answer questions.

Defendant Tannous testimony on this matter is that he could not understand the interpreter because Odeh spoke with an Egyptian accent. Tannous also claimed that the interpreter induced him to sign the form by saying “I’ll help you” and “It won’t hurt you [to sign].”

Odeh, a teacher of Arabic, testified that he was born in the West Bank of Jordan and trained in the same dialect as Tannous. Odeh further testified that he had no trouble understanding Tannous, and that Tan-nous answered some questions in English before Odeh made the translation to Arabic. Odeh denied making any statement suggesting that Tannous sign the form and also testified that Tannous said he understood the Miranda warnings Odeh gave him in Arabic.

As previously ruled, Tannous’ testimony is not credible, and I therefore find that events at DEA headquarters transpired as related by Mr. Sami Odeh, and that defendant Tannous expressly waived his Fifth Amendment rights prior to questioning. Accordingly, I rule that the motion to suppress statements made by the defendant at DEA headquarters be denied.

Defendant El-DeBeib

Milad El-DeBeib was first approached by Federal Agents in Boston at approximately 3:00 p.m. on the day of the arrests. He was subsequently arrested along with defendant Nakhoul in Cambridge after 4:00 p.m. and transported to DEA headquarters. Counsel for El-DeBeib has submitted, unsupported by memorandum, a motion generally aimed at suppression of all illegally seized evidence. For the purposes of this memorandum, the court now addresses the admissibility of post-arrest statements.

The uncontradicted evidence is, and I so find, that Milad El-DeBeib was advised of his Miranda rights on three separate occasions: by Agent Murphy when first confronted by the agents in Boston, by agent Yenizelos after his arrest, and by Agent Meahl upon arrival at DEA headquarters. I further find that on each occasion El-De-Beib made a knowing and intelligent waiver of his rights.

Defendant has tendered no other theory which, if not rebutted by the government, would entitle him to the relief sought. Accordingly, I rule that El-DeBeib’s motion to suppress be denied.

Order accordingly.


author: SHAPIRO, District Judge.

text:
    EXIDE CORPORATION v. ELECTRO SERVICES, INC. v. INCO, LTD., Electroenergy Corporation.
    Civ. A. No. 83-5830.
    United States District Court, E.D. Pennsylvania.
    Oct. 31, 1984.
    Edwin Rome, Philadelphia, Pa., for plaintiff.
    George Lavin, Jr., Philadelphia, Pa., for defendant.
    A. Lamar Matthew, Jr., Sarasota, Fla., for third party defendant.
   MEMORANDUM and ORDER

SHAPIRO, District Judge.

Defendant Electro Services, Inc. (“Electro”), a Florida corporation with its principal place of business in Florida, has moved to transfer this case to United States District Court for the Middle District of Florida pursuant to 28 U.S.C. § 1404(a). The motion will be granted.

Plaintiff Exide Corporation (“Exide”), a Delaware corporation with its principal place of business in Pennsylvania, manufactured and sold automotive and golf car batteries to Electro from 1978 until 1983. Electro, a wholesale distributor and retail seller, sold 99% of these batteries in the Florida area and none in Pennsylvania.

Exide’s batteries were sold with express warranties; Exide granted Electro a 5% warranty allowance to cover servicing warranty claims of Electro’s customers purchasing Exide batteries. In 1982, Electro complained that its expenses in servicing warranty claims exceeded 5% of sales and the two companies entered into a settlement agreement regarding automotive batteries. Subsequently, Electro complained that its warranty claims continued to mount and alleged that Exide committed fraud by misrepresenting the quality of particular automotive batteries. On December 2, 1983, Exide filed suit in the Eastern District of Pennsylvania seeking payment for certain batteries sold and delivered as well as a declaratory judgment barring Electro from asserting a claim against Exide for the batteries that were the subject of the 1982 settlement agreement. Four days later, Electro commenced an action in Manatee County, Florida, against Exide, INCO Ltd., and INCO Electro Energy Corporation that alleged, inter alia, breach of contract and fraud. On petition of Exide, that case was removed to the United States District Court for the Middle District of Florida.

Electro’s motion to dismiss the Pennsylvania case for lack of in personam jurisdiction was denied on January 31, 1984. A motion to transfer under § 1404(a) remained pending. This court also enjoined Electro from proceeding in the Florida case, but permitted discovery of matters relevant to both cases to continue in order to avoid delay in resolving the underlying dispute. Pending here is Exide’s complaint: Count I demands payment for golf car batteries; Count II requests a declaratory judgment validating the agreement settling warranty claims; and Count III claims amounts owing under certain invoices for batteries sold and delivered. See Order dated May 15, 1984. Electro’s amended counterclaim alleges contractual claims in Counts II, III and VI, tort claims in Counts I, VII, and VIII, and fraud and false advertising in Counts IV and V; Count IX was dismissed on motion of the plaintiff.

Under 28 U.S.C. § 1404(a), “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” Exide has a Florida regional office and extensive Florida contacts so it is clear there is jurisdiction over Exide and venue in Florida.

Motions to transfer are determined by consideration of the same factors relevant to a determination of a forum non conveniens motion. Norwood v. Kirkpatrick, 349 U.S. 29, 75 S.Ct. 544, 99 L.Ed. 789 (1955). They are:

1. relative ease of access to sources of proof;
2. availability of compulsory process for attendance of unwilling witnesses;
3. cost of attendance at trial by willing witnesses;
4. the possibility of view of the premises, if appropriate;
5. all other practical problems that make trial of a ease easy, expeditious, and inexpensive; and
6. “public interest” factors, including the relative congestion of court dockets, choice of law considerations, and the relation of the community in which the courts and jurors are required to serve to the occurrences that give rise to the litigation.

Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1947). In weighing these factors in regard to a § 1404(a) transfer motion, a lesser showing of inconvenience is required than when considering dismissal on forum non conveniens grounds. Norwood, supra 349 U.S. at 31-32, 75 S.Ct. at 546.

It is well-established that plaintiffs choice of forum is a “paramount consideration” and “should not be lightly disturbed,” Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir.1970). However, in this instance, plaintiffs choice may not be entitled to its usual weight. F. Lloyd Price, Electro’s Secretary-Treasurer, discussed the likelihood of imminent litigation in a November 17, 1983 letter to Exide. According to Price’s January 25 affidavit, during a subsequent telephone conversation with Alfred J. Snyder, Jr., Exide’s vice-president of legal and governmental affairs, Price was requested not to institute legal proceedings until December 5, 1983, so that Exide could consider Electro’s settlement demands. Snyder’s affidavits are silent regarding any such request, so the court may infer the veracity of Price’s undisputed statements. Electro did not file suit in Florida until December 6, 1983. However, Exide had already commenced its Pennsylvania action on December 2, 1983.

Consolidation of related cases as a consideration favoring transfer is also not entitled to much weight in this instance. Defendant’s Florida action is substantially the same as its amended counterclaim before this court. All claims will be resolved in one trial, whether or not transfer is permitted.

Transfer of this case is warranted by doubt regarding personal jurisdiction over Electro in Pennsylvania and considerations of practical convenience. In January, 1984, this court found that it had personal jurisdiction over Electro. However, the Third Circuit’s subsequent ruling in Time Share Vacation Club v. Atlantic Resorts, Ltd,., 735 F.2d 61 (3d Cir.1984), casts some doubt on this court’s prior determination. The certainty that the Florida court has jurisdiction over Exide is a factor favoring transfer even though INCO Ltd. and INCO Electro Energy Corp., named as defendants in Electro’s original Florida action, may not be amenable to suit in Florida. Electro served these parties only because, until January, 1983, Exide was a subsidiary of INCO Electro Energy and a third tier subsidiary of INCO, Ltd. Initially, Electro’s counterclaim before this court also named INCO, Ltd. and INCO Electro Energy; these parties were omitted from Electro’s amended counterclaim. If this case is transferred, Electro may seek leave to file an amended complaint in the pending Florida action to dismiss INCO Ltd. and INCO Electro Energy Corp. as parties; if not, the Florida court might grant an anticipated motion to dismiss without affecting the cause of action against Exide.

Both Exide and Electro have presented lengthy lists of witnesses residing in Pennsylvania and Florida respectively. This court will focus on the location of the most critical witnesses. Electro’s operations are confined to the state of Florida. All Electro employees are located there; 99% of Electro’s customers (some of whom will testify to the quality of Exide batteries) are in Florida and none is in Pennsylvania.

In contrast, Exide is a national company, with numerous branch offices, including one in Florida. Electro’s primary contacts with Exide were the District Sales Manager residing in Lutz, Florida, a regional sales manager residing in Hendersonville, Tennessee, and an Assistant Plant Manager residing in Atlanta, Georgia. Exide’s Director of Sales is stationed in Denver, Colorado. Additionally, Exide does not dispute the contention that all batteries sold to Electro were manufactured and shipped from states other than Pennsylvania.

With regard to documentary evidence, Electro’s documents are all located in Florida. Exide’s documents are located in several places, including Tennessee, Georgia, Florida, and Pennsylvania. It is not unduly burdensome to expect Exide to make the relevant documents available in Florida.

Choice of law considerations also favor transfer. Federal courts must apply the conflict of law rules of the forum in which the court sits, Klaxon Co. v. Stentor Electric Manufacturing Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Under both Pennsylvania and Florida rules, Florida law governs the tort and contractual issues involved in this case. The causes of action allegedly arise out of oral contracts negotiated primarily in Florida, Georgia, and Tennessee; the batteries were manufactured in Florida and South Carolina and delivered in Florida; Electro distributed the batteries it purchased almost entirely in Florida; Electro’s alleged injuries occurred entirely in Florida.

Defendant Electro’s motion to transfer this case under 28 U.S.C. § 1404(a) will be granted in the interest of the administration of justice.


author: CALLISTER, Chief Judge.

text:
    Mary G. ADAMS, surviving widow of Frank Herbert Adams, Frankie Adams and Fred M. Adams, Plaintiffs, v. ARMSTRONG WORLD INDUSTRIES, INC.; Celotex Corporation; Eagle-Picher Industries, Inc.; Fibreboard Corporation; Forty-Eight Insulation, Inc.; Johns-Manville Sales Corporation; Nicolet Industries, Inc.; Owens-Illinois, Inc.; Owens-Corning Fiberglas Corporation; Pittsburgh Corning Corporation; GAF Corporation; Standard Asbestos Manufacturing and Insulating Company; Unarco Industries, Inc., Defendants.
    Civ. No. 80-4161.
    United States District Court, D. Idaho.
    Nov. 1, 1984.
    Clark Gasser, Steve Richert, Green, Service, Gasser & Kerl, Pocatello, Idaho, Russell W. Budd, Frederick M. Baron & Associates, P.C., Dallas, Tex., for plaintiffs.
    John L. King, Boise, Idaho, Richard B. Evans, Sarah B. Howdén, Gudmundson, Siggins & Stone, San Francisco, Cal., for Armstrong World Industries, Inc.
    Gary T. Dance, N. Randy Smith, Merrill & Merrill, Chartered, Pocatello, Idaho, for Celotex Corp.
    Charles Johnson III, L. Charles Johnson, Johnson & Olson, Chartered, Pocatello, Idaho, for Crown Cork & Seal Co., Inc.
    Christopher Burke, Clemons, Cosho & Humphrey, Boise, Idaho, Donald J. Roberts, Gabriel A. Jackson, Winingham, Roberts, Rogie & Fama, San Francisco, Cal., for Eagle-Pieher Industries, Inc.
    Jeremiah A. Quane, Alan Hull, Jon Carter, Quane, Smith, Howard & Hull, Boise, Idaho, for Fibreboard Corp.
    Louis F. Racine, Jr., Gary L. Cooper, Racine, Olson, Nye, Cooper & Budge, Chartered, Pocatello, Idaho, for Forty-Eight Insulations, Inc.
    Allen B. Ellis, Jon M. Steele, Ellis, Brown, Sheils & Steele, Boise, Idaho, for Keene Corp.
    Ron B. Rock, Robert C. Grisham, Moffatt, Thomas, Barrett & Blanton, Chartered, Boise, Idaho, for Nicolet, Inc.
    Craig L. Meadows, Wayne B. Slaughter, Edwin V. Apel, Jr., Hawley, Troxell, Ennis & Hawley, Boise, Idaho, for GAF Corp.
    Carl P. Burke, Charles L. Hay, Elam, Burke, Evans, Boyd & Koontz, Boise, Idaho, for Owens-Illinois, Inc.
    Ronald P. Rainey, David E. Kerrick, Alexanderson, Davis, Rainey, Whitney & Kerrick, Caldwell, Idaho, for Pittsburgh Corning Corp.
    Steven R. Matthews, Brady, McDaniel & Matthews, Chartered, Boise, Idaho, for Raymark Industries, Inc.
    J. Frederick Mack, Langroise, Sullivan & Smylie, Boise, Idaho, for Standard Insulations, Inc.
   MEMORANDUM DECISION

CALLISTER, Chief Judge.

Before the Court are the defendants’ motions for summary judgment based on the running of the statute of limitations and failure of a condition precedent to a wrongful death action. This is a wrongful death/products liability action brought by Mary G. Adams, Frankie Adams, and Fred M. Adams, the surviving widow and heirs of Frank H. Adams, deceased, against thirteen asbestos manufacturers. The plaintiffs’ complaint is premised upon the three basic products liability theories, breach of implied warranty, negligence, and strict liability in tort. Jurisdiction is based on diversity.

The deceased was employed from 1940 to 1979 as an insulation worker. From 1966 to 1979 he was employed by Waters Asbestos Company (Waters) and installed insulation products purchased solely by Waters. As an insulation worker, the deceased handled and was exposed to large quantities of asbestos-containing products allegedly manufactured and distributed by the defendant asbestos companies.

It is undisputed that none of Waters’ employees, including the deceased, installed asbestos-containing products after 1973. In addition, none of the defendants manufactured or distributed asbestos-containing products after 1975. The plaintiffs do not dispute in their brief, nor did they dispute in oral argument, that the deceased’s last exposure to asbestos occurred well over two years before the deceased was diagnosed as having asbestosis and lung cancer (May 1979), and the date of the deceased’s death (August 17, 1979). This action was filed December 12, 1980.

All of the defendants have moved for summary judgment in this case based on the running of the statute of limitations and consequent failure of a condition precedent to the plaintiffs’ wrongful death action.

This Court is aware that summary judgment may be granted only where there is no genuine dispute as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. The defendants’ asserted basis for summary judgment in the present case may be summarized as follows: The plaintiffs, as the deceased’s heirs, are precluded from bringing this action because the deceased’s cause of action, as of the date of his death, was barred by the statute of limitations. The defendants contend that a condition precedent to any wrongful death action brought in Idaho is that a deceased be able to maintain an action as of the date of his death.

Thus, the initial inquiry involves the pertinent statute of limitations and its application to the facts in the present case. Section 6-1403(3) of the Idaho Products Liability Reform Act Idaho Code §§ 6-1401 et seq., provides that no products liability claim “may be brought more than two (2) years from the time that the cause of action accrues as defined in § 5-219, Idaho Code.” All parties to this dispute agree that Idaho Code § 5-219(4) is controlling in the present case.

Section 5-219(4) is Idaho’s general personal injury/wrongful death statute of limitations. It provides that in all cases except medical malpractice actions involving foreign objects left in the body or the fraudulent concealment of professional malpractice, an action accrues “as of the time of the occurrence, act or omission complained of,” and that the action must be brought within two years from the date on which it accrues.

The defendants contend that the deceased’s cause of action accrued upon his last exposure to asbestos, which, construing the facts most favorably to the plaintiffs, was sometime in 1973-75. The defendants contend that the language of § 5-219(4) is clear in its meaning and intent and provides no discovery exception. Therefore, the defendants argue that as of the time of his death, the deceased’s cause of action was time-barred.

Plaintiffs contend that the Idaho courts would, and should, adopt a discovery rule as to latent diseases such as asbestosis. They argue that the statute of limitations should not begin to run in asbestos cases until a person discovers the disease or should have discovered it in the exercise of reasonable care. While agreeing that Idaho Code § 5-219(4) governs this action, they contend that the Idaho courts would imply a discovery exception for asbestos cases in addition to the two exceptions already contained in § 5-219(4). Plaintiffs argue in the alternative that the key language in § 5-219(4), the “occurrence, act or omission complained of,” refers, in asbestos cases, to the time in which the disease is diagnosed. As support for this proposition, the plaintiffs cite a series of Connecticut cases. Plaintiffs argue that as a matter of policy it is unfair to bar an action before the aggrieved party is even aware of the cause of action.

This Court is compelled, although not without struggle, to reject the plaintiffs’ contentions. The Court finds that § 5-219(4) contains no discovery rule for latent diseases such as asbestosis. This finding is mandated by the decisions of the Idaho Supreme Court and by the clear expression of intent from the Idaho legislature. The legislative and judicial history behind § 5-219(4) are significant in the present case. In that history, the year 1971 is important. In 1971, the Idaho legislature amended § 5-219(4) to include two discovery exceptions. Prior to 1971, on at least two occasions the Idaho Supreme Court created a discovery exception to the version of § 5-219(4) which existed at that time. The first was Billings v. Sisters of Mercy of Idaho, 86 Idaho 485, 389 P.2d 224 (1964). In that case the Idaho Supreme Court adopted the discovery rule for situations where a physician left a foreign object in the patient’s body. Later, in Renner v. Edwards, 93 Idaho 836, 475 P.2d 530 (1969), the court extended the discovery rule to cover medical misdiagnosis. In response to the argument that the extension of the Billings discovery rule “should be left to the legislature,” the court stated:

Our legislature did not define the time of accrual as being either the time of the performance of the negligent act or the time of the acquisition of knowledge of the negligent act. That was done by this court. To adopt the “discovery rule” is to imply the existence of knowledge as a requirement for the accrual of an action and thus supply knowledge as a statutory requirement. Conversely, to reject the rule is to imply that the legislature consider the requirement of knowledge as an element of accrual and deliberately excluded such terminology from the statute. Legislative inaction should not be ignored in determining legislative intent, but to imply such an intent in this case as a result of legislative inaction is unreasonable. At the moment, our statutes, as most others across this country, are silent as to the interrelationship between “knowledge” and “accrual.” We are required to reach a decision without assistance from our legislative brethren.

Renner, supra, 93 Idaho at 840, 475 P.2d at 534 (emphasis added).

Shortly after the Renner case was decided, the 1971 Idaho legislature acted to provide the guidance which the Renner court had stated was lacking by amending Idaho Code § 5-219(4). This amendment created two discovery exceptions, one for the leaving of a foreign object in a body (codifying the Billings holding), the other for fraudulent concealment of a wrongful or negligent act of professional malpractice. The Renner discovery rule was not adopted. For cases falling outside these two express exceptions, the amended version of § 5-219(4) provides:

[I]n all other actions, whether arising from professional malpractice or otherwise, the cause of action shall be deemed to have accrued as of the time of the occurrence, act or omission complained of, and the limitation period shall not be extended by reason of any continuing consequences or damages resulting therefrom____

Idaho Code § 5-219(4) (emphasis added).

Several Idaho cases decided subsequent to the 1971 amendment have recognized the impact of the amendment and have refused to engraft additional discovery exceptions onto § 5-219(4). See, e.g., Twin Falls Clinic and Hospital Building Corporation v. Hamill, 103 Idaho 19, 644 P.2d 341 (1982) (no discovery rule in malpractice action against architect); Owyhee County v. Rife, 100 Idaho 91, 593 P.2d 995 (1979) (no discovery rule in malpractice action against accountant); and Martin v. Clements, 98 Idaho 906, 575 P.2d 885 (1978) (no discovery rule for legal malpractice). In a case decided last year, Holmes v. Iwasa, 104 Idaho 179, 657 P.2d 476 (1983), the Idaho Supreme Court again recognized the impact of the 1971 amendment:

Soon after our decision in Renner, and perhaps partly in response thereto, the legislature substantially amended Idaho Code § 5-219(4). ... By amending Idaho Code § 5-219(4), the legislature narrowed the scope of Renner and, in large part, defined when a cause of action accrues for the purpose of applying the statutory period of limitations in professional malpractice actions.

Id. at 183-84, 657 P.2d at 478-79.

Several cases decided this year by the Idaho Supreme Court and district courts of Idaho reaffirm this interpretation of the 1971 amendment to § 5-219(4). See Wing v. Martin, 107 Idaho 267, 688 P.2d 1172 (1984); Masi v. Seale, 106 Idaho 561, 682 P.2d 102 (1984); Murr v. Selag Corporation, No. 11079, slip op. (5th D.C. Idaho, February 10, 1984). In Murr, a state district court decision, the court held that the statute of limitations in § 5-219(4) had run on an indemnity action brought against a professional engineer even though the claimant could not have sought indemnity earlier (i.e., because there is no cause of action for indemnity until the person seeking indemnity has been sued or forced to pay a judgment). The Murr court expressly refused to allow a discovery exception to § 5-219(4). Id. at 3.

The Court is aware of only one case not in harmony with the above decisions. In Blake v. Cruz, No. 14510, slip op. (Idaho, No. 14510, slip op. (Idaho, Sept. 18, 1984), the Idaho Supreme Court recognized for the first time a wrongful birth cause of action and held that the statute of limitations on such an action does not begin to run until the birth of the child. In Blake, an action brought by parents against a physician whose negligence resulted in the birth of a child with congenital defects, the court held that the statute of limitations began to run from the date of the birth of the child, not from the date of the physician’s misdiagnosis, reasoning that there are no ascertainable damages from a wrongful birth, and thus no prima facie case of negligence, until the birth occurs.

Against the overwhelming weight of authority to the contrary, the Blake case is somewhat of an enigma. The Court concludes that the holding of Blake must be narrowly limited to its particular facts. The Court is inclined to agree with Justice Bakes’ dissent:

It is clear that the legislature knows how to draft a statute which provides for accrual of the cause of action at some later time than “the time of the occurrence, act or omission complained of....”

Id., at 33 (Bakes, J., dissenting).

Finally, Judge McNichols of this Court has recently held that there is no discovery rule, under § 5-219(4), in asbestos eases. See Kellogg v. Johns-Manville Corporation, Civil No. 80-1192 (D.Idaho, Aug. 21, 1981).

Other factors strongly discourage the adoption of a discovery rule in the present case. First, when the Idaho legislature adopted and enacted the Uniform Products Liability Act (in Idaho entitled the “Idaho Products Liability Reform Act,” Idaho Code §§ 6-1401 et seq.) it omitted the discovery provision contained in § 110 of the uniform act and instead cross-referenced to § 5-219(4) to define when a cause of action accrues for purposes of the statute of limitations. Second, Idaho has enacted a statute of limitations applicable to one type of latent disease — ionizing radiation sickness. See Idaho Code §§ 5-242 to -244. The existence of this statute combined with the conspicuous absence of any similar statute for asbestosis is further evidence of legislative intent. Also indicative are other discovery rule statutes, Idaho Code § 6-906, part of the Idaho Tort Claims Act, and § 5-218(4), the common-law fraud statute, both containing discovery exceptions.

As a federal court sitting in diversity, this Court is ill-advised to do what the Idaho legislature and the Idaho Supreme Court (with the possible exception of Blake) have to this date refused to do. The Idaho legislature has made it clear that there is no discovery rule except where the legislature has expressly and affirmatively allowed such a rule.

The Court finds that the limitation period in § 5-219(4) has run on the deceased’s cause of action as of August 17, 1979, the date of his death. Some may regard this ruling to be unjust because under it an asbestos plaintiff may be barred by the statute of limitation before he even knows his cause of action exists. In answer, the Court comments that if the result is indeed “unjust,” this Court is not the appropriate forum in which to remedy the injustice. Presumably, the Idaho legislature is capable of weighing and balancing the cost to society of allowing or disallowing this type of lawsuit. Federal judges are not elected by the people and should avoid usurping the function of those who are so elected.

In addition, it is possible that the “injustice” is only apparent and not real. Asbestosis litigation and the threat of such litigation has forced the demise of a number of large companies, including Johns-Manville and Unarco, both currently in bankruptcy proceedings. Thousands of stockholders, most of them as innocent as the present plaintiffs, have and will lose their investments as a result of the thousands of asbestos claims that have been and will be brought. In addition, it may well be “unjust” to hang over a defendant’s head the threat of litigation at some far distant date, when witnesses cannot be found and evidence has been lost. Asbestosis has been known to have latency periods of up to forty years.

While this Court does not in any way seek to diminish the gravity of harm suffered by the deceased and his survivors, it also recognizes that other interests are at stake in the present case. In spite of this Court’s sympathy for the plaintiffs, it cannot act where the Idaho legislature and Supreme Court have refused to act.

Having found the deceased’s cause of action barred by the statute of limitations as of the date of his death, the next step in the analysis is to decide whether that fact precludes the plaintiffs, as the deceased’s surviving heirs, from maintaining a wrongful death cause of action under the so-called condition precedent rule. The defendants contend that a condition precedent to any wrongful death action brought under Idaho’s wrongful death statute, Idaho Code § 5-311, is that the deceased must have been able to maintain an action as of the date of his death. They base this conclusion upon several decisions by the Idaho Supreme Court in which the court held that the decedent’s contributory or comparative negligence would preclude a wrongful death suit by the decedent’s heirs because the decedent himself would not have been able to recover. The defendants assert that, by analogy, the same rule should apply to the statute of limitations issue. According to this argument, two hurdles must be crossed for a wrongful death plaintiff to be able to sue:

1. The deceased must have been, at the time of his death, within the statute of limitations as to his particular cause of action;

2. The wrongful death plaintiff must bring suit within the prescribed time for a wrongful death action.

The defendants contend that the plaintiffs have failed to surmount the first hurdle.

The plaintiffs concede that Idaho has long followed the condition precedent rule, but contend that a recent decision by the Idaho Supreme Court, Chapman v. Cardiac Pacemakers, Inc., 105 Idaho 785, 673 P.2d 385 (1983), either overrules the condition precedent defense or limits it only to contributory or comparative negligence situations. Chapman held that in a wrongful death action (two-year limitation period in Idaho), the statute of limitations begins to run from the date of the deceased’s death, not from the date of the injury which may have caused the death. The argument here is that wrongful death is a separate independent right of action belonging to the heirs and not to the deceased. Plaintiffs assert that no matter how long ago the injurious acts occurred, so long as the heirs file suit within two years of the deceased’s death, their action may be maintained.

Necessary to the Court’s analysis is a brief comment on Idaho’s wrongful death statute, Idaho Code § 5-311. As Professor Prosser indicates, every American state has a statutory remedy for wrongful death. See W. PROSSER, Handbook of the Law of Torts § 127 at p. 946 (5th ed. 1984). These wrongful death statutes are either (1) survival statutes, which preserve the deceased’s cause of action for the heirs while amplifying the amount of damages because of the death; or (2) “death acts” based on Lord Campbell’s Act which creates a new cause of action for the death in the deceased’s heirs. Id. Section 5-311 is of the latter type. Russell v. Cox, 65 Idaho 534, 148 P.2d 221 (1944).

The original Lord Campbell’s Act, 9 and 10 Viet., ch. 93 (1846), contains an express provision limiting death actions to those cases where the deceased might have recovered damages had he lived. This provision has been carried over into most American death acts, or has been read into them by implication where it does not expressly appear. W. PROSSER, supra at p. 954. This is the case with Idaho Code § 5-311. Though § 5-311 does not expressly contain the above-mentioned provision, the Idaho Supreme Court has consistently read that provision into § 5-311. See Anderson v. Gailey, 97 Idaho 813, 822, 555 P.2d 144, 149 (1976); Clark v. Foster, 87 Idaho 134, 144-45, 391 P.2d 853, 859 (1964) and eases cited therein. In Clark, the court stated:

It is true that Idaho Code § 5-311 does not contain the proviso common to most wrongful death statutes allowing the heirs to maintain an action for wrongful death only “whenever the wrongful act would have entitled the person injured to maintain an action if death had not ensued.” However, for sixty years this jurisdiction and others have uniformly held that the statute should be interpreted as if it continued the above qualification period.

Id. at 144-45, 391 P.2d at 859.

Under most, if not all survival statutes, all defenses valid against the deceased are valid against his heirs. Under the Lord Campbell “death acts,” such as § 5-311, however, the result is not so clear. A leading commentator on the subject of wrongful death states that the question of whether a valid defense against the deceased also precludes the heirs depends upon how a particular state construes its wrongful death act. S. SPEISER, Recovery for Wrongful Death § 11.17 at pp. 192-93, vol. 2 (2d ed. 1975). This is particularly so regarding the defense of the statute of limitations:

The difficulty involved in determining whether the running of the general statute of limitations against decedent before his death bars the right of action for his death is somewhat similar to that involved in the solution of some other problems regarding defenses in actions for wrongful death — namely, first, whether the wrongful death statute grants a new cause of action for the benefit of the designated beneficiaries or merely provides for a survival of the original cause of action; and, second, whether the statute intends it to be a condition precedent to the right of action that decedent was capable of maintaining an action at the time immediately preceding his death or merely at the time of injury.
On the one hand, it has been held that a wrongful death action may not be maintained if the personal injury statute of limitations has run against the decedent. This has been the result in some states where the particular statute involved (as was the case with Lord Campbell’s Act and its successor statutes) gave a right of action if “the act,” causing the death “is such as” would have entitled decedent to maintain an action ____
In other jurisdictions, although decedent fails to bring a personal injury action within the time set by statute, his personal representative is not barred from bringing suit for the death resulting from the injury.

Id. at 192-94 (citations omitted).

The Idaho Supreme Court, in line with the majority of courts, has held that where the deceased was contributorily or comparatively negligent, his heirs cannot recover for wrongful death. See Anderson, supra, 97 Idaho at 822, 555 P.2d at 149 (comparative negligence); Clark, supra, 87 Idaho at 144, 391 P.2d at 859 (contributory negligence); see also W. PROSSER, supra at pp. 854-55. This court has also so ruled, construing Idaho law in Kirk v. United States, 161 F.Supp. 722 (D.Idaho 1958) (Taylor, J.), as has the Ninth Circuit, Chatterton v. Green, 375 F.2d 258 (9th Cir. 1967). The heirs are also generally barred in most jurisdictions where the deceased settled with or released the tortfeasor prior to death. See, e.g., Walrod v. Southern Pacific Co., 447 F.2d 930 (9th Cir.1971); Libera v. Whittaker, Clark & Daniels, 20 N.J.Super. 292, 89 A.2d 734 (1952); Kelliher v. New York Central and H.R.R., 212 N.Y. 207, 105 N.E. 824, 825 (1914).

The Idaho Supreme Court has never specifically addressed the question of whether the heirs may maintain a wrongful death action if the deceased, at the date of his death, would have been barred by the statute of limitations. This Court finds that, if faced with the question, the Idaho court would apply the condition precedent rule to the statute of limitations situation, as it has done in situations involving contributory or comparative negligence.

At the outset, the Court recognizes that courts which have decided this issue have not reached consistent results. See the Appendix to this decision for a comprehensive list of cases addressing this specific issue. From the Court’s survey of the cases, it appears that the condition precedent rule is the dominant rule. See Hicks v. Missouri Pacific Railroad Co., 181 F.Supp. 648 (W.D.Ark.1960), 22 Am.Jur.2d § 37 at p. 635 (1965 and 1984 supp.) and SPEISER, supra, at pp. 193-94, all indicating that application of the condition precedent rule to the statute of limitations situation is the majority rule; but cf. W. PROSSER, supra, at pp. 912-13. The Court feels that the decisions adopting the condition precedent rule are the most sound.

The most recent cases on the subject have applied the condition precedent rule to bar the heirs’ wrongful death action where the deceased was himself barred from bringing an action by the statute of limitations. See McDaniel v. Johns-Manville Sales Corp., 542 F.Supp. 716 (N.D.Ill.1982) (applying Illinois law); Brubaker v. Cavanaugh, 542 F.Supp. 944 (D.Kan.1982) (applying Kansas law); Crownover v. Gleichman, 194 Colo. 48, 574 P.2d 497 (1977); Mason v. Gerin Corp., 231 Kan. 718, 647 P.2d 1340 (1982); but cf. Gramlich v. Travelers Ins. Co., 640 S.W.2d 180 (Ct.App.Mo. 1982). As the court in Mason, supra, noted:

The possibility that the injured person may die five, ten or even twenty years after the injuries were sustained without having filed suit or otherwise settling the case would force the party responsible for the wrongful act or omission to defend acts long forgotten and for which evidence and witnesses may no longer be available.

647 P.2d at 1346 (citations omitted). This policy is harmonious with that of all statutes of limitations — to avoid stale claims and their inherent difficulties.

Plaintiffs argue that the Idaho Supreme Court in Chapman, supra, either completely or partially overruled the condition precedent defense in Idaho. In Chapman, the heirs of the deceased brought suit alleging that death resulted from the placement and failure of a defective cardiac pacemaker in the deceased. ■ The question certified to the Idaho Supreme Court by this Court was “whether, in a wrongful death action, the statute of limitations begins to run from the date of death or the date of the injury from which death resulted.” 673 P.2d at 386. The court held that the statute began to run from the date of death. That rule is not in dispute in the present case.

Though the issue was not before the Chapman court, it nevertheless made some remarks to the effect that the condition precedent rule would not apply to the situation presented there. Because these remarks are clearly dicta, however, they are not binding upon this or any other court. In Chapman, the deceased died within one month of the date of his injury and thus had a valid cause of action at the date of his death, at least valid in regard to the statute of limitations. In contrast, in the present case, the deceased died over five years after his last exposure to asbestos and thus, at the time of his death, his cause of action was time-barred.

The above analysis becomes clear upon looking at a chronology of events in the Chapman case and comparing that chronology with events in the present case:

CHAPMAN—
Pacemaker Failure September 19, 1979
Date of Death October 2, 1979
Suit Filed September 29, 1981
PRESENT CASE—
Last exposure to asbestos 1974
Date of Death August 1979
Suit Filed December 1980

In both Chapman and the present case, the plaintiffs filed suit within the required two years from the deceased’s death. In the present case, unlike Chapman, however, the deceased was barred by the statute of limitations at the time of his death.

In conclusion, the Court finds that it must grant the defendants’ motion for summary judgment. Idaho has no discovery rule for asbestos cases and therefore the general statute of limitations provision in § 5-219(4) operates to bar the deceased’s cause of action. The plaintiffs, though their wrongful death action was filed within two years of the' deceased’s death, cannot maintain this action because of the running of the statute of limitations on the deceased’s cause of action. Therefore, a condition precedent to the plaintiffs’ maintaining of this suit has failed and this action cannot be maintained.

APPENDIX

Cases Applying Condition Precedent Rule

Flynn v. New York R.R. Co., 283 U.S. 53, 51 S.Ct. 357, 75 L.Ed. 837 (1931) (FTCA case)

Grbac v. Reading Fair Co., 688 F.2d 215 (3d Cir.1982) (applying Penn, law) (dicta)

Goodman v. Mead Johnson & Co., 534 F.2d 566 (3d Cir.1976) (applying N.J. law)

Walrod v. Southern Pac. Co., 447 F.2d 930 (9th Cir.1971) (applying Ariz. law)

Pieczonka v. Pullman Co., 89 F.2d 353 (2d Cir.1937) (applying N.Y. law)

McDaniel v. Johns-Manville Sales Corp., 542 F.Supp. 716 (N.D.Ill.1982)

Brubaker v. Cavanaugh, 542 F.Supp. 944 (D.Kan.1982)

Payne v. Piedmont Aviation, Inc., 294 F.Supp. 216 (D.Va.1968)

Hicks v. Missouri Pac. R.R. Co., 181 F.Supp. 648 (W.D.Ark.1960)

Mendola v. Carborundum Co., 26 F.Supp. 359 (D.N.Y.1938)

Ellis v. Black Diamond Coal Mining Co., 268 Ala. 576, 109 So.2d 699 (1959)

Woodward Iron Co. v. Craig, 256 Ala. 37, 53 So.2d 586 (1951)

Matthews v. Travelers Indemn. Ins. Co., 245 Ark. 247, 432 S.W.2d 485 (1968) (dicta)

Crownover v. Gleichman, 194 Colo. 48, 574 P.2d 497 (1977)

Milford Memorial Hosp., Inc. v. Elliott, 210 A.2d 858 (Del.1965)

Collins v. Hall, 117 Fla. 282, 157 So. 646 (1934)

Lambert v. Village of Summit, 104 Ill.App.3d 1034, 60 Ill.Dec. 778, 433 N.E.2d 1016 (1982)

Mason v. Gerin Corp., 231 Kan. 718, 647 P.2d 1340 (1982)

Redick v. Rohm & Haas Co., 97 N.J.Super. 58, 234 A.2d 252 (1967)

Coulter v. New Jersey Pulverizing Co., 11 N.J.Misc. 5, 163 A. 661 (1932)

Kelliher v. New York Central & Hudson River R.R., 212 N.Y. 207, 105 N.E. 824 (Ct.App.1914)

Myers v. Plattsburgh, 13 A.D.2d 866, 214 N.Y.S.2d 773 (1961)

Piukkula v. Pillsbury Astoria Flouring Mills Co., 150 Or. 304, 42 P.2d 921 (1935)

Howard v. Bell Tele. Co., 306 Pa. 518, 160 A. 613 (1932)

Street v. Consumers Mining Corp., 185 Va. 561, 39 S.E.2d 271 (1946)

Calhoun v. Washington Veneer Co., 170 Wash. 152, 15 P.2d 943 (1932)

Cases Rejecting Condition Precedent Rule

Western Union Telegraph Co. v. Preston, 254 Fed. 229 (3d Cir.1918) (applying Penn, law) cert. denied, 248 U.S. 585, 39 S.Ct. 182, 63 L.Ed. 433 (1919)

Larcher v. Wanless, 18 Cal.3d 646, 135 Cal.Rptr. 75, 557 P.2d 507 (1976)

St. Francis Hosp. v. Thompson, 159 Fla. 453, 31 So.2d 710 (1947) (en banc)

N.O. Nelson Mfg. Corp. v. Dickson, 114 Ind.App. 668, 53 N.E.2d 640 (1944)

Smith v. McComb Infirmary Ass’n, 196 So.2d 91 (Miss.1967)

Gramlich v. Travelers Ins. Co., 640 S.W.2d 180 (Ct.App.Mo.1982)

Lawlor v. Cloverleaf Memorial Park, Inc., 101 N.J.Super. 134, 243 A.2d 293 (1968)

DeHart v. Ohio Fuel Gas Co., 84 Ohio App. 62, 85 N.E.2d 586 (1948)

      . The Act applies to all actions filed after July 1, 1980, and thus is applicable to the present case. However, because the key question, under the condition precedent theory, is whether the deceased, as of the date of his death, could have maintained an action, the key point in time in the case at bar is August 17, 1979, the date of Mr. Adams’ death. Thus, the Product Liability Act would not have applied at that time. This technicality does not change the analysis in this case, though, because § 5-219(4) was the governing personal injury statute of limitations pri- or to the Product Liability Act, and under either statute the limitations period is three years.

      . The original Lord Campbell's Act provides, in pertinent part:
      [t]hat whensoever the death of a person shall be caused by the wrongful act, neglect, or default, and the act, neglect, or default is such as would (if death had not ensued) have entitled the party injured to maintain an action and recover damages in respect thereof, then and in every such case the person who would have been liable if death had not ensued shall be liable to an action for damages, notwithstanding the death of the person injured, and although the death shall have been caused under such circumstances as amount in law to felony. Every such action shall be for the benefit of the wife, husband, parent, and child of the person whose death shall have been so caused, and shall be brought by and in the name of the executor or administrator of the person deceased, and in every such action the jury may give such damages as they may think proportioned to the injury resulting from such death to the parties respectively, for whom and for whose benefit such action shall be brought____
      Lord Campbell's Act, 9 & 10 Viet., ch. 93, as quoted in Armijo v. Wesselius, 73 Wash.2d 716, 440 P.2d 471, 475 (1968) (emphasis added). See

        also 15A C.J.S., supra § 15; 22 Am.Jur.2d, Death § 2 (1975) (both discussing Lord Campbell’s Act).