text:
    EXCAVATION CONSTRUCTION, INC., Plaintiff, v. WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Defendant.
    Civ. A. No. 83-1125.
    United States District Court, District of Columbia.
    June 21, 1984.

      Tarrant H. Lomax, Rhodes, Dunbar & Lomax, Washington, D.C., for plaintiff Excavation Const., Inc.
    Frank R. Filiatreau, Jr. and Robert L. Polk, Associates Gen. Counsel, Washington Metropolitan Area Transit Authority, Washington, D.C., for defendant.
   MEMORANDUM

JOHN LEWIS SMITH, Jr., Senior District Judge.

Plaintiff Excavation Construction, Inc. brings this action for monetary relief against defendant Washington Metropolitan Area Transit Authority (“WMATA”). Currently before the Court are cross-motions for summary judgment with respect to Count I of the complaint, and defendant’s motion for summary judgment on Count II.

This case is a dispute about a “disputes clause” in a construction contract. In May 1973, defendant awarded a $21 million contract to plaintiff for construction of the Fort Totten, Takoma Park, and Silver Spring Metrorail stations. The contract included a provision, standard in WMATA construction agreements, concerning disputes “arising under this contract.” In brief, the contract called for administrative disposition involving initial review by a “contracting officer,” and then by WMA-TA’ s “Board of Directors or its duly authorized representative for the determination of such appeals.” The contract also included a standard “suspension of work” clause.

Defendant did not issue its “notice to proceed” on the project until August 1973. As a result, plaintiff submitted a claim to WMATA for additional compensation in the amount of $818,000 because of the delay. The matter was processed pursuant to the disputes clause, and in September 1976, the WMATA contracting officer issued a decision awarding some $272,576 to plaintiff.

In December 1976, plaintiff noticed an appeal to the United States Army Corps of Engineers Board of Contract Appeals (“BCA”). The BCA held hearings in October 1979, and on April 30, 1982, granted plaintiff an award of $420,036 (including the $272,576 previously awarded). The award included compensation for “Home Office Overhead” allegedly incurred by plaintiff as a result of the 66-day delay in the issuance of the notice to proceed.

In May 1982, defendant moved the BCA to reconsider its ruling on the home office overhead issue. The BCA in a six-page opinion denied the motion on September 14, 1982.

Throughout late 1982 and early 1983, plaintiff and defendant corresponded about the WMATA General Manager’s review of the matter. On February 22, 1983, the General Manager executed a “final decision” on the appeal:

“Pursuant to the authority vested in the undersigned by the Washington Metropolitan Area Transit Authority (WMA-TA) Board of Directors to render a final decision in any dispute under the disputes article of a WMATA contract, and
“upon consideration of the record of proceedings before the Corps of Engineers Board of Contract Appeals together with the advisory opinions of that Board dated April 30, 1982 and September 14, 1982, which I hereby adopt, it is the final decision of the undersigned that the captioned appeal is in all respects SUSTAINED in the amount of $420,036.

/s/ Richard S. Page

Richard S. Page

General Manager”

Defendant, however, did not notify plaintiff of this decision, and plaintiff did not receive a copy until May 1983.

Meanwhile, on April 19, 1983, plaintiff filed this suit, seeking recovery of the $147,460 difference between the BCA’s and the contracting officer’s award, and punitive damages for defendant’s “bad faith in the administering the Contract with respect to the resolution” of this matter (Count I). Count II involved several other disputes and their resolution and sought over $12 million in damages.

Ten days after plaintiff filed suit, defendant’s general manager issued an “amended final decision:”

“[u]pon re-consideration of my unissued decision dated February 22, 1983 in light of the decision of the GSBCA in Capital Electric Company, GSBCA Nos. 5316 and 5317, February 17, 1983, and the legal precedent therein cited, and it appearing that applicability of the Eichleay formula in this appeal rises [sic] a substantial legal question and that by reason of the Contractor’s action in the United States District Court for the District of Columbia, CA No. 83-1125 filed on April 19, 1983, the claim involved in this appeal has been made the subject of litigation between WMATA and the Contractor, it is the final decision of the undersigned that my unissued decision dated February 22, 1983 is hereby vacated; that the advisory opinions of the Eng BCA dated April 30, 1982 and September 14, 1982, to the extent they recommend entitlement for items other than home office overhead in the sum of $317,365.00 for an equitable adjustment to the Contract are hereby adopted; and the captioned appeal is SUSTAINED in the amount of $317,365.00.”

Defendant forwarded this document and the original (February 22) decision to plaintiff on May 2.

A. Count I

As noted, plaintiff filed its complaint before WMATA’s general manager issued his decision; indeed, defendant’s “failure to act on the Board’s decision” was the basis of the suit. See Complaint ¶ 56. Although plaintiff has not sought leave under Fed.R. Civ.P. 15(d) to supplement its pleadings to reflect this development, both parties treat the validity of the general manager’s decision as the central issue presented in Count I. Plaintiff makes a threshold challenge. The dispute resolution provision, plaintiff argues, does not contemplate any participation by the general manager; he- has “no authority to alter, modify, or reverse a decision made by the [BCA]” under the terms of the disputes clause in the contract. Pls.Mem.Pts.Auth.SJ. at 1-4. Defendant submits that the contract places final appeals authority in the general manager and that the BCA merely provides “advisory opinions,” which may be accepted or rejected by the general manager.

Defendant is correct: final authority in disputes clause appeals rests with the WMATA general manager. The question turns on interpretation of the contractual provision placing “final and conclusive” authority in the WMATA “Board of Directors or its duly authorized representative for the determination of such appeals” (emphasis supplied). By resolution dated July 7, 1967, the WMATA Board expressly designated the general manager as its “duly authorized representative” for “fully and finally” deciding disputes clause appeals (DX la). Moreover, the Board by resolution dated June 3, 1971, designated the BCA as its “authorized representative” to “hear and render advisory opinions and to “recommend to the general manager ... final decisions on appeals arising under the Disputes clause of Authority contracts” (DX 1) (emphasis supplied).

It thus appears that the WMATA Board has spoken quite clearly as to the identity of its “duly authorized representative” for final determinations on appeals, see Square Construction Co. v. WMATA, 657 F.2d 68, 69 n.1 (4th Cir.1981); WMATA v. Rago nese, 617 F.2d 828, 829 (D.C.Cir.1980); General Railway Signal Co. v. WMATA, 527 F.Supp. 359, 360 (D.D.C.1979) aff'd, 664 F.2d 296 (D.C.Cir.1980), cert. denied, 452 U.S. 915, 101 S.Ct. 3049, 69 L.Ed.2d 418 (1981); Metro Track Constructors v. WMATA, CA No. 75-2129 (D.D.C. July 15, 1976), slip op. at 4-5 & nn.3,4, and it is noteworthy that at no point did plaintiff ever object to further review by the general manager. The 'final decision under review here therefore is the April 29 decision by the general manager.

Under the terms of the disputes clause, this determination is “final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or is not supported by substantial evidence.” Rulings on purely legal issues, however, are subject to much broader review: “[njothing in this contract ... shall be construed as making final the decisions of the Board of Directors or its representative on a question of law.”

Plaintiff correctly observes that the general manager in his original decision expressly “adopted” the advisory opinions of the BCA, which contained detailed evidentiary analyses and findings. In his “amended final decision,” the general manager gave two reasons for modification of the original order. First, he found that an interim decision by the General Services Board of Contract Appeals (“GSBCA”) raised a “substantial legal question” as to the correctness of the home office overhead calculation formula utilized by the BCA. Second, the general manager pointed to the filing of this law suit by plaintiff. Plaintiff argues that: 1) the general manager lacks power to vacate or modify a prior “adoption” of a BCA advisory opinion; and 2) even if he can reconsider an earlier decision, the reasons offered here do not support the result.

Plaintiff’s first argument is not persuasive. The Court has little doubt that the general manager, as the final administrative arbiter of contract disputes, possesses the “inherent right of every tribunal to reconsider [his] own decision within a reasonably short period of time,” and to modify his orders in light of new legal or evidentiary developments. Bookman v. United States, 453 F.2d 1263, 1264-65, 197 Ct.Cl. 108 (1972). The more important issue, and the focal point of this litigation, is whether the general manager’s amended final decision is “arbitrary or capricious” and whether it identifies and correctly answers the relevant “questions of law.”

Under these standards, the decision must be reversed. The “substantial legal question” noted by the general manager— “the applicability of the Eichleay formula in this appeal” — has now been answered by the United States Court of Appeals for the Federal Circuit in its ruling on the very case cited in the April 29 decision. In Capital Electric Co. v. United States, supra, 729 F.2d at 746-47, the Court reaffirmed the validity of the Eichleay formula as a means of calculating recoverable overhead in suspension of work cases. With this decision, as plaintiff notes, there now “remains no basis for the general manager’s deviation from the recommendation and award of the Board,” Pts.Supp. Mem.Pts.Auth. at 3, for the Federal Circuit reversed the GSBCA decision relied on by the general manager as a correct statement of the governing legal standard.

Defendant apparently recognizes this, for its supplemental memorandum addressing the Capital Electric decision urges that “even under Capital Electric home office overhead recovery is properly denied.” Def.Supp.Mem.Pts.Auth. at 6. In particular, defendant argues that the “common law of the District of Columbia” precludes an award for overhead, and that, more generally, there is “no evidence” supporting the BCA’s decision.

There are a number of difficulties with defendant’s position. First, defendant overlooks that the final decision under review here is that of its own general manager, not of the BCA. The general manager had two opportunities to review the evidentiary basis of the BCA’s decision to determine whether it supported the award. In its first decision, “upon consideration of the record,” the general manager expressly adopted in all respects (including factual findings) the BCA’s decision. In its amended decision, the general manager simply cited the “substantial legal question” raised by the Capital Electric case (without exploring that decision’s implications) and plaintiff’s filing of this suit. The general manager said nothing about the factual defects in the BCA’s decision, nor about the “common law of the District of Columbia.” It is a bit late in the game for defendant to vigorously assert that “no evidence” supports the Board’s decision when its own general manager apparently concluded otherwise, or at least deemed the issue unworthy of discussion.

Moreover, there is some doubt regarding the applicability of the purported “District of Columbia common law” rule governing recovery of extended overhead. It is noteworthy that neither the parties nor the various tribunals ever made reference to this “rule” throughout the administrative proceedings, a fact that gives a certain post hoc cast to defendant’s argument. In any event, defendant’s position should be rejected. First, of the three cases cited by defendant as articulations of the “common law,” two involve questions of statutory construction in cases concerning the liability of a surety on a payment bond. See Hartford Accident & Indemnity Co. v. District of Columbia, 441 A.2d 969 (D.C. App.1982) (construing D.C.Code Ann. § 1-804(b)); United States f/u/b Mariana v. Piracci Construction Co., 405 F.Supp. 904 (D.D.C.1975) (Miller Act, 40 U.S.C. § 270a et seq).

The other case relied upon by defendant, W. G. Cornell Co. v. Ceramic Coating Co., 626 F.2d 990 (D.C.Cir.1980) (per curiam) involved damages arising from a breach of contract. As the BCA correctly observed after considering this case (a conclusion not challenged by the general manager in either of his decisions), price adjustments under the suspension of work clause of a contract are not “limited to what would be recoverable in damages for breach of the contract.” BCA Reconsid. at 3. See C.H. Leavell & Co. v. United States, 530 F.2d 878, 892-93, 208 Ct.Cl. 776 (1976); Merritt-Chapman & Scott Co. v. United States, 429 F.2d 431, 432, 192 Ct.Cl. 848 (1970); cf. Seger v. United States, 469 F.2d 292, 300, 199 Ct.Cl. 766 (1972).

Defendant’s “common law” argument is deficient in several respects. From a “substantive” perspective, defendant has failed to demonstrate any such accepted and relevant rule applicable in suspension of work cases. From a “procedural” or “judicial review” perspective, the “common law” and evidentiary arguments represent the sort of “post hoc rationalizations [by counsel] for agency action” that courts may not accept. Ft. Pierce Utilities Authority v. United States, 606 F.2d 986, 1000 (D.C. Cir.) cert. denied, 444 U.S. 842, 100 S.Ct. 83, 62 L.Ed.2d 54 (1979) (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 245, 9 L.Ed.2d 207 (1962)). “[T]his court must not look to the reasons advanced by counsel, but rather to those in fact relied upon by the agency in question.” Compania de Gas de Nuevo Laredo v. FERC, 606 F.2d 1024, 1031 (D.C.Cir. 1979). The Court concludes that defendant’s “amended final decision” rests on arbitrary and incorrect legal grounds, and that plaintiff’s motion for partial summary judgment on the overhead award should be granted.

Defendant, however, is entitled to summary judgment on plaintiff’s claim for punitive damages. Plaintiff seeks over $440,-000 in punitive damages on the grounds of defendant’s “unreasonable [sic], tortious delay, and bad faith” in administering the contract. Defendant urges that two well-established principles dispose of the claim. First, defendant argues, punitive damages are not available for claims that essentially sound in contract. Second and more generally, WMATA, as a governmental entity, is wholly immune from an award of punitive damages against it. Plaintiff contends that summary judgment is inappropriate in that the complaint alleges an accompanying “willful tort,” and that WMATA, for punitive damages purposes, should be treated as a private corporation, “free to contract and act on its own.” Pits.Opp.Def.Mo.S.J. at 16.

Evaluation of defendant’s legal liabilities begins with the interstate compact establishing WMATA. Under section 80 of the compact:

“Liability for Contracts and Torts
80. The Authority shall be liable for its contracts and for its torts and those of its Directors, officers, employees and agent committed in the conduct of any proprietary function, in accordance with the law of the applicable signatory (including rules on conflict of laws), but shall not be liable for any torts occurring in the performance of a governmental function. The exclusive remedy for such breach of contracts and torts for which the Authority shall be liable, as herein provided, shall be by suit against the Authority. Nothing contained in this Title shall be construed as a waiver by the District of Columbia, Maryland, Virginia and the counties and cities within the Zone of any immunity from suit.” D.C. Code Ann. § 1-2431(80).

Second, § 4 describes WMATA as an “instrumentality and agency of each of the signatory parties.” Id. at § 4. See also Morris v. WMATA, 34 PEP Cases 959, 960 (D.D.C. April 16, 1984). Finally, the Compact has been “approved and enacted into ‘state law’ by each of its signatories.” Heffez v. WMATA, 569 F.Supp. 1551, 1554 (D.D.C.1983). In summary, WMATA’s liability turns on state law, and state law here', whether it be supplied by Maryland or the District of Columbia, defines WMA-TA as an “agency or instrumentality” of the state. Neither Maryland nor the District authorizes an award of punitive damages against a governmental unit in the absence of statute, and plaintiff cannot point to any such statute permitting punitives against WMATA specifically or governmental entities generally. See Smith v. District of Columbia, 336 A.2d 831 (D.C. App.1975); Herilla v. Mayor City Council of Baltimore, 37 Md.App. 481, 378 A.2d 162, 169 (1977). See also Rieser v. District of Columbia, 563 F.2d 462, 481-82 (D.C. Cir.1977), modified 580 F.2d 647 (D.C.Cir. 1978). Consequently, the Court concludes that WMATA is not, as a matter of law, subject to an award of punitive damages against it. See Davis v. WMATA, CA No. 82-1684 (D.D.C. May 5, 1983); cf. Newport v. Fact Concerts, Inc., 453 U.S. 247, 101 S.Ct. 2748, 69 L.Ed.2d 616 (1981). Defendant’s motion for summary judgment should therefore be granted in part.

B. Count II

Count II involves five other claims heard but not yet decided by the BCA. Plaintiff alleges that:

“WMATA, having breached its contractual duty to provide a timely administrative process for the resolution of contaractual disputes, Excavation no longer is bound to await the outcome of that administrative process and is entitled to be compensated by this Court for these claims: plied). Complaint II 62 (emphasis sup-

Plaintiff seeks over $3 million in such compensation as well as $9 million in punitive damages for the “tortious, bad faith, course of conduct which [defendant] exhibited in connection with the administrative resolution of disputes.” Complaint 11 62. Defendant urges that the count be dismissed on exhaustion of remedies grounds and also contends that any delay is due to plaintiff’s noncompliance with BCA procedural rules.

Defendant’s motion should be granted on the basis of the Court of Appeals’ recent decision in Rohr Industries v. WMATA, 720 F.2d 1319 (D.C.Cir.1983). In Rohr Industries, the Court reversed a dismissal on exhaustion grounds of a claim that “WMA-TA breached the contract with respect to implementing the Disputes clause:

“The claim by Rohr in Count II that WMATA breached the contract with respect to implementing the Disputes clause is clearly beyond the scope of the Disputes clause in the contract. It is a challenge to that process as established and conducted by WMATA. It depends not at all on any of the contract’s particulars.
“Count II of Rohr’s complaint cannot be said to be even “arguably” subject to the Disputes clause. Thus, it could not properly be dismissed on exhaustion grounds.” Id. at 1323.

The decision in Rohr Industries thus requires a distinction between claims subject to the disputes clause and claims that challenge the dispute resolution process itself.

There is little question that Count II falls within the former category. The Court of Appeals in Rohr Industries did not hold that administrative delay itself works a waiver of the exhaustion requirement with respect to .claims “subject to the disputes clause.” It held only that claims for damages sustained as a result of administrative delay are not within the disputes clause and therefore not subject to administrative exhaustion. Plaintiff here makes no allegations of any injuries it suffered as a result of the delay, nor does it suggest that its request for punitive damages be treated as such an allegation. Moreover, six months after it filed suit, plaintiff acknowledged its continuing interest in administrative processing:

“[Plaintiff] strongly believes that a determination by the Board, with its experience generally and its specific familiarity with this Contract, would be most appropriate and helpful to the Court in deciding the questions presented to it, and particularly questions involving the adoption or rejection of the Board’s determinations. Further, in view of earlier Court decisions involving its review of decisions by the Board, it appears clearly that findings of fact in particular will be sustained by the Courts. Accordingly, we again request that the Board actively decide these appeals.” (DX 17e)

Under these circumstances, further discussion is not necessary. The Court concludes that the claims in Count II are “clearly [within] the Disputes clause in the contract.” Rohr Industries, supra, 720 F.2d at 1323. Consequently, because plaintiff has failed to exhaust its contractual and administrative remedies, Count II is dismissed without prejudice.

Accordingly, plaintiff’s motion for partial summary judgment on Count I is granted. Defendant’s motion for summary judgment on Count I is denied in part and granted in part, and on Count II is granted.

An appropriate order follows.

ORDER

Upon consideration of cross-motions for summary judgment on Count I of the complaint, defendant’s motion for summary judgment on Count II, oral argument, and the entire record, it is by the Court this 21st day of June, 1984

ORDERED that plaintiff’s cross-motion for summary judgment on Count I is granted, and that plaintiff is entitled to judgment in the amount of $147,460. It is further

ORDERED that defendant’s cross-motion for summary judgment on Count I is granted with respect to plaintiff’s claim for punitive damages, and denied in all other respects. It is further

ORDERED that defendant’s motion for summary judgment on Count II is granted, and that Count II is dismissed without prejudice. It is further

ORDERED that plaintiff and defendant shall file within ten days supplemental memoranda of points and authorities addressing plaintiff’s claim for interest under Count I.

      . The contract provides in pertinent part:
      "DISPUTES
      (a) Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Contracting Officer shall be final and conclusive unless, within 30 days from the date of receipt of such copy, the Contractor mails or otherwise furnishes to the Contracting Officer a written appeal addressed to the Board of Directors. The decision of-the Authority Board of Directors or its duly authorized representative for the determination of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or is not supported by substantial evidence. (b) This Disputes article does not preclude consideration of questions of law in connection with decisions provided for in paragraph (a) above. Nothing in this contract, however, shall be construed as making final the decisions of the Board of Directors or its representative on a question of law.
      "SUSPENSION OF WORK
      (a) The Contracting Officer may order the Contractor in writing to suspend, delay, or interrupt all or any part of the work for such period of time as he may determine to abe appropriate for the convenience of the Authority.
      (b) If the performance of all or any part of the work is, for an unreasonable period of time, suspended, delayed, or interrupted by an act of tahe Contracting Officer in the administration of this contract, or by his failure to act within the time specified in this contract (or if no time is specified, within a reasonable time), an adjustment shall be made for any increase in the cost of performance of this contract (excluding profit) necessarily caused by such unreasonable suspension, delay, or interruption and the contract modified in writing accordingly.”

      . This dispute turned the on the continuing validity of a widely-accepted method (the "Eichleay formula") for determining the amount of “home office overhead” recoverable under a suspension of work clause in a construction contract. See generally Capital Electric Co. v. United States, 729 F.2d 743 (Fed.Cir.1984) (discussing Eichleay Corp., ASBCA No. 5183, 60-2 BAC ¶ 2688 (1960), aff’d on recon., 61-1 BAC ¶ 2894.)

      . Recent federal litigation involving WMATA’s status as an "agent" of the signatories arises in the civil rights setting, where Eleventh Amendment immunity turns on an entity's characterization as an “instrumentality" or a "political subdivision.” See, e.g., Heffez v. WMATA, supra; Morris v. WMATA, supra. Neither of these cases considers, nor does the plaintiff cite any cases supporting, the proposition that WMATA should be treated as a private entity for any purpose.

      . The final issue under Count I concerns plaintiff's demand for interest on the overhead award. The Court concludes that it should not attempt to resolve this matter without further briefing by the parties. There apparently are two distinct elements of the interest question, the first concerning the availability and proof of an interest claim under the equitable adjustment clause of the contract, and the second stemming from the District of Columbia's general prejudgment interest statute (D.C.Code Ann. § 15-108). Neither side sufficiently develops these issues, and the parties' mere references to various (and lengthy) administrative decisions in another matter (Rohr Industries, Inc., Eng BCA 4306) are inadequate. Consequently, the Court will defer ruling on the interest claim until the parties offer more complete and coherent submissions on the issue.


source: Caselaw Access Project

author: GASCH, District Judge.

license: Public Domain

text:
    Walter I. BECHTEL, Plaintiff, v. PENSION BENEFIT GUARANTY CORPORATION, Defendant.
    Civ. A. No. 83-0121.
    United States District Court, D. Columbia.
    July 10, 1984.

      Jeffrey L. Gibbs, Washington, D.C., for plaintiff.
    Renae R. Hubbard, Office of the General Counsel, Pension Ben. Guar. Corp., Washington, D.C., for defendant.
   MEMORANDUM

GASCH, District Judge.

This case presents the question of whether payments in excess of statutorily guaranteed benefits made by the Pension Benefit Guaranty Corporation (PBGC) to participants in terminated employee pension plans constitute overpayments that can be recouped by the PBGC. The payments here in question were made in the interim between the termination of the inadequately funded pension plan for employees of the bankrupt Alan Wood Steel Company of Conshohocken, Pennsylvania, and the time when payments were reduced to statutorily guaranteed amounts. The Court denied the plaintiffs motion for preliminary injunction, and the case is now before the Court on the parties’ cross-motions for summary judgment.

BACKGROUND

On June 10, 1977, the Alan Wood Steel Company filed a Chapter XI bankruptcy petition in the Eastern District of Pennsylvania. Alan Wood had maintained a pension plan pursuant to a pension agreement between it and the United Steel Workers of America, AFL-CIO (USWA). All steelmaking operations at Alan Wood ceased and all Alan Wood employees were laid off by November 1, 1977. At that time, employees who were eligible for pension benefits under the plan were receiving pension benefits at levels specified in the plan.

Alan Wood filed a Notice of Intent to Terminate with the PBGC on May 26, 1978, proposing June 5,1978 as the date of termination. In a letter from PBGC to the Alan Wood Pension Advisory Committee, dated June 22, 1978, PBGC indicated that the proposed date would not necessarily be the date of the plan’s termination and that the Advisory Committee could continue making payments to participants and beneficiaries who had been receiving pension benefits when the Notice of Termination was filed and could commence payments to those who subsequently became eligible for benefits for reasons other than the plan’s termination. The PBGC’s letter went on to state:

In the course of the statutory termination procedure it may become necessary to adjust or recapture a portion of the amounts paid to participants or their beneficiaries if such amounts are in excess of benefits guaranteed under [ERI-SA]. Therefore, we recommend that you advise all participants receiving benefits that their benefits may be subject to adjustment or recapture if plan assets ... are insufficient to satisfy guaranteed benefits.

In July 1978, PBGC wrote to the advisory committee recommending discontinuance of monthly Social Security supplemental benefit payments because such payments would not be guaranteed under ERISA. Pursuant to this request, payment of the Social Security supplements was discontinued effective August 1, 1978.

By agreement effective January 5, 1979, PBGC and Alan Wood established November 1,1977, as the date of plan termination. By that agreement, PBGC also became trustee of the plan. Following this agreement, the participants’ benefits continued to be paid at the same levels as those immediately prior to January 5, 1979. On February 27, 1979, PBGC hired Milliman & Robertson, Inc., an actuarial consulting firm, to calculate guaranteed benefits for plan participants. The plan provides for a complicated benefit structure, making calculations difficult.

By letter dated July 19, 1979, PBGC informed participants that it had become trustee of the plan and that the plan termination date was November 1, 1977. The letter stated that no additional benefits would accrue after the termination date, that the guaranteed provisions of ERISA became effective on that date, and that PBGC could pay only those benefits guaranteed by ERISA.

On November 6, 1979, PBGC informed participants who had been receiving benefits in excess of guaranteed amounts that payments would be cut back to guaranteed levels. PBGC also informed participants that they would have to repay amounts received in excess of guaranteed amounts during the period since the date of plan termination. The letter further stated that repayment could be in a lump sum or by pro rata reduction of future payments. Payments at guaranteed levels began in January 1980. On or about November 16, 1982, PBGC notified each participant who had received the November 1979 letter that only excess payments received after June 5, 1978, would be recouped. Recoupment from participants who did not make lump sum repayments began with the February 1. 1983, benefit checks. As of September 13, 1983, PBGC was recouping benefit overpayments by a reduction in benefit payments to 635 Alan Wood participants. DISCUSSION

The Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., is designed to protect participants in employee benefit plans. See 29 U.S.C. § 1001. Title IV of ERISA insures employees against a complete loss of pension benefits in the event their employee pension plans terminate. 29 U.S.C. § 1301 et seq. Section 1301 creates the PBGC to administer this insurance program.

If a pension plan terminates without sufficient assets to pay all vested benefits, the PBGC pays the benefits within certain limits. Section 1322(b) imposes limits on the amounts guaranteed to participants in inadequately funded terminated plans. Section 1361 provides that the PBGC cannot pay benefits above and beyond the limits imposed by Section 1322(b) and the other sections in subtitle B of ERISA.

Section 1342 empowers the PBGC to appoint a trustee to administer a terminating plan until the termination is complete. Between the time the plan is entrusted to the trustee and the time it is terminated, Section 1342(d) grants the trustee the power to “continue payment of some or all of the benefits which were being paid prior to his appointment.” The issue presented by this suit is whether this portion of the statute, empowering the trustee to pay the full measure of benefits the plan’s participants had been receiving prior to the trustee’s appointment is inconsistent with Section 1322(b)(3), which places ceilings on the amount of benefits the PBGC may pay to employees whose pension plans .are terminating without sufficient funds to cover all payments due.

In this case, the PBGC, as trustee of the terminating Alan Wood plan, paid to the employees amounts equal to the amounts the employees were receiving before the plan terminated. Once PBGC calculated actual guaranteed benefits, it sought to recoup the amount by which the interim payments exceeded guaranteed levels. The government has broad powers to recoup monies owing it as a result of over-payments. United States v. Wurtz, 303 U.S. 414, 415, 58 S.Ct. 637, 638, 82 L.Ed. 932 (1938). It is, therefore, only necessary to inquire whether the payment of the benefits in question constituted overpayments such that the government is empowered to recoup them.

Because the PBGC is statutorily liable for, and the employees are statutorily entitled to, only the amount of benefits that Section 1322(b)(3) guarantees, any payments made above and beyond the guaranteed amount prior to the plan’s termination are recoupable as overpayments. There is a limit on what the PBGC can pay and that limit applies while the plan is being administered by a trustee. This fact is reinforced by the dictate of Section 1361 that the PBGC’s payment of benefits under terminated plans be subject to the limitations in Section 1321 through Section 1341a. Under this statutory scheme, amounts paid above guaranteed amounts constitute over-payments.

Because the rights and obligations of the parties are fixed on the date the plan terminates, Audio Fidelity Corp. v. Pension Benefit Guaranty Corp., 624 F.2d 513, 517 (4th Cir.1980), a participant’s benefit level is determined as of that date. Yet the nature of pension plans is such that it may take some time to go through the complex calculations needed to determine exact guaranteed benefit levels for each employee. Such was, in fact, the case here.

Because of the difficulty in making the necessary computations, preliminary estimates of guaranteed levels at the time of termination in this case was impossible. PBGC has proposed a regulation to deal with this difficulty. 48 Fed.Reg. 211 (Monday, October 31, 1983). This regulation provides methods for calculating guaranteed benefits at the time of termination. It also prescribes rules for PBGC’s recoupment of overpayments made after termination from plan participants or beneficiaries, such as the plaintiff in this case. In the present case, however, it was inevitable under this statutory scheme that between the plan termination date and the date by which guaranteed levels had been calculated, payments would be made at a level other than the guaranteed level. By imposing limits on the amount PBGC may pay, the statute necessarily anticipates that such overpayments will be recouped.

CONCLUSION

The provision empowering the plan trustee to pay out amounts at the same rates received prior to plan termination does not alter the statutory limits imposed on the amount of benefits to be paid by the PBGC. The amounts paid in excess of those limits are overpayments subject to ultimate recoupment now that statutory benefit entitlement calculations are complete. Accordingly, summary judgment is entered for the defendant.

      . Social Security supplemental benefits were available to certain retirees who had not yet become entitled to Social Security benefits.

      . All references to sections are to Title 29 of the United States Code.

      . The PBGC is an agency of the federal government, 29 U.S.C. § 1302, and PBGC monies are intermingled, for reporting purposes, with the regular budget of the federal government. 29 U.S.C. § 1305. The plaintiff has noted that the monies in question are not from the federal budget the way, for example, tax monies are. Whether or not the PBGC is considered to be a government agency is important to the plaintiff’s case. This is because the standard for whether a party is empowered to recoup monies owing it differs depending on whether the party is an individual or a government. The court finds that the PBGC is a government agency for purposes of this analysis, and thus has the broad recoupment power accruing to the federal government.


author: BEAM, District Judge.

text:
    UNITED STATES of America, et al., Petitioners, v. GILBERT C. SWANSON FOUNDATION, INC., et al., Respondents.
    CV 84-0-480.
    United States District Court, D. Nebraska.
    Jan. 18, 1985.

      See also, 772 F.2d 440.
    Douglas Semisch, Asst. U.S. Atty., Omaha, Neb., for petitioners.
    Robert J. Murray, Kennedy, Holland, DeLacy & Svobo, Omaha, Neb., for respondents.
   MEMORANDUM AND ORDER

BEAM, District Judge.

This matter is before the Court upon the motion (filing 12) of petitioners to vacate a stay. A hearing on the motion to vacate was held on December 21, 1984, and the matter was then submitted to the Court for decision. The Court finds that the stay should be vacated, subject to certain conditions.

This action involves a petition to enforce an Internal Revenue Service (IRS) summons. After an earlier hearing, the Court decided that the summons should be enforced. The respondents then appealed to the Eighth United States Circuit Court of Appeals and sought, and received, a stay of the enforcement order issued by this Court. The petitioners urge reconsideration and vacation of the stay.

In determining whether to stay enforcement of an IRS summons, the Court should consider

(1) whether irreparable harm will result unless a stay is granted;

(2) the likelihood that appellant will prevail on the merits;

(3) the extent to which harm to other interested persons may result; and

(4) the public interest.

Coleman v. PACCAR, Inc., 424 U.S. 1301, 1304-08, 96 S.Ct. 845, 847-49, 47 L.Ed.2d 67 (1976).

The substantive argument of respondents is that petitioners violated IRS rules, regulations and orders in the issuance and service of the summons. Specifically, respondents cite Treas.Reg. § 301.7602-l(b), which states, in part:

The Commissioner may designate any employee of the Internal Revenue Service as the individual before whom a person summoned pursuant to Section ... 7602 shall appear.

In response to this regulation, a delegation order was adopted which states, in part, as follows:

The authority to issue summonses except ‘John Doe’ summons and to perform the other .functions related thereto specified in paragraph 1(a) of this order is delegated to the following officers and employees except that in the instance of a summons to a third party witness, the issuing officer’s case manager, group manager, or any other supervisory official above that level, has in advance personally authorized the issuance of the summons. Such authorization shall be manifested by the signature of the authorizing officer on the face of the original and all copies of the summons or by a statement on the face of the original and all copies of the summons, signed by the issuing officer, that he/she had prior authorization to issue said summons and stating the name and title of the authorizing official and the date of authorization.

Delegation Order No. 4 (Revision 14) (Effective July 14, 1983). Respondents contend that no authority exists for redelegation.

The summons was duly directed to the “Gilbert C. Swanson Foundation, Inc., 6910 Pacific Street, Suite 104, Omaha, NE 68106.” At the time of service upon Gerald E. Sawall, Treasurer of the Foundation, the agent added the words “Gerald E. Sawall as Treasurer for” and substituted the address of 3335 North 93rd Street, Omaha, NE 68134 for the Pacific street location. These additions and substitutions, respondents reason, violate the regulation and the delegation order to the extent that respondents “administrative due process” is violated.

The Court rejected these allegations after the first hearing. First, there was no evidence that respondents had asserted procedural objections prior to asserting them in this Court. They were, therefore, waived. See, e.g., United States v. Myslajek, 568 F.2d 55 (8th Cir.1977), cert. denied, 438 U.S. 905, 98 S.Ct. 3123, 57 L.Ed.2d 1147 (1978). Second, the deviations of the IRS, if any, caused no material harm to respondents since Gerald E. Sawall was, indeed, the Treasurer for Gilbert C. Swanson Foundation, Inc., and a person, upon whom the summons could be properly served. Authority for such an approach is found in United States v. Bank of Moulton, 614 F.2d 1063 (5th Cir.1980) where the court said:

We, too, decline to elevate form over substance and reject the suggestion that every infringement of a requirement of the Internal Revenue Code absolutely precludes enforcement of an IRS summons. Nothing in the language of the Code itself mandates this sanction for infringement. The correct approach for determining whether to enforce a summons requires the court to evaluate the seriousness of the violation under all the circumstances, including the government’s good faith and the degree of harm imposed by the unlawful conduct.

Bank of Moulton, 614 F.2d at 1066.

The Court finds that respondents will not succeed upon the merits of their contentions upon appeal. Accordingly, the order (filing 11) should be reconsidered and the stay vacated. However, the vacation should not commence until fifteen (15) days after the date of this memorandum in order that the respondents may seek a stay from a judge of the United States Court of Appeals for the Eighth Circuit. Therefore,

IT IS ORDERED as follows:

1. The motion (filing 12) to reconsider should be and hereby is sustained.

2. The order (filing 11) to stay should be and hereby is vacated, however, the stay shall continue in force and effect for fifteen (15) days after the date of this Order.


author: JAMES McGIRR KELLY, District Judge.

text:
    AMALGAMATED CLOTHING AND TEXTILE WORKERS UNION OF AMERICA, AFL-CIO, LOCAL UNION NO. 1369 v. SYNTHANE TAYLOR CORP.—TAYLOR DIVISION.
    Civ. A. Nos. 83-4097, 83-4258.
    United States District Court, E.D. Pennsylvania.
    March 11, 1985.

      Richard S. Meyer, Philadelphia, Pa., for plaintiff.
    Carter R. Buller, Philadelphia, Pa., for defendant.
   MEMORANDUM AND ORDER

JAMES McGIRR KELLY, District Judge.

Defendant, Synthane Taylor Corporation (Synthane) has filed motions for summary judgment against the plaintiff, Amalgamated Clothing and Textile Workers Union of America, AFL-CIO, Local 1369 (Union). The Union filed suit to vacate two arbitration awards which were entered in favor of the defendant. This dispute involves a plant closing which has idled approximately 150 union members. The Union has cross-moved for summary judgment against Syn-thane. The arbitration was necessitated by a difference in the interpretation of two provisions in the collective bargaining agreement (agreement) covering vacation benefits and severance pay. In addition, the plaintiff also alleges that defendant’s failure to provide severance pay benefits violates the Pennsylvania Wage Payment and Collection law, 43 Pa.C.S.A. § 260.1 et seq.

FACTS

The Union represented the production and maintenance employees at the now closed Taylor division plant of the Syn-thane-Taylor corporation. The plant was engaged in the production of unclad laminates, copper clad laminates and special circuitry used in electrical insulation. In September, 1982, Synthane notified the employees of the Taylor division that the company was contemplating permanently closing their plant. It was eventually phased out of operation in March, 1983.

The economic reasons for closing the Taylor plant are found in a fiscal report highlighting the financial results from 1978 to 1982. During that period the division’s profitability, measured by operating income and return on investment, had decreased substantially each succeeding year. This downward trend had not gone unnoticed by the senior management of Aleo Standard, the parent corporation of Synthane-Taylor. In July, 1982, Frank Kelly, Group President of Aleo Standard, proposed transferring the production of industrial laminates from the Taylor plant to the Synthane facility. All other operations at the Taylor division would be terminated.

In Mr. Kelly’s report detailing the reasons for his decision he wrote:

The relocation is being proposed as the definitive resolution to a critical and probably chronic operating problem at the Taylor division ... a problem whose magnitude is best exemplified by the $10 million of capital employed with a negative return____ the Taylor division has been marginally profitable since 1979____ The major problems are: competitive pricing at below cost levels in copper clad laminates; a substantial amount of overhead unabsorbed by volume ...; antiquated equipment; and high labor rates. Interim efforts at circumventing any of these elements have provided little hope for attaining any short or medium term turnaround.

Mr. Kelly concluded his report by stating only one product segment possessed the favorable market characteristics and profitability necessary to economically justify its continuation.

Synthane notified the Union in September, 1982 that its Valley Forge plant would be permanently closed. The greater part of the Union employees worked their last day on December 21, 1982. Eleven others finished up eight days later and a skeleton crew was retained until the plant was closed in March, 1983.

When the shutdown of the plant was announced, the Union cited provisions in their agreement which they interpreted provided for severance pay. The agreement read in part:

In case the Company permanently shuts down a department or section— Any employee or employees with (5) years or more of continual service who are laid off because of technological reasons, including, but not limited to changes in plant or equipment or changes in process operations which cause jobs to be abolished, will be given an opportunity for severance pay under the following conditions ...

It was the Union’s contention then, as it is now, that the shut down was due to technological reasons. Synthane vigorously disagreed with the Union’s position and the dispute over the meaning of this provision was submitted to arbitration.

The Union predicated its case on a series of events preceding the plant closing. Syn-thane had transferred a number of its product lines to other plants. The machines and equipment used to produce these products were transferred also. During the years 1974-1980, the company had to deal with a number of environmental problems involving air and water polution and sewerage disposal. The Union believed that the shut down was for “technological reasons” since it'was based on environmental mandates, changes in plant and equipment and changes in the production process.

The Union sought to have the arbitrator interpret technological changes to include not only those instances where a machine replaces a person, but also those instances where the company chooses not to upgrade or modernize its existing equipment.

The arbitrator rejected this broad interpretation holding that the provision was not intended to cover “technological changes the company should have made to keep the plant in operation.” (emphasis added).

The arbitrator was clearly influenced by the bargaining history surrounding the wording of the severance pay provision. During negotiations, the Union submitted a severance pay proposal to be included in the collective bargaining agreement. The Union’s proposed clause would have provided benefits to any employee who was laid-off regardless of the reason, be it relocation, financial failure, obsolete plant and equipment or technological improvements. The proposed clause read:

In case the company permanently shuts down a section, department or curtails total operation due to relocations, obsolescence of plant or equipment, financial failure or because of technological reasons____

This proposal was rejected by Synthane’s management in lieu of the more restricted language reading in part: “[a]ny employee or employees with (5) years or more of continual service who are laid off because of technological reasons ...”

The arbitrator reasoned that to adopt the Union’s expansive reading of the severance pay provision would be to award them in arbitration what they could not gain through collective bargaining.

The Union appeals from the arbitration holding on two points. First, the arbitrator misinterpreted the contract language by requiring that the lay-offs be due to the introduction of new technology. Second, the Union asserts that Synthane withheld pertinent information from the arbitrator which may have influenced his decision.

The second grievance raised by the plant closing is a dispute over the employees vacation benefits. The agreement provided that “an employee on the employment record of the company on July 1 of each year shall be entitled to vacation time off based upon the continuous service he has with the company ...”

The company interpreted the phrase “on the employment records” as synonymous with working. Since no union members were working as of July 1, 1983, vacation benefits would not be available. The Union’s position was that the company, although shut down, never maintained “employment records”, therefore, other sections of the agreement which reference union members status dictate who were and were not employed by Synthane. Specifically, the agreement provides that an employee retains his seniority for 24 months after his lay-off. Since a plant closing does not cause the employee to forfeit his seniority rights, then he is still an employee of the company eligible for vacation pay.

The arbitrator ruled against the Union stating that (1) they failed to meet their burden of proof that the laid-off employees maintained any employment status with Synthane as of July 1, 1983; (2) past practices indicated that employees on lay-off status did not receive vacation pay if they were not working on July 1 or recalled subsequent to that date.

The Union appeals the vacation pay decision as simply irrational in light of the facts presented.

The court will discuss each of these issues raised by the Union seriatim.

DISCUSSION

In reviewing an appeal from a labor arbitration decision, the threshold question faced by the district court is what is the appropriate scope of review? In the seminal case of United Steelworkers of Amer ica v. Enterprise Wheel and Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960) the Supreme Court held that lower courts are without power to conduct plenary reviews on the merit of the arbitrators awards. Such reviews would render meaningless the provisions of collective bargaining agreements calling for the decisions of the arbitrator as final. Id. at 599, 80 S.Ct. at 1362. “[T]he question of interpretation of the collective bargaining agreement is a question for the arbitrator. It is the arbitrator’s construction which was bargained for; and so far as the arbitrator’s decision concerns construction of the contract, the courts have no business overruling him because their interpretation of the contract is different from his.” Id. at 599, 80 S.Ct. at 1362. The Court clearly indicates that arbitration awards are to be upheld as long as the award “draws its essence from the collective bargaining agreement.” Id. at 597, 80 S.Ct. at 1361.

In Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d 1123 (3d Cir.1969) the court discerned the phrase “draws its essence” to mean:

If the interpretation can in any rational way be derived from the agreement, viewed in light of its language, its context, and any other indicia of the parties’ intention; only where there is a manifest disregard of the agreement, totally unsupported by principal of contract construction and the law of the shop, may a reviewing court disturb the award.

Id. at 1128.

Thus, the scope of our review is narrow, we may not overturn a decision merely because this court would interpret the contract differently. Enterprise, supra; Teamsters Local No. 115 v. DeSoto, 725 F.2d 931, 934 (3d Cir.1984); Mead Corp. v. Int’l Printing and Graphic Communications Union, 572 F.Supp. 786, 790 (E.D.Pa.1983) (quoting Enterprise Wheel, 363 U.S. 599, 80 S.Ct. at 1362).

Did the Arbitrator’s decision to reject the Union’s severance pay grievance draw its essence from the collective bargaining agreement? I.

The arbitrator ruled “laid off because of technological reasons” to address only affirmative technological advances undertaken by Synthane which displaces Union employees. The arbitrator explicitly stated his reasons for so deciding as based upon the plain wording of the provision coupled with the bargaining history the parties established in wording the severance pay clause. The Union seeks to have this court place a broader meaning upon the phrase than was done by the arbitrator, yet this is the very act this court is forbidden to do. United Steelworkers of America v. Enterprise, supra.

It does not strain the imagination to find that one could very well interpret technological reasons more broadly to encompass those instances where state of the art equipment is not purchased because of cost or where a shutdown occurs in the wake of environmental mandates. We are, however, forbidden from simply placing a different interpretation upon words than that chosen by the arbitrator. The issue is not so broad, but must be placed in the more limited context of whether the decision, albeit different from the reviewing court would have arrived at, draws its essence from the agreement.

We see nothing that is inherently implausible in the decision to interpret the severance pay clause as limited to job losses directly attributed to technological advances undertaken by Synthane. The Union’s claim that the severance pay award be overturned on this basis will be denied.

II. Did Synthane fail to disclose pertinent information which could have influenced the arbitrator’s decision?

In August, 1983, six months after the shutdown of the plant Aleo Standard announced plans to restructure by divesting itself of a number of subsidiaries including Synthane. These subsidiaries would form the basis of a new parent corporation, to be partially owned by Aleo Standard.

The restructuring by Aleo was formalized almost one year after the decision to close the Taylor plant. The Union believes that a nexus may exist between the parent corporation’s decision to divest and “technological reasons”.

The chief operating officer of Aleo Standard characterized the subsidiaries to be divested as not being in the forefront of high technology. Alco’s decision to examine the future direction of its operating companies began in mid-1981. The Union believes that Synthane should have made known to the arbitrator the possibility that a restructuring of the parent corporation may take place. Since the subsidiaries which were not classified as “high tech” were all divested, the arbitrator could have been influenced by this information in formulating his decision.

An examination of the chronology of events leading to the plant closing and the subsequent restructuring by the parent corporation will be helpful. In July, 1982, Mr. Kelly, as Aleo group president, placed his imprimatur on the plans to phase out the Taylor division. In September, 1982, the Union and its employees were told of the decision. The majority of the employees were released by December, 1982. The grievance procedure was initiated and the arbitrator ruled against the Union’s grievance in April, 1983, one month after the plant was permanently closed. In late June and early July, 1983, Aleo finalized which of its subsidiaries would be targeted for divestiture. There is no evidence to show that Mr. Kelly ever knew of Alco’s decision to sever Synthane from its corporate family prior to June-July, 1983.

The uncontradicted facts show that Syn-thane placed all the pertinent information before the arbitrator and did not commit any fraudulent act. The Union has accused Synthane of harboring desires to reopen the Taylor division subsequent to a court decision. There is no evidence to suggest that the Taylor plant is about to reopen. The site is now the corporate headquarters for the parent corporation of Synthane, Aleo Industries. Various parts of the building are leased to tenants in unrelated industries and Synthane intends to either lease or sell the remaining property at the plant site.

There is simply no evidence to suggest that fraud was committed by Synthane or even that information in their possession was withheld from the Union and the arbitrator. The plant was closed for economic reasons. The arbitrator’s ruling recognized this fact and further held that the severance pay provision was operable only if affirmative technological advances displaced workers. We see no evidence that Synthane has undertaken any technological improvements in plant or equipment at the Taylor division plant since it was shut down in March, 1983. The arbitration award will be upheld and plaintiff’s motion for summary judgment will be denied.

III. Did the arbitrator’s award denying vacation benefits for Union members draw its essence from the agreement?

The provision of the agreement applicable to vacation pay reads:

An employee on the employment records of the Company on July 1 of each year shall be entitled to vacation time off based upon the continuous service he has with the Company, as of the date, in accordance with the following, provided he has worked a minimum of 1040 hours since the previous July 1: ____

The Union seeks vacation pay for the period July 1, 1983 through June 30, 1984. This pay is based on the hours worked in the preceding twelve (12) months — July 1, 1982 through June 30, 1983. Thus, the issue was a narrow one for the arbitrator and entailed only the question of whether employees who were terminated between December, 1982 and March, 1983 were on the employment records of the company on July 1, 1983.

We think that the arbitrator’s decision was rationally grounded in the agreement and should be upheld. The arbitrator ruled first, that the Union failed to meet its burden of proving that the employees, at the time the vacation benefits vested (July 1, 1983), maintained any employment status with Synthane. The Union made much ado about the fact that there were no “employment records” per se maintained by the company. He stated that the Union presented no evidence that as of July 1, 1983 any of the affected employees were on any records of Synthane or that they had retained rights pursuant to any such records. Secondly, past practices indicated that no employees had received any vacation benefits when they were not working as of July 1.

The Union attacks the decision as irrational and contradictory in light of other clauses in the agreement. Specifically, Article 8, section 11 provides that the seniority of an employee shall end upon the termination of employment by Synthane as the result of certain enumerated causes. Seniority status is retained by an employee who is laid off for 24 months. The thrust of the Union’s premise is that seniority within the Union equates to working for Synthane. This is a specious argument which the court must reject. There is no correlation between whether someone maintains his or her seniority within the Union and whether they are working. Lastly, the court notes that the arbitrator found no evidence which shows that the plant shutdown was attributable in whole or in part to any motivation by Synthane to deprive Union members of their vacation benefits. The record clearly shows that the plant was closed in March, 1983. The majority of the employees were terminated in December of 1982. No employee was working on July 1, 1983, nor were any recalled prior to that date. The decision of the arbitrator will be upheld.

IV. The State law claims.

Since the decisions of the arbitrator will be upheld, the plaintiff’s claims against defendant under 43 Pa.C.S.A. § 260.1, et seq. must fail as a matter of law.

SUMMARY

A review of the facts indicates the arbitrator’s rulings were within his sound discretion. There was no manifest disregard for the applicable clauses. Past history of the parties’ dealings supported both decisions. In consideration of the foregoing, the court will not disturb the arbitration awards.

      . Civil Action No. 83-4097 is a suit to vacate the award denying severance pay and No. 83-4258 seeks to vacate an award denying vacation pay.

      . Synthane-Taylor Corporation had two plants, the Synthane division plant and the Taylor division plant. The Taylor division was located in Valley Forge, Pennsylvania.

      . Synthane was a wholly owned subsidiary of Aleo Standard Corporation. The president of Synthane reported to Mr. Frank Kelly, a group president at Aleo. Mr. Kelly had, in addition to Synthane’s president, 15 other presidents of various Aleo subsidiaries reporting to him.

      . Article 8, Section 14 of the April 26, 1981 Agreement.

      . Page 11, Severance Pay, Arbitrator's Decision.

      . Page 6, Severance Pay, Arbitrator's Decision.

      . Article 8, Section 14 of the April 26, 1981 Agreement.

      . Page 11, Severance Pay Arbitration Decision.

      . Article 5, Section 9 of the April, 1981 Agreement.

      . Thus, had Synthane purchased a machine which displaced a worker, arguably the lay-off would be due to technological reasons.

      . These subsidiaries were to be sold to their management in a leveraged buy-out scheme. Aleo Standard would be at least a 20% owner of the new corporation.


author: JOHN GARRETT PENN, District Judge.

text:
    CONSET CORPORATION, et al., Plaintiffs, v. COMMUNITY SERVICES ADMINISTRATION, et al., Defendants.
    Civ. A. No. 79-1174.
    United States District Court, D. Columbia.
    March 16, 1985.

      William G. Kapit, Washington, D.C., for plaintiffs.
    R. Craig Lawrence, Asst. U.S. Atty., Washington, D.C., for defendants.
   MEMORANDUM OPINION

JOHN GARRETT PENN, District Judge.

The plaintiffs, Conset Corporation and its principal shareholder, Stanley Zimmerman, filed this action on April 27, 1979. Plaintiffs allege that the manner in which the defendant agency officials terminated a business arrangement between Conset and the National Demonstration Water Project, a nonprofit federal grantee, infringed their Fifth Amendment due process rights. The matter is presently before the court on defendants’ motion to dismiss, or for summary judgment.

I

The defendants Mr. Olivarez, Mr. Smith, Mr. Jones, and Mr.Ramsey were Director, Assistant Director, Chief Legal Officer and Chief of the Demonstration Division, respectively. The defendant, Community Services Administration (CSA), was a federal antipoverty agency established by the Economic Opportunity Act of 1964, as amended, 42 U.S.C. §§ 2701 et seq. Section 2825 established pilot and demonstration projects, conducted by public or private agencies, designed to test or assist in the development of new approaches or methods that would aid in overcoming special conditions in furtherance of the public interest. The National Demonstration Water Project (NDWP), designed for the purposes of developing local water and sewer facilities for low income families, was such a demonstration project. Plaintiff, Conset Corporation, was a service corporation that sold management services to NDWP. Plaintiff, Stanley Zimmerman, the President of Con-set, also served as the Executive Director of the NDWP until September 30, 1978.

In August 1977, the new administration of CSA began a re-evaluation of NDWP as a CSA demonstration project. In the course of reviewing that project, the propriety of Conset’s contractual relationship with NDWP was also evaluated. NDWP, a CSA grantee, had contracted its entire grant to Conset, a for-profit corporation, to carry out the NDWP program. An August 17,1977, preliminary opinion indicated, that in light of Mr. Zimmerman’s position as both the President and major stockholder of Conset, and as the Executive Director of NDWP; this business relationship constituted a “conflict of interest” in violation of OEO Instruction Number 6909-01.

In 1977, CSA officials discussed the “dual status issue” with representatives from both the NDWP and Conset. A subsequent memorandum, dated November 7, 1977, also explored the potential conflict of interest issue. Discussions continued between the three parties and the plaintiffs were advised of the existence of the potential conflict issue, although the prior OEO/CSA administrations had always approved of the NWDP/Conset arrangements. Plaintiffs were instructed that even though the past arrangements had been consistently approved, the NDWP had not heretofore violated Instruction Number 6909-01, because the regulations permitted such conflicts to exist, provided that they were specifically approved by the CSA. See Mack affidavit ¶ 4. Despite the lingering existence of the potential conflict of interest, a “short term” contract was approved through January 1, 1978. CSA thereafter decided to provide further funding to NDWP and established a final grant for that organization which terminated on September 30, 1978. This grant was made on August 24, 1978, retroactively effective through February 1, 1978. CSA contends that the termination had nothing to do with the conflict of interest issue; rather, the officials felt that NDWP had fully demonstrated its effectiveness as a “demonstration” project and was suitable for funding by other agencies.

In late February 1978, it came to the attention of CSA officers that the plaintiffs were representing to government and congressional officials that CSA had determined that there was no potential conflict of interest in the NDWP/Conset arrangement. It was at this juncture that the Assistant Director of the Office of Legal Affairs and General Counsel were compelled to issue the “General Counsel’s Final Opinion Memorandum” dated March 9, 1978. It is this memorandum which is the subject of this action.

Defendants contend that the March 9, 1978 memorandum was issued by high agency, officials and counsel, as a final legal opinion re-evaluating the relationship between Conset and NDWP. Plaintiffs contend that they suffered substantial harm as a result of the memorandum and its alleged circulation outside the agency. Plaintiffs maintain that the memorandum ultimately forced the resignation of Zimmerman as Executive Director of the NDWP, foreclosed Conset’s business opportunities, and eventually drove Conset out of business. Plaintiffs seek damages for violation of their constitutional rights, alleging that the defendants failed to afford them adequate notice and sufficient opportunity to respond, subsequent to the preparation of the allegedly “stigmatizing” March 9th memorandum, and before the allegedly “adverse action” of its dissemination outside of the agency.

This court dismissed the action and denied plaintiffs’ motion for injunctive relief. The court of appeals, 655 F.2d 1291, affirmed the decision that plaintiffs had no property rights; but reversed and remanded on the issue of whether plaintiffs had a “liberty interest” which would implicate due process protection. However, this Court resolves the action on the basis of two jurisdictional issues which have not heretofore been considered.

II

The defendants moved to dismiss the action, or for summary judgment, asserting Procunier v. Navarette, 434 U.S. 555, 98 S.Ct. 855, 55 L.Ed.2d 24 (1978), to stand for the proposition that “there can be no individual liability for damages because the defendants are entitled to qualified immunity as a matter of law.” In Procunier, an inmate, alleging infringement of his First Amendment rights, sought damages for the prison officials’ interference with the outgoing prisoner mail. Noting that during the period of the alleged constitutional violations, there was no “clearly established” right protecting an inmate’s mail privileges, the Supreme Court held that summary judgment was appropriate because “the defendant officials were entitled to qualified immunity as a matter of law.” Id. 434 U.S. at 565, 98 S.Ct. at 861.

The plaintiffs, in opposition, maintain that the qualified immunity defense is not available to the individual defendants because they “should have known” that their challenged actions would violate the plaintiff’s constitutional rights. The Court finds that the government officials are entitled to qualified immunity as a matter of law.

a) The Appropriate Qualified Immunity Standard

The former Procunier test encompassed both objective and subjective components:

qualified immunity [was] denied an official who knew or should have known that the action he took within the sphere of official responsibility would violate the constitutional rights of the [complainant], or if [the official] took the action with malicious intention to cause a deprivation of constitutional rights or other injury.

Id. at 434 U.S. at 562, 98 S.Ct. at 860; Wood v. Strickland, 420 U.S. 308, 322, 95 S.Ct. 992, 1001, 43 L.Ed.2d 214 (1975). Thus under the Procunier standard, immunity was available only if the federal official had neither violated clearly established law, nor acted out of malice. Procunier, 434 U.S. at 562, 98 S.Ct. at 860.

The subjective element required a showing that the official took the action in “good faith” without an intention to cause injury, however, the Court soon recognized that the good faith requirement often defeated summary judgment. As questions of subjective intent “are rarely amenable to resolution on motions for summary judgment; the broad-ranging discovery which resulted could often be disruptive of effective government.” Harlow v. Fitzgerald, 457 U.S. 800, 816, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982). The Harlow Court observed that the denial of immunity subjected government officials to harassing civil litigation.

It [is] not difficult for an ingenious plaintiff’s counsel to create a material issue of fact on some element of the immunity defense where subtle questions of constitutional law and the decisionmaker’s thought processes are involved. A sentence from a casual document or a difference in recollection with regard to a particular policy conversation held long ago would usually, under the normal summary judgment standards, be sufficient to force a trial. The effect of this development upon the willingness of individuals to serve their country is obvious.”

Harlow, 457 U.S. at 817 and n. 29, 102 S.Ct. at 2738 and n. 29.

Prompted by the “desire that judges could quickly weed out frivolous claims through firm application of the Federal Rules Civil Procedure”, the Harlow Court made an adjustment of the former qualified immunity standard by severing the subjective element of the defense. Harlow, 457 U.S. at 817-18, 102 S.Ct. at 2738-39; Zwiebon v. Mitchell, 720 F.2d 162, 168 (D.C.Cir. 1983).

Under the current Harlow standard, it is well-established law that “government officials performing discretionary functions generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.” Id.:

The previously recognized subjective aspect of qualified or good faith immunity ... frequently has proved incompatible with the principle that insubstantial claims should not proceed to trial. Now, however, once the trial judge determines that the law was not clearly established at the time that the contested conduct occurred; the inquiry ceases. At that point the official is entitled to summary judgment as a matter of law, and [ujntil this threshold immunity question is resolved, discovery should not be allowed.

Harlow, 457 U.S. at 818, 102 S.Ct. at 2739 (emphasis added).

Moreover, the Harlow Court emphasized that officials could not be expected to predict the future of constitutional law. The defendant official’s conduct was to be measured against not simply currently applicable law, but the clarity of the law at the time that the acts complained of occurred:

If the law at that time was not clearly established, an official could not reasonably be expected to anticipate subsequent legal developments, nor could he fairly be said to ‘know’ that the law forbade conduct not previously identified as unlawful ...

Gray v. Bell, 712 F.2d 490, 496 and n. 8 (D.C.Cir.1983).

b) Application of the Current Standard

This Court’s task is to measure the defendants’ conduct by reference to the clearly established law at the time that the challenged conduct occurred. An assessment of the state of the law at that time reveals that in the context of this action, there was no clearly established constitutional right to additional notice and opportunity to be heard before the CSA general counsel issued a final decision and communicated the decision to third parties.

Any “clearly established” potential due process entitlement in the instant context, stems from a court of appeals decision rendered more than two years after the preparation of the March 9 Memorandum, and after the September 30, 1978 conclusion of the CSA’s grantor relationship. The action was brought by a dairy products supplier, who was denied substantial government contracts based upon á government contracting agency officer’s determination that the supplier “lacked integrity and responsibility.” Old Dominion Dairy Products v. Secretary of Defense, 631 F.2d 953 (D.C.Cir.1980). The court held that the supplier may have had a right to receive notice of the charges against its integrity before the government denied multiple contracts on that basis. Id. The Conset court of appeals relied upon Old Dominion in their decision to reverse and remand the instant action. Therefore, there could not have been any “clearly established” constitutional right, applicable to the Conset plaintiff, two years before the 1981 decision which established that right.

The language of Wood v. Strickland, speaks of settled “indisputable law” and “unquestioned rights.” Wood, 420 U.S. at 321, 95 S.Ct. at 1000. It follows that the procedural history 'of Old Dominion also demonstrates that an implication of due process rights, in the context of the plaintiff’s situation, was not clearly established until the 1981 court of appeals’ decision. The district court initially rejected the plaintiff’s claim of due process entitlement, and entered judgment for the government. Old Dominion v. Brown, 471 F.Supp. 300 (D.D.C.1979). The court of appeals reversed and remanded; holding that the plaintiffs may have been entitled to some due process protection. Old Dominion, 631 F.2d at 953. Since the district court itself did not initially find that the plaintiffs were entitled to due process protection, the CSA government officials in the instant action, could hardly be expected to be cognizant of potential rights which the district court did not recognize as declared or established.

A more recent authority in this circuit is consistent with the Court’s position. Seeking damages for violation of his constitutional (Fourth Amendment) and statutory rights, a plaintiff brought an action against a former Attorney General who had authorized some warrantless wiretaps. Zwiebon v. Mitchell, 720 F.2d 162 (D.C.Cir.1983). The court held that the former Attorney General could claim immunity from liability, because “at the time that the wiretaps were authorized ... the Supreme Court had offered no pronouncement on the legality of the warrantless wiretaps.” Id. at 169. The court explained that notwithstanding the evidence of memoranda and advice to the contrary from some of his advisors; “the defendant did not actually know that his conduct was illegal, and the memoranda could not otherwise support an inference that his belief was objectively unreasonable.” Id. at 171 and n. 16. Expounding on the objective standard, the court added that the defendant, even though an Attorney General, could not be expected to evaluate, assimilate, and apply isolated lower court decisions which may have provided guidance on the impropriety of the wiretaps. Id. at 171 and n. 17. The court determined that defendant Mitchell had “entertained a reasonable belief in the legality of his conduct.” Id. at 171.

Similarly, in the instant action, as previously outlined, the Court finds that at the time of the challenged conduct there existed no clearly established constitutional right to be a party to the later discussions of the General Counsel's Memorandum. As the defendants readily point out, the court of appeals found that the Conset plaintiffs were accorded some opportunity to comment (until December 20,1977). So the question here is really how much opportunity to respond were the plaintiffs entitled. There were no regulations, or internal agency procedures establishing entitlement to notice or opportunity to comment before the initiation of a General Counsels’ decision or subsequent to its circulation. As the Court finds that it would be unreasonable to expect a reasonable person to know of rights which the district court itself did not recognize; the defendants are entitled to qualified immunity as a matter of law.

Ill

The United States is protected from unconsented suit under the ancient common law doctrine of sovereign immunity. Dalehite v. United States, 346 U.S. 15, 73 S.Ct. 956, 97 L.Ed. 1427 (1953). Congress enacted the Federal Tort Claims Act (FTCA) as a broad consent to suits for personal injury or death caused by the tortious actions of government employees acting within the scope of their employment under circumstances where a private person could be held liable. 28 U.S.C. § 1346 (1964).

Balanced against the interest in facilitating private redress, however, was a concern of protecting against unwarranted judicial intrusion into areas of governmental operations and policymaking. Gray v. Bell, 712 F.2d 490, 506 (D.C.Cir.1983); 28 U.S.C. §§ 2671 et seq. Thus, Congress retained a sovereign immunity exception for:

(a) Any claim based upon an act or omission of an employee of the Government, exercising due care, in the execution of a statute or regulation, whether or not such statute or regulation be valid, or based upon the exercise or performance or failure to exercise or perform a discretionary function or duty on the part of a federal agency or employee of the Government whether or not the discretion involved is abused. 28 U.S.C. § 2680(a).

The defendants argue that their challenged conduct falls within the scope of the discretionary function exception to the FTCA. Plaintiffs maintain that neither the government officials’ evaluation and determination (that the current NDWP/Conset arrangement created a potential conflict of interest which was no longer compatible with the purposes, goals and policy of the Agency), nor the officials’ decision that no further discussions or negotiations were required before their subsequent preparation and issuance of a General Counsel’s Memorandum; constituted the exercise of a protected discretionary function. The Court finds that the action against the United States is barred by the discretionary function exception to the Federal Tort Claims Act.

The task of distinguishing between discretionary and ministerial duties is not an easy one. Courts have noted that “the obscurity in this area is matched only by a wealth of conclusory analytical labels, and wading through the relevant case law is surprisingly difficult.” Gray, 712 F.2d at 507. In addition, “strict adherence to the phrase ‘discretionary function’ leads to blind alleys, as the language of the clause discloses virtually nothing about the scope of the protection”. Id. at 508.

Dalehite v. United States, 346 U.S. 15, 73 S.Ct. 956, 97 L.Ed. 1427 (1953) is the leading authority on the discretionary function question. In Dalehite, family members sought damages from the government for the death of their father during a catastrophic nitrate plant explosion. The Court held that the government employees’ participation in the planning, manufacturing, adoption, supervision and maintenance of the nitrate fertilizer export program, preceding the Texas explosion, fell within the discretionary function exception, and therefore, barred suit against the United States. Id. 346 U.S. at 44, 73 S.Ct. at 972.

The Dalehite Court did not attempt to articulate a precise definition for the boundaries of the concept of discretion; but established a general distinction between planning or policymaking activities as opposed to operational or routine matters:

It is unnecessary to define, apart from this case, precisely where discretion ends. It is enough to hold, as we do, that the discretionary function or duty that cannot form a basis for a suit under the Tort Claims Act includes more than the initiation of programs and activities. It also includes determinations made by executives or administrators in establishing plans, specifications or schedules of operations. Where there is room for policy judgment and decision, there is discretion. It necessarily follows that acts of subordinates in carrying out the operations of government in accordance with official directions cannot be actionablé.”

Id. 73 S.Ct. at 968 (emphasis added).

The task of fully expounding the meaning of the discretionary function clause was left to the lower federal courts. The exception has traditionally been applied where “relatively high level choices” were made or where the government officials and decisionmakers “undoubtedly considered a number of policy factors in arriving at their decision.” Melton v. United States, 488 F.Supp. 1066, 1072 (D.D.C. 1980). Early applications of the clause, utilized the Dalehite planning/operational distinction. Courts made distinctions between discretionary decisions involving deliberate judgment (which depended upon considerations affecting the public health and interest, or the practicability of government programs) as contrasted with mere ministerial duties (which involved implementational or operational conduct according to clearly established rules and regulations). “The planning level notion refers to decisions involving questions of policy, that is, the evaluation of factors such as the financial, political, economic, and social effects of a given plan or policy.” Swanson v. United States, 229 F.Supp. 217, 220 (N.D.Cal.1964). More recent decisions have dispensed with a strict application of the operational/planning distinction. In its place has gradually emerged a “functional approach which focuses on the nature and quality of the discretion involved in the challenged conduct.” Gray, 712 F.2d at 513.

A review of the relevant case law underscores the lack of a concise, coherent standard. In light of the imprecision, it is helpful to look to the purpose of the exception. A principal theme of the exception is “that consistent with the related doctrine of official immunity, courts should not subject the sovereign to liability where doing so would inhibit vigorous decisionmaking by government decisionmakers.” Gray, 712 F.2d at 511. Section 2680(a) was meant to preclude those claims arising out of certain acts of discretion. Policy decisions of administrative officials within the purview of their responsibility are simply not actionable under the FTCA.

In the instant action, the government officials’ decisions were made after the evaluation of numerous factors, consideration of the plaintiffs’ correspondence, and much deliberation. No CSA regulations, or clearly established law, indicated what, if any, or how much opportunity to comment should be accorded to the agency’s prospective contractors. Moreover, the CSA officials were not at all constrained in their determinations by strict regulations or rules; a waiver provision in the CSA guidelines provided that even the corporations which did not meet the general CSA standards could be accorded a “special approval.” The general counsels’ decision that Mr. Zimmerman’s dual status continued to create a potential conflict of interest which was not compatible with the agency’s guidelines and goals, seems “exactly the type of discretionary function or duty, which even if abused, Congress sought to place beyond the pale of judicial scrutiny and second-guessing by the courts in tort litigation.” Dalehite, 346 U.S. at 27, 73 S.Ct. at 963. To hold otherwise might seriously chill effective government decision-making.

Two recent decisions in this circuit, provide additional guidance. In Biscoe v. Arlington County, 738 F.2d 1352 (D.C.Cir. 1984), the court characterized discretionary functions as:

certain decisions of the government for which there is no reason to believe that a jury would render a sounder decision than those officials chosen, qualified, and prepared to make them. It is these that are labeled discretionary, and which constitute policy decisions deemed immune from suit because there [was] no legal standard by which a judge or jury could gauge their arbitrariness or lack thereof.

Id. at 1352.

Reiterating the general proposition that a police department’s decision to hire a specific individual is discretionary, but the acts of training, supervising, instructing and controlling the employee are “ministerial;” the Biscoe court warned however, that some actions include both discretionary and ministerial actions. Id. at 1363.

Of course, not all actions having to do with training ... and supervision are necessarily operational or ministerial— training and supervision have both ministerial and discretionary components.

Id. citing Carter v. Carlson, 447 F.2d 358, 363-64 (D.C.Cir. 1971), rev’d in part on other grounds, 409 U.S. 418, 93 S.Ct. 602, 34 L.Ed.2d 613 (1973). Since the official’s decisions were prompted by policy considerations for which no precise statute or regulation was applicable, the court held that “the official’s decision should be removed from the court’s jurisdiction.”

The Gray holding emphasizes that there is not always a bright line distinction between discretionary and ministerial acts. Gray v. Bell, 712 F.2d 490 (D.C.Cir.1983). The Gray court held that a plaintiff’s FTCA claim had been properly dismissed insofar as it incorporated a malicious prosecution claim and thus, challenged an actual decision to institute prosecution. The court concluded that, “prosecutorial decisions as to whether, when, and against whom to initiate prosecution ... are quintessential examples of governmental discretion in enforcing the law.”

The court next addressed the defendant’s alleged violations under the Grand Jury and Due Process clauses of the Fifth Amendment. The court found that “the improper tortious actions allegedly undertaken [were] to intertwined with purely discretionary decision ... to be sufficiently separated from the initial decision to prosecute.” Id. at 516. Each allegation of improper investigator conduct was “inextricably tied” to the decision to prosecute and to present evidence to the grand jury:

Even though prosecutorial misdeeds in investigating and presenting evidence could be viewed as nondiscretionary ... the conduct as alleged in this case is insufficiently separable from the discretionary decision to initiate prosecution, and therefore cannot itself support suit under the FTCA.

Id. (emphasis added).

Under a similar rationale, the Fifth Circuit recently held that certain ministerial duties were inseparable from discretionary functions. Payton v. United States, 679 F.2d 475 (5th Cir. Unit B 1982) (en banc). In Payton, the plaintiff had initiated a wrongful death action against federal parole authorities for a murder perpetrated by a psychotic federal parolee. In anticipation that the parole release determination would be characterized as a discretionary function; the plaintiff drew his complaint— as the Gray plaintiff had — in a fragmentary fashion, challenging the Parole Board’s “ministerial” failure to acquire and examine certain records before making the parole decision. The court nevertheless dismissed all of the allegations, explaining that the plaintiff’s challenge to the “ministerial” omissions implicated the discretionary function of the Board. “To withstand a motion to dismiss, an allegation challenging the Board’s performance of any ministerial act would have to be sufficiently distinguishable from a complaint disputing the Board’s exercise of its discretionary function.” Id. The plaintiff would therefore have to allege that the Board breached a duty sufficiently separable from the decisionmaking function to be non-discretionary and outside the scope of the exception. Id. at 482.

Applying the same rationale to the instant action, the challenged conduct was not sufficiently separable from the officials’ discretionary functions to be placed outside the scope of the exception. The Gray court illustrated that courts will not permit a suit for damages occasioned by activities that are not meaningfully separate from the underlying, protected, undisputably discretionary functions. Gray, 712 F.2d at 516. Plaintiffs themselves, admit that the decision to approve or deny contract arrangements was a discretionary duty of the defendant officials. The general counsel and high level officials possessed specialized knowledge and experience for making such decisions. Obviously, their final decision that no future contracts should be approved and that the potential conflict still existed, of necessity, required a determination of when to prepare and release that final decision. Thus, the Court holds that section 2680(a) exempts the government from liability for exercising the discretion inherent in its decision to terminate the contract arrangement and its subsequent decision that no further discussions, negotiations, or communications from plaintiffs were necessary before rendering and preparing the General Counsels’ memorandum and circulating the charges.

IV

Plaintiffs’ blanket assertion of First Amendment violations is dismissed for failure to state a cognizable claim. Plaintiffs have failed to allege the manner in which they were prevented from access to the Court and why they could not petition through the appropriate government channels. Moreover, plaintiffs have not cited a single authority in support of this allegation.

Plaintiffs’ allegations of conspiracy and gross abuse of discretion are also barred by the doctrine of qualified immunity which protects government officials who, as in the instant action, are acting within their scope of employment.

As the individual defendants are entitled to qualified immunity for their actions, and the claims against the United States are barred by the discretionary function exception; the plaintiffs can prove no set of facts that would entitle them to relief. This Court is without jurisdiction.

Accordingly, this action is dismissed.

An appropriate Order has been entered.

      . The action is on remand from the court of appeals. Conset Corporation, et al. v. Community Services Administration, et al., 655 F.2d 1291 (D.C.Cir.1981).

      . The CSA has been since abolished by the Omnibus Budget Reconciliation Act of 1981, Public Law 97-35, August 13, 1981, 95 Stat. 357, effective September 30, 1981.

      . The predecessor of CSA was the Office of Economic Opportunity (OEO).

      . Memorandum Order dated April 18, 1980.

      . Conset Corp,, 655 F.2d at 1298.

      . The undisputed facts reveal that Conset knew of and had various opportunities to respond to the conflict of interest charges raised by the CSA between August and December 1977, consequently, up until December 20, 1977 by which date the parties had negotiated a set of condition ... Conset had received ample due process. Conset Corp., 655 F.2d at 1296-97.

      . Where decision to activate a military base was made on the planning level, but the directive authorizing the terms of its construction were very general ... the government’s negligence in connection with the construction of the draining ditch and sewage disposal system occurred at the operational level. United States v. Hunsucker, 314 F.2d 98 (9th Cir.1962). In disregarding some factors specified by agency regulations, there was a violation of a nondiscretionary command, placing the actions of officials outside of the discretionary function exception. Griffin v. United States, 500 F.2d 1059, 1066-68 (3d Cir.1974). Once the government decided to build a drainage ditch in furtherance of the construction of an aircraft maintenance facility, it was no longer exercising a discretionary function when it negligently designed the drainage system although the negligent decision was made in the planning stage by the engineers preparing plans and designs ... government decisions concerning designs, plans and specifications are not within the discretionary function exception. Seaboard Coast Line Railroad Company v. United States, 473 F.2d 714 (5th Cir.1973). The Coast Guard's failure to adopt a comprehensive program to protect the public from decertified (unsafe) vessels fell within the discretionary function exception. Gercey v. United States, 540 F.2d 536 (1st Cir.1976). Negligence of government employees, in the registration for interstate sale, and approval of the faulty labeling of a poisionous fungicide, fell within the discretionary function exception, even though the Dept, of Agriculture employees failed to marshall and submit facts to the Secretary for a decision as to its possible cancellation or suspension. First National Bank of Albuquerque v. United States, 552 F.2d 370 (10th Cir. 1977). Government officials' negligence in failing to adequately supervise the work of an engineer who was in charge of the design and installation of the modification of the elevator system on an aircraft constituted activity at the operational level, even though such conduct was required for the execution of a planning level decision. Swanson v. United States, 229 F.Supp. 217 (N.D.Cal.1964). Negligent selection of a contractor to rehabilitate real property and negligent supervision of rehabilitation project after it was started did not fall within the discretionary function exception. Melton v. United States, 488 F.Supp. 1066 (D.D.C.1980).

      . The court held that intentional torts could also fit within the discretionary function exception. Gray, 712 F.2d at 507. In the instant action, plaintiffs have alleged an intentional tort. (See paragraph 34 of Second Amended Complaint.)