author: STAPLETON, Chief Judge.

text:
    In re COLE PATENT LITIGATION. RCA CORPORATION, Plaintiff, v. HAZELTINE CORPORATION, Defendant. LEAR SIEGLER, INC., Plaintiff, v. RCA CORPORATION, Defendant.
    Civ. A. Nos. 79-243, 79-491.
    United States District Court, D. Delaware.
    July 24, 1984.

      William Wade, Richards, Layton & Finger, Wilmington, Del., John Farley, William Gilbreth, Norman Beamer, Fish & Neave, New York City, Albert Russinoff, RCA Corp., Princeton, N.J., for RCA.
    James L. Holzman, Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, Del., Edwin L. Hartz, Christie, Parker & Hale, Pasadena, Cal., for Lear Siegler.
    Daniel F. Wolcott, Jr., Potter, Anderson & Corroon, Wilmington, Del., Dana M. Raymond, James M. Maune, Brumbaugh, Graves, Donohue & Raymond, New York City, for Hazeltine.
    Richard L. Sutton, Thomas Reed Hunt, Jr., Morris, Nichols, Arsht & Tunnell, Wilmington, Del., John F. Pritchard, Winthrop, Stimson, Putnam & Roberts, New York City, for Esprit Systems, Inc.
   MEMORANDUM OPINION

STAPLETON, Chief Judge.

I. THE INFRINGEMENT ISSUE

This Court held (1) that the Cole patent was anticipated by Dirks and accordingly invalid, and (2) that the accused devices would infringe the Cole patent if it were valid. 558 F.Supp. 937. RCA appealed from the determination of invalidity; HLA did not appeal from the determination that the accused devices fell within the scope of the Cole patent claims. The Court of Appeals for the Federal Circuit reversed the determination of invalidity and “remanded for consideration, if appropriate, of ... [certain] counts which were not tried.” 730 F.2d 1440.

Hazeltine and Lear Siegler now assert before this Court (1) that the Court of Appeals construed the Cole patent claims differently than this Court did, (2) that the accused devices do not infringe the claims as construed by the Court of Appeals, and (3) that they are entitled to relitigate the infringement issue in this Court. I conclude that this argument is neither legally nor factually sound.

Hazeltine and Lear Siegler had a full and fair opportunity to litigate in this Court the scope of claims, their validity, and the infringement of the accused terminals. They had the opportunity thereafter to appeal the adverse determination of the infringement issue and to argue that there was no way to distinguish Dirks which does not also distinguish the accused devices and require a finding of non-infringement. Even without appealing the adverse infringement determination, at the time this case was before the Court of Appeals, Hazeltine and Lear Siegler could have urged non-infringement as an alternate ground for supporting the validity of the judgment in their favor. They did argue that acceptance of RCA’s interpretation of the scope of the claims would be inconsistent with a finding of infringement. The Court of Appeals nevertheless adopted RCA’s interpretation of the claims as well as of Dirks. Moreover, its opinion reveals no inconsistency between its conclusion that Dirks does not anticipate and this Court’s conclusion that the accused devices fall within the scope of the claims.

This Court’s determination that the accused devices fall within the scope of the Cole patent claims, standing unreversed as it does, bars Hazeltine and Lear Siegler from relitigating the issue of infringement. Any other conclusion would permit the kind of piecemeal litigation of patent cases which the Court of Appeals of the Federal Circuit condemned in the analogous case of Perkins-Elmer Corporation v. Computer-vision Corporation, 732 F.2d 888 (Fed.Cir.1984). In short, a trial court should make a determination of both validity and infringement, as this Court did, and one appeal should suffice to correct any error.

Even if I were empowered to reconsider the infringement issue with the enlightenment supplied by the Court of Appeals, however, I would not reach a conclusion different from the one I originally reached. The Court of Appeals found that Dirks did not anticipate Claim 1 because it taught no structure which performed the function of “generating position counts.” It reached a similar conclusion with respect to Claims 2 and 3, because Dirks disclosed no “generating means ... for digitally generating a video system.” If one accepts my prior holding that the combination of the ROM and the shift register in the HLA terminals is the equivalent of the digital-to-video generator of Cole, there is nothing in the Court of Appeal’s anticipation analysis which is in any way inconsistent with the analysis leading to my infringement holding. Since I remain of the view that the shift register is properly considered a part of the digital-to-video generator, if I were to reexamine the infringement issue, I would again conclude that the accused devices infringe.

II. RELIEF AGAINST HAZELTINE AND LEAR SIEGLER

RCA seeks an injunction against the manufacture, use or sale of the accused devices, as well as an order requiring an accounting. Hazeltine and Lear Siegler insist that an injunction is not appropriate because RCA has failed to show that, absent an injunction, it will suffer irreparable injury in the last three months of the life of the patent.

RCA’s application is not one for a preliminary injunction. The validity of the Cole patent and infringement by the accused terminals has been judicially determined after a trial on the merits. The Court of Appeals for the Federal Circuit has recently explained that once the patentee’s rights have been held to be valid and infringed, the threat of continued infringement is alone sufficient to warrant injunctive relief. In Smith Intern, Inc. v. Hughes Tool Co., 718 F.2d 1573, 1581 (Fed. Cir.1983) it succinctly stated the rule which must govern here:

The very nature of the patent right is the right to exclude others. Once the patentee’s patents have been held to be valid and infringed, he should be entitled to the full enjoyment and protection of his patent rights. The infringer should not be allowed to continue his infringement in the face of such a holding. A court should not be reluctant to use its equity powers once a party has so clearly established his patent rights. We hold that where validity and continuing infringement have been clearly established, as in this case, immediate irreparable harm is presumed. To hold otherwise would be contrary to the public policy underlying the patent laws.

Since Hazeltine and Lear Siegler point to no competing equities sufficient to override the policy thus articulated, I will enter an appropriate injunction.

III. RCA’S MOTION TO JOIN ESPRIT SYTEMS, INC. (“Esprit”)

It may well be that Esprit is a successor in interest to Hazeltine which is bound by determinations in this action whether or not it is joined as a party defendant. I am unpersuaded, however, that its presence in this case at this juncture would facilitate the conduct of the litigation. RCA can obtain complete relief with respect to all terminals which have been adjudicated to be infringing from Hazeltine without Esprit's participation. It can secure any relief to which it is entitled with respect to any other Esprit terminals in a separate proceeding. Esprit’s presence here would only be a complicating factor in this litigation and this litigation should be concluded as soon as possible. For these reasons, RCA’s motion to join Esprit will be denied.

These findings and the judgments entered contemporaneously do not dispose of the recently filed motion of Lear Siegler pursuant to Rules 59 and 60.

      . The “counts" referred to have now been resolved as a result of a settlement between RCA and ADDS.

      . The Court of Appeals said nothing inconsistent with this view and the majority's tacit rejection of HLA’s argument that RCA’s claim construction would require a finding of non-infringement suggests that it shared this view.

      . The fact that Lear Siegler may suffer adverse economic effects from an injunction does not provide a ground for the denial of an injunction. As stated in Smith Intern., supra, 718 F.2d at 1581:
      Smith argues that public policy and the balance of hardship are in its favor, because it is a substantial competitor and has on hand a large inventory of the rock bits at issue here, and it would be unfair to disrupt its activities with an injunction. But it is clearly established that Smith knew of the Hughes patents when it designed the F series bits and took a calculated risk that it might infringe those patents. It instituted this actioñln an attempt" to invalidate its competitor's patents, and, having failed, it will not now be heard to say that public policy is in its favor. To the contrary, public policy favors protection of the rights secured by the valid patents.

      . Petitions for certiorari are currently pending and it is suggested the injunctive relief should await a ruling thereon. I interpret the Court of Appeal’s denial of HLA’s motion to stay its mandate to be inconsistent with such an approach.


source: Caselaw Access Project

author: JAMES LAWRENCE KING, Chief Judge.

license: Public Domain

text:
    Josephine DORSE, Plaintiff, v. ARMSTRONG WORLD INDUSTRIES, INC., et al., Defendants.
    No. 82-2308-CIV-KING.
    United States District Court, S.D. Florida, Miami Division.
    Aug. 10, 1984.

      Blaire & Cole, Coral Gables, Fla., for Eagle-Picher.
    Lyle & Skipper, St. Petersburg, Fla., for Fibreboard.
    Louis S. Robles, Miami, Fla., Frederick M. Baron & Associates, Dallas, Tex., for plaintiff.
    Lee, Schulte, Murphy & Coe, P.A., Miami, Fla., for Keene Corp.
   ORDER DENYING DEFENDANT EAGLE-PICHER INDUSTRIES, INC’S MOTION FOR SUMMARY JUDGMENT

JAMES LAWRENCE KING, Chief Judge.

This cause arises before the Court upon the defendant Eagle-Picher Industries, Inc.’s motion for summary judgment.

On this motion, the defendant argues that it is entitled to summary judgment against the plaintiff on the basis of the government specification defense. This affirmative defense allows government-contract manufacturers to share in the same immunity from suit enjoyed by the United States when the contractor has complied with explicit government specifications during performance of a contract with the United States. See, e.g., Dolphin Gardens, Inc. v. United States, 243 F.Supp. 824 (D.Conn.1965).

The Court first notes that the defendant has cited no Florida cases explicitly recognizing and applying the government specification defense. The defendant has urged this Court, however, to rely on the case of Rawls v. Ziegler, 107 So.2d 601 (Fla.1958), as providing the conceptual basis for the Florida courts probable adoption of the defense when presented with an opportunity to so adopt.

The Rawls case involved a negligence claim as distinguished from the instant case involving strict products liability and the allegation of a failure to warn. The Court, thus, does not find Rawls persuasive authority for the defendant’s proposition that the Florida courts would likely adopt the government specification defense in the case at bar.

Similarly, the Fifth Circuit has recently refused to apply the government specification defense in a Texas asbestos litigation “[ajbsent some reason to believe that the Texas courts, when presented with the question would adopt such a defense.” Hansen v. Johns-Manville Products Corp., 734 F.2d 1036, 1045 (5th Cir.1984).

The Court further notes that, notwithstanding the fact the Florida courts do not recognize the government specification defense, genuine issues of material fact exist which would preclude summary judgment even if the defense were otherwise available.

Jurisdictions which allow the government specification defense require that the defendant contractor must satisfy two elements under the defense: First, it must comply carefully and fully with the Government’s specifications; second, it must apprise the Government of any hazards, unknown to the Government, associated with the product, of which the contractor is aware and which might affect the Government’s decision to specify its use. In Re Agent Orange Product Liability Litigation, 534 F.Supp. 1046, 1057 (E.D.N.Y.1982).

This latter element would, therefore, require a comparison of the relative knowledge of the United States Government and of the defendant regarding the hazards associated with asbestos containing material and the need for warnings concerning its use. As the Court in Tefft v. A.C. & S., Inc., No. 80-924M (W.D.Wash. May 6, 1983) at 9, noted “[t]he duty-to-warn issue ... does not disappear[ ] with the assertion of the government specification defense, the finder-of-fact must determine who knew what, when, that is, relative knowledge, and, thus where any duty lay.”

Summary judgment is, therefore, inappropriate in the instant case where a material issue of fact exists as to the quantum of knowledge, regarding the hazards of asbestos, possessed by the defendant during the relevant period in question.

Accordingly, the Court, having fully considered the motion, the memoranda of law in support and in opposition there to, as well as the applicable law herein does:

ORDER and ADJUDGE that the defendant’s motion be, and it is, DENIED.


author: HOLDEN, Senior District Judge.

text:
    David F. LACE v. UNITED STATES of America.
    Crim. A. No. 79-44-1.
    United States District Court, D. Vermont.
    Sept. 6, 1984.
    Amendment to Memorandum of Decision filed Oct. 11, 1984.

      Barry E. Griffith, Rutland, Vt., for plaintiff.
    Peter W. Hall, Asst. U.S. Atty., Dist. of Vt., Rutland, Vt., for defendant.
   MEMORANDUM OF DECISION

HOLDEN, Senior District Judge.

Following the appeal of his conviction on a negotiated conditional plea of guilty to the charge of conducting a narcotic enterprise in violation of 21 U.S.C. § 848, the petitioner David Lace instituted the present action claiming deprivation of assistance of counsel. On appeal from this court’s denial of relief under the provisions of 28 U.S.C. § 2255, 573 F.Supp. 950, the court of appeals returned the cause with directions to focus consideration on the adequacy of the representation afforded by the petitioner’s retained counsel, Clifford Steele, Esq., of Atlanta, Georgia, assessed in the light of his lawyer’s conflict of interest. Lace v. United States, 736 F.2d 48, 50 (2d Cir.1984).

The roots of the petitioner’s constitutional claim that he was denied the right to effective assistance of counsel in violation of the Sixth Amendment, are implanted in the fraternal kinship and professional relationship that prevailed between Clifford Steele, one of his two retained attorneys and Steele’s brother Wayne, at the time the petitioner’s guilty plea was tendered and accepted by the court on January 2, 1981. In keeping with the gravity of the offense to which the plea was offered, the agreement submitted to the court was carefully conditioned on numerous points favorable to the petitioner. The Government agreed to petitioner’s release on bail during the pendency of an appeal that was designed to preserve each and every constitutional issue throughout fourteen days of suppression hearings. The most noteworthy aspect of the plea agreement was its provision that requested the court to impose a sentence not to exceed the ten years minimum term of confinement provided for the offense charged in Count III, to which the plea was offered. The agreement was further conditioned on the dismissal of the remaining counts.

Upon completion of a presentence report, sentence was imposed in accord with the conditional plea agreement on February 25, 1981. The judgment of conviction was affirmed. United States v. Lace, 669 F.2d 46 (2d Cir.) cert. denied 459 U.S. 854, 103 S.Ct. 121, 74 L.Ed.2d 106 (1982). On application of Clifford Steele in behalf of the petitioner, the time for his voluntary surrender was enlarged to January 4, 1983.

Clifford Steele continued as counsel for the petitioner and his wife, Libby Lace, in obtaining release on May 23, 1983 of cash bail deposited in the court registry. On May 31, 1983 the present pro se petition was filed. The court appointed experienced and competent counsel under the Criminal Justice Act to represent the petitioner in this action.

The facts which underlie the conviction of David Lace and his codefendants are fully reported in United States v. Lace, et al., 502 F.Supp. 1021 (D.Vt.1980).

The retrospection required in the instant proceeding indicates that the success of the suppression hearings turned out to be the key to the combined strategy of all seven defendants. Over weeks of continuous surveillance of the Sharon distribution point for the controlled substances that culminated in a successful search and seizure of great quantities of contraband, the Vermont State Police had gathered abundant evidence to support the charges made in the federal indictment which followed. The main line of resistance to these accusations was a determined and partially successful assault on the evidence marshalled by the state and federal enforcement officers.

Clifford testified in the proceedings now before the court that many considerations were involved in his advice to the petitioner to join in the written conditional plea agreement which Steele and counsel for his codefendant Ducharme had negotiated with the United States Attorney. Of these the principal factor was based on the adverse results of the suppression hearings

... as our hoped-for relief didn’t materialize. It became less and less of a clear situation that we would prevail on the facts.

Transcript of Hearing, September 12, 1983, at 51-52.

Sufficient evidence survived the suppression hearings to constitute an immediate danger of conviction if the case proceeded to trial without appellate review of the trial court’s failure to suppress some of the most incriminating evidence collected during the surveillance and the searches and seizures which followed on May 16, 1979. The plea agreement was designed to achieve this objective.

Adding Wayne Steele to the Supplemental List of Witnesses

On December 19, 1981, Government attorneys provided defense counsel with a supplemental list of eighteen witnesses which the Government expected to call in the presentation of its direct case. This list was in addition to an earlier list of forty-two witnesses supplied by the prosecution. It included the name of Clifford Steele’s brother Wayne. The second listing also included the name of Randy Ducharme of Taunton, Massachusetts, the defendant Roger Ducharme’s hometown. Lace’s brother Daniel was an indicted co-conspirator.

The trial was scheduled to commence against seven defendants on January 5, 1981. The consultations between Clifford and Wayne, which followed the service of a subpoena on Wayne, gave rise to a claim of privilege by Clifford when he testified in these post conviction hearings. On these facts and circumstances the opinion of the court of appeals held:

Since Clifford was representing Wayne, who was listed as a prosecution witness against Lace, Clifford had a conflict of interest that precluded his representation of Lace, unless Lace, upon full explanation of the fact and implications of the conflict, explicitly asserted the right to proceed with Clifford as his counsel.

Lace v. United States, supra, 736 F.2d at 50.

The rather voluminous record at hand fails to yield any full and explicit explanation afforded to the petitioner by court or his counsel concerning the danger of the conflict of interest that might have attended the relationship between Clifford and Wayne Steele. That is not to say that David Lace was entirely unmindful of the importance that the legal representation of the several defendants should be free from any conflict of interest on the part of the numerous defense attorneys.

During the interval following the court’s denial of the various pretrial suppression motions on October 30, 1980, a potential conflict of interest in a different context came to light. It derived from a change of association of Robert Citronberg, Esq., of Atlanta, Georgia, from the law office of Robert G. Fierer, counsel for the petitioner’s codefendant Gary Butts, to the Clifford Steele law office. As a consequence of this development the court directed the clerk to notify the defense counsel involved to appear at Rutland to enable the court to make inquiry into the possible conflict of interest concerning Mr. Citronberg’s past employment by the Fierer office and his then association with Clifford Steele.

In response to this direction by the court, David Lace on December 16, 1980, submitted his written statement under oath. The petitioner’s affidavit demonstrates his full understanding of the problem, explaining he had no objection to Fierer’s continued representation of Butts, who was named with him in the indictment. The affidavit concludes:

It is further your deponent’s position that he has no objection to Mr. Citron-berg working in this capacity and that insofar as your deponent is concerned, there has not been, is not and cannot be any possible or potential conflict of interest vis a vis Mr. Citronberg and your deponent.
That your deponent makes this election and waiver knowingly after full discussion of the facts of this matter with your deponent’s attorney, Mr. Steele.

Affidavit of David F. Lace filed December 19, 1980.

The affidavit was presented to the court on December 19, 1980, at the time appointed for the hearing. The waivers submitted by the persons concerned obviated the necessity for exploring the possible conflict involved in the Citronberg employment by further hearing. However, Clifford Steele then requested the court to consider another matter, a Motion in Limine, which he presented at the time of the scheduled hearing on December 19. The motion requested an order precluding the Government or any of its attorneys and witnesses from mentioning the name of Wayne Steele, urging that such reference could bring about embarrassment and possible prejudicial inference connecting Wayne to petitioner’s counsel Clifford Steele.

The Government agreed that there was no relevance in the blood relationship between Wayne Steele and petitioner’s counsel. The Government attorney indicated, however, that Wayne might be shown to be an unindicted co-conspirator. The prosecution resisted any effort to restrict its proof of Wayne’s participation if it became relevant. The court was assured that the prosecution would not introduce any evidence tending to connect Wayne Steele with petitioner’s counsel. In the event the Government’s proof might implicate Wayne Steele in some relevant manner, it would not be offered without notice to counsel and consideration by the court out of the presence of the jury. Clifford Steele indicated he was satisfied with this resolution.

There was no specific indication prior to December 19th to petitioner’s counsel of the expectation that Wayne would be added as a possible witness for the prosecution. The question of Clifford’s conflict of interest, by way of his professional and blood relationship with Wayne Steele, was left unattended at the December 19th hearing. It remained unnoticed by the court through the change of plea proceedings which followed on January 2, 1981.

Of course how Clifford Steele would have performed at trial had his brother Wayne been called as a Government witness is unknown. That fact, along with the nature and extent of Wayne’s involvement in the Lace-Ducharme organization was foreclosed by negotiated pleas of the principal participants.

The evidence presented in the first hearing on the post conviction petition establishes that Lace never explained to his counsel, Clifford Steele, the nature and extent of Wayne’s involvement with the LaceDucharme organization. Lace testified that Clifford would have been very surprised to find out about Wayne’s involvement. Lace testified Clifford asked him “Did you guys [Lace and Ducharme] really supply that coke Wayne got busted with?” Lace responded “No.”

Later Lace testified that both he and Ducharme knew of Wayne’s involvement with Roger Ducharme; he didn’t think Clifford was aware of Wayne’s transactions with Ducharme. Lace failed to communicate his knowledge of Wayne’s dealings to his attorney.

Clifford Steele testified in these proceedings that if Wayne were called as a proper witness, Clifford would have to make an application to withdraw as Lace’s attorney. He went on to explain: “I think the only thing that would have been prejudicial to Mr. Lace would have been the existence of the fact that Wayne Steele and I are brothers, and nothing else.” Direct examination of Clifford Steele, transcript of hearing, September 12, 1983, at 32.

Clifford Steele testified that from his inquiries of his client Lace, conversations with his brother, consultations with the Government, as well as evidence developed throughout the weeks of suppression hearings, he had no knowledge of anything that could have been adduced through his brother Wayne that would be harmful to Mr. Lace.

The petitioner testified he had no contact with Wayne Steele after Steele was convicted in 1978. When Clifford asked Lace about Wayne as a possible witness for the prosecution, Lace responded that Wayne couldn’t “bury us,” but added such testimony wouldn’t help either. The Government suggested at the December 19th hearing that Wayne Steele’s connection with the Lace-Ducharme partnership was by way of an employee relationship as one who may have been supervised or directed by one or both partners.

In any event, in retrospect at this point in time, it is now clear enough that the facts and circumstances that were made known to the court at the December 19th hearing called for some further inquiry. Although Clifford had not undertaken to represent more than one accused defendant, the Government suggested Wayne could be regarded as an unindicted co-conspirator. Despite the fact that Wayne was not a codefendant and neither the prosecution nor defense counsel raised the conflict issue, it now appears that caution should have led the court to directly alert the petitioner to the danger of the possibility of divided loyalties on the part of his chosen trial counsel. United States v. Curcio, 680 F.2d 881, 888 (2d Cir.1982). And it now appears that David Lace should have been made fully aware of the

... conflict of two constitutional rights, to wit, the right of a criminal defendant to be represented by counsel of his own choice and the right of such a defendant to counsel whose effectiveness is unimpaired by divided loyalty.

United States v. Curcio, 694 F.2d 14, 22 (2d Cir.1982).

On January 2, 1981, the petitioner and Ducharme joined in offering conditional pleas of guilty. Gary Butts, who was joined with Lace and Ducharme in Count I, charged with possession with intent to distribute 457 pounds of hashish and 100 pounds of marijuana, entered a plea of guilty to this count on December 30, 1980. The codefendant David Southam pleaded guilty to conspiracy on January 2, 1981. The defendants Patricia Eckman and Glen Pollack both pleaded guilty on January 6, 1981.

The Sentence Hearing

Reconsideration of the adequacy of the assistance of counsel provided David Lace in the light of Clifford Steele’s conflicting interest brings into focus the content of the presentence report submitted by the chief probation officer prior to the sentence hearing on February 25, 1981. This document, consisting of thirteen pages, makes a brief reference to Wayne Steele’s involvement under the heading PROSECUTION VERSION:

In early 1978, Wayne Steele was arrested in this district on charges of distributing cocaine. He was subsequently convicted. There were strong indications that he was tied in with the Bailey-Rawson House, and also information that he had previously been a large scale marijuana dealer. This further dovetailed with intelligence information about David Lace and others. In its Bill of Particulars of January 1980, the government was to contend that Wayne Steele, among others, had run a “stash house.”
At various times during this case there were apparently 12 to 15 stash houses, including ones in Andover Ridge, Ludlow, Quechee, Killington, Weston, Sharon, Benson, and Echo Lake, Vermont.
Defendant’s Version:
At the instruction of counsel, the defendant declined to discuss the case.

The sentencing data for the year 1980 contained in the report submitted by the Probation Office to the petitioner, his counsel, and the court prior to the sentence hearing reported nine defendants who were sentenced in the United States for continuing criminal enterprise violations under 21 U.S.C. § 848. Of these, only one convicted person was sentenced to the minimum of ten years imprisonment; three received thirty-year sentences. The remaining sentences imposed ranged from fifteen to fifty years. The average sentence was 24.1 years.

The full context of the presentenee report was made available to the petitioner and his counsel. At the hearing both the accused and counsel informed the court they had read the report and had gone over it together and in detail. Both were given the opportunity to make changes or corrections. Mr. Steele’s only comment concerned his client’s financial situation. When the court inquired of Mr. Lace if he had any suggestions for corrections or amendments, he replied in the negative. Later he explained his answer:

I agree with the government’s, you know, personal history, my background, but I don’t agree with the conclusion of the investigation of all the report. (Record of sentence hearing, page 1-7.)

The petitioner declined to exercise his right of allocution. No reference was made by the prosecution or defense counsel concerning that aspect of the Government’s version of the case that involved Wayne Steele. The sentence hearing in the case of the United States v. Roger Ducharme, Cr. No. 79-44-1, was held at the time of David Lace’s sentencing on February 25, 1981.

The Continuing Criminal Enterprise Charge

The evidence presented during the course of the suppression hearings was clear and convincing in its persuasion that the petitioner was engaged in a continuing criminal enterprise in which he and Ducharme committed a serious narcotic violation in concert with at least five others. Indeed, five others were convicted of such participation by pleas of guilty before the time scheduled for trial. The profits derived from the enterprise were highly lucrative involving multi-ton importations of marijuana and hashish. When Lace and Ducharme were arrested $185,000 in currency was found in the trunk of the Lace vehicle in which the partners drove to the Sharon house. At the time the search warrant was executed approximately 457 pounds of hashish and 100 pounds of marijuana were seized.

Following the petitioner’s arrest on May 16, 1979, one of the arresting enforcement officers inquired of the petitioner if he would be willing to cooperate with the state police. The petitioner responded that he would be more inclined to aid the “feds.” Lace then went on to say that if he decided to cooperate, he “could probably give names of judges, attorneys, members of the Coast Guard____” While he made no disclosure, he suggested further communication with the state trooper. According to testimony at the suppression hearing, Lace suggested to the state police they had “apprehended the biggest people in Vermont____” See United States v. Lace, supra, 502 F.Supp. at 1033.

The petitioner’s testimony at the second hearing on July 19, 1984, on the issue of petitioner’s involvement with the Lace-Ducharme organization, can be simply stated. His testimony on this occasion was offered in support of his present claim that he did not exercise managerial or supervisory responsibilities. He urges that but for Clifford Steele’s advice, he could have successfully defended the continuing criminal enterprise charge.

David Lace testified that he began working with Roger Ducharme in the sale and distribution of marijuana sometime in 1975 or 1976. David Lace financed the operation by initially putting down $15,000 to $20,000. The source of these funds was a check from his mother. David Lace understood his relationship to the organization to be that of a silent partner. Lace put up money, while Roger Ducharme managed the day-to-day operations. Lace testified that he wanted to involve Roger Ducharme as a partner to remove himself from the hands-on operation.

Lace testified that he had a substantial sum of money invested in the organization and knew the generalities of what was going on but that there were certain specifics about which he was unaware. Roger kept the books, but Lace had full access to them. Lace indicated that he never gave the workers any money directly, or told them what to do. However, the workers knew that Lace would stop by occasionally.

Lace also testified concerning several multi-ton marijuana deals which he and Roger conducted as partners. Lace told the court about eight or nine deals which were in the five to seven ton range. About half of these deals were successful, according to Lace, and resulted in profits of between $50,000 to $100,000 on each transaction that succeeded.

The main theme of the petitioner’s testimony was that he always intended to proceed to trial on Count III of the indictment, the count alleging a violation of 21 U.S.C. § 848. The petitioner testified that he persisted in his belief that he would be acquitted on the continuing narcotic enterprise charge, although he expressed the belief that his associate Ducharme would be found guilty. Lace maintained at the second hearing that he was dissuaded from going to trial at the urging of Clifford Steele, his codefendant Ducharme and Ducharme’s counsel, Paul Cambria.

Conclusion

Although no trial took place, the court is called upon to determine whether the conflict of interest that prevailed at the time of Lace’s negotiated plea adversely affected Clifford’s performance in counseling the plea and the conviction that followed. E.g., United States v. Cronic, — U.S. -, -, 104 S.Ct. 2039, 2045, 80 L.Ed.2d 657 (1984); Strickland v. Washington, — U.S.-,-, 104 S.Ct. 2052, 2063, 80 L.Ed.2d 674 (1984); Cuyler v. Sullivan, 446 U.S. 335, 348, 100 S.Ct. 1708, 1718, 64 L.Ed.2d 333 (1980); Lace v. United States, supra, 736 F.2d at 50. A convicted defendant claiming ineffective assistance of counsel is called upon to point out the deficiency in his representation that resulted in an unconstitutional deprivation. Strickland v. Washington, supra, — U.S. at-, 104 S.Ct. at 2065; Cuyler v. Sullivan, supra, 446 U.S. at 349, 100 S.Ct. at 1718; Lace v. United States, supra. The petitioner must show that his counsel’s assistance was below “an objective standard of reasonableness.” Strickland v. Washington, supra, — U.S. at-, 104 S.Ct. at 2063.

The present question for decision is whether the representation afforded the petitioner by his retained counsel, Clifford Steele, constituted reasonably adequate assistance measured by prevailing professional standards. The court’s review of the total record of the conviction now challenged is undertaken with full appreciation of the potential conflict of interest that forms the root and stock of the petitioner’s request for relief.

The opinion by Justice O’Connor in Strickland v. Washington, supra, instructs that

[A] court deciding an actual ineffectiveness claim must judge the reasonableness of counsel’s challenged conduct on the facts of the particular case, viewed as of the time of counsel’s conduct. A convicted defendant making a claim of ineffective assistance must identify the acts or omissions of counsel that are alleged not to have been the result of reasonable professional judgment. The court must then determine whether, in light of all the circumstances, the identified acts or omissions were outside the wide range of professionally competent assistance. In making that determination, the court should keep in mind that counsel’s function, as elaborated in prevailing professional norms, is to make the adversarial testing process work in the particular case. At the same time, the court should recognize that counsel is strongly presumed to have rendered adequate assistance and made all significant decisions in the exercise of reasonable professional judgment.

— U.S. at-, 104 S.Ct. at 2066.

The petitioner has failed to identify the acts or omission on the part of Clifford Steele other than to say that the addition of Wayne’s name to the extended list of witnesses expected to be called was a factor in Lace’s conditional plea. Clifford testified that there were many considerations involved in his counseling Lace to enter the negotiated plea. The witness explained it was a heavy decision but the addition of his brother’s name to the witness list was not a contributing factor “... that entered into it at all. I kept that separate, ... I believe these two things were quite independent and one did not have any relationship to the other.” (Tr. p. 45, Hearing, September 12, 1983).

Petitioner’s able assigned counsel urges that such a nexus is not required in the light of United States v. Cancilla, 725 F.2d 867 (2d Cir.1984). Here the Government has assumed a fact which the court of appeals has held, namely, that Clifford Steele’s representation of Lace was in conflict with his counseling of his brother Wayne, who had been served with a subpoena by the Government. The petitioner urges that an actual lapse of representation has been established even in the absence of a full explanation of the fact and implications of the conflict. Apparently relying on Lace v. United States, supra, 736 F.2d at 50, he contends that an express waiver of his right to other counsel and an explicit election to proceed with Clifford in the face of the conflict inherently renders Steele’s assistance ineffective and unconstitutionally defective.

It is perhaps unfortunate in the interests of protecting the integrity of the carefully negotiated plea agreement in this case that David Lace was not offered the option of continuing with Clifford or electing to proceed to trial with co-counsel alone or other counsel of his choice. No motion was presented to the court to engage the potential problem. That is not to say the petitioner was unaware of the danger of conflicting interest residing in the change of Citronberg's employment. Also, his attention was drawn to the problem in the case of his brother David’s attorney. The adding of Wayne Steele’s name on the Government’s supplemental list of witnesses did not sufficiently attune the court to the danger to stimulate action of its own initiative to probe the potential conflict.

Unlike the situation that confronted the court in United States v. Cunningham, 672 F.2d 1064 (2d Cir.1982), the Government and the accused were either unaware of the conflict or willing to leave it at rest. The right of a defendant “who retains counsel to be represented by that counsel is ‘a right of constitutional dimension.’ ” Id. at 1070. The right of an accused to the undivided loyalty of his attorney is of equal constitutional dimension. United States v. Curdo, supra, 680 F.2d at 888.

The court’s opinion in Cunningham teaches that Sixth Amendment rights are “... too important to be denied on the basis of a mere, though substantial, possibility.” 672 F.2d at 1075. These words were written by Judge Kearse on a constitutional claim with underpinnings based on the prospect of evidence to be presented by a witness which the prosecution intended to call. It is so here. In the event the Government decided against calling Wayne Steele, Lace’s present claim would be illusory and vanish.

To be sure, speculation has suggested that Clifford Steele’s recommendation that the petitioner join in the plea agreement with his co-partner Ducharme was the product of disloyalty to Lace in preference to loyalty to the interests of his brother Wayne, who was also his client. The antagonism between these competing loyalties is without substantial evidentiary support. Neither is the court persuaded that the mere possibility of conflict is so fraught with danger that standing alone in isolation, the mere possibility of conflict impairs the validity of the conditional negotiated plea agreement that underlies the conviction presently challenged.

The petitioner’s claim of deprivation of counsel has a different bearing than that advanced in United States v. Cancilla, supra. There, without disclosing the details, it was assumed by the Government that counsel for the defendant might have engaged in criminal activity related to the charge for which the defendant was convicted, and it further was conceded that the defendant knew nothing of his counsel’s criminal activities. The court, in an opinion by Chief Judge Feinberg, held that the conflict was sufficient of itself to invoke the per se rule of Solina v. United States, 709 F.2d 160 (2d Cir.1983). The key consideration in both Cancilla and Solina is that a criminal defendant is entitled to be represented by an attorney who is free from the constraint of criminal activity on the part of defense counsel.

In the case at hand, there is no suggestion by the petitioner, nor from the prosecution, that Clifford Steele had engaged in criminal conduct. There is only the suggestion by Lace that his attorney’s brother had exposure to Lace-Ducharme activity. As to this, David Lace admitted he failed to inform his attorney of the extent of Wayne Steele’s involvement.

At the close of the recent evidentiary hearing the Government represented that while there was some reason to add Wayne Steele to the supplemental witness list, Wayne’s involvement was only tangential as to David Lace. Further, the prosecution took the position that Clifford Steele was unaware of the reason why the Government expected to call his brother as a witness. This is confirmed by the petitioner’s testimony at the initial post conviction hearing that he had not disclosed to Clifford the extent of Wayne’s connection with the Lace-Ducharme enterprise.

Despite the shortcomings in the record brought into focus by retrospective consideration of the conflict, the court is not persuaded that the assessment made by petitioner’s counsel, that his brother would not be presented as a witness at trial, was incorrect despite the absence of a full commitment by the prosecution on the point. If counsel’s analysis of this possibility was faulty, it was of insufficient gravity to undermine the validity of the plea now under attack. In the Court’s opinion in Strickland, supra, it is written:

The benchmark for judging any claim of ineffectiveness must be whether counsel’s conduct so undermined the proper functioning of the adversarial process that the trial cannot be relied on as having produced a just result.
The same principle applies to a capital sentencing proceeding such as that provided by Florida law. We need not consider the role of counsel in an ordinary sentencing, which may involve formal proceedings and standardless discretion in the sentencer, and hence may require a different approach to the definition of constitutionally effective assistance.

Strickland v. Washington, supra, — U.S. at-, 104 S.Ct. at 2064.

Although Clifford Steele’s representation of the petitioner cannot be measured in the framework of a trial on the merits, the three weeks of hotly contested suppression hearings are sufficient to demonstrate that counsel’s performance was not impaired by his fraternal and professional relationship with Wayne. Although the plea agreement expressly limited the “standardless discretion” of the court to the minimum sentence provided in 21 U.S.C. § 848, this tactic cannot be blamed as faulty. On the facts then available, apart from any evidence that Wayne might have provided, the Government’s evidence presented through the protracted hearings was highly persuasive of guilt.

More importantly, on the issue of divided loyalty David Lace testified he did not make full disclosure of Wayne Steele’s involvement with the Lace-Ducharme enterprise. At the hearing on July 15, 1983, in response to an inquiry by the court, the petitioner responded that at the time of his change of plea: “I don’t believe Cliff at the time understood how much marijuana and hashish Wayne was selling at various times____” David told the court that he knew the extent of Wayne’s involvement, but he didn’t tell Clifford about it.

At the second hearing the Assistant United States Attorney represented to the court that while the Government “had a valid basis for bringing Wayne Steele in, but we would say that Clifford Steele didn’t know about it.” At the time of the hearing on December 19, 1980, as shown in the margin, the prosecution had not decided to call Wayne as a witness, even though his name had been added to the supplemental witness list.

Any compromise of counsel’s duty to avoid conflict of interest must be shared by his clients — the petitioner and Wayne Steele. Both apparently had actual knowledge of the latter’s involvement beyond that which they imparted to the counsel they shared.

The court’s revisitation of the conflict of interest issue with the benefit of the enlightenment shown in Lace v. United States, supra, 786 F.2d at 49, has failed to uncover any evidence that petitioner’s retained counsel opposed the interest of David Lace to protect his brother.

Absent some effect of challenged conduct on the reliability of the trial process, the Sixth Amendment guarantee is generally not implicated.

United States v. Cronic, supra, — U.S. at -, 104 S.Ct. at 2046.

To establish a violation of the Sixth Amendment, a defendant who has raised no objection at trial must establish that counsel’s active representation of the opposing interest adversely affected the assistance he provided the accused. Cuyler v. Sullivan, supra, 446 U.S. at 349, 100 S.Ct. at 1718; Dukes v. Warden, 406 U.S. 250, 257, 92 S.Ct. 1551, 1555, 32 L.Ed.2d 45 (1972); Lace v. United States, supra, 736 F.2d at 49.

How Clifford Steele would have cross-examined his brother, had the prosecution decided to call Wayne Steele as a witness, is, of course, unknown. The second evidentiary hearing has demonstrated that danger was remote at best. While that eventuality did not come to pass, there has been no showing in the record that the danger of that consequence impaired counsel’s fidelity to the interests of the petitioner.

The conditional plea agreement was carefully constructed by experienced defense counsel and the United States Attorney. In the absence of evidence that the conflict of interest exerted an adverse impact on the solemn undertaking negotiated by Clifford Steele and the United States Attorney, the conditional plea must stand. The relief requested in the petition must be denied.

It is SO ORDERED.

AMENDMENT TO MEMORANDUM OF DECISION FILED SEPTEMBER 6, 1984

The petitioner’s appeal from the denial of post-conviction relief pursuant to 28 U.S.C. § 2255, filed September 3, 1981, was withdrawn without prejudice by stipulation of counsel. The agreement was designed to enable the court to hear and determine the Government’s motion under Rule 59(e), F.R.Civ.P., to amend the facts reported in the court’s most recent decision. The court concludes that the Government’s request is well founded. Accordingly, the following facts are added to supplement those stated in the Memorandum of Decision, Cr. No. 79-44-1 (filed September 6, 1984):

During the extended course of the pretrial hearings, prior to the petitioner’s conviction on January 2, 1981, there was no evidence nor notice presented to the court to indicate that Clifford Steele’s fraternal relationship with Wayne Steele included a current professional connection as his brother’s attorney in this or any related proceedings. Other than the Steele kinship, there were no facts then at hand to focus attention on any conflict of interest to impair Clifford’s representation of the petitioner in the negotiated plea which followed.

The court had been previously made aware of the fact that Wayne Steele was the brother of petitioner’s chief counsel. There was no suggestion made during the extended pretrial proceedings that Clifford had undertaken to advise his brother concerning any facts or circumstances which formed the basis of the criminal prosecution of David Lace.

At the time of the hearing on December 19, 1980, the court was not informed that Wayne Steele had been identified as a potential witness for the prosecution. Clifford Steele testified in the present post-conviction hearings that he had not received the letter mailed from the United States Attorney’s office in Burlington on December 18, 1980, which included Wayne Steele as a witness, until after he returned to his office in Atlanta.

During the hearing on December 19th the court’s concern was directed only to the problem that might arise if the kinship of Clifford and Wayne Steele should surface at the impending trial. The relevance of any reference to Wayne Steele was challenged by the defendant. The more aggravated problem of the prospect of Wayne Steele’s being called as a witness for the Government was not discussed nor dealt with at that time. The impact of the designation of Wayne Steele as a witness in the context of conflicting interests in Clifford’s representation of the petitioner was left unattended. The guilty plea left the matter at rest until the instant proceedings were undertaken.

      . By letter to the court dated February 12, 1980, Thomas T. Merrigan, Esq. of Greenfield, Massachusetts, counsel for Daniel Lace in Criminal Action 79-44-6, informed the court of a possible conflict of interest resulting from his prior representation of Ms. Lynn Munsinger, who was named on the Government's revised witness list dated January 25, 1980. Later, during the suppression hearings, Thomas Merrigan filed a motion to withdraw as counsel for Daniel Lace on April 28, 1980. This motion was supported by an affidavit from Mr. Merrigan in which he stated that on or about May 1979, "he consulted with Ms. Munsinger with regard to factual matters potentially relevant to the controversy at hand." Affidavit of Thomas T. Merrigan, Criminal Action No. 79-44-6, filed April 28, 1980. It was Mr. Merrigan’s professional judgment that he had a potential conflict of interest that violated Canon Four of the American Bar Association’s Code of Professional Responsibility.
      After hearing on the motion, and upon Daniel Lace’s representation to the court that he did not object to the motion, the court granted trial counsel’s motion to withdraw as counsel for Daniel Lace. Local counsel for Daniel Lace, Robert P. McClallen, Esq. of Rutland, Vermont, continued alone in the representation of this defendant for the remainder of the proceedings.

      . Clifford Steele’s fear on this score was not unfounded. He testified that the Special Agent of the Drug Enforcement Administration had previously concealed his identity and had made harassing telephone calls to Steele’s law office in Atlanta. The ruse was an apparent attempt to obtain information from Steele’s secretary in an effort to identify various coded telephone numbers found in Roger Ducharme’s notebook that was seized on May 16, 1979. Further, during the agent's cross-examination by Clifford Steele, the agent spontaneously interjected reference to Wayne Steele as the cross-examiner’s brother.

      . The two remaining persons accused in the indictment were in fugitive status. The defendant Roger Ducharme failed to voluntarily surrender following the affirmance of his conviction on appeal and is presently regarded by the Government to be a fugitive. The benefit of hindsight indicates that the condition of the plea agreement that permitted Ducharme liberty on bail pending his appeal was improvidently approved by the court at the time of his sentencing on February 25, 1981.

      . The portions of the Bill of Particulars, filed January 18, 1980, that refer to Wayne Steele are these:

        Count 2 ******
      During the course of the conspiracy when the marijuana and hashish were trucked into Vermont, the substances were taken to houses and/or buildings (referred to as ‘stash houses’) owned, rented or otherwise under the control of certain named members of the conspiracy and others, including ROGER DUCHARME, DUNCAN MacNAMEE, GARY BUTTS, WAYNE STEELE and KENNETH SCHRAGER.
      ****** Count 3

      ****** DAVID LACE and ROGER DUCHARME occupied positions of organizer, supervisor or manager with respect to at least five of the following persons: GARY BUTTS, PATRICIA ECKMAN, DAVID SOUTHAM, DANIEL LACE, JOHN RADZIKOWSKI, PAUL RYZEWIC, GLENN POLLACK, DUNCAN MacNAMEE, KENNETH SCHRAGER, WAYNE STEELE. From their continuing operation DAVID LACE and ROGER DUCHARME made hundreds of thousands of dollars and perhaps over a million dollars.

      . Following the May 16, 1979 seizure of contraband and records maintained by the Lace-Ducharme enterprise, the Internal Revenue Service ("IRS") imposed jeopardy termination assessments under 26 U.S.C. § 6851. By separate actions that were later consolidated for hearing, Lace and Ducharme, acting under 26 U.S.C. § 7429(b), obtained judicial review by the court of the reasonableness of the assessment made by the IRS. Lace v. United States, No. 79-174 and Ducharme v. United States, No. 79-175 (D.Vt. October 9, 1979). The court’s opinion is reported beginning at page 80-367 of Volume 45 of the American Federal Tax Reports (Prentice-Hall), Second Series. These proceedings report the extent and nature of the operations viewed by the IRS for the purpose of making jeopardy assessments.

      . MR. HALL: The government has not any record of what Wayne Steele would testify to. He did not appear as a witness before the grand jury. I assume that he would have asserted a privilege to testify and the government would have been forced to make a decision, I think we argued that earlier, as to whether to grant him immunity or just not call him as a witness in the case. But it seems to me based on what David Lace has said, he had relevant information. The question, though, is whether that — the substance of that knowledge was ever conveyed to Clifford Steele, and every indication is that it was not. Because there was no — Clifford Steele knew of no reason that David — that Wayne Steele would be called to testify. I'm saying, your Honor, there was certainly a good faith basis. There are a number of cases, as I’m sure the Court is aware, where there may be key peopie who have information that we don’t even come in contact with until the time of trial but are aware that they might have information or develop further. I don't recall and I’m not purporting to testify why it is at that point that in Ms. McAndrew’s letter to the attorneys his name was added. The holding action, in essence, on December 19 at the hearing at page 41 of the appendix was an effort on the government’s part just to say, ‘Please don’t limit us in a ruling today because the name may come in and we don’t want to be precluded from suggesting — offering evidence to the jury on the issue of guilt or innocence with regard to persons associated with and as workers in the operation.’ That’s where that came up in the hearing.
      ****** MR. HALL: And I think Mr. Steele was clearly aware of that and we accept the explanation that he gave to the Court. We feel we had a good faith basis for at least making Wayne Steele available to us here in Rutland to see what it was he was willing to say. We believe, based on what Mr. Clifford Steele has said today, that Wayne Steele wasn’t entirely forthright with his brother for certainly understandable reasons about the nature of his relationship to the Lace and Ducharme operation.
      Excerpts from Hearing on Section 2255 Petition, July 19, 1984, in Rutland, Vermont.


author: WEIGEL, Senior District Judge.

text:
    Chester G. GRYWCZYNSKI and Frederick J. Ralston, Plaintiffs, v. SHASTA BEVERAGES, INC., et al., Defendants.
    No. C-83-5717 SAW.
    United States District Court, N.D. California.
    Oct. 23, 1984.

      Steven C. Wolan, King, Johnson & Shapiro, Oakland, Cal., for plaintiffs.
    Robert J. Smith, Morgan, Lewis & Bockius, Washington, D.C., Michael L. Wolfram, Morgan, Lewis & Bockius, Los Angeles, Cal., for defendants.
   MEMORANDUM AND ORDER RE MOTIONS FOR SUMMARY JUDGMENT

WEIGEL, Senior District Judge.

BACKGROUND

Plaintiffs Chester G. Grywzcynski and Frederick J. Ralston brought this action against their former employer, Shasta Beverages, Inc. (“Shasta”), its parent corporation, Consolidated Foods Corporation (“Consolidated”), and the Consolidated Foods Pension Plan (“Plan”), alleging, inter alia, that they were discharged wrongfully and in violation of both Section 510 of the Employment Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1140, and the California Fair Employment and Housing Act, Cal. Gov’t Code § 12941 (West 1980). Plaintiffs have also sued for intentional and negligent infliction of emotional distress arising from their discharge. Defendants now move for summary judgment with regard to the claims of: violation of Section 510 of ERISA; violation of the California Fair Employment and Housing Act; intentional infliction of emotional distress; and negligent infliction of emotional distress. Defendant Consolidated also seeks summary judgment with respect to all of the plaintiffs’ claims.

I. THE ERISA CLAIM

Defendants have moved for summary judgment on the ERISA claim on the grounds that the plaintiffs are barred from suing for interference with pension rights because they failed to exhaust the remedies available through the Plan’s Pension and Employee Benefits Committee (“Committee”) prior to bringing this action. This motion is denied on the grounds that (1) the administrative relief available through the Committee would have been inadequate to satisfy the plaintiffs’ claim and (2) to require exhaustion of such procedures would unnecessarily burden the exercise and protection of pension plan participants’ rights under Section 510.

Plaintiffs have alleged that they were fired as part of a “deliberate nationwide purge of long-term employees” (Plaintiffs Memorandum in Opposition to Motion for Summary Judgment) in order to deprive them of pension benefits which would necessarily have accrued to them in the future. This is a properly pleaded claim under Section 510 of ERISA, which provides in relevant part, “[i]t shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary ... for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, [or] this subchapter.” 29 U.S.C. § 1140; see Titsch v. Reliance Group, Inc., 548 F.Supp. 983 (S.D.N.Y.1982) (allegations of interference with future vesting of benefits sufficient for complaint under Section 510).

In their motion for summary judgment and supporting memoranda, defendants contend that the plaintiffs are es-topped from pursuing judicial redress of their grievances because they have failed to exhaust internal plan procedures for benefit claims. Specifically, they contend that plaintiffs should have submitted applications for benefits to the Committee, which would have ruled on them. If the Committee’s decision had been unfavorable, plaintiffs could also have applied to the Committee for a full review of the claims.

Defendants offer the affidavit of Mr. Leo Contois, Chairman of the Committee, in which he states that Section 13.01 of the Plan gives the Committee “not only the power, right and authority, but also the fiduciary responsibility to fully investigate the factual basis underlying any claim.” Contois Affidavit II 6. This, they contend, demonstrates that intra-plan remedies were available to the plaintiffs and should have been pursued. The plain language of the Plan document contradicts this contention. Section 13.05 of the Plan expressly states, “[t]he Committee may rely upon data furnished by authorized officers of any Employer ... as to any ... information pertinent to any calculations or determinations to be made under the provisions of the Plan and the Committee shall have no duty to inquire into the correctness thereof.” Defendants Exhibit C.

Not only is it doubtful whether the Committee has a duty to investigate the circumstances underlying a claim, it is also unlikely that the plaintiffs’ claim falls within the purview of the Committee. Plaintiffs’ claim is that Shasta violated Section 510 of ERISA itself while the Committee’s authority is limited to deciding questions “arising under the Plan.” Defendants Exhibit C § 13.01(b). Nor does it appear that the Committee could have provided any remedies for the plaintiffs; there is no sign that the Committee has the power to bind participating employers, whether to impose penalties or to otherwise enforce its decisions, find an employer violation. Even if “claims for unfair interference would have been and would be treated and processed as claims under the procedures and guidelines of the Plan” (Contois Affidavit 11 9) the Committee is nonetheless powerless to grant any significant measure of relief on the plaintiffs’ claims.

The federal courts have the power to require exhaustion of intra-plan remedies in ERISA based disputes, and in most cases it is appropriate to do so. See Amato v. Bernard, 618 F.2d 559, 567-68 (9th Cir.1980). However,

[t]here are occasions when a court is obliged to exercise its jurisdiction and is guilty of an abuse of discretion if it does not, the most familiar examples perhaps being when resort to the administrative route is futile or the remedy inadequate.

Winterberger v. General Teamsters, Local Union 162, 558 F.2d 923, 925 (9th Cir.1977).

This is just such an occasion. Our court of appeals has recognized that, in this regard, suits brought under Section 510 of ERISA differ fundamentally from other suits seeking declarations of the rights and duties of the parties to a pension plan. See Amaro v. Continental Can Co., 724 F.2d 747, 750-52 (9th Cir.1984). The rights protected by Section 510 derive directly from the ERISA statute itself, unlike the plan-based rights for which Congress has mandated the establishment of internal appeal procedures. See Section 503 of ERISA, 29 U.S.C. § 1133; id. In Section 510 suits:

We are faced solely with an alleged violation of a protection afforded by ERISA. There is no internal appeal procedure either mandated or recommended by ER-ISA to hear these claims. Furthermore, there is only a statute to interpret. That is a task for the judiciary, not an arbitrator.

Id. at 751.

The decisions relied upon by defendants, Kross v. Western Electric Co., Inc., 534 F.Supp. 251 (N.D.Ill.1982), affirmed in relevant part, 701 F.2d 1238 (7th Cir.1983), and Innocenti v. Shasta Beverages, Inc., No. Y-82-3370 (D.Md.1983) (slip op.), rest on very different reasoning and are in direct conflict with the law in this circuit. See Amaro, 724 F.2d at 752 (“[W]e find Kross to be based on a flawed premise, and we refuse to follow it.”).

II. THE AGE DISCRIMINATION CLAIM

Defendants have also moved for summary judgment on the plaintiffs’ claim that they were terminated in violation of the California Fair Employment and Housing Act (“FEHA”), Cal. Gov’t Code § 12941 (West 1980). Defendants argue that the plaintiffs failed to file their discrimination claims with the appropriate state or federal agencies within the time limits in that statute and are therefore barred from pressing their claims in this action. We agree and have granted defendants’ motion.

Plaintiffs allege that Grywczynski was terminated as of September 21, 1979, and that Ralston was terminated as of November 30, 1979. On December 8, 1980, Grywczynski filed charges against Shasta with the federal Equal Employment Opportunity Commission (“EEOC”) alleging that he had been terminated as a result of discriminatory practices. Ralston filed similar charges with the EEOC on June 27, 1981, almost a month after the commencement of this lawsuit. Thus, Grywczynski’s EEOC charge came more than fourteen months, and Ralston’s more than nineteen months, after they allege they were terminated.

Plaintiffs allege that they were fired in violation of the FEHA, Cal. Gov’t Code § 12941 (West 1980). The FEHA is a comprehensive statutory scheme that encompasses various anti-discrimination statutes including the California Fair Employment Practices Act (former Labor Code §§ 1410 et seq.; see Stats.1959, ch. 121, § 1, p. 2000 et seq.). The FEHA not only designates illegal discriminatory conduct, it establishes specific procedures for enforcement of the rights it protects. Thus, California Government Code section 12965 provides that a person who believes himself aggrieved by discriminatory conduct in violation of the statute may file a complaint with the California Department of Fair Employment and Housing (“DFEH”). However, “[n]o complaint may be filed after the expiration of one year from the date upon which the alleged unlawful practice or refusal to cooperate occurred” unless the aggrieved party learns of the alleged illegality “after one year has passed.” Cal. Gov’t Code § 12965 (West 1980).

Compliance with the administrative procedures set forth in the statute is a prerequisite for any private civil suit for age discrimination under California law. See Bennett v. Borden, Inc., 56 Cal.App.3d 706, 128 Cal.Rptr. 627 (1976); see also Commodore Home Systems, Inc. v. Superior Court, 32 Cal.3d 211, 185 Cal.Rptr. 270, 275, 649 P.2d 912 (1982) (right to sue under California discrimination statute “surely is ‘limited,’ in the sense that extensive administrative procedures are a precondition to its accrual”). Compliance with the one year time limit of Section 12965 is among these preconditions. Cf. Operating Eng’rs Local 12 v. Fair Employment Practice Comm’n, 276 Cal.App.2d 504, 509-10, 81 Cal.Rptr. 47 (1969), cert. denied, 397 U.S. 1037, 90 S.Ct. 1356, 25 L.Ed. 648 (1970) (equating language of Cal.Lab.Code § 1422 — predecessor to Cal. Gov’t Code § 12965 — with language of § 10(b) of the NLRA, 29 U.S.C. § 160(b), and noting that the latter section had been “deemed to constitute a statute of limitations”) (citing Local Lodge No. 1424, 1.A.M. v. NLRB, 362 U.S. 411, 80 S.Ct. 822, 4 L.Ed.2d 832 (1960). Where there is an established administrative mechanism in place to give notice to employers charged with violation and to undertake efforts at conciliation, it would be anomalous indeed to hold that the one year filing requirement in Section 12965 was anything other than a statute of limitations. Even on the basis of plaintiffs own allegations, it is clear that plaintiffs did not satisfy the statute.

Plaintiffs also appear to be arguing that because they filed charges with the EEOC initially, rather than with the California DFEH, their California discrimination claims should somehow be governed by the statute of limitations for the federal anti-discrimination statute. Not only is this argument unsupported by any of the authority the plaintiffs offer, it is unavailing in any event; under the federal Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. §§ 621 et seq., the time limits for filing discrimination charges with the EEOC are actually shorter than those for filing charges under the California statute. Compare 29 U.S.C. 626(d)(2) (300 days maximum) with Cal. Gov’t Code § 12965 (West 1980) (one year). As with the California statute, compliance with the administrative procedures of the ADEA is a precondition for any subsequent private suit. See Powell v. Southwestern Bell Tel., 494 F.2d 485, 488 (5th Cir.1974). Bean v. Crocker Nat’l Bank, 600 F.2d 754 (9th Cir.1979), which the plaintiffs cite as authority for their position, is not to the contrary; it holds only that where federal procedures have been complied with, failure to satisfy state requirements does not bar individual suit under the ADEA.

In an attempt to bolster their arguments plaintiffs point to the letters they received from the California DFEH and from the EEOC notifying them that those agencies were taking no further action and that they could pursue their individual civil remedies if they chose. Such letters are issued as a matter of course by the agencies in question when they conclude their investigations. The California statute provides that whenever the DFEH determines that no accusation will issue (or within 150 days at the latest), the DFEH must notify the person charging the violation. This notice must “indicate that the person claiming to be aggrieved may bring a civil action ... within one year from the date of such notice.” Cal. Gov’t Code § 12965 (West 1980). This additional statute of limitations does not relieve the prospective plaintiff of the duty to meet the time limits for the original filing of the DFEH, it simply imposes further time limits on any subsequent civil suit.

The same is true for the EEOC’s notice to the plaintiffs. In fact, the EEOC letter explicitly states, “[t]he fact that the Commission will take no further action does not affect your right to take legal action on your own behalf.” Plaintiffs’ Exhibit F (emphasis added). The plaintiffs have offered no support for their assertion that “Since the EEOC, Itself, Assumed Jurisdiction Over Plaintiffs’ Age Claims, Defendants Do Not have Standing to Challenge This Compliance.” Memorandum in Opposition to Motion for Summary Judgment at 19. Contra, e.g., Powell v. Southwestern Bell Tel., 494 F.2d 485, 488 (5th Cir.1974) (compliance with timely filing requirement of 29 U.S.C. § 626(d) is “condition precedent” for any subsequent lawsuit) (quoting H.R.Rep. No. 805, 90th Cong., 1st Sess. (1967), 1967 U.S.Code Cong, and Admin.News pp. 2213, 2218).

Finally, plaintiffs argue that equity dictates that the statute of limitations for filing discrimination claims should be tolled in this case. However, they point to no facts to support such equitable tolling. There is no evidence, by way of affidavit or otherwise, of defendants’ active concealment, fraud or deceit. Cf. Franci v. Avco Corp., 460 F.Supp. 389 (D.Conn.1978). Nor is there any evidence that the purposes underlying the time limitations in both the Federal and the California statutes — giving notice to defendants and providing an opportunity for conciliation — have otherwise been met.

III. THE EMOTIONAL DISTRESS CLAIMS

Turning now to plaintiffs’ Sixth and Seventh claims for relief, intentional and negligent infliction of emotional distress, these are barred by California’s one year statute of limitations for personal injury torts. Cal.Civ.Proc.Code § 340(3) (West 1982). This does not alter the possibility that consequential damages could be awarded under the plaintiffs’ “Second Cause of Action” for emotional distress that resulted from the defendants’ alleged breach of an implied covenant of good faith and fair dealing. Cf. State Farm Mut. Automobile Ins. v. Allstate Ins., 9 Cal.App.3d 508, 527, 88 Cal.Rptr. 246, 258 (1970) (award for pain and distress “proper even under a breach of contract theory”); see also McDowell v. Union Mut. Life Ins., 404 F.Supp. 136 (C.D.Cal.1975) (“the tortious invasion of intangible property interests is to be controlled by the two year statute of limitations covering actions upon ‘a contract obligation or liability not founded upon an instrument [of] writing----’”) (quoting Cal.Civ.Proc. Code § 339(1)) (citing, inter alia, TU-VU Drive-In Corp. v. Davies, 66 Cal.2d 435, 58 Cal.Rptr. 105, 426 P.2d 505 (1967)).

Plaintiffs’ claims for infliction of emotional distress — to the extent that they are not time-barred — must be deemed to arise from a contractual, rather than a tort, cause of action. See McDowell at 147-48 (plaintiff may recover emotional distress damages in a timely filed action for breach of implied covenant of good faith but separate claims for intentional infliction of emotional distress are time-barred under Cal. Civ.Proc.Code § 340(3)); Murphy v. Allstate Ins., 83 Cal.App.3d 38, 50, 147 Cal. Rptr. 565 (1978) (same). Because of this, plaintiffs are now precluded from seeking punitive damages for their alleged emotional injury. See Crogan v. Metz, 47 Cal.2d 398, 405, 303 P.2d 1029, 1033 (1956) (“[Punitive damages] may not be granted in an action based on a breach of contract even though the defendant’s breach was wilful or fraudulent.”); see also Cal.Civ.Code § 3294 (West 1970) (“In an action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, express or implied, the plaintiff ... may recover damages for the sake of example and by way of punishing the defendant.”) (emphasis added).

As plaintiffs’ claims for infliction of emotional distress are time-barred, it is unnecessary to decide whether, as defendants argue, the claim of negligent infliction of emotional distress is also preempted by the California Workers’ Compensation Act, Cal. Lab.Code §§ 3600 et seq. (West 1971). This does, however, appear to be the case. See Russell v. Massachusetts Mut. Life Ins., 722 F.2d 482, 493 (9th Cir.1983); McGee v. McNally, 119 Cal.App.3d 891, 174 Cal.Rptr. 253 (1981); Renteria v. County of Orange, 82 Cal.App.3d 833, 147 Cal. Rptr. 447 (1978).

IV. CONSOLIDATED’S MOTION FOR DISMISSAL

Plaintiffs have alleged that Consolidated (parent) and Shasta (subsidiary) acted in concert in a nationwide purge of between fifty and one hundred long-term managerial employees. By itself this is sufficient to state a claim against both companies. Plaintiffs have not, however, produced any evidence to support their claim that Consolidated was involved in the decisions to terminate them. By contrast, defendants have offered the affidavit of Mr. David W. Delker, a Senior Vice President of Shasta Beverages who is responsible for the Human Resources Department of that company. He states, “[a]ll personnel decisions affecting Shasta employees are made by Shasta officials, not by Consolidated Foods Corporation.” Delker Affidavit ¶ 9. As Mr. Delker’s affirmations are uncontradicted, we see no reason to depart from the usual presumption that a subsidiary corporation is legally separate from its parent. See Edwin K. Williams & Co., Inc. v. Edwin K. Williams & Co.-East, 542 F.2d 1053, 1063 (9th Cir.1976), cert. denied, 433 U.S. 908, 97 S.Ct. 2973, 53 L.Ed.2d 1092 (1977).

V. ORDER

For the reasons above set forth:

IT IS HEREBY ORDERED that defendants’ motion for summary judgment as to plaintiffs’ Third Cause of Action is DENIED.

IT IS HEREBY ORDERED that plaintiffs’ Fifth, Sixth, and Seventh Causes of Action are hereby DISMISSED; and

IT IS HEREBY ORDERED that defendant Consolidated Foods Corporation’s motion for summary judgment as to the Second Amended Complaint is GRANTED.


author: LOWE, District Judge.

text:
    GRANADA TELEVISION, INTERNATIONAL, LTD., et al., Plaintiffs, v. LORINDY PICTURES INTERNATIONAL, INC., et al., Defendants.
    No. 82 Civ. 4786 (MJL).
    United States District Court, S.D. New York.
    Oct. 24, 1984.
    As Amended Dec. 6, 1984.

      Cowan, Liebowitz & Latman, P.C., New York City by Roger L. Zissu, Mary A. Donovan, New York City, for plaintiffs.
    Paul Weiss Rifkind Wharton & Garrison, P.C., New York City by Stuart Robinowitz, Andrew J. Peck, Mark S. Olinsky, New York City, for defendants.
   MEMORANDUM OPINION AND ORDER

LOWE, District Judge.

This is a copyright action involving Sir Arthur Conan Doyle’s famed Sherlock Holmes stories. Plaintiff seeks a declaration that certain of the stories are in the public domain. It also seeks damages for what it contends was tortious assertion of a nonexistent copyright. Defendants move pursuant to Fed.R.Civ.P. 12(b) for dismissal of this action on the grounds that there is no jurisdiction over the persons of the defendants. At oral argument the Court made several rulings on the motion. For the reasons stated below, the Court denies the motion to the extent that it seeks dismissal of the second cause of action as to defendants Seymour Weintraub (“Weintraub”) and Lorindy Pictures International, Inc. (“Lorindy”).

FACTS

Plaintiff Granada Television Limited (“Granada U.K.”) is a British company engaged in the production of films for television. Plaintiff Granada Television International Ltd. (“Granada N.Y.”), a New York corporation, and a subsidiary of Granada U.K., is in the business of importing, distributing and exhibiting Granada U.K.’s films throughout the United States.

The primary defendant is Dame Jean Conan Doyle who is the sole surviving child of Sir Arthur and, by way of several transfers, holds (or soon will hold) all copyrights, to the extent they exist, to all of the Sherlock Holmes works. The other defendants are Mr. Seymour Weintraub and Lorindy Pictures.

Lorindy is a Florida corporation engaged in the business of producing television programs. Mr. Weintraub is a California resident, the majority shareholder of Lorindy and is its president.

In May 1981, Michael Cox of Granada U.K. wrote Dame Jean inquiring as to the copyright claims to the Sherlock Holmes stories in various countries. He indicated his plans to produce “an authoritative series of dramatizations of the Sherlock Holmes stories”. Dame Jean responded that she was pleased to hear of his plans; that the stories were in the public domain in the United Kingdom and that she owned the U.S. copyright on the earlier stories and would acquire rights to the later works year by year. In September 1981, Dame Jean wrote Mr. Cox again on her own initiative, advising him that she was negotiating with United States companies for use of her copyrights and reiterated that she was pleased with Cox’s plans. Mr. Cox apparently interpreted Dame Jean’s letters as an offer for Granada U.K. to negotiate rights to the later copyrighted works and not as an indication that she was claiming rights to the earlier works of her father. As stated in Mr. Cox’s letter of September 28, 1981 to Dame Jean:

Our own plans are proceeding slowly and, because we want to deal with the adventures chronologically, we are concentrating on the earlier stories which are, of course, in the public domain both here and the States. (Emphasis added.) (Exhibit G.) Zissu Aff. dated September 7, 1982, at 5.

In Dame Jean’s responding letter, she noted: “I take your point about the earlier stories being unprotected in the USA as well as over here.” Zissu Aff. at 5.

Granada believed that the copyrights on a large number of the Sherlock Holmes stories had expired and thus those stories were in the public domain. Granada seeks a declaratory judgment that these stories are in fact in the public domain.

In June of 1981, Lorindy began to negotiate with Dame Jean’s United States agent for the copyrights to the Holmes works. Lorindy also wanted to produce a series of Sherlock Holmes television shows. After somewhat complex negotiations an agreement was reached, and on December 30, 1981 Dame Jean signed it.

The next significant event occurred about March 19, 1982 when Mr. Nimmer, Lorindy’s California attorney, wrote a letter to Granada U.K. indicating that Lorindy had acquired exclusive licensing rights from Dame Jean and that Lorindy would consider any United States distribution of Granada’s Holmes series a violation of both United States copyright and trademark laws. Because of this letter, Granada N.Y.’s ability to distribute the Granada U.K. series in the United States was placed in serious question.

Plaintiffs claim that the Lorindy letter constitutes a tortious act. Plaintiffs argue that it is a business tort to knowingly claim a copyright which does not exist. Defendants argue that no such tort exists. However, solely for the purposes of this jurisdictional motion defendants have agreed to assume that such a tort does exist under applicable law.

Defendants moved to dismiss on the grounds that the Court lacks in personam jurisdiction over any of the defendants. The Court permitted discovery on the jurisdictional dispute. The Court then held oral argument on the motion. At the argument the Court ruled from the bench that jurisdiction did exist over Dame Jean. The Court held that she was doing business in New York through her agent so that jurisdiction existed under New York Civil Practice Law and Rule (“CPLR”) § 301 (McKinney). The Court also ruled that Mr. Weintraub and Lorindy are not doing business in New York within the meaning of CPLR § 301. Therefore, the only jurisdictional question left for resolution is whether CPLR § 302 provides for in personam jurisdiction over Weintraub and Lorindy in the tort action.

DISCUSSION

This action is brought under the Court’s diversity jurisdiction. In diversity cases the in personam jurisdiction of the District Court is coextensive with that of the court of general jurisdiction in the state in which the federal court sits. We are, therefore, governed by New York’s jurisdictional statutes, viz. CPLR § 302. That statute states in pertinent part:

(a) Acts which are the basis of jurisdiction. As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nondomiciliary, or his executor or administrator, who in person or through an agent: sH $ j}; if: j}:
2. commits a tortious act within the state ...; or
8. commits a tortious act without the state causing injury to person or property within the state, ... if he
(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or
(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or____

New York CPLR § 302 (McKinney’s).

It seems clear that the tort was not committed in New York, so jurisdiction, if it is to be found, must be grounded in section 302(a)(3). The first step in analyzing section 302(a)(3) is to determine whether the act caused injury to person or property within New York State.

In cases of physical injury, the interpretation of section 302 is easy. However, “[t]he troubling question in the instance of a commercial tort is whether New York is the locus of the injury — whether the impact of the tort occurred within the state.” Trafalgar Capital Corp. v. Oil Producers Equipment Corp., 555 F.Supp. 305, 311 (S.D.N.Y.1983).

It is well settled that plaintiffs’ residence or domicile within a state is not sufficient to ground jurisdiction under section 302(a). Fantis Foods, Inc. v. Standard Importing Co., Inc., 49 N.Y.2d 317, 425 N.Y.S.2d 783, 402 N.E.2d 122 (1980). Moreover, no jurisdiction exists when the only alleged injury is loss of income within the state where plaintiffs’ business is located. American Eutectic Welding Alloy Sales Co. v. Dytron Alloys Corp., 439 F.2d 428 (2d Cir.1971); Arbitron Co. v. E.W. Scripps Inc., 559 F.Supp. 400 (S.D.N.Y.1983). “In other words, Section 302(a)(3) CPLR looks to imparting of the original injury within the State of New York and not resultant damage, in order that jurisdiction might be effectuated.” Black v. Oberle Rentals, Inc., 55 Misc.2d 398, 400, 285 N.Y.S.2d 226, 229 (1967).

The court in American Eutectic cited Chief Judge Weinstein’s analysis in Spectacular Promotions, Inc. v. Radio Station WING, 272 F.Supp. 734 (E.D.N.Y.1967) approvingly. Judge Weinstein wrote:

In determining the situs of an injury * * * there are three possibilities worth considering: (1) any place where plaintiff does business; (2) the principal place of business of the plaintiff; and (3) the place where plaintiff lost business. For purposes of a jurisdictional statute such as New York’s, the first can be rejected almost out of hand; the second has slight merit, and the third seems most apt. Where the plaintiff is a large national corporation, permitting it to sue in any of the fifty states in which it does business would obviously be unfair to the defendant. The main place of business of the plaintiff would have no predictable relationship with the tortious activities of the defendant. The place where the plaintiff lost business would normally be a forum reasonably foreseeable by a tortfeasor and it would usually be the place where the critical events associated with the dispute took place.

272 F.Supp. at 737.

Judge Weinstein’s analysis seems well supported by the later New York Court of Appeals case of Sybron Corp. v. Wetzel, 46 N.Y.2d 197, 413 N.Y.S.2d 127, 385 N.E.2d 1055 (1978).

In American Eutectic the Second Circuit held that on the facts plaintiffs only suffered derivative commercial injury in New York which is insufficient to establish jurisdiction under section 302. Lorindy and Weintraub argue that the injury alleged by Granada is as derivative as the damages claimed in American Eutectic. However, that case is distinguishable. In American Eutectic, the plaintiffs’ customers were not in New York (439 F.2d at 432). In the case at bar, Granada clearly alleges that it lost or will lose customers in New York State.

Under Judge Weinstein’s analysis in Spectacular Promotions, the situs of the injury is in the state in which the customers were lost. Since New York is the largest television market in the United States, plaintiffs allege direct injury in New York State. But for defendants’ alleged action, plaintiffs contend Granada N.Y. would be able to sell the Holmes series to New York television stations. The fact that plaintiffs may also suffer injury in other states, as well as New York, is irrelevant. It is enough they allege the loss of customers in New York. We hold that plaintiffs have satisfied the first part of section 302(a)(3).

The next step in the section 302(a)(3) analysis is to determine if one of the four disjunctive elements of section 302(a)(3)(i) or (ii) is met. Those four elements are: (1) regularly does or solicits business in the state or (2) engages in any other persistent course of conduct in the state; or (3) derives substantial revenue from goods used or consumed or services rendered in the state; or (4) expects or should reasonably expect the act (i.e., tort) to have consequences in the state and derives substantial revenue from interstate or international commerce. If any one of these elements is met, there is in personam jurisdiction in New York.

JURISDICTION OVER DEFENDANT WEINTRAUB

There is abundant evidence on the record regarding Mr. Weintraub’s activities in New York State. While it is true that the Court found that these activities did not constitute “doing business” in New York, these activities do meet the requirements of the second element — “engages in any other persistent course of conduct ... in the state.” CPLR § 302(a)(3)(i).

While there is little case law interpreting the “course of conduct” language, Weintraub’s actions seem to fall within the plain language of the statute. This requirement was intended to meet constitutional limitations on in personam jurisdiction. See Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958) (“there [must] be come act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws”); see also WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

In Weintraub’s case, there is no question that his actions meet the “course of conduct” requirement. For example, in the eighteen months prior to service of process, Weintraub was present in New York on 124 different days. Zissu Aff. after Discovery, at ¶¶ 6-14. He is a general partner in at least two New York real estate partnerships and owns land in New York. Zissu Aff. M 15-22. Weintraub has a bank account at Chemical Bank in New York. Zissu Aff. 1123. The record contains other examples of Weintraub’s persistent course of conduct in New York. For various reasons, this Court found that these actions did not constitute doing business under CPLR § 301. However, we hold that they do meet the requirements of CPLR § 302(a)(3)(i) as well as the minimum contacts standard of the Constitution. Accordingly, we find jurisdiction over defendant Weintraub as to the tort action.

JURISDICTION OVER DEFENDANT LORINDY

The Court finds jurisdiction over Lorindy under CPLR § 302(a)(3)(ii). Defendants do not challenge, and from the record it appears to be true, that Lorindy derives substantial revenue from interstate or international commerce. Accordingly, there is jurisdiction over Lorindy if it is expected or reasonably should have expected its act (tort) to have consequences in New York.

The purpose of the letter to Granada U.K. was to invoke the United States copyright in the United States. In other words, the letter was intended to stop the sale of the Holmes series in the United States. As noted before, New York is the largest television market in the United States. Clearly, if it was Lorindy’s intent to stop the distribution of the series in New York then a fortiori they should have foreseen the consequences in New York.

The Court finds that there is jurisdiction over Lorindy and Weintraub for the tort cause of action. Accordingly, the motion to dismiss is granted as to defendants Lorindy and Weintraub on the copyright action and is otherwise denied.

It is So Ordered.

      . Apparently Lorindy, no longer technically has the licensing rights to the Holmes stories, having assigned them to Holmes Pictures in June of 1982. Holmes Pictures is also controlled by Weintraub and has an interlocking directorship with Lorindy.

      . The defendants present a somewhat complicated and novel defense which is not relevant to this jurisdictional motion.

      . This holding, however, has little practical effect on the claim for a declaratory judgment since, if this Court finds that Dame Jean has no copyright to the disputed material, then Lorindy, as Dame Jean's licensee, cannot have any copyright either.

      . There is no dispute that the threatening letter was written in and mailed from California, and it was received by Granada U.K. in England.

      . The Court takes note of the Practice Commentaries by Joseph McLaughlin. He wrote:
      If an injury occurs in New York through the commission of a tortious act outside the state, the tortfeasor may be subject to jurisdiction if he engaged in “any other persistent course of conduct." Again, it is not required that the cause of action arise out of the conduct, so long as it arises from the tortious act. The language was probably inserted to round out the preceding provision for doing and soliciting business in New York, so that any repeated conduct in New York which does not constitute “business" would suffice. The obvious difference between the two provisions is that the persistent course of conduct may involve a great range of human activity which, while it might fall beyond the pale of “business” conduct, would, because of its consistency, serve as a solid link of jurisdiction to New York.
      J. McLaughlin, Practice Commentary, CPLR § 302, at New York CPLR foil. § 302. McKinney’s 1972. (Emphasis added.)

      . "It is clear ... that the legislature did not intend to extend the jurisdiction of the New York courts to the outer reaches of constitutional power.” American Eutectic, 439 F.2d at 435 [Footnote Omitted].