author: NANGLE, Chief Judge.

text:
    ST. LOUIS FEDERAL SAVINGS AND LOAN ASSOCIATION, Plaintiff, v. SILVERADO BANKING, SAVINGS AND LOAN ASSOCIATION, Defendant.
    No. 85-1835C(1).
    United States District Court, E.D. Missouri, E.D.
    Jan. 27, 1986.

      Albert E. Schoenbeck, St. Louis, Mo., for plaintiff.
    Joseph P. Conran, St. Louis, Mo., for defendant.
   MEMORANDUM

NANGLE, Chief Judge.

This cause is before the Court on the motion of defendant to dismiss for lack of personal jurisdiction or, in the alternative, to transfer this case to the District of Colorado under 28 U.S.C. § 1404(a) (1982).

Plaintiff St. Louis Federal Savings and Loan Association (St. Louis Federal), a federally chartered association with its principal office in Clayton, Missouri, sues for specific performance of a contract between itself and Silverado Banking, Savings and Loan Association (Silverado), an association chartered by the State of Colorado and with its principal office in Denver, Colorado. As explained below, defendant’s motions are denied.

In passing on a motion to dismiss for lack of jurisdiction over a non-resident, a federal diversity court is required to engage in a two-step inquiry: first, whether defendant committed one of the acts enumerated in the long-arm statute; and second, whether the exercise of personal jurisdiction over defendant violates the due process clause of the fourteenth amendment. The Land-O-Nod Company v. Bassett Furniture Industries, Inc., 708 F.2d 1338 (8th Cir.1983); Scullin Steel Co. v. National Railway Utilization Corp., 676 F.2d 309, 312 (8th Cir.1982). Plaintiff, the party that is seeking to invoke federal jurisdiction, has the burden of establishing that jurisdiction exists, and this burden may not be shifted to the party challenging the jurisdiction. Mountaire Feeds, Inc. v. Agro Impex, S.A., 677 F.2d 651, 653 (8th Cir. 1982). While the facts are viewed in the light most favorable to the plaintiffs, “there must nonetheless be some evidence upon which a prima facie showing of jurisdiction may be found to exist____” Aaron Ferer & Sons Co. v. Diversified Metals Corp., 564 F.2d 1211, 1215 (8th Cir.1977) (citations omitted). See also Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1285 (9th Cir.1977) (plaintiff need only make a prima facie showing of jurisdictional facts through submission of affidavits plus discovery materials); Greycas, Inc. v. Anderson, 584 F.Supp. 894, 895-96 (E.D.Mo.1984); 4 Wright & Miller, Federal Practice and Procedure § 1068 at 250 (1969).

Missouri’s Long-Arm statute provides in part:

1. Any person or firm, whether or not a citizen or resident of this state, or any corporation, who in person or through an agent does any of the acts enumerated in this section, thereby submits such person, firm, or corporation, and, if an individual, his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any such acts:
(1) The transaction of any business within this state;
(2) The making of any contract within this state;
(3) The commission of a tortious act within this state;
(4) The ownership, use, or possession of any real estate situated in this state;
(5) The contracting to insure any person, property or risk located within this state at the time of contracting.
(6) Engaging in an act of sexual intercourse within this state with the mother of a child on or near the probable period of conception of that child.
2.....
3. Only causes of action arising from acts enumerated in this section may be asserted against a defendant in an action in which jurisdiction over him is based upon this section.

Mo.Rev.Stat. § 506.500 (Supp.1984).

The due process clause of the fourteenth amendment places limits upon the power of a court to exercise personal jurisdiction over a non-resident defendant. The due process clause requires that a defendant have certain minimum contacts with the forum state such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice.” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154,158, 90 L.Ed. 95 (1945); Land-O-Nod, 708 F.2d at 1340. Accord World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); Kulko v. California Superior Court, 436 U.S. 84, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978). “In judging minimum contacts, a court properly focuses on ‘the relationship among the defendant, the forum, and the litigation.’ ” Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 1486, 79 L.Ed.2d 804 (1984) (citations omitted). See also Helicópteros Nacionales de Colombia S.A. v. Hall, 80 U.S. 408, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404 (1984). The defendant’s contacts with the forum state must be purposeful and such that defendant “should reasonably anticipate being haled into court there.” World Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567. See also Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). Parties who reach out beyond one state and create continuing relationships and obligations with citizens of another state are subject to jurisdiction in the other state for the consequences of their activities. Burger King Corp. v. Rudzewicz, — U.S.-, 105 S.Ct. 2174, 2182, 85 L.Ed.2d 528 (1985).

In this circuit, the due process standard has devolved into a consideration of five factors:

(1) the nature and quality of the contacts with the forum state; (2) the quantity of the contacts with the forum state; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties.

Aaron Ferer & Sons Co. v. Diversified Metals Corp., 564 F.2d 1211, 1215 (8th Cir. 1977). See Land-O-Nod, 708 F.2d at 1340. The first three factors are of primary importance and the last two are of secondary importance. Id.

This Court’s evaluation of defendant’s contacts with Missouri begins with a brief overview of the facts underlying plaintiff’s causes of action. During March and April of 1982, Silverado sold to St. Louis Federal an 80% interest in six construction loans. These loans financed construction of housing developments in Colorado. Silverado sold the participation interests pursuant to a Loan Participation Agreement executed by Emmett A. Capstick, then President of St. Louis Federal, and Russell M. Murray, Vice President of Silverado. The agreement was signed in Colorado by Murray on behalf of Silverado, then sent to Clayton where it was signed by Capstick on behalf of St. Louis Federal.

Sometime in early 1982, Murray and Michael J. Wise, Chairman of the Board of Silverado, traveled to the home office of St. Louis Federal in Clayton, Missouri. There, they solicited St. Louis Federal’s participation in the construction loans. Also, they began to negotiate the terms of a Loan Participation Agreement. Two or three meetings between Silverado and St. Louis Federal representatives were held in Clayton to negotiate the terms of the agreement.

Between October 1, 1982 and May 9, 1985, officers of Silverado called and wrote St. Louis Federal at least 54 times to request funds for Stanton Farms, one of the construction projects. As a general practice, Silverado called St. Louis Federal by telephone to request funds and, then, sent supporting documentation. Upon receiving these documents, loan officers of St. Louis Federal audited the materials and authorized payment. Each transaction was completed when St. Louis Federal wired funds to Silverado’s account in Denver. Silverado and St. Louis Federal conducted similar transactions with regard to the five other loans.

On April 11, 1985, Silverado, through its attorneys, proposed a modification of the loan agreement. On May 30, 1985, Sid Roach, Vice President of Silverado and Ron Jacobs, attorney for Silverado, met with representatives of St. Louis Federal to discuss the proposed modification. This meeting occurred at the St. Louis Federal home office in Clayton.

Plaintiff predicates jurisdiction upon the solicitation, negotiation, execution, and performance of the Loan Participation Agreement in Missouri and upon the subsequent negotiations to modify the agreement. As defendant argues, the mere act of signing the contract in Missouri does not satisfy the Missouri long-arm statute.

Under Missouri law, the place of contract is where the final act occurs which makes a binding contract. Servco Equipment Co. v. C.M. Lingle Co., 487 S.W.2d 869, 870 (Mo.Ct.App.1972), citing Daggett v. Kansas City Structural Steel Co., 334 Mo. 207, 65 S.W.2d 1036 (1933); see Commercial Design, Inc. v. Dean/Dale and Dean Architects, 584 F.Supp. 890 (contract made in Missouri when plaintiff accepted counteroffer by initialing defendant’s reply letter in Missouri).

Though Silverado signed the agreement in Colorado, the contract was then sent to St. Louis Federal and signed by its President in Clayton. This signature constitutes the final act in the formation of the contract. Moreover, Silverado solicited and negotiated the agreement in Missouri. Therefore, Silverado was properly served under § 506.500(1)[1], and this Court may exercise jurisdiction over it.

Plaintiff also relies upon § 506.500(1)[2], arguing that.Silverado conducted business in Missouri. Defendant denies that its contacts were sufficient to satisfy this portion of the long-arm statute.

Missouri courts have interpreted the terms of § 506.500 broadly to extend the jurisdiction of Missouri courts over non-resident defendants to the extent permissible under the due process clause. State ex rel. Metal Service Center of Georgia, Inc. v. Gaertner, 677 S.W.2d 325, 327 (Mo. banc 1984); State ex rel. Deere & Co. v. Pinnell, 454 S.W.2d 889. A single meeting in this state has been held sufficient to satisfy the transaction of business requirement of § 506.500. State ex rel Farmland Industries, Inc. v. Elliott, 560 S.W. 60, 63 (Mo. Ct.App.1977). See also Charles Schmitt and Co. v. Barrett, 670 F.2d 802 (8th Cir. 1982); Greycas, Inc. v. Anderson, 584 F.Supp. 894, 896 (E.D.Mo.1984).

Silverado solicited the participation of St. Louis Federal in the construction loans during meetings in Missouri; Silverado negotiated the basic terms of the agreement in Missouri; Silverado made numerous telephone calls to St. Louis Federal in Missouri; and, as a result, St. Louis Federal performed a significant portion of the contract in Missouri. In addition, officers of Silver-ado traveled to Missouri to negotiate a modification in the original agreement. These contacts more than satisfy the transaction of business requirement of § 506.-500(1)[2],

On the basis of the above facts, this Court finds the exercise of jurisdiction over defendants comports with the requirements of due process. Defendant’s contacts with Missouri and with St. Louis Federal were far from random, fortuitous, or attenuated. See Burger King, 105 S.Ct. at 2186. On the contrary, Silverado purposefully solicited contacts with Missouri and maintained continuous communication with St. Louis Federal over the course of the agreement. When defendant sought to alter its contract, it again sent employees to Missouri to negotiate the modification. Moreover, Missouri has a strong interest in providing a forum for its residents to litigate a dispute arising out of a Missouri contract substantially performed in Missouri. Accordingly, defendant’s motion to dismiss is denied.

Defendant seeks to transfer this case to the District of Colorado under 28 U.S.C. § 1404(a). As defendant argues, transfer is warranted because the parties chose Colorado law to govern the contract and because the pertinent witnesses and documents are located in Colorado. The decision to transfer a case lies within the discretion of the trial court and unless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1947). In this case, the location of witnesses and documents is not dispositive. According to the affidavits of both parties, relevant evidence will be found in Missouri and Illinois, as well as Colorado.

The participation agreement specifies that Colorado law governs disputes arising out of the agreement. Although choice of law provisions are relevant to venue, such provisions are not dispositive. See O’Neill v. Stanwood Corp., 577 F.Supp. 1001, 1003 (S.D.N.Y.1984) (choice of law clause not dispositive where no complex issues of foreign law are presented). As a suit for specific performance, this litigation presents no novel or complex issues. Therefore, application of Colorado law should present no unique difficulties for this Court. Accordingly, defendant’s motion to transfer under § 1404(a) is denied.


source: Caselaw Access Project

author: ARONOVITZ, District Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff, v. Louis SOLDANO, Defendant.
    No. 85-881-Cr.
    United States District Court, S.D. Florida.
    Jan. 27, 1986.
    Michael P. Sullivan, Asst. U.S. Atty., Miami, Fla., for plaintiff.
    Joel Kaplan, Miami, Fla., for defendant.
   ORDER GRANTING DEFENDANT’S MOTION TO DISMISS COUNT I OF THE INDICTMENT (WITHOUT PREJUDICE)

ARONOVITZ, District Judge.

Defendant Louis Soldano, through counsel, has submitted a Motion to Dismiss Count I of a two-count indictment. Count I charges defendant to be a member of a conspiracy to knowingly and intentionally import marijuana into the United States in violation of Title 21 U.S.C. § 963; and Count II is a substantive count charging defendant with knowingly and intentionally importing marijuana into the United States in violation of Title 21 U.S.C. §§ 952(a) and 960(a)(1).

The government has filed a Response to defendant’s Motion to Dismiss and the defendant, in turn, has filed a Response to the Government’s Response. This matter was considered by the United States Magistrate, Honorable Samuel J. Smargon, who thereupon submitted a Report and Recommendation to this Court dated January 9, 1986, wherein he recommended denial of the motion without prejudice, but sua sponte ordered the government to file a bill of particulars so that the indictment is sufficiently specific to inform the defendant of the charges against him in the respect of a list of all known co-conspirators and a more specific and particular beginning date of the conspiracy other than “from an unknown date ...”.

Defendant has filed an appeal from and/or objections to the United States Magistrate’s Report and Recommendation aforesaid.

This Court has considered all of the aforegoing and has carefully reviewed same, as well as other pertinent parts of the Court record, and has heard oral argument of counsel thereon, and being otherwise fully advised in the premises, it is thereupon

ORDERED and ADJUDGED that the defendant Louis Soldano’s appeal of and objections to the Magistrate’s Report and Recommendation of January 9, 1986 be, and the same are hereby SUSTAINED and Count I of the Indictment is hereby DISMISSED WITHOUT PREJUDICE.

In his Motion to Dismiss Count I, defendant complains that:

a. ) The conspiracy alleged in Count I stated that it existed “from an unknown date until on or about late April, 1983”. He interprets this to be an open-ended indictment as to the beginning date and therefore a necessary element of this offense is not included.
b. ) Defendant next complains that Count I neither names any co-defendant nor identifies any other person with whom Soldano allegedly conspired. Count I only alleges that Soldano conspired “with persons known and unknown to the grand jury”. According to Soldano, these allegations are insufficient to satisfy Sixth Amendment’s requirement that Soldano be informed with reasonable specificity of the nature of the charges against him; and, it likewise fails to protect him against double jeopardy.
c. ) Defendant Soldano also complains that Count I in its present form deprives him of his right to indictment by a grand jury and that the said Count is insufficient as a matter of law.

The Eleventh Circuit in United States v. Yonn, 702 F.2d 1341, 1348 (1983), addresses the necessary elements which should be set forth in a Section 963 conspiracy as follows:

The appellant, Hugo Sanes-Saavedra, first attacks the sufficiency of the indictment, contending that Count II, the count under which he was convicted, was too vague to satisfy his sixth amendment guarantee to be informed of the government’s accusation against him. See Russell v. United States, 369 U.S. 749, 761, 82 S.Ct. 1038, 1045, 8 L.Ed.2d 240, 249 (1962). To pass constitutional muster, an indictment must be sufficiently specific to inform the defendant of the charge against him and to enable him to plead double jeopardy in any future prosecution for the same offense. Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 2907, 41 L.Ed.2d 590, 620 (1974). Those requirements are satisfied by an indictment that tracks the wording of the statute, as long as the language sets forth the essential elements of the crime. 418 U.S. at 117, 94 S.Ct. at 2907, 41 L.Ed.2d at 620-21; see also United States v. Marable, 578 F.2d 151, 154 (5th Cir.1978). In addition, “an indictment for conspiracy to commit a criminal offense need not be as specific as a substantive count”. United States v. Ramos, 666 F.2d 469, 475 (11th Cir.1982).

In reviewing the specificity of the essential elements alleged in Count I, it appears that this Count does not identify Soldano’s alleged co-conspirators. See Ramos, 666 F.2d at 474. It further appears that the indictment does not set forth the timespan of the conspiracy; “from an unknown date until on or about late April, 1983 ...”. See Marable, 578 F.2d at 154; c.f, United States v. Cecil, 608 F.2d 1294, 1297 (9th Cir.1979) (“open-ended” time-frame considered insufficient). See also Yonn, 702 F.2d at 1348, n. 6. It appears that the lack of these allegations causes Count I to be deficient such that the necessary essential elements are not set forth. See Yonn at 1348. To be constitutionally sufficient, Count I must allege sufficient and specific facts that apprise the defendant of the charge against him so that he can intelligently prepare his defense, and it must supply him with sufficient facts to plead former jeopardy in a subsequent proceeding for the same offense. Russell v. United States, 369 U.S. 749, 763-64, 82 S.Ct. 1038, 1046-47, 8 L.Ed.2d 240 (1962); Hamling v. United States, 418 U.S. 87, 94 S.Ct. 2887, 41 L.Ed.2d 590 (1974). Failure to comply with either of these constitutional considerations renders the indictment defective and subject to dismissal.

Defendant likewise argues that the absence of a sufficiently specific allegation as to the timeframe of the conspiracy renders this Count insufficient and subject to dismissal because the conspiracy technically could have commenced at anytime since birth and throughout his twenty-four years until late April, 1983, and it is not sufficiently specific to protect him against double jeopardy when coupled with the lack of identification with at least one alleged co-conspirator.

The United States Magistrate attempted to correct the aforegoing deficiency by requiring a bill of particulars to be filed by the government setting forth:

1. A list of all known co-conspirators; and,
2. A more specific and particular beginning date of the conspiracy other than “from an unknown date until on or about late April, 1983”.

A bill of particulars cannot save or cure an otherwise invalid or defective indictment. United States v. Radetsky, 535 F.2d 556, 565 (10th Cir.1976), cert. denied, 429 U.S. 820, 97 S.Ct. 68, 50 L.Ed.2d 81; United States v. Smith, 692 F.2d 693 (10th Cir.1982); Russell v. United States, supra; Van Liew v. United States, 321 F.2d 664 (5th Cir.1967). It should also be noted that a bill of particulars is furnished by the government, not by the grand jury, and it is difficult to establish that the beginning date which is a deficiency here and as supplied by the government in the bill of particulars, was the same beginning date which the grand jury had in mind; nor can it be certain with specificity that at least one co-conspirator named among those in the bill of particulars was one which the grand jury had so found as a co-conspirator. It is thereupon

ORDERED and ADJUDGED that the Report and Recommendation of the United States Magistrate is OVERRULED and defendant’s Motion to Dismiss Count I of the Indictment is GRANTED WITHOUT PREJUDICE.


author: YOUNG, District Judge.

text:
    Samuel R. PIERCE, Jr., Secretary of Housing and Urban Development, Plaintiff, v. Charlie DEW, Defendant.
    Civ. A. No. 85-1359-Y.
    United States District Court, D. Massachusetts.
    Jan. 27, 1986.
    Karen F. Green, Martha B. Sosman, Asst. U.S. Attys., Boston, Mass., for plaintiff.

      Daniel S. Manning, Greater Boston Legal Service, Boston, Mass., for defendant.
   MEMORANDUM AND ORDER

YOUNG, District Judge.

This is an eviction case in which the Secretary of the United States Department of Housing and Urban Development (“the Secretary”) is seeking to evict the defendant Charlie Dew from an apartment owned by the Department because of her non-payment of rent. Dew brought several counterclaims, including a claim under Mass. Gen.Laws ch. 93A alleging that the Secretary permitted substantial violations of the State Sanitary Code to exist in the apartment occupied by Dew. The Secretary has moved to dismiss the counterclaim under Chapter 93A on the ground that the Secretary is not a “person” within the meaning of the statute. For the reasons that follow, the motion is denied.

Section 9(1) of Chapter 93A provides in pertinent part:

Any person ... who has been injured by another person’s use or employment of any method, act or practice declared to be unlawful by section two or any rule or regulation issued thereunder ... may bring an action____

Mass.Gen.Laws ch. 93A, § 9(1) (emphasis added).

Section 1(a) of Chapter 93A defines the term “person” as used in § 9(1) to include:

... natural persons, corporations, trusts, partnerships, incorporated or unincorporated associations, and any other legal entity. Mass.Gen.Laws eh. 93A, § 1(a) (emphasis added).

Neither the Massachusetts Supreme Judicial Court nor the Appeals Court have directly addressed the question whether a public body is a proper defendant within the meaning of Chapter 93A. In such circumstances, it is appropriate to look to the decisions of the Massachusetts Superi- or Court, “the great trial court of the Commonwealth,” as declarative of Massachusetts law. See Local Div. 589 v. Commonwealth, 666 F.2d 618, 626 n. 21, 645 (1st Cir.1981), cert. denied, 457 U.S. 1117, 102 S.Ct. 2928, 73 L.Ed.2d 1329 (1982); Flotech, Inc. v. E.I. DuPont de Nemours Co., 627 F.Supp. 358, — (D.Mass.1985). As to the present issue, however, it appears that the Justices of the Superior Court do not agree, as two Justices of that court have reached different conclusions. In Keane, Inc. v. Boston Water and Sewer Comm’n, No. 50133 (Suffolk Superior Court, December 16, 1981) (Meyer, J.), the court held that the phrase “any other legal entity” included a statutorily created public water company. In contrast, the court in The Quincy Corp. v. Massachusetts Bay Transportation Authority, No. 39881 (Suffolk Superior Court, December 18, 1984) (Flannery, J.), held that the Massachusetts Bay Transportation Authority was not a “person” within the meaning of Chapter 93A.

This Court follows the Keane precedent, at least as it applies to the specific facts of this case. Although Chapter 93A does not by its terms specifically apply to public agencies, there is nothing in the statutory language to suggest any legislative intent to exclude such entities from the ambit of the statute. On its face, the phrase “any other legal entity” appears sufficiently broad to include a government agency. See Keane at 3 (the phrase “any other legal entity,” as used in the Massachusetts Workmen’s Compensation Act, Mass.Gen. Laws ch. 152, § 1(7), includes public agencies). This reading is consistent with the declaration of the Supreme Judicial Court that Chapter 93A is a “statute of broad impact,” which forms a “comprehensive substantive and procedural business and consumer protection package.” Slaney v. Westwood Auto, Inc., 366 Mass. 688, 693, 322 N.E.2d 768 (1975)

The Supreme Judicial Court has emphasized that Chapter 93A has special force in the landlord-tenant arena:

[T]enants are among those for whose benefit the Consumer Protection Act was passed ... and we have traditionally been zealous in protecting tenants who have shown that their landlords, for whatever reason, fail to fulfill the obligations imposed upon them by statute and decisional law.

Leardi v. Brown, 394 Mass. 151, 159, 474 N.E.2d 1094 (1985) (citations omitted); see York v. Sullivan, 369 Mass. 157, 338 N.E.2d 341 (1975). Moreover, the regulations governing landlords and tenants under Chapter 93A, 940 C.M.R. 3.17, expressly incorporate the Massachusetts State Sanitary Code, which in turn applies to “governmental unit[s] owning property.” 105 C.M.R. 410.037. See Purity Supreme, Inc. v. Attorney General, 380 Mass. 762, 775, 407 N.E.2d 297 (1980) (rules and regulations promulgated by the Attorney General defining prohibited conduct under Chapter 93A have the force of law).

In light of the strong legislative policy to provide aggrieved tenants with a remedy under Chapter 93A, this Court rules that the Secretary, in his capacity as a landlord, is a “person” subject to suit under the statute. Thus, the Secretary’s motion to dismiss Dew’s counterclaim under Chapter 93A is DENIED.

SO ORDERED.

      . In Spence v. Boston Edison Co., 390 Mass. 604, 459 N.E.2d 80 (1983), the Supreme Judicial Court permitted the Boston Housing Authority to bring an action under Chapter 93A. This holding implicitly construes “person” to include government agencies, since the class of Chapter 93A plaintiffs, as well as defendants, is limited to "persons.”

        . See Irwin v. Commissioner of the Department of Youth Services, 388 Mass. 810, 815, 448 N.E.2d 721 (1983) (Lynch, J.); Pinnick v. Cleary, 360 Mass. 1, 41 n. 3, 271 N.E.2d 592 (1971) (Tauro, CJ. concurring); McArthur Bros. v. Commonwealth, 197 Mass. 137, 139, 83 N.E. 334 (1908) (Rugg, C.J.).

      . The court in The Quincy Corp. did not refer to the Keane decision and presumably acted without knowledge of that prior opinion. This is a regrettable consequence of the failure to publish Massachusetts Superior Court opinions — a failure which deprives the courts, the bar, and the public of important legal developments frequently addressed two to three years before the same issues find their way into Massachusetts appellate decisions.

      . The result in The Quincy Corp. rested on the court’s conclusion that the "unfair” or “deceptive” practices prohibited by Chapter 93A require a wrongful state of mind on the part of the defendant. The court questioned whether a public agency “can ever realistically be said to have a state of mind,” and further concluded that “it is implausible to impute to a public body an anti-social or wrongful intention.” The Quincy Corp. v. Massachusetts Bay Transportation Authority, No. 39881 at 5 (Suffolk Superior Court, December 18, 1984). Although that reasoning may be sound in some circumstances, its force is limited when applied to this case, where Dew’s Chapter 93A claim is based on actual damages only and does not seek multiple damages based on a willful or knowing violation of the statute. Defendant’s Memorandum in Opposition to Plaintiff's Motion to Dismiss Defendant’s Counterclaim at 4. See Burnham v. Mark IV Homes, Inc., 387 Mass. 575, 582-83, 441 N.E.2d 1027 (1982) (defendant liable for actual damages under Mass.Gen.Laws ch. 93A, § 9 even in absence of willful or knowing violation of the statute or bad faith).


author: SELYA, District Judge.

text:
    William DELLA VALLE d/b/a Potters Avenue Supermarket, Plaintiff, v. UNITED STATES of America, DEPARTMENT OF AGRICULTURE, Defendant.
    Civ. A. No. 85-0527-S.
    United States District Court, D. Rhode Island.
    Jan. 27, 1986.

      Donald R. Lembo, North Providence, R.I., for plaintiff.
    Michael P. Iannotti, Asst. U.S. Atty., Providence, R.I., for defendant.
   MEMORANDUM AND ORDER

SELYA, District Judge.

This case, brought by a food retailer under 7 U.S.C. § 2023(a) to challenge a food stamp program disqualification order (FSPD Order) imposed by the Secretary of Agriculture (Secretary), was before this court on a preliminary matter at an earlier ■date. See Della Valle v. United States, 619 F.Supp. 1297 (D.R.I.1985) (Della Valle I). It is now pending the federal defendant’s motion for brevis disposition on the merits. The court entertained oral argument on January 22, 1986 and thereupon reserved decision.

I.

An overview of the litigation is set out in Della Valle I, and the reader is referred to that opinion for background information. E.g., id. at 1299-1300. Thus, a decurtate summary will suffice at present. Effective April 17, 1985, the Potters Avenue Supermarket (Market), a retail food store owned and operated by the plaintiff, William Della Valle, was suspended by RIDH from participation in the special supplemental food program for women, infants, and children (WIC). The state inspectors determined as a basis for the suspension that the Market was guilty of eleven separate violations of the WIC regulations, including the alteration of program vouchers and acceptance of such vouchers in exchange for prohibited items.

The Market did not appeal this suspension, but it claims that the charges were unfounded. The plaintiff says that it was desirous of jettisoning the WIC program, and for that reason did not contest the state’s accusations. Indeed, the record reflects that, during the appeal period from the state suspension, Della Valle sought voluntarily to relinquish his status as a WIC vendor.

RIDH’s edict marked both the end of the plaintiff's WIC-related troubles with the state and the beginning of his federal difficulties. By letter dated May 2, 1985, the Food and Nutrition Service (FNS) of the United States Department of Agriculture notified the Market that its authorization to participate in the federal food stamp program, see 7 U.S.C. §§ 2011-2029, was being withdrawn in consequence of the state’s WIC suspension. The Market pursued an administrative appeal, but to no avail; on July 9, 1985, the Secretary, acting through an administrative review officer, confirmed the Market’s exile from the food stamp program. The period of disqualification (three years) was timed to coincide with the duration of the WIC debarment ordained by the state.

The plaintiff seasonably prosecuted this action under 7 U.S.C. § 2023. This court stayed the operation of the FSPD Order pendente lite, see Della Valle I at 1304, on condition that the Market, during the currency of the stay, observe and abide by the rules of the food stamp program.

II.

The plaintiff seeks judicial review of the three year FSPD Order pursuant to 7 U.S.C. § 2023(a). That statute provides, inter alia:

Whenever ... a retail food store ... is disqualified ..., notice of such administrative action shall be issued to the retail food store, ... [which may thereupon claim its administrative appeal]. If the store ... feels aggrieved by such final determination, it may obtain judicial review thereof by filing a complaint against the United States in the United States court for the district in which it resides or is engaged in business, or in the case of a retail food store ..., in any court of record of the State having competent jurisdiction____ The suit in the United States district court or State court shall be a trial de novo by the court in which the court shall determine the validity of the questioned administrative action in issue____

The “trial de novo” which § 2023(a) contemplates signifies that, as to violation-related matters (including, presumably, programmatic eligibility), “the court should make an independent determination of the issues.” United States v. First City National Bank of Houston, 386 U.S. 361, 368, 87 S.Ct. 1088, 1093, 18 L.Ed.2d 151 (1967). This signification has been judicially adopted for cases arising under § 2023(a). E.g., Cross v. United States, 512 F.2d 1212, 1216 n. 4 (4th Cir. 1975) (en banc); Farmingdale Supermarket, Inc. v. United States, 336 F.Supp. 534, 536 (D.N.J.1971). The distinct court, on this aspect of the case, is not confined to the contents of the administrative record. Broad Street Food Market, Inc. v. United States, 720 F.2d 217, 220 (1st Cir.1983). The Secretary’s selection of a sanction, however, stands on a different footing. Id. at 219-21. No new evidence is admissible in that regard. Id. at 221. The choice of a sanction is “peculiarly a matter for administrative competence.” Kulkin v. Berg-land, 626 F.2d 181,184 (1st Cir.1980). But, it may nevertheless be set aside if it is, on the administrative record, unwarranted in law or unjustified in fact. Broad Street Food Market, 720 F.2d at 220.

The statutory scheme reflects that the power to disqualify prescinds from 7 U.S.C. § 2021(a), which intones in pertinent part as follows:

Any approved retail food store or wholesale food concern may be disqualified for a specified period of time from further participation in the food stamp program ..., on a finding, made as specified in the regulations, that such store or concern has violated any of the provisions of this chapter or the regulations issued pursuant to this chapter.

The Act empowers the Secretary “to issue such regulations consistent [with the statute] as the Secretary deems necessary or appropriate____” 7 U.S.C. § 2013(c). The Secretary has acted upon this authority and has engaged in extensive rulemaking. In this instance, the Secretary relied upon one of these regulations, viz., 7 C.F.R. § 278.1(k), to bottom the FSPD Order. That regulation declares:

FNS shall withdraw the authorization of any firm authorized to participate in the program if it determines that the firm’s continued participation will not further the purposes of the program or the firm fails to meet the specifications of paragraph (b), (c), (d), or (e) of this section,

From this base, the Secretary reasoned that the plaintiff, by virtue of the RIDH suspension, failed to meet the specifications of paragraph (b) of 7 C.F.R. § 278.1, in which it is stated that, when making an eligibility decision, the FNS shall consider: "... (3) the business integrity and reputation of the applicant.” That being so, the Secretary insists that he had a duty, as part and parcel of determining Della Valle’s “business integrity and reputation,” to consider “official records of removal from other Federal, State, or local programs,” 7 C.F.R. § 278.1(b)(3)(ii), and that in this case, the state record of the Market’s ouster as a WIC vendor was issue-determinative.

So, acting in this vein, the FNS declared Della Valle ineligible to participate in the food stamp program in the wake of, and as a result of, the state WIC suspension. As the Secretary concedes, however:

[T]he suspension of the plaintiff was not based upon an FNS investigation, followed by a determination that certain violations has occurred, but rather, [the FSPD Order] was based solely on the fact that the plaintiff had been suspended from participation in the state administered Women, Infants, and Children (WIC) program by the Rhode Island Department of Health.

Government’s Brief at 4 (emphasis original).

III.

The Secretary may well be correct in his assessment that, given the benefit of 7 C.F.R. § 278.1(b)(3)(ii), he had no obligation independently to replicate RIDH’s WIC investigation in order to consider the question of Della Valle’s continued suitability to act as a food stamp program vendor. That position seems to be a sensible one, having in mind the tenor of the regulation and the practicalities of the administrative process. But this court, for reasons which will become apparent, see text post, need not express an opinion on the point. Assuming arguendo that the Secretary had no obligation federally to reinvent the state’s wheel, it does not follow that the “only material fact [before this court] is whether or not a suspension by the State of Rhode Island occurred.” Government’s Brief at 4. The Secretary still had a duty to give reasoned consideration to the RIDH action and to its underpinnings; nothing in the Food Stamp Act or in the regulations thereunder suggest that removal of a vendor from a state or local program automatically triggers an FSPD Order.

In this case, the FNS failed to exercise the independent judgment which the statutory/regulatory mosaic demands. 7 C.F.R. § 278. l(k) does not purport to mandate disqualification whenever removal from another program occurs; it mandates such a finding of ineligibility only if FNS:

determines that the firm’s continued participation will not further the purposes of the program or the firm fails to meet the specifications of paragraph (b), (c), (d), or (e) of this section,____

Id.

Here, FNS made no determination at all concerning whether the Market’s “continued participation” would or would not “further the purposes of the program.” As the government admits, e.g., Brief at 5, the FNS did not exercise its discretion in any way; it treated the FSPD Order as being “compelled,” id., by the regulation. (The field director’s May 2, 1985 notice of Della Valle’s disablement reflects this approach with unmistakable clarity.) That was simply not the case. Nor is the government’s bacon saved by reference back to the language of 7 C.F.R. § 278.1(b)(3). Once again, nothing therein compels a finding of ineligibility. An explication is required.

7 C.F.R. § 278.1(b) is the principal repository of the criteria for a retail vendor’s program eligibility vel non. “In making this determination the FNS officer in charge shall consider” five categories of data. Id. These are:

1. The nature and extent of the purvey- or’s food business. Id. at § 278.-1(b)(1).
2. The projected volume of coupon business to be anticipated. Id. at § 278.-1(b)(2).
3. The business integrity and reputation of the purveyor. Id. at § 278.1(b)(3).
4. The need for, and availability of, bonding. Id. at § 278.1(b)(4).
5. “Any other factors which the FNS officer in charge considers pertinent ...”. Id. at § 278.1(b)(5).

No single one of these ingredients is accorded critical weight. To the contrary, the regulation calls upon the FNS to determine eligibility based upon a reasoned evaluation of all such information.

Within each fascicle of the regulation, the same type of balancing is required. 7 C.F.R. § 278.1(b)(3) does not direct that an applicant must necessarily be deemed bereft of business integrity solely because he has been drummed out of a state program. Rather, it directs the FNS to gauge the purveyor’s “business integrity and reputation” (or the lack thereof) by “consider[ation]” of a melange of elements, such as criminal conviction records, judicial determinations in civil cases, evidence of prior fraudulent behavior, signs of attempted circumvention of earlier FSPD Orders, and the like. Id. “Official records of removal from other Federal, State, or local programs,” id. at § 278.1(b)(3)(h), are but a single entrant in this sweepstakes. And, the regulations do not presume to assign dispositive effect to any one of the various desiderata which the FNS officer in charge is directed to review.

It thus becomes all too evident that the Secretary’s actions in Della Valle’s case were trebly flawed. FNS never made any attempt independently to evaluate the plaintiff’s “business integrity and reputation,” but treated his ouster by RIDH from the WIC program as the functional equivalent of a failing grade on this criterion. Then, FNS compounded the error by treating that failing grade as tantamount to flunking the § 278.1(b) test, without performing the reasoned assessment of the five regulatory ingredients which § 278.-1(b) requires. And, as a crowning indignity, FNS made no finding whatever as to whether “the firm’s continued participation will [or will] not further the purposes of the program.” 7 C.F.R. 278.1(k). Once the field director had erred in these important respects, the administrative process became a nullity.

IV.

To be sure, the Secretary’s interpretation of the regulations is entitled to substantial deference. E.g., Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 566, 100 S.Ct. 790, 797, 63 L.Ed.2d 22 (1980); Citizens Savings Bank v. Bell, 605 F.Supp. 1033, 1041 (D.R.I.1985). But, as this court observed earlier in this proceeding, “[t]he true measure of the deference due ... depends upon how persuasive the interpretation appears to be in light of all the attendant circumstances.” Della Valle I, 619 F.Supp. at 1301. See also Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89 L.Ed. 124 (1944); Citizens Savings Bank, 605 F.Supp. at 1042. As the Court has cautioned, a reviewing tribunal cannot permit itself to “slip into a judicial inertia” or mechanistically to “rubberstamp” the agency. Bureau of Alcohol, Tobacco & Firearms v. Federal Labor Relations Authority, 464 U.S. 89, 104 S.Ct. 439, 444, 78 L.Ed.2d 195 (1983). If an application of the regulations in a particular instance is “unwarranted in law,” it cannot be countenanced. Cf Willy’s Grocery v. United States, 656 F.2d 24, 26 (2d Cir.1981), cert. denied, 454 U.S. 1148, 102 S.Ct. 1011, 71 L.Ed.2d 301 (1982) (regulations anent choice of sanctions).

In the case at bar, the Secretary’s myopic reading of his own regulations is totally unconvincing. He seized upon the acknowledged fact of the Market’s removal from the WIC program, and went no further. But, under the Secretary’s own rules, that shortcut was palpably erroneous. The Secretary’s resultant final decision was a vagabond, drifting far afield from the regulations. Such an interpretation, as this case demonstrates, is “unwarranted in law.” Such a peregrine edict, unanchored in the regulatory format, cannot be salvaged by an anfractuous post hoc deciphering of the rules.

The fact that the Secretary could doubtless have crafted a regulation providing for automatic debarment from the food stamp program in the event a vendor was removed from a kindred state activity for dishonest conduct is totally beside the point; the Secretary promulgated no such rule. Having made its regulatory bed, the FNS cannot casually sleep elsewhere.

The situation before the court parallels— but appears more egregious than — that considered in Grand Islander Health Care Center, Inc., v. Heckler, 573 F.Supp. 405 (D.R.I.1983). In Grand Islander, the Provider Reimbursement Review Board (Board) had affirmed the partial denial of reimbursement to a nursing home under the federal Medicare program, 42 U.S.C. § 1395 et seq. The provider claimed its appeal to the district court pursuant to 42 U.S.C. § 1395oo(f)(l). In one aspect of its review, the Board had refused to exercise its independent judgment, instead holding that an unrelated state audit of the same costs was conclusive on the issue. 573 F.Supp. at 414. The Board, in a manner reminiscent of the fashion in which FNS treated the RIDH suspension in this case, “never deigned in any way to examine the reasonableness of [the state] audit or of its underlying methodology.” Id. This court reversed and remanded, stating:

[T]he Board’s failure to evaluate the adequacy of the plaintiff's proffer, its silent declination to review the state of the evidence generally, and its perfunctory acceptance of the Rhode Island audit combine to represent an abuse of the Board’s discretion.
It is the Secretary who, under the Act, has the obligation of overseeing reimbursement for actual, reasonable costs. That obligation cuts two ways: it assures the government of a dollar’s worth of value for a dollar spent; and it assures the prudent provider of reimbursement if and as reimbursement is due. There is scant warrant under either the Act or the regulations for the Secretary mindlessly to delegate this responsibility to a state agency, or to accept a pig in an unexamined state poke in lieu of fulfilling the incumbent fact-finding function. That sort of blind-man’s buff does violence to settled notions of administrative decision-making____

Grand Islander, 573 F.Supp. at 414 (footnote and citation omitted).

Much the same is true of the case at bar. Instead of weighing the evidence as to the plaintiff’s removal from the WIC program (including, for the sake of argument, the state’s investigatory records, see text ante at 392) and formulating his own assessment as to extent to which such debarment, along with the other available data, adversely affected Della Valle’s “business integrity and reputation,” 7 C.F.R. § 278.1(b)(3), FNS’s field director automatically assumed that the state disqualification destroyed the plaintiff’s good name and irredeemably shredded his honesty. Such a knee-jerk response was wholly impermissible. And, the infirmity was then further infected by FNS’s failure to make any attempt whatever to calibrate the overall balance which § 278.1(b) requires or to assess whether or not the WIC fiasco rendéred the Market’s continued engagement as a food stamp vendor counterproductive to the objectives of the Act.

The Secretary’s action is without support in the regulations and has no rational basis; to the contrary, it is entirely arbitrary. The FSPD Order imposed upon the Market in this impulsive fashion cannot be permitted to stand. While it is true that the basis for an administrative finding need not be expressed with fastidious clarity, Kurzon v. United States, 539 F.2d 788, 793 (1st Cir.1976), a finding must be made and an articulated basis must nonetheless exist. The government here has conceded that FNS made no independent evaluation of the situation in the first instance, regarding such an assessment to be unnecessary. “When an agency resorts to errant ostrichism, there is no balm which the court can, in conscience, apply to resuscitate the resultant finding.” Grand Islander, 573 F.Supp. at 414 n. 14.

V.

This does not mean that Della Valle wins the point by default. The Act is tailored to insure judicial flexibility; it specifically provides that, in a proceeding of this genre, the court shall “enter such judgment or order as it determines is in accordance with the law and the evidence.” 7 U.S.C. § 2023. The wide sweep of the language allows the court to shape a remedy to suit the matter at hand. Although it can be argued that this court, given its power to hold a “trial de novo,” 7 U.S.C. § 2023(a), should simply find the facts which FNS overlooked and develop the necessary calculus, that asseveration completely ignores the value of the Secretary’s admitted expertise in matters anent the food stamp program. The interests of both justice and of uniformity in the application of the regulations will best be served by allowing the agency, once the miasma of its legal errors has been dispelled, to consider the matter afresh. See Goodman v. United States, 518 F.2d 505, 512 (5th Cir.1975) (court remanded to FNS for choice of a new sanction after judicial vacatur of an FSPD Order); cf. Arlington Hospital v. Schweiker, 547 F.Supp. 670, 679-80 (E.D. Va.1982) (court remanded for a determination of reimbursable physician billing costs after finding that the agency’s accounting method was not based on the available cost information but instead, reflected a wholly arbitrary judgment).

VI.

For the reasons stated, the agency’s FSPD Order in this matter cannot be permitted to stand. The FNS too hastily plucked a supposed blossom when only the bud was ready.

The government's motion to affirm the Secretary’s debarment of the Market must be, and it hereby is, denied. The July 9, 1985 order disqualifying Della Valle from acting as a retail food stamp vendor for a period of three years is hereby vacated. The case is remanded to the FNS to conduct a de novo administrative review of the Market’s eligibility to continue its participation in the federal food stamp program, consonant with the legal principles set forth in this rescript.-

It is so ordered.

      . Della Valle originally named the Rhode Island Department of Health (RIDH) as a codefendant. The state agency’s motion for summary judgment in its favor was granted, without opposition, on January 7, 1986. Thus, the United States is the sole remaining defendant.

      . WIC is a federal program designed primarily to furnish supplemental foodstuffs and nutrition education to pregnant, postpartum, and breast-feeding women, and to infants and young children. 7 C.F.R. § 246.1 (1985). The administration and enforcement of the WIC program has been entrusted, in the main, to the states. 7 C.F.R. § 246.10(g). In Rhode Island, this responsibility has devolved upon RIDH.

      . The reasonableness of such individualized consideration is readily apparent. If a vendor was removed from a state program for, say, the failure timely to file a form, it would be difficult to justify his ensuing automatic disqualification from a federal program wherein he had complied meticulously with each and every paperwork requirement. It would similarly be as unjust automatically to disqualify Della Valle, or any other grocer, from the federal food stamp program because, to offer another example, his license to sell state lottery tickets was not renewed, (and he was thereby “removed" from this state "program”) for such a reason as insufficient sales, see R.I.Gen.Laws § 42-61-5(b)(f). Or, to take the matter one step further, it is bizarre to think that automatic disqualification should follow removal from a state scheme wholly unrelated to the grocery business, such as the artificial propagation of game animals program, R.I.Gen.Laws § 20-17-1 et seq., for a cause not reflecting dishonesty or the like. Hypothetically, if Della Valle failed to restrain his proverbial peacocks in the proper enclosure required under state law, id. at § 20-17-1, and thereby lost his permit to propagate and raise such birds, id., he could, on the Secretary's reading of the regulatory mosaic, forfeit his right to participate in the federal food stamp program.

      . The reflexive assumption made by the Secretary in this regard was even more dubious in that Della Valle was at the time a qualified food stamp retail vendor. That means, of course, that his integrity had previously passed the Secretary's muster. A blemish on the escutcheon of an unknown quantity may well be more damning than the same blot on the heraldry of one who has previously established his bona fides. Again, this highlights the need for FNS, under existing regulations, to examine each vendor’s circumstances on a case-by-case basis.

      . This court in no way minimizes the seriousness of RIDH's accusations against the Market. The court neither holds nor suggests that reliably documented charges of such a grave nature cannot serve as an adequate predicate for a long-term FSPD Order. The fault here is a methodologic one. The Secretary has promulgated an elaborate regulatory scheme for analyzing whether or not a purveyor should be eligible to participate in the program. Whatever wrongdoing Della Valle may or may not have committed or sanctioned, he is entitled to have FNS make a reasoned assessment of his situation in line with its own criteria.


author: MeNAUGHT, District Judge.

text:
    ANDOR CORP., LTD. et ali v. Stephen M. RICHMOND, Assignee.
    Civ. A. No. 85-4711 Mc.
    United States District Court, D. Massachusetts.
    Jan. 30, 1986.
    Philip Slotnick, Marullo & Barnes, Boston, Mass., for Andor Corp., Ltd.
    Steve Sheehey, Kaye, Fialkow, Richmond & Rothstein, Boston, Mass., for Stephen M. Richmond.
   STATEMENT OF REASONS FOR DENIAL OF INJUNCTIVE RELIEF

MeNAUGHT, District Judge.

This action came on to be heard on a request by plaintiff that the status quo be preserved pending a determination on the merits. Plaintiff asserts that certain assets were purchased from defendant “in reliance upon representations made by defendant to plaintiffs in regard to the character and value of said assets” (from statement by plaintiff counsel on the Civil Cover Sheet, Form JS 44C).

In the Complaint it is alleged that the defendant assignee sold the assets of Pixel Computer, Inc. for one million, two hundred thousand dollars, of which seven hundred, fifty thousand was represented by collectable account receivables of the corporation; that in fact the account receivables were in large part non-existent. Count I is based on “deceit and misrepresentation” by defendant as assignee for Pixel Computer, Inc. Plaintiffs say that experience with those collections over an eight month period resulted in net collections of only $150,-000. Count II is a Chapter 93A claim. Count III is for “unjust enrichment”. It is averred that since the account receivables were to a great extent non-collectable, the plaintiffs have been unable to make scheduled payments under a promissory note to the defendant (a note dated December 28, 1984); that Pixel’s assets in Massachusetts (having been pledged as security) have been taken and are being re-sold. The Complaint would lead the reader to believe that it was plaintiff Wabinosh who originally purchased the Pixel assets. At least that is the impression which this reader received, and I note that this is partially by reason of the allegations in the Complaint and partially because the agreement was not appended to nor made a part of the body of the Complaint.

In the present motion, plaintiffs ask that defendant be restrained from asserting any ownership or interest in a firm known as Pixel U.K. or interfering in its day to day functioning. They ask also that defendant be ordered to sign a paper “necessary to transfer” the “share of stock in Pixel, U.K. and to complete the sales agreement of the agreed-upon shares of stock”.

I have read the affidavits submitted in support of and in opposition to the relief requested. The defendant in his affidavit refers to Pixel Computer, Inc. as the “Old Pixel”, whose assets he sold on December 28, 1984 to Pixel Systems, Inc., a newly formed Massachusetts corporation which he calls “New Pixel”. The obligations of New Pixel were guaranteed by the plaintiffs Andor Corporation, Wabinosh Corporation and Richard Brack. Exhibit A to the affidavit is the December 28, 1984 Purchase and Sale Agreement. New Pixel was the buyer. Included in the assets sold to New Pixel was the stock in a United Kingdom subsidiary of Old Pixel, called Pixel, U.K. Richmond states that there is a lawsuit pending in the United Kingdom to determine the ownership of Pixel U.K. stock, in which he, as plaintiff, has accused Richard Brack of attempting to sell the U.K. stock without right.

The parties to Exhibit A are Stephen M. Richmond, Assignee and Pixel Systems, Inc., a Massachusetts corporation. One of the assets being sold was the stock of Pixel, U.K.

The request for injunctive relief is denied, after consideration of the affidavits submitted (and the helpful arguments of counsel). Richard Brack, president of Andor, was one of the affiants.

As was emphasized by defendant at the hearing, the purchaser was Pixel Systems, Inc., and that corporation is not even a party to the action. The plaintiffs were not parties. They were guarantors of the note for $1,100,000, which note was secured by a security interest in all assets of new Pixel.

According to defendant’s affidavit, the repossession and sale of “New Pixel’s” assets is fait accompli; hence, any order with reference to restraining such sale would be a vain gesture. Secondly, if the present plaintiffs suffered a loss thereby, it appears that money damages would suffice for a remedy. They are not faced with “irreparable harm” if the injunction is denied. As for any claims that the present plaintiffs may have to ownership of Pixel U.K., and the right to operate it, the rights involving Pixel U.K. are the subject of a lawsuit pending in the United Kingdom. We do not have, on the allegations here, a set of circumstances which would warrant interference by this court with the maintenance of that action.

If all proper plaintiffs were named here, I would still have difficulty finding a likelihood of success on the merits of the case. If misrepresentations were made by defendant, the element of reliance seems difficult if not impossible of proof, since Brack apparently had ample opportunity to investigate the worth of the assets, and since the agreement contains a specific provision that the assets were being sold “as is”. The principal portion of the assets was supposedly made up of the accounts receivable. Although disclaimers ordinarily pertain to physical assets, such could not have been the simple situation here. It is obvious also from the agreement that New Pixel acknowledged that its representatives had access to Old Pixel’s books and records.

Finally, New Pixel may be an indispensable party to this action. We recognized at the hearing that if that proposition is correct, joinder would defeat this court’s jurisdiction.


author: RESTANI, Judge:

text:
    Donna KELLEY, et al., Plaintiffs, v. SECRETARY, UNITED STATES DEPARTMENT OF LABOR, Defendant.
    Court No. 85-03-00437.
    United States Court of International Trade.
    Dec. 30, 1985.
    Donna Kelley, pro se.
    Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Platte B. Moring, III, Civ. Div., U.S. Dept. of Justice, Washington, D.C., for defendant.
   Opinion and Order

RESTANI, Judge:

Plaintiffs, former employees of the American Thread Company’s (American Thread) plant in Tallapoosa, Georgia (Tallapoosa plant), challenge the Secretary of Labor’s determination denying eligibility of former employees of the Tallapoosa plant to apply for trade adjustment assistance under section 223 of the Trade Act of 1974 (Act), 19 U.S.C. § 2273 (1982). Certification for eligibility to apply for adjustment assistance requires an affirmative determination by the Secretary of Labor under the three-part test of section 222. The Secretary of Labor determined that the nexus between increased imports and worker separations required by the third element of Section 222 was lacking and thus the workers in question were denied eligibility to apply for adjustment assistance.

This court has authority to review a decision of the Secretary of Labor denying a petition for eligibility to apply for adjustment assistance. 19 U.S.C. § 2395(a) (1982). The court is bound by findings of fact by the Secretary of Labor supported by substantial evidence. 19 U.S.C. § 2395(b) (1982). The issue before the court is, therefore, whether there is substantial evidence on the administrative record to support the Secretary’s determination that there was lacking the requisite causal nexus between increased imports of “like or directly competitive articles” and worker separations.

Before addressing this issue, however, the court must consider defendant’s jurisdictional challenge. Workers may challenge the Secretary of Labor’s final determination on a petition for adjustment assistance by filing an action with this court within sixty days after notice is given. 19 U.S.C. § 2395(a) (1982). 29 CFR § 90.19(a) (1984) provides that the notice referred to in 19 U.S.C. § 2395(a) is notice via publication in the Federal Register. Notice of denial of eligibility to apply for adjustment assistance was published in the Federal Register on January 4, 1985, and plaintiffs’ summons and complaint were not deemed filed until March 28, 1985. Defendant argues that plaintiffs thereby failed to comply with the sixty day statute of limitations and that this court, therefore, lacks jurisdiction over plaintiffs’ substantive cause of action. Normally, in accordance with regulations and under case law, the sixty day period would run from the time constructive notice is given; the date of the Federal Register publication. Section 2395(a), however, is not so specific in its definition of notice. The court concludes, therefore, that the statute requires a consideration of whether notice was proper in the context of other applicable statutes and regulations. Section 223 of the Act provides that the Secretary of Labor must act on a petition for trade adjustment assistance within sixty days after such petition is filed. 19 U.S.C. § 2273(a) (1982). The Secretary of Labor’s final determination was published in the Federal Register approximately four months after plaintiffs’ petition was filed, far exceeding the sixty day statutory provision. Although failure to comply with this deadline does not make the Secretary of Labor’s determination ultra vires, Katunich v. Donovan, 8 CIT -, 594 F.Supp. 744, 748-49 (1984), the court determines that certain consequences flow from a late determination. As previously recognized by this court,

It is well settled that “the essence of due process is the requirement that a person in jeopardy of serious loss [be given] notice of the case against him and opportunity to meet it.” Mathews v. Eldridge, 424 U.S. 319, 348 [96 S.Ct. 893, 909, 47 L.Ed.2d 18] (1976) (quoting Frankfurter, J., concurring in Joint Anti-Facists Committee v. McGrath, 341 U.S. 123, 171-72 [71 S.Ct. 624, 648-49, 95 L.Ed. 817] (1951)) (emphasis added). It is also true that “because of the ex parte nature of the certification process, and the remedial purpose of the trade adjustment assistance program, the Secretary is obliged to conduct his investigation with the utmost regard for the petitioning workers.” Local 167, International Molders and Allied Workers’ Union v. Marshall, 643 F.2d 26, 31 (1st Cir.1981).

Estate of William Finkel v. Donovan, 9 CIT-, 614 F.Supp. 1245, 1248-49 (1985). Particularly where, as here, a party is proceeding pro se before the Secretary of Labor, the court finds that the Secretary’s failure to comply with the statutory time constraints regarding issuance of a final determination makes it inappropriate to hold that publication in the Federal Register places plaintiffs on constructive notice and thereby marks the beginning of the sixty day statute of limitations. Congress could not have intended a pro se party to constantly search the Federal Register for the final determination of the Secretary of Labor for months beyond the sixty days within which such determination is due under the statute. Under the circumstances of this case, actual notice should have been provided and constructive notice will not mark the running of the statute of limitations. In a somewhat similar situation the court noted, “[t]he cost and administrative burden of conveying the additional information is minimal when compared with the benefits reaped by the parties and the court in devoting their efforts to the merits of the case rather than to procedural issues.” Tyler v. Donovan, 3 CIT 62, 66, 535 F.Supp. 691, 694 (1982). Plaintiffs did not receive actual notice of the negative determination until February 18, 1985. By filing a summons and complaint on March 28, 1985, plaintiffs were well within the sixty day statute of limitations.

As indicated, the court must review the Secretary’s decision to determine if it is supported by substantial evidence. Substantial evidence is characterized as “ ‘more than a mere scintilla.’ ” Dan Stipe v. U.S. Department of Labor, 9 CIT-, Slip Op. 85-112 at 3 (October 25, 1985) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938)). “It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Id. The Office of Trade Adjustment Assistance (OTAA), is charged with conducting investigations of petitions for adjustment assistance. 29 C.F.R. § 90.12 (1984). Although OTAA has a duty to investigate, Cherlin v. Donovan, 7 CIT-, 585 F.Supp. 644, 647 (1984), “[t]he court must show ‘substantial deference’ to the methods chosen by Labor to execute its statutory responsibilities, ‘only remanding a case if [the method] is so marred that [Labor’s] finding is arbitrary or of such a nature that it could not be based on ‘substantial evidence.’ ’ ” Dan Stipe, Slip Op. 85-112 at 4 (quoting United Glass & Ceramic Workers of North America v. Marshall, 584 F.2d 398, 405 (D.C.Cir.1978)).

In completing its investigation, OTAA conducted customer surveys based on sales information provided by American Thread. The surveys compared sales data from 1983 with 1982 and data from the first eight months of 1984, the year of the plant closing, with the same period in 1983. It is clear that OTAA may use surveys to establish whether there is the requisite nexus between increased import penetration and worker separations. Dan Stipe, Slip Op. 85-112 at 4; Cherlin, 585 F.Supp. at 647 (both citing United Glass, 584 F.2d at 405 and Local 167, International Molders and Allied Workers Union v. Marshall, 643 F.2d 26, 29-31 (1st Cir.1981)).

OTAA surveyed five of the six companies that decreased their purchases of cotton and synthetic sewing thread from the Tallapoosa plant in 1983 as compared to 1982. The one company not surveyed decreased its purchases by less than five percent of the total decline represented by the other five companies. Of these five companies, none reported purchases of imported cotton or synthetic thread during the 1982— 83 period. In comparing the first eight months of 1984 with the same period in 1983, OTAA surveyed three of the six companies that decreased purchases from the Tallapoosa plant during that period. The three companies not surveyed decreased their purchases from the Tallapoosa plant by more than twice as much during this period as those companies that were surveyed, with one of the companies not surveyed accounting for almost two-thirds of the total decline of the six companies. No explanation was offered on the record for the failure to survey these three companies. The failure to consider data from the company that accounted for the largest decline in orders during the 1983-84 period or to explain the absence of this data from the record determines that the methodology was not in accordance with law and, as such, cannot support a conclusion that the Secretary of Labor’s determination is supported by substantial evidence.

Defendant relies heavily on OTAA’s data for the 1982-83 period in arguing that the Secretary of Labor’s determination is supported by substantial evidence. Defendant makes no mention, however, of the 1983-84 survey data. As noted, the worker separations took place in 1984. It is presumed, therefore, that, absent explanation for an alternative approach, 1984 is the base period for the investigation and that data for the 1983-84 period should be considered. See Katunich, 594 F.Supp. at 752. Thus, although the survey of the 1982-83 period appears to have been conducted in accordance with law, survey data of those earlier years is insufficient in itself to satisfy the substantial evidence standard. See id. Additional data compiled by OTAA shows that although there was not a dramatic change in production or sales at the Tallapoosa plant between 1982 and 1984, there was a significant decline in employment at the Tallapoosa plant, both in numbers of employees and in employee hours, in 1983 as compared to 1982 and during the first eight months of 1984 as compared to the same period in 1983. Further, OTAA states that imports of cotton and synthetic thread increased by 46.4 percent in 1983 over the 1982 level and by 75.5 percent during the first six months of 1984 compared with a similar period in 1983. Together, the lack of a complete survey and the lack of any identification of the cause of worker separations between 1982 and 1984 as something other than the large increase in imports, renders the decision unsupported by substantial evidence.

Plaintiff challenges the scope of the investigation because OTAA and the Secretary of Labor failed to consider the impact of imports such as shoes and luggage on the sale of domestic cotton and synthetic thread or the impact of immigration on the United States labor force. The third element of section 222 requires that a substantial cause of the worker separations must be imported articles “like or directly competitive” with articles produced by the workers whose petition for adjustment assistance is being considered. 19 U.S.C. § 2272(3) (1982). Case law interpreting this provision establishes that to be “like or directly competitive” within the meaning of the statute, the imported articles must be “ ‘interchangeable with or substitutable for’ the article under investigation.” Dan Stipe, Slip Op. 85-112 at 5 (quoting Holloway, 585 F.Supp. at 1430, quoting Machine Printers, 595 F.2d at 862). Under this standard, plaintiffs’ argument on the need to consider the impact of imported finished articles and of immigrant labor fails. See also United Shoe Workers of America, AFL-CIO v. Bedell, 506 F.2d 174, 186-87 (D.C.Cir.1974) (shoe counters and shoes are not “like or directly competitive” under predecessor to section 222); International Union, United Auto, Aerospace and Agricultural Implement Workers of America v. Donovan, 8 CIT-, 592 F.Supp. 673, 679 (1984) (automotive wheels and automobiles are not “like or directly competitive”); Gropper v. Donovan, 6 CIT -, 569 F.Supp. 883, 887 (1983) (finished fabric and knit fabric garments are not “like or directly competitive”).

Finally, plaintiff contends that there was a lack of substantial evidence to support a determination on hand knitting yarn because no survey was conducted as to this article. As noted, however, plaintiffs’ petition for adjustment assistance, listed only “cotton and synthetic sewing thread” as an article produced by the Tallapoosa plant, the sale or production of which was being hurt by increased imports. In addition, hand knitting yarn is not “like or directly competitive” with cotton and synthetic sewing thread. OTAA was thus justified in so limiting the scope of its investigation, thereby excluding hand knitting yarn from the survey of Tallapoosa plant customers.

The court concludes that this matter must be remanded to the Secretary of Labor for further development of the administrative record on the issue of whether increased imports of cotton and synthetic thread “contributed importantly” to worker separations at the Tallapoosa plant.

      . One determination was issued covering petitions filed by employees of American Thread’s Tallapoosa and Willimantic plants. 50 Fed.Reg. 569. Investigations of those petitions were conducted separately, in large part, and only the Tallapoosa determination is currently before the court.

      . Section 222 provides:
      The Secretary shall certify a group of workers as eligible to aply for adjustment assistance under this part if he determines—
      (1) that a significant number or proportion of the workers in such workers’ firm or an appropriate subdivision of the firm have become totally or partially separated, or are threatened to become totally or partially separated,
      (2) that sales or production, or both, of such firm or subdivision have decreased absolutely, and
      (3) that increases of imports of articles like or directly competitive with articles produced by such workers’ firm or an appropriate subdivision thereof contributed importantly to such total or partial separation, or threat thereof, and to such decline in sales or production.
      For purposes of paragraph (3), the term "contributed importantly” means a cause which is important, but not necessarily more important than any other cause.
      19 U.S.C. § 2272 (1982, & 1983 Supp. I).

      . See subparagraph (3) of section 222 in footnote 2.

      . Regulations governing these proceedings break down this 60 day period further; a recommendation by the Office of Trade Adjustment Assistance (OTAA) on a petition is due within 45 days after such petition is filed and a final determination by the Secretary of Labor is due 15 days thereafter. 29 C.F.R. §§ 90.15-90.16 (1984).

      . Defendant’s procedures may have been further defective in that notice of a negative determination must be given promptly to the "group of workers concerned." 29 C.F.R. § 90.34 (1984). Defendant claims that it provided such notice to American Thread’s personnel manager on January 2, 1985. Not only was this notice sent to an office in a different state from the one in which the plant was located, but it can hardly be said to have been sent to the "group of workers concerned."

      . In Waschko v. Donovan, 4 CIT 271 (1982), this court held that plaintiff, who filed its summons and complaint 61 days after the Secretary of Labor published his negative determination in the Federal Register, was time barred by the statute of limitations. Waschko is distinguishable from the case at bar, however, because the court in Waschko made an affirmative finding that the Secretary of Labor published the negative determination within the 60 day limit imposed by the statute. Id. at 272.

      . Plaintiff’s petition alleged that cotton and synthetic sewing thread was the article produced by the Tallapoosa plant, the sale or production of which was being hurt by increased imports.

      . An "X” on the Tallapoosa plant customer list marked next' to the company that decreased orders by the largest amount during the 1983-84 period may indicate that this company was surveyed. In any event, survey data from this company was omitted from the record without explanation.

      . The record includes an explanation for the poor performance of U.S. industrial thread producers in 1982. There is no suggestion of a connection, nor is there substantial evidence on the record from which to infer such a link, however, between the problems of the industry in general in 1982 and the worker separations that occurred at the Tallapoosa plant in 1983 and 1984.