author: ZIEGLER, District Judge.

text:
    Albert T. GALL, Plaintiff, v. UNITED STATES STEEL CORPORATION, Defendant.
    Civ. A. No. 83-982.
    United States District Court, W.D. Pennsylvania.
    Dec. 3, 1984.

      Joseph I. Lewis, Pittsburgh, Pa., for plaintiff.
    James T. Carney, Pittsburgh, Pa., for defendant.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

ZIEGLER, District Judge.

(1) This is a civil action for pension benefits allegedly wrongfully withheld by United States Steel Corporation in violation of the Veteran’s Reemployment Act. 38 U.S.C. § 2021(b)(1).

(2) Jurisdiction is based on 28 U.S.C. § 1331.

(3) Plaintiff, Albert T. Gall, contends that defendant, United States Steel Corporation, failed to properly calculate pension benefits when he retired on June 30, 1982 because plaintiff was an employee of defendant when he was inducted into the armed forces on September 14, 1943, and not a new employee when he returned to defendant’s employ on April 2, 1946, following military service.

(4) Plaintiff testified that he was hired by defendant at the Duquesne Works on October 14,1939; transferred to the Homestead Works on August 2, 1943; inducted into the armed forces on September 14, 1943; worked for defendant until September 17, 1943; served in the armed forces until February 1,1946; returned to defendant’s employ at the Duquesne Works on April 2, 1946; and retired on June 30, 1982. Thus, according to plaintiff, United States Steel Corporation improperly calculated his pension benefits when it utilized April 2, 1946 as the date of commencement of continuous employment.

(5) The term “continuous service” is important for pension purposes because an employee’s pension is calculated from the last hiring date prior to retirement. See Defendant’s Exhibit N at 69-70. The pension plan between defendant and the United Steelworkers of America provides that continuous service shall not be broken by qualified military service after May 1, 1940 if the employee is reemployed as required by law. Id. at 70. Thus, if the last hiring date of plaintiff prior to retirement was April 2,1946, plaintiff’s monthly pension of $852.29 is correct. On the other hand, if plaintiff was an employee of defendant pri- or to qualified military service, he is entitled to credit for the period from September 17, 1943 to April 1, 1946, and this credit, according to defendant’s counsel, will produce an approximate monthly pension increase of $85.

(6) We find that plaintiff has established by a preponderance of the evidence that Albert T. Gall was an employee of defendant when inducted into the armed forces on September 14, 1943 and therefore plaintiff was entitled by 38 U.S.C. § 2021(a)(A)(i) to “be restored to such position or to a position of like seniority, status, and pay ...” when he sought reemployment on April 2,1946.

(7) We find that plaintiff has established by a preponderance of the evidence that, when Albert T. Gall was reemployed by defendant on April 2, 1946, he was entitled by 38 U.S.C. § 2021(b)(1) to be “restored or reemployed without loss .of seniority.” Moreover, there is no longer any dispute that pension benefits, under the circumstances here presented, are protectible seniority rights under 38 U.S.C. § 2021(b). Alabama Power Co. v. Davis, 431 U.S. 581, 97 S.Ct. 2002, 52 L.Ed.2d 595 (1977).

(8) Congress has provided that an employee who is reemployed following service in the armed forces shall be entitled to “such status” the employee “would have enjoyed if such person had continued in such employment” from the time of entering the military service until the- time of reemployment. 38 U.S.C. § 2021(b)(2).

(9) We find the evidence preponderates that Albert T. Gall was inducted for training and service on September 14, 1943, while employed by defendant, as required by 38 U.S.C. § 2021(a), although he did not report for basic training at Camp Meade until October 5, 1943.

(10) We reject the motion that an employee who has been inducted, sworn and ordered to report within three weeks is not entitled to the protections of the Act. Congress did not intend to deny protection under such circumstances because an employee could be otherwise discharged by an employer, without recourse, merely because the employee had been inducted in the armed forces but had not reported for training.

(11) Having determined that plaintiff was entitled to the protections of the Act following his induction on September 14, 1943, we turn to the question whether plaintiff was an employee of defendant following induction. The records of defendant establish that plaintiff was an employee until September 17, when he allegedly was suspended, subject to discharge, for refusing an assignment and threatening a foreman. Plaintiff testified that the incident never occurred. Plaintiff further testified that he was unaware of any Act of Congress protecting employees when he left defendant’s employ for training and service on September 17, 1943.

(12) The personnel records of defendant contain the following notation: “I want to get my pay at once. I hereby waive the 5 day notice of termination given me on 9/17/43. Albert Gall. September 20, 1943.” The same exhibit notes: “9-20-43. Refused to do work assigned. Says he is going to the Army also.” See Defendant’s Ex. G. According to defendant, this evidence establishes that plaintiff waived his rights under the Act because plaintiff resigned rather than face discharge, and therefore was not an employee within the meaning of 38 U.S.C. § 2021.

(13) We find that such evidence does not establish that Albert T. Gall waived his rights under the Act. Defendant had the right to discipline plaintiff prior to the date on which the protection of federal law became applicable because the alleged incident occurred on September 11, 1943. However, defendant delayed until after plaintiff was inducted and at that time Congress required that an employee must be restored to “such status” of employment and seniority that he “would have enjoyed if such person had continued in employment.” To hold otherwise would permit an employer to schedule grievance and arbitration proceedings after the employee had reported for training and service. In short, neither defendant, nor the grievance machinery of the collective bargaining agreement, could deny plaintiff the rights granted by Congress.

(14) We also find that such evidence does not establish a knowing waiver of the protections of federal law. As rehearsed, plaintiff testified that he was unaware of the relevant statute and the records of defendant are devoid of evidence that defendant advised plaintiff of his rights under the Act. We cannot find a knowing waiver of important rights on this record. Congress has provided that the Act should be liberally construed, Fishgold v. Sullivan Drydock Co., 828 U.S. 275, 285, 66 S.Ct. 1105, 1111, 90 L.Ed. 1230 (1946) and it strikes us as reasonable that a 20-year old employee, who is faced with the imminent departure for military service, may determine “to get my pay at once” rather than pursue a grievance while serving his country.

(15) We find no credible evidence that plaintiff was discharged from employment. Plaintiff was suspended on September 17, 1943. Defendant’s Exhibit G is a termination notice dated September 20, 1943 but the document establishes that defendant did not proceed with adjudication of the alleged infraction. Accordingly, we find the evidence preponderates that Albert Gall was an employee of defendant who was entitled to the protections of federal law commencing on September 14, 1943 and that plaintiff neither resigned nor was discharged.

(16) Defendant’s primary defense is laches. United States Steel Corporation contends that plaintiff unreasonably delayed in asserting credit for continuous service for the period from September 17, 1943 to April 2, 1946 because the company listed plaintiff’s continuous service data in annual statements beginning in 1976; recited plaintiff’s date of employment as April 2, 1946 on various seniority and promotional rosters beginning on July 1, 1974, and thereafter; and granted vacation time based on a date of employment of April 2, 1946 for over 20 years. However, defendant fails to distinguish between a claim for retroactive seniority and a claim for pension benefits. In Alabama Power Co. v. Davis, 383 F.Supp. 880, 892 (S.D.Ala.1974), aff'd on other grounds, 542 F.2d 650 (5th Cir.1976), 431 U.S. 581 (1977), the Supreme Court countenanced a delay of 34 years in asserting a pension based claim. The law is now clear that a pension claim does not accrue until an employee retires. Alabama Power Co., supra; Troiani v. Bethlehem Steel Corp., 570 F.Supp. 1140 (E.D.Pa.1983); Letson v. Liberty Mutual Insur. Co., 523 F.Supp. 1221 (N.D.Ga.1981). We hold that Albert Gall’s claim for pension benefits accrued on June 30,1982, although he could have elected to start the clock running when the anticipatory breach occurred at the time that the earlier decisions were rendered.

(17) We find that plaintiff has sustained his burden of proving that he did not inexcusably or unreasonably delay in pursuing this claim and that defendant was not prejudiced. Plaintiff retired on June 30, 1982 and acted expeditiously in contacting the Department of Labor, and in filing suit on April 26, 1983. Suit within 10 months is neither inexcusable nor unreasonable. Also, defendant cannot contend that it was prejudiced for several reasons. First, Congress has provided that no statute of limitations, federal or state, shall apply to such actions, 38 U.S.C. § 2022, denouncing in the process the rule of Gruca v. United States Steel Corp., 495 F.2d 1252 (3d Cir.1974) and Carmalt v. General Motors Acceptance Corp., 302 F.2d 589 (3d Cir.1962). Second, defendant cannot argue that it suffered prejudice from June 30, 1982 to the date suit was filed. And third, even if we look to the pre-war period for prejudice, the records of defendant are adequate to present its contentions to the fact-finder.

(18) We have purposely imposed the burden of disproving laches on plaintiff. We are mindful of the rule that the burden falls upon a defendant prior to expiration of the statute of limitations and on a plaintiff thereafter. In light of our ruling, we need not enter the thicket concerning whether the amendment by Congress, i.e., no statute of limitation shall apply to these claims, must be applied retroactively.

(19) In summary, we find that Albert T. Gall is entitled to credit for the period of military service as continuous service under the pension agreement between defendant and United Steelworkers of America. Plaintiff left defendant’s employ as a laborer at the Homestead Works on September 17, 1943 and was reemployed as a laborer at the Duquesne Works on April 2, 1946. As stated by counsel for defendant at argument, service at various plants can be combined for the purpose of calculating continuous service and pension benefits. We find defendant’s argument that plaintiff was a new employee following military service to be against the weight of the credible evidence.

(20) Judgment will be entered for plaintiff and against defendant for the appropriate monthly pension benefit, as well as judgment for plaintiff for the loss of past pension payments from June 30, 1982. Defendant will also be required to make future pension installments in accordance with these findings.


source: Caselaw Access Project

author: BATTISTI, Chief Judge.

license: Public Domain

text:
    Gerald D. BENNETT, Judith Grimm, Intervenor-Plaintiff. v. Samuel LOPEMAN, Rollin D. Jauchius, Raymond Ross, Roberta Steinbacher, Ohio Bell Telephone Company.
    No. C83-769.
    United States District Court, N.D. Ohio, E.D.
    Dec. 4, 1984.

      Robert H. Bonthius, Jr., David B. Dawson, Thomas W. Weeks, Cleveland, Ohio, for Bennett.
    Pat Booth Rosenthal, Youngstown, Ohio, for Grimm.
    Rita S. Eppler, Asst. Atty. Gen., Columbus, Ohio, for Lopeman, Jauchius, Ross and Steinbacher.
    Thomas A. Linton, Cleveland, Ohio, for Ohio Bell Telephone Co.
   MEMORANDUM OPINION AND ORDER

BATTISTI, Chief Judge.

This matter comes before the Court on Defendants’ Motion for Summary Judgment and Plaintiff’s Cross-Motion for Summary Judgment, both pursuant to Federal Rule of Civil Procedure 56. This Court denies Defendants’ Motion for Summary Judgment and grants Plaintiff’s Motion for Summary Judgment for the reasons outlined below.

I.

A. FACTS

Plaintiff, Gerald Bennett, was a maintenance employee of the Ohio Bell Telephone Company until May 11, 1982 when he was discharged. On June 1, 1982. Plaintiff applied for unemployment benefits at the Ohio Bureau of Employment Services (OBES). On July 2, 1982, Robert Stein-backer, the OBES Administrator, denied Plaintiff’s application for benefits on the ground that his discharge was for just cause and that he was therefore ineligible for unemployment compensation under Ohio Revised Code § 4141.29(D)(2)(a).

Plaintiff Bennett filed a timely reconsideration request under Ohio Revised Code § 4141.28(G)(1). On September 20, 1982, the OBES administrator reversed the initial denial of benefits. Mr. Bennett began receiving unemployment benefits. Ohio Bell Telephone Company appealed the OBES reconsideration decision to the Unemployment Compensation Board of Review (hereinafter referred to as the “Board”) pursuant to O.R.C. § 4141.28(H). On October 8, 1982, a hearing was held before a Board referee. On October 18, 1982, the referee issued a decision reversing the OBES administrator’s reconsideration decision and thereby denied Plaintiff’s benefits. On October 22,1982, Mr. Bennett filed an application with the Board for further appeal pursuant to O.R.C. § 4141.28(L). Defendant Charles S. Lopeman is Chairman of the Board of Review; Defendants Rollin D. Jauchius and Ray Ross are members of that Board.

On November 24, 1982, the Board denied Plaintiffs’ application for further appeal. This decision in effect affirmed the referee’s denial of benefits to Plaintiff. It is undisputed that the Board’s records indicate that the Board’s decision was mailed to Bennett’s correct address on November 24, 1982.

Bennett, however, never received this letter. He continued to receive benefit checks up to and including January 8,1983. On or about January 22, 1983, Plaintiff Bennett received from OBES a notice dated January 21, 1983, stating that he had been overpaid $3,381.00 in unemployment benefits since November 24, 1982, the date on which Bennett’s last appeal had been denied. Plaintiffs contend and Defendants do not dispute that this was the first time Mr. Bennett learned that his application for further appeal had been denied. Plaintiff did not file an appeal with the Cuyahoga County Court of Common Pleas within. 30 days of the date the Board’s decision was mailed.

B. PROCEDURAL HISTORY.

On February 22, 1983, Mr. Bennett filed a motion for leave to proceed in forma pauperis and a complaint in this action in this Court. Later on February 22, 1983, Mr. Bennett filed a notice of appeal in Cuyahoga County Common Pleas Court appealing the Board’s determination of his appeal and application to institute further appeal. Bennett v. Administrator, et al., No. 55512. On April 13, 1983, Defendant Administrator moved to dismiss Bennett’s state court appeal. On June 7, 1983, Bennett filed a Motion for Stay of Proceedings and Reservation of Federal Constitutional Questions in the Common Pleas Court. On June 17, 1983, the Court of Common Pleas granted the stay.

II.

The issue before this Court is whether Ohio Revised Code § 4141.28(0) violates the due process and equal protection clause of the 14th Amendment of the United States Constitution. The statute preserves an unemployment benefits claimant’s right to appeal upon the claimant’s filing a notice of appeal within 30 days of the date of mailing of the last administrative decision on the claim. The instant case is essentially a story of a wayward letter and whether Plaintiff should be denied his appeal rights because of the circumstance of his not receiving the letter.

This Court will first determine the jurisdictional and procedural issues raised in Defendants’ Summary Judgment Motion before moving to the merits.

A. THE ELEVENTH AMENDMENT

Defendants Lopeman, Jauchius, Ross, and Steinbacher (hereinafter referred to as “State Defendants”) contend that the Eleventh Amendment bars Plaintiff’s suit against them. The Eleventh Amendment states:

The judicial power of the United States shall not be construed to extend to any suit in law or in equity, commenced or prosecuted against one of the United States by citizens of another state, or by citizens or subjects of any foreign state.

Defendant misapprehends the meaning of the Eleventh Amendment and its relationship within the Constitutional framework, particularly with regard to the 14th Amendment. The core meaning of the Eleventh Amendment, and the impetus for its adoption, was the protection of state treasuries from the enforcement of judgments by out-of-state creditors. See Chisolm v. Georgia, 2 Dall. 419 (1793); see also H. Hart & H. Wechsler, The Federal Courts and the Federal System 253-54 (2d ed. 1973). Since in the instant case, Plaintiffs do not seek monetary damages but only injunctive and declaratory relief, the core meaning of the Eleventh Amendment is not implicated.

As the Supreme Court has developed Eleventh Amendment jurisprudence, the proposition that any claim against a state is barred has been all but destroyed. In Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), the Court ruled that the attorney general of Minnesota could be sued to enjoin the enforcement of state statute which violated the Constitution. Justice Peckham’s majority opinion for the Court states:

The act to be enforced is alleged to be unconstitutional, and if it be so, the use of the name of the State to enforce an unconstitutional act to the injury of complainants is a proceeding without the authority of and one which does not affect the state in its governmental capacity .... If the act which the [state official] seeks to enforce be a violation of the Federal Constitution, the officer in proceeding under such enactment comes into conflict with the superior authority of that Constitution, and he is in that case stripped of his official or representative character and is subjected in his person to the consequences of his individual conduct. The State has no power to impart to him any immunity from responsibility to the supreme authority of the United States.

Ex Parte Young, 209 U.S. at 159-60, 28 S.Ct. at 454.

In the instant case, plaintiffs are proceeding against the state officials responsible for enforcing what they allege is an unconstitutional state statute. Plaintiffs are acting consistent with the “stripping doctrine” as stated in Ex Parte Young. Subsequent cases have affirmed the Ex Parte Young doctrine. See Florida Dept. of State v. Treasure Salvors, Inc., 458 U.S. 670, 102 S.Ct. 3304, 73 L.Ed.2d 1057 (1982); Alabama v. Pugh, 438 U.S. 781, 98 S.Ct. 3057, 57 L.Ed.2d 1114 (1978); Georgia R.R. & Banking v. Redwine, 342 U.S. 299, 72 S.Ct. 321, 96 L.Ed. 335 (1952).

As to the equitable relief sought, two cases frame the parameters of the 11th Amendment analysis. In Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974), the Court ruled that the Eleventh Amendment does not bar prospective injunctive relief, only retroactive injunctive relief. The distinction between prospective relief and retroactive relief is often puzzling. However, the fact situation in Quern v. Jordan, 440 U.S. 332, 99 S.Ct. 1139, 59 L.Ed.2d 358 (1979), is sufficiently analagous to the instant case to serve as a guide. In Quern, class action plaintiffs claimed that they had been wrongfully denied welfare benefits by a public official in Illinois. Although plaintiffs were not entitled to receive retroactive welfare benefits, Edelman, 415 U.S. at 651, 94 S.Ct. at 1347, the district court and Seventh Circuit ordered state officials to send to each member of the plaintiff class a notice informing the recipient that he had been denied benefits and a notice of appeal by which he could request a hearing on the denial of benefits.

The Supreme Court ruled in Quern that such a notice of appeal constitutes permissible prospective relief which does not violate the Eleventh Amendment. “We think this relief falls on the Ex parte Young side of the Eleventh Amendment line rather than on the Edelman side.” Quern, 440 U.S. at 347, 99 S.Ct. at 1148. The Supreme Court’s dicta in that case is relevant:

Whether a recipient of notice decides to take advantage of those available state procedures is left completely to the discretion of that particular class member; the federal court plays no role in that decision. And whether or not the class member will receive retroactive benefits rests entirely with the State, its agencies, courts and legislature, not with the federal court.

Quern, 440 U.S. at 348, 99 S.Ct. at 1149.

While state defendants are correct in citing Quern for the proposition that § 1983 was not intended to override the traditional sovereign immunity of the states, the case does not deny all relief against the state but only on retroactive monetary awards from the state treasury. Florida Dept. of State v. Treasure Salvors, Inc., 458 U.S. 670, 102 S.Ct. 3304, 73 L.Ed.2d 1057 (1982).

It is true that Treasure Salvors stated that a state agency or department may not be sued unless it has waived its immunity. The Court went on to state, however, that “The Eleventh Amendment does not bar all claims against officers of the state, even when directed to actions taken in their official capacity and defended by the most senior legal officers in the executive branch of the state government.” Id. 458 U.S. at 684, 102 S.Ct. at 3314. The Court recognized the irony of Ex parte Young that “unconstitutional conduct by a state officer may be ‘state action’ for purposes of the Fourteenth Amendment yet not attributable to the state for purposes of the Eleventh.” Id. at 685, 102 S.Ct. at 3315. This Court affirms the underlying “fiction” of Ex parte Young and embraces its theory: without a means to sue public officials, individuals would be denied the very mechanism contemplated under § 1983 to vindicate their rights. (Since the instant action seeks only declaratory relief and the state defendants are named only in their individual capacities, the Eleventh Amendment does not bar this action.

B. QUASI-JUDICIAL IMMUNITY.

State Defendants Lopeman, Jauchius, and Ross assert that they are absolutely immune from liability because their conduct is of a judicial or quasi-judicial nature. Once again, Defendants cite cases in which the plaintiff sought monetary damages; these authorities are therefore inapposite to the instant case where only declaratory relief is sought. Specifically, in Harlow v. Fitzgerald, 457 U.S. 800, 819 n. 34, 102 S.Ct. 2727, 2739 n. 34, 73 L.Ed.2d 396 (1982), the Court stated this restriction: “We emphasize that our decision applies only to suits for civil damages arising from actions within the scope of an official’s duties and in objective good faith. We express no view as to the conditions in which injunctive or declaratory relief might be available.” (emphasis in original).

The courts have not barred all injunctive or declaratory relief against officials exercising discretionary authority. Furthermore, the balancing of competing values which is contemplated in the immunity determination for such officials, see Butz v. Economou, 438 U.S. 478, 507-08, 98 S.Ct. 2894, 2911, 57 L.Ed.2d 895 (1978), does not argue in favor of immunity in the instant case. Any declaratory relief granted by this Court will not interfere with the discretionary functions of the named defendants. Rather, what is at issue here is what procedures the officials must take to “publicize” the results of the exercise of their discretion, i.e. how are claimants to be notified of their review status and appeal rights. This Court need not address the issue of good faith immunity in this context as that doctrine too is applicable only to damage actions.

C. RES JUDICATA/COLLATERAL ESTOPPEL

Defendants claim that the doctrines of res judicata and collateral estoppel serve as absolute bars to Plaintiff’s action. Although not very clearly stated, Defendants’ argument seems to be that since Plaintiff’s unemployment benefits claim was decided on the merits by the OBES Administrator and the Unemployment Compensation Board of Review that the Plaintiff has had a final decision by a state administrative board on his claims, this Court may not consider the issues.

First, defendants once again do not understand the particular nature of Plaintiff’s action. This suit does not seek a determination of Plaintiff’s claim to benefits on the merits; rather it is to establish Plaintiff’s right to appeal a decision on the merits. This Court’s decision does not address the substantive findings of the administrative agencies below. Hence, res judicata is not implicated in this case. Defendants, nonetheless, assert that res judicata prohibits future litigation on issues which were decided as well as on those issues which could have been decided. However, in the instant case, the matter which Plaintiff challenges did not arise at either the OBES Administrator level nor at the Board review stage. Namely, Plaintiff attacks the means by which the time his right to appeal begins to run. He clearly could not challenge his ability to appeal until the Board had issued its decision and mailed out its notice. Indeed, it is entirely conceivable that Plaintiff would not have been here today if he had received that letter. Additionally, Plaintiff could not have raised a constitutional challenge before the Board of Review since it is not within the purview of that body to decide constitutional questions. The only matter before the Board was the correctness of the Administrator’s decision to award Plaintiff benefits.

Furthermore, the two principal cases Defendants cite in support of their res judicata argument involve issues which were ripe at the time of the original administrative or judicial proceeding. In McCulloch Inter state Gas Corp. v. Federal Power Commission, 536 F.2d 910 (10th Cir.1976), the Federal Power Commission on July 17, 1973 ruled that it lacked jurisdiction to prevent the construction of a third party’s gas pipeline that McCulloch Corporation claimed was interfering with its gas production. McCulloch did not seek judicial review of the FPC denial of jurisdiction. Id. at 912. Subsequently, on April 12, 1974, the FPC granted Phillips a limited license to sell and deliver gas and then on December 12, 1974, a permanent license. McCulloch once again alleged that the FPC had jurisdiction although it had failed to appeal the jurisdiction twice before. Id. at 912. It is therefore understandable that the 10th Circuit would deny McCulloch’s appeal as being collaterally estopped: “A party may not collaterally attack the validity of a prior agency order in a subsequent proceeding ____ An agency’s determination of facts underlying its conclusion that jurisdiction was lacking must be given effect in subsequent litigation.” Id. at 913. Hence, in McCulloch the jurisdictional issue had been decided earlier but was not appealed by McCulloch until a subsequent administrative proceeding, namely Phillips’ application for a license.

In the case of Coogan v. Cincinnati Bar Assoc., 431 F.2d 1209 (1970), Coogan was indefinitely suspended from the practice of law by the Ohio Supreme Court. Coogan filed suit in District Court claiming a violation of his rights as secured under the Civil Rights Act. Coogan claimed that he had an agreement with the Cincinnati Bar Association that he be suspended from practice for six months. The Court of Appeals noted that Coogan had never raised the fact of any such agreement with the bar association at the administrative level before the Board of Commissioners and that he never objected to the Board of Commissioners about their use of an affidavit (an objection which he subsequently claimed in his district court case under the Civil Rights Act.) Hence, the Court of Appeals was not sympathetic to Coogan’s use of the Civil Rights Act to challenge evidentiary and factual findings of the Board of Commissioners made final in the Ohio Supreme Court’s decision to disbar Coogan. Once again, the issues Coogan sought to raise in his federal court case were already present and amenable to being raised at the administrative level; the Plaintiff in the instant case had no such opportunity.

This Court finds it astounding that Defendant would state that “[t]he fact that plaintiff now challenges the administrative decision in this matter as made in violation of his constitutional rights is irrelevant.” (emphasis added). The central issue is indeed whether constitutional rights have been violated; the procedural consideration that this Court must keep in mind is when this violation, if any, became obvious and whether such objection could have been raised at that time. In this case, the Court finds the alleged violation of Plaintiff’s constitutional rights arose only after the two previous proceedings. Hence, res judicata is inapplicable and not a bar to the instant action.

D. ABSTENTION & PENDENT JURISDICTION

This Court has jurisdiction of this action under 28 U.S.C. § 1343(3), (4), 28 U.S.C. § 1331, 28 U.S.C. § 2201 & 2202. This is a § 1983 action seeking vindication of civil rights guaranteed under the Constitution. Hence, federal question subject matter jurisdiction is present.

The Court also need not abstain because of the claim Plaintiff has filed in Common Pleas Court. Plaintiff has properly filed a motion to stay those proceedings and reserve the constitutional questions which this Court is empowered to hear. Furthermore, the state court action seeks to determine whether Plaintiff is entitled to benefits; this action addresses the anterior question about whether Plaintiff is even entitled as a matter of appeal to be in Common Pleas Court.

Abstention by this Court is not warranted in the instant case. Pullman abstention does not apply because there is no uncertainty as to the interpretation of ORC § 4141.28 under state law. The Ohio Supreme Court has affirmed the meaning of the statute’s time limits and notification procedures. See McCruter v. Board of Review, 64 Ohio St.2d 277, 415 N.E.2d 259 (1980); Holmes v. Union Gospel Press, 64 Ohio St.2d 187, 414 N.E.2d 415 (1980). Nor is there the threat of interfering with the practices and procedures of a highly specialized and technical state administrative structure as in Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). While a state’s unemployment compensation system may be complex, the ruling of a federal court on an issue of such fundamental constitutional importance as a claimant's right to appeal does not pose the threat to a structure which is exclusively or uniquely the prerogative of the states. Finally, this Court is not asked to stay a state court proceeding as in Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971); indeed, the decision rendered in this case will either permit the state court action to proceed or be dismissed as being outside plaintiff’s right to appeal. This Court’s decision not to abstain is consistent with the Sixth Circuit’s decision in Hanna v. Toner, 630 F.2d 442 (1980); the Court, too, does not wish to see “[t]he exceptions ... swallow the rule if a federal court were required or allowed to close its doors” to an alleged violation of due process rights. Id. at 443.

III.

Having determined that this Court has jurisdiction and need not abstain from proceeding; that the Eleventh Amendment does not immunize the state defendants; and that res judicata does not bar the instant action, this Court turns to the merits of the summary judgment motion.

A. DUE PROCESS CLAIMS

Plaintiff Bennett argues that his due process rights under the 14th Amendment were violated in that judicial review was denied him because he did not receive timely notice of the Board of Review’s decision.

This case is decided against a background which has already seen the issue of notice rights of unemployment claimants in Ohio litigated. Another judge, on this district’s bench, has already ruled that O.R.C. § 4141.28 is unconstitutional in denying a claimant appeal rights where the claimant received the notice of the adverse decision after the 14-day appeal period of O.R.C. § 4141.28(L) had run. U.A.W. v. Giles, 5 Ohio Bar Repts. 300 (N.D.Ohio1982). The issue before this Court is similar but goes to the broader question of what are the consequences if a claimant receives no notice whatsoever.

This Court finds the reasoning adopted by Magistrate Carr, Western Division of the Northern District of Ohio, in Giles persuasive and adopts that opinion in finding O.R.C. 4141.28(0) unconstitutional in the instant case. Without reiterating the entire argument advanced in Giles, this Court will state the more salient grounds for its concurrence with the opinion in Giles and their applicability to the instant case.

Defendants assert that the due process clause requires only a “meaningful opportunity to be heard” and since Plaintiff has already presented his case before the OBES and the Board of Review, his due process rights were met. What is at issue in this case is not whether the Ohio unemployment compensation system in toto satisfies due process or is “excessive” in affording claimants due process rights. Rather, the question is once the state has created a system of appeals and a right to appeal, what obligations does the state have to permit claimants to reasonably exercise that right. It would be a meaningless promise to provide a claimant with several “opportunities to be heard” and then to either deliberately or through a policy premised on an arbitrary occurrence deny him those opportunities. While it is true that Plaintiff may not have an inherent constitutional right to be heard after the Board of Review denied his claim, since Ohio has given him the right to appeal this decision, it must grant him a means within his control to exercise that appeal. See Griffin v. Illinois, 351 U.S. 12, 76 S.Ct. 585, 100 L.Ed. 891 (1956); Robinson v. Beto, 426 F.2d 797 (5th Cir.1970).

The Ohio Supreme Court has affirmed that the statute at issue here clearly speaks of a claimant's appeal rights ending 30 days after the notice of the Board’s decision was mailed. However, as in U.A.W. v. Giles, such a mechanism can only be thought to satisfy due process standards if there is a “conclusive presumption that mailing a decision results in its receipt by the claimant.” Giles, 5 O.B.R. at 303. Whatever system of notice is chosen must be “reasonably certain to inform those affected ... or, where conditions do not reasonably permit such notice, that the form chosen is not substantially less likely to bring home notice than other of the feasible and customary substitutes.” Mullane v. Central Hanover Tr. Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950).

It is established that in most instances the U.S. mails can be “reasonably calculated” to notify an individual. However, there are inevitably going to be instances when notice is not received, through no fault of either the party posting the item or the party to whom the item is addressed. At one time or another, both the Government and members of the public will become victims of the vagaries of this country’s postal system (which has been the subject of anecdotes about letters being lost and finally arriving albeit years late.) The government would be draconian to deny an individual a property right in unemployment benefits, see Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), without any consideration for the arbitrariness of the non-receipt of that notice. This presumption of receipt upon mailing is at best highly formalistic and at worst totally unrealistic. Admittedly, in the case of recipients of unemployment benefits, it may be difficult for a state agency to determine the actual current address for the party because of changes in residence, etc., conditioned by the loss of income. Nonetheless, a claimant has a right to personal notice. See Pennoyer v. Neff, 95 U.S. (5 Otto) 714, 727, 24 L.Ed. 565 (1877).

This Court like the one in Giles is reluctant to demand that all notices of denial of benefits be sent by certified mail or personal service, Giles, 5 Ohio Bar Repts. at 308, but believes at the very least the State should provide a “good cause exception” to claimants who can demonstrate that they did not receive timely notice. See Giles, 5 Ohio Bar Repts. at 309. Of course, the burden of proof for such a showing could be placed on the claimant who would also have to demonstrate that he had some reason to believe he was entitled to continue receiving such benefits and that in the absence of such signs he had made diligent efforts to find out the status of his case. Essentially, such a standard maintains the current principle that although an agency by proving mailing establishes a presumption of receipt, but at the same time it permits a claimant an opportunity to rebut that presumption. See Giles, 5 Ohio Bar Repts. at 311.

This Court believes that had the state of Ohio had such a good-faith exception, Plaintiff in the instant case would have been able to meet his burden of showing non-receipt. The primary fact which can legitimately be viewed as leading Plaintiff to reasonably believe that he had not been denied benefits by the Board was his continuous receipt of benefit checks between November 24, 1982 (the date the Board denied Bennett’s appeal) and January 22, 1983 (the date he received the overpayment notice from the O.B.E.S.) It is understandable that an individual who received over $3,300 in the course of two months would be shocked and surprised to learn that he was not rightfully entitled to such money; it is reasonable for a claimant, especially one whose action is under review, to assume the state is keeping a watchful eye over such a large payment of benefits. There is also no evidence on the record that Plaintiff failed to pursue his claim once he learned that his appeal to the Board had been denied. Within 30 days of the notification of overpayment, Plaintiff had filed actions in both the Cuyahoga. County Commons Pleas Court and federal court.

B. EQUAL PROTECTION CLAUSE

Having determined that Ohio Revised Code § 4141.28(0) violates the due process clause of the Fourteenth Amendment, this Court finds it unnecessary to rule on the issue of whether O.R.C. § 4141.28(0) violates the equal protection clause of the Fourteenth Amendment.

IV.

In light of this finding of a constitutional violation, this Court as a matter of law denies Defendants’ Motion for Summary Judgment and grants Plaintiffs’ Cross-Motion for Summary Judgment. The Plaintiffs are entitled to the following declaratory and injunctive relief:

1. That O.R.C. § 4141.28(0) violates the due process clause of the Fourteenth Amendment and is therefore void;

2. That the defendants are hereby permanently enjoined and restrained from denying unemployment benefit claimants an appeal in Common Pleas Court without providing a hearing for claimants to establish non-receipt of such notice as a “good faith” reason for not timely filing such an appeal;

3. That the Stay of Plaintiff’s action in Common Pleas Court be removed and that Plaintiff may proceed to appeal his denial of benefits on the merits in that action.

IT IS SO ORDERED.

      . Plaintiff Judith Grimm was permitted to intervene in this case pursuant to Federal Rule of Civil Procedure 24(b) in this Court’s order of November 30, 1983. Plaintiff Grimm worked as a cook for the International House of Pancakes. She too was denied unemployment compensation benefits. She also claims she never received notice of the Board of Review’s denial of her application for appeal. Upon the granting of intervention by this Court, Grimm became a party to this action and is entitled to litigate all her interests on the merits. See United States v. Board of Education, 605 F.2d 573, 28 Fed.R. Serv.2d (Callaghan) 97 (2d Cir.1979); see also Piccard v. Sperry Corp., 36 F.Supp. 1006 (S.D.N. Y.), aff’d 120 F.2d 328 (2d Cir.1941). Because of her status as a full party, plaintiff Grimm is bound by the prior orders as well as all findings of fact and adjudications of law made by this Court. Russo v. Kirby, 15 Fed.R.Serv.2d (Callaghan) 826 (E.D.N.Y.1971). Hence, plaintiff Grimm’s motion for summary judgment is granted and her ability to proceed with an appeal in the Court of Common Pleas on her denial of unemployment benefits is restored.

      . O.R.C. § 4141.28(0) reads in pertinent part:

        Any interested party may ... within thirty days after notice of the decision of the board was mailed to the last known post office address of all interested parties, appeal from the decision of the board to the court of common pleas of the county wherein the appellant, if an employee, is resident or was last employed or of the county wherein the appellant, if an employer, is resident or has his principal place of business in this state. Such appeal shall be taken within such thirty days by the appellant by filing a notice of appeal with the clerk of the court of common pleas, with the board, and upon all appellees by certified mail to their last known post office address. Such notice of appeal shall set forth the decision appealed from and the errors therein complained of. Proof of the filing of such notice with the board shall be filed with the clerk____[emphasis added].

      . It is true that Plaintiff will ultimately seek unemployment benefits in his state court action that will come out of the state treasury. However, the Court need not address the Eleventh Amendment implication of this fact since the action before it does not ask for a judgment on the merits of Plaintiffs claim for benefits but only on his right to appeal. As for Plaintiff’s request for costs and attorney's fees, this Court considers such fees an “ancillary effect on the state treasury [made] permissible and ... an inevitable consequence of the principle announced in Ex Parte Young." See Edelman v. Georgia, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974).

      . The specific issue in Quern was whether the District Court's notice which said the plaintiffs were "denied public assistance to which you were entitled,” Quern 440 U.S. at 335, 99 S.Ct. at 1142, created a retroactive liability whereas the Seventh Circuit notice said plaintiffs may or may not be eligible for past benefits. Id. at 336, 99 S.Ct. at 1142. The Supreme Court affirmed the Circuit Court’s notice. The notice in the instant case is analgous to that in Quern in that it is merely explanatory of the status of an individual’s claim and right to appeal and does not create any obligations on the state treasury.

      . Because this Court has already determined that its decision does not directly judge the merits of plaintiff's claim for benefits (but only his right to appeal), it will not address the issue of whether the actual payment of benefits plaintiff may ultimately receive will violate the Eleventh Amendment if it comes out of state funds or a separate account.

      . Harlow is further inapposite since it alleged unlawful discharge of petitioners by senior aides and advisers to the President. The Court specifically stated "This case involves no issue concerning the elements of the immunity available to state officials sued for constitutional violations under 42 U.S.C. § 1983.” Id., 457 U.S. at 818 n. 30, 102 S.Ct. at 2738-39 n. 30.

      . Defendants do not distinguish between res judicata and collateral estoppel. Plaintiff notes this fact and agrees. For precision’s sake, however, this Court identifies the doctrine that Defendant invokes as res judicata and not collateral estoppel. Although the distinction between the terms has been blurred, collateral estoppel signifies preclusion of relitigation of the same issue in a different cause of action whereas res judicata is relitigation of the same cause of action. 21 Fed.Proc.L.Ed. 588-89 (1984). In this case, Defendants essentially argue that Plaintiff's unemployment benefits have already been determined at the administrative level on the merits and should not be adjudicated again here. Hence, the principle at issue is one of res judicata.

      . While this Court does not at this time require certified mail or personal service, the state may determine that over the long run the additional costs of such alternative means of delivering notice are justified in that they promote the certainty that notice has been received; at the very least such methods provide a means of establishing that the state made its best efforts to notify the particular claimant. See Giles, 5 Ohio Bar Repts. at 310-11.


author: LACEY, District Judge.

text:
    Mary FRANKLIN, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    Civ. No. 83-1700.
    United States District Court, D. New Jersey.
    Dec. 4, 1984.

      Freeman & Bass by Joel Solow, Newark, N.J., for plaintiff.
    Ruth Y. Simon, Sp. Asst. U.S. Atty., New Jersey, N.J., for defendant.
   OPINION

LACEY, District Judge.

Plaintiff Mary Franklin filed an application for disability insurance benefits on November 28, 1980, and for Supplemental Security Income (SSI) on November 30, 1984. Plaintiff claimed a disability as of July 1976 due to “arthritis, orthopedic, hypertension, cardiovascular, neurological, neuropsychiatric, opthalmological [sic].” The application was denied initially and on reconsideration. A hearing was held on November 15, 1981. The AU, in a decision dated November 19,1982, found that plaintiff’s insured status had expired on June 30, 1980, and that prior to January 1982 plaintiff had not suffered any impairment or impairments which significantly limited her ability to perform basic work-related functions. In addition, the AU found that after January 1982 the severity of plaintiff’s impairments equalled the requirements of section 10.10 A, Subpart P, Appendix 1, Regulations No. 4, and that such impairments would preclude her from working for at least twelve months. Thus, plaintiff was found to be entitled to SSI benefits after January 1982, but was denied SSI benefits for any prior time period.

Disability insurance benefits were denied entirely because of the AU’s finding that the disability period did not commence until after plaintiff’s insured status had expired. The Appeals Council confirmed the AU’s decision on March 10,1983, rendering it the final decision of the Secretary. Plaintiff now seeks review of the Secretary’s decision under Section 205(g) of the Social Security Act, 42 U.S.C. § 405(g). Specifically, plaintiff disputes the AU’s decision with respect to the date of onset of the disability-

Disability is defined identically for the purposes of disability insurance and SSI benefits as inability “to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairments which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.” 42 U.S.C. § 423(d)(1)(A); § 1382c(a)(3)(A). If the applicant is presently engaged in substantial activity, or does not have an impairment severe enough to limit significantly his or her ability to perform basic work activities, a finding of nondisability is justified. See 20 C.F.R. 404.1520; 404.1526.

MEDICAL EVIDENCE

The earliest medical evidence of record consists of a battery of five reports resulting from medical examinations conducted between August 9, 1979, and September 4, 1979.

Dr. Pollock, a psychiatrist examined plaintiff on August 9, 1979. He found hyperactive deep tendon reflexes, tremors of the eyelids, tongue and fingers, depression of corneal and pharyngeal reflexes, and a moderately positive Romberg test. He diagnosed “[njeurological residuals of exposure to noxious fumes, dust and loud noise and traumatic anxiety psychoneurosis, also sciatic neuritis____” Dr. Pollock also noted that plaintiff was 61 inches tall, weighed 222 pounds, and had blood pressure of 130/80, and that she “appeared nervous and worried.” He estimated a 100 percent disability.

Dr. Ahmad, an orthopedist, examined plaintiff on August 14, 1979. He diagnosed plaintiff as suffering from cervical and lumbosacral sprain, and varicose veins. He found that flexion of both the cervical spine and the knees was restricted by five degrees. There were spasms in the paravertebral region of the cervical spine, the trapezius muscles, and the buttock areas. Movements of the low back were restricted in flexion by twenty degrees; extension and lateral bending was restricted by ten degrees. There was difficulty in squatting and while standing on the toes and on the heels. There was tenderness in both knees as well as in the lumbosacral region. Varicose veins were also present. He estimated a 100 percent disability.

Dr. Friedman examined the plaintiff on August 29,1979. He diagnosed plaintiff as having chronic bronchitis and hypertensive cardiovascular disease. His examination of plaintiff revealed the beginning of arcus senilis in the eyes, and Grade I hypertensive changes in the eyes. In addition, he found accentuation of the aortic components of the second heart and cardiac enlargement. Testing of the pulmonary function revealed a vital capacity of 1.4 liters which is 43% of predicated normal. He found evidence for restricted pulmonary disease and exogenous obesity. He noted that plaintiff was 64 inches tall, weighed 225 pounds, and found the blood pressure to be 160-94. Dr. Friedman also noted that plaintiff had no varicose veins or osteoarthritis, and found the chest and lungs to be clear. He estimated a 25% disability.

Dr. Klein, an ophthalmologist, examined plaintiff on September 4, 1979, and diagnosed her as having chronic conjunctivitis of both eyes. This diagnosis was apparently based on a finding that both conjunctivas were “infected with dilated blood vessels.” He found a 10% permanent partial total disability.

Dr. Ghander also examined plaintiff on September 4, 1979. His report revealed a bilateral hearing impairment, rhinosinuvitis, nasopharyngitis and tinnitus. He estimated a permanent disability of 35% for both ears.

At the request of defendant, plaintiff was also examined by Dr. Amato in early 1981 — the report is dated February 4,1981. Examination revealed that the plaintiff had an elevated blood pressure of 164/102. However, pulse was regular and an electrocardiogram revealed normal sinus rhythm. The axis was neutral and one junctional premature beat was noted. The P wave in VI was suggestive of left atrial enlargement. The chest x-ray revealed a cardiac silhouette with a moderate degree of cardiomegaly. Examination of the musculature and musculoskeletal system revealed no joint deformity. Neurological examination revealed no motor or sensory deficits, and examination of the extremities revealed no peripheral edema, clubbing or cyanosis. Plaintiff’s weight was listed as 249V2 pounds and her height as 63V2 inches. Dr. Amato concluded that the “arthritis mentioned by the patient is apparently due to degenerative arthritis associated with exogenous obesity,” but that plaintiff should, nonetheless, “not be considered unable to work.”

Hospital records show that plaintiff was admitted to the Hospital Center at Orange in January 1982 due to severe cervical radiculopathy. Morbid obesity, cholelesthiasis, hypertensive cardiovascular disease and uterine myoma were also diagnosed. On admission plaintiff weighed 255 pounds and her blood pressure was 124/80. EMG and nerve conduction studies showed bilateral C6 radiculopathy. X-rays of the cervical spine showed significant degenerative changes at C4 and C5-6 levels. X-rays of the lumbosacral spine showed narrowing of these disc spaces. Plaintiff complained of numbness in the hands and fingers in addition to radiating pain. Plaintiff was treated with cervical traction and muscle relaxants.

The only other medical evidence included in the record is a brief handwritten note from Dr. Edmondson, plaintiffs treating physician, addressed to a Dr. Nichols, and dated August 8,1980. Dr. Edmondson noted that plaintiff had “mild hypertension under good control.” The rest of the note is illegible, and the record fails to provide clarification.

PLAINTIFF’S TESTIMONY

Plaintiff was born in 1934, and the highest grade completed by her was eleventh grade. She testified to being 63/2 inches tall.

Plaintiff worked as a shirt presser for approximately twenty-three years until she quit her job in July 1976; she claims that she became unable to work at that time. She has not been employed in any other capacity since then. She stated that her job required constant standing, but that no lifting was involved.

According to plaintiff’s testimony, she first complained of pains in her legs, arms and shoulders to Dr. Edmondson in 1974. She stated that he prescribed aspirin and high blood pressure medication at that time, and that in 1976 he began treating her arthritis with prescription medication. At the time of the hearing she claimed to be taking the following medications: Aldomet, Tenuate Dospan, Quinamor, Zyloprin, Motrin, Lasix, Bellengal, and Hygroton. Plaintiff claimed that she could not sit for more than the length of the bus ride from East Orange to Newark without her joints stiffening. She also stated that she could not walk enough to get the significant exercise called for by her Weight Watcher’s program.

In addition to the arthritis, plaintiff testified that she had intermittent problems with gout, a pinched nerve (she was wearing a special collar at the hearing), uterine fibroid tumors, and high blood pressure. In terms of subjective symptoms, she stated that she had numbness and swelling of the extremities, dizziness and blurring vision, “sweats and nervousness.”

Plaintiff had never been hospitalized pri- or to 1982 except for “female problems.” She also stated that she was injured in a bus accident in 1979 which resulted in her having to wear a cast on her left knee for six weeks.

Plaintiff testifies that she stays home most of the time. She stated that she is able to care for her personal hygiene, but that her sixteen-year-old son, who lives with her, does most of the housework, and that her sister helps her out with the shopping.

THE ALJ’S DECISION

The AU found that plaintiff had not suffered from a severe impairment before June 1980. Prior to this date he found a paucity of evidence that plaintiffs alleged impairments would significantly restrict basic work-related functions. He noted specifically with respect to each of the five medical examinations conducted in August/September 1979 that the various diagnoses suggesting partial or total disability were, at best, thinly supported by objective medical findings. He also noted that these examinations were performed in connection with a workers’ compensation case, and that under the authority of Minitee v. Harris, 510 F.Supp. 1216 (D.N.J.1981), such reports, though admissible, are not entitled to much weight because they are not geared to the statutory tests of disability defined by Section 223(d)(1) of the Social Security Act. The absence of corresponding and possibly conflicting reports obtained by the employer’s insurance carriers was also noted.

With respect to plaintiff’s subjective complaints of pain prior to the date of expiration of insurance eligibility, the ALJ noted the lack of corroborative evidence in support of plaintiff’s claims: plaintiff “takes no strong pain killing medication, attended no regular treatment sessions for pain, and shown [sic ] no significant restriction in daily activities, loss of weight or extreme changes in personality____” The AU acknowledged the potentially disabling character of severe pain, and accepted plaintiff's contention that she experienced some pain, but nonetheless concluded that there was insufficient evidence of pain severe enough to, either by itself or in combination with other impairments, preclude plaintiff from performing substantial gainful activity.

Although the AU did not explicitly consider Dr. Amato’s report in connection with either the period prior to June 1980 or the period between then and January 1982 when plaintiff was hospitalized, he did consider that report in conjunction with the report of the hospital in reaching his conclusion that plaintiff was disabled as of January 1982. He found that the combination of plaintiff’s increased weight, the x-ray findings of cervical radiculopathy, and plaintiff’s complaints of pain met the criteria set forth in Section 10.10 A, Appendix 1, Regulations No. 4 of Subpart P. The AU’s decision concluded with the following findings:

THE ALJ’S FINDINGS

1. The claimant met the special earnings requirements of the Act on July 1976, the date that the claimant stated she became unable to work, and continued to meet them through June 30, 1980.

2. The claimant has not engaged in substantial gainful activity since July 1976.

3. The claimant has the following impairments: cervical radiculopathy, moderate hypertension, cholelithiasis and morbid obesity.

4. After January 1982 the claimant’s complaints of pain are credible in the light of the evidence of record.

5. Prior to January 1982 the claimant did not have any impairment or impairments which significantly limited the ability to perform basic work-related functions; therefore, the claimant did not have a severe impairment prior to January 1982.

6. After January 1982 the severity of the claimant’s impairments equals the requirements of Section 10.10 A, Subpart P, Appendix 1, Regulations No. 4, and has precluded her from working for at least 12 months.

7. The claimant was not under a disability as defined in the Social Security Act, on or before the claimant’s date last insured June 30, 1980.

STANDARD OF REVIEW

In reviewing the Secretary’s decision, this court must determine whether there is substantial evidence in the record as a whole to support the Secretary’s findings. 42 U.S.C. § 405(g) (Supp. V 1981); Dobrowolsky v. Califano, 606 F.2d 403, 406 (3d Cir.1979). That standard is deferential, but not meaningless; the court “retains a responsibility to scrutinize the entire record and to reverse or remand if the Secretary’s decision is not supported by substantial evidence.” Smith v. Califano, 637 F.2d 968, 970 (3d Cir.1981). Accord, Baerga v. Richardson, 500 F.2d 309, 313 (3d Cir.1974), cert. denied, 420 U.S. 931, 95 S.Ct. 1133, 43 L.Ed.2d 403 (1975).

Substantial evidence is “more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971). Accord, Stewart v. Secretary of HEW, 714 F.2d 287, 290 (3d Cir.1983). Substantial evidence may fall short of a preponderance, and the possibility of drawing two inconsistent conclusions from the record does not preclude a finding of substantial evidence in support of one. Consolo v. Federal Maritime Comm., 383 U.S. 607, 620, 86 S.Ct. 1018, 1026, 16 L.Ed.2d 131 (1966); Port Norris v. I.C.C., 697 F.2d 497, 502 (3d Cir.1982). But the evidence “must do more than create a suspicion of the existence of the fact to be established____ [I]t must be enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury.” Consolo, supra, 383 U.S. at 620, 86 S.Ct. at 1026, quoting Labor Board v. Columbian Enameling & Stamping Co., 306 U.S. 292, 300, 59 S.Ct. 501, 505, 83 L.Ed. 660 (1939). The substantial evidence standard applies not only to administrative determinations of basic facts, but to inferences drawn therefrom. Reading v. Mathews, 542 F.2d 993, 997 (7th Cir.1976); Jolley v. Weinberger, 537 F.2d 1179, 1181 (4th Cir.1976); Reyes v. Harris, 476 F.2d 910, 914 (D.C.Cir.1973); Beane v. Richardson, 457 F.2d 758, 759 (9th Cir.1972), cert. denied, 409 U.S. 859, 93 S.Ct. 144, 34 L.Ed.2d 105 (1973).

I must also review the AU’s decision for errors of law. Nettles v. Schweiker, 714 F.2d 833, 836 (8th Cir.1983); Dellolio v. Heckler, 705 F.2d 123, 125 (5th Cir.1983); Doran v. Schweiker, 681 F.2d 605, 609 (9th Cir.1982); Wiggins v. Schweiker, 679 F.2d 1387, 1389 (11th Cir.1982); Aubeuf v. Schweiker, 649 F.2d 107, 112 (2d Cir.1981). The legal findings of the AU are not entitled to the deference given findings of fact. Allison v. Heckler, 711 F.2d 145, 147 n. 5 (10th Cir.1983); Wiggins, supra, 679 F.2d at 1389 & n. 3. Evidence cannot be “substantial,” or even relevant, except in light of the correct legal standard.

DISCUSSION

The AU found that plaintiff did not suffer from a severe impairment prior to the expiration of her insured status in June 1980. The only evidence of record pertaining to this period are the reports of Doctors Pollock, Ahmad, Friedman, Klein and Ghander. The AU noted that the diagnoses of these five physicians, which suggested partial or total disability, were, at best, thinly supported by objective medical findings.

Beyond this, the court takes notice that each of these physicians frequently prepares consultative reports in support of claims for Social Security benefits. Furthermore, plaintiffs representative, the law firm of Freeman and Bass, invariably submits these physicians’ reports to support their clients’ claims. After a review over several years of reports from each of these physicians, it must be said that the reports before me are of questionable weight. With few exceptions over the years, these physicians’ findings and conclusions have been remarkably similar in report after report, while dealing with males and females of widely disparate backgrounds. They certainly do not reflect a highly individualized examination of the kind required in matters such as this. What happens frequently is that the Freeman and Bass firm retains these physicians to examine clients as petitioners in workers’ compensation proceedings and then uses their reports twice, first in the compensation matter and then — using the same report — in the disability matter. This is why their reports so often reflect workers’ compensation terminology, a fact which was commented upon in Minitee v. Harris, 510 F.Supp. 1216 (D.N.J.1981). Examples of such reports are made a part of this opinion. See Appendix.

These physicians’ reports in these cases fit their unvarying pattern and were quite properly accorded very little weight. It is noted these physicians are not claimed to be treating physicians.

The only other reports of record pertaining to the period prior to January 1982, the date which the AU determined that the plaintiff became disabled, are the reports of Dr. Edmondson, dated August 8, 1980, and Dr. Amato, dated February 4, 1981. Dr. Edmondson found “mild hypertension under good control” and Dr. Amato specifically concluded that “[plaintiff] should not be considered unable to work.” It should be noted that, although the AU did not explicitly consider Dr. Amato’s report in and of itself, he did consider it in conjunction with the report of plaintiff’s January 1982 hospitalization. It is apparent, therefore, that there is no substantial evidence of record which would indicate that plaintiff was disabled until the reports of her hospitalization in January 1982. Only at that time did the AU find that the combination of plaintiff’s increased weight, cervical radiculopathy, and corroborated complaints of pain, were severe enough to meet the criteria of listed impairments as set forth in Section 10.10 A, Appendix 1, Regulations No. 4 of Subpart P.

With respect to plaintiff’s subjective complaints of pain prior to the date of expiration of insurance eligibility, the AU noted the lack of corroborative evidence in support of plaintiff’s claims. He stated that plaintiff “takes no strong pain killing medication, attended no regular treatment sessions for pain, and shown [sic ] no significant restriction in daily activities, loss of weight or extreme changes in personality____” The AU acknowledged the potentially disabling character of severe pain, and accepted plaintiff’s contention that she experienced some pain, but nonetheless concluded that there was insufficient evidence of severe pain which, either by itself or in combination with other impairments, precluded her from performing substantial gainful activity. The AU’s conclusion was clearly proper.

CONCLUSION

The AU’s determination that disability had not been shown to have begun on or before January 1982 is supported by substantial evidence. The AU was justified in giving greater weight to the Amato report and the Edmondson findings and according little weight to the Polloek-Ahmad-Friedman-Klein and Ghander reports.

ORDER

For the reasons stated in the opinion of this date,

IT IS on this 4th day of December 1984,

ORDERED that the final decision of the Secretary of Health and Human Services in the above captioned matter shall be, and hereby is affirmed.

APPENDIX

In addition to the reports by Drs. Pollock, Ahmad, Friedman, Klein and Ghander, submitted to support plaintiffs claim, four more reports from these doctors were chosen at random from those Social Security cases now pending before the district court in which the plaintiff is represented by Freeman & Bass. While all five reports date from May 1979 through September 1983, this court has seen many earlier dated reports and anticipates seeing later dated reports submitted for other cases now pending.

The first report in this appendix under each doctor’s name is from the transcript of the present case. An inspection of the additional four reports shows that they are strikingly identical, not only to each other, but to the reports of the present case as well. Particular note should be taken of the fact that, even though these five physicians have related varying personal histories and differing impairments for each of the individuals they examined, their findings and ultimate conclusions are, nonetheless, the same for each. It should further be noted that other reports, not made part of this appendix, were also gathered and were found to be identical as well. Furthermore, some of these plaintiffs did not even assert certain of the conditions which these doctors reported as the reason for their disabilities. Thus, these five reports, viewed together, clearly are sufficient to illustrate the point that these doctors’ reports may properly be afforded little, if any, weight.

      . See Wallace v. Secretary of HHS, 722 F.2d 1150, 1155-56 (3d Cir.1983) (remanding, in part because Secretary misapplied regulations); Burnam v. Schweiker, 682 F.2d 456 (3d Cir.1982) (same); Fowler v. Califano, 596 F.2d 600, 602 (3d Cir.1979) (decision of AU "fails to observe the appropriate legal standard”); Farley v. Calabrezze, 315 F.2d 704, 706 (3d Cir.1963) (AU’s decision must have "reasonable basis in law"). Recent district court cases have recognized outright our duty to reverse for legal error. Axe v. Dept. of HHS, 564 F.Supp. 789, 791 (E.D.Pa.1983); Curtin v. Harris, 508 F.Supp. 791, 793 (D.N.J.1981). Accord, Friedberg v. Schweiker, 721 F.2d 445, app. at 447 (3d Cir.1983) (reprinting with approval the district court opinion).

      . The AU also noted that these examinations were performed in connection with a workers’ compensation case, and that under the authority of Minitee v. Harris, 510 F.Supp. 1216 (D.N.J.1981), such reports, though admissible, are not entitled to much weight because they are geared to a different statutory test of disability than that defined by Section 223(d)(1) of the Social Security Act. This court, however, specifically notes that it is not bound by the holding in Minitee in this case. The fact that these physicians’ reports, in themselves, are generally suspect is sufficient ground to afford them little weight.

      . In the future it would be advisable that the Secretary seek out any corresponding and possibly conflicting reports obtained by the employees’ insurance carriers in cases where there is a workers’ compensation claim involved. Their presence in the record may compliment or rebut reports submitted by the claimant. This suggestion would necessarily impose more work on the AU’s. However, if the true extent of a claimant’s condition is to be discovered, such a duty seems inevitable.


author: CALDWELL, District Judge.

text:
    Sandra BRADERMAN, Plaintiff, v. PENNSYLVANIA HOUSING FINANCE AGENCY, Commonwealth of Pennsylvania, et al., Defendants.
    Civ. A. No. 84-1244.
    United States District Court, M.D. Pennsylvania.
    Dec. 4, 1984.

      Greg Knight, Tive, Hetrick & Pierce, P.C., Harrisburg, Pa., for plaintiff.
    Gregory R. Neuhauser, Deputy Atty. Gen., Harrisburg, Pa., for defendants.
   MEMORANDUM

CALDWELL, District Judge.

I. Introduction

Plaintiff, Sandra Braderman, has filed a complaint in which she alleges she was discharged from her position as a legal secretary at the Pennsylvania Housing Finance Agency (PHFA) in violation of her First Amendment right to freedom of association. The complaint also makes state constitutional and state law claims for relief. Defendants, PHFA, Harold Dunbar, its former chief counsel, and Trudy Baum, PHFA’s director of personnel, have filed motions to dismiss plaintiff’s complaint pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6).

II. PHFA’s Motion to Dismiss

PHFA contends as its sole ground for dismissal that it is a part of the Commonwealth and, accordingly, the Eleventh Amendment divests this court of jurisdiction to adjudicate plaintiff’s claim against it. Conversely, plaintiff contends that the Eleventh Amendment is inapplicable because PHFA is financially independent of the Commonwealth. After careful review of the briefs of both parties and the applicable law we conclude that PHFA is not a part of the Commonwealth and not entitled to Eleventh Amendment immunity.

Defendant correctly points out that state authority, cited by plaintiff, dealing with sovereign immunity from tort is not dispositive of its claim of Eleventh Amendment immunity. “Whether or not an agency or instrumentality is the alter ego of the state and, therefore, immune from suit by virtue of the Eleventh Amendment is a question of federal, not state, law.” Harris v. Pennsylvania Turnpike Commission, 410 F.2d 1332, 1333 n. 1 (3d Cir.1969), cert. denied, 396 U.S. 1005, 90 S.Ct. 558, 24 L.Ed.2d 497 (1970). We cannot agree with defendant, however, that the “general rule” set forth in Pennhurst State School & Hospital v. Halderman, - U.S. -, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984) (Pennhurst II) applies to Eleventh Amendment determinations. There, the Supreme Court stated: “The general rule is that a suit is against the sovereign if ‘the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration,’ or if the effect of the judgment would be ‘to restrain the Government from acting, or to compel it to act.’ ” Id. at - n. 11, 104 S.Ct. at 908 n. 11, 79 L.Ed.2d at 79 n. 11 (quoting Dugan v. Rank, 372 U.S. 609, 620, 83 S.Ct. 999, 1006, 10 L.Ed.2d 15, 23 (1963)). While this quotation is correct as an abstract statement of the law, it provides no guidance in determining what constitutes the “government” for Eleventh Amendment purposes nor do we believe that it was intended for such a purpose. The Third Circuit Court of Appeals has adopted a more specific and comprehensive test which is as follows:

* * * [L]ocal law and decisions defining the status and nature of the agency involved in its relations to the sovereign are factors to be considered, but only one of a number that are of significance. Among the other factors, no one of which is conclusive, perhaps .the most important is whether, in the event plaintiff prevails, the payment of the judgment will have to be made out of the state treasury; significant here also is whether the agency has the funds or the power to satisfy the judgment. Other relevant factors are whether the agency is performing a governmental or proprietary function; whether it has been separately incorporated; the degree of autonomy over its operations; whether it has the power to sue and be sued and to enter into contracts; whether its property is immune from state taxation, and whether the sovereign has immunized itself from responsibility for the agency’s operations.

Urbano v. Board of Managers of New Jersey State Prison, 415 F.2d 247, 250-51 (3d Cir.1969), cert. denied, 397 U.S. 948, 90 S.Ct. 967, 25 L.Ed.2d 129 (1970) (footnotes omitted) (quoting Krisel v. Duran, 258 F.Supp. 845, 849 (S.D.N.Y.1966), aff'd per curiam, 386 F.2d 179 (2d Cir.1967), cert. denied, 390 U.S. 1042, 88 S.Ct. 1635, 20 L.Ed.2d 303 (1968)).

This test requires us to review PHFA’s statutory scheme.

The Housing Finance Agency Law, Act of Dec. 3, 1959, P.L. 1688, Art. I, § 101 et seq., as amended, 35 P.S. § 1680.101 et seq., created PHFA as a “public corporation,” see 35 P.S. § 1680.201, to provide financing for the construction and rehabilitation of homes and rental housing for persons, including the elderly, of moderate and low incomes. 35 P.S. § 1680.102. The members of the agency are the Secretary of Community Affairs, the State Treasurer, the Secretary of Commerce and the Secretary of Banking. Six additional members are appointed by the governor. The latter are each appointed for a six year term with the approval of two-thirds of the state senate. Id. at § 1680.202. The agency’s governing board consists of its members. Id. at § 1680.203.

Among other powers, PHFA can adopt, use and alter at will a corporate seal, make and alter bylaws for the management and regulation of its affairs, enter into contracts of all kinds and execute all instruments necessary or convenient for carrying on its operations, be a party litigant to lawsuits, acquire, hold and dispose of tangible and intangible personal property, acquire, hold and dispose of real property, borrow money for the operation and work of the agency by the making of notes and by the issuance of bonds, employ an executive director and such other officers, agents, employees, professional and business advisers as may from time to time be necessary in its judgment and to fix their compensation, and do all things necessary or convenient to carry out the powers granted by the Act; Id. at § 1680.205.

Agency moneys are paid to the treasurer of the agency and held in one or more special accounts. Id. at § 1680.206. The agency’s bonds and notes are issued subject to the written approval of the governor. Id. at §§ 1680.501a, 1680.501a.1. They are tax exempt, general obligations of the agency and are “not deemed to constitute a debt of the Commonwealth or of any political subdivision thereof or a pledge of the faith and credit of the Commonwealth or of any such political subdivision.” Id. at §§ 1680.502a, 1680.506a. While the agency is authorized to create “capital reserve funds” into which the General Assembly may contribute, the General Assembly has no legal obligation to do so. Id. at § 1680.-504a(c); Johnson v. Pennsylvania Housing Finance Agency, 453 Pa. 329, 309 A.2d 528 (1973).

PHFA generates revenue by lending money to any mortgagor for the construetion, reconstruction or rehabilitation of housing for sale or lease to persons of low or moderate incomes. Id. at §§ 1680.301a, 1680.401a. The agency also finances the purchase, construction, improvement or rehabilitation of owner-occupied single family residences by contract with lending institutions. Id. at § 1680.401b (Purdon Supp. 1984-85).

Finally, PHFA administers the Homeowner’s Emergency Mortgage Assistance Fund. The Fund is a separate account used to make emergency loans to mortgagors who, through no fault of their own, are suffering financial hardships making them delinquent on their mortgage payments. Id. at §§ 1680.401c, 1680.404c. The program differs from others carried out by PHFA in that the Fund cannot be used by the agency unless funding is specifically authorized and appropriated by the Pennsylvania General Assembly for the purposes provided for by Article IV-C of the Act. Id. at § 1680.408c (Purdon Supp. 1984-85). PHFA also cannot independently raise revenue for the Fund. Aside from the General Assembly, which authorized appropriation of up to $25,750,000.00 for the Fund in fiscal year 1984-85, see Act of May 31, 1984, No. 73-1984, § 3, its funding comes from business entities, which may make tax deductible contributions to it. 35 P.S. § 1680.410c. Repayments to the Fund by mortgagors are to be transferred back to the source from which the money was appropriated. Id. at § 1680.408c.

We now apply the Urbano test in light of the above statutory organization of PHFA.

A. Whether PHFA has corporate powers and is automonous.

PHFA possesses those specific attributes the Court of Appeals considers significant in concluding that a governmental body is automonous. It is separately incorporated, can sue and be sued in its own name, can enter into contracts, acquire property, and perform all things necessary or convenient to carry out its corporate powers.

Against these indications of autonomy, defendant PHFA asserts the following: (1) four members of the governing board are also members of the governor’s cabinet who serve at the governor’s pleasure while the remaining six members are appointed by the governor subject to confirmation by the Senate; and (2) the issuance of PHFA’s bonds and notes are subject to the written approval of the governor.

Defendant’s contentions have some merit but not enough, in showing that PHFA is not independent of the Commonwealth. In connection with the governor’s authority over the membership in the agency, we first note that defendant incorrectly asserts that the State Treasurer serves “at the pleasure of the Governor.” Defendant’s reply brief at 6. Actually, the office of State Treasurer is an elective one. See Pa. Const. Art. IV, § 18. As such, the State Treasurer is independent of the Governor. Additionally, 35 P.S. § 1680.202 provides that the six appointive members of the agency, who together with the State Treasurer, form a seven person majority of the agency and governing board, shall serve staggered six year terms. Thus, the governor cannot remove these members at his pleasure. Commonwealth ex rel. Sortino v. Singley, 481 Pa. 367, 392 A.2d 1337 (1978); Schluraff v. Rzymek, 417 Pa. 144, 208 A.2d 239 (1965). Even admitting that the remaining three members of the agency, the Secretary of Community Affairs, the Secretary of Commerce, and the Secretary of Banking, would serve at the whim of the governor, see Pa. Const. Art. VI, § 7; 71 P.S. § 67.1(d)(1) (Purdon Pamphlet 1984-85); Commonwealth ex rel. Houlahen v. Flynn, 348 Pa. 101, 34 A.2d 59 (1943), this statutory arrangement of the agency membership indicates that the governor’s voice in the selection of agency members is less significant than their day-to-day autonomy in running the agency. The Pennsylvania Turnpike Commission has a similar method of choosing commissioners but the courts have concluded that the Turnpike Commission has no Eleventh Amendment immunity. See Linger v. Pennsylvania Turnpike Commission, 158 F.Supp. 900 (W.D.Pa.1958).

Defendant’s second contention deals with the statutory requirement that the governor give his written approval before the agency issues any bonds or notes. If this were otherwise a “close case,” see Blake v. Kline, 612 F.2d 718, 726 (3d Cir.1979), we would be inclined to develop a record “beyond the mere statutory language,” id., to determine how much control the governor actually exercises over the issuance of bonds and notes. Since this is just one factor among others, however, we can concede that PHFA’s argument has some merit but also conclude that it is outweighed by the other statutory indications of autonomy and separateness.

B. Local Law defining the status and nature of PHFA and its relation to Pennsylvania.

Defendant contends that Edwards v. The Pennsylvania Housing Finance Agency, No. 2224 C.D. 1981 (Pa.Commw. Oct. 21, 1983) establishes that PHFA is not an independent agency. “[Sjtate decisions concerning the relationship of an agency to the state may be an important, and under certain circumstances a controlling factor in the determination of immunity,” Blake v. Kline, supra, 612 F.2d at 722 (brackets added), but Edwards is not such a case. It dealt solely with whether the governor’s general counsel had the authority under the Commonwealth Attorneys Act, Act of October 15, 1980, P.L. 950, No. 164, § 101 et seq., 71 P.S. § 732-101 et seq., (Purdon Pamphlet 1984-85), to hire and discharge the agency’s counsel. As the court itself noted in Edwards: “We do not find that our prior opinion in Pennsylvania Housing Finance Agency v. Abreen Corporation, [— Pa.Commw. —, 480 A.2d 335 (1982) ] ... requires a contrary conclusion. The P.H.F.A.’s financial status for purposes of sovereign immunity and the jurisdiction of this court and the Board of Claims is not relevant to a determination of the applicability of the Administrative Code of 1929 or its supplement, the Commonwealth Attorneys Act, to the agency.” Edwards, slip op. at 7. (brackets added) Accordingly, we also do not consider Edwards relevant to a determination of PHFA’s Eleventh Amendment immunity. Rather, Abreen is the appropriate case to look to in determining how state courts have construed the relationship of PHFA to the Commonwealth.

In Pennsylvania Housing Finance Agency v. Abreen Corp., — Pa.Commw. —, 480 A.2d 335 (1982), the Commonwealth Court, using a financial independence test, held that PHFA was not the “Commonwealth” so that PHFA could in- . voke the exclusive jurisdiction of the Board of Claims under 72 P.S. § 4651-4 in a construction contract dispute. In doing so, the court relied upon Johnson v. Pennsylvania Housing Finance Agency, 453 Pa. 329, 309 A.2d 528 (1973), which upheld the constitutionality of PHFA’s enabling legislation. The Supreme Court in Johnson emphasized the financial independence of PHFA. By statute, its bonds and notes were not the debts of the Commonwealth. Moreover, the Commonwealth had insulated itself from PHFA’s liabilities. Abreen supports a conclusion here that PHFA is not the alter ego of the Commonwealth and therefore not entitled to Eleventh Amendment immunity.

C. Whether payment of the judgment will be made from the state treasury or from PHFA funds.

The statutory powers conferred on PHFA, detailed above, lead us to conclude, as the court in Abreen did, that any judgment rendered against PHFA would not be satisfied out of the state treasury. PHFA can own real and personal property in its own name, raise revenue by issuing bonds and notes, and hold money in its own name. Clearly, a judgment entered against PHFA would not have to be paid out of state funds. Thus, the “most important factor in the determination of Eleventh Amendment immunity,” Blake v. Kline, supra, 612 F.2d at 723, goes against the defendant.

D. Whether PHFA is performing a governmental or proprietary function.

The distinction between a governmental function and a proprietary one is difficult to draw. See Owen v. City of Independence, 445 U.S. 622, 644 n. 26, 100 S.Ct. 1398, 1412 n. 26, 63 L.Ed.2d 673, 689 n. 26 (1980). Financing the construction and rehabilitation of homes and rental housing would traditionally be considered a role played by private entities, and hence a proprietary function, but “ ‘views as to what constitutes a public use necessarily vary with changing conceptions of the scope and functions of government, so that today there are familiar examples of such use which formerly would not have been so considered.’ ” Johnson v. Pennsylvania Housing Finance Agency, supra, 453 Pa. at 337, 309 A.2d at 533 (quoting Doman v. Philadelphia Housing Authority, 331 Pa. 209, 222, 200 A. 834, 841 (1938)). PHFA limits itself to providing financing for housing for low and moderate income persons, and does not compete generally with private entities in the construction and mortgage markets. Accordingly, PHFA retains elements of sovereignty in performing a governmental function of attempting to promote the health, safety and welfare of the Commonwealth’s poorer citizens. See 35 P.S. § 1680.506a.

E. Whether PHFA’s property is immune from state taxation.

In relevant part, 35 P.S. § 1680.506a provides as follows:

The Commonwealth covenants with the purchasers and all subsequent holders and transferees of the notes and bonds issued by the agency, in consideration of the acceptance of any payment for the notes and bonds, that the notes and bonds of the agency, issued pursuant to this act and the income therefrom, the income and revenues of the agency, and the agency and its property shall at all times be free from taxation or assessment of every kind and nature except for inheritance, estate, gift and transfer taxes.

This immunity from taxation is not shared by other entities in the housing and rental markets and has obviously been provided to PHFA by the Commonwealth to aid the former in pursuing its governmental function.

F. Whether the sovereign has immunized itself from responsibility for PHFA’s operations.

As noted previously, 35 P.S. § 1680.502a provides that the general obligations of the agency shall not be deemed a debt of the Commonwealth or of its political subdivisions, or a pledge of the faith and credit of the Commonwealth or of its political subdivisions. In light of the other statutory provisions establishing PHFA’s corporate autonomy, this section indicates the Commonwealth’s intention to immunize itself from PHFA’s operations.

G. Conclusion

Undoubtedly, almost every case dealing with Eleventh Amendment immunity for state agencies will contain mixed statutory signals concerning that agency’s independence. Some of the above factors indicate that PHFA should share in Pennsylvania’s sovereignty. These include its performance of a governmental function, its exemption from state taxation, control of appointments to its membership by the governor, and the requirement that its bonds and notes be issued only with the written approval of the governor. They are countered by the following. First, PHFA clearly has corporate autonomy. It can sue and be sued, and hold property, including money, in its own name. Second, these same corporate powers indicate that, on the most important factor in the determination of. Eleventh Amendment immunity, any judgment rendered against PHFA would not be paid out of the state treasury. Third, state courts have not conferred sovereign immunity upon PHFA. Finally, the state has immunized itself from liability arising from PHFA’s operations.

Based upon the foregoing, we conclude that PHFA is not a part of the Commonwealth of Pennsylvania and, accordingly, cannot assert Eleventh Amendment immunity from suit in federal court. We turn now to the joint motion of Dunbar and Baum to dismiss plaintiff’s complaint.

III. Dunbar and Baum’s Motion to Dismiss

Counts III and IV of the complaint assert state law claims against all the defendants. Specifically, plaintiff asserts in count III a violation of her state constitutional rights under Pa. Const., Art. I, §§ 1, 25, 26. In count IV she asserts a violation of her state due process rights under the same state constitutional provisions based upon a property right in her employment with PHFA. Defendants Dunbar and Baum, relying upon Pennhurst State School & Hospital v. Halderman, supra, assert that this court lacks jurisdiction under the Eleventh Amendment to hear these claims because they are state officials. It is true that the Supreme Court stated in Pennhurst II as follows:

[I]t is difficult to think of a greater intrusion on state sovereignty than when a federal court instructs state officials on how to conform their conduct to state law. Such a result conflicts directly with the principles of federalism that underlie the Eleventh Amendment.

Id. — U.S. at —, 104 S.Ct. at 911, 79 L.Ed.2d at 82 (brackets added). The Court, however, further stated that “a federal suit against state officials on the basis of state law contravenes the Eleventh Amendment when ... the relief sought and ordered has an impact directly on the State itself.” Id. at —, 104 S.Ct. at 917, 79 L.Ed.2d at 89. We have already concluded that PHFA is not a part of the Commonwealth for Eleventh Amendment purposes. Thus, the relief sought would not have an impact directly on the state. Accordingly, whether or not Dunbar and Baum are, or were state officials, Pennhurst II does not bar this action against the individual defendants.

Dunbar and Baum also object to count VI of the complaint. They assert that this breach of contract claim, arising from provisions in PHFA’s employee manual, is not cognizable under 42 U.S.C. § 1983 because no federal rights are involved. Plaintiff, however, has not attempted to pursue this count under the Civil Rights Act of 1871. Rather, plaintiff simply asserts a state claim for breach of contract. Accordingly, in the absence of an Eleventh Amendment bar, we may in our discretion exercise pendent jurisdiction over this state law claim. See Ambromovage v. United Mine Workers, 726 F.2d 972 (3d Cir.1984).

In count II of the complaint, plaintiff asserts a property right in her employment. She alleges that when she was discharged, her Fourteenth Amendment due process rights in that employment were violated. The individual defendants deny that plaintiff had a property right in her employment and, accordingly, the count should be dismissed. Plaintiff can and does rely upon state law to establish her property right. See Klein v. Califano, 586 F.2d 250 (3d Cir.1978). She cites Appeal of Colban, 58 Pa.Commw. 104, 427 A.2d 313 (1981), and DeFrank v. Greene County, 50 Pa. Commw. 30, 412 A.2d 663 (1981) which held that when an employee manual confers certain procedural rights upon a public employee before the employee can be discharged, the employee has been given a property right in his employment which cannot be eliminated without a hearing pri- or to discharge under the Local Agency Law, 2 Pa.C.S. § 551 et seq. Citing Scott v. Philadelphia Parking Authority, 402 Pa. 151, 166 A.2d 278 (1960), defendants deny that such a state law right exists here. In Scott, the Pennsylvania Supreme Court concluded that a public parking authority had no power to enter into a three year contract with an employee when that power had not been specifically conferred upon it by its enabling legislation. Hence, the employee could be discharged despite the contract. Defendants contend that we cannot rely upon the Commonwealth Court authority because we must accept the holding of Scott as the latest pronouncement of Pennsylvania’s highest court on the issue of an employee’s right to continued employment.

We reject defendants’ contention. Scott did not deal with rights created by an employee manual. It simply decided that, absent statutory authority, an employee had no right to continued employment with a local agency. Accordingly, we may consider the pronouncements of the Commonwealth Court as an indication of how the Pennsylvania Supreme Court would rule, see Mazzula v. Monarch Life Insurance Co., 487 F.Supp. 1299 (E.D.Pa.1980), and we conclude that the state’s highest court would find, in the circumstances of Colban and DeFrank, a property right in “a form of guarantee of employment,” see Colban, supra, 58 Pa.Commw. at 107, 427 A.2d at 314, as expressed by certain procedural rights conferred upon an employee before she can be discharged. See Abraham v. Pekarski, 537 F.Supp. 858 (E.D.Pa.1982), aff'd, 728 F.2d 167 (3d Cir.1984) (local ordinance created property right in employment when it provided that employee would not be discharged “without just cause”).

We cannot conclude, however, on the pleadings before us now whether or not Colban and DeFrank would apply to the instant case. The provisions of the personnel manual are not before us. Count II could be based upon procedural safeguards set forth in the manual and we would have to examine these to determine if they would create a property interest under Pennsylvania law consisting of certain guarantees in connection with plaintiff’s employment.

On the other hand, the claim in count II may not be based upon procedural safeguards. Paragraph 44 indicates that plaintiff may be claiming a property right in her employment merely because she had successfully completed her probationary period and had become a “permanent” employee. If this is the basis of her claim, she cannot prevail because permanent employment status, by itself, is not a property right. See Bishop v. Wood, 426 U.S. 341, 96 S.Ct. 2074, 48 L.Ed.2d 684 (1976); Amesbury v. Luzerne County Institution District, supra; If plaintiff pursues count II, we will examine her claim of a property interest in her employment, upon appropriate motion, when an adequate record exists.

Defendants also briefed, but did not raise in their motion, a statute of limitations defense. Since they admit it has only been raised to preserve the issue and that the defense must be rejected in light of Knoll v. Springfield Township School District, 699 F.2d 137 (3d Cir.1982), and Fitzgerald v. Larson, 741 F.2d 32 (3d Cir.1984), we need not discuss it.

We will issue an appropriate order.

ORDER

AND NOW, this 4th day of December, 1984, it is ordered that:

1. The motion of defendant, Pennsylvania Housing Finance Agency, to dismiss plaintiff’s complaint against it be and is hereby denied.
2. The motion of defendants, Harold Dunbar and Trudy Baum, to dismiss counts II, III, IY and VI of plaintiff’s complaint against them be and is hereby denied.

      . Turnpike Commission bonds also require the facsimile signature of the governor, see 36 P.S. § 652h, but, as noted previously, the Turnpike Commission does not have Eleventh Amendment immunity.

      . At the time Abreen was decided the Homeowner’s Emergency Mortgage Assistance Fund had not yet been created. We do not think that the existence of this Fund would change the result in Abreen even though the Fund has received substantial financial assistance in the past from appropriations made by the General Assembly. The fund is maintained in an account separate from other monies kept by PHFA. 35 P.S. § 1680.408c. Additionally, any repayments to the Fund from mortgagors assisted under the program must be lapsed into or transferred back to the source from which the monies were appropriated unless prevented by any other state statute. Id. These provisions sufficiently insulate any money from the state treasury from being used to satisfy a judgment against PHFA. Since PHFA also has both the power and the resources to satisfy any judgment entered against it in this action, its administration of this state-funded account has no affect upon its independence from the Commonwealth. See Gordenstein v. University of Delaware, 381 F.Supp. 718 (D.Del.1974).

      . We note that in both counts plaintiff seeks to enforce these rights pursuant to 42 U.S.C. §§ 1983 and 1988. (Complaint, ¶¶ 57, 65). An essential element of a federal civil rights claim is the deprivation of a right conferred by the federal constitution or federal law. See Padgett v. Stein, 406 F.Supp. 287 (M.D.Pa.1975) and cases cited therein. A state law violation is not sufficient. Williams v. Treen, 671 F.2d 892 (5th Cir.1982), cert. denied, 459 U.S. 1126, 103 S.Ct. 762, 74 L.Ed.2d 977 (1983). Thus, these state constitutional claims would only be enforceable if some type of action, analogous to a Bivens -type action, see Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), was available under state law. Such a cause of action can be asserted under Pa. Const., Art. I, § 1. See Harley v. Schuylkill County, 476 F.Supp. 191 (E.D.Pa.1979).

      . Later Commonwealth Court authority is thus in accord with Scott. See Amesbury v. Luzerne County Institution District, 27 Pa.Comm. 418, 366 A.2d 631 (1976).

      . In Count II plaintiff also claims a Fifth Amendment violation. This claim must fail because the federal government is not involved in this action. See Miller v. Indiana Hospital, 562 F.Supp. 1259 (W.D.Pa.1983).
      Plaintiff also seems to be asserting a direct cause of action under the Fourteenth Amendment. It is unclear whether such a cause of action exists, see Miller v. Indiana Hospital, supra, but we need not decide that issue because plaintiffs claim under Section 1983 provides her with substantially the same remedy. Rogin v. Bensalem Township, 616 F.2d 680 (3d Cir.1980), cert. denied, 450 U.S. 1029, 101 S.Ct. 1737, 68 L.Ed.2d 223 (1981).
      We also note that in resisting plaintiffs claim in Count II, defendants did not brief the issue of state action or involvement in the conduct leading to plaintiff s discharge because it would not have been consistent with PHFA's claim of Eleventh Amendment immunity. This element of plaintiffs claim can await further development of the record. It is not foreclosed by our disposition of the Eleventh Amendment issue and requires a different analysis. See, e.g., Krynicky v. University of Pittsburgh, 742 F.2d 94 (3d Cir.1984).