author: BLUMENFELD, Senior District Judge.

text:
    In re GENERAL DYNAMICS ASBESTOS CASES.
    C.M.L. No. 1.
    United States District Court, D. Connecticut.
    Sept. 13, 1984.
    See also 539 F.Supp. 1106.

      Stephen Embry, Matthew Shafner, O’Brien, Shafner, Bartinik, Stuart & Kelly, Groton, Conn., Stanley Levy and Lawrence W. Burnett, pro hac vice, Kreindler & Kreindler, New York City, for plaintiffs.
    Wesley W. Horton, Susan M. Cormier, Moller, Horton & Fineberg, Hartford, Conn., Peter B. Ellis, Foley, Hoag & Eliot, Boston, Mass., Richard S. Bartlett, MeGann & Bartlett, Vernon, Conn., for intervening plaintiffs.
    Frederick B. Tedford, Danaher, O’Connell, Attmore, Tedford & Flaherty, Hartford, Conn., for defendants.
    James Ackerman, Ernest Mattei, Day, Berry & Howard, Bourke G. Spellacy, Thomas J. Shortell, Charles F. Corcoran, III, Updike, Kelly & Spellacy, Hartford, Conn., for American Asbestos Textile Corp. a/k/a Amatex.
    Joseph Adinolfi, Jr., Joseph A. O’Brien, Joseph P. Fasi, Joseph C. Morelli, James M. Tanski, Hartford, Conn., John Pearson, Bruce Bishop, Willcox, Savage, Dickson, Hollis & Eley, P.C., Norfolk, Va., for Celotex Corp.
    Joel J. Rottner, Skelley, Clifford, Vinkels, Williams & Rottner, Hartford, Conn., for Claremont Co., Inc.
    Joel J. Rottner, Joseph F. Skelley, Jr., Deborah Samuels Freeman, Skelley, Clifford, Vinkels, Williams & Rottner, Hartford, Conn., for Cummings Insulation.
    Edmund T. Curran, David W. Cooney, Hartford, Conn., for Defense Apparel, Inc. (Nuclear & Environmental Protection, Inc.).
    Howard B. Field, III, East Hartford, Conn., S. Robert Jelley, William J. Doyle, William H. Prout, Jr., Patrick M. Noonan, Alan G. Schwartz, Wiggin & Dana, New Haven, Conn., William J. Spriggs, Batzel, Nunn & Bode, Washington, D.C., for Eagle Picher.
    Robert G. Montstream, Glastonbury, Conn., for Eastern Refractories Co., Inc.
    Paul W. Orth, John T. Harris, Hoppin, Carey & Powell, Hartford, Conn., for G.A.F. Corp.
    Vincent J. Dowling, Patrick J. Flaherty, Cooney, Scully & Dowling, Hartford, Conn., Gregory C. Willis, Willis & Holahan, Bridgeport, Conn., Joseph Adinolfi, Jr., Joseph P. Fasi, Frederick B. Tedford, Joyce A. Lagnese, L. Wesley Nichols, Danaher, O’Connell, Attmore, Tedford & Flaherty, Hartford, Conn., for Owens-Corning Fiberglas Corp. a/k/a Corning Glass Works Corp.
    Maurice T. FitzMaurice, Robert J. Hebron, Edward Spinella, Lawrence H. Lissitzyn, David E. Rosengren, Christopher F. Droney, Reid & Riege, P.C., Hartford, Conn., for Owens-Illinois Corp. and Owens-Illinois Glass Corp.
    Hadleigh H. Howd, Hartford, Conn., Peter Ellis, Boston, Mass., Wesley W. Horton, Moller, Horton & Fineberg, Hartford, Conn., for General Dynamics Corp.
    John FjtzGerald, James M. Moher, Richard S. Bartlett, John Stephen Papa, Howard, Kohn, Sprague & FitzGerald, Hartford, Conn., for H.K. Porter Co., Inc.
    Francis J. Wynne, Gould, Killian & Wynne, Hadleigh H. Howd, Winona W. Zimberlin, Gerald S. Sack, Howd & Ludorf, Hartford, Conn., Thomas H. Cotter, John J. Cotter, Bridgeport, Conn., for Johnson Asbestos Corp.
    Peter C. Schwartz, Philip J. O’Connor, Gordon, Muir & Foley, Hartford, Conn., for Johns Manville Corp., Johns Manville Products, Inc. and Johns-Manville Sales Corp.
    George W. Ripley, Manchester, Conn., Stephen P. Sachner, Robert N. Reynolds, Jr., Fred A. Hitt, Andrew D. Coleman, Hitt, Mihalakos, Sachner & Coleman, Cheshire, Conn., for Keene Corp.
    R. Cornelius Danaher, Jr., Frederick B. Tedford, Joyce A. Lagnese, L. Wesley Nichols, John K. Henderson, Jr., Danaher, O’Connell, Attmore, Tedford & Flaherty, Hartford, Conn., Henry Simon, Newark, N.J., for Pittsburgh-Corning Corp.
    Arnold J. Bai, Dennis M. Laccavole, James E. Coyne, Bai, Pollock & Dunnigan, Bridgeport, Conn., for Raybestos Manhattan, Inc.
    Thomas J. Hagarty, Richard C. Tynan, Halloran, Sage, Phelon & Hagarty, Hartford, Conn., Jeffrey Silberfeld, Rivkin, Leff, Sherman & Radler, Garden City, N.Y., Frederick B. Tedford, Joyce A. Lagnese, Danaher, O’Connell, Attmore, Ted-ford & Flaherty, Hartford, Conn., for Sepco Corp.
    Kevin D. O’Leary, Bruce H. Stanger, Henry C. Ide, Bailey & Wechsler, Frederick B. Tedford, Joyce A. Lagnese, Danaher, O’Connell, Attmore, Tedford & Flaherty, Hartford, Conn., for Shook & Fletcher Insulation Co.
    Richard S. Bartlett, John R. FitzGerald, James T. Haviland, II, John Stephen Papa, James M. Moher, Howard, Kohn, Sprague & FitzGerald, Hartford, Conn., for Southern Textile Corp. f/k/a Southern Asbestos Corp.
    Michelle E. Stone, Civ. Div., Dept, of Justice, Washington, D.C., for the U.S. of America.
    Gregory C. Willis, Marsh, Day & Calhoun, Bridgeport, Conn., for Westinghouse Elec. Corp.
   RULING ON MOTION OF THE UNITED STATES FOR DISMISSAL OR SUMMARY JUDGMENT OF THIRD-PARTY CLAIMS

BLUMENFELD, Senior District Judge.

The plaintiffs brought these actions to recover damages for injuries suffered from exposure to the defendants’ asbestos products; the defendants seek non-contractual indemnification or contribution from the United States. The third-party complaints set forth four counts against the United States. The first three are directed to the Department of the Navy (Navy) and sound in simple negligence, active-passive negligence, and breach of implied representations and warranties. The fourth count is directed to the Department of Health, Education and Welfare (HEW) and sounds in negligence; specifically, that HEW breached its duty as a “good Samaritan” to warn of the dangers of asbestos. The United States has moved to dismiss these third-party claims for failure td state a claim upon which relief can be granted or for summary judgment.

The United States argues that it is not subject to a third-party claim because it is immune from tort liability to the plaintiffs; however, I rejected this argument in Brown v. United States, Civil No. H-76-434 (July 23, 1979). The Federal Tort Claims Act (FTCA) provides that the United States is liable to the third-party plaintiffs “under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.” 28 U.S.C. § 1346(b).

The third-party plaintiffs allege that the plaintiffs’ injuries were proximately caused by the “active” negligence of the United States: the government negligently drafted specifications for asbestos materials, it failed to warn of the dangers of asbestos exposure, it failed to provide or require others to provide a safe workplace for the plaintiffs, and it failed to impose reasonable regulations and standards relating to the handling of asbestos. The issues raised by the motion to dismiss or for summary judgment on these claims were considered in In re All Maine Asbestos Litiga tion, 581 F.Supp. 963 (D.Me.1984) (Gignoux, J.). In that case, the third-party-plaintiffs’ claims based on the promulgation of specifications were rejected for failure to state a claim. Id. at 979. Summary judgment was granted on the “good Samaritan” claim because the government’s conduct was not sufficient to constitute an undertaking of an affirmative obligation to warn shipyard workers of the dangers of asbestos. Id. at 977-79. I concur in Judge Gignoux’s analysis of these issues.

Judge Gignoux did not dismiss or grant summary judgment on the third-party plaintiffs’ claims based on the government’s obligation, as owner of the vessels on which the plaintiffs worked, to provide a safe workplace. Id. at 975-77. Claims against the United States under the FTCA are governed by state law; however, the claims of these plaintiffs against the United States as vessel owner are governed by the Longshoremen’s and Harbor Workers’ Compensation Act (LHWCA). 33 U.S.C. § 905(b); Scindia Steam Navigation Co. v. De Los Santos, 451 U.S. 156, 165 n. 13, 101 S.Ct. 1614, 1621 n. 13, 68 L.Ed.2d 1 (1981). Judge Gignoux held that the third-party plaintiffs had stated a claim that the United States had breached its duty to the plaintiffs. Although Judge Gignoux noted that the claims were for noncontractual indemnification or contribution, the opinion did not discuss whether the third-party plaintiffs had a right to contribution.

The Supreme Court has created a right of contribution among joint tortfeasors under maritime law. Cooper Stevedoring Co. v. Fritz Kopke, Inc., 417 U.S. 106, 94 S.Ct. 2174, 40 L.Ed.2d 694 (1974). But the Supreme Court has explicitly stated that it has not decided whether the maritime rule of contribution applies to third-party claims under the LHWCA which are not within the admiralty jurisdiction. Edmonds v. Compagnie Generale Transatlantique, 443 U.S. 256, 272 n. 31, 273, 99 S.Ct. 2753, 2762 n. 31, 2763, 61 L.Ed.2d 521 (1979). These cases are not within the admiralty jurisdiction of the federal courts. Keene Corp. v. United States, 700 F.2d 836 (2d Cir.), cert. denied, _ U.S. _, 104 S.Ct. 195, 78 L.Ed.2d 171 (1983); Austin v. Unarco Indus., Inc., 705 F.2d 1 (1st Cir.), cert. denied, _ U.S. _, 104 S.Ct. 34, 77 L.Ed.2d 1454 (1983). These third-party claims against the United States as vessel owner must be brought under 33 U.S.C. § 905(b), i.e., the LHWCA, but they are not within the admiralty jurisdiction. There are not many cases dealing with the question which was left open in Edmonds, but the Eleventh Circuit has held that because there is no admiralty jurisdiction over this type of case state law governs the claims for contribution or indemnity. Harville v. Johns-Manville Products Corp., 731 F.2d 775, 778, 787 & n. 9 (11 Cir.1984). (In Harville, the Alabama law applied, which does not permit contribution among joint tortfeasors.) I conclude that Connecticut law rather than maritime law governs the third-party plaintiffs’ claims for contribution or indemnity.

Connecticut Law

Ordinarily, there is no right to contribution among joint tortfeasors under Connecticut law but where one party’s negligence is “active,” that party can be required to indemnify a party whose liability is based on “passive” negligence. Kaplan v. Merberg Wrecking Corp., 152 Conn. 405, 207 A.2d 732 (1965). The reason for this rule is to prevent the injustice of placing liability on one whose fault is of a much lesser magnitude:

Where two parties are jointly liable in respect to a tort, one of them for the reason that he is the actual wrongdoer, and the other for the reason that the tort constituted a violation of a positive duty, the latter is entitled to recover from the former the amount which he has been compelled to pay as damages for the injury. The rationale of this rule is that the latter party is chargeable merely with ‘constructive fault’ and is consequently not in pari delicto with the former. In this point of view, the applicability of the rule is negatived, wherever it appears that the party seeking indemnity was himself guilty of affirmative misconduct which was a proximate cause of the injury in question.

Preferred Accident Ins. Co. v. Musante, Berman & Steinberg Co., 133 Conn. 536, 542, 52 A.2d 862 (1947).

Passive negligence is generally limited to constructive or technical fault, see 41 Am.Jur.2d Indemnity § 20 at 706-10 (1968); W. Prosser, Law of Torts § 51 at 311-12 (4th ed. 1971), as where an owner of property is held liable for an injury on his property resulting from a dangerous condition caused by another working on his property. See Kaplan, supra; Fidelity & Casualty Co. v. Jacob Ruppert, Inc., 135 Conn. 307, 63 A.2d 849 (1949)., Even assuming that the United States was guilty of “active” negligence, it does not follow that the third-party plaintiffs are entitled to indemnification. The third-party plaintiffs manufactured the asbestos products which caused the plaintiffs’ injuries; as such, they cannot be considered to have been only passively negligent. At best, then, the third-party plaintiffs can establish only that the government was a joint tortfeasor. The manufacturers thus are not entitled to contribution or indemnity. See Caviote v. Shea, 116 Conn. 569, 165 A. 788 (1933).

For the foregoing reasons, the government’s motion to dismiss is granted.

SO ORDERED.

      . This claim is akin to the government contract defense which was asserted as a complete defense to liability in these actions. That defense was rejected in In re General Dynamics Asbestos Cases, C.M.L. No. 1 (Aug. 22, 1984).

      . However, in other areas of federal common law, the Supreme Court has been unwilling to create a right of contribution among joint tortfeasors. Northwest Airlines, Inc. v. Transport Workers, 451 U.S. 77, 95-99, 101 S.Ct. 1571, 1582-1584, 67 L.Ed.2d 750 (1981) (employment discrimination); Texas Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 641-42, 101 S.Ct. 2061, 2067, 68 L.Ed.2d 500 (1981) (antitrust); see also Matter of Oswego Barge Corp., 664 F.2d 327, 335-36 (2d Cir.1981) (Newman, J.).

      . That section provides, in part:
      In the event of injury to a person covered under this chapter caused by the negligence of a vessel, then such person, or anyone otherwise entitled to recover damages by reason thereof, may bring an action against such vessel as a third party____ The remedy provided in this subsection shall be exclusive of all other remedies against the vessel except remedies available under this chapter.


source: Caselaw Access Project

author: ROBERT L. CARTER, District Judge.

license: Public Domain

text:
    Alfred GELLER, Plaintiff, v. Scott NEWELL, Defendant.
    No. 83 Civ. 8355 (RLC).
    United States District Court, S.D. New York.
    Sept. 20, 1984.

      Kenneth B. Newman, P.C., New York City, for plaintiff.
    William J. McKenney, Garden City, N.Y., for defendant.
   OPINION

ROBERT L. CARTER, District Judge.

Plaintiff, Alfred Geller, manages and represents news reporters and anchors in the electronic media. In April, 1980, he contracted with defendant, Scott Newell, to act as defendant’s sole representative in exchange for 10% of defendant’s gross income from television and radio sources. Plaintiff alleges a breach of contract. Defendant moves to dismiss the complaint for failure to make timely service of process, F.R.Civ.P. 4(j) and 12(b)(5), and for lack of personal jurisdiction. F.R.Civ.P. 12(b)(2).

Service of Process

The complaint in this action was filed on November 16, 1983. Service of process was completed on March 29, 1984, 134 days thereafter. Unless plaintiff’s failure to serve the summons and complaint within 120 days was for “good cause”, the case must be dismissed. F.R.Civ.P. 4(j); Burks v. Griffith, 100 F.R.D. 491, 492 (N.D.N.Y.1984).

Immediately upon commencing this action, plaintiff served the summons and complaint upon William J. McKenney, the attorney representing defendant in the case. In 1981, when defendant terminated his contract with plaintiff, McKenney informed plaintiff that in the event plaintiff contemplated litigation McKenney would accept service of process for defendant. Plaintiff assumed that McKenney would still accept service when this action was brought. On December 15, 1983, however, McKenney informed plaintiff that he was no longer authorized to accept service of process on defendant’s behalf. Neither defendant’s counsel nor his former employer in Atlanta was able to tell plaintiff of defendant’s whereabouts. Plaintiff made extensive inquiries and finally located defendant in Cleveland. Prompt arrangements were made for personal service on defendant.

Although the “good cause” standard of Rule 4(j) has, as yet, been subject to little judicial elaboration, see Sanders v. Marshall, 100 F.R.D. 480 (W.D.Pa.1984); Coleman v. Greyhound Lines, Inc., 100 F.R.D. 476 (N.D.Ill.1984), the court has no difficulty concluding that plaintiff had good cause for the 14 day delay at issue here. The harsh sanction of Rule 4(j) is appropriate to those cases in which non-service was the result of mere inadvertance. Arroyo v. Wheat, 102 F.R.D. 516 (D.Nev.1984); Coleman v. Greyhound Lines, Inc., supra, 100 F.R.D. at 477. Where plaintiff has made a reasonable effort to serve defendant, Congress intended that the 120 day deadline be extended. 1982 U.S.Code Cong. & Ad. News 4434, 4442. While it would be prudent for a plaintiff who will be unable to complete service within the statutory period to move for an enlargement of time under Rule 6(b) prior to the running of the 120 days, the failure to do so does not mandate dismissal under Rule 4(j). In this case, plaintiff was diligent in his efforts to serve defendant and he did, in fact, complete service only 14 days after the. deadline. Defendant has not alleged that he was prejudiced in any way by the brief delay. Under these circumstances, dismissal is unwarranted.

Personal Jurisdiction

The court has considered this motion on affidavits alone. No evidentiary hearing has been held. Therefore, plaintiff need only make a prima facie showing of jurisdiction through his own affidavit to avoid dismissal. Although plaintiff must ultimately establish the court’s jurisdiction over defendant by a preponderance of the evidence, at this stage a prima facie showing will suffice, even if defendant challenges the facts asserted by plaintiff. Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 768 (2d Cir.1983); Mayes v. Leipziger, 674 F.2d 178, 182 n. 3 (2d Cir.1982); Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981). Accordingly, for present purposes, the court has accepted plaintiff’s version of the relevant facts.

On April 8, 1980, defendant wrote to plaintiff forwarding him a videotape of his work and soliciting plaintiff’s professional advice. This was the first contact between the parties. On April 19, defendant came to New York and spent most of the day at plaintiff’s office. During this meeting, plaintiff explained the nature of the services he offered, as well as the terms and conditions of the written representation agreement he presented to defendant. The parties agreed to a four year representation arrangement at that time. The contract was signed by defendant several days later in Atlanta. Plaintiff contends that defendant’s activities in New York on April 19 constitute a transaction of business within the meaning of NYCPLR. § 302(a)(1).

The New York courts routinely assert § 302(a)(1) jurisdiction over defendants in breach of contract suits even in those cases in which the contract itself was signed out of state. In the leading case of Longines-Wittnauer Watch Co. v. Barnes & Reinecke, Inc., 15 N.Y.2d 443, 261 N.Y.S.2d 8, 209 N.E.2d 68 (1965), the Court of Appeals stated that

even though the last act marking the formal execution of the contract may not have occurred within New York, the statutory test may be satisfied by a showing of other purposeful acts performed by the [defendant] in this State in relation to the contract, albeit preliminary or subsequent to its execution.

261 N.Y.S.2d at 18, 209 N.E.2d at 75. In this case, while in New York, defendant participated in extensive, substantial negotiations essential to the formation of the contractual relationship. Such purposeful pre-execution activity satisfies the § 302(a)(1) test. Liquid Carriers Corp. v. American Marine Corp., 375 F.2d 951 (2d Cir.1967); M.L. Byers, Inc. v. HRG Productions, Inc., 492 F.Supp. 827 (S.D.N.Y.1980) (Knapp, J.); see George Reiner & Co. v. Schwartz, 41 N.Y.2d 648, 394 N.Y.S.2d 844, 363 N.E.2d 551 (1977).

Plaintiff also points to his own activities in New York undertaken as defendant’s agent. Although the rule has been criticized, it is the law in New York that an agent-plaintiff’s in-state activities cannot be imputed to the principal-defendant for jurisdictional purposes. Mayes v. Leipziger, supra, 674 F.2d at 181 n. 2; Oliver Promotions Ltd. v. Tams-Witmark Music Library, Inc., 535 F.Supp. 1224, 1229-30 (S.D.N.Y.1982) (Leval, J.); Haar v. Armendaris Corp., 31 N.Y.2d 1040, 342 N.Y.S.2d 70, 294 N.E.2d 855 (1973), reversing 40 A.D.2d 769, 337 N.Y.S.2d 285 (1st Dep’t. 1972) “on the dissenting opinion at the Appellate Division.” Nevertheless, in the court’s view, defendant’s April 19 New York negotiations with plaintiff, standing alone, constitute a transaction of business in this state. As this lawsuit arises out of that transaction of business, the court may properly assert jurisdiction over defendant.

Conclusion

Plaintiff had good cause for the 14 day delay in service of process. Although the burden on the issue will remain with plaintiff at trial, he has, through his affidavit, made out a prima facie case for the court’s jurisdiction over defendant. The motion to dismiss is denied.

IT IS SO ORDERED.

      . According to defendant, the meeting lasted only two hours, "no negotiations were held and the terms of the contract were not discussed.” Newell Aff. ¶¶ 4 and 6. It is difficult to believe that defendant would have signed a four year agreement costing him 10% of his gross income without discussing the matter, but in any case, as noted above, plaintiff need only make a prima facie showing at this point.

      . As subject matter jurisdiction rests on diversity of citizenship, the court must look to New York law to determine whether it has jurisdiction over defendant. Arrowsmith v. United. Press International, 320 F.2d 219, 223 (2d Cir.1963).


text:
    Gail DAVIS, Plaintiff, v. Diana ROSS, Defendant.
    No. 84 Civ. 1127 (RLC).
    United States District Court, S.D. New York.
    Sept. 21, 1984.
    Pryor, Cashman, Sherman & Flynn, New York City, for plaintiff; Donald S. Zakarin, Barbara L. Kagedan, New York City, of counsel.
    Peter Tufo, Anita Barrett, Tufo & Zuccotti, New York City, for defendant; Floyd Abrams, Dean Ringel, Cahill, Gordon & Reindel, New York City, of counsel.
   OPINION

ROBERT L. CARTER, District Judge.

Plaintiff, Gail Davis, worked as an “executive assistant” to defendant Diana Ross, a nationally known singer and actress, from January to November, 1982. Plaintiff alleges that she resigned from her employment voluntarily. She further alleges that on or about October 11, 1983, defendant wrote and publicly disseminated the following letter:

To whom it may concern:

The following people are no longer in my employment:

Carol Acquisto
Deedy (Dorothy) Collins
Susan Stratton
Karen & Scott Webster
Robin Bell
Beth Pearl Kraft
Gail Davis

If I let an employee go, it’s because either their work or their personal habits are not acceptable to me. I do not recommend these people. In fact, if you hear from these people, and they use my name as a reference, I wish to be contacted.

/s/ Diana Ross

Exh. A to Complaint. Plaintiff contends that she was libeled by this letter. Defendant moves to dismiss the complaint for failure to state a claim upon which relief can be granted. F.R.Civ.P. 12(b)(6).

The complaint demands judgment for $2 million, equally divided between compensatory and punitive damages. This round-figured claim, with no itemization, is merely a claim for general damages. Drug Corp. v. Curtis Publishing Co., 7 N.Y.2d 435, 199 N.Y.S.2d 33, 37, 166 N.E.2d 319, 321 (1960). Plaintiff has not pleaded any special damage resulting from the alleged libel. Under New York law, which both parties agree governs this action, such general allegations of damage are sufficient only if the offending writing is defamatory on its face, that is, libelous per se. El Meson Espanol v. NYM Corp., 521 F.2d 737, 740 (2d Cir.1975); James v. Gannett Co., 40 N.Y.2d 415, 386 N.Y.S.2d 871, 874, 353 N.E.2d 834, 837 (1976); McGraw v. Watkins, 49 A.D.2d 958, 373 N.Y.S.2d 663, 665 (3d Dept.1975). Thus, as a threshold matter, the court must decide whether, as a matter of law, defendant’s letter, read fairly and as a whole, is reasonably susceptible of a reading that would render it libelous per se. El Meson Espanol v. NYM Corp., supra, 521 F.2d at 739-40; Tracy v. Newsday, Inc., 5 N.Y.2d 134, 182 N.Y.S.2d 1, 3, 155 N.E.2d 853, 854 (1959); James v. Gannett Co., supra, 386 N.Y.S.2d at 874, 353 N.E.2d at 837.

As a general rule, a writing is libelous per se “if it tends to expose a person to hatred, contempt or aversion, or to induce an evil or unsavory opinion of him in the minds of a substantial number of the community ....” Nichols v. Item Publishers, Inc., 309 N.Y. 596, 132 N.E.2d 860, 861-62 (1956). Nothing on the face of defendant’s letter would so affect plaintiff and the court does not understand plaintiff to claim to the contrary. Words not otherwise defamatory, however, may become so if they are used in connection with a person’s business or professional life. Id. at 862. Words which tend to disparage someone in his professional capacity by imputing to him fraud, dishonesty, misconduct, ignorance, incompetence or incapacity are libelous per se. Four Star Stage Lighting, Inc. v. Merrick, 56 A.D.2d 767, 392 N.Y.S.2d 297 (1st Dept.1977); Amelkin v. Commercial Trading Co., 23 A.D.2d 830, 259 N.Y.S.2d 396 (1st Dept.1965), aff'd, 17 N.Y.2d 500, 267 N.Y.S.2d 218, 214 N.E.2d 379 (1966). More generally put, a statement is defamatory if it imputes to the plaintiff “some quality which would be detrimental, or the absence of some quality which is essential to the successful carrying on of his office, profession or trade.” Cole v. Fischer Rogow, Inc. v. Carl Ally, Inc., 29 A.D.2d 423, 288 N.Y.S.2d 556, 562 (1st Dept.1968) (quoting Gatley on Libel and Slander at 34 (R. McEwen and P. Lewis 6th ed. 1967)).

Plaintiff understands the letter in question as “meaning that she had been fired due to her professional incompetence or to some unstated unsavory or despicable personal habits.” Plaintiffs Memorandum of Law at 8. Were it reasonably susceptible of such a reading, there would be little doubt that defendant’s letter was libelous. Words accusing a person of professional incompetence or behavior unsuited to the carrying on of her work fall squarely within the rule just stated. But in the court’s view, the meaning ascribed by plaintiff does not emerge from a fair reading of the text. See Drug Research Corp. v. Curtis Publishing Co., supra, 199 N.Y.S.2d at 36, 166 N.E.2d at 321 (“Libelous language must be tested by a ‘fair’, not a ‘broad’ reading” (citation omitted)).

Despite the conditional wording “If I let an employee go,” and despite the inherent ambiguity in the expression “let go,” it would certainly be reasonable to read defendant’s letter as asserting that she fired plaintiff. Assuming that plaintiff resigned voluntarily, as she alleges, that would make defendant’s assertion false, but not libelous. The mere fact of being dismissed from employment implies no misconduct or lack of capacity and without such an implication there is no libel. Nichols v. Item Publishers, Inc., supra at 862.

Plaintiffs allegation that the letter is libelous depends upon the conclusion that the words “[her] work or personal habits are not acceptable to me” can reasonably be read as meaning that plaintiff is incompetent to perform as an executive assistant or that her personal habits are such that she cannot function in a manner suited to an executive assistant. A fair reading of this plain language does not permit such a conclusion. Defendant wrote no more than that plaintiff’s work or personal habits were unacceptable to defendant personally. The reader has no way of knowing what defendant requires in the way of work or personal habits and no reason to conclude from this letter that one who is unacceptable to defendant lacks the capacity or character to perform in her chosen calling. As plaintiff reads the letter, defendant is accusing all eight of the named persons of being professionally inadequate or of having “unsavory or despicable personal habits.” This is an unreasonable extrapolation from the simple statement that their work or personal habits are unacceptable to defendant.

Defendant’s letter attributes no particular work or personal habits to plaintiff the possession of which would create the impression that she is incompetent or unfit for her profession. It states only that plaintiffs work or personal habits do not meet defendant’s purely subjective and wholly unarticulated standards. The mere statement that plaintiff is unacceptable to defendant is not libelous. An analogous issue was raised in the case of Ertheiler v. Bernheim, 37 A.D. 472, 56 N.Y.S. 26 (1st Dept.1899). Defendant wrote to a third party that:

in the interest of our business we find it necessary to take a decided stand with respect to our future business relationship with [plaintiff] and to that end we feel called upon and from this date on will refuse any dealings with them, and under no circumstances will we submit samples of our stock to them.

Despite the emphatic terms in which defendant stated its intention to cease all dealings with plaintiff, the court found no libel as there was “certainly nothing to justify the inference that this severing of relations between the defendant and the plaintiff was due to any dishonorable conduct on the part of the plaintiff.” Id. at 27. Similarly, in this case, the letter clearly states that plaintiffs work or personal habits do not meet with defendant’s satisfaction and that defendant severed her relations with plaintiff as a result, but nothing in the letter warrants the inference that plaintiff was incompetent or her behavior improper. The letter is not an actionable libel per se, and although some of the letter’s recipients may be discouraged from hiring plaintiff by the knowledge that she was “unacceptable” to defendant and does not have defendant’s recommendation, that is, at best, damnum absque injuria.

Conclusion

The court’s determination that the allegedly defamatory letter is not libelous per se obviates the need to consider the other arguments proffered in support of defendant’s motion. The complaint is dismissed.

IT IS SO ORDERED.

      . The court’s jurisdiction is based on diversity of citizenship.

      . Plaintiff may be right that "let go" and "fired" are not synonymous in that "let go" can mean many things. But according to Webster’s Third New International Dictionary at 1297 (1961), one of its meanings is "to dismiss from employment."

      . Plaintiff relies on Tedeschi v. Smith Barney, Harris Upham & Co., 548 F.Supp. 1172 (S.D.N.Y.1982) (Weinfeld, J.), for the proposition that a false statement that a person has fired someone is libelous per se. That is not the holding of the case in which the document in question stated not only that plaintiff had been fired but that he had “questionable loyalty and ethics.” The statement that a person is "unethical” has been held libelous per se. Mason v. Sullivan, 26 A.D.2d 115, 271 N.Y.S.2d 314 (1st Dept.1966).


author: JOHN T. NIXON, District Judge.

text:
    Jerry HOLBROOK, Individually, and on behalf of all other Persons similarly situated v. TENNESSEE DEPARTMENT OF EMPLOYMENT SECURITY, and Bob Bible, Commissioner.
    No. 80-3269.
    United States District Court, M.D. Tennessee, Nashville Division.
    Oct. 12, 1984.

      Lenny Croce, Oak Ridge, Tenn., for plaintiff.
    Frank Scanlon, Asst. Atty. Gen., State of Tennessee, Nashville, Tenn., for defendants.
   MEMORANDUM

JOHN T. NIXON, District Judge.

The plaintiff, Jerry Holbrook, brings this action under 42 U.S.C. § 1983 against the Tennessee Department of Employment Security, the State of Tennessee, and the Commissioner of Employment Security, Bob Bible. Plaintiff seeks declaratory and injunctive relief as well as damages resulting from the withholding of unemployment compensation benefits from plaintiff in 1980. Pending before the Court are cross-motions for summary judgment. For the reasons discussed below, the Court GRANTS in part and DENIES in part defendant’s motion for summary judgment and GRANTS in part and DENIES in part plaintiff’s motion for summary judgment.

Plaintiff Jerry Holbrook was declared eligible for federal unemployment compensation for ex-servicemen on March 10, 1973. He received benefits of $57.00 per week for twenty-six weeks, and during that time plaintiff reported every week to his employment security office that he had received no wages for the prior week. At some time after plaintiff began receiving benefits, the Department of Employment Security (“Department”) received allegations from two employees that plaintiff had received wages for nine of those twenty-six weeks. On July 17, 1974, the Department sent plaintiff a letter indicating that a hearing was set in the matter on July 23, but the letter was returned by the post office. On October 25, 1974, another letter was sent advising him of a hearing on October 31, 1974. Plaintiff maintains that he did not receive this letter. Plaintiff did not attend the July or October meeting. The Department’s decision, which was issued on November 26, 1974, indicated that plaintiff was disqualified from receiving benefits for fifty-two weeks. The decision also indicated that plaintiff had received overpayments of $492.00. The Department claimed that the plaintiff owed the Department that amount plus penalties of $648.00 for a total of $1,140.00.

After plaintiff applied for unemployment benefits on March 24, 1980, the Department declared plaintiff eligible for unemployment benefits on April 1, 1980. He received no benefits in April; in May 1980, he was notified that because of the outstanding claim by the Department, the benefits to which he was entitled would be used as credit against the Department’s claim. By June 1, 1980, the Department had withheld a total of $900.00 of unemployment compensation benefits as a credit against its claim of $1,140.00. On June 12, 1980, the Court granted plaintiff’s motion for a temporary restraining order, ordering the Department to pay plaintiff immediately all unemployment benefits beginning with the week of June 1, 1980, and enjoining defendants from withholding future benefits until the Department had given plaintiff notice of his rights to appeal and to request a waiver and an opportunity for a hearing.

Plaintiff filed the action on June 23, 1980, seeking a declaratory judgment, injunctive relief, and damages. On June 18, 1980, plaintiff filed a motion for class certification. On July 7, Commissioner Bible was added as a defendant, and plaintiff also added a 42 U.S.C. § 1983 claim against defendant Bible. On January 22, 1982, the Court denied the motion for class certification. Over the next year and one-half, the parties were involved in serious negotiations but were unable to resolve the dispute. The parties have agreed that the case is ripe for adjudication based on the cross-motions for summary judgment.

The gravamen of the complaint is that the State of Tennessee, through the Tennessee Department of Employment Security and Commissioner Bible, illegally withheld unemployment compensation from Mr. Holbrook, who seeks both damages and injunctive relief under 42 U.S.C. § 1983. Section 1983 permits a cause of action against any person who under color of law deprives any citizen of rights secured under the Constitution and laws of the United States. 42 U.S.C. § 1983. States and agencies of the states are not persons for the purposes of Section 1983. Quern v. Jordan, 440 U.S. 332, 339-40, 99 S.Ct. 1139, 1144-45, 59 L.Ed.2d 358 (1979); Alabama v. Pugh, 438 U.S. 781, 781-82, 98 S.Ct. 3057, 3057-58, 57 L.Ed.2d 1114 (1978); Ohio Inns, Inc. v. Nye, 542 F.2d 673, 676, 681 (6th Cir.1976), cert. denied, 430 U.S. 946, 97 S.Ct. 1583, 51 L.Ed.2d 794 (1977); Deane Hill Country Club, Inc. v. City of Knoxville, 379 F.2d 321, 324 (6th Cir.), cert. denied, 389 U.S. 975, 88 S.Ct. 476, 19 L.Ed.2d 467 (1967). Inasmuch as the State of Tennessee and the Department have not waived their immunity, the Court hereby DISMISSES those parties.

Commissioner Bible, however, is a person for purposes of Section 1983. It is clear that Commissioner Bible is being sued in his official capacity only. In essence, the damages aspect of the claim against Commissioner Bible seeks money from the treasury of the State of Tennessee. The Supreme Court has held that the Eleventh Amendment bars the retroactive payment of benefits wrongfully withheld by the state. Edelman v. Jordan, 415 U.S. 651, 677-78, 94 S.Ct. 1347, 1362-63, 39 L.Ed.2d 662 (1974). In Edelman, the Court held that remedies for public aid recipients whose benefits had been denied illegally by the state were limited to prospective injunctive relief. Id. Therefore, in the case at bar, the Court holds that Mr. Holbrook is entitled to no damages from Commissioner Bible in his official capacity — either for the money withheld or for the consequential damages.

As to the possibility of equitable relief, the parties agree that plaintiff was entitled to notice and an opportunity for an evidentiary hearing prior to the Department’s declaration in 1974 that he had received benefits illegally and therefore had to repay the $492.00 plus a penalty of $648.00 plus be declared ineligible to receive benefits for a period of fifty-two weeks. Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 901, 47 L.Ed.2d 18 (1976); Goldberg v. Kelly, 397 U.S. 254, 267-68, 90 S.Ct. 1011, 1020-21, 25 L.Ed.2d 287 (1970). Such an opportunity is so important that Congress has required the Secretary of Labor to assure that each state receiving certification for payment of federal funds for unemployment compensation benefits have a state law affording “Opportunity for a fair hearing, before an impartial tribunal, for all individuals whose claims for unemployment compensation are denied....” 42 U.S.C. § 503(a)(3).

The Supreme Court has explained why the hearing is necessary and what process is due a recipient to assure a fair hearing:

“The fundamental requisite of due process of law is the opportunity to be heard.” The hearing must be “at a meaningful time and in a meaningful manner.” [Tjhese principles require that a recipient have timely and adequate notice detailing the reasons for a proposed termination, and an effective opportunity to defend by confronting any adverse witnesses and by presenting his own arguments and evidence orally. These rights are important in cases ... where recipients have challenged proposed terminations as resting on incorrect or misleading factual premises or on misapplication of rules or policies to the facts of particular cases. (Citations omitted).

Goldberg, 397 U.S. at 267-68, 90 S.Ct. at 1020. The notice requirement is crucial in cases such as the one at bar. Grannis v. Ordean, 234 U.S. 385, 394, 34 S.Ct. 779, 783, 58 L.Ed. 1363 (1914). “An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950). The Court, therefore, must examine all the circumstances of the case to determine if the attempt of the Department to notify Mr. Holbrook of his pending hearing satisfied the demands of due process. The Supreme Court recently addressed the issue of what constitutes adequate notice in Greene v. Lindsey, 456 U.S. 444, 102 S.Ct. 1874, 72 L.Ed.2d 249 (1982). In Greene, tenants of a housing project challenged a Kentucky law that allowed notice in forcible entry or detainer proceedings by posting notice in a conspicuous place on the premises when personal notice at the premises fails. 102 S.Ct. at 1876. The Court found that while such notice may be adequate in many cases, under the circumstances of that case, it was not adequate because the evidence before the trial court demonstrated that children and other tenants often removed the posted notices. Id. 102 S.Ct. at 1879-80 and n. 7. Nevertheless, the Court held that the reasonableness of the attempt to give notice to the tenants “must be tested with reference to the existence of ‘feasible and customary’ alternatives and supplements to the form of notice chosen.” Id. 102 S.Ct. at 1880. In Greene, the Court held that several other alternatives existed that were constitutionally more preferable to posted service alone, including a second attempt at personal service or combining posted notice with notice by mail, particularly because the defendants knew the correct address of the tenants. Id. 102 S.Ct. at 1880-81.

In the instant case, the Department sent the plaintiff three notices more than one year after he received his last weekly check. It is undisputed that the post office returned the first and third notices. Although the second notice was not returned by the post office, plaintiff has sworn that he never received it. The defendant has given no credible explanation as to how plaintiff could have received the second notice but not the third notice, which was sent to the same address one week later. Inasmuch as the plaintiff was in the Army and stationed in Oklahoma when all three letters were mailed, the Court finds credible the contention that Mr. Holbrook never received any notice of the hearing. There is nothing in the record to indicate that plaintiff intentionally avoided the attempt by the Department to notify him. In addition, when the plaintiff applied for benefits in 1980, the Department could have given him an immediate hearing.

The Court holds that the attempt by the Department to notify plaintiff of the allegations that he had received compensation benefits illegally did not satisfy the requirements of due process. Because the Department’s attempt to notify plaintiff under the circumstances of this case was insufficient, the holding of the Department that plaintiff owed the department $492.00, that plaintiff must pay $648.00 in penalties, and that plaintiff was ineligible to receive benefits for the next fifty-two weeks was invalid. Therefore, the Court holds that the Commissioner’s decision to withhold plaintiff’s unemployment compensation benefits from Mr. Holbrook in 1980 constituted a deprivation of plaintiff’s property in violation of the Due Process Clause of the Fourteenth Amendment. Commissioner Bible is hereby ENJOINED permanently from withholding plaintiff’s benefits until a hearing is conducted, which is consistent with plaintiffs right to due process of law.

An appropriate ORDER will enter.

      . Plaintiff also argues that even if he had been overpaid and even if the notice of the hearing had been adequate, he was entitled to notice and hearing as to whether the overpayment should be waived by the Department in accordanee with the provisions of TENÑ.CODE ANN. § 50-7-303(8). For the reasons discussed below, the Court deems it unnecessary to address that issue.

      . In that it is the opinion of this Court that the 1974 hearing was not constitutionally adequate, the Court deems moot the issue of notice and hearing on plaintiffs right to request a waiver of the assessment of $1,140.00.


text:
    MODERN SETTINGS, INC., and Binder & Binder, as attorneys for Modern Settings, Inc., Plaintiffs, v. PRUDENTIAL-BACHE SECURITIES, INC., Prudential-Bache Metal Co., Inc., Gary Adornato, Felix McCarthy, Richard Berlin, and Frederic Wasserspring, Defendants.
    83 Civ. 6291 (RLC).
    United States District Court, S.D. New York.
    Oct. 17, 1984.
    See also, D.C., 603 F.Supp. 370.

      Jaffe & Asher, New York City, for plaintiffs; Peter A. Jaffe, Ira N. Glauber, New York City, of counsel.
    Dewey, Ballantine, Bushby, Palmer & Wood, New York City, for defendants Prudential-Bache Securities, Inc., PrudentialBache Metal Co., Inc., Felix McCarthy, Richard Berlin, Frederic Wasserspring; John M. Friedman, Jr., Scott M. Univer, New York City, of counsel.
    Henry Putzel, III, New York City, for defendant Gary Adornato.
   OPINION

ROBERT L. CARTER, District Judge.

The main issue before the court is whether plaintiffs have stated with the requisite particularity, pursuant to F.R.Civ.P. 9(b), various counts of fraud with which they charge defendants. Plaintiffs, Modern Settings, Inc. and Binder & Binder, their attorneys in the transactions at issue, allege that defendants Prudential-Bache Securities, Inc., individual managers and a representative of the firm, Prudential-Bache Metal Co., Inc. and its president have violated section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), section 4(b) of the Commodity Exchange Act, 7 U.S.C. § 6b, the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962, New York Stock Exchange Rule 405 and NASD Rules of Fair Practice, Article III, Section 2. They also bring counts of common law fraud and defamation. Because the pleadings, founded largely on information and belief, set forth facts which allow only an inference of negligence on defendants’ part, defendants’ motion to dismiss is granted, but plaintiffs may submit an amended complaint to correct the deficiencies noted herein.

Background

Modern Settings manufactures gold jewelry. It obtained the gold used in its manufacturing process from Prudential-Bache Metal pursuant to a Gold Consignment Agreement between Modern Settings, Binder & Binder and Prudential-Bache Metal. The agreement allowed Modern Settings to hold a certain amount of gold on consignment provided that it posted with Prudential-Bache Securities marginable securities having a value of at least 120% of the value of the consigned gold outstanding at any given time.

In conjunction with this arrangement, Binder & Binder maintained a margin securities account at Prudential-Bache Securities. The account also constituted the sole source of liquid funds for plaintiffs’ operations and gold buying activities. It consisted of pools of mortgage instruments issued by the Government National Mortgage Association (“GNMA”) and the Federal National Mortgage Association (“FNMA”), as well as other conservative investments.

Defendants’ valuation of plaintiffs’ account is at the center of the dispute in this case. On or about June 16, 1983, at Binder & Binder’s request, Modern Settings’ interest in a certain GNMA pool was sold and sales proceeds were credited to plaintiffs’ account. The amount credited to the account was approximately $1,097,000. Defendants derived this figure from a complex mathematical calculation which plaintiffs apparently could not duplicate.

Plaintiffs were apprised orally of the amount credited to their account, and were further informed through confirmation slips, account statements and other documents produced and supplied by defendants. From June 16,1983, through August 15, 1983, defendants regularly reaffirmed the information provided initially with regard to the sale of these GNMA securities. The same procedure followed Binder & Binder’s April, 1983 purchase of a pool of FNMA securities, which was valued at approximately $1,000,000.

Both of defendants’ appraisals were, however, inflated by a total of approximately $630,000. Plaintiffs contend that defendants’ representations were knowingly false and misleading and/or were so reckless as to amount to fraud. (¶1¶ 22, 25). Defendants maintain that upon the facts alleged, fraudulent conduct on defendants’ part cannot be inferred. The parties pursue a similar exchange with respect to plaintiffs’ allegations of market manipulation by defendants. The allegation is that Prudential-Bache liquidated the accounts of other customers who held the same GNMA and FNMA pools as did Modern Settings with the intent of disrupting the market in such pools in reckless disregard of the consequences of their actions. (HIT 34-36).

Defendants are also charged with engaging in unauthorized trading in certain stock held in the account. (¶ 42). Plaintiffs maintain that the losses incurred as a result of the allegedly unauthorized trades, together with the misrepresentations about the value of securities held, triggered margin calls on the account and led eventually to what plaintiffs claim was the wrongful liquidation of the account (HH 31-33) and the consequent cut-off of Modern Settings’ gold supply from Prudential-Bache Metal Co. (¶¶ 38-46). Defendants again complain that the allegations are vague and conclusory and fail to apprise them of the fraudulent acts for which they are faulted.

Discussion

Claims of fraud must be pleaded with particularity, F.R.Civ.P. 9(b), both to enable defendants to' prepare an adequate defense, Posner v. Coopers & Lybrand, 92 F.R.D. 765, 768 (S.D.N.Y.1981) (Goettel, J.), aff'd, 697 F.2d 296 (2d Cir.1982), and to safeguard defendants’ reputations and goodwill since charges of fraud, even without more, are highly damaging. Decker v. Massey-Ferguson-Ltd., 681 F.2d 111, 115 (2d Cir.1982). A plaintiff need not recite the evidence or plead detailed evidentiary matter, but must set forth a factual predicate for the allegations of fraud, including specific facts, the sources from which the facts were derived, and a basis from which an inference of fraud may fairly be drawn. Crystal v. Foy, 562 F.Supp. 422, 424-25 (S.D.N.Y.1983) (Weinfeld, J.). A complaint made out largely on the basis of information and belief must include a statement of facts upon which the belief is founded. Somerville v. Major Exploration, Inc., 576 F.Supp. 902, 909 (S.D.N.Y.1983) (Carter, J.).

A major problem with the complaint, according to defendants, is that plaintiffs have omitted the requisite factual background with respect to the scienter element of plaintiffs’ federal securities claims. Defendants’ point is well-taken. The complaint’s allegations regarding defendants’ knowledge of the misrepresentations at issue are too conclusory and fail to serve adequately the purposes behind Rule 9(b).

Plaintiffs correctly assert that reckless conduct satisfies the scienter requirement of section 10(b) and rule 10b-5, Rolf v. Blyth, Eastman Dillon & Co., Inc., 570 F.2d 38, 45 n. 12, 46 (2d Cir.1978), and that assertions of knowledge need be averred only generally. Zaretsky v. E.F. Hutton & Co., Inc., 509 F.Supp. 68, 75 (S.D.N.Y.1981) (Lowe, J.). Nevertheless, the complaint must make clear that more than mere negligence is alleged. Shemtob v. Shearson, Hammill & Co., 448 F.2d 442 (2d Cir.1971); Zerman v. Jacobs, 510 F.Supp. 132, 134 (S.D.N.Y.) (Weinfeld, J.), aff'd, 672 F.2d 901 (2d Cir.1981). The facts disclosed in plaintiffs’ complaint do not do so. Plaintiffs describe a gross error on defendants’ part in the calculation of the account’s assets. But they do not develop facts from which it can be inferred that the error was either known or so obvious that defendants must have been aware of it. Cf. Somerville v. Major Exploration, supra, 576 F.Supp. at 909-910. The substance of their claims of either fraud or recklessness has, therefore, been omitted. See Rolf v. Blyth, Eastman Dillon & Co., Inc., supra, 570 F.2d at 46-47; Sundstrand Corp. v. Sun Chemical Corp., 553 F.2d 1033, 1044-45 (7th Cir.1977); Aldrich v. New York Stock Exch., 446 F.Supp. 348, 355 (S.D.N.Y.1977) (Werker, J.).

Plaintiffs’ claim of market manipulation on defendants’ part is subject to the same criticism, although to a lesser degree. While, as plaintiffs contend, some of the facts missing from the complaint are those within defendants’ possession, uncovered due to the early stage of the litigation, the allegations read more like factual hypotheses than like factual descriptions of events which have transpired. As a result, the complaint is speculative on the issue of what defendants gained as a consequence of the fraud alleged — information that would seem especially pertinent to the allegation of market manipulation. Cf. Gross v. Diversified Mortgage Investors, 431 F.Supp. 1080, 1088 (S.D.N.Y.1977) (Gagliardi, J.), aff'd, 636 F.2d 1201 (2d Cir.1980). Such speculation is what Rule 9(b) is designed to prevent. See Liu v. L.F. Rothschild, Unterberg, Towbin, 1980 Fed.Sec.L.Rep. (CCH) 1197,633 at 98,396 (S.D.N.Y.1980) (Carter, J.).

Plaintiffs’ assertions of unauthorized trading in Coleco stocks are based upon a failure by Prudential-Bache representatives to follow instructions regarding sale and purchases of stock. (¶ 30-32). These allegations sufficiently apprise defendants of the transactions at issue in that they specify, for the most part, the dates on which the transactions occurred, and the number and kind of stock positions disputed. The allegation that the representative pursuing the stock trades “fraudulently expos[ed] the Account to further losses,” is, however, conclusory; the pleadings do not permit the court to infer legitimately the wilful destruction of plaintiffs’ account, despite plaintiffs’ implications to this effect elsewhere. See Affidavit of Harry J. Binder, ¶¶ 14-17. A violation of either section 10(b) of the Securities Exchange Act, or of section 4b of the Commodity Exchange Act is not, therefore, sufficiently pleaded.

As to plaintiffs’ assertions concerning the wrongful liquidation of the account, no facts, apart from those set forth with regard to the claim of market manipulation, previously discussed, describe a claim of fraud or recklessness. Plaintiffs maintain that the margin calls on its account were improper because the de-valuation of the account was attributable to defendants’ errors alone. (II42). They also contend that the liquidation of the account was conducted in a malicious manner. (¶ 51). The former allegation is not, on its face, one of fraud. The latter is both vague and conclusory. Neither withstands defendants’ 9(b) challenge in the absence of particularized pleadings elsewhere in the complaint which might support these claims.

In light of the court’s disposition of the claims made pursuant to the anti-fraud provisions of the federal securities laws, there is no need to address the sufficiency of plaintiffs’ allegations of defamation, nor of those pertaining to violations of New York Stock Exchange Rule 405 and Article III, .§ 2 of the NASD Rules of Fair Practice. It is noted here briefly that the federal rules do not require special pleading for charges of libel and slander, Geisler v. Petrocelli, 616 F.2d 636, 640 (2d Cir.1980), and on cursory review, plaintiffs’ allegations appear to notify defendants adequately of the defamatory remarks of which plaintiffs complain. On the other hand, defendants’ point with respect to the absence of a private right of action for violations of New York Stock Exchange Rule 405 and Article III, § 2 of the NASD Rules seems amply supported. See, e.g., Juster v. Rothschild, Unterberg, Towbin, 554 F.Supp. 331, 333 (S.D.N.Y.1983) (Knapp, J.); Klitzman v. Bache Halsey Stuart Shields, Inc., 499 F.Supp. 255, 258-59 (S.D.N.Y.1980) (Duffy, J.). Indeed, plaintiffs appear to concede this issue.

Finally, the recent second circuit opinion, Sedima, S.P.L.R. v. Imrex Co., Inc. Armón and Armon, 741 F.2d 482, at 496 (2d Cir.1984), casts serious doubt over the viability of plaintiffs’ RICO charge, even assuming plaintiffs amend their complaint to state a cause of action pursuant to the federal securities laws. (Prior criminal conviction prerequisite to civil RICO action).

Leave to replead is granted. Plaintiffs’ second amended complaint, if any, must be filed with this court by November 2, 1984.

. IT IS SO ORDERED.

      . Defendant Adornato, who is no longer an employee of Prudential-Bache Securities, joined in the motion to dismiss and is not distinguished from other defendants in this discussion.

      . Plaintiffs seek damages for lost profits and damage to the goodwill of the business. They claim further that the entire business has been jeopardized and seek to recover for the business’ lost value. They also allege damages suffered in consequence of defendants’ liquidation of their account. Finally, plaintiffs seek damages for alleged defamatory statements and treble damages under RICO.

      . Defendants’ argument for dismissal of the complaint based on Rule 9(b) is stronger than their contention that the complaint should be dismissed for failure to state a claim upon which relief can be granted based on a reading of Zerman v. Jacobs, 510 F.Supp. 132 (S.D.N.Y.) (Weinfeld, J.), aff’d, 672 F.2d 901 (2d Cir.1981). Plaintiffs here, unlike in Zerman, have grounds on which to claim that their injuries were caused by defendants’ allegedly fraudulent acts. See id. at 134.

      . This does not mean, however, that Rule 9(b) is entirely diluted in its effect.
      The part of Rule 9(b) which permits a general averment of condition of mind does not preclude the allegation with particularity of the circumstances constituting the fraud required under the first sentence of the rule.

        Aldrich v. New York Stock Exch., 446 F.Supp. 348, 355 n. 4 (S.D.N.Y.1977) (Werker, J.). See also Jacobson v. Peat, Marwick, Mitchell & Co., 445 F.Supp. 518, 523-24 (S.D.N.Y.1977) (Werker, J.).

      . Peters v. Prudential-Bache Sec., Inc., 572 F.Supp. 1085, 1983 Fed.Sec.L.Rep. (CCH) ¶ 99,-561 (N.D.Ill.1983) is not support enough for plaintiffs' position. In Peters, the court found sufficiently pleaded allegations of fraud involving misrepresentations concerning a securities account. However, although factual similarities between Peters and the case before this court are apparent, the claims made in the respective complaints are not so apparently alike. While the opinion, which is relatively brief, gives few details of the nature of the complaint, plaintiffs in Peters asserted not only that defendants wilfully made factual misstatements concerning plaintiffs’ account, but that Prudential Bache, the firm involved, was making a market in the stocks at issue. The complaint here, drawn on information and belief, does not succeed in making that assertion. See infra, discussion of market manipulation alleged by plaintiffs. See also Affidavit of Harry J. Binder (mis-valuation of GNMAs and FNMAs is pervasive problem at Prudential Bache, occurring "perhaps due to [Prudential-Bache’s] own ineptitude.”) Id. at ¶ 15.

        Peters reaffirmed the principle of Rule 9(b), that "[f]acts amounting to a form of deception must appear in the complaint,” id. at 572 F.Supp. 1085, 1983 Fed.Sec.L.Rep. (CCH) H 97,219, and to the extent the Peters’ court reached a different judgment on facts analogous to those pleaded here, the court declines to follow it.

      . Insofar as reliance is placed on section 4b of the Commodity Exchange Act, it is not necessary for plaintiffs to allege that the PrudentialBache representative acted with evil motive or an intent to injure plaintiffs. However, plaintiffs must give some indication that defendants acted with knowledge that their acts were unauthorized and contrary to instructions. See Haltmier v. Commodity Futures Trading Comm’n, 554 F.2d 556, 562 (2d Cir.1977).


text:
    In the Matter of Robert W. COMEGNA, A Witness Before the President’s Commission On Organized Crime.
    Misc. No. 84-M57.
    United States District Court, S.D. New York.
    Oct. 23, 1984.

      Stephen M. Ryan, Deputy Counsel, President’s Com’n on Organized Crime, New York City; James D. Harmon, Jr., Executive Director and Chief Counsel, Jonathan J. Rusch, Thomas P. McNulty, Deputy Counsel, President’s Commission on Organized Crime, New York City, of counsel.
    Ivan S. Fisher, Fisher & Ely, P.C., New York City, for Robert Comegna.
   ROBERT L. CARTER, District Judge.

Robert W. Comegna was subpoened on September 28, 1984, by the President’s Commission on Organized Crime to give testimony in a closed deposition. At the deposition Comegna, asserting his 5th amendment privilege against self-incrimination and 4th amendment claim that the testimony which was sought constituted the fruits of illegally seized evidence and should be suppressed, refused to testify.

Application was made to the Attorney General pursuant to 18 U.S.C. § 6004 for authority to grant Comegna immunity as provided in 18 U.S.C. § 6002 in return for his testimony. Such authority has been granted, and the court signed an order on October 17, 1984, compelling Comegna’s testimony. Thus his 5th amendment claim has been vitiated.

Comegna still asserts his 4th amendment claim. He seeks to quash the Commission’s subpoena or, in the alternative, requests an order denying the Commission’s application that Comegna be held in contempt for refusing to honor the subpoena pending a hearing to determine whether the circumstances surrounding the seizure of various documents belonging to Comegna which are, at least in part, the basis of the Commission’s interest in his testimony, warrant application of the 4th amendment exclusionary rule to prohibit the Commission from being allowed to question Comegna about the documents or any matter relative thereto.

The President’s Commission on Organized Crime came into being on July 28, 1983, pursuant to Executive Order 12435. The Commission’s function is to undertake a “complete national and region by region' analysis of organized crime,” define its nature, the sources and amounts of its income, and the uses to which the income is put, obtain information on participants in organized crime networks and evaluate the efficacy of federal laws designed to combat organized crime. The Commission is to present its findings and recommendations for administrative and legislative improvemente in the administration of justice to the President and Attorney General. Executive Order 12435, § 2(a), 48 Fed.Reg. 34723 (1983). Pursuant to Pub.L. 96-368, 94 Stat. 1347 (1984), the Commission has been granted the power to hold hearings, to compel the attendance and testimony of witnesses, and to compel production of information to enable the Commission to complete its task. At present, the Commission is due to expire on July 28, 1985, unless its term is extended. The Commission is planning to hold hearings in New York beginning on October 23, 1984.

On December 9, 1981, Comegna left a briefcase in a supermarket in San Diego, California. An employee found the briefcase, opened it to ascertain ownership and found that it contained $8,000 in cash, checks from various individuals to Comegna’s order totalling in excess of $350,000, a bank statement' of October, 1981, for a Citibank checking account in the name of Comegna’s wife, a list of six Japanese names with accompanying financial notations, a personal telephone book and diary covering the period October 5, 1981, to December 6, 1981.

The briefcase was turned over to the San Diego Sheriff’s Department. The police, in light of the cash involved, turned the briefcase over to the Department’s Narcotic Task Force. The Commission states that Comegna did not contact the police until December 11. Comegna contends that he returned to the supermarket later that day and was told that the briefcase had been turned over to the police. He states that he went personally to the precinct that next morning, was told the briefcase was not there and to call back at 5:30 p.m. He returned at 5:00 p.m. but was told the briefcase was in the main office and that it was now too late to retrieve his property that day, and he was requested to return the next day. On his return to the sheriff’s office the following morning, he was told that the officer who was supposed to bring the briefcase from the main office was out sick, and thus he would have to return the next day to get his briefcase. He returned the next morning and was given another excuse. Finally, the briefcase was returned to him at 5:00 p.m. on December 12, roughly some 60 hours after he had first appeared at the precinct to secure the return of his briefcase.

Comegna contends that in this interval, while he was being denied the return of his property, the San Diego police were making copies of the contents of the briefcase at the direction of federal authorities from the Eastern District of New York. He contends that a hearing will establish that agents from the IRS, Criminal Tax Division or representatives of the United States Attorney for the Eastern District of New York were responsible for the delayed return to Comegna of his briefcase and that they caused San Diego authorities to copy all the contents.

This contention certainly is not lacking in plausibility. In any event, federal authorities in the Eastern District came into possession- of every document in the briefcase. Possession of these documents resulted in a grand jury investigation into Comegna’s affairs. The investigation revealed that Comegna operated a blackjack game exclusively for Japanese businessmen. On May 12, 1983, a two count information was filed against him charging him with participating in an extortionate credit transaction, 18 U.S.C. § 894(a)(1), and evading income tax, 26 U.S.C. § 7201. Comegna pled guilty to those charges before Judge Mishler on July 27, 1983, and was sentenced to serve a prison term of one year and one day. He surrendered to authorities and completed service of his sentence before this proceeding began.

There was no attempt to test the application of the exclusionary rule in the grand jury proceedings in the Eastern District. Nor was the issue raised in reference to the validity of the information. Counsel for Comegna states that he had extensive discussions about the 4th amendment issue with the Assistant United States Attorney in the Eastern District and a special agent who apparently had charge of the Comegna case. Counsel states that in these discussions the Assistant United States Attorney argued that he could prove his case through independent witnesses and that the taint from the unlawful search was attenuated. After discussion with Comegna, a decision was made to waive indictment and plead guilty to the information.

The documents which are the subject of the present proceeding were, according to Comegna, grand jury exhibits in the Eastern District’s investigation. These documents or photocopies were somehow secured by the Commission. The Commission’s papers are silent about how it came into possession of the documents, and it contends that the lawfulness of the search of the briefcase is irrelevant. It argues that invocation of the exclusionary rule under the present circumstances should not be permitted. The reason given is that to allow Comegna to litigate this issue would seriously impede the Commission’s work. In sum, the Commission seeks a ruling that the exclusionary rule is not applicable to it for the same reasons it was found not applicable to grand jury proceedings in United States v. Calandra, 414 U.S. 338, 342-352, 94 S.Ct. 613, 617-622, 38 L.Ed.2d 561 (1974).

A Commission, albeit a presidential one, cannot be equated with a grand jury. It has none of the traditions that the grand jury has held in the Anglo-American criminal justice systems. The grand jury’s genesis in England was two-fold, both to discover and bring to trial persons suspected of crime and to protect citizens against governmental arbitrariness and caprice. See e.g. Costello v. United States, 350 U.S. 359, 361-362, 76 S.Ct. 406, 407-408, 100 L.Ed. 397 (1966); Blair v. United States, 250 U.S. 273, 279-83, 39 S.Ct. 468, 470-471, 63 L.Ed. 979 (1919); Hale v. Henkel, 201 U.S. 43, 59, 26 S.Ct. 370, 372, 50 L.Ed. 652 (1906), for a discussion of the history and role of the grand jury. While the Commission’s task is undoubtedly important and indeed vital, the rationale that screens a grand jury proceeding from imposition of the exclusionary rule cannot undergird a finding that the Commission must be similarly protected. As a general proposition, I would think the 4th amendment’s exclusionary rule would be applicable to the Commission under proper circumstances absent an express judicial holding exempting it from the rule’s reach, as the Court did in United States v. Calandra in re the grand jury. Nonetheless, I do not find a basis for quashing the subpoena in this case.

Whatever its antecedents, see United States v. Calandra, 414 U.S. supra, 354-367, 94 S.Ct. supra, 622-629 (Justice Brennan’s dissenting); Tirado v. Commissioner of Internal Revenue, 689 F.2d 307, 315-317 (2d Cir.1982) (Judge Oake’s dissenting), the primary, if not sole, purpose of the exclusionary rule “is to deter unlawful police conduct.” United States v. Janis, 428 U.S. 433, 446, 96 S.Ct. 3021, 3028, 49 L.Ed.2d 1046 (1976), citing United States v. Calandra 414 U.S. at 347, 94 S.Ct. at 619. In that case the local officer relied in good faith on a warrant, later proved to be defective, to seize evidence which was turned over to federal authorities. The issue was whether this evidence should be held inadmissible in a federal civil tax proceeding. The court answered in the negative. It concluded that since deterrence was the reason for the rule, such deterrence is highly attenuated “when the ‘punishment’ imposed upon the offending criminal enforcement officer is the removal of that evidence from a civil suit by or against a different sovereign.” United States v. Janis, 428 U.S. supra at 458, 96 S.Ct. supra at 3034.

The facts alleged by Comegna, however, do not fit the Janis model. Janis was decided on the assumption that there was no agreement by federal authorities with the officer committing the unconstitutional search to get the evidence for them or turn it over to them and no participation by federal officials in the unconstitutional search. Id. at 451 n. 31, 96 S.Ct. at 3033 n. 31. The situation of local and federal collusion or cooperation in the illegal seizure was left undecided.

However, that gap has now been closed at least in this circuit. In Tirado v. Commissioner of Internal Revenue, 689 F.2d 307 (1982), two federal agents and two police officers of a joint law enforcement unit composed of federal and local officers entered plaintiffs apartment and seized various documents. The federal officials involved met with IRS officials and disclosed the results of the search. The IRS used the information to reconstruct Tirado’s income and to issue a notice of tax deficiency based on its calculations. Tirado petitioned the United States Tax Court to redetermine the deficiency on the ground that it was based on illegally obtained evidence since the items seized were not covered by the warrant. The tax court ruled that the language of the warrant was sufficient to authorize the seizure and upheld the deficiency determination.

The Court of Appeals affirmed holding that the fact that the evidence was seized in violation of the 4th amendment did not require that it be suppressed in a civil tax court proceeding. It reasoned that the closer the nature of the proposed use is to the seizing officers’ “zone of primary interest”, the stronger is the inference that the officer had the use in mind. The court reasoned that local police officers looking for gambling violations are not likely to be motivated by a desire to aid federal tax authorities in winning a deficiency judgment against the person from whom the evidence is seized, id. at 311; and that tax deficiency proceedings are too remote from the zone of primary interest of the narcotics agents who made the seizure for any deterrence to be effected by applying the rule. It was considered unreasonable to assume that a ruling barring use of the evidence in a civil tax proceeding would have materially influenced the agents’ decision whether to make the particular seizures. Id. at 314.

This reasoning points squarely to determination in this case. Assuming that the San Diego police, in agreement with federal authorities in the Eastern District, unlawfully kept possession of Comegna’s briefcase so that all of its contents could be photocopied and turned over to federal law enforcement authorities in the Eastern District of New York, it is not reasonable to assume that the conduct of the San Diego police or federal authorities in the Eastern District in 1981 would have been influenced by application of the exclusionary rule to bar the use of the evidence by a President’s Commission on Organized Crime in 1984.

Law enforcement officials would have little interest one way or another with proceedings by such an agency. Their concern is with detection and prosecution of criminal acts — not with a study group which proposes to generate information for the public on organized crime. Moreover, the Commission was not even in existence when the unlawful seizure of Comegna’s papers took place. There is no warrant, therefore, for applying a rule of deterrence to bar the President’s Commission from obtaining Comegna’s testimony.

Execution is stayed for 24 hours, that is until noon on October 24, 1984, to enable the witness to get the issue before the Court of Appeals.

IT IS SO ORDERED.


author: POLOZOLA, District Judge:

text:
    Lionel E. TURNER v. KAISER ALUMINUM AND CHEMICAL CORPORATION.
    Civ. A. No. 82-436-B.
    United States District Court, M.D. Louisiana.
    Oct. 23, 1984.

      Robert R. Faucheux, Jr., Reserve, La., for plaintiff.
    W.S. McKenzie, Taylor, Porter, Brooks & Phillips, Baton Rouge, La., for defendant.
   POLOZOLA, District Judge:

This matter is before the Court on the following motions which were filed by Kaiser Aluminum and Chemical Corporation (Kaiser): (1) motion for summary judgment; (2) motion for dismissal for failure to state a claim upon which relief can be granted; and, (3) motion to strike plaintiffs demand for a jury.

Plaintiff filed this suit contending he was improperly terminated by Kaiser. Plaintiff alleges his termination violated the plaintiffs constitutional rights as well as the employment contract between Kaiser and the United Steelworkers of America, Local 5702 (Union). Each of the motions will be discussed separately.

1. Motion for Summary Judgment

(a) Claims “sounding in tort”

Kaiser, in its motion for summary judgment, asserts that plaintiffs claim for libel and slander based upon Articles 2315 and 2316 of the Louisiana Civil Code and the claims arising under 42 U.S.C. §§ 1981, 1983 and 1985(3) have prescribed. Kaiser’s contention rests upon the fact that the original complaint which was filed on May 27, 1982, stated that Turner’s date of termination was May 29, 1980. Since Article 3492 of the Louisiana Civil Code governs the prescriptive period for actions “sounding in tort”, Kaiser urges that these claims have prescribed by the passage of more than one (1) year prior to the complaint being filed. However, plaintiff requested and the Court granted plaintiff leave of court to amend his complaint to reflect the correct date of termination which was May 29, 1981. Since the complaint was filed within one year of the corrected termination date, the complaint was filed timely. Therefore, the tort claims have not prescribed and the defendant’s motion for summary judgment based on the prescription of these claims must be denied. The Court reserves the right to sever the state claims filed pursuant to Articles 2315 and 2316 of the Louisiana Civil Code.

(b) Claims based upon breach of contract

Defendant further asserts that plaintiff’s claim arising from the alleged breach of the contract of employment between Kaiser and the union has prescribed in accordance with the provisions of 29 U.S.C. § 160(b). In Delcostello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983), the Supreme Court held that the applicable prescriptive period for suits brought by individual employees against the employer and the union challenging the outcome of grievance and arbitration procedures is six months based upon the application of 29 U.S.C. § 160(b). The six months limitation for unfair labor practices under the National Relations Act was chosen because both the union’s breach of its duty to represent its member and the employer’s breach of the collective bargaining agreement often are also unfair labor practices. Delcostello, supra, 103 S.Ct. at 2283. The Fifth Circuit Court of Appeals in explaining the Delcostello holding, stated that the Supreme Court had “distinguished cases brought by employees attacking both the employer and the union for failing to deal with them fairly from the typical case of a union or employer suing to vacate a labor arbitration award.” The court explained that in the former case, essentially Delcostello, the six month prescriptive period of 29 U.S.C. § 160(b) would apply, whereas in the latter cases, state limitations contained in state arbitration statutes would apply. In a subsequent decision, the Fifth Circuit Court of Appeals pointed out that Delcostello did not overrule International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW), AFL-CIO v. Hoosier Cardinal Corporation, 383 U.S. 696, 86 S.Ct. 1107, 16 L.Ed. 192 (1966), which held that in an action by a union against an employer for damages caused by the employer’s alleged breach of the collective bargaining agreement, the state limitation of actions based on oral contracts governed. Therefore, the state statute of limitations for a breach of contract is the appropriate period “in those cases which could be characterized properly as strict breach of contract actions.” J.C. Farr v. H.K. Porter Co., supra, 727 F.2d at 504. In summary, one of three statutes controls the prescriptive period for a cause of action arising from the alleged breach of a collective bargaining agreement. 29 U.S.C. § 160(b) designates the prescriptive period if an employee is suing the employer and union challenging the outcome of grievance procedures and arbitration. Delcostello, supra. The state arbitration statute supplies the period if a party, usually the union or the employer, is suing to vacate a labor arbitration award. International Union of Electrical, Radio and Machine Workers, supra. Finally, the state statute designating the prescriptive period for contract actions supplies the period if the action is a “strict breach of contract action.” J.C. Farr, supra.

In the present case, the prescriptive period should be governed by 29 U.S.C. § 160(b). This action can neither be characterized as a “strict breach of contract” action nor as an action to vacate a labor arbitration award. It is an action where the employer’s alleged breach could be characterized as an unfair labor practice. Delcostello, supra.

Since Turner failed to assert his cause of action for breach of contract within six (6) months of the arbitration proceeding, this action has now prescribed. Therefore, Kaiser’s motion for summary judgment on the claim alleging breach of the collective bargaining agreement must be granted.

2. Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted

Kaiser moves for a dismissal of claims which plaintiff asserts under 42 U.S.C. § 1983 and 42 U.S.C. § 1985(5) on the ground that Turner has failed to state a claim upon which relief can be granted. An action should not be dismissed under a Rule 12(b)(6) motion unless it is evident that the plaintiff will, not be able to prove a set of facts in support of his claim that would entitle him to relief. Watts v. Graves, 720 F.2d 1416 (5th Cir.1983) and Johnson v. Wells, 566 F.2d 1016 (5th Cir.1978).

(a) Plaintiff’s Claim Under 42 U.S.C. § 1983

Plaintiff has filed a claim under 42 U.S.C. § 1983. For a person to be subject to suit under Section 1983, the alleged infringement of federal rights must be “fairly attributable to the state”, i.e. there must be state action. Lugar v. Edmondson Oil Co., 457 U.S. 922, at 937, 102 S.Ct. 2744, at 2754, 73 L.Ed.2d 482, at 495 (1982). See also Rendell-Baker v. Kohn, 457 U.S. 830, 102 S.Ct. 2764, 73 L.Ed.2d 418 (1982) and Delcambre v. Delcambre, 635 F.2d 407 (5th Cir.1981). Kaiser contends that its decision to discharge Turner was a purely private act that did not constitute state action. The plaintiff, in opposition to the defendant’s motion for dismissal, argues that Kaiser’s adherence to federal statutes and “corresponding state laws” causes Kaiser’s decisions to be made under “color of law” and, therefore, satisfies the state action requirement of Section 1983.

Plaintiff’s contention that adherence to federal law, under any circumstances, could fulfill the requirement of state action under Section 1983 is erroneous. The statute gives a remedy against a person who “under color of state or territorial” law deprives a person of rights guaranteed by the Constitution. Section 1983 does not provide a remedy against persons, who under color of federal law, deprives one of such rights. Zernial v. United States, 714 F.2d 431 (5th Cir.1983). Therefore, plaintiff’s contention that adherence to a federal statute, in certain circumstances, could fulfill the state action requirement for a Section 1983 action is totally without merit.

Plaintiff also contends that Kaiser’s adherence to “corresponding state laws” causes the defendant’s actions to constitute actions under “color of law.” However, a state regulation, even if quite extensive, does not make a private company’s action state action. Jackson v. Metropolitan Edison Co., 419 U.S. 345, 95 449, 42 L.Ed.2d 477 (1974) and Rendell-Baker v. Kohn, supra. In Blum v. Yaretsyk, 457 U.S. 991 at 1004, 102 S.Ct. 2777, at 2786, 73 L.Ed.2d 534, at 546 (1982), the Court stated that “[a] state normally can be held responsible for a private decision only when it has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice in law be deemed to be that of the state.” Adherence to a state regulatory scheme is insufficient to produce the state action prerequisite for an action brought pursuant to Section 1983 in light of recent decisions. In Rendell-Baker v. Kohn, supra, the Court held that a private school, whose income is derived primarily from public sources and is regulated by state authorities, does not act under color of state law for the purposes of 42 U.S.C. § 1983 when it discharges employees. Even though there is a dependence upon state funds and there is extensive regulation of nursing homes by the state, a decision to move patients from one facility to another could not be attributed to the state. Blum v. Yaretsky, supra. Even misuse of a state regulatory scheme by a private party would not constitute state action. Lugar v. Edmondson, supra, 102 S.Ct. at 2756.

The plaintiff contends in his opposition to the defendant’s motion that 29 U.S.C. § 141 et seq. “seeks to discriminate against employees like the plaintiff”. In Lugar, the Court held that although private misuse of a state statute does not constitute conduct that could be attributed to the state, a scheme created by statute is the product of state action. Therefore, the Court concluded that the allegation of use by a private individual of a state statutory scheme that is itself challenged as constitutionally infirm is sufficient to satisfy the state action element in stating a cause of action under Section 1983. Lugar v. Edmondson, supra, 102 S.Ct. at 2756. In the present case, however, there was no challenge to the state regulatory scheme. Only the federal scheme was challenged as discriminatory, and then only in the opposition to the defendant’s motion and not in the complaint itself. Even if 29 U.S.C. § 141 et seq. were found to be constitutionally infirm, such a ruling would not give rise to a cause of action under Section 1983 because Section 1983 is a remedy against only those who act under color of state law, not federal law, as was discussed previously. See, also, Zernial v. United States, supra.

Since Turner has failed to state a claim upon which relief can be granted under 42 U.S.C. § 1983, Kaiser’s motion to dismiss on this claim must be granted.

(b) 42 U.S.C. § 1985(3)

42 U.S.C. § 1985(3) provides a remedy against two or more persons who conspire for the purpose of depriving another of the equal protection of the law or the equal privileges and immunities under the laws. 42 U.S.C. § 1985(3). Liability under this statute arises only if there is both a conspiracy and an overt act in furtherance of such conspiracy, resulting in injury to the plaintiff. Griffin v. Breckenridge, 403 U.S. 88, 91 S.Ct. 1790, 29 L.Ed.2d 338 (1971) and Collins v. Hardyman, 341 U.S. 651, 71 S.Ct. 937, 95 L.Ed. 1253 (1951).

Kaiser, in support of its motion to dismiss for failure to state a claim upon which relief could be granted, correctly asserts that the plaintiff failed to allege a conspiracy in his original complaint. However, plaintiff has been granted leave of court to amend his original complaint to allege a conspiracy among Kaiser’s employees. Therefore, since plaintiff’s amended complaint alleges both a conspiracy and an act in furtherance thereof, resulting in injury, the motion to dismiss the Section 1985(3) claim for failure to state a claim upon which relief could be granted must be denied, reserving to the defendant the right to file a motion for summary judgment on this issue at a later date.

3. Motion to Strike Demand for a Jury Trial under 42 U.S.C. § 1981

The Seventh Amendment's preservation of the right to a jury trial “in suits at common law” encompasses those suits in which legal rights are to be resolved, in contrast to those in which equitable rights and remedies alone are involved. Ross v. Bernhard, 396 U.S. 531, 90 S.Ct. 733, 24 L.Ed.2d 729 (1970). Three factors are used to determine whether there is a right to a jury trial: (1) customary manner of trying such a cause prior to the merger of law and equity; (2) kind of remedy sought; and, (3) practical abilities and limitations of juries. Ross, supra, 90 S.Ct. at 738 n. 10.

In the instant case, the plaintiff alleges damages, including punitive and compensatory damages, in the sum of $1,100,000. Further, Turner seeks reinstatement in addition to backpay and an adjustment to the wage rate, salaries, bonuses and benefits to the level he would be enjoying except for the alleged discriminatory practices of Kaiser.

Compensatory and punitive damages are legal issues and, as such, have been held to be proper issues for jury determination. Whiting v. Jackson State University, 616 F.2d 116, 122 (5th Cir.1980). Both compensatory and punitive damages may be awarded to 42 U.S.C. § 1981. Reinstatement and backpay are also available remedies under § 1981. However, these are equitable remedies and, therefore, there is no right to a trial by jury on these issues. Jones v. Birdsong, 679 F.2d 24 (5th Cir.1982), rehearing denied 683 F.2d 417 (5th Cir.1982), cert. denied 459 U.S. 1202, 103 S.Ct. 1186, 75 L.Ed.2d 433 (1983).

Where both legal and equitable issues are presented in a single case, factual issues common to the equitable and legal claims must be submitted to a jury for a determination of the legal claim before a final court decision on the equitable claim. Roscello v. S. W. Airlines, Co., 726 F.2d 217, 221 (5th Cir.1984), rehearing denied 732 F.2d 941 (5th Cir.1984). See also Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S.Ct. 894, 900-01, 8 L.Ed.2d 44 (1962). There is one caveat, however, to this general rule. The plaintiff may not “unilaterally alter the genre of the proceeding” from one that is essentially equitable in nature by making unsupported allegations of legal claims. Lynch v. Pan American World Airlines, Inc., 475 F.2d 764, 765 (5th Cir.1973). In those cases, it is proper to deny the request for a jury.

In conclusion, there are both legal and equitable claims presented in this case. Under Roscello, Turner is entitled to have the factual issues common to both equitable and legal claims submitted to a jury for a determination of the legal claims before a final court decision of the equitable claims, unless the allegations for compensatory and punitive damages are unsupported. Jones v. Birdson and Lynch v. Pan American World Airlines, Inc., supra. Kaiser has not contended that such allegations are unsupported and therefore, its motion to strike the plaintiffs demand for a jury must be denied at this time. The Court reserves the right to submit certain interrogatories to the jury for its consideration and to, thereafter, decide certain equitable issues based on the answers given by the jury.

Therefore:

IT IS ORDERED that Kaiser’s motion for summary judgment on the claims based on La.Civ.C. arts. 2315 and 2316 and the claims arising under 42 U.S.C. §§ 1981, 1983 and 1985(3) be and it is hereby DENIED.

IT IS FURTHER ORDERED that the defendant’s motion for summary judgment on the claim alleging breach of the collective bargaining agreement be and it is hereby GRANTED.

IT IS FURTHER ORDERED that the defendant’s motion to dismiss the claim pursuant to 42 U.S.C. § 1983 for failure to state a claim upon which relief can be granted be and it is hereby GRANTED.

IT IS FURTHER ORDERED that the motion to dismiss the claim pursuant to 42 U.S.C. § 1985(3) for failure to state a claim upon which relief can be granted be and is hereby DENIED.

IT IS FURTHER ORDERED that the motion to strike plaintiff’s demand for a jury for the claim pursuant to 42 U.S.C. § 1981 be and is hereby DENIED.

      . Berry v. Board of Supervisors, 715 F.2d 971 (5th Cir.1983) and Jones v. Orleans Parish School Board, 679 F.2d 32 (5th Cir.1982), modified in part 688 F.2d 342, rehearing denied 693 F.2d 133 (5th Cir.1982), appeal dismissed and cert. denied, 461 U.S. 951, 103 S.Ct. 2420, 77 L.Ed.2d 1310 (1983).

        . International Union of Electrical, Radio and Machine Workers v. Ingram Mfg. Co., 715 F.2d 886, 888 (5th Cir.1983), rehearing denied 720 F.2d 677 (5th Cir.1983), cert. denied _ U.S. _, 104 S.Ct. 1711, 80 L.Ed.2d 184 (1984).

      . See Delcostello, supra, 103 S.Ct. at 2287, 2289.

      . J.C. Farr v. H.K. Porter Co., 727 F.2d 502 (5th Cir.1984).

      . October 19, 1981

      . F.R.Civ.P. 12(b)(6)

      . 42 U.S.C. § 1983 provides:
      Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other per
        son within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress. For the purposes of this section, any Act of Congress applicable exclusively to the District of Columbia shall be considered to be a statute of the District of Columbia.

      . Blum is a decision discussing the state action requirement under the 14th Amendment; however, Lugar v. Edmondson, supra, 102 S.Ct. at 2754, both that the question concerning state involvement is the same in both Section 1983 cases and cases arising under the 14th Amendment. See also, Rendell-Baker v. Kohn, supra, 102 S.Ct. at 2770.

      . Presumably the overt act in furtherance of the conspiracy was Turner’s termination.

      . Garner v. Giarrusso, 571 F.2d 1330, 1338 (5th Cir.1978), rehearing denied 575 F.2d 300 (5th Cir.1978).

      . Claiborne v. Illinois Central R.R., 583 F.2d 143 (5th Cir.1978) cert. denied 442 U.S. 934, 99 S.Ct. 2869, 61 L.Ed.2d 303 (1979).