author: WEINSHIENK, District Judge.

text:
    Thomas EDWARDS, Jeanette Caldwell, and John Vigil, Plaintiffs, v. Ruben VALDEZ, Executive Director, Colorado Department of Labor; John Kezer, Director, Division of Employment and Training; and Industrial Commission of Colorado (Ex-Officio the Unemployment Compensation Commission), in their official capacities, Defendants.
    Civ. A. No. 83-Z-2492.
    United States District Court, D. Colorado.
    Feb. 13, 1985.

      Melody K. Fuller, Legal Aid Society of Metro Denver, Daniel M. Taubman, Colorado Coalition of Legal Services Programs, Denver, Colo., Jackson L. Peters, Jr., Pikes Peak Legal Services, Colorado Springs, Colo., for plaintiffs.
    Timothy R. Arnold, First Asst. Atty. Gen., Human Resources Section, Denver, Colo., for defendants.
   MEMORANDUM OPINION AND ORDER

WEINSHIENK, District Judge.

This case is before the Court on Cross Motions for Summary Judgment on a matter of statutory interpretation. Jurisdiction is proper pursuant to 28 U.S.C. § 1331, original actions under the constitution; § 1343(a)(3), original jurisdiction for 42 U.S.C. § 1983 actions; §§ 2201, 2202, and Fed.R.Civ.P. Rules 57 and 65 for declaratory and injunctive relief.

Plaintiffs in this action are three Colorado residents who retired with vested social security benefits and began to receive social security payments. Each plaintiff returned to the work force, worked for a new employer, was laid off, and qualified for unemployment insurance benefits. Defendants deducted, or offset, plaintiffs’ social security benefits from the unemployment insurance benefits to which the plaintiffs were entitled. All material facts are covered by an extensive stipulation filed by the parties; no genuine issues of material fact remain.

The parties have stipulated that the requirements are satisfied to certify a 23(b)(2) class with plaintiffs as class representatives if the Court determines the liability issue in favor of plaintiffs.

Three issues are before this Court:

1. Does the Federal Unemployment Tax Act (FUTA), 26 U.S.C. § 3304(a)(15)(A)(i), authorize deduction of social security (and Railroad Retirement Act) benefits when such retirement benefits are based upon work for an employer who is neither a “base period” nor a “chargeable” employer, for the purposes of determining eligibility for unemployment insurance, but the “base period” employer does participate in the social security program?

2. Does defendants’ interpretation of the federal and Colorado statutes violate the Equal Protection clause of the U.S. Constitution?

3. Did the Colorado legislature, in enacting C.R.S. § 8-73-110(3), exceed the federal pension-offset level or did it intend the Colorado statute to be interpreted just as the federal statute is interpreted?

I. AMBIGUITY OF STATUTORY LANGUAGE

The first question in interpreting the language of the statute is to determine whether it is ambiguous, as plaintiffs contend, or whether the language is clear and unambiguous, as defendants assert. Legislative history may be analyzed for evidence of congressional intent, but if statutory language is clear there is no need to consult legislative history.

The words of 26 U.S.C. § 3304(a)(15), as amended in 1980, are as follows:

[T]he amount of [unemployment] compensation payable to an individual for any week which begins after March 31, 1980, and which begins in a period with respect to which such individual is receiving a governmental or other pension, retirement or retired pay, annuity, or any other similar periodic payment which is based on the previous work of such individual shall be reduced (but not below zero) by an amount equal to the amount of such pension, retirement or retired pay, annuity, or other payment, which is reasonably attributable to such week except that—
(A) the requirements of this paragraph shall apply to any pension, retirement or retired pay, annuity, or other similar periodic payment only if—
(i) such pension, retirement or retired pay, annuity, or similar payment is under a plan maintained (or contributed to) by a base period employer or chargeable employer (as determined under applicable law), and
(ii) in the case of such a payment not made under the Social Security Act or the Railroad Retirement Act of 1974, services performed for such employer by the individual after the beginning of the base period (or remuneration for such services) affect eligibility for, or increase the amount of, such pension, retirement or retired pay, annuity, or similar payment, and
(B) the State law may provide for limitations on the amount of any such a reduction to take into account contributions made by the individual for the pension, retirement or retired pay, annuity, or other similar periodic payment.

It is the conclusion of this Court that the language of this statute is ambiguous. The lack of clarity of the statutory language is illustrated by considering the following questions, which remain unanswered after a careful reading of the statute. For the purpose of these questions, the Court will assume Employer A is the social security employer and Employer B is the new employer in the base period.

1. Does the statute cover a situation in which the base period employer used to participate in the social security program, but no longer does so? That is, John Doe is fully vested for social security benefits, retires, begins to receive benefits, then goes to work for Employer B. Employer B used to participate in social security, but switched to a private pension program before Mr. Doe was employed. The statute says that, if Mr. Doe’s pension is from a plan maintained by or contributed to by employer B, it must be offset. Should his social security be offset even though Employer B no longer contributes, because the plan is one “contributed to by” Employer B in the past?

2. How does the statute affect a situation in which Employer B is paying social security, but not on behalf of the individual employee? That is, John Doe comes to Employer B in the same condition as above. Employer B offers Mr. Doe, and all his employees, an option to participate in either social security or a company pension plan. Employer B participates in, and contributes to, both plans. Mr. Doe chooses the company pension option. Should his social security be offset from unemployment benefits when Mr. Doe is laid off?

3. What is the effect of the statute in a situation in which the individual has already qualified for full benefits for social security under prior Employer A and comes to work for Employer B who also participates in the social security program? Should Mr. Doe’s social security benefits be offset when his work at employer B does nothing to qualify him for social security benefits, nor affects those benefits in any significant way?

One logical meaning of (A)(i) would be that social security payments are offset only if the base period employer was one who “contributed to” the social security benefits of the specific employee before retirement. In other words, in interpreting the words of (A)(i), one could infer that the base period employer has not “contributed” to a plan for the employee if that employee never worked for him before the base period and if the employee’s social security benefits were assured before he was ever employed by the base period employer.

The role of a court in interpreting a statute is “to construe the language so as to give effect to the intent of Congress,” United States v. American Trucking Association, 310 U.S. 534, 542, 60 S.Ct. 1059, 1063, 84 L.Ed. 1345 (1940), even if it means going beyond the surface, literal meaning of a statute with apparently unambiguous wording. Hecker v. Edwards, _ U.S. _, 104 S.Ct. 1532, 1538, 79 L.Ed.2d 878 (1984). Legislative history may be considered where the plain meaning of the statute would lead to a result “plainly at variance with the policy of the legislation as a whole.” Ozawa v. United States, 260 U.S. 178, 194, 43 S.Ct. 65, 67, 67 L.Ed. 199 (1922). In this case, the “plain meaning” seen by the defendants is clearly at odds with the policy of both the FUTA and the 1980 amendments, which include subsection 3304(a)(15)(A)(i).

This Court is aware that both the United States Courts of Appeals for the Ninth and Sixth Circuits have found the meaning of this statute to be clear on its face. See Rivera v. Becerra, 714 F.2d 887 (9th Cir.1983); Bowman v. Stumbo, 735 F.2d 192 (6th Cir.1984). See also Peare v. MacFarland, 577 F.Supp. 791 (N.D.Ind.1984). With all due respect to those honorable courts, this Court is obligated to make an independent judgment interpreting the language of the statute. In this case, the language of the statute is ambiguous and its interpretation requires an examination of the legislative history and consideration of the purposes and intentions of Congress in passing and amending the law.

II. LEGISLATIVE HISTORY AND INTENT

A. General Purpose of Statute and Amendments

Congress enacted the federal-state unemployment insurance program in order to insure prompt wage replacement for unemployed workers and to cushion the economic stress of unemployment on the worker and his family for a limited period while he seeks reemployment. See California Department of Human Resources v. Java, 402 U.S. 121, 130, 91 S.Ct. 1347, 1353, 28 L.Ed.2d 666 (1971); Report of the Comm, on Economic Security: Hearings on S.1130 Before the Senate Comm, on Finance, 74th Cong., 1st Sess. 1321 (1935).

In 1976, Congress amended FUTA to require states to offset all pension benefits received by all claimants for unemployment insurance. Pub.L. No. 94-566, § 314(a). The pension offset requirement was added to FUTA in response to congressional concern that many elderly employees, after retiring or being laid off from their jobs, were collecting both pension benefits and unemployment benefits based upon the same period of work and contributions by the same employer. Congress enacted the 1976 pension-offset provision to prevent this practice of “double-dipping.” See, e.g., 126 Cong.Rec. H.624 (February 6, 1980) (remarks of Rep. Frenzel), 122 Cong.Rec. S.33,279-80 (1976) (remarks of Senators Long and Bartlett).

The original 1976 pension offset provision was overly broad in its reach, preventing double-dipping, but also causing pension-offsets to all employees who were legitimately claiming both pension and unemployment benefits. Congress delayed the effective date of the provision twice, with a final effective date of April 1, 1980, 91 Stat. 39, 45 (1977), to enable it to study the pension offset issue. Congress presented the issue to the National Commission on Unemployment Compensation, H.Conf.Rep. 94-1745, 94th Cong., 2d Sess. 116 (1976), U.S.Code Cong. & Admin.News 1976, p. 5997, and the Commission recommended that the provision be repealed. Unemployment Compensation: Final Report, pp. 33-34, July 1980. Within six months of the effective date of the 1976 pension offset provision, Congress passed legislation limiting its application.

Although defendants contend that the purpose behind these 1980 amendments to the 1976 offset provision was to incur fiscal savings for the government, this Court is not convinced. The 1976 pension offset provision was enacted with a fiscal purpose: to avoid double-dipping; but Congress enacted the 1980 amendments with the intent to rectify the basic unfairness of the 1976 total offset law. The comments of Senators Boren, Dole, and Javits all support the conclusion of this Court.

Comparing the proposed 1980 amendments to § 3304(a)(15) to the original statute, Senator Boren remarked:

[I]f a person has been working for a particular employer and he retires and starts receiving a pension from that employer, he cannot go down to the unemployment office and start drawing benefits as if he is unemployed. He is not unemployed. He is retired and he is drawing pension from his last employer. This would keep that provision of current law. However, it would take care of the situation which [sic] a person might have earlier in life worked for a particular employer, let us say for 20 years. He starts to draw his pension, which is not enough to live on. He takes another job and works for the second employer for, let us say 10 years and then, because of an economic downturn, he is thrown out of work. Well, clearly, in that situation, he should not be denied the right to receive unemployment compensation because he might be drawing a pension for work which he finished doing for another employer some 10 or 15 years before. So the bill corrects that provision of the current law.

126 Cong.Rec. S.2095 (March 4,1980). Senator Dole’s remarks are to the same effect:

The offset provision was too broadly drafted in the original legislation and would penalize many legitimately unemployed individuals simply because they had earned pension benefits from a previous employer. Under the bill, only the portion of a pension contributed by the employer to whom the unemployment is attributable is required to be offset. This should assure that individuals who are actually unemployed rather than retired will not be penalized while conversely assuring that individuals who are, in fact, retired are not drawing unemployment benefits.

126 Cong.Rec. S.2096 (March 4,1980). Senator Javits expressed the same view:

If a claimant has retired from an employer with a pension and has then taken another job, he or she has certainly demonstrated current labor market attachment and an intent to work. So application of the pension offset in these circumstances is unfair and unnecessary to prevent the abuse of the UI system by retirees that has been alleged.

126 Cong.Rec. S.2101 (March 4, 1980). See also, 126 Cong.Rec. S.12901 (September 18, 1980) (remarks of Senator Bradley), infra at II.D.; 126 Cong.Rec. S.2104 (March 4, 1980) (remarks of Senator Boren).

B. Interpretation of Subsection (A)(i)

In light of congressional intent to avoid double-dipping a single employer but to preclude pension offset when an individual, after retirement, has been employed and then laid off by a separate employer, the meaning of subsection (A)(i) is clarified. The language, “such pension, retirement or retired pay, annuity, or similar payment is under a plan maintained (or contributed to) by a base period employer or chargeable employer ...” must mean that the base period employer is also the social security employer. Only then would his payment of social security taxes “contribute to” the employee’s retirement plan. If the base period employer is different from the social security employer, his social security payments to the general system would not help the individual’s retirement plan. This reasoning is supported by the remarks of Senator Bradley, one of the sponsors of the 1980 amendment. See 126 Cong.Rec. S.12,-901 (September 18, 1980), quoted infra at section II.D.

Subsection (A)(i) was enacted by Congress on September 19, 1980, as part of H.R. 3904, the Multi-Employer Pension Plan Amendments Act of 1980. The language of (A)(i) was borrowed intact from two predecessor bills: H.R. 5507, which was the bill containing subsection (A)(i) as it first passed the House, and H.R. 4612, which was the bill containing subsection (A)(i) as it first passed the Senate. Because the language of subsection (A)(i) never changed in substance, the remarks by representatives and senators in discussing that subsection can shed light on the enacted law, whether the remarks were made in the early stages of discussion in February 1980, or at the time of passage in September 1980.

Several comments by legislators reflect congressional intent in passing the amendments. Senator Moynihan concluded that H.R. 4612 would “limit the offset to situations where an employee receives a pension from the same employer through which he receives unemployment compensation benefits.” 126 Cong.Rec. S.2,099 (March 4, 1980). Senator Moynihan’s remarks apply equally to social security and private pensions, because subsection (A)(i) makes no distinctions between them. Senator Chaffee, co-sponsor with Senator Bradley of the amendment enacted into law, explained that subsection (A)(i) was intended to “mod-iffy] the existing law to require that the reduction of unemployment benefits is only required if the pension comes from the last employer.” 126 Cong.Rec. S.10,106 (July 29, 1980). This explanation affirms that, if a worker’s social security pension rights are earned before he begins employment with his base period employer, no offset should be required under subsection (A)(i).

In the floor discussion of H.R. 5507, Representative Corman specifically mentioned how social security benefits would be treated under subsection (A)(i). “Under the bill, in the case of a social security beneficiary, a state would only be required to reduce his unemployment insurance payment if his employment during his base period would increase the amount of his social security benefit.” 126 Cong.Rec. 2114 (February 6, 1980). This was the intention of Congress as to how (A)(i) would be interpreted before (A)(ii) was added to the statute.

C. Interpretation of Subsection (A)(ii)

Plaintiffs and defendants agree that, pri- or to the Senate and House passage of the (A)(i) language, both the House and Senate added subsection (A)(ii) language, without the exclusion for social security, for the purpose of allowing its consideration by a conference committee. Senator Boren referred to the addition of (A)(ii) as a “housekeeping” measure that would be inserted into the bill with the proviso that it would not be effective. This was simply a courtesy to the House which had earlier passed H.R. 5507 with this language on February 6, 1980. 126 Cong.Rec. 4572 (March 4, 1980). The House had also added subsection (A)(ii) language, without the social security exclusion, as a ‘.‘corrective amendment.” 126 Cong.Rec. 2149 (February 6, 1980). Both Representative Corman and Representative Rousselot indicated that subsection (A)(ii) was added merely to clarify subsection (A)(i), because subsection (A)(i) was confusing and “not drafted properly in the first place.” Id. Mr. Corman indicated that the (A)(ii) addition did not change the meaning of subsection (A)(i) when he stated that the subsection (A)(ii) language was a “technical amendment” and he did not know of any objections to it. Id. This “technical amendment” simply clarified subsection (A)(i) and was not meant to cause a substantive change in the meaning or application of subsection (A)(i).

Subsection (A)(ii) provides that the offset provision shall apply if

in the case of such a payment not made under the Social Security Act or the Railroad Retirement Act of 1974, services performed for such employer by the individual after the beginning of the base period (or remuneration for such services) affect eligibility for, or increase the amount of, such pension, retirement or retired pay, annuity, or similar payment____

Defendants contend that the plain meaning of subsection (A)(i) is reinforced by the language of (A)(ii), in which Congress did make distinctions between social security and other pensions regarding the effect of work for a base period employer that affects eligibility or amount of pension benefits. They argue that Congress knew how to distinguish treatment of social security benefits and how to make offset dependent on base period employment, causing a difference in the eligibility or amount of benefits. They contend that Congress did so, in (A)(ii), to the detriment of social security recipients. This argument takes the statutory language out of context. When the language is considered in light of the intentions of Congress and the legislative history, a more plausible and credible interpretation is evident, which satisfies congressional intent and a reasonable reading of the statute.

The (A)(ii) provision was added to the 1980 amendments by a House-Senate conference committee. The committee compromised between the Senate and House versions. The House bill sponsored total exemption from offset for social security benefits, while the bill passed by the Senate, H.R. 3904, contained the same language that now appears as subsections (A)(i) and (B). The conference committee rejected the total exemption for social security desired by the House and “generally follow[ed] the Senate amendment,” according to the conference committee report. H.R.Re. No. 13443, 96th Cong., 2d Sess. The Senate version, which was accepted, provided that all pensions would be subject to offset if the base period employer was the same employer as the employer whose contributions resulted in social security benefits. The (A)(ii) language was added in a spirit of compromise to appease the House by providing a further relaxation of the 1976 offset for some pensioners.

The net impact of the exclusion of social security from the (A)(ii) language is to put sole control over offset of social security benefits under subsection (A)(i). Therefore, if a social security recipient returns to a former social security employer during his base period, social security benefits will be offset from unemployment benefits, but not otherwise. If a non-social security pensioner (on private or governmental pension) returns to a former employer during the base period, his pension will be offset from employment insurance only if his base period employment qualified him for eligibility or a higher level of pension. The (A)(ii) formula for offset of benefits when the base period of employment causes an incremental increase in the recipient’s benefits does not apply to social security recipients.

Defendants’ harsh interpretation of the language of (A)(ii) is not persuasive in light of its origin. Subsection (A)(ii) was added by the conference committee as a compromise measure and logically cannot be interpreted to deny social security recipients pension monies they would have received under both the House and Senate versions being considered by the conference committee.

D. Consideration of Amendment in Final Form

During the Senate’s final consideration and passage of H.R. 3904, Senator Williams commented on the changes made by the conference committee. He stated that the subsection (A)(i) language of the Senate amendment had prevailed, implying that (A)(i) was to continue to be interpreted as allowing an offset only under the condition that the employer responsible for social security benefits was also a base period employer. However, when the employer was the same, the offset would apply to social security benefits without the further limitations of subsection (A)(ii). 126 Cong. Rec. 26,040-41 (September 18, 1980).

Senator Bradley was one of the co-sponsors of H.R. 3904 in the Senate. After the bill emerged from the conference committee, Senator Bradley explained the bill in a final speech before the Senate vote. One of the examples he gave has strong relevance to the issue before this Court.

[A]n individual at company A retires and begins to collect social security. For whatever reason, this person then goes to work for company B and, after six months there, is terminated. Assuming the individual is eligible for unemployment insurance because of the work done at company B, the level of unemployment insurance compensation will not be reduced at all. This is because the base period employer is not the same as the social security employer. The offset would apply, however, if the individual had returned to work for company A instead of working for company B. Under those circumstances, the base period employer and the social security employer would be the same.

126 Cong.Rec. S.12,901 (September 18, 1980).

Senator Bradley’s remarks are entitled to great weight, because he was one of the sponsors of the amendment. “It is the sponsors that we look to when the meaning of the statutory words is in doubt.” National Woodwork Mfrs. Assn. v. NLRB, 386 U.S. 612, 640, 87 S.Ct. 1250, 1266, 18 L.Ed.2d 357 (1967). “[R]emarks ... of the sponsor of the language ultimately enacted are an authoritative guide to the statute’s construction.” North Haven Bd. of Educ. v. Bell, 456 U.S. 512, 526-527, 102 S.Ct. 1912, 1920-1921, 72 L.Ed.2d 299 (1982). In this case, the remarks of Senator Bradley leave no room for doubt as to the Senate’s understanding and intent when it passed the amendments.

Likewise, Representative Frenzel, a House conference committee member, addressed the House of Representatives minutes before the final vote on (A)(i). Comparing the 1980 amendment to the 1976 total offset law, he said the language of (A)(i) “restricted the offsets and allowed most benefits to be paid without offset.” 126 Cong.Rec.H. 9179 (September 19,1980). If the conference committee had intended social security benefits to be offset in almost all cases, as envisaged by the defendants, Representative Frenzel would not have been able to make the strong statement that most benefits will be paid without offset under the new law.

It is the conclusion of this Court that Congress intended social security benefits to be offset only if the base period-employer was the same as the social security employer and not when the base period employer merely participates in the federal social security system. This Court therefore accepts plaintiffs’ interpretation and rejects defendants’ interpretation of 26 U.S.C. § 3304(a)(15)(A)(i), concluding that the statute is ambiguous on its face. The Court further concludes that legislative history reveals a congressional intent consistent with plaintiff’s interpretation and which allows a logical reading of the statute.

III. THE FUTA “WHEN DUE” REQUIREMENT

Plaintiffs allege that, by virtue of their unlawful administration of the pension offset statute, defendants are violating the “when due” provision of 42 U.S.C. § 503(a)(1). That section provides that the Secretary of Labor shall not certify funds for payment to any state unless the state laws include certain provisions, including “[sjuch methods of administration ... as are found by the Board [Secretary of Labor] to be reasonably calculated to insure full payment of unemployment compensation when due.”

The congressional intent is to require the prompt payment of unemployment benefits as early as is administratively feasible. Fusari v. Steinber, 419 U.S. 379, 95 S.Ct. 533, 42 L.Ed.2d 521, rehearing denied 420 U.S. 955, 95 S.Ct. 1340, 43 L.Ed.2d 433 (1975); California D.H.R. v. Java, 402 U.S. 121, 130, 91 S.Ct. 1347, 1353, 28 L.Ed.2d 666 (1971). The time in question for § 503(a)(1) is the time the claimant is determined eligible at the first determination. Gary v. Nichols, 447 F.Supp. 320 (D.Idaho, 1978).

In this case plaintiffs do not allege failure of defendants to pay when due the unemployment benefits that were not offset. They merely contend that failure to pay the offset benefits violated the “when due” provision. Because the defendants paid the benefits they had determined to be due in a timely manner and failed to pay only amounts they determined were not due, this Court concludes that defendants did not violate the “when due” provision of 42 U.S.C. § 503(a)(1).

IV. DUE PROCESS CONSIDERATIONS

In asserting violation of their constitutional rights, plaintiffs first assert that their due process rights were denied because their unemployment insurance benefits were denied in an arbitrary and unlawful manner. This Court agrees that unemployment insurance benefits may be a protected property interest, the receipt of which requires that the state grant due process before removing the benefits. Fusari v. Steinberg, 364 F.Supp. 922 (D.Conn.1973) (three judge panel), vacated and remanded on other grounds, 419 U.S. 379, 95 S.Ct. 533, 42 L.Ed.2d 521 (1975). Nevertheless, plaintiffs are not contesting lack of hearing or specific violations of due process. It is the defendants’ interpretation of the FUTA statute which prevented plaintiffs from receiving their benefits, not lack of due process.

V. EQUAL PROTECTION CONSIDERATIONS

Next, plaintiffs assert that their equal protection rights were violated by a classification which treats social security pensioners at a distinct financial disadvantage compared to private or governmental pensioners. The state must administer its public benefit programs in an evenhanded manner and not utilize classifications which arbitrarily subject eligible recipients to different and discriminatory treatment. Shapiro v. Thompson, 394 U.S. 618, 633, 89 S.Ct. 1322, 1330, 22 L.Ed.2d 600 (1969). See also Edelman v. Jordan, 415 U.S. 651 n. 1, 94 S.Ct. 1347 n. 1, 39 L.Ed.2d 662 (1970). In this case, the plaintiffs’ social security benefits were vested prior to their base period employment. Yet these rights were offset from unemployment insurance payments while pension benefits from nonsocial security funds were not offset, in accordance with defendants’ interpretation of the FUTA statute.

In the areas of economic and social welfare, such as unemployment benefits, classifications created by law do not violate the Equal Protection clause if they bear a rational relationship to a legitimate state interest. See Williamson v. Lee Optical Co., 348 U.S. 483, 75 S.Ct. 461, 99 L.Ed. 563 (1955). Defendants contend that the rational state interest involved in this distinction is a fiscal interest. Defendants believe that the desire to save money is a rational reason for denying social security recipients financial benefits which all other pensioners receive when their base period employer is a new employer. This Court does not agree.

We recognize that a State has a valid interest in preserving the fiscal integrity of its programs. It may legitimately attempt to limit its expenditures, whether for public assistance, public education, or any other program. But a State may not accomplish such a purpose by invidious distinctions between classes of its citizens. It could not, for example, reduce expenditures for education by barring indigent children from its schools. ... The saving of welfare costs cannot justify an otherwise invidious classification.

Shapiro v. Thompson, 394 U.S. at 633, 89 S.Ct. at 1330.

This Court does not contest the goal of financial responsibility as a worthwhile aim for a social welfare program. Nevertheless, “fiscal integrity” is not a legitimate banner behind which the defendants can hide in making discriminatory classifications in violation of the Equal Protection clause. Financial savings, if any, should be made equitably by treating all pensioners equally, not by singling out one group for discriminatory treatment and deprivation of benefits. If the Court accepted the interpretation suggested by defendants, the classification would violate the Equal Protection clause. The statute, however, is not void because it can be constitutionally interpreted, as this Court has interpreted it. The interpretation adopted by this Court has the threefold benefit of being constitutional, achieving the intentions of Congress, and rationally interpreting the words of the statute.

VI. THE COLORADO STATUTE

Defendants contend that the federal statute sets a minimum pension-offset level which states may exceed, if they so choose, and that the Colorado statute does exceed the federal minimum. Plaintiffs assert that the federal statute sets a maximum pension-offset level and preempts the field and that, furthermore, the Colorado statute does not exceed the level of pension-offset established by the federal statute. This Court concludes that the question of whether the federal statute sets a minimum or maximum offset level is not at issue if the Colorado statute does not exceed the federal level.

The Court has considered the stipulations of the parties, the language of the Colorado statute, the interoffice memoranda of the Colorado Department of Labor and Energy, the oral argument of the parties, and has concluded that Colorado intended to match its pension-offset provisions exactly to the federal model.

The stipulations of the parties, submitted with plaintiffs’ Motion for Summary Judgment, address the issue of whether the Colorado pension-offset provision exceeds the federal level. “It is the practice and policy of the Defendants to deem the authority to reduce or offset unemployment insurance benefits under C.R.S. § 8-73-110(3) as identical to that existing under 26 U.S.C. § 3304(a)(15)(A)(i).” Joint Stipulation No. 47. This stipulation makes clear the belief of defendants that the Colorado provisions and authority to offset are “identical” to the provisions and authority of the federal statute.

The language of C.R.S. § 8-73-110(3) is very similar to the language of the federal statute, and its effect is the same. Nowhere in the language does the Colorado statute show an effort or intent to go beyond the offset level, be it minimum or maximum, established in subsection 3304(a)(15). Colorado did not opt to offset only 50 percent of social security benefits, in order to credit individual recipients with amounts which they contributed to their pensions, even though such a credit was expressly made optional for states in subsection 3304(a)(15)(B). In all other respects § 8-73-110(3) matches the federal provisions.

Furthermore, there is no indication in the interoffice memoranda of the Division of Employment and Training of the Colorado Department of Labor and Employment, which is entrusted with administration of the Colorado Employment Security Act, C.R.S. § 8-72-102, that the Department interpreted the Colorado law as exceeding the federal statute. Nor are defendants able to offer any legislative history supporting their allegations.

Finally, plaintiffs contend that, if the Division of Employment and Training had intended its regulations to exceed the level authorized by the federal statute, defendants would have had to comply with the notice and comment provisions of the Colorado Administrative Procedure Act (A.P. A.), C.R.S. § 24-4-103. The fact that defendants made no efforts to comply with the A.P.A. reveals that they did not believe that the Colorado provision exceeded the federally mandated pension-offset level.

VII. THE EFFECTS OF PENNHURST and EDELMAN

As a final defense, defendants argue that the Court is divested of jurisdiction in this case by the Eleventh Amendment, as interpreted in Pennhurst State School v. Halderman, _ U.S. _, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984). In Pennhurst the Supreme Court held that the Eleventh Amendment bars suits against states for violation of state laws. This case, however, is not barred by the Pennhurst decision.

The general rule is that a suit is against the sovereign if “the judgment sought would expend itself of 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.”

_ U.S. at _, 104 S.Ct. at 908 n. 11, 79 L.Ed.2d at 79 n. 11, citing Dugan v. Rank, 372 U.S. 609, 83 S.Ct. 999, 10 L.Ed.2d 15 (1963).

This is not a suit against state officials on the basis of state law. The unemployment insurance program is a joint federal-state program and the social security benefits which were offset are accrued through the federal social security program. The unemployment insurance benefits received by plaintiffs do not come from the state treasury; the unemployment insurance fund is a separate and distinct fund, not supported by state tax money. Statutory provisions make clear that the state and unemployment commission are not liable if the fund runs dry. C.R.S. § 8-77-104(5). This Court has already determined that the Colorado statute does not exceed the levels established in the federal law, but that the offset authority under both provisions is identical.

The case at bar is governed by the analysis of the Supreme Court in Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974). The Court in Pennhurst distinguished suits against state officials for violation of state laws from the Edelman-type case. Pennhurst, _ U.S. at _, 104 S.Ct. at 911, 79 L.Ed.2d at 82. “Edelman held that when a plaintiff sues a state official alleging a violation of federal law, the federal court may award an injunction that governs the official’s future conduct, but not one that awards retroactive monetary relief.” 79 L.Ed.2d at 80. Because this suit primarily raises a federal question and involves violation of a federal law and the Equal Protection clause of the United States Constitution, Edelman precludes retroactive monetary relief but allows prospective injunctive relief.

VIII. RELIEF

The Court will issue an injunction prohibiting defendants from continuing to interpret 26 U.S.C. 3304(a)(15)(A)(i) so as to require an offset of social security and railroad benefits from unemployment insurance benefits unless the base period employer is the same as the social security employer. Although an injunction is ordered as of this date, its effect shall be stayed for 90 days or until the Court of Appeals has had an opportunity to rule on this case if an appeal is taken.

Because of the requirements of Edelman v. Jordan, this Court will not issue retroactive monetary damages. For this reason, it is unnecessary to certify a class under Fed.R.Civ.P. Rule 23(b)(2). All potential class members will benefit from the injunction regardless of certification. Additionally, the Court notes that the parties have stipulated that the state unemployment insurance fund is in debt in the amount of approximately 40 million dollars. In this situation, an order of damages to the named plaintiffs could be required to be paid from the state general fund, which could adversely affect the state treasury in violation of Pennhurst.

For the reasons set forth above, it is

ORDERED that plaintiffs’ Motion for Summary Judgment is granted as set forth in this opinion. It is

FURTHER ORDERED that defendants’ Motion for Summary Judgment is denied. It is

FURTHER ORDERED that the Clerk shall enter judgment in favor of plaintiffs Thomas Edwards, Jeanette Caldwell, and John Vigil, and against defendants Ruben Valdez, John Kezer, and Industrial Commission of Colorado (Ex-Officio the Unemployment Compensation Commission), enjoining defendants, as of this date, from continuing their invalid and unconstitutional interpretation of the federal pension-offset provision. It is

FURTHER ORDERED that 26 U.S.C. § 3304(a)(15)(A)(i) shall be interpreted so as to require an offset of social security and railroad benefits from unemployment insurance benefits only if the base period employer is also the social security employer. It is

FURTHER ORDERED that this injunction is stayed for 90 days or until the United States Court of Appeals for the Tenth Circuit has ruled on the appeal of this case if an appeal is taken.


source: Caselaw Access Project

author: JOSEPH H. YOUNG, District Judge.

license: Public Domain

text:
    SPINELLI, KEHIAYAN-BERKMAN, S.A. v. IMAS GRUNER, A.I.A., & ASSOCIATES, et al.
    Civ. No. Y-84-1116.
    United States District Court, D. Maryland.
    Feb. 13, 1985.

      Robert J. Beagan and Jeffrey G. Gilmore, Vienna, Va., and Gerald O’Brien, Rockville, Md., for plaintiff.
    Stephen Leventhal, Bethesda, Md., for defendants.
   MEMORANDUM AND ORDER

JOSEPH H. YOUNG, District Judge.

I. BACKGROUND

This action was instituted by Robert O. Spinelli (“Spinelli”) and Spinelli, Kehiayan-Berkman, S.A. (“SKB”), an Argentinian corporation against defendants Lelia Imas Gruner, Juan Gruner, Imas Gruner, A.I.A., and Associates (“AIA”), a Maryland partnership. The suit arises out of a series of partnership and real estate ventures entered into by the parties in mid 1980 and continuing through 1983. These transactions involved four properties and a $100,-000 loan made to defendants Juan and Lelia Gruner by SKB. The properties include:

1) 2101 P. Street, N.W.;
2) Silver Spring Business Center;
3) 1224 Thirteenth Street, N.W.; and
4) Strathmore Apartments.

In their amended complaint, plaintiffs allege that SKB and AIA executed a partnership agreement on July 17, 1981, forming a general partnership known as the Five Seasons Partnership (“the partnership”). Count I of the amended complaint alleges that AIA (IGA in the amended complaint) and Juan Gruner, as managing partners of the partnership, owed a fiduciary duty to the plaintiff (general partners) and that the defendant managing partners breached this fiduciary duty and their statutory duty to make partnership records available. Count II alleges that defendants misappropriated partnership funds and directed plaintiffs share of the profits and proceeds from the sale of the Silver Spring Business Center (partnership property) for uses unknown to the plaintiffs. The net profit of $486,-818.00 from this sale as well as $33,638.00 in additional interest income was to be equally divided between plaintiffs and defendants, inasmuch as each maintained a 50% interest in the partnership under the partnership agreement. Count II also alleges that defendants were to pay plaintiffs $180,000 to’ acquire plaintiffs interest in the 2101 F. Street partnership and $100,-000 in satisfaction of a loan plaintiff SKB had made to defendants earlier. Plaintiffs allege in Count II that nine checks numbered 481-490 and submitted by defendants to plaintiffs in satisfaction of $406,-500.00 of the alleged outstanding debt were returned because of insufficient funds, and that the monies represented by these checks were directed and otherwise misappropriated by defendants.

Count III of the amended complaint seeks dissolution of the partnership and an audit and accounting of all partnership transactions, books, and records. Plaintiffs allege that all demands concerning the request for an audit and accounting have been refused or ignored by the defendants.

Count IV of the amended complaint, based on the Federal RICO Statute, 18 U.S.C. § 1961-68, was dismissed by plaintiffs prior to trial.

Finally, Count V, alleging mail fraud under 18 U.S.C. § 1341 as the predicate act necessary to obtain relief under RICO, was dismissed prior to trial for reasons stated herein.

Defendants reject plaintiffs contentions in Count I of the amended complaint alleging a breach of a fiduciary and statutory duty and argue that the partnership was under the joint management of both Messrs. Gruner and Spinelli to enable each to protect the interest of their respective constituents. Defendants allege that they performed all duties owed to the plaintiffs and made full disclosure to them, either directly or through Spinelli, of facts known to the defendants which related to the partnership business. Defendants also contend that the partnerships’ books were not kept current and that all parties were aware of that fact. Finally, defendants insist that it was Spinelli’s responsibility to keep SKB informed and that he failed to do so.

Defendants also deny any misappropriation of funds relating to the Silver Spring Business Center as alleged by plaintiffs in Count II of the amended complaint. They contend that any funds received by or on behalf of the partnership for the sale of the Silver Spring Business Center are the subject of an accounting and have yet to be stated with any specificity. They also argue that these funds did not constitute profit alone as the partnership has and had significant debts. They do admit commingling partnership funds in one or more of the defendants’ accounts but contend that it was done with the consent of the plaintiffs. Defendants indicate that this commingling resulted from a difficulty in accounting for the use of all the funds initially, but that the funds have now been accounted for.

Defendants also deny the allegations of Count III of the amended complaint and insist that the plaintiffs have never been denied an accounting or audit and argue that the plaintiffs have never undertaken such an accounting or audit on their own and that the partnership was, and is without funds to pay for an accounting. Defendants also object to the plaintiffs’ persistent efforts to have a receiver appointed on the grounds that it is an unnecessary expense in light of the fact that the defendants are agreeable to permitting the plaintiffs to operate the partnership if they will post a security bond as they are not American citizens and have substantial interests and residences abroad.

Defendants offer the following legal theories as a basis for resisting and responding to plaintiffs’ claims for relief in Counts I — III of the amended complaint.

Legal Theories

1. No breach of duty existed.
2. The doctrine of laches bars equitable relief.
3. The Statute of Limitations bars legal and equitable remedies.
4. Unless set aside as prayed for in the counterclaim, the October 14, 1983 agreement represented an accord and satisfaction settling all disputes through that date.
5. Plaintiffs have waived their right to complain because, their agent, Spinelli, did not act to direct the maintenance of records to their satisfaction and concealed or failed to reveal information concerning the partnership to the plaintiffs.
6. Spinelli’s failure to participate in the partnership as agreed has created in whole or in part any problems which plaintiffs perceive.
7. There is want of a necessary party, Ricardo Kehiayan.
8. The plaintiffs have failed to state a claim upon which relief may be granted.

II. ANALYSIS

A.

Under Maryland’s statute of limitations, civil actions may be filed within three years of the accrual of a cause of action. Md.Ann.Code Maryland Courts and Judicial Proceedings § 5-101 (1984). A cause of action does not accrue until a claimant knows or should reasonably know of the existence of his claim. See Poffenberger v. Risser, 290 Md. 631, 431 A.2d 677 (1981). Moreover, where a fiduciary duty or relationship exists between the plaintiff and defendant, the failure to use due diligence in discovering the claim may be excused. See Merchants Mortgage Co. v. Lubow, 275 Md. 208, 339 A.2d 664 (1975). Therefore, defendants’ theory involving the statute of limitations as a defense has no merit. This suit was filed on March 21, 1984, and the transactions which are the subject matter of this litigation and which give rise to the causes of action pursued here occurred between October, 1981, and February, 1984, well within the three-year limitations period. Moreover, had any transaction occurred earlier, the causes of action arising therefrom would not have accrued for limitations purpose while the partnership continued and a fiduciary duty was owed to the plaintiff by the defendants.

Defendants do not contest the fact that in an accounting, the plaintiffs are entitled to a credit of $180,000 for the purchase price on the F. Street property and the repayment of the $100,000 loan made to defendants by SKB.

B.

In addressing Count V, the Court notes that the plaintiffs seek treble damages, costs, and attorneys fees pursuant to § 1964 of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq., alleging mail fraud, 18 U.S.C. § 1341, and state felony bad check, Md.Ann.Code 27 § 142 as the requisite predicate acts necessary to establish a “pattern of racketeering activity” under the RICO statute. This is not a proper case to invoke the civil remedies available under RICO. There are numerous grounds for attacking the RICO count under the facts of this case. Moreover, it is apparent that Congress did not intend that RICO should apply to private plaintiffs who seek to prosecute every garden variety fraud or contract violation. See Sedima, S.P.R.L. v. IMREX, 741 F.2d 482, 503 (2d Cir.1984); Furman v. Cirrito, 741 F.2d 524, 528-29 (2d Cir.1984).

Although there is no unanimity among various federal courts on this point, these Second Circuit cases state clearly that, before a private civil action may be maintained under RICO, there must be a violation, “that is, criminal convictions on the underlying predicate offenses” which form the pattern of racketeering activity that the RICO statute is intended to address. Sedima, 741 F.2d at 503; see generally, Bankers Trust Co. v. Rhoades, 741 F.2d 511, 516, n. 5 (2d Cir.1984) (recognizing the criminal convictions requirement enunciated by the Sedima panel); Furman, 741 F.2d at 526 (same); contra, e.g., USACO Coal Co. v. Carbomin Energy, Inc., 689 F.2d 94, 95, n. 1 (6th Cir.1982) (nothing in the plain language of RICO to suggest that civil liability under § 1964 is limited only to those already convicted or charged with criminal racketeering activity) (other citations omitted).

There is sound justification for this criminal conviction requirement. As the Sedima court reasoned, RICO civil liability simply does not exist without criminal conduct, Sedima, 741 F.2d at 501; see U.S. v. Campanale, 518 F.2d 352, 365, n. 36 (9th Cir.1975) (“[t]he acts constituting racketeering activity must themselves be criminal offenses”), although in a criminal RICO case the proof of the predicate act convictions may be made under the same indictment, “in the same trial and coordinately with the proof of the RICO offenses.” However, in a civil context, there is no way to know whether the conduct in question is “already criminal,” a problem which is compounded by the fact that ordinarily there is a lower burden of proof in civil actions. Sedima, 741 F.2d at 501.

Insofar as the RICO scheme calls for only criminal conduct to be punished, it thus appears that in the absence of previous convictions a civil plaintiff must carry a burden equal to that in a criminal case in proving that criminal conduct. Yet it would be extraordinarily difficult for juries to understand the different burdens of proof required for different elements of a civil case. Moreover, if Congress had intended to impose such an unusual scheme, one would think that some suggestion of it would have occurred in the extensive legislative history. Instead, that history indicates that Congress assumed a preponderance standard was appropriate. The most logical conclusion to be drawn is that Congress expected the criminality of the predicate acts to be proven before the private action went forward — that a criminal conviction must precede a private civil suit.

Sedima, 741 F.2d at 501-02.

In addition to burden of proof problems, civil RICO claims without criminal convictions would frequently be unfruitful as it is unlikely that such private RICO actions would progress very far, since defendants may block discovery by invoking the Fifth Amendment where a criminal prosecution is possible. Sedima, 741 F.2d at 503; see Bridges, Private RICO Litigation Based on “Fraud in the Sale of Securities,” 18 Ga.L.Rev. 43, 46 n. 20 (1983).

Finally, the Second Circuit has given a particularly plausible reading of the words “indictable” and “chargeable” found in RICO’s definitional section, 18 U.S.C. § 1961(1), which suggests that Congress did not intend to give civil courts power to determine whether an act is “indictable” in the absence of a properly returned indictment or “chargeable” absent an information. “Courts do not traditionally look at a given set of facts — proved by a preponderance of evidence only — and say that these facts make out acts which are ‘indictable’ or ‘chargeable.’ ” Sedina, 741 F.2d at 500, citing Kleiner v. First National Bank of Atlanta, 526 F.Supp. 1019, 1022 (N.D.Ga.1981), overruled on other grounds sub nom. Morosani v. First National Bank of Atlanta, 703 F.2d 1220 (11th Cir.1983). Indictments are the exclusive province of grand juries. The Fifth Amendment provides that “no person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury ...,” and “being declared a ‘racketeer’ or held responsible for being one is being held to ‘answer for’ an ‘infamous crime.’ ” Id. Thus, under the interpretation given RICO by those courts which do not require criminal convictions of the predicate acts before commencement of a civil action, “every private plaintiff becomes his own one person grand jury, or in the case of state felonies chargeable by information, his own prosecutor.” Id. This Court does not adopt this interpretation of the RICO statute and thereby avoids the attendant anomalistic results.

The Court is not aware of any convictions of the defendants for the predicate acts of mail fraud and felony bad check. Accordingly, Count V of the amended complaint is dismissed.

C.

Spinelli and Juan Gruner, both native Argentinians and architects, first met in 1974 and thereafter entered into four basic real estate transactions with varying degrees of success. Plaintiffs now seek money damages on each of these transactions.

2101 F. Street

Plaintiffs were not satisfied with the progress of this project and entered into an agreement with defendants that required defendants to repay plaintiffs’ capital contribution of $180,000 with interest at 12% per annum from November 3, 1982. Although the property was sold by defendants on February 11, 1984, no payment has been made under this agreement. Judgment will be entered for $180,000 with interest at 12% from November 3, 1982.

Silver Spring Business Center

Plaintiffs and defendants formed the Five Seasons Partnership in 1981. Under the terms of the partnership agreement signed July 17, 1981, plaintiffs agreed to pay $500,000 for a 50% interest and defendants contribution in facilities, materials, goods and services, research, development and professional 'expertise was valued at $500,000 and received a 50% interest. Thereafter, plaintiffs contributed an additional $279,500.

The Silver Spring Business Center was later sold for $1,850,000 to Coldspring Associates. Unknown to the plaintiffs, defendants also received a 29% interest in Coldspring for which they paid nothing, alleging the interest was given to them in exchange for certain services. The Court finds this interest should be added to the sale price which then becomes $2,605,634. The defendants provided no credible evidence to justify the theory that the 29% interest was in exchange for defendants’ contribution to Coldspring Associates. In any event, secret dealing between defendants and Coldspring would result in a clear breach of defendants’ obligations to plaintiff under their partnership agreement.

Judgment will, therefore, be entered in favor of plaintiffs in the amount of $1,582,-317 as a result of the sale of the Silver Spring Business Center with interest at 12% from April 15, 1982.

1224 13th Street

Plaintiffs allege that this property located in the District of Columbia was acquired with funds from the Five Seasons Partnership and they should receive one-half of the value of the property. Although defendants’ conduct in all of these transactions make this a possible inference, it is no more than that, and plaintiffs have failed to carry their burden to prove the source of funds used to acquire this property-

Strathmore Apartments

The Five Seasons Partnership entered into an agreement with others, forming the Strathmore Limited Partnership. The details of the financing of that partnership and its subsequent activities were not fully developed at trial. However, all parties apparently agree that this partnership should be timely dissolved. Until a sale can be negotiated and a proper accounting made between the parties, the defendants will be relieved of any management responsibility and the management of the Strathmore Limited Partnership will be turned over to plaintiffs.

Loan

On April 24, 1983, plaintiffs loaned defendants the sum of $100,000. The debt was to be paid with interest at 12% from November 2, 1982. The loan has not been paid and defendants agree that judgment should be entered for this amount.

Accordingly, judgment will be entered in favor of plaintiffs against defendants in the amount of $100,000 with interest at 12% from November 2, 1982.

Defendants filed a counterclaim against plaintiffs seeking rescission of an agreement dated October 14, 1983, and a third-party complaint against Robert Spinelli and Jaime Berkman, the S and B respectively in the partnership SKB. This complaint alleges that if defendants are liable to plaintiffs, then the third party defendants are liable to defendants in a similar amount. The theory of this claim is that defendants relied upon the advice of Spinelli and Berkman and therefore they should be equally responsible to any claims.

This claim is so disingenuous that it requires little comment. This case is replete with evidence that defendants did what they wanted to do and consulted with plaintiffs only when necessary. The funds of the partnership were, on occasion, commingled with their personal funds. Accordingly, judgment on both claims will be entered in favor of the counter-defendants and third-party defendants.

The findings of fact and conclusion of law made herein are in accordance with the provisions of Rule 52, Federal Rules of Civil Procedure, whether or not so specifically identified.

       The Court is aware of Battlefield Builders, Inc. v. Swango, et al., 743 F.2d 1060, 1063 (4th Cir.1984), in which the Fourth Circuit noted that a pattern of racketeering activity as contemplated by the RICO statute is established by the plaintiffs allegation that the defendants were guilty of both extortion and attempted extortion. However, the precedential value of Battlefield is expressly limited by the court’s statement that its interpretation was "for the purposes of [the case before it]." Id. at 1063. The resolution of that case necessarily embodied a determination that an allegation of two or more predicate acts attributable to the defendants was sufficient to maintain a RICO claim, and thus, the court’s finding on this issue is not dictum in a strict sense. However, the qualifying language in the opinion indicates that the determination need not be applied wholesale nor need it control the resolution of the case before this Court. This view is particularly appropriate in light of the fact that the opinion in Battlefield does not explore or address in a substantial way the question of whether a mere allegation of the requisite predicate acts is sufficient to maintain a RICO claim or whether a prior indictment or conviction is a prerequisite to establishing a viable civil claim under the RICO statute.

      . This problem, of course, relates to the burden which a plaintiff must carry to prove that a defendant is a “racketeer,” because he has committed at least two predicate acts. At least three different standards of proof are within the realm of possibility: proof beyond a reasonable doubt, proof by clear and convincing evidence, and proof by a preponderance of evidence. “Courts in addition have indicated that probable cause must be alleged with reference to the predicate acts, although how this is meant to relate to the burden of proof of the plaintiff at trial remains something of a mystery.” Sedima, supra, at 501 (citations to cases suggesting the above are omitted).

      . Under the facts, the contract price was for $1,850,000 representing 71% of the total sale price. The defendants retained a 29% interest in the Coldspring venture. The selling price for 100% interest was $2,605,634. The parties have yet to provide the Court with the value of Coldspring, therefore, this method of calculation is a viable alternative.

      . The total sale price was $2,605,634. Plaintiffs’ interest was 50% or $1,302,817 plus the additional contribution of $279,500.


author: GILMORE, District Judge.

text:
    Susan M. STEPHENS, Plaintiff, v. G.D. SEARLE & COMPANY, a foreign corporation, Defendant.
    No. 83-CV-2946-DT.
    United States District Court, E.D. Michigan, S.D.
    Feb. 14, 1985.
    Thomas H. Bleakley, P.C. by Brian J. McKeen, Detroit, Mich., for plaintiff.
    Kitch, Saurbier, Drutchas, Wagner & Kenney, P.C. by Richard A. Kitch, Allan G. Meganck, Detroit, Mich., for defendant.
   OPINION

GILMORE, District Judge.

This is a drug products liability ease in which plaintiff alleges that her use of Ovulen 21 birth control pills manufactured by the defendant caused her a stroke on November 2, 1981. The complaint charges defendant with liability on six counts: negligence, negligence per se, breach of express warranty, breach of implied warranty, fraud and deceit, and strict liability.

In its motion for summary judgment, defendant raises six arguments, but the principal one relates to whether a manufacturer of prescription drugs is under any duty under Michigan law to put warnings on oral contraceptives to warn the patient directly of the risks and potential side effects associated with their use.

This issue was certified to the Supreme Court of Michigan by Judge Cohn of this court, and argued in the Supreme Court of Michigan on May 5, 1983.

On December 10, 1984, a divided Supreme Court stated that there was no rule of law in Michigan that would answer the question, and declined to decide the question or state a rule of law, holding that allocation of a duty to warn is a question of public policy involving the marketing system and economics of a major industry, and that the Legislature is in a better position to address the question than the Court. In re Certified Questions, Odgers v. Ortho Pharmaceutical Corp., Grainger v. Sandoz Pharmaceuticals, 419 Mich. 686, 358 N.W.2d 873 (1984).

A vigorous and intelligent dissent was filed by Justice Boyle, who was joined by Chief Justice Williams and Justice Brickley. In this dissent, Justice Boyle argued that the certified question should be answered, and answered in the following way:

We would hold that in addition to its duty to warn the prescribing physician, the manufacturer of an oral contraceptive has a duty to warn the user directly of known hazards, but the manufacturer of a therapeutic, diagnostic or curative drug does not have this additional duty.

Id. at 699, 358 N.W.2d 873.

The minority opinion carefully analyzed the so-called “learned intermediary doctrine,” which creates an exception to the usual duty to warn for the prescription drug situation on the rationale that the patient relies almost entirely on the expertise of the physician, who thus acts as a “learned intermediary” between the patient and the drug manufacturer. The dissent concluded that it did not apply to warnings in cases involving oral contraceptives:

[T]he compelling reasons that persuaded us to limit the manufacturer’s duty to a physician warning in connection with therapeutic, diagnostic and curative drugs do not apply in the case of oral contraceptives____the patient seeking a contraceptive does not rely completely on the physician’s selection of an appropriate method or drug. The focus with oral contraceptives is on patient choice. When used for contraceptive purposes, the drug has no therapeutic or healing properties. Consumer demand for oral contraceptives has prompted their use more often than has the doctor’s advice____ The physician makes no assessment of medical need. Rather, the threshold question or need for contraception has already been decided by the patient when she visits the physician. Patient choice plays a much more prominent role than in the case of drugs prescribed for the treatment of illness or injury. The role of patient choice in this process supports the need for a direct patient warning.

Id. at 711-12, 358 N.W.2d 873.

Justice Boyle also noted that oral contraceptives are distinguished from other prescription drugs by the zealous marketing practices used by the manufacturers, who aimed laudatory publicity directly at consumers. “As a result of this publicity, patients eager to take the pill have specifically requested it as the most effective means of preventing unwanted pregnancies, and doctors have responded to these requests by prescribing it.” Id. at 712, 358 N.W.2d 873.

The dissent noted as well that the nature of the physician-patient relationship may be different in the case of oral contraceptives than with other prescription drugs since a “woman does not necessarily consult her physician every time she decides to refill her prescription,” and because “a woman may take oral contraceptives for extended periods without any medical assessment of side effects.” Id. at 713-14, 358 N.W.2d 873.

The dissent stated in conclusion:

[W]e would hold that a manufacturer of a prescription drug has a duty to warn the prescribing physician of known hazards associated with the use of the drug. We would also hold that a manufacturer of oral contraceptives has a duty to provide such a warning directly to the user of the drug. However, a manufacturer of a therapeutic, diagnostic or curative prescription drug, including oral contraceptives prescribed for such purposes, has no duty to warn the user directly, and need only warn the prescribing physician. The rationale of the learned intermediary doctrine supplies valid and important reasons in support of this rule.

Id. at 718, 358 N.W.2d 873.

The fact that a majority of the Supreme Court of Michigan declined to decide this question does not prevent this Court from fulfilling its responsibility to rule on the issue. It would have been much better if a majority of the Supreme Court had answered what is essentially a common law question. Such questions are universally addressed to courts. However, its failure to do so makes it necessary for this Court to expound Michigan law.

Therefore, this Court is free to adopt the language of the minority opinion in deciding the issue. The Court does so, but only insofar as it applies to the issue in this case: whether the manufacturer of a prescription oral contraceptive has a duty under Michigan law to warn users directly of the risks and potential side effects of the drug when used for contraceptive purposes. Since the broader question of the duty of a manufacturer of any prescription drug directly to warn users of the risks of such drug was expressly left unresolved by a majority of the Supreme Court of Michigan, this Court need not address that issue.

In this case, there is no question that the plaintiff sought and received her prescription for contraceptive purposes. Therefore, the motion for summary judgment on this issue is denied, and this Court holds that the manufacturer of prescription drugs is under a duty to warn the patient directly of the risks and side effects of oral contraceptives when prescribed for contraceptive purposes.

Another claim in the motion for summary judgment is that the warning provided by the defendant to the medical profession was adequate, as a matter of law. It is clear to this Court that the adequacy of a warning in a products liability case is a question for the jury. Stapleton v. Kawasaki Heavy Industries, Ltd., 608 F.2d 571 (5th Cir.1978); Dougherty v. Hooker Chemical Corp., 540 F.2d 174 (3d Cir.1976). Therefore, this claim must be tried.

The next claim by defendant is that Michigan does not recognize a separate cause of action for breach of implied warranty in cases alleging failure to warn of the dangers of prescription drugs, citing Smith v. E.R. Squibb & Co., 405 Mich. 79, 273 N.W.2d 476 (1979). Plaintiff correctly points out that what Smith held was only that in such cases negligence and breach of implied warranty involve identical evidence and require proof of the same elements. Defendant argues that the evidence here shows that it is not liable under the negligence theory, and thus cannot be liable for breach of implied warranty. Plaintiff reiterates that questions of fact remain as to the adequacy of defendant’s warnings.

Defendant also asserts that uncontradicted evidence that plaintiff read the warranty on the package insert and sought advice from her doctor shows there is no genuine issue of fact as to express warranties. Plaintiff, on the other hand, notes that under Section 2-313(l)(a) of the Uniform Commercial Code, M.C.L. 440.2313(l)(a):

Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

2-313(2) of the U.C.C., M.C.L. 440.2313(2), provides:

It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee” or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement proporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.

Plaintiff points out that statements made in the advertising and promotional literature that the drug was safe and fit for use constituted the requisite affirmations of fact.

Again, on this issue, questions of fact exist, and the Court will therefore deny the motion for summary judgment on this issue.

The next claim of the defendant is that federal law preempts any state action with respect to the labeling of oral contraceptives, and that the warnings and labeling it used complied with federal regulations, and any interpretation of state law that would require more extensive warnings is preempted by FDA regulations.

There appears, however, to be a factual dispute as to whether defendant’s warnings did comply with federal guidelines. Further, the preemption argument is weak in the context of this case, which involves the application of state negligence doctrine. This is entirely different from a state enforcing a specific statute or administrative regulation contradicting federal statutes and regulations. In this case, the Court deals with the common law tort of negligence, and holds that FDA labeling regulations cannot preempt a state from enforcing its own negligence doctrine.

The next contention of the defendant is that no private right of action exists under the Food, Drug and Cosmetic Act. Defendant argues that Count II of the complaint, “negligence per se,” is an attempt to plead a separate cause of action based solely on an alleged statutory violation. The plaintiff clarifies this by explaining that she cites the alleged violation only as evidence of negligence as in Zeni v. Anderson, 397 Mich. 117, 243 N.W.2d 270 (1976). Accordingly, there is no basis for summary judgment here.

Finally, the defendant claims that Michigan courts have rejected the use of strict liability as a separate theory of recovery in products liability cases, and, therefore, plaintiff’s Count VI should be dismissed. On this point, the defendant is correct. In Johnson v. Chrysler Corp., 74 Mich.App. 532, 254 N.W.2d 569 (1977), the Court stated:

If anything, the proofs that would be presented under a strict liability theory in a product ease would overlap with the proofs that would be presented under an implied warranty theory. The addition of the third count adds only confusion, not substance.

And in Lemire v. Garrard Drugs, 95 Mich. App. 520, 523, 291 N.W.2d 103 (1980), the court stated: “[I]n Michigan, two theories of recovery are recognized in the areas of product liability: negligence and breach of implied warranty.”

Plaintiff has pled both of the other theories, and therefore defendant’s summary judgment as to Count VI and strict liability is granted.

An order embodying the findings of this opinion may be presented.

      . Id. at 696 n. 9, 358 N.W.2d 873.


author: POLOZOLA, District Judge.

text:
    LOUISIANA & ARKANSAS RAILWAY COMPANY v. Marie McCauley BICKHAM, as Testamentary Executrix of the Succession of Talmadge D. Bickham, Jr.
    Civ. A. No. 83-4-B.
    United States District Court, M.D. Louisiana.
    Feb. 14, 1985.
    F. Frank Fontenot, Milling, Benson, Woodward', Hillyer, Pierson & Miller, New Orleans, La., for plaintiff.
    Curtis K. Stafford, Jr., Baton Rouge, La., for defendant.
   POLOZOLA, District Judge.

Louisiana & Arkansas Railway Company (“L & A”) filed this action against the succession of Talmadge D. Bickham, Jr. (“Bickham”), through its executrix, seeking injunctive relief and damages. More specifically, L & A seeks to enjoin Bickham from interferring with L & A’s use of a servitude on which L & A has a railroad track. L & A also seeks to recover damages from Bickham as a result of Bickham’s alleged unlawful removal of the railroad track from an area near the Bickham home. Bickham is the owner of a tract of land in East Baton Rouge Parish which is located near the Georgia-Pacific plant in Port Hudson, Louisiana. In 1903 Bickham’s ancestor in title granted a limited personal servitude of passage to the Shreveport and Red River Valley Railroad (“SRRV”). Through a series of conveyances, L & A subsequently became the owner of the railroad line originally owned by the SRRV.

After the Georgia-Pacific plant was built in Port Hudson, Louisiana, L & A furnished interstate rail service in and out of the plant. The Bickham servitude was used by L & A for moving, switching and temporarily storing rail cars as part of those shipments. L & A’s use of the servitude continued until approximately 1978, when the switch was spiked down due to the unsafe condition of the tracks.

In 1981, Bickham’s employees, at the direction of T.D. Bickham, removed several hundred feet of railroad ties and rails from the servitude. L & A now seeks to enjoin Bickham from further interference with its use of the servitude, as well as the cost of replacement of the tracks. Bickham, however, contends that the servitude has been extinguished either by the ten year prescription for nonuse provided in Louisiana Civil Code article 753 or by the occurrence of the resolutory condition contained in the deed granting the servitude, which provided:

This right-of-way shall be in perpetuity or so long as it is used by said company, its successors or assigns, as a railroad.

The Interstate Commerce Commission (“ICC”) has been granted exclusive authority by Congress to regulate the activities of interstate rail carriers, including their decisions relative to cessation of service on branch lines. Chicago and North Western Transportation Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 313, 101 S.Ct. 1124, 1128, 67 L.Ed.2d 258 (1981); 49 U.S.C. § 10501. “ ‘Cessation of service ... or long disuse of the line, coupled with the intention not to resume such service or use’ ” constitutes abandonment, over which the ICC has both exclusive and plenary authority. Thus, state efforts at regulation of rail carriers which conflict or interfere with the federal scheme must fall. Kalo Brick, supra, at 318-323, 101 S.Ct. at 1130-1133.

Congress has provided a detailed procedure which must be followed before operations over any part of an interstate rail carrier’s lines may be abandoned or discontinued, 49 U.S.C. § 10901, et seq. Any local law in conflict therewith is preempted by this federal statutory scheme. Abandonment of a railroad line cannot be required by the state absent a certificate of abandonment from the ICC. New Orleans Terminal Co. v. Spencer, 366 F.2d 160, 164-66 (5th Cir.1966).

Extinguishment of the Bickham servitude under Louisiana law would force the railroad to abandon this branch line. This is in direct conflict with § 10903, which prohibits an interstate rail carrier from abandoning a line without ICC approval. See ICC v. Chicago and North Western Transp. Co., 533 F.2d 1025, 1028 (8th Cir.1976). Thus, state law must yield to Congress’ “paramount control insofar as interstate commerce is involved.” Colorado v. United States, 271 U.S. 153, 165-66, 46 S.Ct. 452, 454-55, 70 L.Ed. 878 (1926); Kalo Brick, supra, 450 U.S. at 321, 101 S.Ct. at 1132.

Bickham could have filed an application with the ICC to have the line declared abandoned prior to his destruction of the remaining tracks. Had he successfully done so, he then could have sought enforcement of the resolutory condition in the servitude deed. Since Bickham failed to take such action, interference with L & A’s use of the servitude is unlawful. Consequently, this Court holds that Bickham is permanently enjoined from interfering, diminishing, or making more inconvenient L & A’s reinstatement, use or operation and maintenance of its railroad servitude.

The parties shall, within fifteen days, prepare and file with the Court a proposed judgment in accordance with this opinion.

      . Article 753 provides: "A predial servitude is extinguished by nonuse for ten years."

      . City of Alexandria, Louisiana, v. Chicago, Rock Island and Pacific Railroad Co., 311 F.2d 7, 10 (5th Cir.1962), citing Akron & Barberton Belt R.R. Abandonment of Operation, 239 I.C.C. 250, 254.

      . In Spencer, permission to construct rail crossings over certain city streets was granted by the Jefferson Parish Police Jury. Several years later, the Police Jury passed an ordinance compelling removal of the tracks. The Fifth Circuit held that federal law relative to abandonments pre-empted the ordinance and thus, the ordinance was unenforceable.

      . In Thompson v. Texas Mexican Railway Co., 328 U.S. 134, 145, 66 S.Ct. 937, 944, 90 L.Ed. 1132 (1946), the court stated that persons other than carriers who have a proper interest in the subject matter may bring an abandonment proceeding.

      . Once the ICC has declared a line abandoned, its jurisdiction is terminated, and state law applies. Hayfield Northern Railroad Co. v. Chicago and North Western Transp. Co., _ U.S. _, 104 S.Ct. 2610, 81 L.Ed.2d 527 (1984). This Court notes that Louisiana Civil Code article 2047 requires a court judgment to give effect to a resolutory condition dependent upon the will of one of the parties, rather than simple extinguishment of the contract upon occurrence of the condition, as contended by Bickham.


author: SACHS, District Judge.

text:
    James E. RAYBOURN, Plaintiff, v. BURLINGTON NORTHERN RAILROAD COMPANY, Defendant.
    No. 84-0624-CV-W-6.
    United States District Court, W.D. Missouri, W.D.
    Feb. 15, 1985.
    Patrick Beeman, William Harrison Norton, Norton, Pollard & Norton, Inc., Kansas City, Mo., for plaintiff.
    Edward W. Mullen, Deaey & Deacy, Kansas City, Mo., for defendant.
   MEMORANDUM AND ORDER

SACHS, District Judge.

Pending before the court is defendant’s motion for summary judgment. This action arose from a set of events that occurred on October 19, .1983. Plaintiff was an employee of defendant railroad since January 8, 1945. Defendant’s Ex. G at 38. On October 19, 1983, plaintiff was working as a field man, id. when he was discovered by two of defendant’s representatives, D.L. Banning and K.D. Dunn. Id. at 5, 11. Banning and Dunn found plaintiff in a caboose sleeping. Id. at 5, 11. When awoken, plaintiff’s eyes were observed to be bloodshot, he staggered, and his speech was slurred. Id. at 6, 12, 13. Banning and Dunn thought plaintiff was drunk. Id. at 6, 13.

Plaintiff denied drinking on October 19, 1983, although he admitted to having drunk a half pint of Wild Turkey at 11:45 p.m. on October 18, 1983. Id. at 39-40. No liquor was found on plaintiff, in his personal bag, or in any likely places. Id. at 15. Furthermore, plaintiff claimed to have had permission to be lying down. Id. at 22. Plaintiff explains the weakness in his walking as a result of lying awake all night and crying. Id. at 40. This also might explain plaintiff’s bloodshot eyes.

Plaintiff was taken to North Kansas City Hospital for a blood alcohol test. Id. 5, 12. Apparently plaintiff initially agreed to the test, but when Banning, Dunn and he arrived at the hospital, he refused to take the test without the presence of his family doctor. Id. at 5, 9, 16. Banning and Dunn further testified that plaintiff also wished to speak with his lawyer. Id. 5, 13. Banning, Dunn, and plaintiff evidently argued about plaintiff’s requests for about thirty minutes in a heated fashion. Id. at 5. Plaintiff testified that he did not trust the qualifications of the' hospital employees who were to give him the blood alcohol test. Id. at 46-47. Finally, Banning offered to make other arrangements for plaintiff to either return home or go back to the business premises. Id. at 16-17. Apparently, it was defendant’s policy when an employee was under the influence of alcohol to either call someone to come and get the employee at his request or call the North Kansas City, Missouri, police and tell them that the employee was under the influence of alcohol and would possibly be driving home. Id. at 16.

From the time he arrived at the hospital, plaintiff had stated that he wished to go upstairs and visit his wife who was a patient there. Id. at 17. Plaintiff’s wife was in the hospital because of liver cancer. Id. at 64. Evidently, the prognosis was poor. Id. Her illness may have caused plaintiff to lie awake crying the night of October 18, 1983. Id.

Subsequently, Banning called the police. Id. at 16-17. Plaintiff was arrested for disorderly conduct, id. at 17 and was in jail for five to six hours before he was released on bond. Id. at 49. The charges against him were subsequently dismissed without prejudice. Id. at 22.

Plaintiff’s employment was terminated. He unsuccessfully pursued his appeal rights under the collective bargaining agreement. The termination was upheld by the highest officer designated by the-company to hear such matters. Affidavit of J.W. Tolbert at 6-7 (signed Dec. 22, 1984). Tolbert states that plaintiff has until July of 1985 within which to file a grievance with the National Railroad Adjustment Board or to a public law board designated by the parties. Id. at 7.

On May 7, 1984, plaintiff filed suit in the Clay County Circuit Court complaining of false arrest and imprisonment by defendant’s agents and their wrongful institution of his arrest and confinement by the North Kansas City, Missouri, Police Department. Defendant, an out-of-state corporation, removed the case to this court.

Defendant contends that the same facts and matters forming the factual background for the arrest and confinement complained of were the facts and matters determined in the investigation hearing on the contested discharge, held pursuant to the union contract, and from which plaintiff appealed pursuant to the provisions of the Railway Labor Act, 45 U.S.C. §§ 151 et seq. Therefore, defendant contends that plaintiff's claim is preempted by the Railway Labor Act and should be subject to mandatory arbitration as a minor dispute arising out of the collective bargaining agreement. See 45 U.S.C. § 153 First (i). The court disagrees.

Simply because plaintiff may have an arbitrable claim for wrongful discharge does not mean that plaintiff must pursue that remedy, and somehow seek relief in arbitration for the wrongs here alleged. There was no effort, in enacting the Railway Labor Act, to comprehensively regulate labor-management relations in that portion of the economy, or to divert from the courts every controversy between an employee and a railroad employer. The court of appeals for this circuit has rejected efforts to push all such controversies into the exclusive jurisdiction of administrative bodies, particularly where the administrative remedies appear to be inadequate. Norman v. Missouri Pacific R. Co., 414 F.2d 73, 83 (8th Cir.1969). See also Peters v. Missouri Pacific Railroad Co., 483 F.2d 490, 497 (5th Cir.), cert. denied, 414 U.S. 1002, 94 S.Ct. 356, 38 L.Ed.2d 238 (1973); Stevens v. Braniff Airways, Inc., 490 F.Supp. 231, 233 (D.Minn.1980); Bremer v. St. Louis Southwestern Railroad Co., 310 F.Supp. 1333, 1336-37 (E.D.Mo.1969).

This is not a case where plaintiff is simply trying to relabel claims arising from a discharge, as was attempted in Magnuson v. Burlington Northern, Inc., 576 F.2d 1367 (9th Cir.), cert. denied, 439 U.S. 930, 99 S.Ct. 318, 58 L.Ed.2d 323 (1978). See Viestenz v. Fleming Companies, Inc., 681 F.2d 699 (10th Cir.), cert. denied, 459 U.S. 972, 103 S.Ct. 303, 74 L.Ed.2d 284 (1982); Balzeit v. Southern Pacific Transportation Co., 569 F.Supp. 986, 990 (N.D.Cal.1983). Plaintiff claims to be the victim of a tort which is legally independent of any contractual claims or grievances he may have and that may be arbitrable.

Plaintiffs claim is also free of the preemption questions that arise when the questioned conduct is “arguably permitted” by national labor policy or an “arguably prohibited” unfair labor practice, under the more comprehensive provisions of the Labor Management Relations Act, 29 U.S.C. § 158. Even if that legislation were applicable, it is unlikely this type of claim would be preempted. Tumbarella v. Kroger Co., 85 Mich.App. 482, 271 N.W.2d 284 (1978). While the plaintiffs breach of contract claim may be factually related, and must be processed in another manner, it is sophistry to contend this typical tort claim is covered by, or precluded by, the Railway Labor Act.

The court recognizes that Majors v. U.S. Air, Inc., 525 F.Supp. 853 (D.Md.1981) reaches a result advocated by this defendant. In Majors the plaintiff sued his employer for false imprisonment and defamation as a result of his detention by his supervisors in an investigation of theft of company property. Judge Jones held that where plaintiff’s claim for allegedly tortious conduct committed in the course of a company investigation was “founded on some incident of the employment relation, it [was] immaterial, for purposes of the Railway Labor Act, whether the claim [was] expressly covered by the bargaining agreement, or [was] independent of that agreement.” 525 F.Supp. at 857. Judge Jones further held that

[investigation of suspected thefts of company property is a normal incident of any employment relationship. This is especially so where, as here, theft is a grounds for discharge under the collective bargaining agreement. Therefore, although that agreement does not speak to the procedures that govern such investigations, the dispute at issue bears a not insubstantial relationship to the labor contract, and this Court’s jurisdiction is preempted.

Id. (footnote omitted).

Under the Consolidated Code of Operating Rules, Defendant’s Ex. O, Rule G

[t]he use of alcoholic beverages ... by employees subject to duty, or their possession or use while on duty or on Company property, is prohibited.
Employees must not report for duty under the influence of any alcoholic beverage ... that may in any way adversely affect their alertness, coordination, reaction, response or safety.

Thus, if the court were to accept Judge Jones’ reasoning, plaintiff’s claim would be preempted since investigation of a violation of company rules, i.e., being intoxicated while on duty, could have reasonably been expected'. The court does not, however, take so restrictive a view of the law. Under Judge Jones’ analysis, no matter how outrageous the conduct of an employer’s investigation of possible misconduct by an employee was, a state cause of action would be preempted. For example, an employee whose home was broken into to search for evidence of a breach of company rules, e.g., theft of company property, would have no valid cause of action.

In the case at bar, the alleged false arrest imprisonment is an independent tort. Missouri has a substantial interest in protecting its citizens from false arrest and imprisonment, even when the claim is processed against an employer. There is little or no risk that the current action will interfere with the effective administration of the Railway Labor Act or with Congressional intent in enacting that legislation. Accordingly, it is hereby

ORDERED that defendant’s motion for summary judgment is DENIED.

      . His wife’s condition may, of course, have contributed to causing excessive use of alcohol, as defendant contends.

      . The preemption principles under the Railway Labor Act and the Labor Management Relations Act are related, but the comparison is probably restricted to the breach of contract section (29 U.S.C. § 185) of the latter Act. See Viestenz, 681 F.2d at 704 n. 4; Balzeit, 569 F.Supp. at 988 n. 5.

      . Many of the considerations set forth in the dissenting opinion of Justice Douglas in Andrews v. Louisville & Nashville R. Co., 406 U.S. 320, 326-336, 92 S.Ct. 1562, 1566-1571, 32 L.Ed.2d 95 (1972) are applicable here, although the court obviously accepts the view of the Andrews majority that wrongful discharge cases are within the exclusive jurisdiction of the Adjustment Board. See generally, Gorman, Labor Law at 768 (1976).