text:
    SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. DRYSDALE SECURITIES CORPORATION, et al., Defendants.
    No. 83 Civ. 5599 (RWS).
    United States District Court, S.D. New York.
    March 22, 1985.
    Ira Lee Sorkin, Regional Administrator, New York City, for plaintiff Securities and Exchange Commission; Daniel L. Goelzer, General Counsel, Jacob H. Stillman, Associate General Counsel, Rosalind C. Cohen, Asst. Regional Administrator, New York City, Jason R. Gettinger, Assistant Regional Administrator, Daniel J. Kraus, Washington, D.C., of counsel.
    Curtis, Mallet-Prevost, Colt & Mosle, New York City, for defendants Warren Essner; Peter Fleming, Jr., Mark H. O’Donoghue, Bernard V. Preziosi, Jr., New York City, of counsel.
   OPINION

SWEET, District Judge.

Defendant Warren Essner (“Essner”) has brought this motion to dismiss the complaint of the plaintiff Securities and Exchange Commission (“SEC”) pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) relying upon the Second Circuit’s recent decision in Chemical Bank v. Arthur Andersen & Co., 726 F.2d 930 (2d Cir.), cert. denied, — U.S. -, 105 S.Ct. 253, 83 L.Ed.2d 190 (1984). The motion is granted.

The Complaint

The SEC brought this action against Essner arising out of his participation in a fraud which resulted in the collapse of Drysdale Government Securities, Inc. (“DGSI”), and losses to investors of about $290 million. The allegations in the complaint, described below, are accepted as true for the purposes of deciding this motion to dismiss. Miree v. DeKalb, 433 U.S. 25, 27, 97 S.Ct. 2490, 2492, 53 L.Ed.2d 557 (1977).

Drysdale Securities Corporation (“DSC”), a broker-dealer registered with the SEC and regulated by the New York Stock Exchange, operated a business in U.S. Government obligations including United States treasury bonds, notes and bills. From December 1979 to February 1982, DSC’s government securities business was conducted by David Heuwetter. This operation was taken over by DGSI, a newly formed corporation, as of January 31, 1982, and was continued by DGSI under Heuwetter’s direction until May 17, 1982 when DGSI defaulted on payments of over $160 million in accrued coupon interest obligations. (Complaint at Ml 31-32).

This default occurred as a consequence of DGSI’s repurchase and reverse repurchase agreements in what is called the “repo” market in U.S. Government obligations. (Complaint at 1142). In its repurchase agreements, DGSI loaned U.S. government obligations to third parties in return for cash. These agreements provided that DGSI would repay the cash, with interest, at a specified date, and that the third parties would return the same or similar U.S. government obligations. Ownership of the U.S. government obligations did not change, and the owners remained entitled to all coupon interest which accrued during the term of the agreements. (Complaint at Ml 34-39).

In its reverse repurchase agreements, DGSI borrowed U.S. government obligations from third parties and loaned cash in return. DGSI was obligated to return the same or similar U.S. government obligations at a specified date, and the third party was required to repay the cash, with interest, to DGSI. Again, ownership of the U.S. government obligations did not change, and the owner remained entitled to coupon interest which accrued during the term of the agreements. (Complaint at H 39). See generally SEC v. Miller, 495 F.Supp. 465 (S.D.N.Y.1980).

DGSI followed the earlier practice of DSC, generating working capital for its government securities business by taking advantage of prevailing pricing practices in the government securities markets. At that time, the purchaser of a government security in a reverse repo transaction did not pay the seller accrued coupon interest as part of the purchase price but remitted it when the coupon matured. In contrast, the purchaser of a government security in the cash or outright market was required to pay the accrued interest as part of the purchase price (Complaint at 1139). This disparity enabled DGSI to obtain securities through reverse repos, sell them to dealers in the outright market, and immediately realize the accrued interest. Using this strategy, DGSI had use of the interest until the coupon payment dates. However, once the securities were sold outright, DGSI had to purchase securities in the cash market in order to redeliver them to the reverse repo sellers at the close of the transaction. (Complaint Ml 37-39, 53).

DGSI carried out these operations on a massive scale, its daily cash transactions amounted to over $100 million (Complaint 1153), and DGSI’s ability to carry out commitments to its trading partners depended on continually opening new reverse repo positions and selling the government securities thus acquired. (Complaint Ml 42, 51, 53). When its reverse repo partners cut back on the open positions maintained with DGSI (Complaint II55), the firm collapsed.

In January 1982, Essner, an audit partner at the accounting firm of Arthur Andersen & Co., was retained by DSC to assist in the spin-off of its government securities business (Complaint at Ml 26, 43). Essner proposed a plan, which DSC implemented, to transfer DSC’s government securities business to DGSI. (Complaint at 1143). At the request of DSC’s chairman of the board, Essner drafted a letter for distribution to various government securities dealers and banks, announcing DGSI’s formation and representing its capital as $20.8 million. (Complaint at Ml 44, 65). In fact, DGSI inherited from DSC its positions in government securities carrying with them a deficit of approximately $190 million. (Complaint at Ml 40, 43, 52, 65).

To give DGSI greater credibility, Essner prepared, on behalf of Arthur Andersen, a certified statement of DGSI’s subordinated debt and equity, accompanied by an unqualified audit opinion representing that the examination of DGSI’s subordinated debt and equity had been made in accordance with generally accepted auditing standards. (Complaint at ¶¶ 45-48). In addition to repeating the representation that DGSI had capital of $20.8 million, the report materially misstated the net fair value of significant operating assets and liabilities which ostensibly had been transferred to DGSI in exchange for preferred stock. (Complaint at 111148, 65). The report, issued on February 22, 1982, and dated February 1, did not disclose that $15.8 million of DGSI’s capital was in fact loaned indirectly to it by DSC, and that on February 1, after DGSI opened for business, it transferred at least $12 million of these funds back to DSC. (Complaint at 111149, 65(c)(3)). Essner knew that DGSI would use these documents to induce securities dealers and banks to engage in government securities transactions. (Complaint at ¶ 50).

Conclusions

The SEC alleges that Essner’s acts constitute violations of § 17(a) of the Securities Act, 15 U.S.C. § 77q(a) and Section 10(b) of the Exchange, 15 U.S.C. § 78j(b), and Rule 10b-5,17 C.F.R. § 240.10b-5, promulgated thereunder. These provisions make it unlawful to engage in fraudulent' conduct “in connection with the purchase or sale of a security.” The issue that must be resolved here, in light of Chemical Bank, supra, is whether Essner’s alleged misrepresentations with respect to DGSI’s financial condition, but not with respect to the Government securities involved in the repo and reverse repo transactions, are “in connection with” the purchase or sale of a security. If the complaint does not satisfy the “in connection with” requirement, no cause of action under either § 17(a) or § 10(b) has been alleged, and the complaint must be dismissed.

The Honorable Henry J. Friendly, in Chemical Bank, supra, confronted the issue reserved by the Supreme Court in Rubin v. United States, 449 U.S. 424, 429 n. 6, 101 S.Ct. 698, 701, n. 6, 66 L.Ed.2d 633 (1981), namely “whether misrepresentations or omissions involved in a securities transaction but not pertaining to the securities themselves can form the basis of a violation of § 17(a).” Id. Judge Friendly concluded that they did not. That decision controls the result here.

In Chemical Bank plaintiff Chemical Bank and three other commercial banks had loaned $15.5 million to Frigitemp Corporation in a series of transactions from late 1975 to early 1977. In August 1977, the banks and Frigitemp executed a refinancing transaction which included a loan of $4 million to Frigitemp’s wholly-owned subsidiary, Elsters, Inc., for which the banks received promissory notes of Elsters. Frigitemp guaranteed the notes and pledged as security 100% of Elster’s common stock. This pledge constituted a sale and purchase under § 10(b). Chemical Bank at 939; Mallis v. Federal Deposit Insurance Corp., 568 F.2d 824, 830 (2d Cir.1977), cert. dismissed, 435 U.S. 381, 98 S.Ct. 1117, 55 L.Ed.2d 357 (1978). In March 1978, Frigitemp filed a petition in bankruptcy. The banks sued Andersen and three Frigitemp officers, alleging violations of § 10(b), Rule 10b-5, and § 17(a). Although Andersen had audited and reported upon Frigitemp’s financial statements for the years 1973-76, Andersen had made no representations concerning Elsters or the value of its stock. The banks contended that but for the Frigitemp financial statements, which were prepared by Andersen, and were alleged to be false and misleading, the banks would not have entered into the loan transaction with Elster, which included the pledge of Elsters’ stock. The banks argued further that the misrepresentations with respect to Frigitemp affected the entire Elsters transaction because Frigitemp’s guarantee was less valuable than the banks had been made to believe and the banks would consequently have to rely more heavily on the pledge of Elsters’ stock.

Judge Friendly held that the banks’ showing that but for Andersen’s description of Frigitemp the banks would not have renewed the Frigitemp loans or made the Elsters loan, which led to the pledge of Elsters’ stock, was insufficient to satisfy the “in connection with” requirement. Chemical Bank at 943. Because Andersen’s misrepresentation related to Frigitemp, and not the securities involved in the transaction, the pledged Elsters’ stock, the “in connection with” requirement was not satisfied. The opinion explained:

The purpose of § 10(b) and Rule 10b-5 is to protect persons who are deceived in securities transactions — to make sure that buyers of securities get what they think they are getting and that sellers of securities are not tricked into parting with something for a price known to the buyer to be inadequate or for a consideration known to the buyer not to be what it purports to be. Andersen is not alleged to have deceived the Banks with respect to the pledge of the Elsters stock; the Banks got exactly what they expected. Their showing is simply that but for Andersen’s description of Frigitemp they would not have renewed the Frigitemp loans or made the Elsters loan which Frigitemp guaranteed, and, that if they had not done this, there would have been no pledge of Elsters’ stock. Such “but-for” causation is not enough. The Act and Rule impose liability for a proscribed act in connection with the purchase or sale of a security; it is not sufficient to allege that a defendant has committed a proscribed act in a transaction of which the pledge of a security is a part.

Id.

In this case as well, the alleged misrepresentations by Essner and Andersen related to the capitalization of DGSI, not to the value of the government securities underlying the “repo” market or the financial stability of the issuer. Moreover, to the extent that Andersen’s misrepresentations of Frigitemp’s financial condition in Chemical Bank were indirectly relevant to the financial condition of Frigitemp’s wholly-owned subsidiary, Elsters, and consequently the value of Elsters’ stock, see Chemical Bank at 947 (Yan Graafeiland, J. dissenting), Essner’s report is that much more remote from the securities in this case. DGSI clearly has no such comparable relationship with the U.S. government.

The SEC relies, however, on Competitive Assoc. Inc. v. Laventhol, K.H. & H., 516 F.2d 811 (2d Cir.1975), which was not expressly overruled by Chemical Bank, but was denied much of its precedential value by the reasoning and result of Chemical Bank. In Competitive Assoc., Competitive Associates, (“Associates”) a publicly held mutual fund, alleged that Laventhol, Krekstein, Horwath and Horwath (“Laventhol”), an accounting firm, in furtherance of a fraudulent scheme to induce Associates to retain Akiyoshi Yamada (“Yamada”) and Takara Asset Management as managers of a part of Associate’s portfolio, knowingly certified false and misleading financial statements of Takara Partners, a private investment fund managed by Yamada. As a result, Associates subsequently lost several million dollars from purchases and sales of securities which Yamada made, in his capacity as advisor. Associates alleged that the investment performance of Takara Partners was the primary criterion by which Yamada’s expertise as an investment advisor was gauged and that the statements certified by Laventhol were materially false and misleading with respect to Takara’s performance. Further, Associates alleged that Laventhol knowingly and with intent to defraud certified these statements in order to aid Yamada in attracting customers, thereby also creating a market for securities which Takara was manipulating. The court found on these facts that the “in connection with” requirement was satisfied, holding that:

The “in connection with” requirement has been broadly interpreted by the Supreme Court to require only that plaintiff shall have “suffered an injury as a result of deceptive practices touching its sale of securities as an investor.” Superintendent of Insurance v. Bankers Life and Casualty Co., 404 U.S. 6, 12-13, 92 S.Ct. 165, 169, 30 L.Ed.2d 128 (1971). The broad “touch” test enunciated in Bankers Life is certainly met by plaintiffs allegations that the very purpose of defendants’ certification of Takara’s financial statement was to aid in placing Yamada in a position where he could manipulate securities prices and sell these securities to investors attracted by Yamada’s reputation and performance ... [Pjlaintiff here alleges that the accountants accepted payoffs and otherwise actively collaborated with Yamada for the specific purpose of influencing investors to authorize Yamada to carry out security transactions on its behalf.

Id. at 815 (emphasis supplied).

The court in Chemical Bank distinguished Competitive Associates because it involved “misrepresentation by an accounting firm with respect to an investment fund through which plaintiff intended to and did engage in massive trading in securities.” However, the opinion in Chemical Bank, does not focus on the fact that the misrepresentations in Competitive Associates did not relate to the securities involved thereafter in the securities transactions. Moreover, Competitive Associates appears to rely upon the “but for” causation rejected in Chemical Bank.

Whether or not the proposition that the cases can be distinguished is accepted, the facts now before this court are closer to Chemical Bank than Competitive Associates. Repos and reverse repos have been conceded by the SEC not themselves to constitute securities, and the SEC has not altered its position in this case. (See Reply Mem. of Def. Essner, p. 2). The contact between the misrepresentation and the “massive” securities transactions that the court found in Competitive Assoc, is thus more direct than in the facts here. Whether or not the repos are characterized as loans merely collateralized by government securities, as Essner argues in order to make the facts of this case more parallel to those of Chemical Bank, the misrepresentation of DGSI’s financial condition did not relate to the value of the government securities upon which the repo market was based. However, only by relying on the “but for” causation specifically rejected in Chemical Bank, which in my view effectively overruled the reasoning of Competitive Associates, could I find the “in connection with” requirement satisfied here.

SEC argues that Chemical Bank is distinguishable because that case arose from “a conventional lending relationship” with respect to which the pledge of Elsters stock was “merely an incident in a transaction not otherwise involving the purchase or sale of securities,” Chemical Bank at 944 n. 24. The reasoning in Chemical Bank, however, hinged not on the degree to which the entire transaction involved securities, but rather on the extent to which the alleged misrepresentation was linked to the securities which were involved in the transaction. The linked misrepresentation is less direct here, and the motion is therefore granted as required by the holding of Chemical Bank.

The ease is dismissed, and the clerk is directed to enter judgment.

IT IS SO ORDERED.

      . The parties agree that the "in connection with” requirement of § 10(b) is indistinguishable in substance from § 17(a)’s requirement that the fraud be “in” the offer or sale of securities. United States v. Naftalin, 441 U.S. 768, 773 n. 4, 99 S.Ct. 2077, 2081 n. 4, 60 L.Ed.2d 624 (1979); Chemical Bank v. Arthur Andersen & Co., 726 F.2d 930, 942 (2d Cir.), cert. denied, — U.S. -, 105 S.Ct. 253, 83 L.Ed.2d 190 (1984).


source: Caselaw Access Project

author: SWEET, District Judge.

license: Public Domain

text:
    R. Stockton RUSH III, Plaintiff, v. OPPENHEIMER & CO., INC. and Scott Seskis, Defendants.
    No. 84 Civ. 3219 (RWS).
    United States District Court, S.D. New York.
    March 22, 1985.
    Lovell & Stewart, New York City, for plaintiff; Victor E. Stewart, New York City, of counsel.
    Joan Caridi, New York City, for defendant Oppenheimer & Co., Inc.
   OPINION

SWEET, District Judge.

Defendants Oppenheimer & Co., Inc. (“Oppenheimer”) and Scott Seskis (“Seskis”) have moved to sever the pendent common law claims, to compel arbitration of those claims, and to stay this arbitration until final resolution of the federal securities law claims. The motion is denied.

Prior Proceedings

R. Stockton Rush III (“Rush”) commenced this action by filing a complaint on May 10,1984. Count one alleged violations of the Federal securities laws; count two alleged violations of New York common law; and count three alleged violations of the Organized Crime Control Act of 1970, 18 U.S.C. § 1961(1)(D). The specific allegations of the first complaint are set forth in this court’s August 23, 1984 opinion and need not be reiterated here. 592 F.Supp. 1108. Rush granted Oppenheimer several extensions of time to answer the complaint or bring a motion, and on June 25, 1984 Oppenheimer filed a motion to dismiss pursuant to Fed.R.Civ.P. 9(b), 10(b), and 12(b)(6). At no point in its challenge to the court’s jurisdiction did Oppenheimer argue that a prior arbitration agreement required severance of the state claims. On August 23, 1984 I issued an opinion dismissing the third count and the punitive damages aspect of the second count. Also on August 23, Rush filed an amended complaint.

On August 31, 1984 Rush filed a motion for reargument on that aspect of the August 23 opinion that dismissed the claim for punitive damages. On September 7, Oppenheimer answered the amended complaint, denying the allegations and raising thirteen affirmative defenses. The answer nowhere mentioned the existence of an arbitration agreement between Rush and Oppenheimer. Throughout this period, discovery progressed, and Oppenheimer obtained documents from Rush, noticed the depositions of two non-parties, and produced defendant Seskis.

On November 9, 1984 I issued an opinion reinstating the punitive damages aspect of Rush’s state claims and setting a discovery deadline of February 6, 1984. 596 F.Supp. 1529. On December 31, 1984 Oppenheimer filed this motion for severance, and the motion was argued on January 18, 1985.

Discussion

Oppenheimer seeks through this motion to enforce an arbitration agreement signed by Rush on November 30, 1981. The agreement states:

Any controversy between you and the undersigned arising out of, or relating to this agreement, or the breach thereof, or arising out of transactions with you shall be settled by arbitration, in accordance with the Rules, then obtaining, of either the National Association of Securities Dealers, Inc. or of the New York Stock Exchange Inc., as I may elect. If I do not make such election by registered mail addressed to you at your main office within five days after receipt of notification from you requesting such election, then you may make such election. Any arbitration hereunder shall be before at least three arbitrators, and the award of the arbitrators or a majority of them shall be final, and judgment upon the award rendered may be entered in any court having jurisdiction. I agree that notice of, and, in any such arbitration [sic] may be sent to me by mail, and waive personal service thereof.

Rush initially argued that the doctrine of intertwining prevents the severance. However, in view of Dean Witter Reynolds Inc. v. Byrd, — U.S.-, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985), in which the Supreme Court rejected the doctrine of intertwining, Rush now relies exclusively on the arguments that the agreement to arbitrate was fraudulently induced and is therefore not enforceable, and that any right to enforce arbitration has been waived by Oppenheimer’s active participation in the litigation to this point. Because I conclude that Oppenheimer waived its right to arbitration, I need not reach the question whether the agreement to arbitrate was fraudulently induced.

Despite the strong federal policy favoring arbitration of contractual disputes, United Steelworkers v. Warrior and Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 1352-53, 4 L.Ed.2d 1409 (1960), the right to arbitrate may be waived. Caribbean Ins. Servs., Inc. v. American Bankers Life Assur. Co., 715 F.2d 17 (1st Cir. 1983); Jones Motor Co., Inc. v. Chauffeurs, Teamsters, 671 F.2d 38 (1st Cir.), cert. denied, 459 U.S. 943, 103 S.Ct. 257, 74 L.Ed.2d 200 (1982); Demsey & Associates v. S.S. Sea Star, 461 F.2d 1009 (2d Cir.1972); Lubrizol Intern., S.A. v. M/V Stolt Argobay, 562 F.Supp. 565 (S.D.N.Y.1982).

The rule in this Circuit is that a party may waive its right to arbitration by actively participating in a lawsuit in a manner inconsistent with the right to arbitration such that there is prejudice to the other party. The element of prejudice is determinative. See Demsey & Associates, supra; Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2d Cir.1968); Lubrizol Intern., supra. Courts have found prejudice wheré a party seeking arbitration has taken advantage of discovery that would not be available in an arbitration proceeding, Carcich, supra, at 696; where a party has caused substantial expense and loss of time by continuing litigation instead of demanding arbitration, Demsey, supra, at 1018; and where a party has advanced so far in court proceedings before seeking arbitration that permitting arbitration would effectively allow a party sensing an adverse decision a second chance in another forum, Jones Motor Co., supra, at 43.

Oppenheimer’s extensive involvement over the course of eight months in the litigation, including taking rather extensive discovery, bringing a motion to dismiss, and posing thirteen affirmative defenses to the amended complaint, all without raising the right to arbitration, constitutes prejudice to Rush and a waiver of the right to arbitrate. These actions, were they to be followed by arbitration, would have caused unnecessary cost and delay to Rush. Further, Oppenheimer has sought to shift the forum for resolution of the state claims only after this court reinstated the punitive damages aspect of those claims. Having litigated an issue and having obtained a decision adverse to its interests on a critical issue of its exposure to damages, Oppenheimer cannot now shift the forum of this dispute without causing prejudice to Rush.

Oppenheimer’s motion to compel arbitration of the state claims is denied. Discovery in this case shall be completed by May 22, 1985 and a joint pretrial order submitted by May 29, 1985.

IT IS SO ORDERED.


author: STANLEY S. HARRIS, District Judge.

text:
    Pratibha JOSHI, Plaintiff, v. PROFESSIONAL HEALTH SERVICES, INC., Celeste Szewczyk, Martha Gramlich, and Greater Southeast Community Hospital, Defendants.
    Civ. A. Nos. CA 83-1073, 83-1074 and 83-1075.
    United States District Court, District of Columbia.
    March 25, 1985.

      Michael Schwartz, Baltimore, Md., for plaintiff.
    Mary Lou Mayers, Washington, D.C., for Greater Southeast Community Hospital.
    Charles E. Gallagher, Upper Marlboro, Md., for Prof. Health Services.
    Robert G. Brewer, Jr., Bethesda, Md., for Celeste Szewczyk.
    John B. Williams, Washington, D.C., for Martha Gramlich.
   MEMORANDUM OPINION AND ORDER

STANLEY S. HARRIS, District Judge.

These three consolidated cases involve claims of discrimination and retaliation against Pratibha Joshi, M.D., who is a United States citizen of East Indian extraction, having her national origin in India, and belonging to the Asian-Pacific Islander minority classification. Dr. Joshi contends that she was discriminated against because of her race and color and retaliated against because she sought relief from the Equal Employment Opportunity Commission in 1980.

The stage may be set briefly. As its name indicates, defendant Greater Southeast Community Hospital is a general hospital in the District of Columbia. It has a very active emergency room. When the events involved here began, the emergency room physicians there were not employed by the hospital. Instead, the emergency room physicians were employed by defendant Professional Health Services, Inc. (PHS). Three of the physicians who thus were employed by PHS to work in the hospital’s emergency room were the plaintiff Joshi and defendants Celeste Szewczyk and Martha Gramlich.

The Court turns now to an abbreviated description of the history of this litigation, which reveals its tangled and protracted procedural posture as well as the plaintiff’s litigious nature.

Dr. Joshi filed her first complaints with the Equal Employment Opportunity Commission in July 1980. Numbered [ XXX-XX-XXXX ] and [ XXX-XX-XXXX ], those complaints asserted claims under the Equal Pay Act and sought redress of grievances allegedly arising out of the denial of promotional opportunities and harassment on the job. The filing of those complaints became the basis of a retaliation claim, the first of the cases now before this Court, Civil Action No. 83-1073. That case originally was brought as Civil Action No. K-80-2621 in the United States District Court for the District of Maryland. It was filed in October 1980, when Dr. Joshi was informed, subsequent in time to her Equal Pay Act complaints, that her employment with the defendant PHS would be terminated. She then filed her first court action alleging racial discrimination under 42 U.S.C. § 1981 and conspiracy, motivated by class-based discriminatory animus, under 42 U.S.C. § 1985(3). The named defendants were PHS, a nonprofit organization which, as noted, contracted with the Greater Southeast Community Hospital to provide medical services in the Department of Emergency Medicine from July 2, 1978, to July 1, 1981; Dr. Szewczyk, the Acting Chairman of the Department of Emergency Medicine at the hospital; and Dr. Gramlich, the Acting Vice Chairman of the Department. Following an EEOC finding of reasonable cause to believe the truth of Dr. Joshi’s allegations of retaliation for the earlier complaints, the EEOC filed, in the District of Malryland, Civil Action No. K-802736 based on Title VII.

On October 16, 1980, the District Court for the District of Maryland held a non-evidentiary hearing and consolidated the cases. See Joshi v. Professional Health Services, Inc., CA No. K-80-2621 (D.Md. Oct. 16, 1980) (Order). On October 25, 1980, the parties reached a settlement. On November 17, 1980, a consent order was entered which provided in significant part: (1) that Dr. Szewczyk and Dr. Gramlich were to be dismissed as defendants with prejudice; (2) that Dr. Joshi was to be reinstated; (3) that Dr. Joshi’s personnel file was to be expunged of all material documenting complaints or incidents entered in such file subsequent to July 18, 1980; (4) that Dr. Joshi was to be awarded $9,900; and (5) that the parties were to “seek to ensure a satisfactory working relationship.” See Joshi v. PHS, CA No. K-80-2621 (D.Md. Nov. 17, 1980) (Consent Order).

The contract under which Dr. Joshi resumed work after her reinstatement specified that her compensation would be $30.47 per hour and that she would work an average of 40 hours per week. Less than one year later, the hospital decided not to renew its contract with PHS and to hire its own emergency room doctors. When it decided not to employ Dr. Joshi, she filed petitions seeking to have the defendants held in contempt of court and to seize her personnel file. Concomitant with those petitions, Dr. Joshi filed two new administrative complaints with the EEOC, numbered [ XXX-XX-XXXX ] (against PHS), and [ XXX-XX-XXXX ] (against the hospital), alleging unlawful discrimination and retaliation for the filing of the 1980 Equal Pay Act complaints. Consideration of those new complaints resulted in EEOC determinations that there was not reasonable cause to believe that the allegations were true. The EEOC thereafter issued two right-to-sue notices.

On January 25, 1982, Dr. Joshi filed two new court actions in the District of Maryland based on the right-to-sue notices. They were Civil Action No. K-82-191 (now here as CA No. 83-1074) and Civil Action No. K-82-192 (now here as CA No. 83-1075). The named defendants were PHS, the hospital, Dr. Szewczyk, and Dr. Gramlich. In those actions, Dr. Joshi alleged violations of Title VII in retaliation for the 1980 charges she had made against PHS and the two doctors. For relief, Dr. Joshi asked that her employment at the hospital be continued, that her personnel file be expunged, and that she be awarded $300,-000 in damages, back pay, employee benefits, attorneys’ fees, and costs. Furthermore, she moved to reopen Civil Action No. K-80-2621 and to vacate the consent order.

At a hearing on the three actions on March 21, 1983, plaintiff’s counsel stated that Dr. Joshi was proceeding in Civil Action No. K-82-191 and Civil Action No. K-82-192 under both Title VII and § 1981. See Letter from Michael Schwartz to Judge Kaufman (October 17, 1980) (adding allegation that plaintiff is a member of the brown race). Defense counsel affirmatively stated that the defendants did not oppose what Judge Kaufman understood to be an oral, on the record amendment of the complaints to add the § 1981 claim. See Joshi v. PHS, CA No. K-80-2621 (D.Md. Apr. 13, 1983) (Memorandum and Order transferring case at 2 n. 1). On March 29, Judge Kaufman ordered CA No. K-80-2736 (the EEOC’s complaint) closed pursuant to the EEOC counsel’s statement that there was no objection and that the EEOC proceedings were completed. Id. at 3. The court determined that disputed issues of material fact precluded summary judgment. The charges against Dr. Gramlich under Title VII in Civil Actions No. K-82-191 and K-82-192 were dismissed for lack of subject matter jurisdiction. Id. at 14. The court then transferred the three remaining open cases of Dr. Joshi (Nos. K-80-2621, K-82-191, and K-82-192) to the United States District Court for the District of Columbia.

Those cases now are before this court as No. 83-1073 (formerly No. K-80-2621), referred to as “the contempt proceedings” which allege violations of the consent order, and No. 83-1074 (formerly K-82-191) and No. 83-1075 (formerly K-82-192), together referred to as the Title VII actions which allege retaliation. PHS, Dr. Szewczyk, and the hospital are defendants in all three cases. Dr. Gramlich is a defendant only in No. 83-1073, the contempt proceeding. In the contempt proceeding, Dr. Joshi seeks enforcement of the consent order through reinstatement and compensation. In the Title VII actions, she seeks injunctive relief mandating the renewal of her employment as an emergency room physician at Greater Southeast Community Hospital.

It should be noted that contrary to the memorandum and order of Judge Kaufman in the District Court for the District of Maryland and the consolidated statement of the defendants pursuant to the court order of April 22,1983, the plaintiff did not amend her complaints in Civil Actions No. 83-1074 and No. 83-1075 to allege discrimination or to allege a cause of action under 42 U.S.C. § 1981. Instead, CA No. 83-1074 is predicated on the ground of retaliation by the defendants for the plaintiff’s actions in seeking to vindicate her rights against racial discrimination with the EEOC and with the court in CA No. K-80-2621. Civil Action No. 83-1075 alleges only retaliation by the hospital, aided by the other defendants, in the failure to continue the plaintiff’s employment. See Plaintiff’s memorandum in response to defendant’s consolidated statement (May 25, 1983).

The Contempt of Court Proceedings

Rule 70 of the Federal Rules of Civil Procedure allows a court to adjudge a party in contempt for failure to perform a specific act as directed by a judgment. To be held in contempt, a party must have knowledge of the court’s order, an ability to comply with that order, see WMATA v. Amalgamated Transit Union, 531 F.2d 617, 621 (D.C.Cir.1976); Natural Resources Defense Council v. Train, 510 F.2d 692, 713 (D.C.Cir.1975), and the party must have directly violated a specific court order. See International Longshoremen’s Association v. Philadelphia Marine Trade Association, 389 U.S. 64, 76, 88 S.Ct. 201, 208, 19 L.Ed.2d 236 (1967).

Dr. Joshi claims that the defendants’ failure to perform mandatory requirements of the consent order, the defendants’ constant harassment of the plaintiff, and the defendant hospital’s failure to hire the plaintiff were actions in contempt of the 1980 consent order. As the defendants point out, however, none of these is a direct violation of any provision of the consent order. The consent order is drafted in such general and inexact language that the plaintiffs contentions in effect are based on violations of inferred or imaginary requirements, not specific court orders. Prohibited conduct will not be implied. See Ford v. Kammerer, 450 F.2d 279, 280 (3d Cir.1971). The Supreme Court has stated: “The judicial contempt power is a potent weapon. When it is founded upon a decree too vague to be understood, it can be a deadly one.” International Longshoremen’s Association, 389 U.S. at 76, 88 S.Ct. at 208. A penalty may not be imposed for disobeying a command that exists only in one’s wishful thinking.

The first of the requirements which Dr. Joshi claims that the defendants did not satisfy was to “promptly” (the plaintiff’s word) “execute the contract identified as Physician Contract Number 2,” which Dr. Joshi states was supposed to be attached to the consent order. See Consent Order ¶ 3. There was no specific date by which the contract was to be executed; neither party added the word “promptly” to the order; and neither party undertook to provide for the attachment of the contract to the consent order. Therefore, there was no direct order to execute the contract promptly. The delay in signing (which, incidentally, was explained quite satisfactorily at trial) cannot be contemptuous of the order.

The second requirement was to pay correct wages as specified. Again, nothing in the order regarding wages makes violative or contemptuous the inadvertent incorrect payment — or even the legitimately disputed underpayment — which was referred to the employer’s counsel and eventually resolved.

The final requirement said to be violated was the direction to remove negative materials from Dr. Joshi’s personnel file. See Consent Order ¶ 6. The plaintiff has admitted that PHS expunged a personnel file as required by the consent order. That file was produced at the request of the plaintiff’s attorney and contained only Dr. Joshi’s resume, pay stubs, W-2 forms, and expense vouchers. At some point thereafter, another file was produced containing several documents, complaints, or accounts of incidents involving Dr. Joshi. This file, plaintiff contends, was the one referred to in the consent order. The relevant language of the consent order is as follows: “Defendant, Professional Health Services, Inc., shall remove from the personnel file of the Plaintiff, Pratibha Joshi, all material documenting complaints or incidents entered in such file subsequent to July 18, 1980.” There is no exact description of any particular file; the defendants scarcely could be found in contempt for expunging the “wrong” file. An ambiguous order redounds to the benefit of the person charged with contempt. See Ford v. Kammerer, 450 F.2d at 280.

The plaintiff further contends that the defendants subjected her to constant harassment in contempt of the consent order’s requirement that the defendant and Dr. Joshi seek to ensure a mutually satisfactory working relationship. The incidents that the plaintiff has described range from unpleasant annoyances to unintentional and insignificant oversights. For example, Dr. Gramlich misinformed Dr. Joshi about her entitlement to bereavement leave following her father’s death. Only two days later, Dr. Gramlich rectified this error in a letter making clear Dr. Joshi’s entitlement and apologizing for the mistake. Other incidents included Dr. Szewczyk’s asking Dr. Joshi whether she intended to leave the emergency room when thé hospital’s contract with PHS was not renewed and Dr. Levy’s failure to introduce Dr. Joshi to a visiting doctor. Neither incident would amount to anything unusual in normal day-to-day interactions in a busy emergency room. Dr. Joshi also complained about the interruption of her “circadian rhythms” by a schedule requiring varying hours of 30-50 per week. Her contract required only an average of 40 hours per week, her schedule was agreed to by her attorneys, and the schedule is consistent with the treatment of all full-time emergency room doctors. Thus, the schedule cannot constitute harassment in violation of the consent order. (Obviously, the needs of a busy 24-hour-a-day emergency room cannot be met by the 9:00 to 5:00 schedule preferred by Dr. Joshi.)

Other incidents appear to have been brought about by Dr. Joshi’s own behavior: she failed to report for work as scheduled, she did not arrange alternate coverage for days she could not work as required of all emergency room doctors, and she failed to take on-call assignments. There also were some questions raised as to her handling of certain patients. Dr. Joshi was put on probation in 1981, and she received an unfavorable evaluation from a physician’s assistant student.

In summary, her claims of harassment either amount to nothing more than routine and reasonable efforts by the defendants to deal with a professionally competent but volatile and disruptive individual consistent with the treatment of other doctors in the emergency room and with a consent order which was drafted in vague terms. What constitutes a “satisfactory” working relationship is subject to interpretation, but surely it would include conformity with emergency room policies and procedures by both parties, a requirement which the evidence revealed was breached considerably more often by the plaintiff than by the defendants.

Finally, the plaintiff cites as contemptuous the hospital’s decision not to hire her when it did not renew the contract with PHS. Dr. Joshi was among four of eight full-time emergency room doctors who were not hired. Hiring by the hospital cannot be contemplated as being within the scope of the consent order, which required only that PHS reinstate her to her prior position as an emergency room physician. See Consent Order ¶ 2. The physician’s agreement signed pursuant to the consent order specifically stated that she could be terminated at any time for cause; she was given no guarantee of continuous employment .by PHS and certainly not by the hospital. Since PHS was not bound to continue Dr. Joshi’s employment indefinitely, the Court need not consider the issue of whether the hospital was so bound as the successor or parent of PHS.

The Title VII Claims

The elements of proof and the burdens of production and proof for a claim under Title VII are well established. In this case, the plaintiff must establish a prima facie case of retaliation for her prior exercise of her civil rights by showing, first, that she engaged in a protected activity {i.e., that she made a legal charge, testified, assisted, or participated in an EEOC investigation; second, that the defendants knew of the protected activities; and finally that the defendants took employment action disadvantageous to the plaintiff and that there was a causal link between the last two elements. See Plummer v. Bolger, 559 F.Supp. 324, 332 (D.D.C.1983); 42 U.S.C. § 2000e-3. Retaliatory intent or motive must be shown. Cohen v. Fred Meyer, Inc., 686 F.2d 793, 798 (9th Cir.1982). If a plaintiff such as Dr. Joshi establishes a prima facie case, the burden shifts to the defendants to show that there was no discriminatory reason for the employment actions taken in that Dr. Joshi’s discharge was a result of her unreasonable and aggressive manner at work. See McKenzie v. Sawyer, 684 F.2d 62, 71 (D.C.Cir.1982). At such a point, the plaintiff would reassume the burden to show that the defendants’ reasons were only pretextual. Id. If evidence is presented which shows a mixed cause for Dr. Joshi’s discharge, i.e., both lawful and unlawful reasons, the plaintiff can prevail only if she shows she would have retained her job but for a retaliatory motive. If the plaintiff would have lost her job anyway, absent retaliation for the 1980 EEOC complaints, there was no unlawful retaliation. See Williams v. Boorstin, 663 F.2d 109, 117 (D.C.Cir.1980).

Dr. Joshi has not satisfied the first step because she did not make a prima facie case of retaliation. Dr. Joshi asserts that the protected activities in which she engaged were the filings of the 1980 complaints and lawsuits leading to the consent order of November 1980. However, since these activities were the subject of the consent order and hence were merged into the final judgment, they may not serve as the basis of a prima facie case of retaliation in a Title VII lawsuit. “A valid agreement of compromise and settlement of a case properly pending in a court of competent jurisdiction ... constitutes a merger and a bar of all claims properly litigable in such case.” 47 Am.Jur.2d Judgments § 1093 (1964). See United States v. American Telephone and Telegraph Co., 524 F.Supp. 1336, 1353 n. 70 (D.D.C.1981). Only the consent order itself may be the basis of further litigation.

Furthermore, even if a prima facie case had been made, legitimate, nondiscriminatory, and nonpretextual reasons existed for the decision not to hire Dr. Joshi. Testimony at trial made it clear that the decision was made on the basis that she was not compatible with the group of emergency room doctors who were hired by the hospital, that she could not work cooperatively with the staff and management of the hospital, that she was a disruptive force, and that if she had been hired, other doctors may have resigned. The defendants introduced evidence of examples of her working difficulties, such as her constant complaints about her supervisor’s scheduling decisions; (2) her failure to report to work or to arrange alternative scheduling on December 18, 1980; her failure to work or notify of her intent not to work on December 27, 1980; and three incidents in which the plaintiff demonstrated a lack of judgment, i.e., the Bryan Bostich brouhaha, the rerouting argument of December 1980, and the unfavorable physician’s assistant’s evaluation from a student with whom she cannot remember working. At trial, one of her former supervisors at Greater Southeast Community Hospital summarily characterized Dr. Joshi as “at best, uncommunicative, at worst, verbally abusive.”

These factors, individually rather trivial but collectively quite revealing, were corroborated by testimony as to other positions in which she has been employed. For example, Dr. Mehdi Nabavi, the Associate Director of Emergency Services at the Southern Maryland Hospital Center (where plaintiff worked in 1981-83), testified that he intended to have Dr. Joshi placed on probation following behavior which he described as “bizarre, rude, uncontrolled, and volatile.” See n. 3, infra. Dr. Joshi was terminated from the Shaw Community Comprehensive Health Center in 1976 for disciplinary reasons. Dr. Edwin McCampbell from that organization testified that her “history at Shaw was marked by personality conflicts.”

Plantiff’s hostile nature became evident to the Court in the non-conciliatory, abrasive language reflected in the pleadings and in the letters and documents received as exhibits. There is no question but that among the chief reasons she was not hired by the hospital when PHS stopped staffing the emergency room was Dr. Joshi’s incompatibility with the highly desirable goal of achieving a smoothly functioning emergency room. A place of split-second decisions, critical medical needs, and limited personnel is no place for a person unwilling and unable to work as a teamplayer.

The Plaintiffs Discovery Abuse and False Testimony

The discovery and pretrial aspects of this case were handled by United States Magistrate Arthur L. Burnett, Sr. As part of discovery, defendants sought information as to Dr. Joshi’s employment at the Southern Maryland Hospital Center, specifically directed to whether she had been reprimanded and placed on probation there. Dr. Joshi did not produce certain documents which defendants believed were in her possession, and she denied having been put in a probationary status.

In April 1984, defendants sought the sanction of dismissal under Fed.R.Civ.P. 37 for what they asserted to be Dr. Joshi’s willful failure to provide the discovery required. Magistrate Burnett conducted an evidentiary hearing on the matter on May 29 and June 19,1984. Particularly at issue was a memorandum dated March 16, 1984, from Dr. Nabavi to Dr. Joshi. Plaintiff was one of the witnesses at the hearing. On five occasions she flatly denied having received the memorandum; on a sixth she asserted that she had no recollection of it.

On July 26, 1984, Magistrate Burnett issued a Memorandum and Order denying defendants’ motion for sanctions. Faced with what was then a difficult credibility determination, he concluded that Dr. Joshi was “a credible witness.” He concluded in part:

Indeed, the defendants’ evidence failed to establish that Dr. Joshi ever received or saw the memorandum written by Dr. Nabavi which used the word probation.

On September 12, defendants came into possession of a letter from Dr. Joshi to the Chief of the Medical Staff of the Southern Maryland Hospital Center. It was dated March 22, 1983. It was bitter in tone, and its entire thrust was against Dr. Nabavi’s reprimand of Dr. Joshi. Plaintiff’s letter stated in part:

Dr. Nabavi then proceeded to take arbitrary and capricious action against me. (See attached memo of March 16, 1983, received by me March 19, 1983.)

The memo which was attached to Dr. Joshi’s letter was in fact Dr. Nabavi’s memorandum of March 16 which is set forth in footnote 4.

Trial was to begin on September 14, 1984. On September 13, defendants filed with the Court (the case having left the Magistrate) a lengthy Motion for Reconsideration of Decision on Sanctions. Dismissal again was sought. The subject matter was new to the undersigned, who promptly read the pleading. On the next morning, the Court denied the motion and trial commenced.

It now is clear that Dr. Joshi received the memorandum and retained a copy of it. It also is clear that Dr. Joshi failed to respond to legitimate discovery requests and willfully testified contrary to her oath numerous times on the record, both in the hearing before Magistrate Burnett and at the trial. Her lack of credibility is further evident when contrasted with the testimony at trial of Dr. Nabavi and Bonnie Johnson, the Administrative Assistant in the emergency room of Southern Maryland Hospital Center (both of whom also had testified in the Magistrate’s hearing).

Beyond finding Dr. Joshi not to be credible on this discovery matter, the Court finds that Dr. Joshi was not a credible witness in her overall testimony. Once a witness is found to have lied with respect to a particular matter, it is difficult to accord her testimony the veracity it may deserve without extensive rehabilitation. No such rehabilitation occurred here. Consequently, Dr. Joshi’s truthfulness remained in question throughout the trial.

In considering the appropriate sanctions under Rule 37 for Dr. Joshi’s discovery abuse, at this stage dismissal of the case is not feasible. Rather, the Court hereby imposes the same sanctions as those specified in the Magistrate’s Order issued April 19, 1984, i.e., requiring Dr. Joshi to pay the defendants’ cost of obtaining the March 16, 1983, memorandum of Dr. Nabavi and the March 22, 1983, letter of Dr. Joshi. This shall include reasonable expenses incurred in preparing the various motions related to sanctions and for reconsideration and in preparing for, and participating in, the evidentiary hearing before Magistrate Burnett on May 29 and June 19.

Conclusion

Even if the Court were to conclude that Dr. Joshi had been a fully credible witness (which, as noted, it does not), she nonetheless woefully failed to make out a prima facie case of discrimination or retaliation. The Clerk shall enter a judgment providing that the plaintiff shall take nothing and dismissing the cases.

SO ORDERED.

      . Plaintiff contended she was underpaid $2.78 per hour from October 26, 1980, to June 3, 1981. She notified Mrs. Marian Patterson, then the President of PHS, who attempted to rectify the situation by tendering a paycheck with arrears added from January 23, 1981, the date the Physician’s Agreement was signed. When Dr. Joshi again complained, the matter was referred to Mr. Koch, the hospital’s counsel, and the error in payment from November 17, 1980, to January 23, 1981, was admitted. Now, only a period of three weeks, from October 26, 1980, to November 17, 1980, apparently remains at issue.

      . There is no need to deal with the issues of whether the defendants Gramlich or Szewczyk had the authority to expunge the file or whether they or the hospital had knowledge of the requirement to do so since the entire issue of the file is resolved on the ambiguity of the consent order's provisions.

      . The plaintiff put forth only two incidents as allegedly demonstrating proof of retaliatory intent. On January 16, 1981, Mrs. Patterson met with Dr. Joshi in an effort to resolve the difficulties which were being encountered, at which time the plaintiff was told, "Well, but we are having problems ... you did sue____” On June 16, 1981, Dr. Levy informed Dr. Joshi that there would be no position for her in the emergency room after the hospital took over. Asked whether there were any reasons, he said no. In light of the foregoing nonretaliatory reasons for the hospital’s not hiring of the plaintiff, these incidents do not supply the necessary inference of retaliatory intent sufficient to supply the "but for" rebuttal.

      . It reads as follows:
      MEMORANDUM
      TO: Pratibha Joshi, M.D.
      FROM: Mehdi Nabavi, M.D.
      Associate Director — Emergency Services
      SUBJ: Disciplinary Action
      DATE: March 16, 1983
      On February 13, 1983, following the care of a patient at the Southern Maryland Hospital Center Emergency Room, you exhibited a bizzare, rude, uncontrolled and volatile behavior while being observed by the Emergency Room staff and many patients.
      I chose to give you every opportunity to take reparative action, which you have failed to do.
      You are hereby reprimanded for your actions of February 13th and are placed on probation. Your behavior was professionally and socially unacceptable and if noted again, will result in your immediate dismissal.

      . It should be noted that the Chairman of the Department of Emergency Medicine at the Southern Maryland Hospital Center testified in the hearing before Magistrate Burnett that Dr. Nabavi did not have the authority to put Dr. Joshi on probation.

      . In open court immediately prior to the commencement of trial, the Court made the following statement to counsel for Dr. Joshi:
      Among the problems that are presented, Mr. Schwartz, is the possibility that this matter might ultimately be referred to the United States Attorney's Office for a possible perjury charge. [See 18 U.S.C. § 1621.]
      So Dr. Joshi should understand, to the extent she testifies in this proceeding, anything she says could be used in any such proceeding against her.
      She should be on notice anyway that that is a possibility.

      . Defendants may submit pleadings directed to such costs and expenses within three weeks of the date of this Memorandum Opinion and Order; plaintiff may have two weeks thereafter within which to respond thereto. (Costs otherwise allowable to the defendants under Rule 54(d) shall be determined by the Clerk of the Court.)

      . On March 27, 1984, in an effort to terminate this essentially frivolous litigation which has consumed such extraordinary resources, the defendants made an offer of judgment pursuant to Rule 68 in the amount of $20,000. That offer was rejected by the plaintiff.


author: FULLAM, Judge.

text:
    DISABLED IN ACTION OF PENNSYLVANIA, et al. v. Samuel R. PIERCE, in his capacity as Secretary of the United States Department of Housing and Urban Development, et al.
    Civ. A. No. 85-1035.
    United States District Court, E.D. Pennsylvania.
    March 26, 1985.

      Stephen F. Gold, Frank J. Laski, Timothy M. Cook, Public Interest Law Center of Philadelphia, Philadelphia, Pa., for plaintiffs.
    James G. Sheehan, Richard A. Stout, Asst. Dist. Attys., Philadelphia, Pa., for defendants.
   MEMORANDUM AND ORDER

FULLAM, Judge.

The essence of plaintiffs’ complaint is that on January 7, 1985, the U.S. Department of Housing and Urban Development (HUD) moved into new local quarters at 105 S. 7th Street in Philadelphia (“The Liberty Square Building”); according to plaintiffs, the newly renovated structure does not comply with federal requirements for access to the handicapped.

Defendants are the Secretary of HUD, the Administrator of this HUD region (Region III), the Acting Administrator of the General Services Administration (GSA), and the Region III GSA Administrator.

Plaintiffs Disabled in Action of Pennsylvania and Handicap Advocacy Network of Delaware, Inc., are described as organizations which have as their primary goal the enforcement of federal laws calling for “barrier-free” buildings. The three individual plaintiffs are physically handicapped persons who have full mobility through the use of wheelchairs, but who cannot gain entrance to the new HUD building in this manner. The plaintiffs charge that because of HUD’s failure to provide barrier-free access, they cannot share in HUD’s programs, seek employment with HUD, monitor HUD’s activities, or file complaints with HUD on behalf of other disabled people.

Plaintiffs contend that the leased building, which was renovated expressly for HUD under the direction of the GSA, fails to meet federal requirements in the following ways:

1. The primary front entrance is inaccessible to wheelchair users and others with mobility disabilities (there are no ramps; only “extremely steep and slippery steps”);
2. The entrance door and other internal doors cannot be opened in a single motion. Their handles are difficult to grasp and operate with one hand; and
3. Elevator buttons are too high to be reached by a person in a wheelchair. Nor do the elevators have braille markings or direction-indicator bells for the visually impaired.

As relief, plaintiffs ask the court (1) to certify their action as a class action; (2) to declare defendants’ actions to be violative of § 504 of the Rehabilitation Act of 1973 (29 U.S.C. § 794); (3) to enjoin, preliminarily and permanently, defendants from denying plaintiffs equal access; (4) to direct defendants to submit and implement a plan which outlines the steps which defendants will take in compliance; and (5) to award costs and attorneys fees to plaintiffs.

A hearing on the motion for preliminary injunction was scheduled for March 13. On the eve of the hearing, defendants submitted their response in the form of a motion to dismiss. Defendants contend (1) that plaintiffs’ claim is properly founded on the Architectural Barriers Act (42 U.S.C. § 4151 et seq.) and not the Rehabilitation Act; (2) that under the Barriers Act, plaintiffs must exhaust their administrative remedies; (3) that, even assuming that plaintiffs may bring suit pursuant to § 504 of the Rehabilitation Act, they have not shown that they are “otherwise qualified” within the meaning of the Act; and, finally, (4) that the Liberty Square Building, still undergoing renovations, is now in compliance with the appropriate federal standards.

At the preliminary injunction hearing, I sought counsel’s viewpoint on the interplay between the two statutes. It was plaintiffs’ counsel’s view that the Rehabilitation Act provided a remedy independent of the Barriers Act. Defendants’ counsel pointed to the administrative enforcement and implementation scheme in place under the Barriers Act as evidence that it was the controlling statute. In order to consider the matter further and to allow plaintiffs an opportunity to respond to the newly filed motion to dismiss, I adjourned the hearing for a period of two weeks, and stated that I would rule on the motion to dismiss in the interim; if I were to deny the motion, I would then hear evidence regarding irreparable harm.

As I see it, the crucial issue to be resolved at this point in the case is whether, in the present circumstances, the Achitectural Barriers Act preempts § 504 of the Rehabilitation Act with respect to the regulation of the physical accessibility of federal buildings. If so, plaintiffs would be obligated to resort to the administrative remedies provided in the Barriers Act before seeking judicial relief; if not, plaintiffs’ challenge in this court would be proper.

In 1968, Congress passed the Architectural Barriers Act, which provides that GSA, in conjunction with the Department of Health and Human Services (HHS), “shall prescribe standards for the design, construction, and alteration of buildings ... to insure whenever possible that physically handicapped persons will have ready access to, and use of such buildings.” 42 U.S.C. § 4152. A building is defined as

any [federally owned, funded, or leased] building or facility ... the intended use for which either will require that such building or facility be accessible to the public, or may result in the employment or residence therein of physically handicapped persons____

Id. § 4151.

Congress later created the Architectural and Transportation Barriers Compliance Board (ATBCB) to “insure compliance with the standards prescribed ... pursuant to the Architectural Barriers Act of 1968, as amended....” 29 U.S.C. § 792(b)(1) (§ 502 of the Rehabilitation Act of 1973). Pursuant to its mandate, the ATBCB promulgated “Minimum Guidelines and Requirements for Accessible Design.” 36 C.F.R. § 1190. These guidelines, as their name suggests, set the minimum allowable level of compliance for all agencies permitted to set standards under the Barriers Act. Id. § 1190.-4(a). In August 1984, GSA and the other empowered agencies (including HUD), adopted the Uniform Federal Accessibility Standards (UFAS), which, “wherever possible ... [are] consistent with the standards published by ... American National Standards Institute (ANSI) for general use while complying with the guidelines adopted by the ATBCB.” 49 Fed.Reg. 31,-528 (Aug. 7, 1984) (to be codified at 41 C.F.R. Part 101-19). Buildings undergoing alteration on or after the effective date of these standards (July 31, 1984) are governed by them. Id. at 31,625.

An extensive administrative review framework exists under the Barriers Act by which “[a]ny person may submit a complaint to the A & TBCB alleging that a building or facility does not comply with applicable standards issued under the Architectural Barriers Act.” 36 C.F.R. § 1150.12(a). Upon petition, the complainant may participate in the review proceedings, and may seek judicial review of a final order issued by the Board. See 29 U.S.C. § 792(d) (incorporating judicial review procedure of the Administrative Procedure Act (APA), 5 U.S.C. § 704); 36 F.R.D. § 1150.12(E), 1150.13, 1150.104.

The second statute at issue here, § 504 of the Rehabilitation Act of 1973 (29 U.S.C. § 794 as amended) provides in pertinent part:

No otherwise qualified handicapped individual in the United States ... shall, solely by reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subject to discrimination under any program or activity receiving Federal financial assistance or under any program or activity conducted by an Executive agency____ The head of each agency shall promulgate such regulations as may be necessary to carry out the amendments to this section made by the Rehabilitation Comprehensive Services, and Developmental Disabilities Act of 1978.

29 U.S.C. § 794. The 1978 amendments added federal executive agencies and the U.S. Postal Service to the list of entities which were not to deny benefits to or discriminate against the handicapped.

The legislative history of the Rehabilitation Act reveals that one of its primary intentions was the elimination of architectural barriers; among the reasons for its passage was

the lack of action in areas related to rehabilitation which limit a handicapped individual’s ability to function in society, e.g., employment discrimination, lack of housing and transportation services and architectural and transportation barriers.

S.Rep. No. 318, 93d Cong., 1st Sess., reprinted in 1973 U.S.Code Cong. & Ad. News 2076, 2078. See also Alexander v. Choate, — U.S. -, 105 S.Ct. 712, 83 L.Ed.2d 661 (1985) (and legislative history cited therein) (Court found that § 504 reached some cases of disparate impact, noting that “[f]or example, elimination of architectual barriers was one of the central aims of the Act ..., yet such barriers were clearly not erected with the aim or intent of excluding the handicapped.” Id. at 719 (citations omitted)).

The § 504 coordinating regulations adopted by the Department of Justice (DOJ) in 1981 provide, inter alia, that “[e]ach agency [defined as ‘a Federal department or agency that is empowered to extend financial assistance’ 28 C.F.R. § 41.-3(c) ] shall issue ... a regulation to implement section 504 with respect to the programs and activities to which it provides assistance.” 28 C.F.R. § 41.4(a). In implementing their regulations, agencies are to

consult with the [ATBCB] in developing requirements for the accessibility of new facilities and alterations, as required in [28 C.F.R.] § 41.58, and shall coordinate with the Board in enforcing such requirements with respect to facilities that are subject to section 502 of the Rehabilitation Act of 1973, as amended, as well as to section 504.

Id. § 41.7(a).

Recently, DOJ adopted a final rule implementing its own § 504 regulations, and several other departments and agencies (including GSA, but not HUD) have jointly issued a notice of proposed rulemaking in which they proposed regulations identical to those adopted by DOJ. See 49 Fed.Reg. 35,724 (Sept. 11, 1984; DOJ); 49 Fed.Reg. 34,132 (Aug. 28, 1984; other agencies). These § 504 regulations provide, inter alia, that leased buildings are to be treated as existing buildings, and that when such buildings are altered, they must be altered to meet the requirements of the Barriers Act (hence, incorporating UFAS by reference). See 49 Fed.Reg. 35,729-31 (discussing 28 C.F.R. §§ 39.150, 39.151). But, in providing for enforcement of these standards, the regulations do not refer the aggrieved to the ATBCB; each of the proposing agencies and departments has suggested its own compliance procedures. See, e.g., 49 Fed.Reg. 35,737 (28 C.F.R. § 39.-170). These procedures do provide, however, that the ATBCB must be notified promptly of any complaint alleging inaccessibility of a building or facility that is subject to the Barriers Act. See id. § 39.-170(e). But nothing more than notification is required; the agency must still go on with its own enforcement proceeding.

And this is as Congress intended it to be. The legislative history of the 1978 Amendments to the Rehabilitation Act reveals that the proposed house bill would have required the ATBCB “to make final determinations with regard to compliance with section 504 of this Act regarding architectural ... barriers confronting handicapped individuals.” H.Conf.Rep. No. 1780, 95th Cong., 2d Sess. 90, reprinted in 1978 U.S. Code Cong. & Ad.News, 7312, 7375, 7401. The Senate amendment had made no provision for this, and the House receded. The conferees, however, expressed “the opinion that common standards should be applied by all Federal agencies and ... encourage[d] the use of the expertise that might reside on the board and rely [sic ] upon its recommendation.” Id. at 91, 1978 U.S. Code Cong. & Ad.News at 7402.

In light of the foregoing, it appears that § 504 was intended by Congress to be an independent weapon in its barrier-free arsenal. Nor does defendants’ “specific controls the general” argument convince me otherwise. This was the view expressed in Rose v. United States Postal Service, 566 F.Supp. 367 (C.D.Cal.1983), rev’d, 725 F.2d 1249 (9th Cir.1984) (opinion withdrawn). Apparently, the district court in Rose viewed § 504 as a general statute because it proscribes more than the physical inaccessibility that is the sole subject of the Barriers Act. See 566 F.Supp. at 369.

This analysis, in my view, does not cut deeply enough to justify the complete excision of a protection so clearly embedded in § 504. Recently, in Smith v. Robinson, — U.S. -, 104 S.Ct. 3457, 82 L.Ed.2d 746 (1984), the Supreme Court considered an analogous situation — the relationship of § 504 and the Education of the Handicapped Act (EHA, 20 U.S.C. §§ 1401-1454). The latter specifically provides handicapped children with the right to a free appropriate public education. In holding that an action to enforce this right must be brought under the EHA and not § 504, the Court did not rely solely on “the specific controls the general” argument, although, clearly, the EHA is much more specific on this issue than is § 504. Instead, the Smith Court found that Congress intended to preclude reliance on § 504 in these circumstances. It noted that the EHA provides an intricate statutory scheme, including requirements that states and local agencies (1) formulate individual plans for the education of each child, (2) cooperate with the parents of the children, and (3) guarantee precise procedural safeguards in carrying out the EHA. The Court also noted that while the EHA mandates affirmative action, § 504 does not. Hence, the Smith Court ruled that plaintiffs, who had brought suit pursuant to the EHA, § 504, and 28 U.S.C. § 1983, could not be awarded counsel fees and costs under the Rehabilitation Act.

The present case differs decisively from Smith. The Barriers Act features no such exacting statutory scheme, and its regulatory framework is not substantially different from that promulgated recently under § 504. Indeed, the recent regulations adopted by the Justice Department provide that a complainant has a right to request a hearing and shall be a party to the hearing. See 49 Fed.Reg. 35,738 (Sept. 11, 1984) (to be codified at 28 C.F.R. §§ 39.170(h)(4), 39.-170(k)(2). The regulations of the ATBCB, however, provide that a complainant is not a party to a hearing, but may petition as of right to participate in it. 36 C.F.R. § 1150.-13(a). Moreover, it does not appear that the Barriers Act mandates anything that § 504 does not. Although there is a paucity of case law on the point, it is clear from the language of the act that it is not an absolute guarantee: it provides that the GSA must “insure whenever possible that physically handicapped persons will have access to” the buildings under its control. 42 U.S.C. § 4152 (emphasis added).

Hence, in view of the foregoing, and bearing in mind Congress’ clearly expressed intent that § 504 be used to eradicate architectural barriers without initial referral to the ATBCB, I see no reason to force plaintiffs to choose one statute over the other. So long as they allege, as they have, that their inaccessibility to HUD activities or programs is the result of improper physical barriers, plaintiffs may maintain an action pursuant to § 504.

Since neither GSA nor HUD has adopted a final set of regulations to implement § 504, plaintiffs cannot be asked to exhaust administrative remedies. Cf. Lloyd v. Regional Transportation Authority, 548 F.2d 1277 (7th Cir.1977) (Plaintiffs sued pursuant to, inter alia, § 504 and the Barriers Act. The court noted that “until effective enforcement regulations are promulgated, Section 504 in its present incarnation as an independent cause of action should not be subjected to the doctrine of exhaustion____ But assuming a meaningful administrative exhaustion mechanism, the private cause of action under Section 504 should be limited to a posteriori judicial review.” Id. at 1286 n. 29).

Finally, since it is clear to me that the motion to dismiss should be denied, I must determine, in the absence of guiding regulations, what standards control the accessibility of the Liberty Square Building. Plaintiffs argue that the standards of the American National Standards Institute (ANSI) control. Their argument is, essentially, that HHS, formerly the § 504 coordinating agency, adopted ANSI standards for physical accessibility (see 45 C.F.R. § 84.23) and that, as the Supreme Court noted in Consolidated Rail Corp. v. Darrone, — U.S.-, 104 S.Ct. 1248, 79 L.Ed.2d 568 (1984), Congress intended to codify those regulations in adopting the 1978 amendments to the Rehabilitation Act. Id. at 1254-55 & nn. 15 & 16 (citing S.Rep. No. 890, 95 Cong., 2d Sess. 19 (1978)). Hence, they contend ANSI standards are statutorily mandated.

I disagree. The portion of the legislative history cited by plaintiffs and by the Darrone Court is actually a review of amended § 505(a)(2) of the Rehabilitation Act, not § 504. Section 505(a)(2) provides:

The remedies, procedures, and rights set forth in Title VI of the Civil Rights Act of 1964 [42 U.S.C.A. § 2000d et seq.] shall be available to any person aggrieved by any act or failure to act by any recipient of Federal assistance or Federal provider of such assistance under section 794 [§ 504] of this title.

29 U.S.C. § 794a(a)(2). It was regarding this subsection that the Committee remarked:

It is the committee’s understanding that the regulations promulgated by the Department of Health, Education, and Welfare with respect to the procedures, remedies, and rights under Section 504 conform with those promulgated under Title VI. Thus, the amendment codifies existing practice as a specific statutory requirement.

S.Rep. No. 890, supra, at 19.

The Darrone Court noted that this passage referred to the HHS regulations which incorporated Title VI complaint and enforcement procedures. 104 S.Ct. at 1255 n. 16. Hence, this language does not apply to HHS regulations dealing with the subjective content, of § 504 rights (such as the manner in which government facilities are to made accessible to the handicapped). Moreover, the present coordinating agency has not prescribed that ANSI standards must govern; instead, DOJ has incorporated the Barriers Act standard. In light of the fact that defendants’ agencies, HUD and GSA, have adopted the Uniform Federal Accessibility Standards (UFAS) as the governing standard under the Barriers Act, and the fact that GSA has proposed § 504 regulations which incorporate by reference the Barriers Act standards, I conclude that UFAS controls the present situation. In any event, it appears that UFAS and ANSI are generally consistent (see p. 313 supra ); thus, I perceive no prejudice to plaintiffs in the application of UFAS.

In view of the foregoing determination, the plaintiffs will be expected to prepare, for submission at the upcoming preliminary injunction hearing, a brief index collating each instance of alleged inaccessibility with the appropriate UFAS standard.

      . Section 504 provides, in pertinent part, as follows:
      “No otherwise qualified handicapped individual in the United States ... shall, solely by reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance or under any program or activity conducted by any Executive agency____” 29 U.S.C. § 794.

      . At the hearing, counsel expressed substantial difference of opinion as to the building's compliance with the standards for accessibility. Under either statute, plaintiffs could not be said to be injured at all if appropriate standards had been met.

      . Other provisions of the Barriers Act provide that the Secretary of HUD shall formulate standards for residential buildings, and that the Secretary of the Department of Defense and the U.S. Postal Service Commissioner are responsible for the promulgation of standards for buildings within their respective jurisdictions. 42 U.S.C. §§ 4153-4154a.

      . Coordination of the promulgation of regulations was delegated to DOJ in Executive Order No. 12,250, 45 Fed.Reg. 72,995 (Nov. 2, 1980), reprinted in note fol. 42 U.S.C.A. § 2000d-1 (1981)). Formerly, the role of coordinator had been given to HHS (then HEW).

      . This would have made sense, since many of the buildings subject to the Barriers Act were now subject to the Rehabilitation Act as well; formerly, only recipients of federal funds (which included state agencies) came within the ambit of § 504.

      . But the EHA, unlike the Rehabilitation Act, does not permit an award of costs and attorneys fees. See 29 U.S.C. § 505(b). This conflict exists in the present case as well, since the Barriers Act has no such provision.

      . Defendants' contention that plaintiffs have not established that they are "otherwise qualified” for HUD’s programs and activities is thus premature. It is sufficient at the pleading stage for plaintiffs to make potentially meritorious allegations of preclusion from HUD’s programs or activities; whether such allegations are capable of being proven, however, remains an open question.

      . Defendants do not dispute that plaintiffs may maintain a private right of action pursuant to § 504. See NAACP v. Medical Center, Inc., 599 F.2d 1247, 1258 (3d Cir.1979).

      . Plaintiffs inform the court that HUD and GSA are also currently being sued in federal court in California for this apparent failure to act. Williams v. United States, CV 80-5368-WPG (C.D.Cal.). But, as I read plaintiffs’ Complaint, they do not here challenge HUD’s failure to promulgate regulations.


author: HUNGATE, District Judge.

text:
    Bessielove LEE, Plaintiff, v. UNION ELECTRIC COMPANY, Union Electric Retirement Plan, Defendants.
    No. 83-2547C(3).
    United States District Court, E.D. Missouri, E.D.
    March 26, 1985.

      Kenneth J. Heinz, St. Louis, Mo., for plaintiff.
    Schlafly, Griesedieck, Ferrell & Toft, Francis X. Duda, St. Louis, Mo., for defendants.
   MEMORANDUM

HUNGATE, District Judge.

Plaintiff, the widow of a former Union Electric Company employee, brings this action under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001, et seq., to recover survivor benefits allegedly owed to her by virtue of Union Electric Company’s retirement plan. Plaintiff alleges that defendants violated their duty under ERISA accurately to inform participants of their rights and obligations under the plan, thereby causing plaintiff’s husband to fail to make an election for survivor benefits for plaintiff.

A nonjury trial was held on January 3, 1985.

Findings of Fact

1. Plaintiff, Bessielove Lee, is an individual who resides in the Eastern District of Missouri and is the surviving spouse of Guy Lee, who died on July 19, 1983, at age 61.

2. Defendant, Union Electric Company (the Company), is a Missouri corporation and was at all times the sponsor and administrator of defendant Union Electric Retirement Plan (Plan).

3. Except for those periods of time during which he served in the armed forces, Guy Lee was employed by the Company from 1940 through his death in 1983. Mr. Lee was a participant in the Plan at issue.

4. Prior to the enactment of ERISA, the Company’s Plan provided for the payment of retirement income, to qualified retirees, in the form of a life annuity with monthly payments until time of death. However, if an employee affirmatively elected a “Contingent Annuity Option,” available under the Plan, and the option was in effect at the employee’s death, monthly payments would be made to the employee’s contingent annuitant following the death of the employee after age 55. These payments were to be made regardless of whether or not the employee had retired by the time of his death. (Plaintiff’s Ex. 19.)

5. The Contingent Annuity Option was explained in Section 7.02 of the Plan, and provided that:

a. An employee may ... elect to receive a reduced retirement income during his life and designate a Contingent Annuitant, if living, to receive, following the employee’s death on or after the effective date of the Option, the same amount or such smaller amount as the employee may designate. Such Option may be elected while in the service of the Company at any time prior to normal (or early) retirement date, to become effective on a date specified by the employee, but may not become effective until the later of (1) the employee’s 55th birthday, or, (2) two years after the date of election. If either the employee or the designated Contingent Annuitant is not living on the specified effective date, the Option shall not become effective. The reduced monthly retirement income the retired employee is to receive and the monthly amount the Contingent Annuitant is to receive shall be determined from the attached Schedule H, entitled, “Factors for Determination of Monthly Retirement Income Under Contingent Annuity Option.”

6. A few months before his fifty-third birthday, Mr. Lee received a packet of information from the Company in regard to the Contingent Annuity Option. In addition to the letter explaining the Option, the Company sent Mr. Lee a statement of his Plan benefits, an explanatory booklet on the Option, an election form and sample completed election form, and a form for notification of interest in further information or of no interest in the Option. (Defendants’ Ex. H.)

7. The letter, which was found among Mr. Lee’s papers after his death, informed Mr. Lee of the Option’s two-year waiting period before becoming effective and of other important Option provisions, and also stated that:

The decision to elect the Option or not is a matter of personal judgment to be based on your particular circumstances and objectives. The election and operation of the Option is a complex matter and you may want more information before you decide to elect it or not. If so, we will be glad to review it with you at your convenience.

8. The explanatory booklet sent with the letter thoroughly defined and explained the Option and provided specific examples of its operation and effect. The booklet clearly stated that the Option must be in effect for a Contingent Annuitant to receive monthly payments upon an employee’s death prior to retirement:

6. WHAT IF I DIE BEFORE I RETIRE?
If the option is in effect and you die before you retire, a monthly payment, starting as of the first of the month after your death, would be made to your “Contingent Annuitant” if she (he) is still living. The monthly payment would continue for the life of your “Contingent Annuitant” and would amount to the percentage, as elected by you, of the pension that would have been paid to you if you had lived and retired on the first of the month following your death. (See Example III attached.)

(emphasis in original).

9. When the Company did not receive any response from Mr. Lee, another letter was sent to him on August 15, 1974, reminding him of the Option and requesting that he inform the Company whether he wished to elect the Option or had any future interest in it. A self-addressed envelope was enclosed with the letter, which again advised Mr. Lee of the Company’s willingness to provide further information:

The decision to elect the Option or not is a matter of your personal judgment and should be based on your particular circumstances and objectives. The election and operation of the Option is a complex matter and you may want more information before you decide to elect it or not.
If you want more information or have misplaced our earlier letter which was accompanied by an explanatory booklet and a statement of your benefits under the Retirement Plan, you are invited and encouraged to call us (stations 2670 or 2774) or write to us (mail code 533).

10. The Company never received either a notice of election or a notice of decision not to elect, nor did the Company ever receive any proof of age for a Contingent Annuitant for Mr. Lee, as required by the notice of election.

11. On October 29, 1975, the Company sent a memorandum summarizing Plan changes called for by ERISA. (Defendant’s Ex. K.) The memorandum stated that:

4. The payment of retirement income provisions will be amended to provide that the normal form of annuity payment will be a qualified-spouse benefit with the 50% Contingent Annuity Option in effect at retirement, provided the employee is married prior to the initial date of commencement of benefit payments. All other provisions now contained in the Plan which define the terms and conditions of the Contingent Annuity Option will be continued. It will be amended, however, to provide that a participant may elect, upon proper notice to the Company, to receive his benefits under the life annuity option of the Plan without a spouse benefit.

(emphasis in original).

12. The Company’s amended Plan, effective as of January 1, 1976, provided that the normal method of payment of retirement income for an employee with a qualified spouse would be in the form of a “50% Contingent Annuity Option.” This method entailed monthly payments to the participant following retirement, with monthly payments to the Contingent Annuitant, if living, following the participant’s death. (Plaintiff’s Ex. 21.)

13. The Plan also provided for election of a “Contingent Annuity Option,” which could be elected to become effective as early as an employee’s fifty-fifth birthday two years after the election, under which a Contingent Annuitant could be designated to receive monthly payments following an employee’s death after the effective date of the Option. The participant need not have retired for the Option to go into effect. (Plaintiff’s Ex. 21.)

14. Section 8.02 of the Plan explained that:

[I]f the deceased retired employee retired under the normal form of payment of a 50% Contingent Annuity Option or had elected the Contingent Annuity Option in accordance with Section 8.03 and it was in effect, monthly payments will be made to the Contingent Annuitant starting the month following the death of the retired employee and will continue until the death of the Contingent Annuitant. Upon the death of an employee prior to retirement, and if the deceased employee had elected the Contingent Annuity Option and it was in effect, monthly payments will be made to the Contingent Annuitant starting the month following the death of the employee, and will continue until the death of the Contingent Annuitant.

(emphasis added).

15. On May 25, 1976, the Company issued a memorandum regarding the passage of ERISA. The letter stated that information on various plans was available to employees at a reasonable charge, and that all plan documents were available for examination at no charge. The letter concluded with:

If you have any questions about this Notice or your rights, contact the Employee Benefits Department. You may call (Station 2546) or visit Room W117 at the General Office Building. Also, the nearest Area Office of the Labor Department has people who will be able to assist you or provide you with additional information.

(Plaintiff’s Ex. 27.)

16. A description of the Plan was issued to employees by the Company in November of 1977. (Plaintiff’s Ex. 22.) The summary identified the normal method of payment of retirement income as the “50% Contingent Annuity Option.” The summary identified as an optional form of retirement income the “Contingent Annuity Option,” which “enables you to provide 25% 50% 75% or 100% of your Retirement Income to be payable, after your death, to the person you name as your contingent annuitant.'.. .”

17. The summary stated that the Option could become effective as early as the employee’s fifty-fifth birthday, but no specific examples were provided to illustrate the Option’s effect upon payments after an employee’s death prior to retirement. The summary did not explicitly state that if an employee died prior to retirement without having elected the “Contingent Annuity Option,” no monthly payments would be made to a surviving spouse.

18. The Plan was amended again in 1979 and 1980 and then in May of 1981. In May of 1981, the “50% Contingent Annuity Option” became known as the “50% Surviv- or Benefit Option,” and the “Contingent Annuity Option” became known as the “Survivor Benefit Option.” Additionally, the Plan provided for a “Survivor Spouse’s Benefit Option” whereby, upon election, an employee could provide for payment of fifty percent of his retirement income to his spouse if he died after his forty-fifth birthday with the Option in effect. (Plaintiff’s Ex. 24.)

19. At all times between 1971 and Mr. Lee’s death in 1988, the Plan required an affirmative election to provide for monthly payments of an employee’s retirement income to his spouse following his pre-retirement death. Such an election entailed acceptance of a smaller retirement income for the employee if he lived to retirement.

20. No evidence was introduced to suggest that Mr. Lee ever indicated any interest in a Contingent Annuity/Survivor Benefit Option or ever asked for assistance in planning for his spouse’s future. Mr. Lee’s son, Guy J. Lee III, said that Lee had told him plaintiff would be provided for from his retirement fund. Mr. Lee’s son, Gary, testified that he overheard Mr. Lee state that plaintiff would get a percentage of his retirement money; however, on cross-examination, he acknowledged that Mr. Lee said she would receive it when and if he retired.

Conclusions of Law

1. ERISA requires that summary plan descriptions be provided to each participant in an employee benefit plan, 29 U.S.C. § 1021(a), and that the description “be written in a manner calculated to be understood by the average plan participant and ... be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan.” 29 U.S.C. § 1022(a)(1). See also 29 C.F.R. § 2520.-102-2.

2. Plaintiff argues that the use of the terms “50% Contingent Annuity Option” and “Contingent Annuity Option” was confusing. Since employees were told that the normal method of payment of retirement income for employees with qualified spouses was by the former option unless they affirmatively elected otherwise, plaintiff argues, Mr. Lee naturally assumed that this option also insured coverage for his wife upon his death prior to retirement. However, all Company references to death before retirément stated that payments to a surviving spouse would be made if the Contingent Annuity Option had been elected and was in effect.

3. Even assuming that the Company’s post-ERISA summaries and information were not sufficiently clear, the Court finds that Mr. Lee was apprised of the relevant Plan provisions by the pre-ERISA letter of explanation sent to him in June of 1974. The letter and accompanying explanatory materials informed Mr. Lee of the necessity of electing the Contingent Annuity Option if he was to provide for his wife after his death, either before or after retirement, and Mr. Lee indicated no interest in doing so. While the Plan later provided for a contingent annuity to be paid to an employee’s spouse upon the employee’s post-retirement death, the requirement of affirmatively electing a contingent annuity to cover a spouse upon pre-retirement death never changed. The materials sent to Mr. Lee in June of 1974 provided numerous examples of various contingencies and how the Plan affected them. Moreover, when Mr. Lee failed to respond to this information, the Company sent an additional informative letter seeking his decision.

4. Finally, the Court finds it significant that Mr. Lee never made any effort to contact any knowledgeable person in the Company for further information or explanation, despite repeated invitations from the Company to do so. The Plan administrator satisfied the fiduciary obligation owed to Mr. Lee under ERISA; fiduciaries are not expected to provide individualized attention to participants. See Allen v. Atlantic Richfield Retirement Plan, 480 F.Supp. 848, 851 (E.D.Pa.1979), aff'd, 633 F.2d 209 (3d Cir.1980).

5. In Hopkins v. FMC Corp., 535 F.Supp. 235 (W.D.N.C.1982), plaintiff charged violation of fiduciary duty following the cancellation of her husband’s elected 100% Joint and Survivor Annuity upon her husband’s pre-retirement death. The deceased had been on long-term disability leave of absence for an extended period prior to his death; had he chosen instead to accept early retirement, the annuity would have been in effect at his death. However, the deceased would have received less money each month as a retiree than he did while employed but on leave.

As in this case, there was no evidence that the deceased had ever notified his company of any concern or confusion about his benefits, and he had received a comprehensive summary of the plan. The Hopkins court found the absence of employee-initiated inquiry into the relevant provision significant in light of the deceased’s ability to inquire if he chose.

This Court finds the Hopkins analysis applicable to the facts of this case. Accordingly, defendants are entitled to judgment.