author: ROBERT H. HALL, District Judge.

text:
    Jack JERSAWITZ, Plaintiff, v. Jack HANBERRY, et al., Defendants.
    Civ. A. No. C83-2202A.
    United States District Court, N.D. Georgia, Atlanta Division.
    April 29, 1985.

      Joseph M. Beck and Norman P. Stein, Jeffrey 0. Bramlett, Bondurant, Miller, Hishon & Stephenson, Atlanta, Ga., for plaintiff.
    Barbara V. Tinsley, Asst. U.S. Atty., Atlanta, Ga., for defendants.
   ORDER

ROBERT H. HALL, District Judge.

This action is presently before the court on the parties’ cross-motions for summary judgment. Federal jurisdiction is predicated upon the existence of a federal question, 28 U.S.C. § 1331 (West Supp.1984). For the reasons stated herein, defendants’ motion for summary judgment is GRANTED and plaintiff’s motion for summary judgment is DENIED.

FACTUAL BACKGROUND

The parties to this action have stipulated that summary judgment is appropriate because the facts are not in dispute. On October 7, 1983, plaintiff requested permission to interview a particular inmate who was temporarily confined at the Atlanta Federal Penitentiary. Plaintiff sought the interview for use on a self-produced television show called “Let’s Tell It Like It Is,” which airs via a public access channel provided by Cable Atlanta. Plaintiff is not employed by Cable Atlanta nor is he subject to its control or supervision; instead he considers himself an independent journalist.

Warden Hanberry of the Atlanta Federal Penitentiary denied plaintiff’s request to interview the specified inmate. The Warden based this denial on the fact that plaintiff did not qualify as a “representative of the news media” under the applicable Bureau of Prisons’ definition, 28 C.F.R. § 540.2(b) (1984). Plaintiff admits that he is not a “representative of the news media” as defined by the regulation.

The Bureau of Prisons’ regulations governing federal prisoners’ contact with the media are embodied in 28 C.F.R. § 540.60, et seq. (1984). Those regulations permit, under certain conditions, “representatives of the news media” to conduct interviews with prisoners incarcerated in federal penal institutions, including the Atlanta Penitentiary. The regulations define “representatives of the news media” as follows:

Persons whose principal employment is to gather or report news for:

1) A newspaper which qualifies as a general circulation newspaper in the community in which it is published. A newspaper is one of “general circulation” if it circulates among the general public and if it publishes news of a general character of general interest to the public such as news of political, religious, commercial, or social affairs. A key test to determine whether a newspaper qualifies as a “general circulation” newspaper is to determine whether the paper qualifies for the purpose of publishing legal notices in the community in which it is located or the area to which it distributes;
2) A news magazine which has a national circulation and is sold by newsstands and by mail subscription to the general public;
3) A national or international news service; or
4) A radio or television news program of a station holding a Federal Communications Commission license.

28 C.F.R. § 540.2(b).

Plaintiff originally brought this action seeking a mandamus ordering the warden to admit him to the Atlanta Penitentiary for the purpose of interviewing the inmate. During the pendency of the proceedings, the inmate was transferred from the Atlanta Penitentiary to his designated place of confinement. The court therefore ruled that the mandamus issue was moot.

Subsequently plaintiff filed an amended complaint in which he seeks the following: (1) a declaratory judgment that 28 C.F.R. § 540.60 et seq is “unconstitutional insofar as it distinguishes between plaintiff and ‘representatiaves of the media’ ” (Plaintiff’s Complaint, jj 1); (2) an order permanently enjoining defendants from denying plaintiff the privilege of interviewing prisoners at the Atlanta Penitentiary for the reason that he is not a “representative of the media”; and (3) an order requiring the defendants to either bring the inmate to Atlanta for an interview or to pay to transport plaintiff to the inmate’s place of confinement for an interview. By order dated February 6, 1985, the court granted plaintiff leave to file the brief of the Atlanta Press Club, an amicus curiae.

DISCUSSION

As noted earlier, the parties have agreed that summary judgment is appropriate in this case. The issue before the court, therefore, is whether the prison regulations, 28 C.F.R. § 540.60 et seq., are unconstitutional, as plaintiff alleges.

Plaintiff has alleged that the regulations violate both the First and the Fifth Amendments to the United States Constitution. Specifically, plaintiff alleges that the regulations violate the First Amendment “by denying plaintiff a privilege extended to segments of the general public, to wit the privilege of ‘representatives of the news media’ to interview prisoners____” and by “distinguishing and classifying among different categories of the press____” (Plaintiff’s Complaint, Count 1, U1J a and b). While these allegations purport to state a First Amendment violation, it appears to the court that they more correctly allege an equal protection violation. The Supreme Court has held that restrictions on media access to prisons do not abridge the First Amendment’s guarantee of freedom of the press. Pell v. Procunier, 417 U.S. 817, 94 S.Ct. 2800, 41 L.Ed.2d 495 (1973); Saxbe v. Washington Post Co., 417 U.S. 843, 94 S.Ct. 2811, 41 L.Ed.2d 514 (1974). In any event this case, unlike Pell and Saxbe, does not present a ease of prison regulations totally prohibiting the press from interviewing prisoners, instead the question in this ease is whether the regulations’ classifications are constitutionally valid. For this reason the court will focus on plaintiff’s claims of a Fifth Amendment violation.

In Count II of his complaint, plaintiff alleges that the regulations “violated the Due Process Clause of the Fifth Amendment to the United States Constitution by granting privileges to selected categories of the media while denying them to plaintiff.” In his motion for summary judgment plaintiff contends that the government must have a compelling state interest in order to validate the classifications. This standard is simply not the correct standard by which to judge the regulations. As the Atlanta Press Club correctly notes in its amicus brief, the proper standard by which to measure the regulations is whether the government has a rational basis for its actions. The “compelling state interest” analysis only arises in cases involving government action which implicates a constitutional right or affects a suspect class. Clearly the class to which plaintiff belongs, i.e., independent journalists, is not a suspect class under relevant precedents, nor does this case implicate fundamental constitutional rights. As noted earlier, the Supreme Court has held that freedom of the press is not abridged by restrictions on prison access. Pell; Saxbe, supra. The court has no choice but to interpret these cases as holding that there is no fundamental right to enter prisons to gather news.

The issue before the court, therefore, is whether the government has a rational basis for defining “representatives of the news media” as it does, thereby excluding plaintiff and other journalists like him. This analysis will focus only on that portion of the regulation’s definition which is applicable to plaintiff, i.e. 28 C.F.R. § 540.2(b)(4). According to the government its definition is necessary in order to insure “limited access for interviews while insuring that the representatives would be responsible persons employed by and responsible to recognized media organizations.” (Defendants’ Brief in Support of Motion for Summary Judgment, p. 5). Its definition, i.e., the requirement of affiliation with a federally recognized and licensed media organization, enables the prison to readily ascertain the credentials and responsibility of the individual seeking prison access. Given the prisons’ obvious need to maintain security and order within the prisons, and the need for administrative ease in implementing visitor regulations, this court holds that the government does in fact have a rational basis for its classifications.

Plaintiff also contends that although he did not qualify for admittance as a “representative of the news media,” he should have been granted entry under the warden’s discretionary power to allow members of the general public admittance. In this case the warden, in the exercise of his discretion, chose not to admit plaintiff as a non-qualifying reporter or member of the general public. In order to find this decision improper the court would have to determine that the warden’s decision was an abuse of his discretion, i.e., either arbitrary or capricious. Plaintiff has presented no evidence whatsoever to support such a finding. Defendants, on the other hand, have shown that such is not the case. According to Warden Hanberry, he does not allow persons, other than those recognized by the regulations, inside the prison unless they “demonstrate exceptional circumstances which satisfy [his] concern regarding the security and unhampered administration of the prison.” (Hanberry Affidavit, ([ 5). Warden Hanberry further states that plaintiff did not “present facts ... which allowed [the warden] to determine that admitting him ... would not compromise the security or administration of the Atlanta Federal Penitentiary.” (Id., j| 6). On the uncontroverted evidence before it, the court finds no abuse of discretion in Warden Hanberry’s actions.

The court has determined that the prison regulations at issue, 28 C.F.R. § 540.60 et seq, are not unconstitutional as alleged by plaintiff. For this reason plaintiff is not, and was not, entitled to an interview with the inmate he specified. There is no basis, therefore, for ordering the demanded transportation to enable plaintiff to conduct the interview. The court hereby GRANTS summary judgment in favor of defendants on all of plaintiff’s claims.

      . While this court feels that the better analysis would have been to recognize the First Amendment right, but to acknowledge that the government has compelling reasons for the restrictions, this does not appear to be the analysis employed by the Court in Pell and Saxbe. This court has no choice but to abide by these decisions.

      . The Atlanta Press Club makes two arguments to which the court deems a response necessary. The club contends that the government could have devised a better method of insuring administrative ease. While this may be true, the government need not devise the best system possible but merely have a rational basis for the system it does devise. Second, the club argues that the regulations are vague and ambiguous. In making this argument the club points only to portions of the statute which are not at issue in this case. Neither plaintiff nor the amicus have standing to challenge the constitutionality of portions of the regulation which are not relevant to the case, when the regulation as it applies to plaintiff (i.e., § 540.2(b)(4)) is not, and is not even alleged to be, vague or ambiguous. Federal courts are not in the business of rendering advisory opinions. United Public Workers v. Mitchell, 330 U.S. 75, 67 S.Ct. 556, 91 L.Ed. 754 (1947).


source: Caselaw Access Project

author: SCOTT 0. WRIGHT, Chief Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff v. Kirk C. REIVICH, Defendant.
    No. 85-00018-01-CR-W-5.
    United States District Court, W.D. Missouri, W.D.
    April 30, 1985.

      Robert C. Larsen, Asst. U.S. Atty., Kansas City, Mo., for plaintiff.
    Bruce C. Houdek, Kansas City, Mo., for defendant.
   ORDER

SCOTT 0. WRIGHT, Chief Judge.

Defendant has moved to suppress all items seized during the execution of a search warrant at his residence and a search of his automobile on August 31, 1984. Pursuant to that motion, an evidentiary hearing was held before Chief United States Magistrate Calvin K. Hamilton. In light of the evidence adduced at that hearing, and after review of the challenged affidavit and warrant, the Court is compelled to grant defendant’s motion to suppress.

FACTS

Shortly after selling an eighth of an ounce of cocaine to an informant, Creg Burns and Thomas Linsin were arrested by two Johnson County policemen. Lt. Vince Werkowitch followed the pair, stopped them and ultimately arrested them with the assistance of Det. Joe Sweeten, also of the Johnson County Police Department. The two men were separated and detained in the parking lot. Both were read their Miranda rights.

Lt. Werkowitch admits quickly telling Linsin that he had an opportunity to better his situation; that he was currently charged with possession of cocaine, which is a Class C felony in Kansas. Werkowitch explained to Linsin that in order to better his situation, he needed to “tell us where he got the cocaine from.” Werkowitch then contacted the Assistant District Attorney and inquired as to what deal he could make Linsin. It was agreed that if Linsin cooperated that night, he would avoid going to jail, and would later be charged with conspiracy to sell cocaine, a Class E felony. Werkowitch testified that Det. Sweeten was present at, and participated in, these discussions in the parking lot and later at the police station. Linsin’s part of the bargain, Werkowitch continued, was to reveal his source and assist in the investigation of that person. Linsin had yet to reveal his source.

Linsin insists that Werkowitch maintained he “could pretty much guarantee probation” in return for the information. Although Werkowitch denies this, he concedes explaining to Linsin that a Class E felony raised a presumption of probation. Linsin testified that the officers told him that “they could unarrest me just as easily as they arrested me.” Linsin was led to believe Burns was also providing information. Linsin alleges the officers put him on “a little guilt trip” by describing his family background and explaining to him if he wanted to get off he would have to provide information “now or never.” Linsin further maintains that he merely confirmed the information the officers sought from him--the officers asserted that he had gotten the cocaine from Reivich and he (Lin-sin) merely agreed. In any event, Linsin provided Reivich’s phone number (after calling home to obtain it), yet could not recite Reivich’s address with any specificity beyond 59th & Troost.

Burns was not offered the Class E felony deal, however, claims to have been told he too could “better his situation” by helping the officers out. Burns provided neither Reivich’s phone number nor a specific address, however, he did identify Reivich as his source after assurances from a third officer that it would be in his best interest to tell them about the cocaine. No written statements were obtained from the two suspects. Neither these men, nor the unidentified informant that led to their arrest had previously been used as informants.

Werkowitch passed his information along to Det. Sweeten who contacted Officer Donna L. Rollo of the Kansas City Police Vice Department. Sweeten and Rollo had never met, and no written reports or statements were exchanged. Sweeten relayed the information by phone to Rollo who prepared the affidavit. Rollo had no personal knowledge of any part of the information, and it appears much of the information Sweeten proffered he had obtained from Werkowitch. Although Rollo’s supervisor reviewed the affidavit, advice was neither sought nor obtained from the Jackson County Prosecutor’s office. Sweeten read over the affidavit and actually went with Rollo to Associate Circuit Judge Baker’s chambers in order to obtain the warrant. Sweeten did not sign the affidavit, however. Judge Baker took no testimony nor requested additional information prior to issuing the warrant.

Pertinent information in the affidavit, with respect to probable cause is:

1. On 8-30-84 a confidential informant purchased Vs oz. of cocaine from Creg Burns.
2. Mr. Burns and Thomas Linsin were surveilled by Johnson County Detectives and followed from 7801 Grant Lane to the area of 59th & Troost where the Detectives lost sight of the pair.
3. After locating and arresting the pair in Overland Park, Kansas, Det. Sweeten debriefed Linsin, who identified the source of the cocaine as Kirk Reivich who resides in the area of 59th & Troost, Kansas City, Jackson County, Mo., tel. no: 816-333-3789.
4. Linsin stated that while at Reivich’s residence he was told by Reivich that “there’s plenty of coke left.”
5. Linsin stated that he has been purchasing cocaine from Mr. Reivich for approximately 3 years and that Mr. Reivich is never out of cocaine. Linsin stated that he knows that Reivich has gone to Florida in the past for cocaine. Linsin stated that on one occasion Reivich had a pound of cocaine and that this occurred within the last three months. Linsin stated that Reivich had moved to the house at 59th & Troost three days ago.
6. Burns was interviewed by Werkowitch at the same time. Burns stated that he received the ounce of cocaine from Reivich who lives just west of 59th & Troost, Kansas City, phone number 816-333-3789.
7. Burns claims to have been told by Reivich “I have more coke left.” Burns stated that two months ago he and Reivich went to Florida where they purchased 1 (one) kilo of cocaine which was transported back to the Kansas City area. Burns was confident Reivich was obtaining a further quantity of cocaine during the late morning hours of 8-31-84.
8. Det. Sweeten stated that he verified the telephone number to be listed to a Mark Bland at 5912 Harrison, Kansas City. On 8-31-84 Sweeten drove by the 5912 Harrison address and observed a 1979 tan/bronze Cutlass registered to Kirk Reivich parked in the driveway.

The affidavit was signed by Officer Donna L. Rollo.

OPINION

The Fourth Amendment to the Constitution of the United States guarantees freedom from unreasonable search and seizure, and provides that no warrant shall issue except upon probable cause. One of the primary values of the warrant process is that it permits informed and deliberate determinations of probable cause to be made by a neutral and detached magistrate. Aguilar v. Texas, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723 (1964). In assessing the sufficiency of information and/or affidavits offered to establish probable cause, a “two-prong” test was designed to establish the reliability of the information and the credibility of the source. See, e.g., Spinelli v. United States, 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969).

Prior to the development of the two-prong test, the United States Supreme Court had maintained that the probable cause standard was a practical, non-technical conception. Brinegar v. United States, 338 U.S. 160, 69 S.Ct. 1302, 1311, 93 L.Ed. 1879 (1949). Embracing a return to traditional motions of probable cause determination, the United States Supreme Court has recently advanced a “totality of the circumstances” analysis for probable cause. Illinois v. Gates, 462 U.S. 213, 103 S.Ct. 2317, 2328, 76 L.Ed.2d 527 (1983). This standard simply requires the magistrate to make a practical, common-sense decision whether, given all the circumstances set forth in the affidavit before him, including the veracity and basis of knowledge of persons supplying hearsay information, there is a fair probability that contraband or evidence of a crime will be found in a particular place. Id., 103 S.Ct. at 2332.

The Gates decision arises out of the fact that the determination of probable cause does not lend itself to a prescribed set of rules, like those that had developed after Spinelli and Aguilar. The “totality of the circumstances” is a flexible, common sense standard that better serves the purposes of the Fourth Amendment’s probable cause requirement.

This Court does not review de novo the previous determination of probable cause now challenged by way of defendant’s motion. Great deference is to be afforded the magistrate’s determination of probable cause. United States v. Leon, — U.S. -, 104 S.Ct. 3405, 3417, 82 L.Ed.2d 677 (1984); Spinelli v. United States, supra, 89 S.Ct. at 590. However, in abandoning the two-prong test for probable cause, in no way did the Supreme Court sanction the abdication of the magistrate’s duty. Deference to the magistrate is not boundless, and this Court still conscientiously reviews the sufficiency of an affidavit upon which a warrant issues. This court will not defer to a warrant based on an affidavit that does not provide the magistrate with a substantial basis for determining the existence of probable cause. United States v. Leon, supra, 104 S.Ct. at 3417; Illinois v. Gates, supra, 103 S.Ct. at 2332. Sufficient information must be presented to the magistrate to allow that official to determine probable cause; his action cannot be a mere ratification of the bare conclusions of others. Id.

Review of the probable cause determination is not yet an exercise in “20-20” hindsight. Regardless of the result obtained by way of the challenged warrant and/or search, the “totality of the circumstances” set forth in the affidavit presented to the magistrate must sufficiently establish probable cause for the issuance of the warrant. Nothing in the Gates or Leon decisions imply that the fact that the search is ultimately successful remedies or cures an otherwise deficient affidavit. Accordingly, in examining the affidavit presented to Associate Jackson County Circuit Judge Baker, this Court finds that insufficient information was contained therein upon which to determine probable cause existed to search 5912 Harrison for cocaine.

While retreating from the use of the two-step Spinelli test, the Supreme Court in Gates reiterated the importance of the reliability of the source of information in determining probable cause. See Illinois v. Gates, supra, 103 S.Ct. at 2332. The affidavit presented to Judge Baker is almost devoid of any assurances that Linsin and Burns are reliable. Neither volunteered the information — it was obtained from them at the time of their arrest, in a Quik-Trip parking lot, as part of a “deal” to “help themselves out” and “better their situations.” Neither had been used previously as a source.

In some cases reliability might be inferred from statements against penal interest, however, it can hardly be gainsaid that the statements given were against either’s penal interest. The pair had been arrested and admitted possession of Vs oz. cocaine. Revealing Reivich’s name, address, and/or phone number was not against their penal interest. Arguably, admitting their past participation in cocaine sales approaches such a statement, but again does nothing more than implicate a third party, by bald accusation, in the crime they had just been arrested for. Nothing contained in the affidavit establishes the reliability of Burns and Linsin, nor could it be inferred from their selfserving finger-pointing directed at this defendant.

The United States Supreme Court has consistently recognized the value of corroboration of details of an informant’s tip by independent police work. See, e.g. Jones v. United States, 362 U.S. 257, 80 S.Ct. 725, 735, 4 L.Ed.2d 697 (1960). Many of the concerns regarding the reliability of hearsay information can be alleviated or even eliminated so long as the information can be corroborated by other matters within the affiant’s knowledge. Corroboration through other sources of information reduces the chance of a reckless or prevaricating tale, thus providing a substantial basis for crediting hearsay and establishing probable cause. Illinois v. Gates, supra, 103 S.Ct. at 2335.

Given the absence of information relating to Burns and Linsin’s reliability, the importance of corroboration becomes manifest. Facts obtained through corroboration that suggest the truth and reliability of the pair would have provided a substantial basis for establishing probable cause; such corroboration, however, is lacking here.

Page 3 of the affidavit reveals Detective Sweeten’s efforts at corroborating Burns and Linsin’s accusations. Sweeten corroborated four rather innocuous facts — (1) the phone number given as Reivich’s was listed to a Mark Bland, at the 5900 block of Harrison. (2) [Although not stated in the affidavit,] Harrison is west of Troost. (3) After driving by that address, Sweeten observed an automobile in the driveway that was registered to the defendant. (4) Burns and Linsin had been in the vicinity of 59th & Troost earlier in the day. This is the extent of Sweeten’s corroboration. These [corroborated] facts do not establish a fair probability that defendant was indeed the source of Burns’ and Linsin’s cocaine. The corroborated facts did not involve predictions of future events. Cf. Draper v. United States, 358 U.S. 307, 79 S.Ct. 329, 3 L.Ed.2d 327 (1959) (“classic case on the value of corroboration”). The facts corroborated did not encompass a range of details regarding the future actions of third parties not easily predicted. Cf Illinois v. Gates, supra, 103 S.Ct. at 2335. Finally, the corroborated facts were innocuous, easily obtained bits of information that were not corroborative of the statements regarding defendant “never being out” of cocaine or “having more coke left,” the cornerstone of the probable cause determination. Cf. United States v. Robinson, 756 F.2d 56, 60 (8th Cir.1985). Corroboration’s value lies in the fact that if an informant is right about some things he is more likely to be right about other facts. See Spinelli, supra, 89 S.Ct. at 594. Sweeten’s corroboration, however, doesn’t even establish the correctness of the given facts — the phone number was listed to [previously unmentioned] Mark Bland, and Reivich’s car was merely in the driveway of a residence west of 59th & Troost. Neither informant ever gave 5912 Harrison as defendant’s address.

Although hindsight ameliorates the potential or actual coercive effect, the omission of the facts regarding the offers and inducements made Burns and Linsin in return for the information cannot be minimized. Omitting these facts suppressed potential doubts as to the informants’ credibility and thereby deprived Judge Baker of the totality of the circumstances necessary to a neutral, detached, and even-handed determination of probable cause. Disclosure of the inducements might have severely undermined the value of the informants’ statements. At the least, it deprived Judge Baker of the information essential to his assessment of the informants’ credibility, whose information was a lynch-pin of the issuance of the warrant. Without this information, Judge Baker was unable to fully evaluate, on a proper understanding the information provided him in the affidavit. Accord United States v. Rule, 594 F.Supp. 1223,1240 (D.Me.1984).

Given the totality of the circumstances described in this affidavit, the Court concludes that there was not a substantial basis for concluding that probable cause existed to search for cocaine in the defendant’s car and the dwelling at 5912 Harrison.

-B-

The Court’s inquiry does not end here, however. Despite the invalidity of the search warrant, suppression may not yet be appropriate. The Exclusionary Rule is often described as a judicially-created, but necessary, corollary of the Fourth Amendment. Mapp v. Ohio, 367 U.S. 643, 81 S.Ct. 1684, 1689, 1691-92, 6 L.Ed.2d 1081 (1960). However, the Fourth Amendment does not expressly preclude the use of evidence obtained in violation of its commands, and the origin and purpose of the Amendment makes it clear that the use of the fruits of a previous, unlawful, search or seizure works no new Fourth Amendment wrong. United States v. Leon, supra, 104 S.Ct. at 3412; United States v. Calandra, 94 S.Ct. 613, 94 S.Ct. 613, 623, 38 L.Ed.2d 561 (1974). Close attention to the well-recognized remedial objectives of the Exclusionary Rule has been relaxed somewhat by recent Supreme Court decisions in the Fourth Amendment area.

Admittedly, if exclusion of evidence obtained pursuant to a subsequently invalidated warrant is to have any deterrent effect, it must alter the behavior of the individual law enforcement officers or department policies. See United States v. Leon, supra, 104 S.Ct. at 3419. Accordingly, the United States Supreme Court has declared that suppression of evidence obtained pursuant to a warrant should be ordered only on a case-by-case basis and then only in those unusual cases in which exclusion will further the purposes of exclusionary rules. Id. at 3419. The marginal benefit produced by suppressing evidence obtained in objectively reasonable reliance on a subsequently invalidated search warrant does not justify the substantial costs of exclusion. See United States v. Leon, supra, 104 S.Ct. at 3421. However, this goodfaith exception for searches conducted pursuant to warrants does not signal judicial unwillingness to strictly enforce the requirements of the Fourth Amendment. Id. at 3422. The Leon decision avoids penalizing the officer (through suppression) for errors, other than his own, so long as his actions are objectively reasonable. A search pursuant to a warrant issued by a magistrate normally suffices to establish that the law enforcement officer has acted in good faith in conducting the search, however, the officer’s reliance on the probable cause determination and technical sufficiency of the warrant must be objectively reasonable. Cf. Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 2737-2739, 73 L.Ed.2d 396 (1982). Suppression remains appropriate in circumstances where the officer(s) involved have no reasonable grounds for believing that the warrant was properly issued. United States v. Leon, supra, 104 S.Ct. at 3421. Moreover, it is necessary to consider the objective reasonableness, not only of the officers who eventually execute a warrant, but also of the officers who originally obtained it, or who provided information material to the probable cause determination. Id. at 3421 n. 24.

Thus, just as the Court’s deference to a magistrate’s probable cause determination can be vitiated by inquiry into the knowing or reckless falsity of the affidavit on which that determination was based, see Franks v. Delaware, 438 U.S. 154, 98 S.Ct. 2674, 57 L.Ed.2d 667 (1978), so too will suppression remain appropriate where the magistrate was misled by information in an affidavit that the affiant knew was false or would have known was false except for reckless disregard of the truth. United States v. Leon, supra, 104 S.Ct. at 3421.

This analysis/reasoning applies equally to cases involving material omissions of facts in the affidavit. See United States v. Dennis, 625 F.2d 782 (8th Cir.1980). By failing to include the information regarding inducements offered Burns and Linsin for their information, Sweeten displayed, at the very least, reckless disregard for the truth of said affidavit. Sweeten made a conscious decision as to what was relevant to Judge Baker’s probable cause determination. Judge Baker, not Detective Sweeten, must judge the totality of the circumstances and make an informed, neutral determination as to the existence of probable cause. Objective reasonableness requires the presentation of facts known to an applicant for a warrant which will allow the magistrate to make an informed decision as to the existence of probable cause. By omitting the information regarding the inducements and “deal” offered to the informants, an officer objectively acts with reckless disregard for the truthfulness of an affidavit, in a manner destructive of the warrant process. Cf. United States v. Rule, 594 F.Supp. 1223, 1247 n. 1. Neither does Sweeten’s recitation of the information to Officer Rollo, and her signature on the affidavit insulate the warrant and fruits of the search from suppression. Reliance on colleagues ignorant of the circumstances under which the warrant was obtained to conduct the search cannot cure Sweeten’s lack of objective reasonableness. See, e.g. United States v. Leon supra, 104 S.Ct. at 3421 n. 24. Interestingly, Detective Sweeten read over the affidavit and accompanied Officer Rollo to the courthouse to obtain the warrant, yet neither signed nor offered the affidavit.

Suppression in this case does indeed further the purposes of the Exclusionary Rule, consistent with the Leon decision. Suppression here does not penalize the officers for errors largely attributed to the issuing judge. Sweeten’s deliberate omission of information which bears greatly on the [otherwise lacking] evidence of the informants’ credibility usurped the function of Judge Baker. Assuming, arguendo, that the affidavit otherwise contained sufficient indicia of the informants’ credibility or reliability, this information no doubt detracts therefrom. Withholding the information is an unwarranted arrogation of the magistrate’s function. Cf. United States v. Rule, supra, 594 F.Supp. at 1247.

CONCLUSION

The Court concludes the affidavit failed to establish a substantial basis for determining the existence of probable cause. Moreover, as the officer(s) involved have not displayed objective reasonableness, application of the sanction of exclusion is appropriate.

Accordingly, it is hereby

ORDERED that defendant’s motion to suppress is sustained.

      . While the Court has previously determined that there was an insufficient basis upon which to determine the existence of probable cause and ultimately issue the warrant, the failure therein was due in large part to Det. Sweeten’s omissions. Moreover, once determining, for any reason, that the warrant should not have issued, the officer’s lack of objective reasonableness prevents good-faith reliance on the warrant.


author: DIANA E. MURPHY, District Judge.

text:
    MUTUAL OF OMAHA INSURANCE COMPANY, Plaintiff, v. AMERICAN NATIONAL BANK AND TRUST COMPANY, Executor of the Estate of May V. Wilson; Cerro Gordo Charity; and Laine Memorial Fund, Defendants.
    Civ. No. 3-83-569.
    United States District Court, D. Minnesota, Fourth Division.
    April 30, 1985.

      Robert S. Cragg, Esq., Cragg & Bailly, Minneapolis, Mn., for Mutual of Omaha Insurance Company.
    Jonathan L. Eisenberg, Esq., Pepin, Dayton, Herman, Graham & Getts, Minneapolis, Mn., for American National Bank & Trust Company.
    Richard G. Mark, Esq., Michael H. Streater, Esq., Briggs & Morgan, Minneapolis, Mn., for Cerro Gordo Charity and Laine Memorial Fund.
   MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

Nonparty Leonard Richards appeals from an order of Magistrate Floyd E. Boline determining the privileged status of medical records of Leonard Richards sought in a deposition subpoena issued by Mutual of Omaha Insurance Company (Mutual of Omaha). Memoranda on the appeal have been submitted by Richards and appellee Mutual of Omaha. Other parties involved in related insurance actions have also submitted memoranda. The Ashawa and Bothnia Trusts, the Elmwood Fund and the Rova Family Fund (family trusts) have submitted a memorandum in support of the appeal of Leonard Richards. The defendant insurance companies in these related actions have submitted memoranda in support of the decision of the Magistrate.

This court in prior orders affirmed the Magistrate’s decision to conduct an in camera review of the requested documents and denied a stay of that order pending appeal. Magistrate Boline subsequently reviewed the documents and found that of the documents submitted by Dr. Guerrero documents 1, 2, 8, 15, 18, and 19-60 are not privileged and should be produced. The Magistrate also held that portions of documents 16 and 17 are not privileged because they reflect a communication relating to the commission of a future crime. The Magistrate held that of the documents submitted by Golden Valley Health Center, documents 1, 3-48, and 50 are privileged. Documents 49, and 51-54 were held not to be privileged. Documents 2A and 2B are identical to documents 16 and 17 produced by Guerrero and were ordered produced for the same reasons.

This dispute arises out of related actions involving the refusal of insurers to pay insurance proceeds upon the death of May V. Wilson, a named insured under accident insurance policies they issued. Wilson died in May of 1982, the victim of an apparent homicide. Leonard Richards, the half-brother of Wilson, is a suspect in an investigation into her death. The insurance companies raise several defenses to payment, including that the policies were fraudulently procured by Richards or others acting on his behalf in order to obtain benefit from the proceeds paid as a result of Wilson’s death. The insurers seek to obtain hospital and medical records from Golden Valley Health Center and Dr. James Guerrero. Richards was hospitalized in November of 1977 at Golden Valley Health Center under the care of Dr. Guerrero, a psychiatrist.

Discussion

Minn.Stat. § 595.02(4) establishes a patient-physician privilege:

A licensed physician or surgeon, dentist, or chiropractor shall not, without the consent of his patient, be allowed to disclose any information or any opinion based thereof which he acquired in attending the patient in a professional capacity, and which was necessary to enable him to act in that capacity.

Additionally, Minn.Stat. § 144.651, subd. 16, provides for the confidentiality of medical records, stating:

Patients and residents shall be assured confidential treatment of their personal and medical records, and may approve or refuse their release to any individual outside the facility.

Numerous documents were found by Magistrate Boline not to fall within the coverage of the privilege because they did not arise out of the professional treatment of Richards. Richards objects “to the determination in the Order classifying any part of the medical records as nonprivileged.” Richards argues that all of the communications and medical records were part of a course of treatment and therefore are protected by the privilege.

The court has carefully reviewed all of the documents held not to fall within the scope of the privilege and finds that the rulings are proper. The documents do not disclose any information acquired by Dr. Guerrero in his professional treatment of the patient or any opinion of the doctor. These rulings of the Magistrate are not clearly erroneous or contrary to law and should be affirmed.

Richards also appeals the Magistrate’s decision that portions of certain documents do not fall within the privilege because they relate to the commission of a future crime. The Magistrate applied this rationale to portions of documents 16 and 17 of the items produced by Dr. Guerrero and documents 2A and 2B of the items produced by the Golden Valley Health Center. 16 and 17 are identical to 2A and 2B and are a discharge summary on Leonard Richards prepared by Dr. Guerrero.

In reaching his decision, the Magistrate relied on a 1905 Minnesota case where a woman’s request to a physician that he perform an abortion was held to be “nothing more than an open request to the physician to join in a conspiracy to commit a vile crime,” and thus, not privileged because it was made in furtherance of a criminal purpose. McKenzie v. Banks, 94 Minn. 496, 103 N.W. 497, 498 (Minn.1905). The Magistrate drew further support by analogizing to the attorney-client privilege which has an exception for communications relating to the commission of future crime or fraud.

Mutual of Omaha and the other insurers argue that the Magistrate should be affirmed. They argue that the analogy drawn to the attorney-client privilege is appropriate and cite additional authority for the proposition that a future crime exception to the patient-physician privilege has been adopted in Minnesota. Richards and the family trusts assert that there is no “future crime” exception to the physician-patient privilege in Minnesota and that the circumstances of this case do not merit any departure from the privilege.

The rationale behind the physician-patient privilege is the encouragement of the patient to reveal his condition. Snyker v. Snyker, 245 Minn. 405, 72 N.W.2d 357, 359 (1955). This rationale is even more persuasive in the context of a psychotherapist whose effectiveness largely depends upon the patient’s willingness to talk freely. See G. Lilly, An Introduction to the Law of Evidence § 93 p. 357-58. The entire process could be crippled if confidentiality were not ensured. See, e.g., Advisory Committee’s Note on Proposed Fed.R. of Evid. 504, 56 F.R.D. 241, 242. The special need for the privilege in psychotherapy treatment is long recognized and widely supported by courts and commentators. The District of Columbia Circuit Court of Appeals has stated:

Many physical ailments might be treated to some degree of effectiveness by a doctor whom the patient did not trust, but a psychiatrist must have his patient’s confidence or he can not help him. ‘The psychiatric patient confides more utterly than anyone else in the world. He exposes to the therapist not only what his words directly express; he lays bare his entire self, his dreams, his fantasies, his sins, and his shame. Most patients who undergo psychotherapy know that this is what will be expected of them, and that they cannot get help except on that condition____ It would be too much to expect them to do so if they knew that all they say — and all that the psychiatrist learns from what they say may be revealed to the whole world from a witness stand.’

Taylor v. United States, 222 F.2d 398, 401 (D.C.Cir.1955), quoting Guttmacher & Weihofen, Psychiatry and the Law (1952).

The cases cited by the Magistrate and the insurers state no more than the general rule that where the patient’s purpose in the consultation is an unlawful one, as to secure an illegal abortion, or conceal a crime, the law withholds the shield of privilege. Sticha v. Benzick, 156 Minn. 52, 194 N.W. 752, 753 (1923); McCormick on Evidence § 99. This exception does not necessarily extend to the disclosure to a psychotherapist during treatment of a future intent to commit a crime. The patient’s purpose in divulging such thoughts may well be to obtain treatment rather than aid in furtherance or concealment of a crime.

Recognized exceptions to the confidentiality of patient-psychotherapist communications have been in narrowly circumscribed situations. In Tarasoff v. Regents of the University of California, 17 Cal.3d 425, 131 Cal.Rptr. 14, 551 P.2d 334 (1976), the court held that a psychotherapist may have a duty to warn in instances in which disclosure is necessary to avert danger to others. The Minnesota Supreme Court has indicated that a duty to warn may arise where the necessary special relationship exists and specific threats are made against specific victims. Cairl v. State, 323 N.W.2d 20, 25-26 (Minn.1982). In addition, the privilege is not violated to the extent the disclosure is authorized by other statutory provisions passed by the legislature. State v. Odenbrett, 349 N.W.2d 265, 268-69 (Minn.1984).

The court has carefully reviewed the record, memoranda, and in camera documents and finds that none of the exceptions to the privilege are applicable under the specific circumstances presented. Minnesota does not recognize the broad exception to the patient-psychotherapist privilege urged by the insurers. There may under certain circumstances be an exception to the privilege in situations where a duty to warn arises. See Cairl v. State, 323 N.W.2d at 25-26. The court need not determine the exact contours of such exception, however, because the record shows that disclosure is not compelled on this record.

The privilege and its exceptions are founded on competing policy goals. The policy behind the privilege is to encourage people to seek treatment and in that way to prevent asocial acts. The policy behind the exception for the duty to warn situation is to encourage therapists to make necessary disclosure to prevent harm to third parties. The court is called upon to consider these goals in the circumstances of the individual case and to protect privileged communications unless significant interests outweigh this result. See Lora v. Board of Education, 74 F.R.D. 565 (E.D.N.Y.1977) (Weinstein, J.) (psychiatrist-patient privilege is not absolute but is qualified and must be balanced against legitimate and weighty competing private and state interests). The policy to. encourage doctors to warn to prevent injuries to others is not implicated so much where injury has already occurred. Disclosure in this case is now unrelated to any existing need to warn.

Here the insurers are attempting to implicate Richards , in a fraudulent scheme to procure the many insurance policies and in the 1982 death of Wilson. Even if the in camera documents could be interpreted to place on Dr. Guerrero a duty to warn of possible danger to Wilson from Richards in November of 1977, there has been no showing that he would have been required to disclose privileged communications beyond the warning itself. Any required disclosure should be made “discreetly, and in a fashion that would preserve the privacy of his patient to the fullest extent compatible with the prevention of the threatened danger.” Tarasoff v. Regents, 131 Cal.Rptr. at 27, 551 P.2d at 361. Under the circumstances presented, there is no exception to the psychotherapist-patient privilege that compels the disclosure of these records. The determination of the Magistrate that portions of documents 16 and 17 of the records of Dr. Guerrero and documents 2A and 2B of the records of the Golden Valley Health Center are not privileged should be reversed.

ORDER

Accordingly, based on the above and all the files, records, and proceedings herein,

IT IS HEREBY ORDERED that

1. The finding of the Magistrate that portions of documents #16 and #17 of the records of Dr. Guerrero and portions of documents #2A and #2B of the records of Golden Valley Health Center are not privileged is reversed.

2. In all other respects the findings of the Magistrate are affirmed, and those documents designated as not privileged shall be produced.

3. Plaintiff, Mutual of Omaha Insurance Company, may depose Dr. Guerrero, but only as to the information and communications set forth in the documents which have been ordered disclosed.

      . Shortly before this order was issued the court received a phone call from counsel for Richards. Counsel requested an opportunity to respond to the insurer’s reply memoranda indicating that he had just recently been substituted as counsel. The court informed counsel that no additional briefing would be allowed, noting that the appeal had been pending for some time and that the legal issues raised have been before the court several times and have been fuily briefed.

      . See, e.g., Caesar v. Mountanos, 542 F.2d 1064 (9th Cir.1976), cert. denied, 430 U.S. 954, 97 S.Ct. 1598, 51 L.Ed.2d 804 (1977); Robinson v. Magovern, 83 F.R.D. 79, 91 (W.D.Pa.1979); 2 Weinstein’s Evidence § 504, et seq. (1982 & Supp. 1984); Slovenko, Psychiatry and a Second Look at the Medical Privilege, 6 Wayne L.Rev. 175 (1960).

      . The Minnesota court noted in Odenbrett that while the medical privilege has been thought to be only of statutory origin, there may be a constitutional right to privacy in communications made in psychotherapy. State v. Odenbrett, 349 N.W.2d 265, 268-69 (Minn.1984).

      . In Tarasoff v. Regents of the University of California, 17 Cal.3d 425, 131 Cal.Rptr. 14, 551 P.2d 334 (1976), the California legislature had created a specific and limited exception to the psychotherapist-patient privilege in those instances where
      the psychotherapist has reasonable cause to believe that the patient is in such mental or emotional condition as to be dangerous to himself or to the person or property of another and that disclosure of the communication is necessary to prevent the threatened danger.
      No such statutory exception exists in Minnesota.

      . The policy interests behind the privilege, Minn.Stat. § 595.02(4), may well be different from those behind Minn.Stat. § 144.651, subd. 16. The latter merely assures "confidential treatment” of records. Court-ordered disclosure arguably does not implicate this statute.


text:
    BITRONICS SALES COMPANY, INC., a Minnesota corporation, Plaintiff, v. MICROSEMICONDUCTOR CORPORATION, a Delaware corporation, Defendant.
    Civ. No. 4-82-1290.
    United States District Court, D. Minnesota, Fourth Division.
    May 1, 1985.

      Robert A. Brunig, O’Connor & Hannan, Minneapolis, Minn., for plaintiff.
    Charles K. Dayton, Pepin, Dayton, Herman, Graham & Getts, Minneapolis, Minn., and Alan M. Klein, Los Angeles, Cal., for defendant.
   MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

Plaintiff, Bitronics Sales Company, Inc. (Bitronics), brought this action against defendant Microsemiconductor Corporation (Microsemi) alleging violations of the Sales Representative Agreement (agreement) between the parties and that the agreement constitutes a “franchise” that was terminated without good cause in violation of the Minnesota Franchise Act, Minn.Stat. § 80C.01 et seq. (the Act).

The case was tried before the court and a jury. A special verdict was returned on February 4, 1985.' The jury found that the agreement provided for Bitronics to receive commissions at a rate greater than five percent, but that Bitronics had waived its right to this higher commission rate. It further found that Bitronics was entitled under the agreement to receive commissions on sales made by other manufacturer representatives and awarded it $1,000 for such commissions. The jury concluded that Bitronics was not entitled to sales made by distributors. On the issue of notice of termination, the jury found that Bitronics received such written notice on April 2, 1982 and was entitled under the agreement to a 120 day notice period. The jury then determined that Bitronics was entitled to $87,000 in commissions for the 120 day notice period. The jury also found that the parties modified their written agreement after January 13, 1975 and that Bitronics had not breached a material provision of the agreement sufficient to excuse performance by Microsemi.

Subsequent to return of the verdict, memoranda were submitted from both parties relative to post-trial motions filed by Microsemi and legal issues still in dispute. All materials were received by the court as of March 13, 1985 when the matters were formally taken under advisement.

Jury Verdict

The parties focus their discussion on different aspects of the jury verdict. Microsemi seeks to alter or amend the judgment regarding damages under Fed.R.Civ.P. 59(e) and, alternatively, a new trial on the issue of damages only, under Fed.R.Civ.P. 59(a). It also seeks relief from judgment under Fed.R.Civ.P. 60(b)(6). Bitronics requests an addition to the amount awarded by the jury on special verdict question 6, judgment notwithstanding the verdict on the jury’s finding that Bitronics waived its right to commissions at a rate in excess of five percent, and prejudgment interest on the amount of the judgment.

The court has carefully considered the points and authorities raised in the memoranda, as well as the evidence and issues at trial, and finds that a new trial is not warranted and that the judgment should be upheld. The parties requested a jury trial, and the contested issues were decided by a jury. The jury verdict is supported by the evidence.

Damages

Microsemi argues that the separate awards of damages on special verdict questions 6 and 11 must both be reduced or, alternatively, a new trial must be held, because they are not supported by the evidence. Bitronics contends that the evidence supports an even greater award for question 6 and is sufficient to uphold the amount awarded in response to question 11. Question 6 asked for the amount of additional commissions on sales made by other manufacturer representatives to which Bitronics is entitled. The jury answered the question by awarding Bitronics $1,000. Question 11 asked what amount Bitronics should receive for commissions earned in the time period from the giving of the notice of termination through the end of the period of notice to which it was entitled. The jury answered this question by awarding Bitronics $37,000.

Microsemi concedes that, under the verdict, the plaintiff is entitled to commissions on sales by Skor, Inc. for question 6. (Microsemi claims these commissions total $384.57, while Bitronics argues they properly total $388.65.) The evidence supports the inclusion of the Skor, Inc. commissions in answer to question 6. The answer is also supported by the evidence of commissions earned by Stan Clothier, Inc. in the amount of $1,600.26. Microsemi argues that Bitronics sought during closing arguments to have the jury apply these commissions to the award under question 11. Thus, it argues that upholding the $1,000 award under question 6 would grant Bitronics a double recovery on the Clothier commissions. Bitronics, on the other hand, ignores the possibility that the jury may have awarded part of the Clothier commissions under question 11 and argues that the court must include an addition of $988.91 on question 6. It was for the jury to determine whether some of those commissions should be applied to commissions earned in the notice period or to commissions from sales by other manufacturer representatives. The award for commissions from sales by other manufacturer representatives was neither against the evidence nor inadequate in light of all the evidence.

Microsemi claims that the award of $37,000 under question 11 is excessive for several reasons. It argues that Bitronics is entitled only to commissions on orders shipped during the termination period. Bitronics asserts that under the contract it was entitled to commissions for any orders booked prior to the end of the termination period. The language of the agreement is ambiguous, therefore, it was for the jury to determine what commissions were owing.

Microsemi also argues that the award must be reduced because it was based in part upon what it calls the “Medtronic, Inc. annual forecast of expected orders.” It claims the evidence demonstrates that this was not an order, but only a forecast and, therefore, no commissions are owing from it. Bitronics, on the other hand, claims that the commissions owing from what it calls the “Medtronic, Inc. Annual Purchase Agreement” show that there is substantial evidence to sustain the verdict. The evidence on this issue consists of two letters and the testimony of Steve Nelson, purchasing manager for Medtronic, Inc.

Plaintiffs exhibit 44 is a March 3, 1982 telex from Microsemi to Medtronic, Inc., which states in relevant part:

SUB: ANNUAL PURCHASE AGREEMENT
TO CONFIRM THE AGREEMENT WHICH WE UNDERSTAND WILL BE EFFECTIVE FOR ALL PRICING ON ORDERS PLACED FROM 1 MARCH 1982 UNTIL 28 FEBRUARY 1983 AS FOLLOWS:
137067-002 6800 @ $4.75 EA.
137071-007 8000 COMBINATION OF
-008 -007, -008, R -011
at $2.30 EA.
137075-002 100,000 ® $4.00

Defendant’s exhibit 33 is a March 3, 1982 letter from Nelson to Mike Gregson of Microsemi which covers the same parts listed in the telex but states that it is a “Pricing Agreement” and that:

This letter is to agree on pricing and terms only and to advise you with respect to the anticipated usage for planning purposes. Buyer has no responsibility whatsoever to any materials, labor or other costs or expenses incurred by you, except if such cost or expenses are incurred in response to actual purchase orders placed with your company.

Nelson testified that the documents do not reflect an actual purchase order, but that all of the parts listed were in fact purchased, and purchased at the unit prices.

Whether or not this transaction gave rise to a commission for Bitronics under its sales representative agreement with Micro-semi depends upon an evaluation of the above evidence and an interpretation of the contractual language. The agreement provided:

Manufacturer agrees to and shall pay Sales Representative a commission when all of the three following activities occur: (i) orders for the Products originate (specified) in the Territory; (ii) purchase of the Products is made in the Territory; and (iii) the Products are used and serviced in the Territory. Said commission shall be paid on or before the 21st day of the month next following the month in which Manufacturer receives payment for such Products, and, except as hereinafter provided, said commission shall be a percentage of the net billing price (net of federal, state and local taxes and discounts) as follows:

It was for the jury to determine from the conflicting evidence what was required under the agreement to earn a commission and whether the March 3, 1982 transaction entitled Bitronics to a commission.

The jury was properly instructed that “[i]f a contract is prepared by one of the parties to the contract and if the language is ambiguous, you are to construe the language against the party who prepared the contract.” The undisputed evidence was that the agreement at issue had been drafted by Microsemi. The jury’s answer to question 11 reflects a reasonable finding that Bitronics was entitled, at least in part, to a commission for the Medtronics agreement and subsequent sales. The jury also received other evidence of sales on orders booked and invoiced, and orders booked but not shipped during the termination period. Bitronics argues the evidence would support a verdict of $45,-777.39. Microsemi contends the evidence only justifies $12,567.04. The jury’s award of $37,000 was neither against the evidence nor inadequate in light of all the evidence.

Bitronics seeks judgment notwithstanding the verdict claiming that there is no evidence to support the jury’s finding that Bitronics waived its right to commissions at a rate in excess of five percent. Fed.R.Civ.P. 50(b) provides that a party who has previously moved for a directed verdict may move for judgment notwithstanding the verdict. Bitronics failed to move for a directed verdict during the course of trial; accordingly, it is precluded from seeking relief under Fed.R.Civ.P. 50(b). Furthermore, the instruction given to the jury on waiver was an accurate statement of the law, and the jury’s answer that a waiver occurred is supported by the evidence.

There is evidence that Bitronics intentionally relinquished its right to a higher commission by statements and conduct inconsistent with an intent to enforce that right. John C. Nutt, the president and sole shareholder of Bitronics never indicated to anyone at Microsemi, prior to the institution of this litigation, that he was or would be entitled to commission at a rate of seven percent. ' Nutt met with officials of Micro-semi and in the mid 1970s and negotiated a contract for Iowa Technical Sales at the five percent base rate. In all of these contacts with Microsemi, Bitronics had conducted business without voicing any objection to the commission it was receiving. In addition, there was evidence that it received commissions based on the five percent rate and the commissions it paid its own salespeople were based on a commission rate of five percent from Microsemi. The jury’s finding is reasonable in light of the evidence, and the court will not interfere with it.

Interest

Bitronics also seeks prejudgment interest. The law in Minnesota is that interest is allowed on an unliquidated claim that is readily ascertainable by computation, or by reference to generally recognized objective standards of measurement, and that does not depend upon any contingency. ICC Leasing Corp. v. Midwestern Mach. Co., 257 N.W.2d 551, 556 (Minn.1977); Moosbrugger v. McGraw-Edison Co., 284 Minn. 143, 170 N.W.2d 72, 82 (Minn.1969). Where ambiguity in the contract terms prevents the claim from being made certain by mathematical calculations from known factors, it is not readily ascertainable, however. See Super Hooper, Inc. v. Dietrich & Sons, Inc., 347 N.W.2d 152, 156 (N.D.1984).

Bitronics’ claim was not readily ascertainable because it was uncertain as to time, quantity, and rate. The agreement was ambiguous on whether the proper notice period was 120 days or a lesser period; whether sales by other manufacture representatives were covered; whether commissions were earned only on those orders shipped prior to the end of the termination period; and whether the commission rate was at five or seven percent. This made the claim unliquidated and also made the amount owing not readily ascertainable. Accordingly, Bitronics’ demand for prejudgment interest from the “applicable date” for interest at nine percent under Minn.Stat. § 549.09, subd. 1(c) through February 4,1985; and “prior to the applicable date” for interest at six percent under Minn.Stat. § 334.01, shall be denied.

The court also decided in an order dated January 31, 1985 that the notice given by Microsemi was effective at the end of the notice period provided by the contract even though it attempted to terminate the agreement at an earlier date. Bitronics now seeks reconsideration of this ruling. The issue was briefed extensively prior to the court’s ruling, and the court finds no basis for reversing its decision. The notice provided by Microsemi was effective for the reasons stated in the court’s earlier order.

Franchise Act

Bitronics seeks injunctive and ancillary monetary relief under the Act, Minn.Stat. § 80C.01 et seq. and the regulations, promulgated thereunder. The evidence at trial and the post-trial memoranda present three issues to be resolved under the Act: 1) whether applying the regulation allowing termination only for good cause would be a retroactive application of the Act, and whether such retroactive application is permissible; 2) whether Bitronics paid, either directly or indirectly, a franchise fee; 3) assuming, the Act applies, whether the termination of Bitronics violated its provisions.

The court has carefully reviewed the record and the memoranda submitted and finds that Bitronics is not entitled to relief under the Act. The agreement predates the enactment of the pertinent regulations, and the subsequent acts of the parties are not sufficient to bring the agreement within the Act so as to avoid its impermissible retroactive application. Furthermore, the evidence supports a conclusion that Bitronics did not pay a franchise fee and therefore does not fall under the protection of the Act. Because the Act does not apply, it is thus unnecessary to determine whether its terms were violated.

The Act was adopted in 1973 “as remedial legislation designed to protect potential franchises within Minnesota from unfair contracts and other perceived abuses in a growing national franchise industry. Like most other franchise regulation acts, the Minnesota statute required registration by any person offering or selling a franchise within the state with the Commissioner of Securities and full disclosure in a proposed public offering statement. Martin Investors, Inc. v. Vander Bie, 269 N.W.2d 868, 872 (Minn.1978). Minn.Stat. § 80C.14 prohibits “any unfair or inequitable practice in contravention of such rules as the commissioner may adopt defining as to franchises the words ‘unfair and inequitable’ ”. Bitronics relies on a rule promulgated under that section which requires good cause for any franchise termination as well as 60 days written notice setting forth all the reasons for such termination. Minn.Reg.S. Div. 1714(e, f). The regulation became effective on January 13, 1975.

The original sales representative agreement was executed on September 14, 1970. Bitronics argues that the “good cause” requirements can be applied retroactively to this agreement on which notice of termination was given April 2, 1982. It also argues that acts of the parties subsequent to the January 13, 1975 effective date of the regulation resulted in a new agreement or novation that falls under the Act. In February of 1975 Microsemi sent a memorandum addressed to all of its “U.S. Representatives” stating:

The purpose of this memo is to formally reiterate a long standing Micro policy that we do not pay Rep Commissions on sales to a distributor owned or operated by a Micro Rep.
This memo is to be considered an addendum to your Sales Representative Agreement. Please sign and return one copy.

The memorandum was signed by John C. Nutt as President of Bitronics and dated February 24, 1975. In 1977 Nutt approached Microsemi about setting up a separate entity to operate in Iowa, Nebraska, and one county in Illinois. The Iowa territory was at that time part of Bitronics’ territory. In December of 1977 Microsemi and Iowa Technical Sales entered into a separate sales representation agreement covering the requested territory. The agreement was signed by John C. Nutt as Sales Representative for Iowa Technical Sales.

Applying the canons of statutory interpretation, the “good cause” requirements promulgated under Minn.Stat. § 80C.14 should not be given retroactive effect. Minnesota laws and rules promulgated thereunder are presumed to have no retroactive effect unless clearly and manifestly intended by the legislature. Minn.Stat. § 645.21; Mason v. Farmers Ins. Cos., 281 N.W.2d 344, 348 (Minn.1979). The Minnesota Supreme Court found in Mason that no clear and manifest intent to give the good cause requirements retroactive effect existed. Id. The reasoning in Mason extends to the situation here where contractual rights vested prior to the effective date. Id.; see, e.g., Scuncio Motors, Inc. v. Subaru, 555 F.Supp. 1121, 1131 (D.R.I. 1982).

Thus, unless one of the post-January 1975 events put forth by Bitronics is sufficient to bring the agreement within the Act, the claims must fail. Courts have found the retroactivity problem to be avoided where parties entered into negotiations for a new agreement or renewed a contract that terminated on a specific date subsequent to the effective date of the franchise act. See Rochester v. Royal Appl. Mfg. Co., 569 F.Supp. 736, 739 (W.D.Wis.1983); Kealey Pharmacy & Home Care Serv. v. Walgreen Co., 539 F.Supp. 1357, 1363 (W.D.Wis.1982); see also Reinders Bros. v. Rain Bird Eastern Sales Corp., 627 F.2d 44 (7th Cir.1980). In these circumstances the parties were making a fresh decision whether to continue the contractual relationship; thus no retroactive application was involved. Kealey Pharmacy, 539 F.Supp. at 1363. Minor modifications of prior contracts are not sufficient, however. There must be a significant or material alteration of the relationship between the parties for a new contract to exist which postdates the Act. See, e.g., Kealey Pharmacy, 539 F.Supp. at 1363; Easterby-Thackston, Inc. v. Chrysler Cory., 477 F.Supp. 954, 956 (D.S.C.1979).

The 1970 Sales Representative Agreement between the parties was not an agreement that was renewed or terminated on a specified date and negotiated anew, but rather the terms provided it was to “commence on the date it is executed and continue until terminated.” The only possible modifications that could bring the agreement under the Act, therefore, are the 1975 letter from Micro and the 1977 agreement between Iowa Technical Sales and Microsemi.

Neither of those events is sufficient to trigger coverage, however. The 1975 addendum was sent to every Microsemi sales representative and simply reiterated a long standing policy that it does not pay commissions under the circumstances described. This was not a significant or material alteration of the agreement. No discussion occurred between the parties, the sales agreement was not renegotiated or renewed, and in practical effect no change occurred because there is no evidence that Bitronics had ever received this type of commission.

The other modification involves the making of a sales agreement with Iowa Technical Sales. The 1977 sales agreement is between Microsemi and Iowa Technical Sales rather than Bitronics. It does not explicitly modify the sales agreement with Bitronics, although it reduces the territory covered in the 1970 agreement. Furthermore, this new Iowa Technical Sales agreement was proposed by John Nutt and entered into at his request. The parties did not make the necessary “fresh decision” about the sales agreement with Bitronics; rather the parties merely continued this pre-existing relationship, on a slightly smaller scale. Any effect on the 1970 sales agreement was not the substantial or material modification necessary to invoke the coverage of the Act. See, e.g., Rochester v. Royal Ayyl. Mfg. Co., 569 F.Supp. 736 (W.D.Wis.1983) (relinquishment of one-half of territory insufficient to invoke Wisconsin Fair Dealership Law); Dickinson v. Simpson Elec., 509 F.Supp. 1241 (E.D.Wis.1981) (addition of a product line after effective date of Act did not amount to an amendment).

The franchise cases cited by Bitronics do not call for a different result in this case. In Union Oil Co. v. Moesch, 88 Cal.App.3d 75, 151 Cal.Rptr. 517 (1979), the entire lease agreement of the parties terminated after the effective date of the California franchise act. At this juncture, the parties entered into negotiations and agreed upon a new arrangement, continuing their relationship on a month-to-month basis. The lease was then finally terminated several months later. The application of the Act to these facts was not retroactive, because the parties had made the necessary fresh decision by conducting negotiations and entering into a new arrangement. Id. 151 Cal.Rptr. at 521. In Phillips Petroleum Co. v. Paradee Oil Co., 343 A.2d 610 (Del. 1975), the parties entered into an agreement prior to the enactment of the Delaware Franchise Security Act, but subsequently renewed it on a yearly basis. Here also the parties reconsidered the entire agreement, thus making the necessary fresh decision. In effect, the parties decided to enter into a new agreement every year. The determination that the modifications to the 1970 sales agreement are insufficient to bring it within the Act is consistent with these cases cited by Bitronics. Furthermore, the Minnesota Act does not explicitly attempt to cover amendments or renewals, in contrast to Wisconsin and Delaware where such explicit statutory language is included.

The evidence also shows that the relationship between the parties was not a franchise because no franchise fee was paid. A relationship is not a franchise unless each of the three statutory elements has been satisfied. Martin Investors, Inc. v. Vander Bie, 269 N.W.2d 868, 874-75 (Minn.1978). Franchise is defined as:

... a contract or agreement, either express or implied, whether oral or written, for a definite or indefinite period, between two or more persons:
(a) by which a franchisee is granted the right to engage in the business of offering or distributing goods or services using the franchisor’s trade name, trademark, service mark, logotype, advertising, or other commercial symbol or related characteristic;
(b) in which the franchisor and franchisee have a community of interest in the marketing of goods and services at wholesale, retail, by lease, agreement, or otherwise; and
(c) for which the franchisee pays, directly or indirectly, a franchise fee.

Minn.Stat. § 80C.01, subd. 4.

Bitronics argues that it paid an indirect franchise fee. A “Franchise fee” is defined as:

Subd. 9. ... any fee or charge that a franchisee or subfranchisor is required to pay or agrees to pay for the right to enter into a business or to continue a business under a franchise agreement, including, but not limited to, the payment either in lump sum or by installments of an initial capital investment fee, any fee or charges based upon a percentage of gross or net sales whether or not referred to as royalty fees, any payment for goods or services, or any training fees or training school fees or charges; provided, however, that the following shall not be considered the payment of a franchise fee:
(a) The purchase of goods or agreement to purchase goods at a bona fide wholesale price;
(b) The purchase of goods or agreement to purchase goods on consignment, if the proceeds remitted by the franchisee from any such sale shall reflect only the bona fide wholesale price of such goods;
(c) The repayment by the franchisee of a bona fide loan made to the franchisee from the franchisor;
(d) The purchase of goods or agreement to purchase goods at a bona fide retail price subject to a bona fide commission or compensation plan that in substance reflects only a bona fide wholesale transaction;
(e) The purchase, at their fair market value, of supplies or fixtures or agreement to so purchase supplies or fixtures necessary to enter into the business or to continue the business under the franchise agreement;
(f) The purchase or lease, at the fair market value, of real property or agreement to so purchase or lease real property necessary to enter into the business or to continue the business under the franchise agreement.

Minn.Stat. § 80C.01, subd. 9.

Bitronics puts forth several possible bases for its indirect franchise fee: the agreement that Microsemi would not be required to pay commissions on sales to Bitronics’ Cassidy division; its payment of prices exceeding bona fide wholesale prices for products from Microsemi; the requirement imposed by Microsemi that Bitronics purchase minimum volumes; and training school fees for a Bitronics salesperson.

None of this evidence constitutes an indirect fee which a “franchisee is required to pay or agrees to pay for the right to enter into a business or to continue a business under a franchise agreement.” Minn.Stat. § 80C.01 subd. 9. Microsemi’s policy of not paying commissions on sales to a distributor owned by the Microsemi representative is an ordinary business practice. Bitronics chose on its own to establish a wholly owned distributor. It was not required by Microsemi to operate a distributor, and its failure to receive a commission for sales to its own subsidiary is merely an ordinary business expense. See, e.g., Schultz v. Onan Corp., 737 F.2d 339 (8th Cir.1984); Siedare Assoc., Inc. v. Amerex Sales Corp., Civ. 4-79-398 (July 20, 1981) (Alsop, J.). Furthermore, there is no evidence of any correlation between Bitronics agreeing not to receive such a commission and its having the right to enter in or continue its relationship with Microsemi.

Bitronics’ allegations of minimum inventory and payments above bona fide wholesale prices are insufficient to meet the requirements of a franchise fee. There is no evidence that Bitronics agreed to such conditions, if they existed at all, for the right to enter into a business or to continue a business under a franchise agreement. In fact, the volume and price requirements alleged do not even pertain to Bitronics, or the 1970 sales agreement, but rather to its wholly owned distributor. There is no claim that Bitronics was required to have a distributor; it had been established at the initiative of Bitronics. Regardless of the burden of proof, Bitronics has failed to establish that it agreed or was required to meet such conditions to enter or continue its business with Microsemi.

Finally, any expenses Bitronics might have incurred in training salesmen are insufficient to create a franchise fee. “The expenditure of funds for travel, lodging, food and other ordinary business expenses does not constitute a franchise fee.” Schultz v. Onan Corp., 737 F.2d 339 (8th Cir.1984) (citation omitted).

ORDER

Accordingly, based on the above and all the files, records, and proceedings herein,

IT IS HEREBY ORDERED that

1. Judgment be entered on the special verdict returned by the jury on February 4, 1985.

2. Based upon that verdict, plaintiff Bitronics is entitled to entry of judgment in its favor against defendant Microsemieonductor Corporation in the amount of $38,-000 and its costs.

3. The motion of defendant Microsemiconductor Corporation to, alter or amend the verdict regarding damages, for a new trial on the issue of damages only, and for relief from judgment is denied.

4. The requests of plaintiff Bitronics for additional damages, judgment notwithstanding the verdict, and prejudgment are denied.

5. Plaintiff Bitronics is not entitled to relief under count four of its complaint asserting violations of the Minnesota Franchise Act, and that claim is dismissed.

LET JUDGMENT BE ENTERED ACCORDINGLY.

      . Counsel for Bitronics submitted a letter to the court dated April 30, 1985 discussing the issue of waiver and citing a recent Eighth Circuit opinion. The court has considered the arguments raised in the letter and believes they do not call for a different result. No new issues are raised and the court's ruling is consistent with governing law. The jury was properly instructed on the law of waiver.
      The verdict on this question is supported by substantial evidence. The evidence on the issue of waiver includes the conversations between John C. Nutt and Microsemi over the time period from October 8, 1970, when the sales representative agreement was entered into, until April 2, 1982 when Nutt was terminated. Under Minnesota law, where different inferences may be drawn, waiver must be resolved as a fact question by the jury. Meagher v. Karli, 251 Minn. 477, 486, 88 N.W.2d 871, 878 (1958); see also Cohler v. Smith, 280 Minn. 181, 158 N.W.2d 574, 579 (1968). The evidence of Bitronics’ conduct over the twelve year relationship is strong evidence of an intent to waive its rights.

      . The conclusion that Bitronics’ claim for interest was not readily ascertainable is supported by Bitronics’ failure to specify at any time the amount on which interest was owing and the date or dates from which it should accrue. In addition, Bitronics did not separately list interest as an item in its prayer for relief. It did not inform Microsemi that it was seeking interest until shortly before the commencement of trial.

      . Minn.Stat. § 80C.14 was amended in 1981 to incorporate these parts of the regulation into the statute itself.

      . Application of the franchise provisions to the 1970 agreement could also result in an unconstitutional impairment of contractual rights. See Allied Structural Steel v. Spannaus, 438 U.S. 234, 98 S.Ct. 2716, 57 L.Ed.2d 727 (1978); Wipperfurth v. U-Haul Co., 101 Wis.2d 586, 304 N.W.2d 767, 770-73 (Wis.1981) (retroactive application of Wisconsin Fair Dealership Law prohibited as an unconstitutional impairment of contract).

      . Bitronics also alleges that in late 1973 or early 1974, the parties orally agreed to modify their agreement to permit Bitronics to establish Cassidy Electronics which acted as a distributor. No evidence of such an oral modification was produced at trial nor is there any evidence that such a modification would have been after the enactment of the good cause regulation. Furthermore, such a modification might not be sufficient to create a new agreement subject to the Act.

      . The evidence on volume and pricing was conflicting. John Nutt testified that Bitronics was required to make purchases of certain amounts of diodes that it would not have purchased otherwise. The deposition testimony of Michael Gregson was that only small sales were made to Cassidy while he was with Microsemi and that they were probably priced on an OEM type basis rather than at a franchise distributor’s level because the distributor is buying in considerably larger volume. No documented evidence was produced to show that a minimum amount was required or to establish the price at which the sales were made. The testimony at trial was that the diodes cost only a few cents apiece.