text:
    The STATE OF IDAHO, Idaho Transportation Department, ex rel. Carl C. Moore, Lloyd F. Barron and Roy I. Stroschein, Idaho Transportation Board, Plaintiffs, v. OREGON SHORT LINE RAILROAD COMPANY, a Utah corporation, and Union Pacific Railroad Company, a Utah corporation, Defendants, Blaine County, City of Ketchum and City of Hailey, M’Lynn Childers, Joan K. Janoe, John F. Schwartz and Clarise M. Schwartz, husband and wife, and all other individuals and organizations similarly situated, Intervenors.
    Civ. No. 83-1473.
    United States District Court, D. Idaho.
    Sept. 3, 1985.
    Duane A. Bybee, Green, Service, Gasser & Kerl, Pocatello, Idaho, for defendants Oregon Short Line R. Co., a Utah corporation, and Union Pacific R. Co., a Utah corporation.
    James W. Phillips, Ketchum City Atty., Ketchum, Idaho, for City of Ketchum.
    Sandra Shaw, Pros. Atty., Russell G. Pinto, Sp. Deputy Pros. Atty., Hailey, Idaho, for City of Hailey and Blaine County, Idaho.
    John C. Ward and Brian R. Hanson, Holland & Hart, Langroise, Sullivan & Smylie, Boise, Idaho, for M’Lynn Childers, Joan K. Janoe, John F. Schwartz and Clarise M. Schwartz, husband and wife.
    Robert L. Trabert, Chief Legal Counsel, Patrick W. Fanning, Leonard G. Hill, Attys., Idaho Transp. Dept., Boise, Idaho, for plaintiffs State of Idaho, Idaho Transp. Dept, ex rel, Carl C. Moore, Lloyd F. Barron and Roy I. Stroschein, Idaho Transp. Bd.
   MEMORANDUM DECISION

CALLISTER, Chief Judge.

Before the Court is plaintiff State of Idaho’s “Motion Relative to 43 U.S.C. § 913 and 23 U.S.C. § 316.” The Court has reviewed the memoranda submitted by the parties as well as all other matters on file in the case.

In its motion, the plaintiff seeks a declaration as to whether 23 U.S.C. § 316 takes precedence over 43 U.S.C. § 913. This Court declares that it does.

Title 43 U.S.C. § 913 was enacted May 25, 1920, and was entitled “An Act Authorizing Certain Railroad Companies or Their Successors in Interest, to Convey for Public Road Purposes Certain Parts of Their Rights-of-Way.” 41 STAT. 621 (1920). This Act allowed railroads to convey portions of their rights-of-way but limited such conveyances, providing that they could not diminish the right-of-way to less than fifty feet on either side of the center line of the right-of-way. Section 913 reads:

All railroad companies to which grants for rights-of-way through the public lands have been made by Congress, or their successors in interest or assigns, are hereby authorized to convey to any state, or municipality any portion of such right-of-way to be used as a public highway or street: provided, that no such conveyance shall have the effect to diminish the right-of-way of such railroad company to a less width than fifty feet on each side of the center of the main track of the railroad as now established and maintained.
Title 23 U.S.C. § 316 reads as follows: For the purposes of this title [23 U.S.C. §§ 101 et seq.] the consent of the United States is given to any railroad or canal company to convey to the state highway department of any state, or its nominee, any part of its right-of-way or other property in that state acquired by grant from the United States.

(emphasis added).

Section 316 was originally part of the Federal Highway Act, enacted November 9, 1921. See 42 STAT. 212, ch. 119 at § 16. Section 26 of that same Act states:

That all acts or parts of acts in any way inconsistent with the provisions of this act are hereby repealed, and this act shall take effect on its passage.

42 STAT. 212, ch. 119 at § 26.

The Court finds, and hereby DECLARES, that 43 U.S.C. § 913, to the extent that it limits conveyances of railroad rights-of-way, was repealed by the Federal Highway Act, particularly by that portion of the Act now codified as 23 U.S.C. § 316.

The Court’s previous memorandum decision and order, each dated May 1,1985, and the memorandum decision and partial declaratory judgment, each dated July 1, 1985, shall be incorporated into the declaratory judgment in connection with this memorandum decision. The present memorandum decision and declaratory judgment shall constitute the final judgment in this case for all purposes, including appeal.


source: Caselaw Access Project

author: HAIGHT, District Judge:

license: Public Domain

text:
    Harold NORDLICHT, on Behalf of himself and all others similarly situated, Plaintiff, v. NEW YORK TELEPHONE COMPANY, Defendant.
    No. 82 Civ. 3006-CSH.
    United States District Court, S.D. New York.
    May 2, 1985.

      Deutsch & Frey, New York City, for plaintiff; Robert E. Frey, New York City, of counsel.
    Gerald E. Murray, Walter C. Reid, Harold S. Levy, New York City, for defendant.
   MEMORANDUM OPINION AND ORDER

HAIGHT, District Judge:

This case concerns unspecified phone calls plaintiff made within Canada and from Canada to the United States. Plaintiff, a New York resident, directed the Canadian telephone company to bill the cost of these calls to his American telephone account with defendant New York Telephone. It is alleged that the Canadian company billed defendant for these calls in Canadian dollars and that defendant then billed plaintiff for the calls in the same amount of American dollars. At the time the exchange rate of the two dollars was not one-for-one, with the American dollar the stronger currency. As a result, New York Telephone would have billed plaintiff for, in effect, a higher price than it was charged. It allegedly pocketed the difference.

Plaintiff filed this as yet uncertified class action in New York Supreme Court to recover the difference in value between the Canadian and American prices, alleging fraud and money had and received. Defendant removed the action to this Court pursuant to 28 U.S.C. § 1441, alleging subject matter jurisdiction under two federal question statutes, 28 U.S.C. §§ 1331 and 1337. Following some discovery, defendant has moved to dismiss under Rules 9(b) and 12(c), Fed.R.Civ.P. Plaintiff cross-moves for remand pursuant to 28 U.S.C. § 1447(c) or alternatively for summary judgment.

I.

Because the motion for remand goes directly to the Court’s power to adjudicate this dispute, I address it first. Removal was proper only if subject matter jurisdiction exists in federal court. 28 U.S.C. § 1441. Defendant contends that jurisdiction can be found under the federal question statute, 28 U.S.C. § 1331. Section 1331 grants a federal forum to lawsuits “arising under” federal law. Plaintiff contends that his common law causes of action do not so arise.

The leading case is Ivy Broadcasting Co. v. American Telegraph and Telephone Co., 391 F.2d 486 (2d Cir.1968). Plaintiff in Ivy operated radio stations. It contracted with the telephone company to provide communications service in connection with the broadcast of Syracuse University football games and New York political conventions. The telephone company allegedly provided inadequate service, ruining plaintiff’s broadcasts. Plaintiff sued, stating causes of action for negligence and breach of contract. The district court sua sponte dismissed the complaint for want of subject matter jurisdiction, reasoning that the claims arose not under federal law but under the common law of New York State.

The Court of Appeals reversed. The court acknowledged that the remedy which the plaintiff sought was not one granted by federal statutory law, since the acts alleged were not violations of specific provisions of the Communications Act of 1934 (“the Act”), 47 U.S.C. §§ 151-609, a statute which provides a comprehensive scheme of regulation for carriers such as the telephone company. However, the very comprehensiveness of the regulatory scheme established by the Act led the court to consider whether Congress intended to displace state law with federal common law in the governance of contracts involving communications carriers. After considering a number of United States Supreme Court cases in which a uniform federal rule was held to displace state law in actions involving the provision of telegraphic services, the court held that:

... questions concerning the duties, charges and liabilities of telegraph or telephone companies with respect to interstate communications service are to be governed solely by federal law ... [T]he states are precluded from acting in this area. Where neither the Communications Act itself nor the tariffs filed pursuant to the Act deals with a particular question, the courts are to apply a uniform rule of federal common law.

391 F.2d at 491. The application of federal common law was held to create federal subject matter jurisdiction. Id. at 493. The Supreme Court has since concurred in the latter conclusion. Illinois v. City of Milwaukee, 406 U.S. 91, 100, 92 S.Ct. 1385, 1391, 31 L.Ed.2d 712 (1972) (pollution of interstate or navigable waters).

Ivy is controlling here and creates federal subject matter jurisdiction. The holding of Ivy is both broad and absolute — “questions concerning the duties, charges and liabilities of ... telephone companies with respect to interstate communications service are to be governed solely by federal law.” 391 F.2d at 491. This case involves the charges for the provision of communications service. That it is framed in terms of a tort is irrelevant — the Ivy plaintiff, too, was pleading a tort. The only potentially significant difference between this action and Ivy is that this action concerns international and wholly foreign service. However, the regulatory scheme of the Act which persuaded the Ivy court to apply federal common law extends not only to the provision of interstate but also of foreign communication. Section 201 of the Act, 47 U.S.C. § 201, for example, which governs “service and charges,” applies to “every common carrier engaged in interstate and foreign communication.” Thus the reasoning which led the Court of Appeals to apply federal common law to disputes over interstate service extends equally to disputes over foreign communication. Both are within the Act’s regulatory scheme. As a result, federal jurisdiction exists, and whatever claims plaintiff is raising are governed by federal, not state, common law.

Plaintiff argues that because rates for intra-Canada calls are not subject to regulation by the Act, Ivy is inapplicable. The specific rates for intra-Canada calls, however, are not at issue here. Plaintiff’s concern is with New York Telephone’s method of billing for these calls, not the actual price of the calls. Section 201(b) of the Act requires “all charges” in connection with the provision of interstate and foreign communications services to be “just and reasonable.” This would appear to include the provision of billing services for foreign calls. In addition, the type of contract under which defendant provides this billing service for the Canadian telephone company must be filed with the Federal Communications Commission (“FCC”) pursuant to 47 U.S.C. § 211, see also 47 C.F.R. § 43.-51(a)(1), which may veto such contracts if they are “contrary to the public interest.” 47 U.S.C. § 201(b). Plainly, billing for intra-Canada calls is subject to regulation under the Act. Plaintiff’s objection is meritless. Removal was proper.

II.

The parties have cross-moved for judgment. Defendant styles its motion as one pursuant to Rule 12(c), Fed.R.Civ.P., but because it relies upon factual matters outside the pleadings which contradict the allegations of the complaint, it is more appropriately treated as a motion for summary judgment pursuant to Rule 56. Because plaintiff has himself filed a motion under Rule 56,1 find no prejudice in treating both of the cross-motions as motions for summary judgment.

Based on the evidence submitted by defendant, it appears that the true nature of the transactions between Canadian and American telephone companies is quite different from that stated in the complaint. The complaint asserts that whenever plaintiff made an intra-Canadian or international call from within Canada, the Canadian company would bill New York Telephone in Canadian dollars while New York Telephone would in turn bill plaintiff in stronger American dollars. New York Telephone allegedly kept the difference in value between the two currencies, which plaintiff alleges at the time of his calls amounted to 15 percent of their price.

That is not the way it works. Not surprisingly, the true relationship between the two telephone companies and their customers is more complex.

According to the affidavit of Mary Sta-chow, an employee of defendant who has work experience in the collection of revenues from international and foreign telephone calls, distribution of revenue collected in the United States to pay for intra-Canadian and Canada/United States telephone calls is (or was at the time of the incidents alleged) governed by a written agreement dated December 21, 1971.

At the time of the incidents alleged in this lawsuit, the Bell System was still a unified monopoly. New York Telephone handled plaintiff’s billing and local telephone service, but it was American Telephone and Telegraph Co. which actually settled accounts concerning international and foreign service. The agreement was signed by AT & T and several Canadian telephone companies, and AT & T acted as defendant’s agent in dealing with the Canadian telephone companies in all the transactions described below. The Canadian companies themselves formed a corresponding consortium to deal with AT & T.

The agreement establishes a uniform dollar rate for international calls. If payment for the call is to be collected in the United States, the price of the call is to be quoted and collected in American dollars; if the debt is to be collected in Canada, Canadian dollars are quoted and collected. Agreement, at 4, 11 5. The companies established in the agreement a system for dividing the revenues thus collected and agreed to settle accounts monthly. Any payments made to settle accounts are to be made half in “the equivalent of” Canadian and half in “the equivalent of” American dollars. Although the point is not entirely clear, I take this to mean that half of the payment is made in each currency, with the amounts of each currency adjusted to account for their relative values.

The international phone rates specified in the agreement have been filed by defendant with the FCC as a tariff. Not only is defendant required by the tariff to collect these charges, it is required to do so in American dollars:

In connection with service from points outside the United States ... to points within the United States, when charges to Customers are made by Telephone Companies in the United States rates as specified [in the tariff] ... in United States dollars, apply to all calls.

FCC Tariff No. 263, Regulation No. 2.4.6. (March 26, 1979).

Thus it appears that with regard to calls made between the United States and Canada, both FCC regulations and defendant’s contractual commitments require it to apply rates calculated in American dollars. Those are also the rates which are quoted to Americans in Canada, in American dollars. The simplistic “billed in Canadian dollars, paid in American dollars” scheme hypothesized by plaintiff in his complaint appears to have no basis in reality.

By its terms the agreement applies only to international calls. However, according to the Reid and Stachow affidavits, filed by defendant in support of its motion, billing for intra-Canadian calls is also governed by the agreement. The price for intra-Canadian service is not, of course, regulated by the FCC. Rather, it is governed by tariffs filed with Canadian regulatory agencies. According to the affidavits, New York Telephone acts essentially as an agent for collection of payment for the calls. A Canadian company reports to defendant the price, in American dollars, which is to be charged for the intra-Canada call; defendant bills its customer that amount (again in American dollars); and defendant then turns that money over to the Canadian company as part of the agreement’s monthly settlement process. If the agreement is adhered to, Americans are quoted rates for calls in American dollars, and the monthly settlement is made half in the equivalent of Canadian and half in the equivalent of American dollars. It is uncertain whether the intra-Canadian phone rates reported to the American companies are adjusted for relative exchange rates or are, like international rates, the same in either dollar. It is also unclear whether defendant turns over all of the money it collects or whether, contrarily, it is paid a fee for collecting payments for intra-Canadian calls.

I have one reservation about defendant’s account of its billing method for intra-Canadian calls. As far as I can see, nowhere in the agreement, which appears to deal solely with international calls, are intra-Canadian calls mentioned. Certainly the scheme outlined by Reid and Stachow is not detailed in it. Nevertheless, in the absence of any contrary evidence I accept the sworn testimony of Reid and Stachow, the latter of whom worked in the division of New York Telephone responsible for handling these transactions, that collection and payment of bills for intra-Canada telephone calls are conducted in accordance with the terms of the agreement.

Plaintiff has not submitted any contrary evidence. One would expect that plaintiff, having moved for summary judgment, would have submitted some proof to back up his allegations — indeed, to prove that there was no dispute that his allegations were true. In his memorandum of law, he states as a proposition of fact that he was quoted a price in Canadian dollars but billed in the same amount of American dollars. This is, of course, a somewhat different claim than the one he pleaded in his complaint. Even this claim, however, is supported by no affidavit of plaintiff, as one might expect when an essential element of his claim is that prices were quoted to him in a particular manner.

Instead, plaintiff cites to three other sources of evidentiary support. The first is an excerpt from a deposition of Mary Sta-chow, the same individual who filed an affidavit in support of defendant’s motion. At her deposition, Stachow was' asked whether New York Telephone was billed in Canadian dollars for intra-Canadian calls. The question in context is actually somewhat ambiguous. It could be taken as asking the question left open above— whether intra-Canadian tariffs are adjusted to account for the exchange rate when billed in the United States. In any event, her response was, “I’m not sure. They would tell us to bill $5.00 and we would bill $5.00.” This plainly gives no support to plaintiff’s position. The second purported source of evidence is a response by defendant to a request to admit. The request is for defendant to admit that Canadian telephone companies billed it in Canadian dollars for the type of calls at issue here. Defendant denied this. I am at a loss to see how this supports plaintiff. Finally plaintiff refers to a letter dated November 8, 1978 from a Mrs. L. Eng to a Mr. Herbert Deutsch, written on New York Telephone stationery. This letter — which in any event is insufficient to create an issue of fact, being unsworn, unauthenticated hearsay — states only that rates for intraCanada calls are set by Canadian authorities. This, too, gives no comfort to plaintiff. In short, plaintiff has presented no factual support for his claims. Defendant’s version of the facts stands undisputed.

Based on defendant’s evidence, it appears that the scheme for billing international and intra-Canada calls in the United States is quite different from that pleaded in the complaint. Canadian companies never “bill” defendant for international calls. The price for a Canada-United States call may be determined from a pre-set dollar tariff. If the call is to be billed to the individual customer in the United States, defendant figures the price from the tariff and charges in American dollars. If it is to be billed in Canada, a Canadian company calculates the charges and bills the same number of Canadian dollars. Once a month the two nations’ telephone companies split up their respective receipts according to a predetermined formula.

Nor does a Canadian company “bill” defendant for intra-Canada calls in Canadian dollars. If a customer requests that such a call be billed to an American account, the Canadian company reports to defendant the occurrence of the call, the customer to whom the call is to be charged, and the price for the call. The price reported to defendant is calculated according to Canadian tariffs and is stated in (and is to be billed in) American dollars. Whether the price is adjusted for currency differences or is, like the rates for international calls, stated in the same number of Canadian and American dollars, is unclear. I infer from defendant’s conspicuous silence on the question, however, that no adjustment is made. Defendant bills all such calls and, once a month, turns over what it collects to the Canadian company. Whether defendant keeps a portion of the proceeds as the equivalent of a “service charge” is unclear.

Thus, defendant does not systematically skim off the difference between the Canadian and American price of foreign and international calls billed in the United States. It does appear to be true, however, that the real price of such calls to an American customer varies depending upon whether he or she pays for them immediately, in Canada, or has them charged to an account maintained in the United States. The difference in real price is equivalent to the difference in value of the Canadian and American dollars. It remains to consider the legal consequences of this state of affairs.

III.

Defendant raises the “filed tariff” doctrine as a complete defense to the claims regarding the Canada-United States calls. This doctrine was first pronounced by the Supreme Court in an anti-trust action entitled Keogh v. Chicago & Northwestern Railway Co., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922). Plaintiff in Keogh alleged that the defendants had concocted rail shipping rates in violation of the Sherman Act. The rates were charged under a tariff filed with and approved by the Interstate Commerce Commission. In dismissing the action, Justice Brandéis essentially held that a shipper may not be held liable for damages in the nature of an overcharge when charging an approved tariff:

Section 7 of the Anti-Trust Act gives a right of action to one who has been “injured in his business or property.” Injury implies violation of a legal right. The legal rights of shipper as against carrier in respect to a rate are measured by the published tariff. Unless and until suspended or set aside, this rate is made, for all purposes, the legal rate, as between carrier and shipper. The rights as defined by the tariff cannot be varied or enlarged by either contract or tort of the carrier.

260 U.S. at 163, 43 S.Ct. at 49. According to the Second Circuit, “[t]he rationale [for the doctrine] is that the regulatory agency determines the legal rate and the utility must collect it while it is in effect.” City of Groton v. Connecticut Light & Power Co., 662 F.2d 921, 929 (2d Cir.1981).

I conclude that “filed tariff” doctrine bars any recovery by plaintiff for the cost of Canada-United States calls under a contractual theory such as money had and received. Money had and received is a somewhat nebulous doctrine. It is sometimes spoken of as gwasi-contractual in nature, see Miller v. Schloss, 218 N.Y. 400, 406, 113 N.E. 337 (1916), and is grounded in equity. Ordinarily it is employed when money which in good conscience should belong to one party has somehow found its way into the hands of another. See Northern Trust Co. v. Chase Manhattan Bank, N.A., 582 F.Supp. 1380, 1384 (S.D.N.Y. 1984). It may be used, for example, to recover money which has been paid to one on the understanding that it be paid to another when the second payment is not or cannot be made. See Unger v. Travel Arrangements, Inc., 25 A.D.2d 40, 266 N.Y.S.2d 715, 720-721 (1966). Reflecting its general nature, the elements of the cause of action are stated broadly. The Second Circuit recently formulated them thus: 1) receipt by defendant of money belonging to plaintiff, 2) a benefit to defendant from receipt of the money, and 3) a finding that defendant should not equitably be permitted to keep the money. Aaron Ferer & Sons Ltd. v. Chase Manhattan Bank, N.A., 731 F.2d 112, 125 (2d Cir.1984).

The filed tariff doctrine is relevant to the third element. In order to recover, plaintiff must show that he has a superior equitable claim on the money at issue. The existence of a filed tariff essentially neuters any claim plaintiff might have that the utility’s adherence to the rate is improper or inequitable. The filed tariff doctrine defines such a rate as wholly proper. In this case, the filed tariff authorized defendant to charge the specified rates in American dollars. This is precisely what it did. So long as defendant provided the requisite service, it was lawfully entitled by those tariffs to charge those rates. The filed tariff doctrine thus insulates defendant from any equitable claim that its charging these rates was improper.

Because the rates for intra-Canada calls are set by Canadian tariffs, defendant may not invoke the filed tariff doctrine to protect itself from liability for those calls. Nevertheless, it seems likely that a claim for money had and received concerning the intra-Canada calls will be unsuccessful. First, it is clear that if, as defendant seems to claim, rates for intra-Canada calls were quoted to plaintiff in American dollars, equity would not demand any refund to plaintiff. The quote constituted in essence an offer and plaintiff’s making the call contractually committed him to pay the tariff rate in American dollars. Second, if the rate was quoted by a Canadian company in Canadian dollars, once defendant surrendered all of the money collected for the call to the Canadian company defendant was released from liability. In this circumstance, defendant was acting as a billing agent for the Canadian company. Once defendant paid its principal the entire sum collected, it was relieved of any liability to plaintiff under the doctrine of money had and received. Unger, supra, 266 N.Y.S.2d at 721. Plaintiff’s remedy would lie in Canada. If plaintiff was quoted in Canadian dollars, he may, however, be able to regain any service charge which defendant retained. See Unger, supra, 266 N.Y.S.2d at 722 (defendant, essentially a broker, forced to return retained commission on unconsummated sale to plaintiff but released from liability on the remaining sale price because defendant had turned over remainder to seller).

IV.

Claims of fraud are different. The filed tariff doctrine is designed to protect utilities charging filed rates for lawfully provided service. It is of no help to a defendant which fraudulently induces a plaintiff to pay a filed rate or which otherwise exacts payment by fraud. There is nothing in the policy underpinnings of the doctrine which would cause it to protect a defendant which unlawfully exacts payment, even at a lawful rate.

Plaintiff,, however, has yet to state a viable claim for fraud. I find defendant’s motion to dismiss for failure to plead fraud with particularity wholly justified. Rule 9(b), Fed.R.Civ.P. A fraud plaintiff is required to state in his or her complaint not only the specific fraudulent misrepresentations alleged but also the time when those misrepresentations occurred and the circumstances of their occurrence which give rise to an inference of fraud. Ross v. A.H. Robins Co., 607 F.2d 545, 558 (2d Cir.1979). Plaintiff has not even pleaded any misrepresentations by defendant, let alone the time and circumstances of their occurrence. He simply states (falsely, it appears) that defendant keeps the difference between the American and Canadian price for these calls and that this constitutes fraud. Such conclusory pleading is wholly inadequate.

At one point in his memorandum of law plaintiff claims that defendant quoted him a price in Canadian dollars and charged him in American dollars. If plaintiff wishes actually to plead this, rather than merely to have his lawyers ineffectually assert it in a memorandum of law, he must state, at a minimum, the time at which this misrepresentation was made to him, the person who made it, and the circumstances which would cause one to infer a fraudulent intent from it.

At other points in his memorandum of law plaintiff seems to argue that it was defendant’s failure to inform him of the option of paying immediately in Canadian dollars which constituted the fraud he wishes to allege. If this is so, he must allege the occasions on which this material information was withheld from him, the circumstances which created in defendant a duty to disclose the information, intent, deception, reliance, and damages. See Aaron Ferer & Sons, supra, 731 F.2d at 123; Kaplan v. ITT-U.S. Transmission Systems, Inc., 589 F.Supp. 729, 736 (E.D.N. Y.1984). Because plaintiff’s fraud pleading is inadequate, I dismiss the claims without prejudice, and with leave to replead.

V.

The parties extensively briefed the issue of primary jurisdiction. Defendant argues that this action should be stayed pending referral of plaintiff’s claims to the FCC. I find it unnecessary to discuss the issue in the detail which the parties devoted to it. Judge Glasser covered the same ground in comprehensive fashion in his recent decision in Kaplan v. ITT-U.S. Transmission Systems, Inc., supra, 589 F.Supp. at 733-736. For the reasons stated therein, I conclude that application of the doctrine of primary jurisdiction is inappropriate to the common law causes of action pleaded in this case. Plaintiff is entitled to an immediate judicial forum. I deny defendant’s motion to stay the action on this ground.

Finally, defendant also raises a non-dis-positive statute of limitations argument, asserting that recovery for all calls made more than two years prior to the filing of the lawsuit is barred on grounds of the two-year statute of limitations found in 47 U.S.C. § 415(b). Section 415(b) by its express terms bars only complaints filed with the FCC more than two years after accrual of a claim. However, an extensive analysis of the statutory history led the court in Ward v. Northern Ohio Telephone Co., 251 F.Supp. 606 (N.D.Ohio 1966), aff'd. per curiam, 381 F.2d 16 (6th Cir.1967) to conclude that § 415(b) was also intended to apply to suits filed in district court. The Ward decision has been unanimously adopted by those few courts which have considered the issue in the intervening years. See Pavlak v. Church, 727 F.2d 1425 (9th Cir.1984); Swarthout v. Michigan Bell Telephone Co., 504 F.2d 748 (6th Cir.1974); Cole v. Kelley, 438 F.Supp. 129 (C.D.Cal.1977); Hofler v. American Telephone and Telegraph Co., 328 F.Supp. 893 (E.D.Va.1971).

However, because of the difficulty which sometimes arises in determining when a cause of action for fraud accrues, I will not hold at this time that recovery for all calls made more than two years before the filing of the action is necessarily barred. I do note, however, that a two year statute of limitations is apparently applicable. Application of the statute to these facts awaits further fleshing out of the details of the fraud.

VI.

In conclusion, defendant’s motions to dismiss this action entirely, to stay it, or to refer it to the FCC are denied, as is plaintiff’s motion for summary judgment.

Summary judgment is granted to defendant on the claim for money had and received regarding international (Canada-United States) telephone calls.

Defendant’s motion to dismiss the fraud claims for failure to comply with Rule 9(b), Fed.R.Civ.P., is granted. Plaintiff is granted twenty days’ leave from the date of filing of this decision to file an amended complaint spelling out his fraud claims in proper detail. In order that it may be determined whether plaintiff states a viable claim for money had and received concerning the intra-Canada calls, plaintiff is directed to replead this claim, stating when, by whom, and in what currency the intraCanadian calls were quoted to him, and whether he informed the person making the rate quote that he intended to bill the call to his New York account. If no amended pleading is submitted within that time, it will be assumed that plaintiff cannot plead viable claims, and the entire action will be dismissed with prejudice.

In light of the apparently baseless nature of many of the factual allegations in plaintiff’s initial complaint, I find it appropriate to remind him and his lawyers of the requirement of Rule 11, Fed.R.Civ.P., that every attorney who signs a pleading does so only upon finding “after reasonable inquiry [that the pleading] is well grounded in fact and is warranted by existing law.” Imposition of sanctions is mandatory when Rule 11 is violated.

I find no merit in the remainder of defendant’s arguments.

It is SO ORDERED.

      . In what appears to be an effort to mislead the Court as to the nature of the agreement, plaintiff in his initial memorandum of law, at 7, quotes only the second half of the relevant sentence in the agreement, which reads in full, “For [telephone service] the charges for which are payable in Canada, the rates shall be quoted to and payable by the customer in Canadian currency.” Of course, by leaving out the initial phrase, "the charges for which are payable in Canada,” plaintiff seeks to create the impression that the clause concerning quotation in Canadian currency somehow applies to his situation. It does not, and it is worth noting that his complaint contains no allegation that he was ever quoted prices in Canadian currency. I do not appreciate plaintiffs seeming attempt to create the contrary impression through partial quotation.

      . As noted in footnote 2, supra, plaintiff does not plead that he was ever quoted a price in Canadian dollars. Even if he was, however, the misrepresentation would appear to have been committed by a Canadian telephone company, not defendant.

      . There is really no mystery in plaintiffs failure to submit an affidavit alleging that misrepresentations had been made to him individually. Plaintiff filed this action as a class action and will presumably seek to have himself declared a representative class plaintiff. The propriety of class treatment depends in part upon whether the fraud alleged was systematic or aberrational. It is no doubt plaintiffs hope to demonstrate that it was standard practice for defendant to quote call prices in Canadian dollars and bill in American dollars. Under such circumstances, class treatment would appear reasonable. If, on the other hand, quotation in American dollars was the norm and plaintiff's claimed experience was aberrational, class treatment is more dubious.
      Neither party has submitted any evidence of defendant’s standard practice, but the FCC tariff and defendant’s contractual commitments require it to quote prices in American dollars for calls which are to be billed in the United States. If its standard practice deviates from this — and I hasten to add there is absolutely no evidence that this is so — a serious charge of fraud could be made out.

      . The filed tariff doctrine, however, does not immunize a regulated utility from all liability. For example, under certain circumstances it does not shield a utility from liability when charging an ultimately disapproved tariff, id., at 929; Litton Systems, Inc. v. American Telephone & Telegraph, Inc., 700 F.2d 785, 820 (2d Cir. 1983), and it provides no protection from lawsuits not directly connected with rates. See, e.g., Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973).

      . In addition to the filed tariff doctrine, at this point in its papers defendant raises the issue of exhaustion of administrative remedies. It would be proper to require exhaustion only if plaintiff were challenging the reasonableness of defendant's tariff rate or of its practice of billing in American dollars without adjusting for the value of the currency. I do not read the complaint as making such a challenge, although the question is complicated by the mistaken allegations in the complaint. Plaintiff is not complaining about the existence or propriety of the tariff and the practice of charging in unconverted dollars per se. He is complaining about defendant’s failure to tell him that he had the option of saving money by paying for his calls in Canada. Consequently, it is not the practice which plaintiff challenges but defendant's failure to make him aware of it. The case resembles Nader v. Allegheny Airlines, Inc., 445 F.Supp. 168 (D.D.C.1978). No exhaustion is necessary.


author: HUGH GIBSON, District Judge.

text:
    GULF COAST RICE PRODUCERS ASSOCIATION, R.C. Farrell, Paul Trugold, Rufus Farrell, R.C. Staples, R.C. Farrel, H.D. Johnston, C.J. Christofferson, J.A. Farrell, Wayne Miller, Briscoe Production Co., James Holston, David Le Compte, Jr., Mary F. Le Compte, Richard Le Compte, Hall’s Bayou Ranch, V.C. McGinnes, James McRae, Walter Todd, Mark Tomlinson, D.W. Pryor, R.G. Huepers, D.J. Bulant, Donnie Bulanek, Nelson Bulanek, Pat Bulanek, Ronnie Dumfsnil, J.T. Garrett, J.H. Peltier, Robert Peltier, John G. Phillips, III, and Max Wollman & Sons v. John R. BLOCK, Secretary of Agriculture, United States Department of Agriculture, Commodity Credit Corporation.
    Civ. A. No. G-83-433.
    United States District Court, S.D. Texas, Galveston Division.
    May 8, 1985.

      Sam Dawkins, Jr., Houston, Tex., O.C. Hamilton, Jr., McAllen, Tex., for plaintiffs.
    Helen Goldberg, Washington, D.C., for defendants.
   MEMORANDUM AND ORDER

HUGH GIBSON, District Judge.

Before the Court are defendants’ motion to dismiss and motion for summary judgment. Plaintiffs, a group of ■ Texas rice producers, instituted this action against the United States Department of Agriculture, Secretary of Agriculture John R. Block, and the Commodity Credit Corp. (CCC), seeking damages for anticipatory breach of contract.

The individual plaintiffs entered into contracts with the CCC in order to participate in the 1983 Rice Payment-In-Kind (PIK) program. Under these contracts, plaintiffs agreed to set aside certain base acreage that would have been used for growing long-grain rice. In return, the CCC would compensate plaintiffs with a determined quantity of long-grain rice, called “payment in kind”. Producers would be eligible to receive their PIK at the time they would have normally harvested the commodity. Prior to such time, plaintiffs were advised that they would not receive “long-grain” rice. Instead, payment would be made in “medium-grain” rice which was of a lower quality and market value. Plaintiffs sought redress in this Court, contending that this Court has subject matter jurisdiction pursuant to the Commodity Credit Corporation Charter Act, 15 U.S.C. § 714b. Defendants maintain that since plaintiffs’ damage claims undisputedly exceed $10,-000.00, they must be brought in the United States Claims Court in accordance with the Tucker Act, 28 U.S.C. § 1346 and § 1491.

The Federal District Court and the Claims Court have concurrent jurisdiction over contract claims not exceeding $10,-000.00 against the United States. See 28 U.S.C. § 1346(a)(2) and § 1491. When the claim is in excess of $10,000.00, the Tucker Act gives the Claims Court exclusive jurisdiction. See 28 U.S.C. § 1491; Rains v. Block, 599 F.Supp. 196 (D.Colorado 1984); U.S. v. Sherwood, 312 U.S. 584, 61 S.Ct. 767, 85 L.Ed. 1058 (1941).

The CCC Charter Act, 15 U.S.C. § 714b, subsection C, as amended in 1949, provides in part that:

“The district courts of the United States ... shall have exclusive original jurisdiction, without regard to the amount in controversy, of all suits brought by or against the Corporation. ... Any suit by or against the United States as the real party in interest based upon any claim by or against the Corporation shall be subject to the provisions of ... this section to the same extent as though such suit were by or against the Corporation, except that
(1) any such suit against the United States based upon any claim of the type enumerated in section 1491 of Title 28, [28 USC § 1491 — the Tucker Act], may be brought in the United States Court of Claims, AND
(2) no such suit against the United States may be brought in a district court unless such suit might, without regard to the provisions of sections 714 to 714p of this title [15 USCS §§ 714 et seq.] be brought in such court

The Court holds that the plaintiffs’ claims in the case at bar will expend themselves upon the public treasury and, therefore, are indeed against the United States as the real defendant in interest. Rainwater v. U.S., 356 U.S. 590, 78 S.Ct. 946, 2 L.Ed.2d 996 (1958). All capital stock of the CCC is held by the United States, 15 U.S.C. § 714e, and any net gain of the CCC is deposited to the U.S. Treasury, 15 U.S.C. § 713a-12; Stone v. U.S., 286 F.2d 56 (8th Cir.1961). Although Section 714b(c) vests the federal district courts with exclusive jurisdiction of all suits brought by or against Commodity, regardless of the amount in controversy, this broad grant is circumscribed where suit is brought by or against the United States as the real party in interest. In such a case, “no * * * suit against the United States may be brought in a district court unless such suit might, without regard to the provisions of this ... title [the CCC Charter Act] be brought in such court.” 15 U.S.C. § 714b(c). The Court holds that this exception serves to limit the federal district court’s jurisdiction by incorporating the amount-in-controversy requirement of the Tucker Act. U.S. v. Anasae International Corporation, 197 F.Supp. 926 (S.D.N.Y.1961). See also dictum language in United States v. O’Neil, 709 F.2d 361, 375 (5th Cir.1983); Raines v. Block, 599 F.Supp. 196 (D.Colorado 1984). Without regard to provisions of the CCC Charter Act, a plaintiff cannot bring a contract claim in excess of $10,000.00 against the United States in the federal district court, as the Court of Claims is, by statute, the exclusive forum for the adjudication of such claim. The plaintiffs do not contest the fact that their claims each exceed $10,-000.00. Accordingly, the Court lacks subject matter jurisdiction to adjudicate plaintiffs’ claims.

Although the defendants moved to dismiss this case, the Court finds that a more appropriate resolution, in the interest of justice and judicial economy, is to transfer this case to the Claims Court in Washington, D.C. Section 1406(c) of Title 28 of the United States Code (1976) provides that “(i)f a case within the exclusive jurisdiction of the Court of Claims is filed in a district court, the district court shall, if it be in the interest of justice, transfer such case to the Court of Claims, where the case shall proceed as if it had been filed on the date it was filed in the district court.” (Emphasis added) See also Russell v. Law Enforcement Assistance Administration of the United States of America, 637 F.2d 354 (5th Cir.1981); U.S.A. v. Buiges, 524 F.Supp. 1288 (S.D.N.Y.1981).

It is, therefore, ORDERED, ADJUDGED and DECREED that this case be TRANSFERRED to the Claims Court; and defendants’ motion to dismiss and motion for summary judgment are considered MOOT.

      . Defendants also allege that plaintiffs failed to exhaust administrative remedies, and that there has been no breach of contract. The Court need not consider these arguments if it dismisses this case for lack of subject matter jurisdiction.

      . The underscore indicates the language added by the 1949 amendment. The amendment also changed the statute of limitation from four to six years in order to place the CCC in the same position as other government agencies {see H.R. Rep. 81-418, 81st Congress, 1st Sess. at 8-9 (April 9, 1949), U.S.Code Cong.Service 1949, p. 1328, and allowed the pleading of counterclaims or set-offs which would otherwise have been barred by limitation.

      . Plaintiffs cited numerous decisions for the proposition that this Court has jurisdiction regardless of the amount in controversy. The Court finds that these cases are distinguishable from the case at bar, or simply do not interpret the exception outlined in the last sentence of section 714b(c) of the CCC Charter Act. This exception does not apply in cases involving the United States, or the CCC, as a plaintiff. See U.S. v. McCabe Co., 261 F.2d 539 (8th Cir.1958); U.S. v. World Transport Ltd., 322 F.Supp. 385 (S.D.N.Y.1971); U.S. v. Westview Grain Co., 189 F.Supp. 482 (N.D.Iowa 1960); U.S. v. McDonald Grain & Seed Co., 154 F.Supp. 329 (N.Dakota 1957); Stone v. United States, 286 F.2d 56 (8th Cir.1961). Where the plaintiff brought suit against the CCC for a declaratory judgment, the plaintiff was, in effect, in a defending position as to any damage recovery or monetary obligations between the parties. In such a case, this court is of the opinion that the exception in section 714b(c) of the CCC Charter Act does not apply. See Kraft Foods Co. of Wisconsin v. CCC, 164 F.Supp. 168, rev’d in part on other grounds, 266 F.2d 254 (7th Cir.1959); St. Paul Fire & Marine Insurance Company v. Commodity Credit Corporation, 474 F.2d 192 (5th Cir.1973). In the remaining cases, although judgment against the United States or the CCC was rendered by the district court, the opinions contained no discussion of the jurisdictional issue.


author: MILES, Chief Judge.

text:
    UNITED STATES of America, Plaintiff, v. George M. HOUSE and Marion M. House, Defendants.
    Nos. G85-23-01, G85-23-02.
    United States District Court, W.D. Michigan, S.D.
    May 13, 1985.

      In pro. per. George M. House and Marion M. House.
    Lowell H. Becraft, Jr., Huntsville, Ala., for defendants.
    David M. Brown and Dana Boente, Dept, of Justice, Washington, D.C., for plaintiff.
   OPINION ON MOTION IN LIMINE

MILES, Chief Judge.

Government’s Motion in Limine

The government moves to exclude various items of evidence that it anticipates defendant will proffer. The Court will address each request seriatim.

1. Evidence challenging the constitutionality of the income tax laws of the United States.

The authority from which the United States income tax laws is derived emanates from the Sixteenth Amendment to the Constitution. The power of Congress to enact revenue laws and to punish violations thereof has been consistently upheld. Wheeler v. United States, 744 F.2d 292, 293 (2d Cir.1984); United States v. Acker, 415 F.2d 328, 329 (6th Cir.1969), cert. denied, 396 U.S. 1003, 90 S.Ct. 553, 24 L.Ed.2d 495 (1970).

The Court agrees with the government that questions of law are within the Court’s prerogative to decide, and that the jury must not be allowed to speculate on such issues as the constitutionality of the internal revenue laws. The potential for jury confusion by allowing defendant to submit opposing opinions of law is enormous. Accordingly, documentary evidence such as federal court opinions regarding the income tax laws shall be excluded. United States v. Kraeger, 711 F.2d 6 (2d Cir.1983); United States v. Gleason, 726 F.2d 385 (8th Cir.1984).

2. Evidence purportedly establishing defendant’s good faith belief that the federal income tax laws are unconstitutional.

Defendant is charged with tax evasion and willful failure to file an income tax return. Conviction on either charge requires proof of the essential element of “willfulness.” This element may be established by proof that defendant intentionally failed to file tax returns knowing he was legally obligated to do so.

Clearly, defendant is entitled to establish that he did not act with the required “willfulness” and to submit such evidence as relevantly bears on his state of mind. United States v. Burton, 737 F.2d 439 (5th Cir.1984). A good-faith misunderstanding of the law’s requirements negates the element of willfulness, whereas a good-faith belief that the tax laws are unconstitutional, or disagreement with such laws, does not. United States v. Burton, supra; United States v. Kraeger, supra; United States v. Moore, 627 F.2d 830 (7th Cir. 1980); United States v. Grumka, 728 F.2d 794 (6th Cir.1984).

The government argues:

Defendant has, on numerous occasions, espoused the belief that the Federal income tax laws are unconstitutional and, thus, the Government anticipates that Defendant will attempt to introduce at trial evidence which purportedly led to this belief. Such evidence would then be used to argue that regardless of the correctness of Defendant’s belief, Defendant’s conduct was not willful. The Government submits that Defendant’s belief in the unconstitutionality of the Internal Revenue Code, no matter how sincerely held, is not a defense to the instant charges and, therefore, evidence to that effect is inadmissible.

The Court believes the government’s argument excludes too much, and trenches seriously on defendant’s right to establish a defense.

Clearly, such evidence as tends to establish only that defendant believes that the tax laws are unconstitutional, or that he disagrees with such laws, must be excluded. However, to the extent that proffered evidence tends to establish that defendant misunderstood his legal obligations, regardless of the correctness or credibility of purported “misunderstandings,” defendant must be allowed to introduce such evidence. The government’s argument is similar to that made in United States v. Burton, supra at 442-443,

The government, seeking support for its ‘objectively reasonable’ limitation on good faith misunderstandings of the law defenses, relies on decisions holding that it is not a defense to a willful violation of the Revenue Code for the defendant to act out of a belief that the law is unconstitutional. See, e.g., United States v. Douglass, 476 F.2d 260, 264 (5th Cir. 1973); United States v. Quilty, 541 F.2d 172, 175 (7th Cir.1976); United States v. Kelley, 539 F.2d 1199, 1204 (9th Cir.), cert. denied, 429 U.S. 963, 97 S.Ct. 393, 50 L.Ed.2d 332 (1976). It is immediately apparent that the premise of these decisions is that in each case the defendant knew of the tax law and was not uncertain about the duty Congress meant to impose.
Thus, we agree with the government that there is a difference between willful defiance of a statute and ignorance of a statute’s existence or meaning. These distinctions, while arbitrary at their edges, distinguish citizens who simply choose not to obey a known duty from those who act out of ignorance or misunderstanding. Although the jury must, in any event, determine whether the defendant willfully violated the statute, these distinctions will control whether or not the defendant's good faith beliefs will provide a defense to the criminal charge as to which the jury should be instructed. Thus, when this issue is raised by the evidence, the jury can be told that in deciding whether the government has met its burden of proving that the defendant acted willfully, they may draw the inference that the defendant was aware of his legal obligation from acts taken in protest or to express a political view, even though made with conviction and sincerity of purpose. Such inquiries into a defendant’s state of mind, while not a quest for a quantifiable and neatly measurable existence, are standard fare for juries. They are the essence of ‘black box’ decisions.
There is a temptation for judges to decide that a defendant’s claim is too incredible. This temptation is reinforced by concern that a defendant is being allowed to escape the reach of settled legal rules by erroneous arguments to a jury in an abuse of the roles of counsel and the court. Moreover, there may be concern that such objective limitations by the judge are necessary to prevent confusing ‘proofs’ of law as an evidentiary fact. Each such concern is understandable but unfounded. The quick answer is that, apart from constitutional strictures explained in United States v. Johnson [718 F.2d 1317 (5th Cir.1983) ], such limitations upon defendants serve no practical purpose, for they will not materially affect the nature of the trial evidence or the trial. A jury is the ultimate discipline to a silly argument. Here the district court was understandably frustrated by the implausibility of Burton’s contention, but he ought not have taken the question from the jury.

Burton réversed the defendant’s conviction after the trial judge instructed the jury that a “good faith belief” that wages are not income is not a defense to failure to file a tax return.

Admittedly, it is difficult to discern from the cases an unambiguous, “bright line” test of what evidence is or is not admissible in alleged tax protest prosecutions. Burton allows a defendant to submit evidence of a good faith misunderstanding of his legal obligations, no matter how objectively far-fetched or unreasonable the defendant’s contentions may be, as it is for the jury to decide the defendant’s state of mind. United States v. Ingredient Technology Corp., 698 F.2d 88 (2d Cir.1983) upheld the district court’s exclusion of proffered “expert” testimony regarding interpretation of the tax regulations, where there was no evidence that the defendant subjectively believed in the lawfulness of his conduct. A careful reading of United States v. Gleason, 726 F.2d 385 (8th Cir. 1984) reveals that the district court permitted the defendant to testify that he relied on certain federal court opinions in formulating his beliefs with respect to the tax laws.

Thus, to the extent any proferred evidence shows only that defendant believed the income tax laws to be unconstitutional, the government’s motion to exclude is GRANTED. However, to the extent such evidence bears on a misunderstanding by defendant of his legal obligations, the motion to exclude is DENIED. Issues of state of mind and credibility are for the jury to decide. The government may be entitled to an instruction similar to that approved in United States v. Burton, regarding permissible inferences from conduct as bearing on the issue of willfulness.

3. Evidence challenging the validity of Federal Reserve Notes as legal tender.

The government anticipates that defendant may claim he received no “income” in the years in question as he was not paid in gold-or-silver-backed dollars. Evidence that federal reserve notes are not legal tender has been excluded from the jury’s consideration. This issue is irrelevant, as the income tax laws are concerned with taxation of “income,” not “legal tender.” United States v. Whitesel, 543 F.2d 1176 (6th Cir.1976); United States v. Weir, 679 F.2d 769 (8th Cir.1982). The motion is GRANTED.

4. Evidence alleging that wages are not income.

As the Court noted in United States v. Burton, supra, at 443-444, in upholding the district court’s exclusion of proffered expert testimony that wages are not income,

Though the credibility of a defendant’s assertion that he was ignorant of the tax requirement must be left to the jury, it does not necessarily follow that evidence regarding the uncertainty of the controlling law is, a fortiori, sufficiently probative to overcome its potential for prejudice and confusion. Though evidence that others shared a misunderstanding of the law may be relevant to the credibility of a defendant's claim that he had a particular belief, under Fed.R.Evid. 403, a trial judge’s analysis of admissibility only begins with the decision that proffered evidence is relevant. He must yet weigh its marginal contribution against potential prejudice and confusion, keeping in mind that the judge remains the jury’s source of information regarding the law. The Rule 403 balance, when struck by the district court in the first instance, will not be overturned on appeal absent an abuse of discretion. Ballou v. Henri Studios, Inc., 656 F.2d 1147, 1153 (5th Cir.1981).
Testimony such as that offered by Burton’s ‘expert’ is not admissible as an explication of plausible readings of the statutory language; erroneous legal views which may have been held by the defendant can be described by the trial judge in his instruction on willfulness and good faith, keeping in mind that it is the defendant’s state of mind at the time of the accused conduct which is at issue. As noted, a defendant could offer competent evidence that his view was not unique but was shared by others; this evidence might take the form of surveys. While indistinguishable in logical relevance from the opinions of the professor which we find excludable, its weight in the Rule 403 balance, including its reduced potential for confusion and protracted evidentiary side trips, might well lead a district court to admit it.
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Evidence of legal uncertainty, except as it relates to defendant’s effort to show the source of his state of mind, need not be received, at least where, as here, the claimed uncertainty does not approach vagueness and is neither widely recognized nor related to a novel or unusual application of the law. It is significant that Burton did not in his proffer suggest that he relied upon the expressed views of the tax professor in not paying his taxes or in inadequately completing the required tax forms.

The motion is granted except insofar as any proffered evidence relates to defendant’s state of mind.

5. Third-party testimony regarding defendant's state of mind.

Any third-party testimony purporting to establish defendant’s belief regarding his tax obligation is inadmissible hearsay. Rule 801 provides that a party’s statement is not hearsay only when it is being offered against a party. The state-of-mind exception in Rule 803 expressly excludes the admission of any “statement of memory or belief to prove the fact remembered unless it relates to the execution, revocation, identification or terms of declarant’s will.” United States v. Cohen, 631 F.2d 1223 (5th Cir.1980). The motion is GRANTED.

6. Documentary evidence purportedly relied on by defendant in determining that he was not required to file federal tax returns.

The government correctly notes that defendant is entitled to claim reliance upon documents such as tax protest books, federal court decisions, and the like. However, introduction of such materials would have great potential for jury confusion and would obscure the Court’s role as decider of the applicable law. United States v. Kraeger, supra. The motion is GRANTED.

7. Evidence regarding civil procedures for collecting taxes.

Evidence of this sort clearly invites the jury to nullify the law, and has no relevance to whether defendant has committed the offenses in question. United States v. Drefke, 707 F.2d 978 (8th Cir. 1983); United States v. Wiley, 503 F.2d 106 (8th Cir.1974). The motion is GRANTED.

Conclusion

In accordance with the foregoing opinion, the government’s motion in limine is GRANTED IN PART and DENIED IN PART.


text:
    UNITED STATES of America, Plaintiff, v. George M. HOUSE and Marion M. House, Defendants.
    Nos. G85-23-01 CR, G85-23-02 CR.
    United States District Court, W.D. Michigan.
    June 7, 1985.
    George M. House and Marion M. House, in pro. per.
    Lowell H. Becraft, Jr., Huntsville, Ala., for defendants.
    David M. Brown and Dana Boente, Dept, of Justice, Washington, D.C., for plaintiff.
   OPINION ON MOTION TO RECONSIDER MOTION TO DISMISS

MILES, Chief Judge.

Defendants were indicted on March 7, 1985 on seven counts of tax evasion in violation of 26 U.S.C. § 7201, and seven counts of failure to file income tax returns in violation of 26 U.S.C. § 7203. Defendants filed a motion to dismiss the indictment on April 12, 1985, claiming that the sixteenth amendment which grants Congress the power to lay taxes was never properly ratified, and that as a result, all laws that have been passed pursuant to the authority granted by the sixteenth amendment are null and void.

The Court denied defendants’ motion to dismiss on April 30, 1985. On May 21, 1985, the date noticed for jury selection, defendants submitted a motion for reconsideration of their motion to dismiss on the basis that the Court had not had the opportunity to consider all the evidence on the subject of the ratification of the sixteenth amendment.

A hearing was held on Saturday, May 25, 1985. At that time defendants introduced the testimony of William Benson, co-author of the book, The Law That Never Was (1985). Mr. Benson testified that he had researched the legislative history of the sixteenth amendment and had discovered that in the ratification process only four states had passed resolutions that quoted absolutely and accurately the sixteenth amendment as proposed by Congress. All the other states which had allegedly passed the amendment had in fact passed resolutions that in one or more ways differed from the language of the Congressional resolution.

It is defendants’ contention that Philander Knox, then Secretary of State, was aware of the differences between the Congressional and the state versions of the proposed amendment, but that he nevertheless certified the amendment as having been ratified. This action, defendants contend, was in violation of the law, and rendered void the certification process.

The matter of the ratification of the sixteenth amendment as set forth by the defendants is one- of first impression. It has never been before any appellate court of our nation.

In support of their contentions defendants introduced copies of what Mr. Beilson testified were certified documents he had obtained from the National Archives in Washington, D.C. and copies of certified documents he had obtained from eight of the forty-eight states he had visited during his research. Over the objection of the government, which had never had an opportunity to review the voluminous documents, the Court agreed to provisionally admit the documents into evidence.

The documents illustrate that Secretary of State Philander Knox was aware in 1913 that the resolutions passed by the various states were not in every particular identical to the resolution adopted by Congress. Philander Knox nevertheless certified that thirty-six states had ratified the amendment. Some of the variances noted by Mr. Benson were the use of the word “sources” instead of “source,” the word “levy” instead of “lay,” the word “income” instead of “incomes,” and differences in capitalization and punctuation. Mr. Benson presented evidence that Minnesota did not provide a copy of the resolution it passed, even though the state of Wyoming was specifically required to do so. He also presented evidence that the state of Kentucky had never properly ratified the sixteenth amendment.

Defendants have not, in either their initial motion or in their motion for reconsideration, asserted any authority for their contention that state resolutions are invalid if they do not exactly mirror in every particular the amendment as proposed by Congress. Mr. Benson testified that he was aware of no constitutional provision, no statute, and no cases which state that errors in punctuation render an attempted ratification null and void. Defendants’ only authority for their assertion that the ratification attempts were invalid is found in a Library of Congress Congressional Research Service publication dated April 18, 1980. That publication, according to defendant, states that the joint resolution must contain in full the exact language of the proposed amendment, and that it must contain a clear, unequivocal ratification clause. Defendants have offered no evidence that such a publication is binding on this Court at the present time, or on Philander Knox in 1913.

Neither has defendant offered any evidence that the variations of text affected in any material way the meaning or intent of the sixteenth amendment. Defendants have not shown the - Court any evidence that a resolution containing the word “levy” means anything different from a resolution containing the word “lay.” Neither have they shown any significance deriving from the addition of the letter “s” to the word “source” or the deletion of the letter “s” from the word “incomes.” Defendants have not shown that the meaning of the amendment was altered in any way by the omission of a comma or the failure to capitalize a word.

Defendants have merely pointed to technical variances which may be of some historical interest, but which have no substantive effect on the meaning of the sixteenth amendment.

In Leser v. Garnett, 258 U.S. 130, 42 S.Ct. 217, 66 L.Ed. 505 (1922), the Supreme Court was faced with the contention that the ratifying resolutions of Tennessee and West Virginia for the fifteenth amendment were inoperative because they were adopted in violation of the rules of legislative procedure prevailing in the respective states. The Court rejected this attack on the ratification procedure, stating:

As the legislatures of Tennessee and of West Virginia had power to adopt the resolutions of ratification, official notice to the Secretary, duly authenticated, that they had done so was conclusive upon him, and, being certified to by his proclamation, is conclusive upon the courts.

Id. at 137, 42 S.Ct. at 218.

Philander Knox, Secretary of State in 1913, certified that the requisite number of states had ratified the sixteenth amendment. This certification was not made without knowledge of the minor discrepancies between the proposed amendment and the resolutions of the various states, as evidenced by the February 15, 1913 memorandum from the Office of the Solicitor. In that memorandum Mr. Knox was alerted to the errors in the resolutions passed by the legislatures of the several states ratifying the sixteenth amendment. Nevertheless, the memorandum recommended that he issue a declaration announcing the adoption of the sixteenth amendment. The memorandum noted that errors in wording, capitalization and punctuation had also been made in the resolutions of the states ratifying the fourteenth and fifteenth amendments, but that those errors had been found to be immaterial to the adoption of the amendments. The reasoning in this memorandum from the Office of the Solicitor is as persuasive to this Court as it apparently was to Secretary Knox:

It should, moreover, be observed that it seems clearly to have been the intention of the legislature in each and every case to accept and ratify the 16th amendment as proposed by Congress. Again, the incorporation of the terms of the proposed amendment in the ratifying resolution seems in every case merely to have been by way of recitation. In no case has any legislature signified in any way its deliberate intention to change the wording of the proposed amendment. The errors appear in most cases to have been merely typographical and incidental to an attempt to make an accurate quotation.
Furthermore, under the provisions of the Constitution a legislature is not authorized to alter in any way the amendment proposed by Congress, the function of the legislature consisting merely in the right to approve or disapprove the proposed amendment. It, therefore, seems a necessary presumption, in the absence of no express stipulation to the contrary, that a legislature did not intend to do something that it had not the power to do, but rather that it intended to do something that it had the power to do, namely, where its action has been affirmative, to ratify the amendment proposed by Congress. Moreover, it could not be presumed that by a mere change of wording probably inadvertent, the legislature had intended to reject the amendment as proposed by Congress where all parts of the resolution other than those merely reciting the proposed amendment had set forth an affirmative action by the legislature. For these reasons it is believed that the Secretary of State should in the present instance include in his declaration announcing the adoption of the 16th amendment to the Constitution the States referred to notwithstanding it appears that errors exist in the certified copies of Resolutions passed by the Legislatures of those States ratifying such amendment.

February 15, 1913 Memorandum from the Office of the Solicitor, pp. 15-16, quoted in The Law That Never Was, pp. 19-20.

Finally, the Court notes that the sixteenth amendment has been in existence for over half a century and has been applied by the Supreme Court in hundreds of cases. As stated in Maryland Petition Committee v. Johnson, 265 F.Supp. 823, 826 (D.Md.1967)), cert. denied, 393 U.S. 835, 89 S.Ct. 109, 21 L.Ed.2d 106 (1968), “While age and usage are not absolute barriers to judicial inquiry, the courts have recognized them as persuasive indicia of validity.”

In upholding the fifteenth amendment against constitutional challenge the United States Supreme Court noted that it “has been recognized and acted on for half a century.” Leser v. Garnett, 258 U.S. 130, 136, 42 S.Ct. 217, 217, 66 L.Ed. 505 (1922). In United States v. Association of Citizens Councils, 187 F.Supp. 846, 848 (W.D. La.1960), the constitutionality of the fourteenth and fifteenth amendments was upheld “In the light of hundreds of cases in which the United States Supreme Court has applied the amendments.” Similarly, in United States v. Gugel, 119 F.Supp. 897, 900 (E.D.Ky.1954), in rejecting a constitutional attack on the fourteenth amendment, the Court found legal significance in the fact that the fourteenth amendment had been recognized and acted upon by the Supreme Court for more than three-quarters of a century.

The sixteenth amendment and the tax laws passed pursuant to it have been followed by the courts for over half a century. They represent the recognized law of the land.

Because the sixteenth amendment was duly certified by the Secretary of State, because defendants have not alleged that the minor variations in capitalization, punctuation and wording of the various state resolutions are materially different in purpose or effect from the language of the congressional joint resolution proposing adoption of the sixteenth amendment, and because the sixteenth amendment has been recognized and acted upon since 1913, the Court rejects defendants’ argument that the sixteenth amendment is not a part of the United States Constitution.

Plaintiff’s motion to dismiss is DENIED.

IT IS SO ORDERED.


text:
    UNITED STATES of America, Plaintiff, v. George M. HOUSE and Marion M. House, Defendants.
    No. G85-23 CR.
    United States District Court, W.D. Michigan.
    June 7, 1985.

      George M. House and Marion M. House, in pro. per.
    Lowell H. Becraft, Jr., Huntsville, Ala., for defendants.
    David M. Brown and Dana Boente, Dept, of Justice, Washington, D.C., for plaintiff.
   OPINION AND JUDGMENT

MILES, Chief Judge.

On March 7, 1985, George and Marion House were charged by a grand jury with willfully attempting to evade their federal income tax obligations. Marion House was indicted for violations of 26 U.S.C. § 7201 over a four year period from 1980 through 1983. George House was indicted for violations of 26 U.S.C. § 7201 over a three year period from 1980 through 1982. In each of these counts, the Houses were charged with affirmatively supplying false and fraudulent Employee Withholding Allowance Certificates (Forms W-4) to their employers, failing to make an income tax return to the Internal Revenue Service, and failing to pay the Internal Revenue Service taxes due and owing for each calendar year. Additionally, the Houses were charged by the grand jury with willfully failing to file federal income tax returns for their respective prosecution years in violation of 26 U.S.C. § 7203.

A jury trial was scheduled for May 21, 1985. On that date defendants informed the Court of their desire to waive a jury trial and to proceed with a bench trial of this matter. Accordingly, a bench trial was held on May 25, 1985. The Court’s findings of fact and conclusions of law follow.

Findings of Fact

Defendant George House was employed during the prosecution years by the Bendix Corporation. Defendant Marion House was employed during the prosecution years by the Avion Coach Corporation. When they were not employed they received unemployment compensation from the State of Michigan.

Prior to 1980 the Houses routinely filed their income tax returns in a timely manner, reported their wages consistent with the Forms W-2 supplied by their employers, and paid the appropriate amount of tax.

Beginning in 1980, defendants began filing Forms W-4 with their employers claiming exempt status from withholding tax. George House filed Forms W-4 with his employer bearing the notation “exempt” on March 17, 1980, May 14, 1982, February 9, 1983 and April 4,1983. Marion House filed Forms W-4 with her employer bearing the notation “exempt” on April 7, 1980, May 5, 1981, July 21, 1981, May 14, 1982 and February 9, 1983.

In each year charged in the indictment the Houses failed to file federal income tax returns despite the fact that their wages were sufficient to require them to file returns.

In 1980 George House’s gross income was $23,245.25. In 1981 Ms gross income was $23,613.59. In 1982 Ms gross income was $28,355.16.

In 1980 Marion House’s gross income was $7,492.53. In 1981 her gross income was $15,713.60. In 1982 her gross income was $21,318.44. In 1983 her gross income was $23,300.19.

George House has $3,698.72 additional tax due and owing for 1980; $2,859.79 for 1981; and $3,755.81 for 1982.

Marion House has $677.81 additional tax due and owing for 1980; $2,246.64 for 1981; $2,651.59 for 1982; and $1,674.87 for 1983.

Both George and Marion House received ample notice of their duty to pay taxes in the years covered by the indictment. Both received W-2 forms from their employers for each of the years they are charged with tax evasion. Seven delinquency notices have been sent to George House concerning his failure to file a tax return for 1980 and 1981. Five delinquency notices have been sent to Marion House concerning her failure to file a tax return for 1981.

A $500.00 civil penalty was assessed by the I.R.S. against Marion House on December 5, 1983 for filing a false Form W-4. A $500.00 civil penalty was assessed by the I.R.S. against George House on March 7, 1983 and again on January 9, 1984 for submitting a false Form W-4.

Three letters were sent by the I.R.S. to George House in 1983 requesting him to call the office. George House did not respond.

In response to a notice from the I.R.S. dated June 3,1983, Marion House appeared for an appointment at the I.R.S. office in Benton Harbor on June 10, 1983. She informed the I.R.S. agent that she was not required to file a tax return and refused to produce documents.

Both George and Marion House protested their obligation to pay taxes and the interference of the I.R.S. in directing their employers to withhold taxes in spite of the exempt status claimed on their W-4’s.

During the years covered by the indictment the employers of George and Marion House received letters from Paul Bell of the Belanco Religious Order, a tax protest organization, on behalf of George and Marion House, claiming that the Houses, members of the Belanco organization, were exempt from taxation because they were not employees of the federal government.

George House submitted a letter to his employer dated March 10, 1983 requesting his employer to honor his exempt status as filed on his Form W-4 and directing any questions to the Belanco Organization.

In a letter dated April 4, 1983 Marion House directed her employer not to disclose any information about her to anyone, including “unconstitutional agencies” such as the I.R.S.

In a letter dated July 5, 1983 addressed to “Mr. IRS Flunkie,” Marion House claimed her right to file exempt status. In an affidavit dated October 10, 1983 Marion House stated that as an “unenfranchised free person, merchant and trader” she had a right not to have her wages withheld.

Identical computer generated privacy notices were sent by George and Marion House to their employers.

After their employers began withholding taxes from their paychecks in 1983, George and Marion House endorsed a number of paychecks with the notation “Partial payment for services rendered on account persuant [sic] to my work contract.”

Conclusions of Law

The indictment charges George and Marion House with attempted tax evasion in violation of 26 U.S.C. § 7201 and with failure to file income tax returns in violation of 26 U.S.C. § 7203.

The elements of the offense of attempt to evade or defeat a tax are:

1. An affirmative attempt to evade or defeat an income tax in any manner;
2. A tax deficiency or money due and owing to the United States; and
3. Willfulness.

Sansone v. United States, 380 U.S. 343, 351, 85 S.Ct. 1004, 1010, 13 L.Ed.2d 882 (1965); United States v. Stone, 702 F.2d 1333, 1338-39 (11th Cir.1983); United States v. Garavaglia, 566 F.2d 1056, 1057 (6th Cir.1977).

As to the first element of the offense, the evidence is undisputed that the defendants submitted Forms W-4 to their employers claiming that they were exempt from withholding taxes. To properly claim an exempt status an individual must have owed no federal tax in the year before filing the Form W-4 and must not anticipate owing any federal tax in the year of filing the Form W-4. 26 U.S.C. § 3402. In fact, defendants did owe a tax in each of the calendar years preceding the years in which they filed Forms W-4 claiming an exempt status, and they reasonably anticipated owing taxes in the years in which they filed the forms W-4 claiming an exempt status, and they reasonably anticipated owing taxes in the years in which they filed the forms W-4 claiming an exempt status. Defendants’ Forms W-4 on which they claimed an exempt status were false and fraudulent. United States v. Grumka, 728 F.2d 794, 797 (6th Cir.1984).

The filing of false and fraudulent Forms W-4 is sufficient to satisfy the element of an affirmative act of evasion. The statute makes it a crime to willfully attempt, in any manner, to evade or defeat any income tax imposed by law. 26 U.S.C. § 7201. The filing of a false W-4 claiming exempt status has the effect of substantially reducing or eliminating, without legal justification, the amount of tax withheld from wages. In combination with defendants’ failure to file income tax returns and pay the tax due, the act of filing false Forms W-4 is an affirmative act of evasion.

The second element of the offense is a tax deficiency. The evidence at trial disclosed that George House had tax due and owing in 1980, 1981 and 1982. The evidence disclosed that Marion House had tax due and owing in 1980, 1981, 1982 and 1983. The government met its burden of proving the second element of the offense.

The third element of the offense is willfulness. For the attempt to evade or defeat the tax to be willful it must be an attempt made voluntarily and intentionally, and with the intent to keep from the government a tax imposed by the income-tax laws, which it was the legal duty of the defendants to pay and which the defendants knew was their legal duty to pay. 2 Devitt & Blackmar § 35.04. In connection with this offense, willful means a “voluntary, intentional violation of a known legal duty.” United States v. Pomponio, 429 U.S. 10, 12, 97 S.Ct. 22, 23, 50 L.Ed.2d 12 (1976).

The conduct of defendants was not willful if they acted through negligence, gross negligence, inadvertence or mistake, or due to their good faith misunderstanding of the requirements of the law. United States v. Aitken, 755 F.2d 188, 191 (1st Cir.1985); United States v. Burton, 737 F.2d 439, 442 (5th Cir.1984); United States v. Grumka, 728 F.2d 794, 797 (6th Cir. 1984). However, “neither a defendant’s disagreement with the law, nor his own belief that such law is unconstitutional — no matter how earnestly held — constitute a defense of good faith misunderstanding of the law.” United States v. Ware, 608 F.2d 400, 405 (10th Cir.1979), cited with approval in Grumka, 728 F.2d at 797. See also, Burton, 737 F.2d at 442.

The government’s proofs at trial on the issue of willfulness were largely circumstantial. The government can meet its burden of proof on this issue even when proof of willfulness is entirely circumstantial. Grumka, 728 F.2d at 797. In Grumka the Court held that evidence that defendant had filed proper tax returns from 1972 through 1975 was sufficient to establish that he knew of his legal duty to file proper tax returns and that he willfully failed to do so in the years covered by the indictment. Id. “A defendant’s prior taxpaying history is competent to establish ‘willfulness.’ ”. Id. • See also United States v. Heise, 709 F.2d 449, 451 (6th Cir.1983).

Protest documents filed by the defendant were also held to constitute sufficient circumstantial evidence of willfulness. Id. The Fifth Circuit has specifically approved the drawing of an inference that the defendant was aware of his legal obligation from acts taken in protest or to express a political view. Burton, 737 F.2d at 442.

In the present case the government introduced evidence that defendants filed proper returns in 1978 and 1979. Evidence was also introduced that defendants were members of Belanco, a tax protest organization, and that tax protest documents were submitted on their behalf to their employers and to the I.R.S. This is circumstantial evidence of defendants’ willfulness.

In addition, the Court finds the following evidence persuasive on the issue of willfulness: defendants’ submission of false Forms W-4, defendants’ receipt of W-2 forms which should have alerted them to their duty to file, and defendants’ failure to respond to I.R.S. inquiries concerning their failure to file tax returns.

Taken as a whole the evidence is proof beyond a reasonable doubt that defendants voluntarily and intentionally attempted to keep from the government a tax imposed by the income-tax laws which it was their legal duty to pay and which they knew was their legal duty to pay.

It is the Court’s determination that George House is guilty of counts I, II and III, willful attempted tax evasion in violation of 26 U.S.C. § 7201. It is the Court’s determination that Marion House is guilty of counts VII, VIII, IX and X, willful attempted tax evasion in violation of 26 U.S.C. § 7201. In view of the fact that defendants have both been found guilty as to all charges of attempted tax evasion, it is not necessary for the Court to consider the charges of failure to file under 26 U.S.C. § 7203 which constitute lesser included offenses. United States v. Buckley, 586 F.2d 498, 504 (5th Cir.1978), cert. denied, 440 U.S. 982, 99 S.Ct. 1792, 60 L.Ed.2d 242 (1978).

Defendant George House is CONVICTED on Counts I, II and III and Marion House is CONVICTED on Counts VII, VIII, IX and X.

IT IS SO ORDERED.


author: GASCH, District Judge.

text:
    Norman A.J. McCALL, Plaintiff, v. SHIELDS ASSOCIATES, INC., et al., Defendants.
    Civ. A. No. 83-2715.
    United States District Court, District of Columbia.
    May 15, 1985.

      Jack H. Olender, Harlow R. Case, John O’Connor, Washington, D.C., for plaintiff.
    Kevin J. McCarthy, Upper Marlboro, Md., for defendant Shields.
    Thomas H. Talbott, Rockville, Md. and Sam DeBlasis, Upper Marlboro, Md., for defendant Smith.
   MEMORANDUM

GASCH, District Judge.

On May 6, 1985, defendant Shields Associates, Inc. (“Shields”) filed a motion challenging the constitutionality of the Modified Plan for the United States District Court for the District of Columbia for the Random Selection of Grand and Petit Jurors (as amended through May 22, 1978) (hereinafter “the Modified Plan”). Shields also contends that the Modified Plan violates the Federal Jury Selection and Service Act of 1968, 28 U.S.C. § 1861 et seq. (“the Jury Act”). On May 10, 1985, the Court held a hearing on this motion, which included testimony presented by Ugo Carusi, Esq., Chairman of the Jury Commission of the District of Columbia, and Kathleen C. Beadnell, Chief Clerk to that Commission. The Court denied the Shields motion from the bench. This memorandum is issued pursuant to that ruling.

The Shields motion challenges only one aspect of the Modified Plan: the automatic excuse provisions contained in Section G(2). Under that section, individuals in specified categories may elect to be excused from jury duty. Shields contends that because a higher percentage of white persons receiving jury questionnaires elect to rely on one of these excuse provisions than black persons responding to the questionnaires, the Modified Plan systematically excludes white persons from serving on juries in violation of the Seventh Amendment, Due Process Clause, and Jury Act.

Shields relies principally on Duren v. Missouri, 439 U.S. 357, 364, 99 S.Ct. 664, 668, 58 L.Ed.2d 579 (1979), and Taylor v. Louisiana, 419 U.S. 522, 95 S.Ct. 692, 42 L.Ed.2d 690 (1975). Duren, Taylor, and their progeny, however, are not applicable to this case as they address the Sixth Amendment right (made applicable to the states by virtue of the Fourteenth Amendment) of criminal defendants to a jury drawn from a fair cross-section of the community. See, e.g., Bullington v. Missouri, 451 U.S. 430, 436, 101 S.Ct. 1852, 1856, 68 L.Ed.2d 270 (1981); Taylor, 419 U.S. at 522-23, 95 S.Ct. at 692-94. By its terms, the Sixth Amendment has no relevance to civil proceedings but instead serves to “guarantee[] an impartial jury trial in criminal prosecutions.” Taylor, 419 U.S. at 526, 95 S.Ct. at 695 (emphasis supplied).

A review of the cases cited in Shields’ brief fails to support Shields’ argument that the Seventh Amendment or Due Process Clause provide a civil defendant with a right to a jury drawn from a fair cross-section of the community that is identical to that of a criminal defendant. Moreover, even assuming Shields is correct in this regard, it has failed to establish a prima facie case of violation of the fair cross-section requirement. To do so Shields would have to establish that the representation of whites on the qualified jury wheel “is not fair and reasonable in relation to the number of such persons in the community.” Duren, 439 U.S. at 364, 99 S.Ct. at 668. As the affidavit submitted by Dr. Richard J. Lurito demonstrates, whites make up 18.64 percent of those persons on the qualified jury wheel and 26 percent of the total population in the District of Columbia. Although there is some disparity, the Court finds that the discrepancy is not sufficient to constitute a violation of the fair cross-section requirement. See Swain v. Alabama, 380 U.S. 202, 85 S.Ct. 824, 13 L.Ed.2d 759 (1965); United States v. Test, 550 F.2d 577, 587 (10th Cir.1976). This case is thus distinguishable from Duren where women represented 54 percent of the population but only 14.5 percent of the prospective jurors. 439 U.S. at 365-66, 99 S.Ct. at 669.

The Supreme Court has also recognized the Equal Protection Clause protects against discriminatory exclusion or substantial underrepresentation of persons from petit or grand juries. See, e.g., Castaneda v. Partida, 430 U.S. 482, 493-94, 97 S.Ct. 1272, 1279-80, 51 L.Ed.2d 498 (1977); Hernandez v. Texas, 347 U.S. 475, 477, 74 S.Ct. 667, 669, 98 L.Ed. 866 (1954). Assuming, without deciding, that this line of cases applies both to civil and criminal proceedings, Shields cannot succeed in its challenge under this authority as well. As discussed supra, Shields has failed to establish a sufficient “degree of underrepresentation.” Moreover, Shields failed to establish that the selection process is not racially neutral or that it is susceptible of abuse. It is undisputed that the jury lists are compiled from racially neutral sources. The excuse provisions complained of are based solely on objective criteria. See United States v. Lopez, 588 F.2d 450, 451-52 (5th Cir.), cert. denied, 442 U.S. 947, 99 S.Ct. 2895, 61 L.Ed.2d 319 (1979); Obregon v. United States, 423 A.2d 200, 207 (D.C. 1980), cert. denied, 452 U.S. 918, 101 S.Ct. 3054, 69 L.Ed.2d 422 (1981). Thus plaintiff has failed to establish a prima facie case as the statistics proffered do not support an inference of intentional discrimination.

Even if Shields had established a prima facie violation, the testimony of Ugo Carusi, Chairman of the District of Columbia Jury Commission, clearly demonstrated that the Modified Plan was developed, adopted, and implemented without discriminatory intent. Any unequal representation was shown to be the product of racially neutral selection criteria. Washington v. Davis, 426 U.S. 229, 241, 96 S.Ct. 2040, 2048, 48 L.Ed.2d 597 (1976).

Having rejected Shields’ constitutional challenge, the Court next considers the sufficiency of Shields’ claim that the Modified Plan fails to comply with the Jury Act. Shields does not contend that the Modified Plan violates the requirement of 28 U.S.C. § 1863(b)(2) that the names of prospective jurors “be selected from the voter registration lists.” Rather Shields challenges the excuse provisions of Section G(2) of the Modified Plan as violative of 28 U.S.C. § 1863(b)(5). The Court rejects this challenge as without merit. First, the excuse provisions were adopted pursuant to findings of the District Court referred to in the Modified Plan that mandatory service by the affected categories “would entail undue hardship or extreme inconvenience to the members thereof, and [that] excuse of the members [of these groups] would not be inconsistent with sections 1861 and 1862” of the Judicial Code. Section 1863(b)(5) specifically authorizes such excuse provisions if such findings are properly made. The Court sees no basis for challenging these findings. Second, the legislative history of the Jury Act demonstrates that the statute does not contemplate challenges such as that presently before the Court so long as “the initial source list [in] the selection process” produces a fair representation of the make-up of the community. See H.R.Rep. No. 1076, 90th Cong., 2d Sess. at 5, reprinted in [1968] U.S.Code Cong. & Ad.News, p. 1794. The District of Columbia Court of Appeals relied on this reasoning to reject a Jury Act challenge to the Modified Plan in Obregon v. United States, supra, and the Court adopts the reasoning of that decision. See id. at 207-09.

      . The Modified Plan provides that the following persons may be excused from jury service on request:
      1. Persons over 70 years of age;
      2. Nurses in active practice;
      3. Persons actively engaged as ministers of religion, or clergymen, of any denomination;
      4. Persons who have served as grand or petit jurors in the District of Columbia within four years;
      5. Persons actively teaching or supervising in public, private, or parochial school or college;
      6. Persons required at home to care for children under ten years of age, or for a disabled person who cannot be left alone, where there is no other family member available to provide substitute care;
      7. Self-employed in a "one person” business;
      8. Attorneys admitted to practice before any Court, State or Federal and all or part of whose time is spent in advising, interpreting, or applying the law;
      9. Physicians and surgeons in active practice; and
      10. Dentists in active practice.
      Members of these classes are not, however, required to request excuses.

      . Pursuant to Section D(7) of the Modified Plan, as the need arises, the Jury Commission draws the names of persons from the master wheel which consists of a merger of the D.C. Board of Elections' Registered Voters Master File with the D.C. Department of Motor Vehicles file of licensed drivers who are eighteen years of age or over. All persons whose names are drawn receive questionnaires examining their qualifications for jury service. The completed questionnaires are then reviewed by the Commission in establishing the “qualified jury wheel.”

      . Specifically, Shields contends that the percentage of white persons who took advantage of excuse provisions ranged from 29.13 to 41.27% between 1977 and 1984 while the percentage of black persons doing so ranged from 11.04 to 26.63%.

      . The only cases cited by Shields that arise in the context of civil litigation are Thiel v. Southern Pacific Co., 328 U.S. 217, 66 S.Ct. 984, 90 L.Ed. 1181 (1946), and McGinnis v. M.I. Harris, Inc., 486 F.Supp. 750, 755 (N.D.Tex.1980). In Thiel, a plaintiff employed as a daily wage earner who had brought a personal injury claim challenged the jury verdict in favor of the defendant railroad by arguing that all persons who worked for a daily wage had been excluded from the jury list. The clerk of the court and jury commissioner admitted in their testimony that this exclusion had been made "deliberately and intentionally.” 328 U.S. at 221, 66 S.Ct. at 986. Without identifying any constitutional basis, the Court stated that: "The American tradition of trial by jury, considered in connection with either criminal or civil proceedings contemplates an impartial jury drawn from a cross-section of the community." Id. at 220, 985. Even assuming that the Thiel holding was based on either the Due Process Clause or the Seventh Amendment, the Court finds that the instant case is distinguishable from Thiel. The Thiel Court noted that there was “nothing in the federal statutes [that] warrants such an exclusion.” In contrast, as discussed infra, the Jury Act expressly authorizes the excuse provisions Shields complains of where, as here, certain findings have been made.
      Shields’ reliance on McGinnis is also misplaced. The McGinnis Court rejected the jury challenge in that case as time-barred and expressly reserved the question of whether the Duren analysis is applicable to civil cases. 486 F.Supp. at 755.

      . The Court’s decision is also supported by language in Taylor v. Louisiana, 419 U.S. at 534, 95 S.Ct. at 699, authorizing
      exemptions from jury service to individuals in case of special hardship or incapacity and to those engaged in particular occupations the uninterrupted performance of which is critical to the community’s welfare.
      The Taylor Court explicitly noted its continuing approval of Rawlins v. Georgia, 201 U.S. 638, 26 S.Ct. 560, 50 L.Ed. 899 (1906), where a challenge similar to the instant case was rejected with the following language:
      [I]f the state law [] should exclude certain classes [from mandatory jury service] on the bona fide ground that it was for the good of the community that their regular work should not be interrupted, there is nothing in the Fourteenth Amendment to prevent it.

        The Rawlins Court specifically offered as examples of such permissible exemptions any “exemption of lawyers, ministers of the gospel, [and] doctors,” three of those recognized by the Modified Plan.

      . The test for establishing an Equal Protection Clause violation is as follows:
      The first step is to establish that the group [that was substantially underrepresented] is one that is a recognizable, distinct class, singled out for different treatment under the laws, as written or as applied. Next, the degree of underrepresentation must be proved, by comparing the proportion of the group in the total population to the proportion called to serve as grand jurors, over a significant period of time. Finally, [ ] a selection procedure that is susceptible of abuse or is not racially neutral supports the presumption of discrimination raised by the statistical showing.

        Castaneda, 430 U.S. at 494, 97 S.Ct. at 1280 (citations omitted).

      . Indeed, the legislative history of the Jury Act suggests that Congress specifically anticipated that a jury plan could properly authorize excuses from service from a number of the categories contained in Section G(2). See Sweet v. United States, 449 A.2d 315, 326 (D.C.1982) (noting that Congress contemplated that "among others, doctors, ministers, sole proprietors of business, and mothers with young children” would be eligible for excuse provisions).