author: SHAW, District Judge.

text:
    C.M. ROUSSEAU, Jr. v. TELEDYNE MOVIBLE OFFSHORE, INC.
    Civ. A. No. 83-2553.
    United States District Court, W.D. Louisiana, Lafayette-Opelousas Division.
    Oct. 18, 1985.

      Wendell G. Lindsay, Jr., Lindsay & Marcel, Baton Rouge, La., for plaintiffs.
    Greg Guidry, Onebane, Donohoe, Bernard, Torian, Diaz, McNamara & Abell, Lafayette, La., for defendants.
   OPINION

SHAW, District Judge.

Plaintiffs have filed this lawsuit under the Fair Labor Standards Act claiming entitlement to pay for all time not reasonably allocable to eating and sleeping and other personal time when they were off duty but not allowed to leave the barges that they worked on.

In addition to this claim, twenty-four of the original plaintiffs amended their complaint to add a second cause of action under the Fair Labor Standards Act. This cause of action alleges that Teledyne Movible Offshore, Inc., the defendant, laid off these particular plaintiffs on March 1, 1984 in retaliation for their filing of the lawsuit.

The trial was bifurcated, resulting in the claims for overtime being tried by the Judge while the retaliatory discharge claims were tried by a jury. The jury returned a verdict for the plaintiffs and the defendant has filed a motion for judgment notwithstanding the verdict or in the alternative a new trial.

Teledyne Movible Offshore, Inc. is a company engaged in the business of fully servicing the oil and gas industry offshore. Its construction department consists of two divisions, the fabrication yard at Amelia, Louisiana and the offshore division, the division of the company involved in this litigation. In the offshore division, the company owns three derrick barges.

The derrick barges are used to lift offshore structures from cargo barges and place them in position on the Gulf of Mexico floor. They are also used to perform maintenance and repair work to fixed offshore structures, for fighting blowouts, for laying pipelines, and for engaging in other similar activities concerning fixed offshore structures. These derrick barges are not self-propelled and must be towed to offshore locations by tug boats.

All sixty-three plaintiffs in this matter were employed on defendant’s derrick barges in connection with the barges’ activities in offshore construction. Individual plaintiffs were engaged in various jobs on the derrick barges, including rigger foreman, rigger leaderman, rigger first class, crane operator, barge engineer, crane engineer, barge clerk, barge welder, and cook. All plaintiffs in this matter were paid an hourly rate, ranging from $7.25 per hour to $13.10 per hour.

The plaintiffs, at all relevant times, worked and work for defendant on a “hitch” basis, spending seven days working and living on defendant’s derrick barges, and then spending seven days not working or living on defendant’s derrick barges. The seven-day hitch begins on Thursday and ends on the following Thursday.

Defendant’s seven-day “workweek” runs from midnight Wednesday to the midnight of the following Wednesday. The first 40 hours worked by the employee after he begins his hitch on Thursday are compensated at the regular hourly rate. All hours worked in excess of forty, between Thursday and midnight Wednesday, are compensated at a rate of one and one-half times the hourly rate. All time worked on the last Thursday of the hitch, since it is in a new workweek (and the employee’s eighth day), is compensated at the regular hourly rate.

All plaintiffs, at all material times, were regularly assigned a daily schedule of hours within which to perform their various job functions. Prior to October 1, 1982, this regular daily schedule had always been twelve hours, regardless of whether the derrick barges were engaged in income-producing work or not, and whether or not they were docked. The one exception to the twelve-hour schedule was that of the cook, whose normal daily schedule was fourteen hours. In October of 1982, in an effort to reduce costs because of drastically declining derrick barge utilization, representatives of defendant made a decision to reduce the derrick barge crews’ regular daily work schedule when the derrick barges were on non-income-producing jobs. For most employees, this meant a reduction of the normal twelve-hour day to an eight-hour day. The cooks were reduced to a daily work schedule of nine and one-half hours. Except for the reduced daily schedule, there was absolutely no change in the company’s pay system or policies. This reduced regular schedule on non-income-producing jobs was the practice from October 1, 1982 until the time of this lawsuit. At times when the derrick barges were “working” during this period, the employee reverted to a twelve and twelve schedule.

Sometimes, some derrick barge employees would work in excess of the daily schedule of hours. These times were normally when the barges were working and were normally limited to situations involving special jobs, such as rig moves, and in emergencies. All employees and plaintiffs were paid for all time worked in excess of the regular daily schedule. Employees considered this extra work desirable, because of increased earnings. The opportunities for the “extra time” became less and less as derrick barge utilization on income-producing jobs decreased. When the derrick barges are not working and are docked, the derrick barge employees seldom or never exceeded or exceed the regular daily schedule.

After the derrick barge employees are released from the day’s active or physical labor, normally in the form of the daily regular schedule, they are completely released from all job duties and are free to engage in such activities as are available in the living quarters aboard the derrick barges, including watching television and VCR movies, listening to music, reading, eating, playing cards and similar games, sleeping, playing pingpong (on at least two of the three derrick barges), playing darts (on at least two of the three derrick barges), fishing and generally attending to personal needs.

The living quarters of the derrick barges are similar to those found on many offshore drilling platforms, with recreation rooms, sleeping quarters and large galleys (in which derrick barge employees are allowed to have access to food and drink at any time during their off-duty periods).

The meal period taken during the employee’s work shift is generally paid time. Off-duty meal periods are before and after the regular daily schedule, or after the day’s work was completed, and employees could take generally as much time as they wanted to in eating these meals, depending on their own off-duty schedule, their own eating habits, and their own personal desires. Additionally, they could and did spend time snacking in their off-duty hours.

During their off-duty periods, each derrick barge employee was in fact subject to being called to work, if circumstances required. However, the experiences of individual plaintiffs demonstrate that they were either never, seldom, or infrequently called upon to perform job duties after they had been released from the day’s work and before their next day’s work began, particularly when the barges were docked and are not working. When the derrick barges are working, derrick barge employees are divided into two separate crews, with one working the day shift, and the other working the night shift. Most employees alternate or rotate the day and night shifts, working a day shift one seven-day shift, and the night shift the next seven-day hitch. When the barges are not working, however, all crew members typically work the day shift only, there being no need for two shifts.

Given normal business conditions, the normal location of the derrick barges was somewhere in the Gulf of Mexico. In 1977, the derrick barges had an 88% utilization rate for the year, meaning they were being utilized on income-producing jobs 88% of the time. Even when not working, the barges typically stayed in the Gulf. Subsequent years indicate the following utilization rates: In 1978, the utilization was 66%, in 1979 it was 51%, in 1980 it was 50%, in 1981 it was 32%, in 1982 it was 27%, and in 1983, the year that this lawsuit was filed, it was 14%.

As a result of these drastically declining percentages, the company was forced to make several cost-cutting changes. On January 30, 1980, it released the first tug boat that was under contract to tow the barges from location to location. On February 28, 1981, it released its other contract tug boat. Rather than keep the derrick barges in the Gulf of Mexico when not working, the company began to have them towed in to various sites. One such site is the construction departments’ fabrication yard at Amelia, Louisiana. At other times, the derrick barges were tied up at various sea buoys in the Gulf, several miles offshore. Another site that the derrick barges were brought to- when there were no income-producing jobs was inside Belle Passe. Belle Passe is the name for the place where the mouth of an inland waterway meets the Gulf of Mexico, on the coast of Louisiana between Leeville and Grand Isle, Louisiana, and near Fourchon City, Louisiana. When the derrick barges were “inside” Belle Passe, meaning in the inland navigable waterway, as opposed to the sea buoy one or two miles in the Gulf “outside” of the Passe, they would normally be anchored to one side of the navigable waterway. If the barge was located at Belle Passe in the navigable waterways, derrick barge employees would be bused from Amelia to the docks at Fourchon City, a two to two and one-half hour bus ride, and then transferred to the derrick barge by some form of marine transportation.

At all relevant times to this lawsuit, the Company has for numerous years had a policy of requiring derrick barge crews to reside on the derrick barges during the seven-day hitch, even at times when the derrick barge was docked at the Amelia, Louisiana fabrication yard. The reasons for the policy at dockside were several, including liability and safety concerns, a desire to avoid having to take disciplinary action due to employees drinking and related rule violations, and the desire and need to remain in a “movable” status with a full crew aboard.

Plaintiffs testified that they did not like the company’s no-leave policy when it was in effect, particularly after their income was reduced because their regular schedule of hours was reduced from twelve to eight hours after October of 1982 when the barges were docked at Amelia. Several complained about the pay reduction and about having to stay aboard, yet all continued working, with full knowledge that they would be paid only for time actually spent in productive job duties.

All plaintiffs were fully aware of and understood at all times, before and after the “cut” that they were to be paid only for those hours actually spent in physical or active labor, and that they were not to be paid for their off-duty time on the barges, except when called upon to perform extra work due to the exigencies of the job.

The Court will first address the claims for overtime. 29 U.S.C. § 207(a)(1) provides in pertinent part that no employer “shall employ any of his employees ... for a work week longer than forty hours unless such employee receives compensation for his employment in excess of [forty] hours at a rate not less than time and one-half the regular rate at which he is employed.” Plaintiffs contend that they were “employed” by Teledyne during all of the time which they spent on the boat less a credit for eating, sleeping and personal time and therefore are entitled to overtime for all hours in excess of forty hours.

In order to determine that an employee is “employed” so as to activate the overtime payment requirement of the FLSA, it is not necessary that he be engaged in active labor. The Supreme Court has held that he is employed for purposes of the statute if he is engaged to wait for work. Armour & Co. v. Wantock, 323 U.S. 126, 65 S.Ct. 165, 89 L.Ed. 118 (1944); Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944). Whether an employee is engaged to wait for work is a question of fact to be resolved by appropriate findings of the trial court. Skidmore v. Swift & Co., supra; Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460 (1942). As the Supreme Court stated in Swift this inquiry “involves scrutiny and construction of the agreements between the particular parties, appraisal of their practical construction of the working agreement by conduct, consideration of the nature of the service, and its relation to the waiting time, and all of the surrounding circumstances. Facts may show that the employee was engaged to wait, or they may show that he waited to be engaged. His compensation may cover both waiting and task, or only performance of the task itself. Living quarters may in some situations be furnished as a facility of the task and in another as part of its compensation. The law does not impose an arrangement upon the parties. It imposes upon the courts the task of finding what the arrangement was.” 323 U.S. at 137, 65 S.Ct. at 163.

Considering the overall circumstances of this case, the Court is convinced that the plaintiffs were paid for all time that they reasonably expected to be paid for and that their claims for extra compensation must be rejected in their entirety. First, the Court finds that as stipulated by the parties, all plaintiffs were fully aware of and understood that they would be paid for only time spent in active or physical labor while on their seven days on, regardless of where the barge was located, and that even though the plaintiffs received a reduction in their take-home pay after their regular schedule of hours was cut on non-income-producing jobs, this understanding and their awareness of what time they would be paid for never changed. The Court finds that the arrangement between plaintiffs and the company was that they would be paid for their regular schedule of hours, whether it be 8 or 12, that they would be paid for all hours worked in excess of the regular schedule, and that this was to be the system whether the barge was offshore or docked.

The Fifth Circuit has addressed a similar situation in the case of Allen v. Atlantic Richfield Co., 724 F.2d 1131 (5th Cir.1984). In Allen, twenty-two security guards at an Arco refinery brought suit alleging that Arco owed them additional overtime compensation for hours worked during a strike in 1980 by production employees. The guards normally worked three eight-hour shifts. During the strike, however, they worked twelve-hour on-duty shifts each day. They were paid for their on-duty shifts and for any actual work required during the off-duty twelve-hour period. Otherwise the guards were not paid for off-duty time when they were required to remain inside the refinery.

Evidence was introduced to show that this pay arrangement had been employed during two previous strikes in 1961 and 1969. Prior to each strike Arco met with the guard’s union representatives. Agreements were put in writing that the guards would receive a higher than usual hourly rate for their first forty hours on duty each week and get time and a half that rate for any excess hours worked. These written agreements did not address the specific work hours. At a 1978 pre-strike meeting a company representative stated that the guards would not be paid for twenty-four hours a day during the strike.

Prior to the 1980 strike, at the pre-strike meeting, a company representative told the guard’s union representative that the guards would receive the higher rate of pay only for the twelve-hour on-duty time. An employee of Arco who interviewed all guard applicants testified that he told numerous guards when he interviewed them of the strike arrangement whereby guards stayed at the plant full-time but were paid only for twelve hours. Also, evidence was introduced of discussions between the guards which indicated that they understood they were to remain in the refinery on a twenty-four hour basis and only be paid for twelve-hour on-duty shifts.

During the initial stages of the strike the guards were required to remain in the refinery on a twenty-four hour basis during both their twelve-hour on-duty shifts and their off-duty time. The guards were provided sleeping quarters and food was provided at no cost around the clock. So long as they remained inside the refinery, the guards were free to utilize various recreational facilities which were provided. Interruptions to non-work time were infrequent and when they did occur the guards were paid for those interruptions.

The Fifth Circuit rejected the guards’ argument that no evidence should have been admitted to show that past practice resulted in an agreement regarding what was noncompensable time since the employees could not agree to waive their rights under the Fair Labor Standards Act. The Court noted that the Supreme Court had made it clear in Skidmore that “an agreement between the parties is one factor that the fact finder properly should consider.” 724 F.2d at 1136. The trial court had properly admitted evidence of an agreement between Arco and the plaintiff guards since the agreement was a circumstance to consider in determining whether the off-duty time in the plant was spent primarily for Arco’s benefit.

After reviewing the record the Fifth Circuit concluded that there was sufficient evidence for the jury to conclude that an agreement did exist between the guards and Arco regarding time to be spent in the plant and affirmed the lower court decision that the guard’s time spent on off-duty status was not work time.

In this case a similar agreement existed between the plaintiffs and Teledyne. As stated above, the evidence establishes that the plaintiffs were well aware of the fact that they would be paid only for their regular shift and any hours spent in active, physical labor and would not be paid for their off-duty time. The evidence also establishes that the plaintiffs were aware of the no-leave policy. The fact that there was no written agreement does not negate the existence of such agreement. Skid-more, supra; Allen, supra; Rural Fire Protection Co. v. Hepp., 366 F.2d 355 (9th Cir.1966); Bowers v. Remington Rand, Inc., 159 F.2d 114 (7th Cir.1946), cert. de nied, 330 U.S. 843, 67 S.Ct. 1083, 91 L.Ed. 1288 (1947).

The Court rejects plaintiff’s argument that the plaintiffs negated the existence of an implied agreement by the fact that they complained about having to stay on the barge after their daily work schedules were reduced from twelve hours to eight hours at all times when the barges were not working. What we are concerned about here is the agreement as to what hours would be considered to be working hours and not whether the employees liked having to stay on the barges during their off hours. The plaintiffs knew about the no-leave policy and knew that they would not be paid during their off hours. By their conduct in continuing to work for defendant with full knowledge of the compensation system, as well as the “no-leave” rule, they impliedly consented to the continued working arrangement that had always existed between the parties, as part of their employment in the offshore industry. Bowers v. Remington Rand, supra (failure of several plaintiffs to sign written agreements confirming new pay system not controlling, since employees continued to work for employer after system was instituted.) General Electric Co. v. Porter, 208 F.2d 805 (9th Cir.1953) (court held, as a matter of law, that unilateral action of employer to pay firemen on a monthly salary basis rather than hourly wages with overtime, was impliedly accepted when the firemen reported to work and worked pursuant to the new schedule).

An argument that the plaintiffs’ continued employment could not equal an implied consent because their only choice other than accepting the policy was to lose their jobs, is rejected by this Court. The Ninth Circuit addressed a similar claim of economic compulsion in the case of Irwin v. Clark, 400 F.2d 882 (6th Cir.1968). In that case the employees were on call twenty-four hours per day and seven days per week, but were not required to report at any given time, or remain for any stated period on the employer’s premises. They were required to leave a telephone number where they could be called in the event that they were needed. Many of the plaintiffs frequently came to defendant’s place of business between seven and eight o’clock a.m. voluntarily and without being called. Often if there was no work to be done at the time of reporting, they would wait for some period on the employer’s premises on the chance that a work order would come in and that their services would be needed. While thus waiting, the plaintiffs performed no services for the employer, but the men who were on the premises and immediately available were the ones who received the most work. The plaintiffs claimed that they reported and waited as they did because of the likelihood of a better paycheck. From this they argued that the waiting time was not voluntary as a matter of law. In short, the plaintiff’s position was, if there is any economic reward for waiting, the waiting must be compensated. The Sixth Circuit disagreed. The court cited Skidmore and stated: “[I]t is clear that economic compulsion is not a controlling factor.” 400 F.2d at 884. The court noted that in Skidmore the firemen were required to stay in or close to the fire hall and presumably would not be hired were they unwilling to do so. The Supreme Court implied in its decision to remand the case for further proceedings that the district court might find as a matter of fact that “the waiting time (compelled as it was) was not working time.” 400 F.2d at 884. Similarly, this Court recognizes that there was a degree of economic compulsion involved here but when considered as a factor along with the other factors, it does not negate the existence of an implied agreement that the employees would be paid only for their regular shift and any hours actually spent in physical labor. See also, General Electric Co. v. Porter, supra.

The Court also rejects the notion argued by plaintiffs that the fact that defendant derived benefit from its no-leave policy classifies plaintiff’s off-duty time as “hours worked”. As recognized by the Fifth Circuit in Allen v. Atlantic Richfield Company, supra, the fact that the employer benefits from the employee being required to remain on the premises does not, alone, answer the question of whether or not the actual time in question is spent predominantly for the employer’s benefit. “There are many instances, however, in which time spent on the employer’s premises is not compensable working time.” 724 F.2d at 1136. Whether time is compensa-ble working time depends “upon the degree to which the employee is free to engage in personal activities during periods of idleness when he is subject to call and the number of consecutive hours that the employee is subject to call, without being required to perform active work.” 724 F.2d at 1137. The stipulated facts and evidence show that during their off-duty time on the barges, the plaintiffs were free to sleep, eat, watch television, watch VCR movies, play pingpong or cards, read, listen to music, etc. They seldom or never did any physical work after their regular shift ended and if they did they were paid for it pursuant to the agreement.

Another factor which leads to the conclusion that the waiting time was not predominantly for the employer’s benefit is the fact that both the employer and the employee stood to gain if the employees were ready to go the minute a job came up. All parties concede that the economic situation at this time was very poor. When the barges were docked the employer was not producing any income. This case is distinguishable from Smith v. Superior Casing Crews, 299 F.Supp. 725 (E.D.La.1969). In Smith the court awarded the plaintiffs compensation for all time spent riding on boats to and from offshore rigs and all time spent waiting on the rigs until it was time to run casing. Among the distinguishing facts of this case was the fact that their employer billed his customers for all of this time. In the instant case the employer did not have any customers to bill while they were sitting at the dock. That is the precise reason why they were at the dock. Both the employer and the employees were waiting to be engaged. If and when a job came in, by being on the barges, the employees were assured of getting extra compensation. If they had been given the option to leave the employer’s premises, it is arguable that many would have stayed on the barges just as the employees in Irwin v. Clark waited outside the gate of their employer to insure that they would be the ones sent out on the jobs. See also, Arthur v. K.D. Emrick Well Servicing Company, 209 F.Supp. 491 (E.D.Okla.1962). The average employee lived more than one hundred miles from the fabrication yard and therefore would not have been able to respond within minutes if he was at home and a job came up.

Lastly, the Court notes that the employer could have done legally what the plaintiffs contend they did “illegally.” Instead of paying premium wages to the employees during their shifts and nothing during their off-duty hours, Teledyne could have cut them all to minimum wage and paid them for twenty-four hours a day less a credit for sleeping and eating time. Given the economic situation at this time and the scarcity of jobs, it is arguable that the employees would have agreed to stay on under these conditions. Instead they agreed to be paid premium rates for the hours they worked and nothing for the hours when they did nothing. It would be inequitable to impose the plaintiffs’ requested sanctions upon Teledyne under these circumstances.

In conclusion, the Court holds that there was an agreement between Teledyne and the plaintiffs that they would stay on the barges for twenty-four hours and be paid only for their regular shift and any hours actually spent in physical labor. This agreement along with the fact that the employees seldom, if ever, were called to work after their regular shift, they were free to eat, sleep and engage in various recreational activities, they benefited by being on the barges when a job did come up because they were able to insure themselves that they would earn overtime, and the fact that Teledyne could have accomplished the same result by paying the employees the minimum wage twenty-four hours a day less a credit for sleeping and eating time led this Court to conclude that the time spent waiting on the barges was not primarily for the employer’s benefit. Although Teledyne did benefit from the arrangement, so did the employees. This Court holds that the employees were not “engaged to wait.”

We now reach the final chapter of this case. The plaintiffs’ retaliatory discharge claims were tried to a jury which returned the following answers to the Court’s interrogatories:

1. Did the filing of the lawsuit play any part in the employer’s decision to discharge or lay off any plaintiffs?

Answer Yes or No: “Yes”

(Note: If you answered “No” to Question One, proceed no further. If you answered “Yes” to Question One, proceed to Question Two.)

2. Did the defendant have a legitimate non-discriminatory reason which played any part in the decision to discharge or lay off any plaintiffs?

Answer Yes or No: “No”

(Note: If you answered “No” to Question Two, skip Question Three and proceed to Question Four. If you answered “Yes” to Question Two, proceed to Question Three.)

3. Has any plaintiff proved by a preponderance of the evidence that a discriminatory reason more likely motivated the employer or that the employer’s profferred explanation is unworthy of credence?

Answer Yes or No: _

(Note: If you answered “No” to Question Three, proceed no further. If you answered “Yes” to Question Three, proceed to Question Four.)

4. Were all of the discharged or laid-off plaintiffs discriminated against by the defendant?

Answer Yes or No: “Yes”

(Note: If you answered “Yes” to Question Four, proceed no further. If you answered “No” to Question Four, proceed to Question Five.)

5. Check the name(s) of the plaintiffs) whom you conclude have been discriminated against by the defendant.

_Harry L. Bellard

_Kenneth Breaux

_Tommy L. Brown

_William E. Chandler, Jr.

_Keevin Comeaux

_Jimmy R. Edison

_John Jerry Deville

_Layman E. Gillmore

_Bruce A. Hebert

_Michael S,3 Hebert

_Lloyd A. Jones

_Seaborn L. Lott

Defendant has filed a motion for judgment notwithstanding the verdict or in the alternative, a new trial. As grounds for the judgment notwithstanding the verdict the defendant points to interrogatory number two where the jury concluded that the defendant had no legitimate non-discriminatory reason that played any part in the layoff or discharge of the employees. As grounds for a new trial defendant urges this same reason and also alleges juror misconduct.

This Court notes that in order to grant a judgment notwithstanding the verdict, the Court must conclude that the evidence, together with all the inferences that can reasonably be drawn therefrom is so one-sided that reasonable men could not disagree on the verdict. Coburn v. Pan American World Airways, Inc., 711 F.2d 339 (D.C. Cir.1983). After reviewing the evidence presented at trial this Court concludes that a judgment notwithstanding the verdict is proper and will be granted.

As agreed by the parties and the Court before the trial of this matter, the burden of proof in this action is the same as that in employment discrimination cases brought under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq., and similar discrimination laws. The plaintiffs must prove by a preponderance of the evidence a prima facie case of discrimination. If plaintiff establishes a prima facie case of discrimination, the burden of production shifts to defendant to' simply articulate a legitimate, nondiscriminatory reason for their action. If defendant meets that burden, the plaintiff has the opportunity to prove by a preponderance of the evidence that the reasons offered by defendant are not the true reasons, but are a pretext for discrimination. Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981); McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973).

The Court’s first three interrogatories to the jury were based upon the above stated burden of proof. Although there was sufficient evidence to support the jury’s conclusion in interrogatory number one, the Court concludes that no reasonable person could have concluded as the jury did in interrogatory number two. Throughout the trial, all parties conceded that due to the economic situation that existed on March 1,1984 the defendant, Teledyne, had to take some action to reduce costs. Plaintiff Bud Rousseau admitted under oath on the stand that the company had to take some sort of “job action” in March of 1984 because of the obviously poor business conditions. Counsel for plaintiffs argued in opening and closing statements that the plaintiffs were not contending that defendant did not have a need and a right to reduce payroll costs because of the economy, but that what they were attacking was defendant’s choice of the layoff over the PCP program.

Defendant introduced evidence which established that Teledyne Movible Offshore has suffered a steady decline in business for the last several years, and that during the last few months prior to the March 1, 1984 layoff, its derrick barge utilization in the offshore division of the construction department was at its lowest level in the history of the company. Testimony established that layoffs and the need for another layoff in the offshore division of its construction department was a topic of steady and repeated discussion between company officials long before any lawsuit was filed in October of 1983 and long before the layoff in March of 1984 took place. Due to a lack of work and poor economic conditions, the company had laid off hundreds of employees throughout the company, none of whom were suing the company for wage and hour violations at the time that the layoffs occurred. Specifically, Mr. Ned Travis testified that between 1980 and the end of 1984, 238 employees were laid off or terminated for lack of work in the drilling department; 112 employees were laid off or terminated for lack of work in the fabrication yard division of the construction department; and that nine employees were laid off or terminated for lack of work in other departments of the company. Of these over 400 employees who lost their jobs because of lack of work, only a small group of them were placed on the partial claims program offered by the Department of Employment Security for the state of Louisiana. These were employees employed in the fabrication yard, who, because of the nature of their land-based job and their own particular work schedules, were considered by defendant to be well-suited to participate in the program. The drilling department, the offshore division of the construction department, and other miscellaneous departments of the company did not participate in the PCP program.

The offshore division itself had previously conducted a layoff of derrick barge employees in early 1980, due to lack of work. The system for determining who would be selected for the layoff was by determining which job classifications were least critical for the company’s manning of its derrick barges, which is the same system the company testified it utilized in choosing who would be laid off in the March, 1984 layoff litigated in this case.

In October of 1982 the company considered a layoff but Mr. James Stanley, Vice President of Construction, testified that the company preferred to keep as many people on as it could, with the hope that business would improve. Rather than lay off half of its workforce in the offshore division, the company chose to reduce the regular schedule of hours from twelve to eight on the days when the derrick barges were not working.

From October of 1982 through March of 1984, búsiness did not improve and derrick barge utilization figures continued to decline, as shown in defendant’s exhibits 1 and 20. Testimony revealed that throughout this time, Mr. Stanley and Mr. Theriot repeatedly and continuously discussed the fact that a layoff was imminent.

As stated above the defendant had only a burden of production, not a burden of persuasion. Its duty was merely to produce evidence of a legitimate, non-discriminatory reason for the layoff. “The defendant need not persuade the court that it was actually motivated by the proffered reasons____ It is sufficient if the defendant’s evidence raises a genuine issue of fact as to whether it discriminated against the plaintiff.” Texas Dept. of Comm. Affairs v. Burdine, 450 U.S. at 254-55, 101 S.Ct. at 1094. The defendant met this burden. All of the evidence, as well as the contentions of both parties, convince the Court that the economic situation in the oil industry at the time of the layoff was such as to justify a decision to lay off employees in order to reduce costs. In light of the evidence, no reasonable juror could have concluded as the jury did in interrogatory number two.

Having decided that the defendant met its burden of production, and therefore, the jury’s conclusion in interrogatory two was wrong, the Court must now decide whether the plaintiffs proved their case directly by a preponderance that a discriminatory reason more likely motivated the defendant or indirectly by a showing that the defendant’s proffered explanation is unworthy of credence. Texas Dept. of Comm. Affairs v. Brodine, supra. The Court concludes that plaintiffs have failed to meet this burden.

Plaintiffs introduced evidence that when Mr. Theriot received a copy of the lawsuit, he posted it on the derrick barge bulletin boards immediately adjacent to a notice of an NLRB election which was underway at the time. Plaintiffs contend this was done so as to prominently display the names of those who brought the action.

' Defendant claims its purpose was to talk to employees about the union and the lawsuit and their relationship to one another. Theriot wished to point out that the union’s attorney, Mr. Wendell Lindsay, had also signed the lawsuit and to emphasize to employees that they had to separate the two and that one did not have to join the union in order to assert his rights under the wage and hour laws. Theriot also called a meeting for that purpose and explained the above items to employees. He answered questions from the floor, pointing out that he was not certain what impact the lawsuit would have on company business, indicating that a large judgment could impact company business, and advised employees that he thought they would probably have to file suit on their own if they wanted to collect any money if the company was found in violation of the Fair Labor Standards Act. He also told the employees that it was the right of every employee to assert their rights under the wage and hour law and that no one would be retaliated against by doing so, and that they did not need to join the union to have protection in asserting their rights under the wage and hour law. All of these communications by Mr. Theriot were corroborated and confirmed by plaintiffs who testified at trial.

The rest of plaintiffs’ evidence merely attacks the defendant’s business decision to lay off the employees as opposed to some other method of solving their financial problems, in particular the Partial Compensation Plan (“PCP”).

Several weeks before the layoff, plaintiff Budd Rousseau approached Mr. Theriot with a proposal that instead of having a layoff the company could put the employees on the PCP program. This would have allowed the employees to work on a temporary basis, one week out of the month, and then draw unemployment compensation during some of the remaining weeks of the month. Mr. Theriot told Mr. Rousseau that he had already looked into it for the derrick barges in the previous year at the same time- that the fabrication yard employees had been put on it (before the lawsuit was filed), and that he had decided against it. However, Mr. Theriot told Mr. Rousseau that the company would study his proposal and consider it.

At trial Mr. Rousseau presented elaborate calculations in which his figures showed that the company could have spent less dollars by going to a PCP program rather than the March 1, 1984 layoff. An expert confirmed Mr. Rousseau’s calculations but conceded on cross-examination that assuming vacation pay would accrue, the company would have saved a minimum of $5,000 per month by having the layoff instead of going to the PCP program.

Defendant put on evidence to show that Mr. Theriot asked James Kiesler, Offshore Division Manager, to study the program and give recommendations on the program. He spent approximately three days studying it, performing cost estimates, and finding out about the mechanics of the PCP program as it related to the seven-and-seven employment of the derrick barge crews. Mr. Kiesler testified that his cost estimates showed that the company would save an additional $15,000 per month by going to the layoff instead of PCP. He also concluded that operationally the program would have been difficult and complicated and was not something that he saw to be of benefit to the company or its employees. He also felt that the slight additional earnings that the employees would have received by going to the PCP program would not have improved morale that greatly, as compared to putting a reduced workforce back on a twelve-and-twelve basis, with a ten (10%) per cent cut in the pay rate. For these reasons, he recommended to Mr. Theriot that the company not go to the PCP program.

This Court is of the opinion that Teledyne had the exclusive right to decide on what course of conduct it would take to resolve its economic problems. Teledyne was not under a duty to implement the program that was least injurious to the employees. The Fair Labor Standards Act does not preclude an employer from making an adverse decision against an employee if that decision is not motivated by discriminatory reasons.

In the case of Loeb v. Textron, Inc., 600 F.2d 1003 (1st Cir.1979), the Court was faced with an Age Discrimination in Employment Act claim. The A.D.E.A. also utilizes the Title VII Burdine standard of proof. Stacey v. Allied Stores Corp., 581 F.Supp. 1103 (D.C.D.C.1984). The court stated in footnote six:

“While an employer’s judgment or course of action may seem poor or erroneous to outsiders, the relevant question is simply whether the given reason was a pretext for illegal discrimination. The employer’s stated legitimate reason must be reasonably articulated and nondiscriminatory, but does not have to be a reason that the judge or jurors would act on or approve. Nor is an employer required to adopt the policy that will maximize the number of minorities, women, or older persons in his workforce. See Furnco Construction Corp. v. Waters, 438 U.S. 567, 576-77, 98 S.Ct. 2943 [2949-50], 57 L.Ed.2d 957 (1978). An employer is entitled to make his own policy and business judgments, and may, for example, fire an adequate employee if his reason is to hire one who will be even better, as long as this is not a pretext for discrimination.

600 F.2d at 1012, n. 6. See also Stacey v. Allied Stores Corp., supra; Williamson v. Owens-Illinois, Inc., 589 F.Supp. 1051 (N.D.Ohio W.D.1984).

The court went on to point out that the reasonableness of the employer’s reasons may be probative of whether they are pretexts. “The more idiosyncratic or questionable the employer’s reason, the easier it will be to expose it as a pretext, if indeed it is one.” 600 F.2d at 1012, n. 6.

The evidence does not lead this Court to conclude that Teledyne’s reasons were “idiosyncratic or questionable” or that they were a pretext. The defendant introduced evidence that they were experiencing an economic crisis and that they did investigate the PCP plan but determined it was infeasible. This decision is not “idiosyncratic.” Under their cost analyses which included accrual of vacation time, Teledyne could save more money by using the layoff rather than the PCP program. This was corroborated by plaintiffs’ expert witness. Although plaintiffs claim they did not need vacation because under PCP they would have more time off, the Court recognizes that the employer may have considered that it was legally obligated to give vacation time. Indeed, in the only segment of the company ever temporarily put on a PCP program, the fabrication yard, the employees did continue to accrue vacation benefits. If vacation benefits were given generally within the company, Teledyne may have feared Title VII exposure by excluding these employees from those benefits.

Defendant also stated that they would have exposed themselves to greater liability under the PCP program due to its requirements. Under the PCP program, Tel-edyne would have been required to conduct midnight shift changes. A shift change at midnight out in the middle of the Gulf of Mexico is very hazardous. Teledyne’s consideration of this factor is not “questionable.” .

Finally, the Court notes that several of the plaintiffs in the wage and hour lawsuit were not laid off and that besides the plaintiffs that were laid off, several other people lost their jobs. These were people who had never filed a suit against Teledyne. Teledyne followed a plan in deciding who to lay off. They determined job classification priorities that they felt were essential to man the barges that would be kept in service. After that, they went by seniority within job classification and determined who would be laid off, just as they had done in the 1980 layoff.

Considering all of the evidence the Court holds that the plaintiff has failed to meet its burden of proving that Teledyne’s proffered reason for the layoff was a pretext for discrimination. The Court is satisfied that there was no evidence whatsoever that the defendant’s decision to lay off the plaintiffs was in retaliation for the filing of the wage and hour lawsuit. The evidence and inferences point so strongly in favor of Teledyne Movible Offshore that reasonable minds could not arrive at a contrary verdict. Accordingly, the defendant’s motion for judgment notwithstanding the verdict is GRANTED and judgment is entered in favor of the defendant.

At this point, the Court must consider defendant’s alternative motion for a new trial pursuant to Federal Rule of Civil Procedure 50(c)(1). This ruling is conditioned upon a reversal or vacation of the judgment for defendant notwithstanding the verdict for plaintiff. It is the opinion of the Court that a new trial should be granted for the same reasons as advanced for the judgment notwithstanding the verdict. The Court rejects defendant’s argument that a new trial should be granted on the basis of juror misconduct. The juror, Mrs. Kasperski, answered all questions truthfully. Her uncle, a former employee of Tele-dyne, is not a member of her “immediate family.” Mrs. Kasperski did not give any indication that she could not be a fair and impartial juror.

For the foregoing reasons, it is:

ORDERED that judgment be entered in favor of the defendant in the wage and hour claims tried to the Judge.

FURTHER ORDERED that defendant’s motion notwithstanding the verdict is GRANTED and judgment is entered in favor of the defendant in the retaliatory discharge claims.

FURTHER ORDERED that defendant’s alternative motion for a new trial is CONDITIONALLY GRANTED.


source: Caselaw Access Project

author: LOUGHLIN, District Judge.

license: Public Domain

text:
    David J. MOONEY v. UNITED STATES of America, the United States Postal Service, an agency of the United States of America.
    No. 82-636-L.
    United States District Court, D. New Hampshire.
    Oct. 18, 1985.

      Mark S. Gearreald, Engel & Morse, Exe-ter, N.H., for plaintiff.
    Office of the U.S. Atty., Concord, N.H., for defendant.
   FINDINGS OF FACT AND RULINGS OF LAW

LOUGHLIN, District Judge.

This action arises under the Federal Tort Claims Act, 28 USC §§ 1346 (b), 2671 et seq. The plaintiff’s date of birth is March 20, 1920. He 'is a widower and has five children. He was 'member of the United States Navy from June 6, 1942 until October 26, 1962. Upon, his discharge from the Service, he was an employee at the Portsmouth Navy Yard for approximately nine years. On January 8, 1981 he had written a letter to his son, a member of the United States Army stationed in Korea. On that date at or about 3:00 P.M. he. went into the Exeter Post Office. It had snowed the prior evening or in the early morning of January 8, 1981. The plaintiff was standing in line waiting to purchase stamps to mail the letter to his son when he went to step ahead. The next thing that he realized he was on his back. As a result of his fall, he injured his right hip and right shoulder.

He was taken to the Exeter Hospital by ambulance and treated by Dr. Edward W. King, an orthopedic surgeon. He suffered a fracture to his right femur and through open reduction, and an internal fixation, the fracture was taken care of. He was also put in a Buck’s traction in order to immobilize the leg. During the operation screws were used to set the fracture and he was discharged from the hospital on January 19, 1981. He also had injury to the rotator cup of the right shoulder. He was subsequently re-admitted to the Exe-ter Hospital on January 29, 1982 to have the screws removed from his leg and he was discharged on January 31, 1982.

Dr. King testified that he suffered a permanent partial injury of 5% to his right leg and a similar disability to his right shoulder. It was also the opinion of Dr. King that the shoulder which had previously been injured in 1975 or 1976 was further exacerbated by the injury of January 8, 1981.

Lillian Cassier was a patron or customer of the Exeter Post Office during the mid-morning of January 8, 1981. Upon walking into the lobby of the Post Office one of her feet slipped and she noted that the floor was wet and slushy. This was about ten o’clock in the morning. She had no recollection one way or the other of whether there was a rug in the lobby area or any signs warning customers that the floor was wet.

Patrick Scanlon, also from Exeter, New Hampshire testified. He is a Post Office employee and has been for the last 7V2 years. He is not employed at the Exeter Post Office but at the Manchester Post Office. On January 8, 1981 he was standing in line at the service window and the plaintiff was to the rear standing next to him. Mr. Scanlon felt something strike his right leg and it was the plaintiff who subsequently fell to the floor.

During the fall and winter of 1980, the plaintiff was seeking employment. As a result of this, he was interviewed by Bernard Cool of the New Hampshire Department of Employment Security. Due to Cool’s efforts, Mooney was referred to several jobs, one of which was a custodial type job at the Indian Head Bank. A job opportunity was also available at Tyco. The hourly wage was in the vicinity of $4.00 an hour. Cool considered Mooney a good applicant.

Defendant’s manual designated that during wet weather the floor should be damp mopped and safety mats layed out. This was not done on the date of the accident.

Norman T. Fecteau was the postmaster on January 8,1981 and he saw the plaintiff on the floor. The plaintiff appeared to be in pain. In his accident report, Fecteau stated that the floor had a light water content.

It had snowed the night before and the custodian had cleaned the steps leading to the Post Office at 6:00 A.M., January 8, 1981.

The Post Office had signs warning of wet floors which were not put out on the date of the accident. Photographs were taken right after the accident and have been entered into evidence as exhibits. When floors were wet, the policy was to damp mop and then put out the mats.

Patricia Schamberger was in her first week of employment and present when the plaintiff was injured. Her hours were from 2:00 P.M. to 6:00 P.M. and she was a janitress.

According to her schedule, she was to mop the floor at 4:00 P.M.. The accident occurred between 3 and 3:30 P.M.

She testified that the walk leading into the Post Office was very clean, but the lobby was damp and dirty. The wetness of the floor was due to the tracking into the lobby by patrons of the Post Office.

She thought she saw the plaintiff fall, her recollection was that he was wiping the slush off his feet before he fell and the fall was a hard one.

In her opinion, she saw no reason to put out the signs.

Donald Wilson, an industrial engineer from Florida testified relative to Terrazo ceramic, the material that the lobby floor was made of which he stated was foreseeable as being hazardous. The first time that he examined the floor was August 21, 1985. He was first contacted to be a witness in the case in February, 1985.

John M. Hallinan, a postal employee at the Exeter Post Office on January 8, 1981 presently an employee at the Portsmouth Post Office saw the plaintiff after he fell. Plaintiff was dazed, on his left side and in pain. The floor was damp, but without snow or slush on it. Hallinan took the photographs.

The court is not specifically ruling on plaintiff’s 125 requests or defendant’s 116 requests, which total 241 requests, as the important and relevant facts are incorporated into this opinion. Fed.R.Civ.P. 52; United States v. Forness, 125 F.2d 928 (2d Cir.1942), cert. denied, 316 U.S. 694, 62 S.Ct. 1293, 86 L.Ed. 1764 (1942). See also Concord General Ins. Co. v. Haynes, 110 N.H. 76, 79, 260 A.2d 99 (1969).

The plaintiff has the burden of proving each element of his cause of action by a preponderance of evidence. Zellers v. Chase, 105 N.H. 266, 197 A.2d 206 (1964).

State Law determines issues of liability in actions brought under the Federal Torts Claims Act, 28 U.S.C. § 2674. Brooks v. United States, 695 F.2d 984 (5th Cir.1983); Harrigan v. United States, 63 F.R.D. 402 (D.C.Pa.1974); Loney v. McPhillips, 268 Or. 378, 521 P.2d 340 (1974).

Under New Hampshire law, a possessor of real estate is subject to liability for harm .caused to business invitees upon the premises, if the harm results either from the possessor’s failure to carry on its activities with reasonable care or from its failure to remedy or to give warning of a dangerous condition of which it knew or in the exercise of reasonable care should know. Partin v. A & P Tea Co., 102 N.H. 62, 63-64, 149 A.2d 860 (1959). See Pridham v. Cash and Carry Building Center, Inc., 116 N.H. 292, 359 A.2d 193 (1976).

The United States is liable in a negligence action in the same manner and to the same extent as a private individual under like circumstances but shall not be liable for interest prior to judgment or for punitive damages. 28 U.S.C. § 2674.

The proximate cause of the plaintiff’s slip and subsequent fall was the negligence of the defendant’s employee in allowing the condition of the wet floor to exist and their failure to take remedial action by drying it out by mopping, having mats in place and failure to have warning signs on the premises.

N.H. RSA 507:7a provides,

Comparative Negligence. Contributory negligence shall not bar recovery in an action by any plaintiff, or his legal representative, to recover damages for negligence resulting in death, personal injury, or property damage, if such negligence was not greater than the causal negligence of the defendant, but the damages awarded shall be diminished, by general verdict, in proportion to the amount of negligence attributed to the plaintiff; provided that where recovery is allowed against more than one defendant, each such defendant shall be liable for that proportion of the total dollar amount awarded as damages in the ratio of the amount of his causal negligence to the amount of causal negligence attributed to all defendants against whom recovery is allowed. The burden of proof as to the existence or amount of causal negligence alleged to be attributable to a party shall rest upon the party making such allegation.

The court finds that the plaintiff just prior to falling was in the process of or did lift one foot on the wet floor. The court finds that the proportion of negligence attributed to the plaintiff was 20 percent (20%).

Damages that are recoverable are determined by the law of New Hampshire. 28 U.S.C. § 2674. Components and measures of damages in Federal Tort Claims Act cases are taken from the law of the state where the tort occurred. Ferrero v. United States, 603 F.2d 510, reh’g denied, 606 F.2d 321 (5th Cir.1979).

The plaintiff received painful and serious injuries to his right hip particularly and a pre-existent injury to his right shoulder was exacerbated by the accident. As a general rule if a second injury or an aggravation of a prior one is considered to be a direct consequence or a natural result of the original injury, the original wrongdoer is held liable for the entire damage. Armstrong v. Bergeron, 104 N.H. 85, 86, 178 A.2d 293 (1962).

His most serious injury was an intero-chanteric fracture of his right hip. Plaintiff was hospitalized on two separate occasions and the evidence is uncontroverted that he suffered a great deal of pain, both physical and mental.

The evidence is also fairly pristine that the plaintiff did as a result of the accident incur a diminution in earning capacity. Ellsworth v. Watkins, 101 N.H. 51, 132 A.2d 136 (1957).

Plaintiffs gross earnings for the years 1981, 1982 and 1983 were $9,349.00. Conservatively, evidence was presented that the plaintiff would have grossed at least $15,000 for these three years if he had not been injured. The court finds that Mooney incurred a wage loss of at least $6,000.00.

Additionally, the evidence is uncontra-dicted that he now has a 5% permanent partial disability to his right lower extremity. He also suffered an aggravation of the pre-existing soft tissue injury to his right shoulder, resulting in Mr. Mooney’s having a 5% permanent partial disability today in that shoulder. His average life expectancy from the date of the accident is 18.4 years.

It is the further finding of this court that, contrary to the allegations of the defendant, the plaintiff had not imbibed in any alcoholic beverages on the date of the accident. Further, this court finds that just prior to and as soon after his injury as possible, he looked for and eventually procured employment.

When the plaintiff submitted his administrative claim, the increased amount in the complaint over that presented in the administrative claim was based on newly discovered evidence not reasonably discovered at the time and proof of intervening facts. 28 U.S.C. 2675(b). Lehner v. United States, 685 F.2d 1187 (9th Cir.1982).

Defendant in its requests for findings of fact enumerated as 112 and 113 incorporated herein, posits as follows: the defendant, through its agent the Civilian Health and Medical Program of the Uniformed Service (hereafter referred to as. CHAMPUS) paid some or all of the medical bills originally listed in the administrative claim. CHAMPUS is a benefit program provided by the federal government, funds for which are provided by Congress to the Department of Defense. David Mooney paid no premiums or other types of contributions to CHAMPUS.

CHAMPUS refused to allow plaintiff’s counsel to claim any loss on its part jointly with Mr. Mooney’s claim “since the only possible source of recovery [would be] another federal agency.” In essence, CHAM-PUS would not be involved because the result would simply be the defendant paying the defendant a sum after deducting the third for legal fees plus expenses to David Mooney’s attorney.

Champús paid approximately $6,800.14, plaintiff $2,424.20. New Hampshire has long recognized the collateral source rule. Merchants Mutual Insurance Group v. Orthopedic Professional Association, 124 N.H. 648, 656, 480 A.2d 840 (1984). The Government claims that any recovery awarded to Mr. Mooney should be reduced by the amount previously paid from CHAMPUS.

Under the Federal Tort Claims Act, 28 U.S.C. § 2674, the federal court is required to apply the whole law of the state where the act or omission giving rise to the cause of action occurred. Richards v. United States, 369 U.S. 1, 82 S.Ct. 585, 7 L.Ed.2d 492 (1962). The law of New Hampshire recognizes the collateral source rule. Merchants Mutual Insurance Group v. Orthopedic Professional Association, 124 N.H. 648, 656, 480 A.2d 840 (1984); Moul-ton v. Groveton Papers Co., 114 N.H. 505, 509, 323 A.2d 906 (1974); Anderson v. De-Laurier, 106 N.H. 57, 59, 204 A.2d 230 (1964); Waumbec Mills v. Bahnson Service, 103 N.H. 461, 464, 174 A.2d 839 (1961). “Under the collateral source rule, if a plaintiff is compensated in whole or in part for his damages by some source independent of the tort-feasor, he is still permitted to make full recovery against him.” Moulton, 114 N.H. at 509, 323 A.2d 906.

The problem in this case, as in many cases under the F.T.C.A., is that the payments were made by the tort-feasor, i.e. the federal government. In cases such as this, the question turns on whether the source from which plaintiff’s medical bills were paid is the general revenue of the federal treasury or whether it is from a “specifically funded source.” Feeley v. U.S., 337 F.2d 924, 934 (3rd Cir.1964), (citing United States v. Hayashi, 282 F.2d 599, 603 (9th Cir.1960)). See also Smith v. United States, 587 F.2d 1013, 1016 (3rd Cir.1978).

In Feeley, the plaintiffs F.T.C.A. recovery was reduced by the value of the free hospital care provided by the Veteran’s Administration because otherwise plaintiff would have received double payment out of the general treasury of the United States. Feeley, 337 F.2d at 933. See also United States v. Brown, 348 U.S. 110,113, 75 S.Ct. 141, 143, 99 L.Ed. 139 (1954) (recovery reduced by disability payments made under Veteran’s Act). Recovery under F.T.C.A. has not been reduced by payments from Social Security benefits, Smith, 587 F.2d at 1016, benefits under the Civil Service Retirement Act, United States v. Price, 288 F.2d 448 (4th Cir.1961) and benefits under Nat'l Service Life Ins., United States v. Brooks, 176 F.2d 482 (4th Cir.1949). Those benefits were deemed by the courts to be a “collateral source” thereby triggering the applicable state’s collateral source rule.

In the present case, it is unclear whether payments made by CHAMPUS are from a specially funded source. Plaintiff’s counsel admits that he has not been able to ascertain this, nor has defendant’s counsel been able to shed any light on the issue.

In ascertaining damages, the court treats the issue involving payments by CHAM-PUS as a case of first impression, especially in the First Circuit. The court further finds that the recovery awarded to the plaintiff should not be reduced by the amount previously awarded by CHAMPUS.

In its reasoning and findings on this issue regarding CHAMPUS in addition to the following, the New Hampshire law regarding the collateral source rule, the court rules: in serving in the United States Navy for over twenty years, the plaintiff had the reasonable expectancy that upon his retirement, he would receive full benefits due under CHAMPUS without any strings attached.

Judgment is entered for the plaintiff in the net sum of $76,000. This takes into consideration a judgment of $95,000, reduced by plaintiff’s contributory negligence of twenty percent (20%) or $19,000 to $76,-000. New Hampshire RSA 507:7a.

In the event that this court is found in error on appeal, relative to the collateral source rule issue regarding CHAMPUS, this being the sole error, the judgment would be as follows. Judgment for the plaintiff in the sum of $72,000 reduced by plaintiff’s contributory negligence of twenty percent (20%) or $14,400 to $57,600.


text:
    Howard GERSHMAN, Esq., Assignee for Benefit of creditors of Vanguard Machinery, Inc. v. INTERNATIONAL BUSINESS MACHINES CORPORATION.
    Civ. A. No. 82-2577.
    United States District Court, E.D. Pennsylvania.
    Oct. 18, 1985.

      Melvin A. Bank, Philadelphia, Pa., for plaintiff.
    K. Robert Conrad, Elizabeth K. Schuster, Philadelphia, Pa., for defendant.
   OPINION

JOSEPH S. LORD, III, Senior District Judge.

During 1979 and 1980 Vanguard Machinery, Inc. manufactured more than 7,000 printhead assemblies pursuant to written purchase orders from IBM Corporation. IBM rejected thousands of the parts claiming that they were out of blueprint specification. With the expectation of receiving purchase orders for up to 50,000 printhead assemblies, Vanguard devoted additional man hours to reworking several thousand of the parts. When the anticipated purchase orders were not forthcoming, the substantial losses already incurred on the project led to Vanguard’s insolvency and the appointment of plaintiff as the assignee for the benefit of Vanguard’s creditors.

According to plaintiff the parts were rejected and needed to be reworked because IBM supplied Vanguard with gauges that were incapable of measuring accurately the precision tolerances called for by IBM’s blueprints. Since IBM allegedly required Vanguard to use the faulty gauges, plaintiff claims that IBM is responsible for the parts needing to be reworked and must bear the costs incurred by Vanguard in reworking the parts to specification.

As well as denying liability, defendant has counterclaimed to recover (1) various tools defendant consigned to Vanguard which have not yet been returned; (2) parts paid for by defendant which are still in plaintiff’s possession; and (3) costs incurred by defendant in reworking nonconforming parts.

Judgment was originally entered in this suit on March 29, 1984. On appeal by defendant, the court of appeals remanded the case with an order under which plaintiff was permitted to amend his complaint, defendant was permitted to amend its answer, and the parties were given the opportunity to present additional evidence. What follows constitute my findings of fact and conclusions of law based upon the amended pleadings, the evidence at the first trial and the evidence produced at the second trial.

Plaintiff is the assignee for the benefit of the creditors of Vanguard Machinery, Inc. Plaintiff is an individual and a citizen of the Commonwealth of Pennsylvania. Defendant is a New York corporation with its principal place of business in New York. The amount alleged to be in controversy is more than $10,000. I therefore have subject matter jurisdiction over this suit.

In 1979 and 1980 Vanguard received written purchase orders from IBM for approximately 7,500 printhead assemblies. As it does with other of its suppliers, IBM loaned Vanguard numerous tools to aid in the production of the parts it had on order. Among those tools were the gauges at issue in this lawsuit, which Vanguard used to measure whether the parts it was producing met IBM’s demanding specifications.

Before IBM would consign any equipment to its suppliers, it required them to sign blank tooling certificates that specified the conditions under which IBM was

lending the equipment. In conspicuous type the tooling certificates purported to disclaim any warranties by IBM: “NO WARRANTIES OR REPRESENTATIONS ARE MADE BY IBM WITH RESPECT TO THE EQUIPMENT OR DOCUMENTATION, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.”

One of these tooling certificates was signed by Vanguard before it contracted to produce any of the parts at issue in this suit, and was in effect when IBM submitted its first four purchase orders. A second tooling certificate was signed by Vanguard in October, 1979, and was in effect when IBM submitted the remaining purchase orders at issue in this suit. Since by their terms the tooling certificates covered all IBM owned tools and equipment in Vanguard’s possession, they clearly applied to the gauges provided by IBM.

Over the two year course of production of the printhead assemblies, IBM furnished Vanguard with four different gauges to measure the parts being produced. Whenever IBM provided Vanguard with a gauge it kept a copy so that IBM could also check the printhead assemblies as they were received from Vanguard. The first set of gauges, referred to as P-B and P-G, had been previously used by Vanguard in the production of another part for IBM. Due to Vanguard’s problems with the first set of gauges, they were replaced by IBM in early May, 1980, with a gauge referred to as P-D. In late May, 1980, Vanguard received another gauge from IBM referred to as the “super gauge.”

Vanguard has made two somewhat contradictory complaints about the gauges. First, Vanguard claims that because of the design of the gauges it was physically impossible for them to measure the specifications about. which IBM was concerned. Due to the equipment supplied by IBM, it was, therefore, impossible for Vanguard to know whether it was producing conforming parts. Vanguard also claims that the P-B gauge maintained by Vanguard and the P-B gauge maintained by IBM did not correspond to one another, so that parts which conformed to specifications according to the Vanguard gauge would appear to be nonconforming when measured on IBM's gauge.

IBM’s own internal documents show that gauge P-G needed to be redesigned and that the P-B gauges needed to be recalib-rated so that they would correspond to one another. I therefore find that the inability of gauges P-B and P-G to measure properly the assemblies caused Vanguard to produce nonconforming parts. Vanguard, however, has not sustained its burden of proving that the gauges delivered by IBM in May, 1980, had defects which caused Vanguard to produce nonconforming parts. I therefore find that beginning in early May, 1980, when Vanguard received gauge P-D, IBM’s gauges did not cause Vanguard to produce nonconforming parts.

Simply because IBM supplied Vanguard with gauges'P-B and P-G, which were in fact faulty gauges and which did in fact cause the production of nonconforming parts, however, does not establish IBM’s liability for Vanguard’s damages. ' At most, plaintiff has established that IBM agreed to supply Vanguard with certain tools, including gauges to measure whether conforming parts were being produced by Vanguard. There is insufficient evidence, however, to prove that IBM agreed to design and supply tools which would meet Vanguard’s needs in fulfilling its contract with IBM. IBM was relying on Vanguard to decide which tools would be used to manufacture conforming parts and how those tools would be designed. If Vanguard was unhappy with the gauges first supplied by IBM, it did not have to use them. Instead, Vanguard could have told IBM what type of gauges it needed and showed IBM how to design them. IBM then either would have built the gauges for Vanguard or paid for someone else to do so.

The fact that a buyer agrees to supply some of the tools and raw materials needed to produce an article it wants to purchase, does not necessarily mean that the buyer has agreed to decide what tools and raw materials should be used in production. In many instances one would expect a supplier who has the skill and expertise necessary to produce the desired article, to decide which tools or raw materials will be used, even if the buyer has agreed to furnish them. When a production run of thousands of duplicate parts requires the design and manufacture of unique tools, as was necessary in the production of print-head assemblies by Vanguard, one cannot assume that the risk of correctly designing and manufacturing the necessary tools has been shifted to the buyer simply because it has agreed to supply some of the seller’s tools.

Plaintiff has failed to prove by a fair preponderance of the evidence that IBM agreed to assume the risk of designing and manufacturing the gauges needed by Vanguard to measure whether it was producing conforming parts. IBM did not give any express warranties by affirmation, promise or otherwise, concerning the gauges. In the tooling certificates signed by Vanguard, IBM clearly, conspicuously and specifically disclaimed all warranties, including the warranties of merchantability and fitness for a particular purpose, concerning the tools it was lending to Vanguard. Vanguard was on notice that it was responsible for making sure that the tools it was using were adequate to accomplish the task for which they were required.

Although not pled in his complaint, plaintiff now claims that IBM’s disclaimer of warranties was unconscionable. Unconscionability is a doctrine under which courts may refuse to enforce unfair or oppressive contracts because of procedural abuses arising out of the contract formation process or substantive abuses relating to the terms of the contract. Unconscionability is often described as a lack of meaningful choice coupled with a contract term which is so one-sided as to be oppressive. See, e.g., Stanley A. Klopp, Inc. v. John Deere Co., 510 F.Supp. 807, 810 (E.D.Pa. 1981) , aff'd mem., 676 F.2d 688 (3d Cir. 1982) . The principle, however, is meant to prevent oppression and unfair surprise and not to disturb the allocation of risks resulting from superior bargaining power. 13 Pa.C.S.A. § 2302 comment 1 (1984).

The burden of proving unconscionability is greater in a commercial setting where the parties are assumed to be capable of looking out for their interests and less likely to be taken by surprise. Principles developed to protect unwitting consumers cannot blindly be transferred to a purely commercial context and used to favor one commercial party over another. A number of courts have recognized that, although it is possible, it is rare that a commercial contract or term will be found to be unconscionable. See, e.g., 510 F.Supp. at 810.

The circumstances surrounding the formation of this contract lend little support to plaintiff's claim of unconscionability. Vanguard can scarcely claim to have been surprised by the terms of the contract. The tooling certificates left no doubt that IBM disclaimed all warranties on equipment lent to Vanguard by IBM. Even though Vanguard’s previous experience with gauges supplied by IBM had proven quite problematic, it still chose to accept a new contract from IBM without insisting that IBM explicitly assume responsibility for designing and building an appropriate gauge. Even as Vanguard was having problems using the gauge and producing conforming parts, it chose to sign a second tooling certificate without even attempting to place the burden of supplying a suitable gauge on IBM.

Nor can Vanguard claim that it was denied a meaningful choice in accepting or rejecting the contract terms offered by IBM. The tooling certificates explicitly invited amendments to their terms and conditions, but Vanguard chose to accept them as written. There is no evidence that Vanguard attempted to alter the contract but was rebuffed by IBM.

Although with hindsight the terms of Vanguard’s contract with IBM seem somewhat one-sided, both Vanguard and its president, Albert Epprecht, had sufficient experience in the industry to comprehend fully the terms of the bargain. The doctrine of unconscionability was not intended to relieve experienced merchants from misfortunes occasioned by their poor business judgments. Vanguard made a bad bargain, but I do not have the power to correct its mistake.

Plaintiff also relies upon the implied covenant of good faith and fair dealing which plaintiff claims should be viewed as part of every contract. In support of his position plaintiff cites a number of construction contract cases in which contractors were awarded damages due to the other parties’ breach of their obligation not to impede or hinder the contractors in performance of their obligations. See, e.g., North Shore Sewer & Water, Inc. v. Corbetta Const. Co., 395 F.2d 145 (7th Cir.1968); Fairbanks Builders, Inc. v. Morton DeLima, Inc., 483 P.2d 194 (Alaska 1971).

The general duty not to hinder or delay, however, can be disclaimed by an exculpatory clause that prohibits claims for delay damages. Kalisch-Jarcho, Inc. v. City of New York, 58 N.Y.2d 377, 461 N.Y.S.2d 746, 448 N.E.2d 413 (N.Y.1983). Although public policy might prohibit an exculpatory clause from insulating a party from liability for intentional wrong doing or grossly negligent conduct, such a clause would “have little purpose if it were not read to extend acceptability to a range of unreasonable [conduct]?’' 461 N.Y.S.2d 749, 448 N.E.2d at 416.

Plaintiff has neither claimed nor proven that IBM’s conduct with respect to the gauges constituted gross negligence or intentional wrong doing. I find, therefore, that to whatever extent IBM’s conduct, visa-vis the gauges, delayed or hindered Vanguard in the performance of its contract, IBM cannot be held liable for that conduct due to its disclaimer of warranties concerning the gauges.

Judgment will therefore be entered against plaintiff and for IBM as to all of plaintiff’s claims for damages arising out of IBM’s consignment of gauges to Vanguard.

Plaintiff has made an additional claim for damages unrelated to the gauges. Plaintiff claims that while Vanguard was in the process of filling an IBM purchase order for 500 assemblies (purchase order No. [ A XXXXXX XXX ] S), IBM made several engineering changes which forced Vanguard to scrap more than 500 parts it had already machined to conform to IBM’s original specifications.

Regardless of how many parts Vanguard was forced to scrap, IBM’s responsibility cannot extend beyond the 500 parts requested in the purchase order. If Vanguard chose to manufacture parts not yet on order, it cannot claim damages when its customer orders parts which do not correspond to those Vanguard, on its own, decided to produce. By producing parts before receiving an order, Vanguard assumed the risk that the orders it anticipated would not be forthcoming.

Epprecht testified that IBM’s engineering changes forced Vanguard to scrap more than 500 parts. Documentary evidence submitted by plaintiff in support of his position, however, shows that Vanguard waited almost two years before requesting that IBM pay for the scrapped parts. IBM has presented testimony and documentary evidence that the parts delivered in accordance with the purchase order at issue were inspected to the specifications that existed before IBM made its engineering change. See Ex. T.D-13 and T.D-669. Since IBM was inspecting the parts according to the older engineering specifications, there was no reason for Vanguard to scrap parts made to satisfy those older specifications. I therefore find that plaintiff has not sustained its burden of proving that Vanguard scrapped 500 parts due to IBM’s engineering change.

Plaintiff admits that Vanguard is obligated to return all tools and gauges that it received from IBM. Accordingly, I con-elude that any such tools or gauges are the property of IBM and must be returned.

Similarly, plaintiff admits that it is holding an undetermined number of printhead assemblies which IBM returned for reworking and for which IBM has already paid. Accordingly, plaintiff must give IBM all such parts or return the money received for such parts.

Finally, IBM seeks recovery for the costs it incurred in reworking nonconforming assemblies it received from Vanguard. A party is entitled to recover the cost incurred to perform work which was the responsibility of another party to perform. United States v. Klefstad Engineering Co., 324 F.Supp. 972, 976 (W.D.Pa.1971). I conclude that IBM is therefore entitled to receive all costs incurred to rework nonconforming parts delivered by Vanguard. The evidence submitted by IBM shows those costs to have been $5,026.74.

        . These claims are contradictory because if it was physically impossible to measure any specifications with the gauges supplied by IBM, then it would be irrelevant whether Vanguard’s copy of the gauge corresponded to IBM’s.


author: SHABAZ, District Judge.

text:
    Donald H. LUND, Plaintiff, v. AMERICAN MOTORISTS INSURANCE COMPANY, a foreign insurance corporation, Defendant.
    No. 85-C-594-S.
    United States District Court, W.D. Wisconsin.
    Oct. 21, 1985.
    Gordon Davenport III, Foley & Lardner, Madison, Wis., for plaintiff.
    Briony Jean Foy of Jenswold, Studt, Hanson, Clark & Kaufmann, Madison, Wis., for defendant.
   MEMORANDUM AND ORDER

SHABAZ, District Judge.

Plaintiff Donald H. Lund brings this action to compel the defendant American Motorists Insurance Company to defend him in a state court action in which damages are claimed and to pay any adjudged damages. Plaintiff contends that the defendant’s refusal to defend him is in bad faith and therefore also requests punitive damages.

Plaintiff was covered by an insurance policy during part of the 1960’s that obligated defendant to pay for damages “caused by accident” during the policy period and to defend plaintiff in a court action in which such damages were claimed. In 1985 plaintiff was sued in state court for damages and asked defendant to defend him in the state court action. Defendant refused, contending that the damages involved were not caused by an accident that occurred during the policy period.

Plaintiff and the defendant have both moved for summary judgment. There is no genuine issue with respect to any material facts. The only issue, interpretation of the word “accident” in the insurance policy, is a question of law. Therefore, summary judgment is appropriate.

FACTS

Plaintiff Lund is an adult resident of Dane County, Wisconsin. Defendant American Motorists Insurance Company is an insurance corporation incorporated under the laws of Illinois, with its principal place of business located in Illinois. American Motorists has- been’ authorized to do business in Wisconsin and has in fact been doing business in Wisconsin.

Lund has been named as a defendant in a Wisconsin court action. Plaintiffs in the state court action allege that in the early 1960’s Lund negligently designed and constructed the roof of an apartment building located at 1667 Capital Avenue, Madison, Wisconsin. This negligence, according to the state court plaintiffs, caused the roof to collapse on or about February 27, 1984.

During the time that Lund designed and constructed the apartment building there was in effect a policy of comprehensive general liability insurance issued to Lund by American Motorists. The acts and omissions by Lund that the plaintiffs in the state court action allege were negligent occurred while this insurance policy was in effect. The American Motorists policy issued to Lund contained the following language regarding property damage liability:

Coverage B — Property Damage Liability. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident.
IV. Policy Period, Territory. This policy applies only to accidents which occur during the policy period within the United States of America, its territories or possessions, or Canada.

Emphasis added.

When American Motorists was advised by Lund that the state court plaintiffs had demanded payment for the property damage resulting from the collapse of the roof from Lund before commencing litigation, American Motorists denied coverage for the claim under the policy on the grounds that the “accident” did not occur during the policy period. After the state court action was commenced, Lund tendered the defense of that action to American Motorists by letter from his counsel dated June 20, 1985. Enclosed with this letter were copies of Kremers-Urban Co. v. American Employers Insurance Co., 119 Wis.2d 722, 351 N.W.2d 156 (1984) and Western Casualty & Surety Co. v. Budrus, 112 Wis.2d 348, 332 N.W.2d 837 (Ct.App.1983). American Motorists received the June 20, 1985, letter and enclosed case decisions, and reviewed those decisions. After reviewing the June 20, 1985, letter and the enclosed decisions, American Motorists rejected the tender of the defense and continued in its denial of coverage on the grounds that the “accident” did not occur during the policy period.

MEMORANDUM

This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1332.

The liability insurance policy issued to Lund by American Motorists provides coverage for property damage “caused by accident,” where the accident occurs “during the policy period.” Lund’s alleged negligence in designing and constructing the roof of the apartment building occurred during the policy period, but the collapse of the roof occurred after the policy had expired. The question, then, is whether Lund’s alleged negligent acts constitute an accident during the policy period under the policy language and Wisconsin law.

The construction of ambiguous words and phrases in an insurance policy is generally a question of law. Words or phrases in a policy are ambiguous when they are fairly susceptible to more than one construction. Whether words or phrases in a policy are ambiguous is a question of law. Where no ambiguous words or phrases exist, the Court will not engage in construction, but will merely apply the policy terms. Where ambiguous words or phrases do exist, the Court’s objective is to construe the policy so as to carry out the intention of the parties. Words used in the policy should be given their common everyday meaning and should be interpreted reasonably. The test of coverage is what a reasonable person in the insured’s position would have believed to be covered. Kremers-Urban Co. v. American Employers Insurance Co., 119 Wis.2d 722, 735-36, 351 N.W.2d 156, 163 (1984); Western Casualty & Surety Co. v. Budrus, 112 Wis.2d 348, 350-51, 332 N.W.2d 837, 839 (Ct.App.1983).

The phrases “caused by accident” and “accidents which occur during the policy period” are not defined in the liability insurance policy. The plaintiff contends that the term “accident” is the same as the term “occurrence” and that therefore the Wisconsin Supreme Court’s interpretation of the term “occurrence” in Kremers-Urban dictates that Lund’s negligent act was an accident that would invoke insurance coverage. The defendant contends that an “accident” is not the same as an “occurrence.” Instead, defendant contends, an “accident” is an unprecedented, sudden and unexpected event resulting in damages; Lund’s negligent act or omission is not such an event and, therefore, there is no insurance coverage.

After reviewing each party’s contentions, the Court finds that the phrases “caused by accident” and “accidents which occur during the policy period” are ambiguous. Accordingly, the Court will construe the contractual phrases so as to carry out the parties’ reasonable intentions.

Accident is defined in the Webster’s New International Dictionary (2nd Edition, Unabridged) as:

1. Literally, a befalling, a. An event that takes place without one’s foresight or expectation; an undesigned, sudden, and unexpected event____

Cases applying Wisconsin law that construe the term “accident” are in accordance with the above definition.

In Koehring Co. v. American Automobile Insurance Co., 353 F.2d 993 (7th Cir. 1965), the insured was covered by an insurance policy that obligated the insurer to pay damages caused by accident. The issue in Koehring was whether damages caused by the insured’s installation of inadequate cylinders in two cement mixers and the mixers’ subsequent breakdown were damages “caused by accident.” The Koehring court found that the breakdown of the mixers was an “accident.” The court stated:

We think it evident that in the context in which it is used in the policy provision here involved that the word “accident” refers to the event or occurrence which produced the damages and does not require that the conduct of the insured upon which the liability for the damages is predicated — here the intentional installation of a certain type of hydraulic cylinder which happened to prove inadequate — be “accidental” in the sense of an involuntary or unintentional act of the insured.

Koehring, 353 F.2d at 996-97.

The Koehring court’s distinction between an event which produced damages and an event upon which the liability for damages was predicated, implicitly reflected the court’s conclusion that the manufacturer’s negligence in installing inadequate cylinders was not an accident. While the manufacturer’s negligence in installing inadequate cylinders was the event upon which the liability for damages was predicated, the mixer’s breakdown was the accident or event that produced damages.

Another Wisconsin case that interpreted the word “accident” was Clark v. London & Lancashire Indemnity Co., 21 Wis.2d 268, 124 N.W.2d 29. In Clark, plaintiff was covered by an insurance policy that obligated the defendant insurance company to pay damages “caused by accident.” The crucial issue in Clark was whether damages caused by a long-continuing course of action constituted damages “caused by accident” within the meaning of the policy. The court held that where a long-continuing nuisance condition alone caused the damage, without the concurrence of some other event, the damage was not “caused by accident.” The Clark court cited a number of opinions from other jurisdictions for support. The Clark court also cited a contrary case.

A case contra to the hereinbefore-cited nuisance cases is Wolk v. Royal Indemnity Co. (1961), 27 Misc.(2d) 478, 210 N.Y.Supp.(2d) 677. There suit was brought on a contractor’s liability policy, which contained the usual “caused by accident” provision, to recover the expenses the insureds incurred in defending a damage action. This latter action had been instituted against the insureds which charged that, in constructing a golf course, they had changed the. contour of the land so as to artificially raise hills and mounds near the boundary line. It was further alleged that when it rained this condition caused water to be funneled with great force onto the neighboring land causing great damage, and that this damage was the result of the original construction and maintenance thereafter of the condition causing injury. The insureds defended the action, and secured its dismissal. The court held that the damage claimed in this pri- or nuisance action was “caused by accident” within the meaning of the policy. We believe that this is a minority view and extends the meaning of the word “accident” beyond its common and ordinary meaning.

Clark, 21 Wis.2d at 282, 124 N.W.2d at 36. The Clark court’s rejection of the Wolk holding implicitly demonstrated the court’s position that any negligence in constructing the golf course was not an “accident” that would invoke insurance coverage.

Koehring and Clark clearly demonstrate that in the early 1960’s, negligence unaccompanied by a contemporaneous, unde-signed, sudden, and unexpected event that produced damage was not an “accident.” Therefore, a reasonable person in Lund’s position in the early 1960’s would not have believed that Lund’s negligence in designing and constructing the apartment building roof was an “accident” that would invoke insurance coverage because it was not accompanied by a contemporaneous, unde-signed, sudden, and unexpected event that produced damage.

Plaintiff contends that his negligence in designing and constructing the apartment building roof alone constitutes an “accident.” Plaintiff’s contention relies heavily on Kremers-Urban Co. v. American Employers Insurance Co., 119 Wis.2d 722, 351 N.W.2d 156 (1984) and Western Casualty & Surety Co. v. Budrus, 112 Wis.2d 348, 332 N.W.2d 837 (1983). The applicable insurance policies in Kremers-Urban and Budrus provided coverage for damages caused by an “occurrence.” In most cases, the definition of “occurrence” contained the word “accident.”

Plaintiff contends that there is no difference between the word “occurrence” and the word “accident” for purposes of deciding whether the negligent acts are an “accident” within the meaning of the policy. The Court does not agree. The difference between the word “occurrence” and the word “accident” was set forth in Patrick v. Head of the Lakes Cooperative Electric Ass’n, 98 Wis.2d 66, 69-70, 295 N.W.2d 205, 207 (Ct.App.1980).

The term “occurrence” originally came into use in insurance policies because a restrictive construction of the term “accident” proved unsatisfactory to the insured, the public, and the courts. The purpose of using “occurrence” rather than “accident” was to expand coverage. 7A Appleman, Insurance Law and Practice § 4492 (1979). Its use permits consideration of the state of mind of the actor as it relates to the resultant damage, rather than only as it relates to causation. 7A Appleman, supra § 4492.-02. Its use affords coverage for an intended act and an unintended result if they cause damage unintended from the standpoint of the insured.

' As Patrick made clear, the purpose of using “occurrence” rather than “accident” was to expand coverage. Therefore, any reliance on cases that construe the more expanded word “occurrence” is misplaced.

The Court, therefore, holds that the plaintiffs alleged negligence in designing and constructing the apartment building roof is not an accident during the policy period within the meaning of the insurance policy language. The insurance policy does not provide coverage for the claims made against Lund in the state court actions. Where there is no coverage, defendant has no duty to defend Lund in the state court action or to indemnify him for any judgment against him or for his costs and expenses in that action. Because defendant had no duty to defend Lund, defendant’s refusal to defend cannot be in bad faith.

Accordingly,

ORDER

IT IS ORDERED that plaintiff’s motion for summary judgment is DENIED.

IT IS FURTHER ORDERED that defendant’s motion for summary judgment is GRANTED, with costs.