text:
    Albert GAINEY, Donald Jones, Edwin Mezen, Eugene Young and Ronald Williamson, Plaintiffs, v. Arne VEMO, Bob Baley, Dan Sheffield, John Korsmo, Tom Paulsen, Omas Brown, Lynn Baneker, Wilbur Hayes, James Freeman, August Miller, William Smith and Edward Vandenheuval, Trustees of the Carpenters Trust of Western Washington, Defendants.
    No. C83-1094D.
    United States District Court, W.D. Washington.
    Jan. 9, 1986.

      F.G. Enslow, Griffin & Enslow, Tacoma, Wash., for plaintiffs.
    Laura M. Murphy, Carney, Stephenson, Badley, Smith & Mueller, Seattle, Wash., for defendants.
   MEMORANDUM AND ORDER

DIMMICK, District Judge.

Plaintiffs, members of a carpenters’ union, challenged the discretionary powers of trustees to refuse contributions to a private union benefit fund. Procedurally, the union moved for a permanent injunction under 29 U.S.C. § 1132(a)(3). Defendant trustees responded by moving for summary judgment. After hearing oral argument, the Court grants the trustees’ motion for summary judgment.

I.

THE FACTS

No facts are disputed. The controversy began on October 6, 1981, when the plaintiffs, Carpenters Local 470 (“Carpenters”) contracted with their employer, Modern Builders, Inc. The contracting parties varied the terms of the Association of General Contractors’ (“AGC”) standard labor contract, effective June 1, 1981, through May 31,1983. In particular, the Carpenters and Modern Builders changed the subcontracting clause in the standard contract. Under the AGC contract, the employer was automatically liable if its subcontractor failed to make benefit fund contributions on behalf of carpenters working for the subcontractor. Under the Carpenters’ modified contract, the employer would be liable only if it failed to notify the Carpenters of the use of subcontractors before the subcontractors began to work. This modification was a substantial issue in their negotiation process.

In January 1982, the Trustees of the Carpenters’ Trusts of Western Washington (“Trustees”) notified Modern Builders of their disapproval of the subcontracting clause. The Trustees informed Modern Builders that they would place funds received from them in an escrow account until Modern Builders executed an agreement to comply with the subcontracting clause in the AGC contract. The Trustees used the same compliance agreement that they have used for several years for employers outside of the AGC wishing to make contributions to the Trusts. Modern Builders refused to sign the compliance agreement.

On April 20,1982, the Trustees told Modem Builders that they would accept contributions and pay benefits only until June 1, 1982. Afterwards Modern Builders would be required to sign the compliance agreement and to maintain records of hours worked by subcontractors’ employees, as required under the standard AGC agreement. Modern Builders refused.

On July 23, 1982, the Trustees notified Modern Builders that they would refund contributions. Modern Builders’ checks were then returned.

II.

THE LAW

The Carpenters Trusts are TaftHartley trust funds governed by 29 U.S.C. §§ 141-187 and 29 U.S.C. §§ 1001-1381 (Employee Retirement Income Security Act, “ERISA”). Civil enforcement of ERISA and of the terms of individual trust fund plans is provided under 29 U.S.C. § 1132. The Carpenters sue under 29 U.S.C. § 1132(a)(3) which provides that a civil action may be brought by a participant or beneficiary of a trust to enjoin any act or practice which violates any provision of ERISA or the terms of a trust fund plan or to obtain other appropriate equitable relief. Section 1132 provides further that in any action under that section by a participant or beneficiary, the court in its discretion may allow a reasonable attorney’s fee and costs of action to either party. 29 U.S.C. § 1132(g)(1). Trusts, such as the Carpenters Trusts, are to be administered according to trust fund agreements. Trustees have a duty to enforce the terms of their trust fund agreements regarding contributions solely for the benefit of the fund beneficiaries. NLRB v. Amax Coal Co., 453 U.S. 322, 336, 101 S.Ct. 2789, 2797, 69 L.Ed.2d 672, reh’g denied, United Mineworkers v. NLRB, 453 U.S. 950, 102 S.Ct. 26, 69 L.Ed.2d 1036 and reh’g denied, NLRB v. Amax Coal Co., 453 U.S. 950, 102 S.Ct. 26, 69 L.Ed.2d 1036 (1981). The Trustees have an unwavering duty of complete loyalty to the beneficiaries of the Trusts. Id.

Trustees have wide discretion in determining the best interests of Trust beneficiaries. Tomlin v. Board of Trustees of Constr. Laborers Pension Trust, 586 F.2d 148, 150-51 (9th Cir.1978) (summary judgment for trustees upheld; trustees decisions overturned only when made in bad faith, for lack of factual foundation, or unsupported by substantial evidence); Toensing v. Brown, 528 F.2d 69, 70-72 (9th Cir.1975) (trustees have a duty to exercise independent judgment in administering trust funds, and their acts are reviewable for abuse of discretion); see also Elser v. I.A.M. Nat. Pension Fund, 684 F.2d 648, 654 (9th Cir.1982), cert. denied, I.A.M. Nat. Pension Fund. v. Elser, 464 U.S. 813, 104 S.Ct. 67, 78 L.Ed.2d 82 (1983), later proceeding Elser v. I.A.M. Nat. Pension Fund, 579 F.Supp. 1375 (C.D.Cal.1984) (trustees of pension plans have broad discretion in setting eligibility rules). The Ninth Circuit has emphasized that “[cjourts are extremely reluctant to substitute their judgments for the judgments of the trustees, and will do so only if the actions of the trustees are not grounded on any reasonable basis.” Souza v. Trustees of Western Conference of Teamsters Pension Fund, 663 F.2d 942, 946 (9th Cir.1981), quoting Ponce v. Construction Laborers Pension Trust, 628 F.2d 537, 542 (9th Cir.1980), on remand, 582 F.Supp. 1310 (C.D.Cal.1984), aff'd, 114, F.2d 1401 (9th Cir.1985). In particular, the Souza court refused to second-guess the good faith discretionary judgment of trustees where that judgment was based on technical economic guidelines provided by advisors. Id. at 947. See also Griffith Co. v. National Labor Relations Board, 660 F.2d 406, 411 (9th Cir.1981), cert. denied, 457 U.S. 1105, 102 S.Ct. 2903, 73 L.Ed.2d 1313 (1982) (payments of contractors to pension funds were not extracted by unlawful means where trustees enforced delinquency clause involving subcontractor contributions in master labor agreement against contractors).

The Second Circuit has recently affirmed a summary judgment for trustees of a union pension trust on facts similar to those in the present case. Building Trades Employers Assoc. v. New York State Teamsters Conference Pension and Retirement Fund, 761 F.2d 115 (2d Cir.1985), affirming Morse v. New York State Teamsters Conference Pension and Retirement Fund, 580 F.Supp. 180 (W.D.N.Y.1983). The Trustees in Morse had required employers to sign a participation agreement before they would accept employer contributions to the trust fund. 580 F.Supp. at 188. The trustees were unable to administer an actuarily sound pension fund unless the employers agreed to contribute according to uniform procedures. Id. The plaintiff’s employer modified the terms of the trust participation agreement. Consequently, the trustees refused to accept the employer’s tender of contributions. The district court held that as a matter of law the trustees could require execution of a uniform participation agreement. The Second Circuit upheld the district court’s judgment, emphasizing the broad discretionary powers of trustees and their exclusive authority to manage and control their fund.

III.

ANALYSIS

The Trustees in the present case are bound by the terms of their Trust Agreement. The Trustees are given express power in the Trust Agreement to construe all of its provisions, necessarily including contribution provisions. The Trustees’ constructions are binding on individual employers, such as Modern Builders, if they subscribe to the Trusts.

The terms governing contributions create discretionary power in the Trustees to approve non-standard collective bargaining agreements, such as the Carpenters’ labor contract. The Trustees thus have the authority to refuse Modern Builders’ contributions. They also have a duty to do so if Modern Builders’ participation might threaten the interest of Fund beneficiaries.

The Trustees have disapproved the Carpenters’ contract because it would cost more to administer than the standard AGC contract. The Carpenters’ subcontracting clause might also result in preferential treatment of Modern Builders at the expense of members of the AGC and of all Fund beneficiaries. The Trustees would, for example, have to get records from each of Modern Builders’ subcontractors rather than from Modern Builders alone. As the Morse court observed, if an employer such as Modern Builders could force its individualized labor contract on the Trustees, then such an employer would to some degree control Fund administration and, ultimately, control distribution of its assets. 580 F.Supp. at 187.

The Trust Agreement additionally provides that the Trustees may require any individual employer to furnish on demand any information reasonably necessary for the purposes of Fund administration. By affidavit, the Trust administrator averred that when time records have not been maintained in the past by the employer, the Trusts have had difficulty getting records from the subcontractors, who — not being' signatories to the Trust Agreement — were not bound by its recordkeeping requirements. The Trust administrator further averred that all other employers contributing to the Trusts were required by the Trust Agreement to maintain daily records of subcontractors’ job site hours. He explained that uniform recordkeeping procedures are necessary to avoid discriminatory treatment of employers and to control costs of administration, including costs of additional legal advice needed for anomalous collecting procedures.

Finally, the Trustees have submitted evidence that the subcontracting clause is required to prevent a general contractor from circumventing its obligation to pay wages and fringe benefits by subcontracting all its work or substantial parts of it. The Carpenters submitted no evidence challenging the factual basis of any of the Trustees’ decisions.

Instead of challenging the Trustees’ factual assertions, the Carpenters point to the political effects of the Trustees’ decisions. The Carpenters argue that the Trustees’ disapproval of the Carpenters’ freely negotiated contract amounts to an interference with the collective bargaining process. The Carpenters argue that the fringe benefit package provided by the Carpenters Trusts is a substantial cost factor in their negotiations. These arguments are undercut, however, by the plaintiffs’ own admissions, first, that Modern Builders could obtain coverage for its employees from other sources and, second, that the Carpenters could petition the parties to the Trust Agreement to amend the Trustees’ authority-

IV.

CONCLUSION

The Trustees’ motion for summary judgment is granted. Their requirement that non-member employers comply with the standard subcontracting clause is neither arbitrary nor capricious. The Carpenters have consequently failed to establish a right to relief. Their motion for a permanent injunction is thus denied. In any event, where a dispute is moot, as both parties admitted this one to be, a permanent injunction does not issue. Two Guys from Harrison-Allentown, Inc. v. McGinley, 366 U.S. 582, 588-89, 81 S.Ct. 1135, 1138-39, 6 L.Ed.2d 551 (1961), reh’g denied, 368 U.S. 869, 82 S.Ct. 21, 7 L.Ed.2d 69 (1961).

The Trustees’ motion for summary judgment is GRANTED. The Carpenters’ motion for permanent injunction is DENIED. The only matter left for consideration is the Trustees’ request for attorney’s fees and costs under 29 U.S.C. § 1132(g)(1).


source: Caselaw Access Project

author: CACHERIS, District Judge.

license: Public Domain

text:
    UNITED STATES of America v. Christopher F. RECKMEYER, II, et al.
    Crim. No. 85-00010-A.
    United States District Court, E.D. Virginia, Alexandria Division.
    Jan. 9, 1986.

      Karen P. Tandy, Asst. U.S. Atty., Alexandria, Va., for plaintiff.
    William B. Hanes, Robert E. Sevila, Hanes, Sevila, Saunders & McCahill, P.C., Leesburg, Va., for Jesse A.B. Smith, Jr.
    David C. Culbert, Hazel, Beckhorn & Hanes, Leesburg, Va., for First American Bank.
   MEMORANDUM OPINION

CACHERIS, District Judge.

This matter is before the court on the Verified Claim of Jesse A.B. Smith, Jr., who seeks to recover the value of a herd of cattle, which, pursuant to the Federal Criminal Forfeiture Statute, 21 U.S.C. § 853, was seized by the United States Marshal at the Shelburne Glebe farm in Loudoun County, Virginia, and forfeited to the United States as proceeds of a continuing criminal enterprise engaged in by Christopher Reckmeyer. For the reasons set forth below, Mr. Smith’s claim is granted.

I

After taking evidence on October 22, 1985, the court makes the following findings of fact.

On March 14, 1985, Christopher Reck-meyer plead guilty to engaging in a continuing criminal enterprise, in violation of 21 U.S.C. § 848. Pursuant to 21 U.S.C. § 853, the Criminal Forfeiture Statute, Reckmeyer forfeited his farm, the Shel-burne Glebe, and other personal property located thereon, as proceeds of the continuing criminal enterprise. The herd of cattle claimed by Smith was among the items of personal property forfeited to the United States.

In August, 1981, Smith entered into an agreement with Reckmeyer to sell to Reck-meyer a herd of cattle consisting of approximately 55 to 60 cattle, plus calves, their progeny, and two bulls. The subject cattle were a Charoláis breed which is an unusual breed in the Loudoun County area. The cattle weré delivered to Shelburne Glebe. At the time this transaction was made, Smith was unaware of Reckmeyer’s drug-trafficking activities.

The sale price was $92,000. Pursuant to the sales agreement, Reckmeyer was to pay Smith the purchase price, in cash, when the herd of cattle was delivered, or, in the alternative, agree to assume full payment of a $95,000 promissory note secured by the cattle and made payable to the Peoples National Bank of Leesburg. To assume the note, Reckmeyer had to obtain the Bank’s credit approval and either sign a separate promissory note or co-sign Smith’s note.

At the time Smith delivered the herd of cattle to Reckmeyer, Reckmeyer paid Smith $12,000 in cash. Five appointments were then scheduled for Reckmeyer to go to the Peoples National Bank to sign a promissory note or to co-sign Smith’s note. Reckmeyer never appeared at the bank, never applied for credit approval, and never executed the necessary documents.

Smith wrote several letters to Reckmeyer requesting payment. No payments were made. Smith attempted to remove the herd but Reckmeyer only allowed Smith to pick up certain cattle which were suffering from insufficient grain feeding. In September, 1982, Smith instituted a lawsuit against Reckmeyer in the Circuit Court of Loudoun County for breach of the agreement (See Smith’s Exhibit 8).

In January, 1985, the United States Marshal Service levied and took possession of the cattle. Smith appeared on five occasions at Shelburne Glebe and observed the cattle under the control of the Marshal Service. On these occasions, Smith was able to personally identify his cattle and the offspring. This identification was possible because of Smith’s personal familiarity with the physical features of his cattle, i.e., their size, color, markings, and age.

On May 8, 1985, a Consent Order of Sale was entered. The Fauquier Livestock Exchange, Inc. prepared detailed records identifying each of the livestock sold and their unique number markings. Smith testified that he did not have a bill of sale or any records reflecting the markings or identity of the cattle he sold to Reckmeyer. Smith further testified that it was not his practice nor the local industry practice to keep precise records of cattle transactions such as this. He states that he could have personally identified each cow for the court prior to the sale and would not have agreed to the sale if he had known that the identity of the livestock would be at issue.

II

Under 21 U.S.C. § 853, once property is forfeited to the government, a petitioner must establish his superior right to the property by a preponderance of the evidence. 21 U.S.C. § 853(n)(6) specifically provides:

(6) if, after the hearing, the court determines that the petitioner has established by a preponderance of the evidence that—
(A) the petitioner has a legal right, title, or interest in the property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; ... the court shall amend the order of forfeiture in accordance with its determination.

Id.

The court finds that Smith has established by a preponderance of the evidence that his right to the cattle in question is superior to Reckmeyer’s. The court finds Mr. Smith to be a very credible witness and gives great weight to his testimony concerning the transaction with Reckmeyer and his identification of the cattle at Shelburne Glebe. At the time of the transaction, Smith was dealing in good faith with Reckmeyer and was unaware of his drug trafficking activities.

Concerning the original sales transaction, the evidence shows that title to the cattle was never transferred because Reckmeyer never made any arrangements with the Peoples National Bank for payment. These were conditions precedent to title of the cattle passing from Smith to Reckmeyer. The failure of Reckmeyer to perform these conditions precedent prevented title to the cattle from vesting in him. Tiedman v. American Pigment Corp., 253 F.2d 803 (4th Cir.1958); Wendlinger v. Smith, 75 Va. 309 (1881).

As to the issue of the adequacy of Smith’s identification of the cattle, with no evidence introduced indicating that the cattle belonged to anyone else, the court is satisfied that the cattle sold under the Consent Order of May 8, 1985, was the same cattle, with accretions, as was the subject of the original transaction between Smith and Reckmeyer. The lack of any records specifically identifying each cow is not controlling in light of the evidence showing the informal course of dealing usually associated with such cattle sales and the strong testimony of Mr. Smith. The court does not feel that it should require a more formal transaction with Reckmeyer than is normally required in the cattle business.

In summary, Smith has met his burden under 21 U.S.C. § 853(n)(6) of establishing by a preponderance of the evidence that title to the cattle was vested in himself and not in the Defendant Reckmeyer. The court will therefore direct that the proceeds from the sale of the full and mixed Charo-láis cattle be paid to Jesse A.B. Smith.

An appropriate Order shall issue.

      .The C.C.E. charge was contained in Count 2 of the 48 count indictment. Reckmeyer also plead guilty to Count 26, violations of 26 U.S.C. § 7206(2) and 18 U.S.C. § 2; and Count 31, a violation of 26 U.S.C. § 7206(1).

      . On the date of delivery, all of the cattle and their progeny were subject to the lien of a valid Deed of Trust which was duly perfected by the Bank.

      . The Peoples National Bank of Leesburg now trades as The First American Bank of Virginia.

      . A condition precedent calls for the performance of some act, or the happening of some event after the terms of the contract have been agreed upon, before the contract shall take effect. See Vol. 4B, Michie's Jurisprudence Virginia and West Virginia 94 (1974 Repl.Vol).


author: RICE, District Judge.

text:
    Mary J. TAYLOR, et al., Plaintiffs, v. CHECKRITE, LTD., Defendant.
    No. C-3-82-608.
    United States District Court, S.D. Ohio, W.D.
    Jan. 13, 1986.
    Horace W. Baggott, Jr., Dayton, Ohio, for plaintiffs.
    Jerome B. Bohman, Dayton, Ohio, for defendant.
   DECISION AND ENTRY OVERRULING DEFENDANT’S MOTION TO DISMISS

RICE, District Judge.

This case is presently before the Court on Defendant’s Motion to Dismiss (Doc. # 4), which the Court has ruled it will treat as a motion for summary judgment. See Entry Deferring Ruling on Defendant’s Motion to Dismiss (Doc. #7). The Court must decide whether, for purpose of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 — 1681t, and the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692 o, Defendant’s franchisee was its agent. If the Court finds that the franchisee was Defendant’s agent, then Plaintiffs’ Complaint states a claim upon which relief can be granted, and the Court has personal jurisdiction over the Defendant. If the Court finds that the franchisee was not an agent of the Defendant, then this action must be dismissed.

The events surrounding this action, as alleged by Plaintiffs, began when Plaintiff Mary J. Taylor wrote a check to an Imperial Foodtown Store in the amount of $20.00. The check was returned to the Imperial Foodtown Store by the payor bank, Third National Bank, because of insufficient funds in Mrs. Taylor’s account. Imperial Foodtown submitted the check to Defendant’s franchisee for collection. The franchisee informed Mrs. Taylor that she was required to pay the franchisee $29.00: $20.00 on the original check and $9.00 as a collection fee. The notice also indicated that if Plaintiff failed to pay the $29.00 to franchisee, her name might appear in the CheckRite Bulletin and thereby affect her check-cashing privileges. Plaintiff, however, paid $20.00 directly to the Imperial Foodtown Store at which she had originally written the check. She was then told by the franchisee over the telephone that if she failed to pay the $9.00 fee, her name would appear in the CheckRite Bulletin. Plaintiff, upon this conversation, sent to the franchisee a notification of dispute and statement of dispute pursuant to the Fair Credit Reporting Act, but the franchisee failed to disclose the statement of dispute in the CheckRite Bulletin. In addition, although Stephen Taylor was informed by franchisee on July 23, 1982, that the $9.00 fee had been waived, Mary Taylor’s name remained in the CheckRite Bulletin dated September 1, 1982, and on September 15, 1982, she was refused acceptance of a personal check by Elder-Beerman Stores, Inc., based upon the listing in the CheckRite Bulletin.

Under the Fair Credit Reporting Act, a person or organization that falls within the definition of “consumer reporting agency” must in cases of disputes as to the accuracy of a report, publish a statement of the dispute supplied by the consumer. 15 U.S.C. § 1681. Under the Fair Debt Collection Practices Act, a person or organization that falls within the definition of “debt collector” is limited in the procedures it may use in attempting collection of the debt. 15 U.S.C. §§ 1692b-1692g. Defendant, at present, has not argued that the franchisee does not fall within the definitions of debt collector and consumer reporting agency. Rather, Defendant argues that because the franchisee is not its agent, it is neither a debt collector nor a consumer reporting agency under these statutes.

Plaintiff has the burden of proof on the issue of whether the franchisee was Defendant’s agent. See Gardner Plumbing, Inc. v. Cottrill, 44 Ohio St.2d 111, 338 N.E.2d 757 (1975); Petty v. First National Bank of Akron, 50 Ohio App.2d 365, 363 N.E.2d 599 (1976). However, in the present action any agency relationship between the Defendant and the franchisee would be evidenced by the contract between them (Exhibit attached to Doc. # 4) as interpreted in light of the CheckRite Procedure Manual (Exhibit attached to Doc. # 14).

In determining whether an agency relationship exists under Ohio law, the Court first notes that the existence of a franchisor-franchisee relationship between persons does not in itself preclude the existence of a principal-agent relationship between them. See Arnson v. General Motors Corp., 377 F.Supp. 209, 212-14 (N.D.Ohio 1974) (finding no agency, but basing analysis on lack of a right of control as demonstrated by uncontradicted facts). The Court must scrutinize the relationship between persons who are franchisor-franchisee just as it would scrutinize any relationship in determining whether an agency relationship exists. The central factor under Ohio law in determining whether an agency relationship exists is the right of control vested in the principal. See Priess v. Fisherfolk, 535 F.Supp. 1271, 1279 (S.D. Ohio 1982) (“The most important element in determining whether an agency exists in the presence of some control over the conduct of the agent.”); Arnson, 377 F.Supp. at 213; Griffith v. Rutledge, 110 Ohio App. 301, 304, 169 N.E.2d 464 (1960) (“[T]he existence of the relationship of principal and agent depends, not upon any exercise of control at the moment, but upon the right of control.”); see also Note, Theories of Liability for Retail Franchisors: A Theme and Four Variations, 39 Md.L. Rev. 264, 267 (1979) (“Because a franchise is something of a hybrid business form, resembling both an association of independent businessmen and a company-owned chain, the primary problem in ascertaining franchise liability has been fitting the franchiser-franchisee relationship into one of the two traditional categories of agency law, principal-independent contractor or master-servant_ The central question in the courts’ analysis has been the extent of control exercised by the franchisor over the franchise operations_”).

In determining whether Defendant had a right of control over the franchisee in the present action, the Court must first examine the contract between the two. That contract (Exhibit attached to Doc. # 4) provides in part:

In order to protect the reputation and goodwill associated with the mark “CHECKRITE”, and to maintain uniform standards of operation, Franchisee shall conduct its franchise in strict accordance with Franchisor’s Procedure Manual.

Contract at 4. The contract in two places provides:

Franchisor or its agent shall at all reasonable times have the right to entry and inspection of Franchisee’s premises, and to observe the manner in which Franchisee is rendering its services, to confer with Franchisee’s employees and customers, and to select products and services for testing and evaluation in order to make certain that they are satisfactory.

Id. at 4 and 5. The contract also controls who the franchisee may purchase supplies from:

Franchisee shall purchase all supplies and materials required for the operation of the CHECK RITE franchise licensed from suppliers designated by Franchisor or from such other suppliers who shall meet all of Franchisor’s specifications and standards as to quality, composition, finish, appearance, and service.

Id. at 5. Further, the franchisee must implement any modification of the system in its operations:

Franchisee recognizes that from time to time Franchisor may improve or modify the system presently identified by the mark CHECK RITE, including the adoption and use of new or modified trade name, trademarks, service marks or copyrighted materials, or new techniques, and that upon prior written notice from Franchisor, Franchisee will use and display for the purpose of this agreement any such changes in the system, including new or modified trade names, trade-marks, service marks or copyrighted materials, or new techniques, as if they were part of this agreement at the time of execution thereof. Franchisee will make such expenditures as such changes or modifications in the system may reasonably require, and do so within a reasonable time.

Id.

Examining these contract provisions in light of the Procedure Manual (Exhibit attached to Doc. # 14), the Court must conclude that Defendant has such a right of control over the franchisee as to make that franchisee its agent in regard to the activities complained of in this lawsuit. The Procedure Manual provides very detailed, step-by-step directions to the franchisee in carrying out its business operations, including setting up new accounts for merchants, member billing, file set-up, receiving mail, check processing, bookkeeping procedures, and preparing the computer listing sheet for the CheckRite Bulletin. The franchisee is given virtually no discretion in performing these operations. Most importantly for purposes of this lawsuit, the franchisee under the Manual has no discretion in the practices underlying the allegations of Plaintiffs’ Complaint. For example, Plaintiffs’ Complaint alleges Defendant failed to publish a statement of dispute regarding the check written to the Imperial Foodtown Store. (Doe. # 1 at ¶¶ 8-13). The Manual, however, in providing step-by-step instructions for preparation of the computer listing sheet, does not permit the inclusion of a statement of dispute in this report. Thus, the franchisee, who must follow Defendant’s Manual, could not include a statement of dispute in the CheckRite Bulletin. Given such restrictions, the Court must find as a matter of law that Defendant had a right of control over the franchisee, and accordingly that Plaintiffs have shown that the franchisee was Defendant’s agent.

This finding of possible agency relationship is not inconsistent with the cases cited by Defendant in support of its motion. Defendant argues that the Court should look to New York, Chicago & St. Louis Railroad Co. v. Heffner Construction Co., 9 Ohio App.2d 174, 223 N.E.2d 649 (1967), and Blakeman v. Hendrix, 14 Ohio App.2d 141, 237 N.E. 334 (1967), for standards in determining when a right of control exists. However, these cases stand for the rule that “[w]hen an employer retains control over the mode and manner of doing a specified portion of work only, and an injury results to a third person from the doing of some other portions of the work, the contractor alone is liable.,” Blakeman, 14 Ohio App.2d at 143, 237 N.E.2d at 336 (quoting Hughes v. Cincinnati & S. Railway Co., 39 Ohio St. 461 (1883).) As noted above, the evidence in this case indicates that the right of control held by Defendant over the franchisee was specifically in the areas of operation relevant to Plaintiffs’ claims.

Therefore, because Plaintiffs have shown the franchisee to be Defendant’s agent, the Court finds that Plaintiffs have stated a claim upon which relief could be granted and that the Court has personal jurisdiction over the Defendant. Accordingly, Defendant’s Motion to Dismiss is overruled.

A telephone conference call will be convened at 4:15 p.m. on Friday, January 24, 1986, in order to set a trial date and other dates leading to disposition of this lawsuit.

      . It is not clear to the Court that Defendant was not a consumer reporting agency and/or a debt collector under the statutes even if the franchisee was not its agent. Neither party has addressed this issue, and because the record is not developed on the issue of what functions Defendant actually performs, the Court will not address this possible basis of liability at this time.

      . The Court applies Ohio law rather than federal common law to this action because there is no clear indication Congress sought to replace state agency law with federal law in the area of consumer credit regulation or that there is an overwhelming need for a single national definition of agent for the purpose of these statutes. See Burks v. Lasker, 441 U.S. 471, 476-78, 99 S.Ct. 1831, 1836-37, 60 L.Ed.2d 404 (1979); see abo Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 641, 101 S.Ct. 2061, 2067, 68 L.Ed.2d 500 (1981). In any case, Ohio law and federal common law are identical in all relevant aspects.


author: HADEN, Chief Judge.

text:
    Howard DAVIS, Plaintiff, v. MONSANTO COMPANY, Defendant.
    Civ. A. No. 84-2493.
    United States District Court, S.D. West Virginia, Charleston Division.
    Jan. 14, 1986.

      Leland T. Sloan, St. Albans, W.Va., for plaintiff.
    Alicia J. Clegg, Bowles, McDavid, Graff & Love, Charleston, W.Va., for defendant.
   ORDER

HADEN, Chief Judge.

This case is presented to the Court on cross motions for summary judgment. The Plaintiff, Howard Davis, and the Defendant, Monsanto Company, have each moved for summary judgment by motions filed November 4, 1985. Davis has also moved for reconsideration of this Court’s Order entered October 21, 1985. Davis’ argument fails to establish good cause to alter the time frames established in the Pretrial Procedures and Final Scheduling Order entered April 5, 1985, for amendment and joinder of parties. Further, allowance of this amendment would delay consideration of this action now set for trial in February, 1985. Accordingly, on the grounds asserted, Davis’ motion to vacate the Order entered October 21, 1985, is denied.

With respect to the motions for summary judgment, the Court finds the following facts to be undisputed. In March of 1983, Howard Davis began experiencing marital problems. In March of 1984, his wife left him. During March of 1984, Davis experienced difficulty sleeping, lost weight — 28 pounds in four weeks — and felt nervous. Davis voluntarily made an appointment to see Lyn Lewis, who subcontracted counseling services for Personal Performance Consultants, Inc. PPC provided counseling services to Monsanto’s employees as a fringe benefit to those employees. Lewis, who has a Master’s Degree in counseling, has practiced psychotherapy for fourteen years. At the appointed time on the morning of March 20, 1984, Lewis met with and counseled Davis for about an hour and a half at Lewis’ office in Charleston. Lewis observed and evaluated Davis physically and mentally. Based upon Lewis’ observation, he concluded that Davis was dangerous to the point of being suicidal to himself and homicidal toward his wife and others, and that he could easily be provoked into creating a life-threatening situation in the work place and other places. Lewis opined that this danger was imminent.

Lewis, pursuant to W.Va.Code, § 27-3-1, and also pursuant to the Employee Statement of Understanding determined that his responsibility as counselor would require him to divulge Davis’ confidences in order to protect Davis and others. Lewis contacted Rick Kinyon, Corporate Manager of Operations of PPC in St. Louis, Missouri.

Kinyon contacted in turn Don Johnson, the personnel supervisor at Monsanto, and related Lewis’ assessment of Davis’ dangerous condition. Johnson related the information to Merle Mahler, Monsanto’s personnel superintendent at its Nitro plant, and Mahler and Johnson contacted Lewis to confirm Davis’ condition and to enlist his aid in determining the appropriate course of action. Lewis recommended that Davis be removed from his job and that he be urged to seek medical treatment.

All of these foregoing communications occurred between the time of Davis’ counseling session on the morning of March 20, 1984, and Davis’ scheduled work time at 2:30 p.m. that same day. Mahler, the personnel supervisor, contemplated removing Davis from the job and contacted the president of Davis’ bargáining representative, United Steelworkers of America, Local Union No. 12610, Thomas Collier. Mahler felt that the divulging of Davis’ information to the Union was necessary before taking action on Davis’ employment status.

Mahler conducted a meeting with Johnson, Collier and Gregory Witt — a Union committeeman. The Union representatives took exception to Lewis’ assessment and the recommended action by Monsanto. The Union representative wanted an opportunity to discuss the matter with Lewis himself and a meeting was arranged. Davis was permitted to work on March 20, 1984, but Davis later took medical disability leave for four weeks. In January, 1985, Davis retired at the age of 62.

Davis’ complaint contains two counts. One alleges a tortious invasion of privacy. The second alleges a breach of contract. The Court will consider the motions for summary judgment first upon the tort theory, and second on the contract theory.

Four types of invasion of privacy have been recognized under West Virginia law: (1) unreasonable intrusion upon the seclusion of another; (2) appropriation of another’s name or likeness; (3) unreasonable publicity given to another’s private life; and (4) publicity that unreasonably places another in a false light before the public. Crump v. Beckley Newspapers, Inc., 320 S.E.2d 70, 83 (W.Va.1984); cf., Cantrell v. Forest Publishing Co., 419 U.S. 245, 248 n. 2, 95 S.Ct. 465, 468 n. 2, 42 L.Ed.2d 419 (1974) (false light theory recognized as adopted in West Virginia); and Roach v. Harper, 143 W.Va. 869, 105 S.E.2d 564 (1958) (recognizing “intrusion on the seclusion of another” type of privacy claim). Davis complains of the third type — that Monsanto unreasonably publicized facts concerning his private life.

Under Section 652D of the Restatement (2d) of Torts (1977), the Court discerns four elements necessary to state a cause of action. In order to establish a cause of action for public disclosure of private facts, a plaintiff would need to prove the following elements: (1) that there was a public disclosure by the Defendant of facts regarding the Plaintiff; (2) that the facts disclosed were private facts; (3) that the disclosure of such facts is highly offensive and objectionable to a reasonable person of reasonable sensibilities; and (4) that the public has no legitimate interest in the facts disclosed.

It should be noted that “publication” required in privacy actions of the sort outlined by Section 652D is different from the mere communication to a third party required under libel law. It is not an invasion of privacy to communicate the private fact to a single person or a small group of persons. The tort of invasion of privacy requires widespread publicity. Comment A, Restatement (2d) of Torts, § 652D.

Publication of private facts may also be privileged, either absolutely or qualifiedly. A communication of private facts is absolutely privileged if required by the law. Crump, 320 S.E.2d at 83 n. 5; see also Restatement (2d) of Torts, §§ 592A and 652F (1977). The failure to protect persons from the danger of mentally disturbed persons by one bearing a “special relationship” gives rise to a claim for damages according to Tarasoff v. Regents of the University of California, 17 Cal.3d 425, 131 Cal.Rptr. 14, 551 P.2d 334, 83 A.L.R.3d 1166 (1976). In that case, the Supreme Court of California found that a psychologist who came to know of an individual’s intent to kill the plaintiffs decedent and the psychologist’s employer were liable for the failure of the psychologist to inform the victim of his patient’s intent to kill her.

Also, as an employer in West Virginia, Monsanto had the duty to provide all of its employees with a safe place to work. W.Va.Code, § 21-3-1 states:

“Every employer shall ... adopt and use methods and processes reasonably adequate to render employment and the place of employment safe, and shall do every other thing reasonably necessary to protect life, health, safety and welfare of such employees.”

Additionally, a qualified privilege may attach to communications of private information. Where the communication of such information is in furtherance of the communicator’s legitimate interest or where the communication is for the purpose of another’s legitimate interests, the communicator is entitled to a qualified privilege. Crump, 320 S.E.2d at 79, 83 n. 5. W.Va. Code, § 27-3-1 permits information obtained in the course of a psychological treatment or evaluation to be divulged “to protect against a clear and substantial danger of imminent injury by a patient or client to himself or another.” W. Va. Code, § 27-3-1(b)(4).

In the instant action, Monsanto received the information from a mental health professional who believed Davis to be lethally dangerous to himself and those around him. Davis worked with potentially dangerous chemicals in his position with Monsanto, and Monsanto's agents took immediate action to determine whether Davis should be permitted to work. Davis’ ability to establish a prima facie claim is inhibited by the fact that Monsanto told only two persons outside the management level personnel making the determination of whether Davis would continue working. This limited disclosure is not the widespread “publication” required and thus does not constitute a publication necessary to establish a cause of action for public disclosure of private facts as outlined in Restatement (2d) of Torts, § 652D.

Secondly, Monsanto’s divulgence to the Union was in furtherance of its own interests in protecting its plant and employees from danger it also furthered the Union officials’ legitimate interest in protecting its membership from danger and protecting the employment rights of Davis. Accordingly, Monsanto’s disclosures were qualifiedly immune.

And thirdly, Monsanto’s actions were required by law as Monsanto is an employer faced with a dangerous condition in its work place. Monsanto is required to make the work place safe under W.Va. Code, § 21-3-1. As such, Monsanto’s disclosures were absolutely privileged.

As Monsanto has established facts which are not in dispute and which entitle Monsanto to judgment as a matter of law, Monsanto’s motion for summary judgment is granted in favor of Monsanto on Davis’ claim for tortious invasion of privacy.

Davis has also raised a claim that Monsanto’s communications violated his contractual rights. The contract involved here is a collective bargaining agreement struck between Monsanto and the United Steelworkers of America, Local Union No. 12610. An employee must attempt to exhaust the provisions of the collective bargaining agreement before resorting to judicial relief. Vaca v. Sipes, 386 U.S. 171, 184, 87 S.Ct. 903, 913, 17 L.Ed.2d 842 (1967). For matters relating to a collective bargaining contract, the grievance procedure provided therein states the exclusive remedy. Republic Steel Corp. v. Maddox, 379 U.S. 650, 658, 85 S.Ct. 614, 619, 13 L.Ed.2d 580 (1965); United Steelworkers of America v. American Manufacturing, 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960); and United Steelworkers of America v. Warrior and Gulf Navigation Co., 363 U.S. 567, 578, 80 S.Ct. 1343, 1350, 4 L.Ed.2d 1403 (1960).

Further, any action brought pursuant to a collective bargaining agreement must be brought within the six-month statute of limitations applicable to such actions under 29 U.S.C. § 185. DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983); Thomas v. Kroger, 583 F.Supp. 1031 (S.D.W.Va.1984).

No contract between Monsanto and Davis appears in the documents presented to the Court other than the collective bargaining agreement. The scope of the bargaining agreement is indeed broad:

“The purpose of this agreement is to promote and maintain harmonious relations between the parties and to advance their mutual interests by maintaining and improving the manufacture of products at the plant. It is agreed that the fullest cooperation between the company and its employees is necessary to permit the maintenance of satisfactory manufacturing operations and payment of adequate wages. Both parties shall abide by this agreement and all mutual understandings contained herein, it being their purpose to settle all differences without disturbance to industrial peace.
It is mutually understood that the terms and conditions relating to the employment of workers covered by this agreement have been decided upon by collective bargaining. This agreement may be modified by mutual consent, in writing, by the parties hereto.”

Article I, Section 2, Contract between Monsanto Company and United Steelworkers of America, Local 12610.

The agreement contains the following grievance clause:

“Any employee may discuss with the employee’s firstline supervisor or the department supervisor any complaint or other matter which the employee feels requires adjustment. Should they fail to reach a satisfactory settlement, the complaint may be treated as a grievance under the terms of this agreement provided the difference arises as a result of a question as to meaning and application of or compliance with the provisions of this agreement. All grievances arising under the terms of this agreement shall be settled in the following manner:”

Id. at Article XV, Section 1. The agreement at this place lists a three-step grievance process. This grievance process was not observed in this case. Accordingly, Davis’ action against Monsanto in district court is barred for failure to resort to the grievance processes contained in the collective bargaining agreement mentioned.

Also, the incident giving rise to this claim occurred in March of 1984. This action was filed in December, 1984. Thus, the action is barred by the statute of limitations applicable to such suits.

Accordingly, there being no genuine issue of material fact and Monsanto being entitled to judgment as a matter of law, the Court grants Monsanto’s motion for summary judgment on the contract count alleged by Davis.

      . The Plaintiff does not contest the accuracy of Lewis' assessment, but rather takes issue with the manner in which Lewis and Monsanto handled the information that the Plaintiff divulged to Lewis. Plaintiffs brief in opposition to the Defendant’s motion for summary judgment received November 21, 1985.

      . The Employee Statement of Understanding states as follows:
      "Confidentiality. No one at PPC will reveal information concerning details of a person’s counseling to anyone outside PPC without the person’s written permission unless absolutely required by law. Generally, legal rules do not require release of such information except where life or safety are seriously threatened.”

      . Specifically, Mahler states:
      "At the time, based on information that I had been provided by the counselor, I felt we would remove Mr. Davis from his job and place him on a disability status. I felt that, based on the recommendation of the counsel- or, that this individual was lethal, homicidal, might cause harm to either himself or could easily be provoked and might cause harm to his fellow workers and we would most likely remove him from the job. In which case, of course, we certainly needed to talk with Union representatives about the situation, certainly the representative agent under the collective bargaining agreement and when remove a member of a bargaining agreement from an assigned job, then they certainly have to understand the reason for doing that and that was the reason for notifying the president of the Union."
      Mahler deposition at pp. 13-14.

      . The Restatement sections concerning invasion of privacy torts has been explicitly recognized in Crump v. Beckley Newspapers, Inc., 320 S.E.2d 70 (W.Va.1984).


author: WARRINER, District Judge.

text:
    Paul KIRK v. Warden WHITE, et al.
    Civ. A. No. 85-0697-R.
    United States District Court, E.D. Virginia, Richmond Division.
    Jan. 15, 1986.

      Paul Kirk, pro se.
    G. Wingate Grant, Asst. U.S. Atty., Richmond, Va., for respondents.
   OPINION AND ORDER

WARRINER, District Judge.

Petitioner, proceeding pro se, filed this petition for a writ of habeas corpus under 28 U.S.C. § 2241 on 25 September 1985. On 21 October respondents submitted a motion for summary judgment to which petitioner responded on 28 October. Respondents’ motion is ripe for consideration. The Court exercises jurisdiction under 28 U.S.C. § 2241.

On 12 November petitioner filed a motion for a preliminary injunction in which he asks that the Court order his immediate release on parole. Respondents have replied to this motion and the Court will rule on it together with the instant petition.

Paul Kirk, an inmate at the Federal Correctional Institution (F.C.I.) in Petersburg, Virginia, brings this action challenging a recent decision by the United States Parole Commission to set a parole release date “outside the guidelines.” (U.S.P.C.)

Kirk’s present thirty-year sentence results from separate convictions for bank robbery in 1975 and 1976. His eligibility for parole began 5 June 1985, the point at which he had served one-third of his total sentence. On 7 May 1985, an examiner panel of the U.S.P.C. held a hearing at the F.C.I. in Petersburg to determine whether and when petitioner should be paroled. The panel recommended that Kirk be paroled effective 5 November 1985, a period five months after his initial parole eligibility date. By notice of action dated 17 May the Regional Commissioner adopted that recommendation. Understanding Kirk’s challenge to the above decision necessitates a brief review of Parole Commission regulations.

Inmates’ presumptive parole dates are generally calculated by using the “guidelines” promulgated by the U.S.P.C. pursuant to 18 U.S.C. § 4203(a)(1). The guidelines, see 28 C.F.R. § 2.20, provide the U.S. P.C. with a suggested “range” of dates for parole release. That range is arrived at through the combination of two factors: offense severity and “salient factor score,” a shorthand way of predicting parole success. Notwithstanding the release date the guidelines suggest, the U.S.P.C. may grant or withhold parole if it determines there is “good cause” for such a decision. See 18 U.S.C. § 4206(c). In Kirk’s case, application of the guidelines suggested release on parole after 60 to 72 months of imprisonment. Kirk’s sentences aggregated 360 months. Because Kirk could not be released until he had served one-third of his total sentence, 120 months, see 18 U.S.C. § 1405, incarceration “above the guidelines” to the extent of 48 months was unavoidable. The examiner panel, however, decided that an additional five months beyond the 120 months was required in order to formulate a “parole release plan” for Kirk. It is this decision that Kirk challenges, asserting that lack of a satisfactory “release plan” does not constitute the “good cause” necessary to justify a release date outside the guidelines.

In response, the Parole Commission maintains that a release plan is an essential element of the parole process which insures that an inmate “properly reintegrates into society.” Further, formulation of such a plan is required, it argues, by the U.S.P. C.’s statutory mandate of ensuring that “release [of a parolee] would not jeopardize the public welfare” see 18 U.S.C.S. 4206(a)(2). Respondent also points to language in the Parole Commission’s regulations stating that: “A grant of parole is conditioned upon the approval of release plans by the Regional Commissioner.” 28 C.F.R. § 2.33(a). Finally respondent has cited a number of cases in which release on parole was delayed because of the lack of a suitable release plan. See Housler v. Nelson, 453 F.Supp. 874 (D.Conn.1978), Paulus v. Fenton, 443 F.Supp. 473 (M.D.Pa. 1977).

The first step in addressing Kirk’s claim is to determine what standard ought to govern the Court’s review of his allegation that the U.S.P.C. has acted in contravention of its own regulations. Kirk has brought this action pursuant to 28 U.S.C. § 2241 which provides that the writ of habeas corpus may issue to a prisoner “in custody in violation of the Constitution or laws of the United States.” Section 2241 most often provides a jurisdictional basis for claims of constitutional infringement. In the instant case, however, Kirk’s claim that the U.S. P.C. failed to follow its own regulations essentially alleges a violation of the Administrative Procedure Act, see 5 U.S.C. § 701, et seq. It is settled in this circuit, see Garcia v. Neagle, 660 F.2d 983 (4th Cir.1981), that the U.S.P.C. is, like other administrative agencies, subject to the requirements of the A.P.A. Further, § 703 of the Act expressly authorizes review by a petition for a writ of habeas corpus, the route Kirk has taken here. Accordingly, the initial inquiry in this case is not whether Kirk is in custody “in violation” of the Constitution or laws of the United States but rather whether he is “aggrieved by agency action” within the meaning of 5 U.S.C. § 702, see Brown v. Lundgren, 528 F.2d 1050, 1054 n. 4 (5th Cir.1976).

Because judicial review of agency action is founded on the A.P.A., it may be restricted by a congressional determination that certain actions are committed to agency discretion. See 5 U.S.C. § 701(a)(2). 18 U.S.C. § 4218(d) makes clear that the U.S. P.C.’s substantive decisions to either grant or withhold parole are not reviewable by this Court even under an “abuse of discretion” standard. See Garcia, 660 F.2d at 988 n. 4.

Nevertheless, although the U.S.P. C.’s substantive decisions oh the merits are exempt from review, courts retain the power to review allegations that an agency has taken action in violation of its own regulations. See R. Pierce, Jr., S. Shapiro and P. Verkuil, Administrative Law and Procedure p. 219 (1985) or acted “without observance of procedure required by law.” 5 U.S.C. § 706(2)(D). Accordingly, this Court is authorized to review Kirk's claim that the U.S.P.C. improperly arrived at a decision outside the guidelines by relying on a statutorily impermissible ground. Before commencing this review the Court notes that Kirk has exhausted administrative, remedies by appealing the examiner panel’s decision to the U.S.P.C.’s National Appeals Board.

In reviewing an allegation that an agency has taken action in contravention of its own regulations, a court may sometimes be required to scrutinize the agency’s contention that its own interpretation of its regulations indicate that they were in fact followed. Review of the reasonableness of the agency’s interpretation is required if the principle that agency discretion is bounded by its own regulations is to have any meaning. Nevertheless, in conducting its inquiry into whether the agency’s interpretation can be rested upon the regulation, a court should not attempt to substitute its own judgment for that of the agency or choose the “best” interpretation over a viable one advanced by the agency. An agency’s interpretation of its own regulations is due special deference by virtue of its unique familiarity with the subject matter of regulation. See National Assoc. of Metal Finishers v. Environmental Protection Agency, 719 F.2d 624 (3d Cir.1983). This deference requires that challenges to an agency’s interpretation should fail unless the agency’s interpretation is “unreasonable.” See Lieberman v. Gunnell, 726 F.2d 75 (2d Cir.1984).

In the present case Kirk contends that the U.S.P.C.’s application of the § 4206(c)’s “good cause” exception to a lack of release plan rests upon an unreasonable interpretation of its own regulations. The Court agrees, finding that the U.S.P.C.’s own regulations expressly provide procedures to be followed when a release plan has not been formulated and disable the agency from treating the same factor as “good cause” for setting a release date outside the guidelines.

Determining whether the U.S.P.C. properly used § 4206’s “good cause” exception requires more than answering whether it is appropriate for the U.S.P.C. to delay release on parole in order to formulate a release plan. It is only too easy to accept respondent’s suggestion that a release plan is an essential element of parole, the satisfactory formulation of which must precede release. It would be a short step to the further conclusion that delay of release for such a reason sensibly fits into the “good cause” justification for decisions outside the guideline. Indeed, in the absence of any indication of a contrary regulatory intent, this Court would feel bound to accept respondent’s argument.

A plausible interpretation of a regulation standing alone may lose its persuasiveness when the regulation is considered within the context or an overall statutory or regulatory scheme. Here, a careful review of the U.S.P.C.’s rules and procedures manual has led the Court to two conclusions, first, the U.S.P.C. may in an appropriate case retard release on parole for lack of a release plan, second, in the instant case the decision to retard was made by the wrong arm of the U.S.P.C. and without the procedural protections that the regulations provide for such decisions.

In reviewing the U.S.P.C.’s regulations, the Court looks first to those circumstances which the regulations specifically advise may constitute “good cause” for a decision above the guidelines. The Notes and Procedures following 28 C.F.R. § 2.20, § 2.20-05, give some of the following as factors warranting a decision above the guidelines: “(1) Aggravated nature of offense behavior; (2) Extremely vulnerable victim; (4) Poorer parole risk (alcohol, drug use, etc.); (8) Institutional misconduct.” Although the notes caution that the above are not “the only situations in which a decision above the guidelines may be considered,” they present examples of “good cause” somewhat at variance from the mere absence of a release plan.

Judging from the above Notes, the U.S. P.C. generally finds the “good cause” required for going above the guidelines in factors that bear directly upon the applicant’s essential fitness for parole, e.g., dangerousness, attitude, etc. By contrast, formulation of a release plan would appear to be primarily an administrative matter that could, and should, be performed at some time before the inmate is otherwise ready to be released. In the instant case, the last year or so of the ten years during which Mr. Kirk has been imprisoned surely constitutes an adequate period of time in which to arrive at a satisfactory “release plan.”

There appear to be circumstances explaining the failure of the U.S.P.C. to come up with a release plan prior to Kirk’s initial parole eligibility date of 5 June 1985. According to the unrefuted affidavit of Stephen Michniak, a “Correctional Treatment Specialist” at Petersburg, Kirk “prior to his 7 May hearing ... refused to assist or cooperate with staff in the preparation of release planning, despite warnings that the lack of release planning could possibly result in the retardation of his release date.” Kirk’s lack of cooperation adequately explains why a release plan had not been designed previous to 5 June.

It might be argued that the “good cause” exception of § 4206(a)(2), usually applied to deny an “unfit” parolee release, fairly applies where an inmate’s recalcitrance delays completion of an essential element of the parole package. But Kirk’s recalcitrance was not advanced as the reason for delay. Further, the absence of a release plan is explicitly dealt with by U.S.P.C. regulations.

28 C.F.R. § 2.28(e) reads:

When an effective date of parole has been set by the Commission release on that date shall be conditioned upon the completion of a satisfactory plan for parole supervision. The appropriate Regional Commissioner may on his own motion reconsider any case prior to release and may reopen and advance or retard an effective parole date for purposes of release planning. Retardation without a hearing may not exceed 120 days.

Other sections of the U.S.P.C. regulation which speak of the necessity of retarding ‘release in order to formulate a release plan refer back to § 2.28(e). For example, see 28 C.F.R. § 2.12(d): “A presumptive parole date shall be contingent upon an affirmative finding ... that the prisoner has ... suitable release plan and shall be subject to the provisions of Section ... 2.28.” See also 28 C.F.R. § 2.14(6) Pre-release reviews. “(2) Following review, the Regional Commissioner may: ... (ii) Advance or retard a parole date for purposes of release planning as provided by Sec. 2.28(e)”.

Consideration of the above sections has convinced the Court that delay of release because of the lack of a release plan should be handled pursuant to the explicit provisions of § 2.28(e) cited above. Interestingly, in one of the two cases cited by respondents to show that the U.S.P.C. may retard release because of lack of an adequate release plan, retardation occurred pursuant to § 2.28(e). See Housler v. Nelson, supra.

It is true that § 2.28(e) dictates the procedures to be followed for retardation for lack of a release plan after an “effective date of release has been set” by the Commission. In Kirk’s case the U.S.P.C. had not yet arrived at an effective release date. Rather than retarding what was already a fixed release date, the U.S.P.C. “only” delayed setting the effective release date. Therefore, it might be argued, the procedural protections of § 2.28(e) do not apply.

The problem with this argument is that § 2.28(e) evinces an obvious intent to have the U.S.P.C.’s finding that a parolee’s release plan is inadequate and that his release should therefore be delayed subject to periodic review. This intent would be undercut if the U.S.P.C. could avoid the requirements of § 2.28(e) by simply making its decision to retard release when setting the effective date of release. The U.S.P.C., by doing little more than changing the label on its actions could thus effectively negate § 2.28(e).

Section 2.28(e) expressly provides a method for the retardation of parole where a release plan is lacking or is unsatisfactory. Other sections involving lack of a release plan refer back to it as does a ease cited by respondent. The conclusion is forced upon the Court that § 2.28(e), which is tailored to the problem and provides procedural protections to ensure the rationality and re-viewability of the decision to delay release, controls this situation and that U.S.P.C. is not free to delay release on parole for lack of a release plan under the amorphous justification of “good cause.”

In making the determination whether petitioner’s presumptive parole date should become his effective date of release the examiner panel erred in considering whether an adequate release plan had been arrived at. The examiner panel should have set an effective release date without regard to that factor. It would then have been up to the Regional Commissioner to decide, pursuant to § 2.28(e), whether and for how long to retard release.

Agencies are bound by their own regulations and courts have the responsibility of reviewing “allegations that an agency exceeded its legal authority ... or failed to follow its own regulations.” Garcia v. Neagle, 660 F.2d 983, 988 (4th Cir.1981), citing Ness Investment Corp. v. U.S. Department of Agriculture, 512 F.2d at 714. Here review has uncovered an error in setting petitioner’s effective release date. The remaining question is the appropriate remedy.

Kirk’s effective date of release, 5 November 1985, has come and gone; he remains incarcerated. The pleadings indicate that sometime before his effective date of release, Kirk had a change of heart as to where he wished to serve his parole. Kirk’s new itinerary again caused delay in the approval of his release plan and evidently the U.S.P.C. retarded his release pursuant to § 2.28(e). Under this section Kirk will receive a hearing within 120 days.

Kirk, in his motion for injunctive relief, seeks immediate release. As the case now stands such relief is premature. Rather the Court will insist that the Commission restore to Kirk the procedural rights he would have received had the regulations been properly followed.

The Court will assume that Kirk’s effective date, of release, absent U.S.P.C. error, would have been 5 June 1985. Because no release plan had been formulated, the Regional Commission could have retarded release pursuant to § 2.28(e).

Had the Commission followed appropriate procedures, petitioner would already have had the hearing mandated by § 2.28(e). He should have it now. Such a hearing need not result in his release; as the note following § 2.28(e) indicate, an inmate’s release may be delayed indefinitely by the Regional Commissioner. Nevertheless, Kirk is entitled to have the U.S. P.C. consider whether and when his release is appropriate in accordance with the regulations it has commendably chosen to provide. This requirement should not prove onerous for the Commission. Instead of giving Kirk a hearing sometime in March as they would in any event be required to, they must provide such hearing within twenty days of the date of entry hereof. If the Parole Commission fails to provide a § 2.28(e) hearing within that time the Court will issue the writ and direct that petitioner be discharged from custody. See Lupo v. Norton, 371 F.Supp. 156 (D.Conn.1974).

And it is so ORDERED.

      . "Above the guidelines” is measured from the upper limit of the range, here 72 months. (120 — 72 = 48).

      . This discussion assumes the efficacy of parole and accepts arguendo the Commission’s ability to predict success on parole.


author: KOCORAS, District Judge:

text:
    Fay Moores GERVASIO, Plaintiff, v. UNITED STATES of America, Defendant.
    No. 85 C 5477.
    United States District Court, N.D. Illinois, E.D.
    Jan. 15, 1986.

      Michael G. Boylan, P.C., Geneva, Ill., for plaintiff.
    Marilla Lane Ross, Tax Div., U.S. Dept, of Justice, Washington, D.C., for U.S.
   MEMORANDUM OPINION

KOCORAS, District Judge:

The plaintiff Fay Moores Gervasio has brought this tax refund suit for $1.00 she alleges was improperly assessed by the Internal Revenue Service. The IRS apparently assessed a 100% penalty against Ger-vasio on June 27, 1983 for failure to pay $31,616.72 in withholding taxes for employees of the 20th Century Realty & Construction Co. for the second calendar quarter of 1979. According to Gervasio’s refund claim form, 20th Century Realty ceased operations in December, 1978. Therefore, the corporation paid no wages and owed no taxes in 1979, according to Gervasio.

On June 7, 1985, the plaintiff paid the IRS $1.00 and filed her claim for refund of the $1.00. According to the complaint, “[s]aid claim has been disallowed by the Internal Revenue Service on June 7, 1985 by Revenue Officers V. Thomas and J. Agoranos.” The plaintiff elaborates on this statement in her brief. On June 7, 1985, Gervasio’s attorney hand-delivered Form 843, a claim for abatement, to Revenue Officer Thomas at the Aurora, Illinois IRS office. After conferring with his supervisor, Revenue Officer Agoranos, Thomas informed the plaintiff’s attorney that he could not accept the claim. Thomas subsequently mailed the claim by first-class mail back to the plaintiff’s attorney. On June 11, 1985, Gervasio filed this refund suit.

The IRS has moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b) on the grounds that the court lacks jurisdiction and the complaint fails to state a claim upon which relief can be granted. The gist of the government’s argument is that the plaintiff failed to meet the jurisdictional prerequisites to bringing a tax refund suit as set forth in the Internal Revenue Code and Treasury Regulations.

The government does not specify whether it brings its motion under Federal Rule 12(b)(1), lack of subject matter jurisdiction, or 12(b)(6), failure to state a claim upon which relief can be granted. The plaintiff urges the court to treat the motion as one under Rule 12(b)(6). Under Rule 12(b)(6), the plaintiff’s allegations must be taken as true and the motion should not be granted unless the plaintiff would not be entitled to relief under any circumstances. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

This motion seems more properly brought under Rule 12(b)(1) than under Rule 12(b)(6) since the essence of the government’s argument is that the court lacks jurisdiction over the complaint. Rule 12(b)(1) is the proper vehicle for dismissing cases which are untimely and over which no subject matter jurisdiction exists because the plaintiff has failed to exhaust his administrative remedies before coming to court. Likewise, the defense that a claim is barred by sovereign immunity may also be raised by a motion under Rule 12(b)(1) since the court has no jurisdiction over an action against the United States unless the government has consented to be sued. 5 C. Wright & A. Miller, Federal Practice & Procedure § 1350 (Supp.1985). Therefore, the court will treat this as a Rule 12(b)(1) motion.

The district court is not bound to accept as true the allegations of the complaint as to jurisdiction where a party properly, as through a Rule 12(b)(1) motion, raises a factual question concerning the court’s jurisdiction. Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir.1979). The court may look beyond the jurisdictional allegations and view whatever evidence has been submitted to determine whether in fact subject matter jurisdiction exists. Id. citing Gibbs v. Buck, 307 U.S. 66, 59 S.Ct. 725, 83 L.Ed. 1111 (1939). The party asserting jurisdiction has the burden of supporting his jurisdictional allegations with competent proof. Id.

Under the Internal Revenue Code, no refund suits may be brought unless the tax or penalty is paid and a claim for refund is duly filed with the IRS in accordance with the Code and the Treasury Regulations. I.R.C. § 7422(a).

The Code further provides:
No suit or proceeding under section 7422(a) for the recovery of any internal revenue tax, penalty or other sum, shall be begun before the expiration of 6 months from the date of filing the claim required under such section unless the Secretary renders a decision thereon within that time, nor after the expiration of 2 years from the date of mailing by certified mail or registered mail by the Secretary or his delegate to the taxpayer of a notice of the disallowance of the part of the claim to which the suit or proceeding relates.

I.R.C. § 6532(a).

The related regulation provides that the notice of disallowance is to be sent by registered or certified mail by a district director, a director of an internal revenue service center, or an assistant regional commissioner.

The six-month waiting period between the filing of a claim for tax refund and the commencement of suit in district court to recover on that claim gives the IRS a reasonable period of time within which to process the claim and to render a decision allowing or disallowing the claim in whole or in part before being called upon to defend a suit brought on that claim. However, Congress also intended that if a decision should be rendered on the refund claim within the six-month period, the taxpayer should be free to commence suit in a district court from the moment that decision is rendered. Register Publishing Co. v. United States, 189 F.Supp. 626, 630 (D.Conn.1960).

Since the present suit was begun on June II, 1985, before the expiration of six months from June 7, 1985, the date of filing the claim for refund, the motion to dismiss must be granted, unless the revenue officer’s refusal to accept the claim is to be construed as a decision by the Secretary or his delegate within the meaning of section 6532(a)(1).

The government asserts that “(i)t is highly unlikely that the Internal Revenue Service would reject a claim on the same day that it was filed.” Even assuming that rejection of claims on the same day as filing is “highly unlikely,” this statement in no way advances the government’s argument that no decision was rendered on Ger-vasio’s claim on the date of filing.

The government also argues that even if the claim was rejected, the court lacks jurisdiction because the plaintiff did not receive a notice of disallowance by registered or certified mail from a district director, a director of an internal revenue service center, or an assistant regional commissioner as required by the Treasury Regulations, 26 C.F.R. § 301.6532-1. Read literally, both the Code and the regulations require only that the notice of disallowance triggering the two-year statute of limitations be in this form. Neither the statute nor the regulations contain similar requirements for denials of claims during the six-month waiting period.

Whether the requirements of notice by registered or certified mail and from a particular person apply to denials during the waiting period appears to be an open question. Even if these technical requirements do apply, however, the government has waived strict compliance with the notice requirements in this case. The IRS officers refused to accept the plaintiff’s claim and then mailed the claim form back to her by first-class mail. The government does not contend, and could not seriously contend, that the plaintiff would have received a more formal notice of denial had she waited. Nor was it conceivable that the IRS would render a decision favorable to the plaintiff during the six-month waiting period since the IRS no longer had the claim form in its possession. The IRS officers, through their actions, unequivocally denied the plaintiff’s claim. Therefore, the court finds that the plaintiff has complied with the jurisdictional prerequisites for bringing a tax refund suit under section 6532(a)(1).

Finally, the court notes that the government’s objection to the unsigned copy of the refund claim is moot as the plaintiff has now filed a signed copy of the claim form.


author: ROETTGER, District Judge.

text:
    EXPERT DIESEL, INC., Plaintiff, v. The YACHT “FISHIN FOOL”, her engines, tackle, etc., in rem, and Orca, Inc., in personam, Defendants.
    No. 85-8011-CIV.
    United States District Court, S.D. Florida, Fort Lauderdale Division.
    Jan. 15, 1986.
    Ronald Payne, Fort Lauderdale, Fla., for plaintiff.
    Kevin A. Malone, Fort Lauderdale, Fla., for defendants.
   ORDER

ROETTGER, District Judge.

Plaintiff brought this action in rem and in •personam to enforce a maritime lien for necessary labor and materials provided in the amount of $6,716.20. Defendants brought an in personam counterclaim, alleging that Plaintiff performed the agreed upon work in an unworkmanlike manner. Defendant claimed $30,000.00 in damages on the counterclaim, composed of “approximately $20,000.00” lost on a subsequent sale of the vessel, “approximately $1,000.00 to $1,500.00 per week” for lost use of the vessel “for several weeks”, and “additional funds” expended to repair the vessel properly.

Prior to the vessel’s seizure pursuant to the warrant of arrest in rem issued by the court, Plaintiff and Defendant Orea, Inc. (“Orea”) entered into a stipulation whereby Plaintiff agreed to refrain from arresting the vessel, if Orea posted a $10,000.00 bond. Following Orea’s posting of the for-ebearance bond, Defendants moved to compel the posting of a bond to secure the counterclaim pursuant to Rule E(7) of the Supplemental Rules for Certain Admiralty and Maritime Claims. Applying the rule in its literal sense, the court granted the motion, requiring Plaintiff to post counter-security in the amount of $30,000.00. Plaintiff then filed its “Notice of Declination to Post Bond”, basically urging reconsideration of the court’s order, and a show cause hearing was subsequently held on the matter.

RULE E(7)

Although the language of Rule E(7) appears mandatory, the propriety of requiring security on a counterclaim and the appropriate amount of any such security are within the discretion of. the district court. First Maryland Leasecorp. v. M/V Golden Egret, 764 F.2d 749, 758 n. 4 (11th Cir.1985); Whitney-Fidalgo Seafoods v. Miss Tammy, 542 F.Supp. 1302, 1305 (W.D. Wash.1982); Vic Franck’s Boat Co. v. Yacht Sunchaser III, 508 F.Supp. 609, 610 (W.D.Wash.1981). The discretion accorded the district courts under Rule E(7) carried over from old Admiralty Rule 50, the forerunner to Rule E(7). Under the old rule, a district court was allowed to determine whether to require the bond, and if required, to set the bond at an amount just and reasonable under the circumstances. See Spriggs v. Hoffstot, 240 F.2d 76 (4th Cir.1957).

The district courts’ broad discretion derives, in part, from the purpose of Rule E(7), which is to place the parties on equal-footing regarding security, not to inhibit the plaintiff’s prosecution of its suit as a maritime lien holder. See Miss Tammy, 542 F.Supp. at 1305. See also, Washington-Southern Navigation Co. v. Baltimore & Philadelphia Steamboat Co., 263 U.S. 629, 44 S.Ct. 220, 68 L.Ed. 480 (1924) (discussing Admiralty Rule 50); Seaboard & Caribbean Transport Corp. v. Hafen-Dampfschiffahrt A.G. Hapag-Hadac See-baderdienst, 329 F.2d 538 (5th Cir.1964) (same). This discretion also derives, in this court’s opinion, from admiralty courts being courts of purest equity.

The court agrees with Plaintiff’s contention that requiring a bond pursuant to Rule E(7) can have a deterrent effect on the enforcement of maritime liens and on the use of the already expensive procedures of maritime arrest and attachment. A district court should move with caution, then, under Rule E(7), and as Professor Moore argues, should be particularly reluctant to compel a party to post counter-security where that party is not attempting to secure the release of any property. 7A J. Moore, Moore’s Federal Practice ¶ E.15, at E-738 (2d ed. 1983). The imposition of such a duty may inequitably and unjustifiably burden maritime lien claimants. But that determination must, of course, be made on a case-by-case basis.

The court finds, on the facts of this case, that no security is necessary under Rule E(7) to equalize the positions of the parties. The court also finds that compelling Plaintiff to post a bond to secure Defendants’ counterclaim would unfairly and unreasonably inhibit Plaintiff’s prosecution of its case.

Plaintiff is basically a one-man operation — a local maritime diesel engine mechanic without dock facilities. Unable to exert a possessory lien, Plaintiff must rely on the enforcement of maritime liens through the admiralty jurisdiction of the district courts, as in this case. Plaintiff, furthermore, is not seeking to secure the release of any property. Finally, the court is reluctant to compel Plaintiff to post a bond in light of Defendants’ damage claims of a general, rather than a precisely detailed, nature.

ACCORDINGLY, upon consideration of the foregoing, the arguments and memo-randa of law submitted by counsel, and the entire record in this case, it is hereby

ORDERED AND ADJUDGED that the court’s order dated August 26, 1985, requiring Plaintiff to post a security bond in the amount of $30,000.00 pursuant to Rule E(7) and staying all proceedings until the posting of said bond, is VACATED.