text:
    NORTHWEST AIRLINES, INC.; Northwest Airlines, Inc., Pilots' Pension Plan; and State Street Bank and Trust Company, Plaintiffs, v. Arthur ROEMER, in his official capacity as Commissioner, Minnesota Department of Revenue; and Steven A. Felak, Jr., Defendants.
    Civ. No. 4-83-662.
    United States District Court, D. Minnesota, Fourth Division.
    March 15, 1984.
    Edward J. Pluimer, and Joseph M. Musilek, Dorsey & Whitney, Minneapolis, Minn., for plaintiffs.
    Neil F. Scott, Sp. Asst. Atty. Gen., Revenue Div., St. Paul, Minn., Steven Felak, pro se, for defendants.
   DIANA E. MURPHY, District Judge.

Plaintiffs Northwest Airlines, Inc. (NWA), Northwest Airlines, Inc., Pilots’ Pension Plan, and State Street Bank and Trust Company (State Street Bank) have filed a complaint for interpleader and declaratory judgment. Plaintiffs also seek an award of their costs and attorneys’ fees. Jurisdiction is invoked pursuant to 28 U.S.C. §§ 1332(a)(2) and 1335. The matter is now before the court upon cross motions for summary judgment filed by plaintiffs and defendant Arthur Roemer. Background

Plaintiffs and defendant Roemer have submitted a signed stipulation of facts. A request for admissions, containing the identical facts set forth in the stipulation, was served upon defendant Steven A. Felak, Jr. He neither objected to nor denied any of the Requests for Admissions, and the matters are therefore deemed admitted. Fed. R.Civ.P. 36(a). The facts set forth below are based on the stipulation and request for admissions.

NWA is a Minnesota corporation with its principal place of business in St. Paul, Minnesota. The Pilots’ Pension Plan is a qualified employee pension plan subject to federal regulation under the Employment Retirement Security Act of 1974 (ERISA), as codified at 29 U.S.C. § 1001 et seq. and subject to the tax laws of the United States as codified at 26 U.S.C. § 401 et seq. NWA is the Plan Administrator for the Pilots’ Pension Plan, while State Street Bank is the Trustee.

Defendant Roemer is a resident of the State of Minnesota and is the Commissioner of the Minnesota Department of Revenue (MDR), an agency of the State of Minnesota. Defendant Felak is a retired pilot of NWA and a participant in the Pilots’ Pension Plan. Felak is presently a resident of the State of Washington.

Felak retired as a pilot for NWA in the Spring of 1983. Based upon his past earnings as a pilot for NWA, Felak is entitled to receive a monthly employee pension from the Pilots’ Pension Plan in the amount of $5,205.17. The payment is to be made by the State Street Bank as Trustee at the direction of NWA as Plan Administrator. The first payment was sent to Felak at his residence on May 31, 1983.

A tax assessment has been made against Felak by Roemer in his official capacity for $128,719.19. Roemer asserts that Felak owes this amount for unpaid Minnesota state income taxes, interest and penalties. A default judgment was entered in the District Court of the State of Minnesota against Felak in favor of the MDR for this amount on May 24,1983. The Commissioner and the MDR are vested with authority pursuant to Minn.Stat. § 290.92, subd. 23 to administer the collection of delinquent Minnesota state income taxes.

On or about April 1, 1983, after Felak had retired as a pilot for NWA and had begun accruing his monthly pension benefit, NWA and State Street Bank received a Notice to Employer from the MDR, pursuant to Minn.Stat. § 290.92, subd. 23. The notice demanded that NWA and State Street Bank withhold from the monthly pension payment to Felak one quarter of the total pension payment, or $1,301.29 each month. The notice directed NWA and State Street Bank to remit the withheld monies to the MDR in partial payment of the $128,719.19 allegedly owed by Felak. The notice further stated that if plaintiffs willfully failed to comply with the requirements set forth in the Notice, they themselves would be liable for the amount demanded plus accrued interest.

At the hearing on this matter and in a letter sent by Felak to M.J. Lapensky, Chairman and Chief Executive Officer of Northwest, Felak denied owing any Minnesota state income taxes and claimed that he is entitled to the full amount of the monthly pension benefit. Under the terms of the Pilots’ Pension Plan, he is to continue receiving his monthly pension payment for the duration of his life.

At the outset of this case plaintiffs obtained an order from this court, dated July 26, 1983, permitting them to deposit $1,301.29 into the registry of the court for the month of June, and an equal amount for each subsequent month, pending a final judgment. This represents the amount claimed by the MDR. The funds on deposit are thus subject to conflicting claims of Felak and the MDR.

Plaintiffs and defendant Roemer have filed motions for summary judgment. Plaintiffs seek an order declaring that ERI-SA preempts the MDR’s efforts to levy on Felak’s monthly pension benefit. Plaintiffs further move the court for an order, pursuant to 28 U.S.C. § 1335, directing that the money deposited into the registry of the court be delivered to defendant Felak. They also seek to be discharged from all liability to defendants relating to past pension payments. Defendant Roemer seeks an order requiring the plaintiffs to comply with the Notice to Employer of additional withholding tax served on or about April 1, 1983 and ordering that the funds deposited in the registry of the court be paid to him. Discussion

The focal issue to be resolved is whether ERISA preempts the authority of Roemer to levy upon an ERISA-covered employee pension plan, pursuant to Minn.Stat. § 290.92, subd. 23, to satisfy the state income tax liability of one of the plan’s participants.

Preemption is a question of Congressional intent. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 2899, 77 L.Ed.2d 490 (1983). “Preemption may be either express or implied, and ‘is compelled whether Congress’ command is explicitly stated in the statute’s language or implicitly contained in its structure and purpose’....” Id. (citations omitted). The starting point for the analysis is the language of the statute itself. Greyhound Corp. v. Mount Hood Stages, Inc., 437 U.S. 322, 98 S.Ct. 2370, 57 L.Ed.2d 239 (1978).

The two relevant provisions of ERISA are 29 U.S.C. §§ 1056(d) and 1144(a). Section 1056(d) requires that “[e]ach pension plan shall provide that benefits provided under the plan may not be assigned or alienated.” 29 U.S.C. § 1056(d). Section 1144(a) provides that ERISA “supercede[s] any and all State laws insofar as they may now or hereafter relate to any employee benefit plan ....” 29 U.S.C. § 1144(a).

A. Section 1056(d)

Defendant Roemer argues that § 1056(d) specifically addresses only voluntary transfers of beneficial rights and does not expressly prohibit the enforcement of judgments against a pensioner’s benefits by levy, garnishment, or attachment. He contends ERISA is thus different from other Congressional acts where benefits are exempted from execution or levy in explicit terms. See 42 U.S.C. § 407 (Social Security benefits); 45 U.S.C. § 231m (Railroad Retirement benefits); 38 U.S.C. § 3101(a) (Veteran’s benefits). Roemer argues that the intent of § 1056(d) is merely to prevent employees and families from bargaining away pension benefits.

The only available legislative history on § 1056' is an interpretive comment by the Joint House and Senate Conference Committee which states in part;

Under the conference substitute, a plan must provide that benefits under the plan may not be assigned or alienated. However, the plan may provide that after a benefit is in pay status, there may be a voluntary revocable assignment (not to exceed 10 percent of any benefit payment) by an employee which is not for purposes of defraying the administrative costs of the plan. For purposes of this rule, a garnishment or levy is not to be considered a voluntary assignment.

House Conference Rep. 93-1280, 93d Congress, 2d Session, U.S.Code Cong. & Admin.News, 1974 pp. 4639, 5061. This comment, as well as the language of the statute, indicate that Congress intended the prohibition against assignments to include both voluntary and involuntary assignments. The general prohibition against assignments stated in the first sentence of the statutory provision contains no qualification. By contrast, references to voluntary assignments in both the statute and the Conference Committee’s comment are explicit. The final sentence of the comment clearly indicates that Congress intended to distinguish between the general prohibition, which includes garnishments and levies, and the limited exception for voluntary transfers of 10% or less. See Commercial Mortgage Insurance Inc. v. Citizens National Bank of Dallas, 526 F.Supp. 510 (N.D.Tex.1981); cf. General Motors Corporation v. Buha, 623 F.2d 455 (6th Cir.1980) (legislative history inconclusive).

The Internal Revenue Service has adopted regulations which are consistent with this interpretation. The regulations provide, in part, as follows:

(b) No assignment or alienation — (1) General Rule. Under section 401(a)(13) a trust will not be qualified unless the plan of which the trust is part provides that benefits provided under the plan may not be anticipated, assigned (either at law or in equity), alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process.

26 C.F.R. § 1.401(a)-(13)(b)(1). Significantly, these regulations provide an exception for levies in aid of federal tax collection. 26 C.F.R. § 1.401(aH13)(b)(2). There is no comparable provision for state tax levies.

The Internal Revenue Service is jointly charged with the Department of Labor with administering ERISA. See General Motors Corp. v. Buha, 623 F.2d 455, 461 (6th Cir.1980); Commercial Mortgage Insurance, Inc. v. Citizens National Bank, 526 F.Supp. 510, 519 (N.D.Tex.1981). The regulation prohibiting assignments and alienation must be followed “unless it was issued in excess of the statutory authority of the Secretary or was ‘arbitrary, capricious, or an abuse of discretion or otherwise not in accordance with law’....” General Motors Corp., 623 F.2d at 462-63 (citations omitted). This regulation was well within the statutory authority of the secretary.

The court’s reading of the statute and supporting regulations finds support in a number of decisions which have addressed the issue of whether ERISA benefits are subject to garnishment by creditors. Courts have consistently held that a non-family third party creditor may not garnish benefits derived from a pension plan which is governed by ERISA. See, e.g., Tenneco Inc. v. First Virginia Bank of Tidewater, 698 F.2d 688, 689-90 (4th Cir.1983); General Motors Corp. v. Buha, 623 F.2d 455, 462 (6th Cir.1980); Commercial Mortgage Insurance Inc. v. Citizens National Bank of Dallas, 526 F.Supp. 510, 520 (N.D.Tex. 1981); Helmsley-Spear, Inc. v. Winter, 426 N.Y.S.2d 778, 74 A.D.2d 195, 199 (1980), aff’d 52 N.Y.2d 984, 438 N.Y.S.2d 79, 419 N.E.2d 1078 (1981); Christ Hospital v. Greenwald, 82 Ill.App.3d 1024, 38 Ill.Dec. 469, 403 N.E.2d 700 (1980); Ward v. Ward, 164 N.J.Super. 354, 396 A.2d 365 (1978).

The only judicial exception to the general rule against garnishment appears to be where a debt is owed to an employee’s spouse. Under these circumstances courts have permitted garnishment of the employer’s interest in the plan. See e.g., American Telephone & Telegraph v. Merry, 592 F.2d 118 (2nd Cir.1979); Senco of Florida, Inc. v. Clark, 473 F.Supp. 902 (M.D.Fla. 1979); Cartledge v. Miller, 457 F.Supp. 1146 (S.D.N.Y.1978); Stone v. Stone, 450 F.Supp. 919 (N.D.Cal.1978); Knapp v. Johnson, 301 N.W.2d 548 (Minn.1980). Courts have interpreted this exception narrowly. “The exception is premised upon the statute’s broad purpose to provide protection for employees and their families, so that intra-familial transfers are not to be viewed in the same light as an involuntary transfer for the benefit of a third-party creditor.” Tenneco Inc. v. First Virginia Bank of Tidewater, 698 F.2d 688, 690 (4th Cir.1983).

The general prohibition against assignments contained in § 1056(d), therefore, as well as provisions in the tax code and regulations, implicitly indicate Congress’ intention to preempt Roemer’s authority to levy upon an ERISA-covered employee pension plan to satisfy the state income tax liability of one of the plan’s participants.

B. Section 1144(a)

Roemer argues for a narrow construction of § 1144(a) which provides that ERI-SA “supercede(s) any and all state laws insofar as they ... relate to any employee benefit plan....” He contends that state law “relates to” an employee benefit plan only if it regulates the terms and conditions of a pension plan. Because Minn. Stat. § 290.02, subd. 23 is a law of general application which seeks only to secure payment of delinquent taxes, Roemer argues that it does not fall into the category of state laws which are superceded by § 1144(a).

The narrow reading of § 1144(a) proposed by Roemer, however, has been rejected by the Supreme Court. In Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 101 S.Ct. 1895, 68 L.Ed.2d 402 (1981), the Court was confronted with a New Jersey law which prohibited worker compensation benefits from being used to offset pension benefits. Despite the fact that the law had only a collateral effect on pension plans, the court unanimously held that the provision was preempted by ERISA. Alessi, 451 U.S. at 524-526,101 S.Ct. at 1906-1908. “ERISA makes clear that even indirect state action bearing on private pensions may encroach upon the area of exclusive federal concern.” Id. at 525, 101 S.Ct. at 1907.

Similarly, in Shaw v. Delta Airlines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983), the Court unanimously held that ERISA preempted a New York Human Rights law which had been interpreted to require welfare benefit plans to afford its participants disability benefits when they became disabled by pregnancy. The Court had no difficulty concluding that the Human rights law “related to” employee benefit plans. The Court carefully reviewed the legislative history of ERISA and concluded that Congress intended the words “relate to” in § 1144(a) to be used in their “broad sense.” Shaw, 103 S.Ct. at 2900-01.

The contention that the ERISA preemption should be narrowly construed is also undermined by Congress’ specific identification of areas of state legislation that were not preempted. State laws regulating insurance, banking, or securities, as well as generally applicable criminal laws, are specifically exempted from the preemption provision. 29 U.S.C. §§ 1144(b)(2) and (4). When ERISA was originally considered, Congress rejected a request by the Secretaries of Labor and Treasury to exempt state taxation from the preemption provision. In 1983, when ERISA’s preemption language was amended to exclude Hawaii’s experimental health benefit statute from § 1144(a), Congress specifically endorsed the preemption of state tax laws. The language of § 1144(a) and the legislative history indicate, therefore, that Congress intended to preempt state tax laws insofar as they relate to employee benefit plans. National Carriers’ Conference Committee v. Heffernan, 454 F.Supp. 914 (D.Conn.1978).

ORDER

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

IT IS HEREBY ORDERED that:

1. Plaintiffs’ motion for summary judgment is granted.

2. Defendant Roemer’s motion for summary judgment is denied.

3. The court hereby declares and adjudges that ERISA preempts the application of Minn.Stat. § 290.02, subd. 23, and that defendant Arthur Roemer, in his official capacity as Commissioner, Department of Revenue, cannot demand that plaintiffs, or any of them, withhold and/or remit funds to said Department which are payable out of the assets of Northwest Airlines, Inc., Pilots’ Pension Plan to defendant Steven A. Felak, Jr., a participant in the Pilots’ Pension Plan.

4. The funds deposited in the registry of the court by plaintiffs shall be paid by the Clerk of Court to defendant Steven A. Felak, Jr.

5. Plaintiffs are hereby discharged from all liability to defendants relating to the funds deposited into the registry of the court, past pension payments, and the Notice to Employer from the Minnesota Department of Revenue.

6. Any claim for attorneys fees must be brought in accordance with Local Rule 4(D).

LET JUDGMENT BE ENTERED ACCORDINGLY.

      . Minn.Stat. § 290.92, subd. 23, provides in pertinent part as follows:
      Subd. 23. Withholding by employer of delinquent taxes. (1) The commissioner may, within five years after the taxes should have been paid or the return is filed, whichever is later, give notice to any employer, deriving income which has a taxable status in this state regardless of whether the income is exempt from taxation, that an employee of that employer is delinquent in a certain amount with respect to any state taxes, including penalties, interest and costs. The Commissioner can proceed under this subdivision only if the tax is uncontested or if the time for appeal of the tax has expired. The Commissioner shall not proceed under this subdivision until the expiration of 30 days after mailing to the taxpayer, at his last known address, a written notice of (a) the amount of taxes, interest and penalties due from the taxpayer and demand for their payment and (b) the Commissioner's intention to require additional withholding by the taxpayer’s employer pursuant to this subdivision. The effect of the notice shall expire 180 days after it has been mailed to the taxpayer provided that the notice may be renewed by mailing a new notice which is in accordance with this subdivision. The renewed notice shall have the effect of reinstating the priority of the original claim. The notice to the taxpayer shall be in substantially the same form as that provided in section 571.41. The notice shall further inform the taxpayer of the wage exemptions contained in section 550.37, subdivision 14. If no statement of exemption is received by the Commissioner within 30 days from the mailing of the notice, he may proceed under this subdivision. The notice to the taxpayer’s employer may be served by mail or by delivery by an employee of the department of revenue and shall be in substantially • the same form as provided in section 571.495. Upon receipt of notice, the employer shall withhold from compensation due or to become due to the employee, the total amount shown by the notice, subject to the provisions of section 571.-55. The employer shall continue to withhold each pay period until the amount shown by the notice is paid in full.

      . Defendant Felak has submitted a number of documents, some of which mention jurisdiction, but he has not filed any type of motion. At the hearing Felak was given an opportunity to present his views. He stated:
      I’m just here to challenge the jurisdiction, not within the bar____ I am an unenfranchised sovereign, American, a free man. I come under the Constitution and statute law. I don’t come under the MDR or the IRS because that’s a special privilege tax; and wages, salaries, and first commissions are not taxable ... MDR has no jurisdiction over me, and that's it. And the burden of proof is upon them to prove that they have have jurisdiction over me. It appears that Felak challenges the right of the MDR to levy taxes on his income rather than the jurisdiction of this court.

      . Section 1056(d) further provides that "[f]or purposes ... of this subsection, there shall not be taken into account any voluntary and revocable assignment of not to exceed 10 percent of any benefit payment.”
      A provision almost identical to § 1056(d)(1) is found in the companion tax provisions to ERI-SA in the Internal Revenue Code wherein assignment or alienation of benefits is also prohibited if a pension plan is to be qualified for special tax benefits under the statute. 26 U.S.C. § 401(a)(13).

      . 26 C.F.R. § 1.401(a)-(13)(b)(2) provides as follows:
      A plan provision satisfying the requirements of subparagraph (1) of this paragraph shall not preclude the following:
      (i) The enforcement of a Federal tax levy made pursuant to section 6331.
      (ii) The collection by the United States on a judgment resulting from an unpaid tax assessment.

      . The regulations do, however, contain a provision which excludes from the prohibition against assignment any “arrangement for the withholding of Federal, State or local tax from any benefit payments.” 26 C.F.R. § 1.401(a)-(13)(c)(2)(ii). Defendant Roemer cites this provision in support of his contention that state tax levies are not prohibited by ERISA. However, the regulations clearly draw a distinction between “tax levies” and “arrangements for withholding.” Otherwise the provision specifically permitting federal tax levies would be superfluous. This provision was apparently enacted to comply with 26 U.S.C. § 3402(o )(1)(B) (1978 Supp) which permitted an individual to request to have a portion of his pension withheld for payment of federal income tax. Congress subsequently enacted 26 U.S.C. § 3405 which requires that federal income taxes be withheld unless the pensioner elects to waive the withholding requirement. The provision permitting an arrangement for withholding taxes, as well as the other arrangements listed in § 1.401(a)-(13)(c)(2), are clearly designed to be consensual in nature.

        . Roemer cites a New York State Appellate Division case which held that ERISA did not exempt pension benefits from New York statutory procedures governing enforcement of money judgments by a judgment creditor. National Bank of North America v. International Brotherhood of Electrical Workers Local #3, 419 N.Y.S.2d 127, 69 A.D.2d 679, appeal dismissed, 48 N.Y.2d 752, 422 N.Y.S.2d 666, 397 N.E.2d 1333 (1979). The appeal in that case was dismissed after the judgment debtor discharged his debt. Moreover, another panel of the New York Appellate Division, in a subsequent decision that was affirmed by the New York Court of Appeals, held that ERISA did in fact preempt New York’s statutory procedure governing enforcement of money judgments. Helmsley-Spear, Inc. v. Winter, 426 N.Y.S.2d 778, 74 A.D.2d 195, 199 (1980), aff’d 52 N.Y.2d 984, 438 N.Y.S.2d 79, 419 N.E.2d 1078 (1981).

      . The Court’s review of the legislative history indicated the following:
      The bill that became ERISA originally contained a limited preemption clause, applicable only to state laws relating to the specific subjects covered by ERISA. The Conference Committee rejected these provisions in favor of the present language, and indicated that the section's preemptive scope was as broad as its language____ Statements by the bill’s sponsors during the subsequent debates stressed the breadth of federal preemption.

        Shaw, 103 S.Ct. at 2900-01 (citations and footnotes omitted).

      . The Secretaries of Labor and Treasury jointly suggested a revised preemption provision which read in part:
      Notwithstanding the provisions of this section, a state shall have the authority to prescribe rules and regulations governing the tax qualification and taxation of contributions, distributions or income, of an employee pension plan (including a trust forming a part of such plan) as defined in the Welfare and Pension Plan Disclosure Act.
      Administration Recommendations to the House and Senate Conferees on H.R. 2 to Provide for Pension Reform (April, 1974), reprinted in 3 Legislative History 5050, 5147.

      . That amendment. Section 302 of Pub.L. No. 94-473, 96 Stat. 2611, signed on January 14, 1983, provides in pertinent part:
      (a) EXEMPTION FROM PREEMPTION.— Section 514(b) of Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144(b)) is amended by adding at the end thereof the following new paragraph:
      "(5)(A) Except as provided in subparagraph (B), subsection (a) shall not apply to the Hawaii Prepaid Health Care Act (Haw.Rev.Stat. §§ 393-1 through 393-51).
      (B): Nothing in subparagraph (A) shall be construed to exempt from subsection (a)— (i) any State tax law relating to employee benefit plans ... (emphasis added).
      The Conference Report explained as follows: "The provision generally exempts the Hawaii Prepaid Health Care Act from preemption by ERISA. Under the provision, however, preemption is continued with respect to ... any State Tax law relating to employee benefit plans....” H.R.Rep. No. 97-984, 97th Cong., 2d Sess. 18 (1982) , U.S.Code Cong. & Admin.News 1982, pp. 4580, 4603.

      . This conclusion is also consistent with that reached by the Ninth Circuit in Franchise Tax Board of California v. Construction Laborers Vacation Trust, 679 F.2d 1307 (9th Cir.1982), vacated, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) , in which the court held that the State of California could not levy upon vacation funds for tax collection. 679 F.2d 1309.
      The Vacation Trust relied on an ERISA Advisory Opinion from the Department of Labor which concluded “that the process of any state judicial or administrative agency seeking to levy for unpaid taxes ... upon benefits due a participant or beneficiary under the plan is preempted under ERISA Section 514.” While the Supreme Court vacated the decision on appeal, holding that the case had been improperly removed to federal court and that the district court was without federal jurisdiction, the Court noted in dicta that "the Court of Appeals may well be correct that ERISA precludes enforcement of the State’s levy in the circumstances of this case ....” 103 S.Ct. at 2855.


source: Caselaw Access Project

author: ARONOVITZ, District Judge.

license: Public Domain

text:
    POLO FASHIONS INC., Plaintiff, v. MAGIC TRIMMINGS, INC.; Arthur Abramson; and Maria Mataylo, Defendants.
    No. 83-0261-Civ-SMA.
    United States District Court, S.D. Florida.
    April 24, 1984.

      Robert W. Wells, Miami, Fla., for plaintiff.
    Barry Halpern, Miami, Fla., for defendants.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

ARONOVITZ, District Judge.

I.

FINDINGS OF FACT

A. The Parties.

1. The Plaintiff Polo Fashions Inc. (hereinafter “Polo”) is a New York corporation having an office and place of business at 40 West 55th Street, New York, New York 10019.

2. The Defendant, Magic Trimmings, Inc. (hereinafter “Defendant Magic Trimmings”) is a Florida corporation having an office and place of business at 1071 East 16th Street, Hialeah, Florida.

3. The Defendant Arthur Abramson (hereinafter “Defendant Abramson”) is a resident and a citizen of the State of Florida and is an officer and director of Magic Trimmings, Inc. with an office and place of business at the same address.

4. The Defendant Maria Mataylo (hereinafter “Defendant Mataylo”) is a resident and citizen of the State of Florida and is an officer and director of Magic Trimmings, Inc. having an office and place of business at the same address.

B. Jurisdiction and Venue.

5. This action arises under the provisions of the Trademark Act of 1946, 15 U.S.C. § 1051 et seq., particularly pursuant to 15 U.S.C. §§ 1114(1) and 1125(a), and, under the common law of the State of Florida. This court has jurisdiction over the subject matter of this claim pursuant to 15 U.S.C. § 1121 and 28 U.S.C. § 1338. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391. Jurisdiction is proper over Defendants pursuant to the laws of the State of Florida and Rule 4 of the Federal Rules of Civil Procedure.

C. The Business of the Parties.

6. Plaintiff Polo is a world famous fashion house which under the direction of its world famous designer Ralph Lauren styles, manufacturers and sells both directly and through related companies and licensees, diverse articles of men’s and women’s wearing apparel identified by the trademarks and tradenames POLO, RALPH LAUREN, POLO BY RALPH LAUREN and a fanciful representation of a polo player on a horse (the “Polo Player Symbol”) both individually and as composite trademarks, including a composite mark consisting of the mark RALPH LAUREN in combination with the Polo Player Symbol (the “Ralph Lauren Logo”). These trademarks are hereinafter collectively referred to as the “Polo Trademarks”.

7. Defendants are engaged in the clothing manufacturing business and specifically are involved in the placing of embroidery on garments and in silkscreening designs onto garments at their facility in Hialeah, Florida. In the process of conducting embroidery, Defendants utilize several twelve-head embroidery machines controlled by paper tape drives and use silkscreening apparatus which are hand-operated. The Defendants’ gross volume of sales in the year 1983 was approximately $300,000, constituting primarily the sale of embroidery and silkscreen printing on garments.

D. Background.

8. Polo, following the conduct of an investigation, submitted an ex parte Motion for Temporary Restraining Order duly supported by affidavits. An order was issued by the Court on February 2, 1983, (Docket No. 7) authorizing an inspection of Defendants’ premises coupled with service of process and service of an Order setting a hearing for Preliminary Injunction. Subsequently, the Court entered its Order authorizing seizure of counterfeit materials found at Defendants’ premises. (Docket No. 9)

9. A Preliminary Injunction Order Upon Consent was entered on February 8, 1983, (Docket No. 22).

10. This court has previously granted Polo’s Motion for Summary Judgment on Liability (Docket No. 41) in its Order on Pretrial Conference dated February 6, 1984, (Docket No. 54). At present Polo’s U.S. trademark registrations include among others: registration number 984,005 of May 14,1974 for the Ralph Lauren Logo trademark for diverse items of wearing apparel and registration number 1,050,722 of October 19, 1976 for the Ralph Lauren Logo trademark for diverse items of women’s apparel. The foregoing registrations are all valid and subsisting.

E. Damages.

11. The issues tried to the Court include Polo’s right to injunctive relief pursuant to 15 U.S.C. § 1116 and Polo’s right to monetary relief pursuant to 15 U.S.C. § 1117 including calculation of Defendants’ profits to be awarded to Polo; a determination of whether there should be a trebling of the monetary award made to Polo; a determination of costs; and a determination of whether this is an “exceptional case” wherein the Court may award a reasonable attorneys’ fee to Polo.

12. The Court finds that in the two year period prior to February 1983, Defendants acquired not one tape, as a sample, but seven computer tapes which were used to drive Defendants’ multihead embroidery machines which operate at a high rate of speed and with great precision and which were used to embroider counterfeits of the Polo Player Symbol. The Court finds that the acquisition of these tapes demonstrates an intentional plan by Defendants to infringe the Polo Trademarks.

13. The Defendants had in their possession, at the time process was served on February 2, 1983, not only tapes for embroidery of Polo’s trademarks but also tapes capable of producing embroidery of numerous other designer trademarks including: Sergio Valenti, Gloria Vanderbilt, Jordache, JouJou, Yves St. Laurent, Givenchy, Sasson, Gucci, Christian Dior, Pac Man, Fox (J.C.P.), Mickey Mouse, Swan (Gloria Vanderbilt), Rabbit Head (Playboy), Pierre Cardin name, and Pierre Cardin letter “P”. At the time process was served upon Defendants, the multihead embroidery machines were engaged in the process of embroidering the Jordache logo upon garments and, in another area of Defendants’ premises, Defendants were engaged in the process of placing Adidas designs on garments using their silkscreen apparatus. The Court finds from this evidence that Defendants had no regard for the trademark rights of the rightful owner of the trademarks in question, including Plaintiff’s Polo Player Symbol and the other trademark owners not Plaintiffs in this action. The Court finds that the Defendants were guilty of bad faith and willful and malicious infringement of the Polo Trademarks and the trademarks of others.

14. Defendant Abramson testified that Magic Trimmings did not provide embroidery of the Polo Player Symbol to one of its customers, Aliar Enterprises, Inc. The testimony of Aliar Enterprises, Inc., however, establishes that Defendants embroidered the Polo Player Symbol on approximately 1,000 shirts for Aliar Enterprises, Inc. The Court finds the Defendants’ lack of candor under oath in failing to have testified as to supplying Aliar Enterprises, Inc. with counterfeit embroidery is further evidence of the Defendants bad faith and intentional infringement.

15. The Court finds that the sole purpose of Mishigoss, Inc., a customer of Defendants, was to produce garments bearing counterfeits of Polo’s registered trademarks, including embroidery of the Polo Player Symbol. Invoices from Magic Trimmings to Mishigoss, Inc. indicate that Magic Trimmings, Inc. conducted embroidery for Mishigoss, Inc. The embroidery included shirts styled 4009 which Mishigoss, Inc. has identified as counterfeit POLO BY RALPH LAUREN interlock shirts and upon sweaters. The Court finds that since Mishigoss, Inc. only manufactured shirts bearing one or more of the Polo Trademarks, the work done by Magic Trimmings, Inc. for Mishigoss, Inc. necessarily involved embroidery of the Polo Player Symbol.

16. Both the Mishigoss, Inc. invoices and the Aliar Enterprises, Inc. invoices show embroidery of “style x.” The Court finds that Magic Trimmings, Inc.’s style x is embroidery of the Polo Player Symbol.

17. Defendants have testified that their only embroidery of the Polo Player Symbol was on eight garments picked up by a customer, Paris 2000, for which Paris 2000 never paid. Former U.S. Marshal Arkadis Karb, however, testified that while serving process on Paris 2000, Inc. in other trademark litigation, he observed approximately 4,500 garments at the premises of Paris 2000 bearing the label POLO BY RALPH LAUREN and embroidery of the Polo Player Symbol. By the time Polo initiated action against Paris 2000, the garments had been removed from the Paris 2000 facility and only a small portion of the total garments observed by Marshal Karb were ever recovered.

18. In a storage area at Defendants’ premises, approximately 250 dress fronts were found all bearing the Plaintiff’s Polo Player Symbol embroidered on the chest region thereof.

19. Defendants’ embroidery of the Polo Player Symbol upon the 250 dress fronts is explained by Defendants to be an “experiment.” An examination of the dress fronts reveals that on each garment the Polo Player Symbol embroidery appears in the appropriate place in the chest region of the garment. The evidence establishes that the claimed “experiment” took approximately 4 hours to perform. An experiment could logically be performed on one or two garments in a brief period to determine whether the machine was properly functioning. The expenditure of 4 hours time and the effort required in terms of sheer cost of labor and material to the Defendants to produce 250 dress fronts does not support the claim that it was an experiment. The Court finds that the testimony offered by Defendant Abramson is not worthy of belief. It is simply incredible and it does not form any basis or foundation for acceptance by this Court as an explanation for Defendants’ use of the tapes of the Polo Player Symbol. The existence of the 250 dress fronts at Defendants’ premises demonstrates that the Defendants embroidered the Polo Player Symbol in volume.

20. At the time process was served upon the Defendants, one of the investigators for Polo requested from the Defendants’ operations supervisor, Luis Benevides, information concerning the last date upon which production of embroidery of the Polo Player Symbol had been conducted. The operations supervisor stated, “about two weeks ago.” When further inquiry was made concerning the whereabouts of invoices reflecting the production of such embroidery, the operations supervisor stated, “he would be crazy to put anything like that on an invoice.” The Court finds that these admissions indicate that Defendants were conducting a volume business in the embroidery of the Polo Player Symbol and further finds that accurate and reliable records concerning the volume of this embroidery are not available.

21. The Court finds that based upon the testimony and documentary evidence and the reasonable inferences and deductions to be drawn therefrom that Defendants have sold the following quantities of embroidery of counterfeits of the Polo Player Symbol to the individuals designated:

Customer Quantity Description
Paris 2000 8 Shirts with Polo Player Symbol embroidery
Allar Enterprises, Inc. 1,000 Shirts with Polo Player Symbol embroidery, Style “x”
Mishigoss, Inc. 928 Computer style embroidery, Style “x”
Mishigoss, Inc. 168 Fronts, Style “x”
Mishigoss, Inc. 201 Sweaters, Style “x” embroidery
Mishigoss, Inc. 652 Poly fronts with Style "x” 4009
Paris 2000 4,500 Shirts with Polo Player Symbol embroidery
TOTAL 7,457

22. The Court finds from the evidence that it is reasonable to infer and deduce that the average charge of Defendants per each embroidery of the Polo Player Symbol sold was 50 cents ($.50).

23. The Court finds that the Defendants have offered no proof whatsoever concerning their costs or deductions claimed as a result of their embroidery operations involving embroidery of the Polo Player Symbol.

24. The Court finds that the entire business operation of Magic Trimmings, as reflected by the evidence before the Court, shows a willful perpetration of a fraud and the intentional infringement of registered trademark rights as it relates to this Plaintiff and as it relates to others who are not plaintiffs here in a manner and in a method that is a gross violation and one which cries out for absolution.

25. The Court finds this to be an exceptional case and considers it one which probably cannot be duplicated in terms of the number of trademark abuses and excesses that are shown to have occurred or existed at the premises of the Defendants. From the testimony and documentary evidence presented, the Court finds the conduct of the Defendants here borders and verges upon criminal offenses in terms of the fraud and the other acts that have been perpetrated. If there ever has been an exceptional case, this is it and the awards to be made to the Plaintiff herein are justified by the circumstances of this case.

26. The Court makes the same findings with respect to each Defendant, Magic Trimmings and Arthur Abramson; however, the Court specifically finds that no evidence has been adduced or established that would support the entry of judgment or such findings with regard to Co-defendant, Maria Mataylo.

II.

CONCLUSIONS OF LAW

27. The statutory basis for Polo’s right to monetary relief is contained in Section 35 of The Trademark Act of 1946, 15 U.S.C. § 1117. This section governs the award of monetary relief in cases of trademark infringement and unfair competition and provides:

When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 of this title, and subject to the principles of equity, to récover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. The court shall assess such profits and damages or cause the same to be assessed under its direction. In assessing profits the plaintiff shall be required to prove defendant’s sales only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. If the court shall find that the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case. Such sum in either of the above circumstances shall constitute compensation and not a penalty. The court in exceptional cases may award reasonable attorney fees to the prevailing party.

This section applies to causes of action for unfair competition under 15 U.S.C. § 1125(a) as well as to causes of action for infringement of registered trademarks. Winterland Concessions Co. v. Creative Screen Design, Ltd., 214 U.S.P.Q. 188 (N.D.Ill.1981).

28. There are strong public policy considerations for the strict enforcement of trademark laws. These laws exist to protect both the businessman who has striven to develop his good will and to protect the consumer against “spurious and falsely marked goods.” Vuitton Et Fils, S.A. v. Crown Handbags, 492 F.Supp. 1071, 1075 (S.D.N.Y.1979), aff’d, 622 F.2d 577 (2d Cir. 1980). An honest businessman has a duty to select a different design or name than one registered to another and the Court should suspect the motives of one who uses a mark identical to the successful registered mark of another. See 492 F.Supp. at 1075. In the United States today, counterfeiting of registered trademarks has reached “epidemic proportions.” Montres Rolex, S.A. v. Snyder, 718 F.2d 524, 528 (2d Cir.1983).

29. When a defendant is guilty of bad faith or willful infringement, an award to the plaintiff of defendant’s profits is appropriate. Carl Zeiss Stiftung v. VEB Carl Zeiss Jena, 433 F.2d 686 (2d Cir.1970), cert. denied, 403 U.S. 905, 91 S.Ct. 2205, 29 L.Ed.2d 680 (1971); Maltina Corp. v. Cawy Bottling Company, 613 F.2d 582 (5th Cir. 1980). In W.E. Bassett Co. v. Revlon, Inc., 435 F.2d 656 (2d Cir.1970), the Court noted that an award of profits is appropriate against a defendant who has exhibited:

[A]n aura of indifference to plaintiff’s rights and a smug willingness to determine unilaterally that the good will plaintiff had sought to foster could safely be treated as a nullity.

435 F.2d at 662.

30. To recover Defendants’ profits, The Lanham Act requires that Polo show Defendants’ gross sales of infringing goods. The burden is then on Defendants to demonstrate their costs. Quaker State Oil Refining Corp. v. Kooltone, Inc., 649 F.2d 94, 95 (2d Cir.1981); Playboy Enterprises, Inc. v. P.K. Sorren Export Co., 546 F.Supp. 987 (S.D.Fla.1982). In determining the entitlement to Defendants’ profits as an element of monetary relief, the Plaintiff need not demonstrate any actual damages in order to obtain an accounting for profits. Playboy Enterprises, Inc. v. P.K. Sorren Export Co., 546 F.Supp. 987 (S.D.Fla.1982).

31. The Court may award the Plaintiff up to three times the amount of profits made by the Defendants as damages as justice shall require. Such an award is discretionary and may be based on a finding of willfulness. Playboy Enterprises v. P.K. Sorren Export Co., 546 F.Supp. 987, 998 (S.D.Fla.1982).

32. The Court, in its discretion, may award the Plaintiff such sum as it finds just according to the circumstances of the case when the award to the Plaintiff is based upon Defendants’ profits and the award of profits is deemed inadequate. 15 U.S.C. § 1117.

33. The prevailing party is entitled to recover its costs in the bringing this action. 15 U.S.C. § 1117, Rule 54(d), Federal Rules of Civil Procedure.

34. In an exceptional case, the court may award attorneys’ fees to the plaintiff whose trademark has been infringed. Playboy Enterprises v. P.K. Sorren Export Co., 546 F.Supp. 987, 999 (S.D.Fla. 1982); Boston Professional Hockey Ass’n., Inc. v. Dallas Cap & Emblem Mfg., Inc., 510 F.2d 1004 (5th Cir.), cert. denied, 423 U.S. 868, 96 S.Ct. 132, 46 L.Ed.2d 98 (1975).

35. In 1975, The Lanham Act was amended for the express purpose of permitting the recovery of attorneys’ fees in “exceptional cases.” 15 U.S.C. § 1117. Exceptional cases are those where the acts of infringement can be characterized as “malicious, fraudulent, deliberate, or willful.” Playboy Enterprises, Inc. v. Baccarat Clothing Co., 216 U.S.P.Q. 1083, 1086, citing 1974 U.S.Code Cong. & Ad.News 7132.

36. The evidence presented in this case establishes that it is an “exceptional case” within the meaning of 15 U.S.C. § 1117 and it is therefore appropriate for the Court to make an award of attorneys’ fees. This is an exceptional case since the Defendants cannot justify their actions as either a reasonable attempt to develop their own trademark or as the result of any innocent confusion on their part concerning the existence of the Polo Trademarks. The amendments to The Lanham Act were obviously intended and directed towards eliminating such blatant counterfeiting activity as has been conducted by the Defendants herein. See Playboy Enterprises, Inc. v. Baccarat Clothing Co., 216 U.S.P.Q. at 1086 (9th Cir.1982). Playboy Enterprises v. P.K. Sorren Export Co., 546 F.Supp. 987 (S.D.Fla.1982).

37. Based upon the evidence before the Court, Polo has established the basis for an award of monetary relief at least in the minimum of the following elements:

38. Defendants’ Profits. The Court finds the amount of Defendants’ profits to be awarded as damages to the Plaintiff to be calculated upon the sale of 7,457 garments bearing the Polo Player Symbol sold at fifty cents each for profits in the amount of $3,728.50 unreduced by any costs incurred on behalf of Defendants.

39. Treble Damages. The Court finds willfulness in the action of Defendants in embroidery of the Polo Player Symbol which obviously has resulted in damage to the Plaintiff. Justice requires that the amount of Defendants’ profits awarded to the Plaintiff as damages be trebled in the amount of $11,175.50.

40. Alternative Award. The Court alternatively and not additionally specifically determines that the award of profits as damages, under the circumstances of this case, including the trebling thereof, is inadequate and therefore finds a concurrent award of damages equivalent to 4,500 embroidery at fifty cents per embroidery trebled is necessary and required according to the circumstances of this case to compensate the Plaintiff and not as a penalty against the Defendants. Such award shall be considered severally with the other awards made herein and not in addition thereto.

41. Costs. As the prevailing party, Polo is entitled to recovery of costs in this action and shall submit its Bill of Costs for the taxation of costs by the clerk.

42. Attorney’s Fee. In this, an exceptional case, the Court determines an award of a reasonable attorneys’ fee is justified and the Court directs that Polo submit affidavits reciting the work done, the time involved and the amount claimed for such work. The Defendants may file an affidavit in opposition within ten days after receipt of such proof submitted by Polo. The Court will then determine the amount of the reasonable attorneys’ fee to be awarded.

43. These Findings of Fact and Conclusions of Law are to be considered severally and any finding of fact made which constitutes a conclusion of law is hereby adopted as a conclusion of law and any conclusion of law made which is a finding of fact is hereby adopted as a finding of fact.

44. The Plaintiff, Polo Fashions Inc., is entitled to final judgment incorporating and extending the terms of the Preliminary Injunction heretofore entered and to the award of Defendants’ profits as damages, the trebling thereof, additional damages court costs and attorneys’ fees as more fully set forth in these Findings of Fact and Conclusions of Law.

FINAL JUDGMENT

On April 11, 1984, the above cause came on for trial to the Court on the issue of damages, all parties being represented by their attorneys of record herein, and the parties having presented evidence, authorities and argument to the Court, and having closed the evidence on April 11, 1984, and the Court concluding that judgment should be entered for Plaintiff herein in accordance with the Findings of Fact and Conclusions of Law filed heretofore, and the Court having previously entered a Preliminary Injunction Upon Consent and having previously ordered summary judgment in favor of the Plaintiff on the issue of liability, it is

ORDERED, ADJUDGED AND DECREED as between the parties hereto that:

1. Defendants, Arthur Abramson, Magic Trimmings, Inc. and its officers, agents, servants, employees and attorneys, and all persons in active concert and participation with them, be and hereby are permanently restrained and enjoined:

(a) From using the trademarks POLO, RALPH LAUREN, POLO BY RALPH LAUREN, the Polo Player Symbol, or any marks similar thereto in connection with the sale of any unauthorized goods, or the production of any unauthorized embroidery, or the rendering of any unauthorized services, including, without limitation, distributing or delivering any such goods manufactured, ordered or sold prior to the date of this Order;
(b) From manufacturing, distributing, advertising, promoting, holding for sale or selling any goods, labels, tags, logos, decals, emblems, signs, embroidery, and other forms of markings, any packaging, wrappers, containers or receptacles, and any jacquard cards, catalogs, price lists, promotional materials and the like bearing a copy or colorable imitation of Plaintiffs POLO, RALPH LAUREN, POLO BY RALPH LAUREN, or the Polo Player Symbol trademarks;
(c) From using any logo, trade name, or trademark which may be calculated to falsely represent or which has the effect of falsely representing that the services, products or embroidery of Defendants are sponsored by, authorized by, or in any way associated with Plaintiff Polo;
(d) From infringing Plaintiff Polo’s registered trademarks;
(e) From otherwise unfairly competing with Plaintiff Polo;
(f) From falsely representing themselves as being connected with Plaintiff Polo or sponsored by or associated with Plaintiff Polo;
(g) From using any reproduction, counterfeit, copy, or colorable imitation of the trademarks POLO, RALPH LAUREN, POLO BY RALPH LAUREN, the Polo Player Symbol, or any of the Polo Trademarks in connection with the publicity, promotion, sale, or advertising of goods sold by Defendants including, without limitation, knit shirts or other apparel bearing embroidery or a copy or colorable imitation of Plaintiff Polo’s POLO BY RALPH LAUREN or the Polo Player Symbol trademarks;
(h) From affixing, applying, annexing, or using in connection with the sale of any goods, a false description or representation, including embroidery, words or other symbols tending to falsely describe or represent such goods as being those of Plaintiff Polo and from offering such goods in commerce; and
(i) From using any trademark or trade name in connection with the sale of any goods which may be calculated to falsely represent such goods as being connected with, approved by or sponsored by Plaintiff Polo.

2. The Plaintiff, Polo Fashions, Inc., shall recover from the Defendants, Magic Trimmings, Inc. and Arthur Abramson, individually, jointly and severally, the sum of Eleven Thousand One Hundred Seventy-Five and 50/100 dollars ($11,175.50), together with interest at the rate of 10.81 percent from the date hereof compounded annually, plus attorneys’ fees to be determined by the Court upon the submission of affidavits, plus all costs of suit herein to be taxed by the Clerk of the Court upon submission of a Bill of Costs within 30 days of the date hereof.

3. The jurisdiction of this Court is retained for purposes of making any further orders necessary or proper for the construction or modification of this judgment, the enforcement thereof and the punishment of any violations thereof, including such orders as are required for the destruction of all counterfeit garments and embroidery tapes seized from the premises of Defendants pursuant to this Court’s previous Order.

4. The Plaintiff, Polo Fashions Inc., shall recover no money damages from the Defendant Maria Mataylo, who shall go hence without day.

      . This Court held an evidentiary hearing/trial on the issue of damages. Having examined the exhibits introduced into evidence and having heard all of the testimony adduced as well as closing argument by attorneys for plaintiff and defendants, these Findings of Fact and Conclusions of Law are hereby entered thereon.


author: SKINNER, District Judge.

text:
    Ephraim ISAAC, Plaintiff, v. HARVARD UNIVERSITY, Defendant.
    Civ. A. No. 80-1344-S.
    United States District Court, D. Massachusetts.
    July 31, 1984.
    On Motions For Reconsideration, Amendment And Certification Oct. 19, 1984.
    Theodore C. Landsmark, Elizabeth A. Rodgers, Robert Doyle, Kehoe, Doyle, Playter & Novick, Boston, Mass., Wendy Kaplan, Cambridge, Mass., for plaintiff.
    John H. Mason, Ropes & Gray, Boston, Mass., for defendant.
   MEMORANDUM AND ORDER ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

SKINNER, District Judge.

The plaintiff’s claims under the Thirteenth Amendment are not supported by any allegation that he has been subjected to slavery. There is no need to reach the question of a private right of action. This claim is DISMISSED.

The plaintiffs claim under the Fourteenth Amendment is DISMISSED because the Fourteenth Amendment applies only to state action. Harvard is not a state agency. Rice v. President and Fellows of Harvard College, 663 F.2d 336 (1st Cir.1981); Krohn v. Harvard Law School, 552 F.2d 21 (1st Cir.1977).

The applicable statute of limitations in this circuit with respect to claims under 42 U.S.C. §§ 1981 and 1985(3) is six months. Burns v. Sullivan, 619 F.2d 99 (1st Cir.1980). This is in no way affected by Patsy v. Board of Regents, 457 U.S. 496, 102 S.Ct. 2557, 73 L.Ed.2d 172 (1982). Plaintiff did not timely file this complaint. Furthermore, the defendant is a single corporate body and cannot conspire with itself or with its employees. Accordingly, the claims under those two statutes are DISMISSED.

Plaintiffs claim under Title VII, 42 U.S.C. § 2000e-l ff. raises a more complex issue. Defendant claims that this court is without subject matter jurisdiction because plaintiff did not make a timely complaint to the EEOC as required by 42 U.S.C. § 2000e-5(e). For purposes of the computation of time, the plaintiff was informed that he would not receive tenure on June 27, 1975. This is not altered by his request for reconsideration or the continuing effect of the decision.

Plaintiff filed his complaint directly with the EEOC on February 20, 1976 (Day 237). It was received by EEOC on February 23 (Day 241). EEOC referred it to the state’s “§ 706 agency”, the Massachusetts Commission Against Discrimination (“MCAD”) on March 4, 1976 (Day 251). MCAD declined action and referred the complaint back to EEOC on March 16,1976 (Day 263).

42 U.S.C. § 2000e-5(e) requires that a complaint be filed (in this case) within 300 days of the alleged unlawful event. 42 U.S.C. 2000e-5(c) provides that no charge may be filed with EEOC until proceedings have been commenced under state law, i.e., in this case a complaint to MCAD. Before the EEOC charge can be filed, sixty days must elapse “unless such proceedings have been earlier terminated ”. The statute is to be strictly construed. Mohasco Corp. v. Silver, 447 U.S. 807, 100 S.Ct. 2486, 65 L.Ed.2d 532 (1980).

The EEOC may file with the MCAD as agent of the plaintiff and hold the charge filed with it in abeyance until it is ripe. Love v. Pullman Co., 404 U.S. 522, 525, 92 S.Ct. 616, 618, 30 L.Ed.2d 679 (1972).

Accordingly, I rule that the above described events have the following effect: The proceeding before the MCAD was commenced on March 4, 1976 (Day 251). The proceedings were terminated on March 16, 1976 (Day 263). The charge was then ripe for filing with EEOC (it having previously been filed) and March 16, 1976 was the effective day of filing with the EEOC. Since this was Day 263 after June 27,1975, it is within the 300-day limit and timely. No contrary result is required by Mohasco Corp. v. Silver, supra. There the Court said that a plaintiff must file his proceedings with the state “§ 706 agency” within 240 days to be assured of making the deadline. That is true enough. This plaintiff was lucky; he made it because the proceedings were terminated in less than 60 days.

The charges filed with EEOC, and by EEOC with MCAD, allege a continuing violation. Under MCAD rules, such an allegation tolls the 180-day filing requirement of M.G.L. c. 151B. The proceedings before the MCAD were thus timely commenced. See Fitzgerald v. New England Tel. & Tel. Co., 459 F.Supp. 996 (D.Mass.1978).

Accordingly, all jurisdictional prerequisites have been met. This action was commenced on the 90th day after EEOC issued its notice of right to sue. The motion for summary judgment is DENIED with respect to the plaintiff’s claims under Title VII.

ON MOTIONS FOR RECONSIDERATION, AMENDMENT AND CERTIFICATION

Plaintiff has correctly called to my attention the opinion of the Supreme Court in Burnett v. Grattan, — U.S. —, 104 S.Ct. 2924, 82 L.Ed.2d 36 (1984), in which the Court held that short limitation periods for administrative complaints are not appropriately analogous periods to be applied to complaints filed in a district court under civil rights acts which have no specific limitation period. Our circuit’s decision in Burns v. Sullivan, 619 F.2d 99 (1st Cir. 1980), which applies the six-month period for filing administrative claims under the state employment discrimination statute, has been effectively overruled.

Prior to the decision in Burns, I had decided that the most analogous statute of limitations under state law is the limitation provided for actions in the Superior Court for employment discrimination under M.G.L. c. 151B, § 9. Currington v. Polaroid, 457 F.Supp. 922 (D.Mass.1978). I have re-read this case and I am still of the opinion expressed therein. The statutory period is two years. Applying that period rather than the six-month general contract limitation to the plaintiff’s claim under 42 U.S.C. § 1981 I still arrive at the same result: the plaintiff’s claim is barred as untimely. This result is more in keeping with the policy of prompt disposition of employment discrimination cases announced in Mohasco Corp. v. Silver, 447 U.S. 807, 100 S.Ct. 2486, 65 L.Ed.2d 532 (1980), than is the general contract limitation of six years suggested by plaintiff.

It is not necessary to reconsider the limitation period for plaintiff’s claims under 42 U.S.C. § 1985(3) and the Thirteenth Amendment, because the complaint does not state substantive claims thereunder.

A more serious point is raised by defendant’s motion for reconsideration. In my order of July 31, 1984, I found a way to keep the plaintiff’s Title VII claim alive, notwithstanding apparent violation of the mandatory time limitations in the statute. Plaintiff’s Title VII claim is the only claim that appears to me to be substantially viable on the basis of the facts submitted by the parties through their various affidavits. My decision denying the defendant’s motion was based on a conclusion that proceedings before the MCAD had terminated on March 16, 1976, thus making the filing with the EEOC effective within the statutory limit. As I stated at that time, this was in my opinion the only basis on which any part of the plaintiff’s claim could survive the defendant’s motion for summary judgment.

It now appears from documents submitted by the defendant with its motion for reconsideration that the proceedings before the MCAD were not terminated on March 16 but are in fact still ongoing. Furthermore, on July 18, 1984, while the motion for summary judgment was actually under advisement, Mrs. Rodgers wrote MCAD and insisted that the MCAD proceeding be kept alive in case the plaintiff failed in this court to achieve all the relief that he sought.

The substance of plaintiff's case is potentially interesting and for a while it looked as if the chance at least to try the issues on the merits could be preserved. Obviously, however, an order based entirely on the proposition that the MCAD proceedings were terminated cannot stand in the face of the documents noted above.

Accordingly, the order of July 31, 1984 denying defendant’s motion for summary judgment is VACATED. The defendant’s motion is ALLOWED and the complaint is DISMISSED on the merits. Since a final judgment of dismissal will enter, there is no need to consider the parties’ motions for certification to the Court of Appeals since the judgment is appealable as of right.


author: NEESE, Senior District Judge,

text:
    Wayne FOX, Petitioner, v. Michael DUTTON, etc., et al., Respondents.
    Civ. A. No. 3:84-0890.
    United States District Court, M.D. Tennessee, Nashville Division.
    Aug. 23, 1984.
    Wayne Fox, pro se.
    W.J. Michael Cody, Atty. Gen., Nashville, Tenn., for respondents.
   MEMORANDUM OPINION, ORDER, AND CERTIFICATE

NEESE, Senior District Judge,

Sitting by Designation and Assignment.

The petitioner Mr. Wayne Fox filed pro se an application for the federal writ of habeas corpus, claiming that he is in the custody of the respondent-warden within this District pursuant to the judgment of January 20, 1982 of the Circuit Court of Polk County, Tennessee, within the Eastern District of Tennessee, in violation of the federal Constitution, Fifth Amendment, Double-Jeopardy Clause. 28 U.S.C. § 2254(a). He asserts that, by applying to the aforenamed Court for the same relief he seeks here and to the Supreme Court of Tennessee unsuccessfully for a writ of mandamus to cause such aforenamed Court “to hear the habeas corpus petition,” he has established the existence of circumstances which render the corrective process of Tennessee ineffective to protect his rights as a prisoner. 28 U.S.C. § 2254(b).

The precise contention of the applicant is difficult to decipher; but it appears he pleaded guilty in 1980 before the Court of General Sessions of Polk County, Tennessee to the crimes of “hit-and-run and traffic violations” and waived extradition to the state of Georgia under a plea-bargain in exchange for a sentence of imprisonment of six months which was suspended; that he was arrested on August 27, 1981, after the expiration of such suspended sentence, sentenced subsequently by the Circuit Court of Polk County, Tennessee to a term of imprisonment of not less than one nor more than three years on his plea of guilty to the crime of joyriding and to serve consecutively thereto the aforementioned allegedly expired suspended sentence of six months. His claim is that he is entitled to aggregate sentences of six months less than from one year to three years.

There is no violation of the federal Double-Jeopardy Clause implicated in this claim. Indubitably, the state of Tennessee was obliged to observe its prohibition, Benton v. Maryland, 395 U.S. 784, 794, 89 S.Ct. 2056, 2062[9], 23 L.Ed.2d 707 (1969), overruling Palko v. Connecticut, 302 U.S. 319, 58 S.Ct. 149, 82 L.Ed. 288 (1937); but, “ * * * the Double Jeopardy Clause ‘prohibits merely punishing twice, or attempting to punish criminally, for the same offense.’ * * * ” United States v. Wilson, 420 U.S. 332, 345, n. 13, 95 S.Ct. 1013, 1022, n. 13[15], 43 L.Ed.2d 232 (1975). “* * * [T]wo offenses are ‘the same’ for double jeopardy purposes unless each requires proof of an additional fact that the other does not. * * * ” Jeffers v. United States, 432 U.S. 137, 151, 97 S.Ct. 2207, 2216[5], 53 L.Ed.2d 168 (1977), reh. den., 434 U.S. 880, 98 S.Ct. 241, 54 L.Ed.2d 164 (1977). Obviously, the proof of entirely different facts was required for the crimes of “hit-and-run and traffic” offenses as were required for the crime of joyriding.

The applicant does not favor the Court with any allegation regarding the specific date in the year 1980 in which his six-months’ suspended sentence commenced to run; if that sentence had not expired when the applicant was convicted of yet other crimes, the trial judge was empowered to revoke and annul such suspension. T.C.A. § 40-21-106 (“in any case of revocation or suspension [of sentence] on account of conduct by the defendant which has resulted in a judgment of conviction against him during his period of probation, the trial judge may * * * order that the term of imprisonment imposed by the original judgment be served consecutive[ly] to any sentence which was imposed upon said conviction.”) See and cf. Anderson v. State, 554 S.W.2d 660 (Tenn.Crim.App.1977), cert. den. by S.Ct. of Tenn. (1977) (where defendant was given a suspended sentence for joyriding and was convicted subsequently of third-degree burglary, the trial court had authority to revoke the suspension of the joyriding sentence and order it to run consecutively with the burglary sentence.)

It appears plainly from an examination of the face of the applicant’s petition during preliminary consideration that the petitioner is not entitled to relief in this Court, Rule 4, 28 U.S.C. fol. § 2254, and this Court is required to and does make the following orders:

1. the petition herein hereby is DISMISSED summarily, id.;

2. the clerk shall so notify the petitioner forthwith, id.; and,

3. the clerk shall serve forthwith upon the respondent-warden and the attorney general and reporter of Tennessee by certified mail copies of such petition and of this order, id.

Should the petitioner give timely notice of an appeal from the order and judgment to be entered herein, Rule 58(1), F.R.Civ.P., he is authorized to proceed on such appeal in forma pauperis. Rule 24(a), F.R.App.P. Any such notice will be treated also as ah application for a certificate of probable cause, Rule 22(b), F.R.App.P., which, under the circumstances, shall ISSUE, id.

      . “No person shall * * * be subject for the same offence to be twice put in jeopardy of * * * limb * * *.” Constitution, Fifth Amendment, supra.

      . The applicant was required to “ * * * set forth in summary form the facts supporting * * * ” the ground(s) he claimed for relief, Rule 2(c), 28 U.S.C. fol. § 2254, and not rely on such conclusory statements which were not sufficiently substantiated with actual facts.


author: KELLEHER, Senior District Judge.

text:
    Marshall HOUTS, Plaintiff, v. UNIVERSAL CITY STUDIOS, INC., a corporation; MCA, Inc., a corporation; National Broadcasting Company, Inc., a corporation; Glen Larson Productions, Inc., a Corporation; and Jack Klugman, Defendants.
    No. CV 78-0281-RJK
    United States District Court, C.D. California.
    Aug. 30, 1984.

      Richards, Watson, Dreyfuss & Gershon, Harry L. Gershon, Michael Jenkins, Deborah S. Gershon, Los Angeles, Cal., for plaintiff.
    Youngman, Hungate & Leopold, Joel McCabe Smith, Gary L. Swingle, Los Angeles, Cal., for defendants.
   MEMORANDUM OF DECISION AND ORDER

KELLEHER, Senior District Judge.

This is an action for damages and injunction based on copyright infringement. Plaintiff Marshall Houts, author of the book Where Death Delights, brings this suit against the writers, producers, distributors, and broadcasters of the television series Quincy. Defendants are Universal City Studios, MCA, National Broadcasting Company, Glen Larson Productions, and Jack Klugman. Plaintiff contends that defendants have infringed upon his copyright in the book in connection with the writing, production, distribution, and television broadcast of the series Quincy.

The Court presently has before it defendants’ motion for summary judgment.

Defendants allege that as a matter of law plaintiff is estopped from claiming that Where Death Delights is partly or wholly fictional, since the book is held out to the public as nonfiction and factual.

The basic tenet of copyright law is that copyright protection is predicated upon originality. 17 U.S.C. § 102(a). No one, however, may claim originality as to facts. Pacts may be discovered, but they are not created by an act of authorship. 1 Nimmer on Copyright § 2.11[A]. Consequently, the copyright protection afforded to fictional works differs from that afforded to factual works. In the case at bar, plaintiff claims that his book is an amalgam of fact and fiction, and hence it is entitled to full copyright protection. The general rule is that fictional elements, or fictionalized versions of factual elements, of an otherwise factual work are protectable under copyright law. 1 Nimmer at § 2.11[C]. Copyright estoppel is an exception to the general rule. Under the doctrine of copyright estoppel, once a plaintiffs work has been held out to the public as factual the author-plaintiff cannot then claim that the book is, in actuality, fiction and thus entitled to the higher protection allowed to fictional works. See Oliver v. St. Germain Foundation, 41 F.Supp. 296, 299 (S.D.Cal.1941).

In the case at bar, the plaintiff and publishers have made numerous statements and representations as to the book’s factuality. These representations include:

(a) the book jacket of the American hardcover edition extols the books as “real life detective stories”;
(b) the spine of the Dell paperback edition has the notation “N-F,” expressly informing the public that the book is non-fiction; and
(c) the first page of the paperback edition proclaims that “[hjere is a book that shows that truth can be more brutal than fiction.”

The question then becomes whether these representations amount to holding the book out to the public as fact, thereby estopping plaintiff from asserting that it is partially fictional.

Case law has not established the standard for determining whether plaintiff held the book out as fact of fiction. Irrespective of the standard used, it is uncontested that plaintiff unambiguously held the book out as factual. Indeed, even plaintiff’s literary experts concede that the book’s style, tone, and structure bespeak that of a factual work. Furthermore, an analysis of Marshall v. Yates, CV 81-1850-MML (C.D.Cal.1983), a recent copyright estoppel case cited extensively by the parties with virtually identical facts, upholds the view that, irrespective of the standard used, literary critic or reasonable person, the plaintiff presented the book as factual.

Marshall v. Yates, involved the book Shadowland and the movie “Frances”— both of which relate to the life story of Frances Farmer, an actress and political activist prominent in the 1930’s and 1940’s. In Marshall, the plaintiffs alleged that portions of Shadowland were “fictionalized elements” which are protectable under the copyright laws even in largely biographical works. The court found, however, that plaintiffs were estopped from contending that portions of Shadowland were fictional, because Shadowland was presented to the public as nonfiction work.

In the case at bar, plaintiff argues that the holding and rationale of Marshall were decided after a full trial on the merits. Under Local Rule 7.14 and Fed.R.Civ.P. 56, when there is no triable issue of fact, the Court is required to decide the questions of law. Plaintiff does not claim that there is any dispute as to what the book jacket represents, or what the publishers represented to the public in releasing the book. Plaintiff does not contend that there is any other triable issue of fact relating to the representations made to the public. With the exception of the plaintiff’s argument regarding the value to be given to certain evidentiary items, discussed below, the plaintiff disputes neither what was represented nor any other material fact. Thus, this matter is properly disposed of by summary judgment under Fed.R.Civ.P. 56 and Local Rule 7.14. Indeed, numerous courts, on motions for summary judgment, have estopped plaintiffs from claiming that a work was fiction after they held it out as fact. See Oliver, 41 F.Supp. 296; Jason v. Fonda, 526 F.Supp. 774 (C.D.Cal.1981). In opposition to defendants’ motion for summary judgment, plaintiff also argues that the plaintiff must have “expressly held the book out as being completely factual” and that in this case, the plaintiff neither expressly holds it out nor holds it out as being completely factual. The first assertion is blatantly false. The book jacket expressly holds the book out as being true. If the statements “one of the most absorbing books on true crime ever published” and “truth can be more brutal than fiction” do not expressly hold the contents of the book out as true, then this Court is unaware of any situation in which an assertion could be deemed as being an express indication of a book’s veracity.

Moreover, in Marshall, Lake v. Columbia Broadcasting System, 140 F.Supp. 707, 709 (S.D.Cal,1956), and Huie v. National Broadcasting Company, 184 F.Supp. 198, 199-200 (S.D.N.Y.1960), the courts found that expressions very similar to those here were statements “expressly” holding the work out to the public as fact. In Marshall, for example, Shadowland’s book jacket indicated that it is “the harrowing, controversial, frighteningly true story of what really happened to one of the world’s most luminous young actresses.” Without discussion, Judge Lucas concluded that Shadowland was expressly held out to the public as a factual work. This Court finds that Where Death Delights was expressly presented to the public as a factual work.

Plaintiff also claims that the book must not only be held out as factual, but also as completely factual, for estoppel to apply. See 1 Nimmer at § 2.11[C] (“[o]ne who represents his work to be completely factual may not in a subsequent infringement action prove that part of the work was fictional and therefore protectable”). Plaintiff contends that there is no indication that the book is entirely factual, and that at best, the work is held out as being only partially factual and partially fictional. This argument is unpersuasive. As noted above, the statements on the book jacket hold the book out as being true. These statements imply that the entire book, not a portion of it, is true. Given these broad and inclusive representations, the reader is compelled to conclude that the entire book is true.

In Marshall, the court faced a similar situation. There, the author of the book made broad, all-inclusive statements about the truth of the story told therein. Again, without discussion, the court found that the book had been held out as being completely true. The Court finds that the broad, all-inclusive statements in Where Death Delights similarly hold the book out as being completely true.

This holding must necessarily be reached. If not, a plaintiff could make broad statements like those found here, clearly representing that the book is factual, and then avoid estoppel merely because the plaintiff had the foresight to not represent that each line, fact, detail, and chapter was factual and unembellished. Such a result would entirely incapacitate the estoppel doctrine. Therefore, this Court concludes that the language used in the book jacket herein holds the book out as being completely true.

Plaintiff further argues that because of the absurdity of some of the stories within Where Death Delights, any reader should have known that the stories were really fictionalized, irrespective of representations on the jacket cover about the book’s factuality. The plaintiff then quotes from Marshall wherein Judge Lucas found that Shadowland was not so clearly incredible that “defendants should have been put on notice that portions of the book were fictionalized.” Marshall at 9-10 n. 3.

Initially, this Court is not convinced that intrinsic evidence contained within the book is relevant to determine how the book was represented to the public. Nimmer indicates that only in the absence of an express representation that the book is factual will the courts look to the representations implicit in the book. 1 Nimmer at § 2.11[C]. In this case, there were express representations that the book was factual. Thus, there is no need to reach the issue of what the implicit evidence represents to the public. In addition, in this case the plaintiff is arguing that the stories themselves represent to the public that the work is fiction merely by the fact that the stories are so ludicrous that no one would believe them to be fact. However, it is a non sequitur to argue that the stories hold themselves out as being fiction because the stories are not believable. Furthermore, Ninth Circuit courts have found that intrinsic evidence of a story’s absurdity, evidence clearly more ludicrous to the average reader than the stories in Where Death Delights, would not overcome evidence that the plaintiff had expressly held the book out as factual in the introduction to the book. See Oliver, 41 F.Supp. 296. In Oliver, the plaintiff represented to the reader that his book, telling of experiences of an extraterrestrial, was not his words, but in fact had been told to him by the extraterrestrial. The court found by the author’s assertions that the book was factual, he was estopped from claiming that the ludicrousness of the stories was intrinsic evidence that the book was held out as fiction. Id. at 299.

Moreover, any analysis of the intrinsic evidence would necessarily involve a determination of whether the stories aré true or false. The cases hold, however, that the Court’s inquiry is not whether the stories are true and believeable or false and absurd but whether the book was held out to the public as fact or fiction. See Marshall, CV 81-1850-MML (C.D.Cal. 1983); Oliver, 41 F.Supp. 296 (S.D.Cal. 1941); Lake, 140 F.Supp. 207 (S.D.Cal. 1956); Huie, 184 F.Supp. 198 (S.D.N.Y. 1960).

Even assuming intrinsic evidence is relevant, the Court has reviewed the story which the parties indicate is the most blatant example of this intrinsic absurdity which should have put the defendants on notice that the book was actually fiction. This Court finds that the Mike Malloy story is not so ludicrous as to make the “reader at least ... doubt very seriously the factuality of these unauthenticated facts and incidents.” This conclusion is supported by the defendants’ written and oral representations, uncontroverted by plaintiff, that the Mike Malloy story is in fact a true story that was reported extensively in the New York Times. Moreover, plaintiff argues that since the book contains many examples of conversations and events that the author and Dr. Helpern could not possibly have been present to experience, the book is clearly fictional. This, however, is the very nature of biographical works that involve any historical perspective. All historical renditions would be deemed fictionalized under plaintiff’s theory merely because the author was not there personally. In addition, other courts have estopped plaintiffs from claiming their works were fiction after holding them out as factual in cases involving historical works. See, e.g., Marshall, CV 81-1850-MML, and Lake v. Columbia Broadcasting, 140 F.Supp. at 709.

The importance, however, of the intrinsic evidence, according to plaintiff, is that it conflicts with the express representations made on the jacket cover. Plaintiff claims that this creates a triable issue of fact as to whether the plaintiff actually represented the book as factual. Contrary to plaintiff’s assertions, the possibility that intrinsic evidence, if admissible, might lead a jury to conclude that the book was not held out as factual, does not create a triable issue of fact. The issue before the Court is whether, based on the uncontroverted representations, intrinsic or extrinsic, the plaintiff held the book out to the public as factual. It is undisputed that the Mike Malloy story is part of the book. Likewise, it is undisputed that the jacket represents that the book contains the true life stories of Dr. Helpern. Thus, by introducing evidence to indicate that the intrinsic evidence might lead to the conclusion that the book was not held out as fact, the plaintiff has not created an issue of material fact; the plaintiff has merely added new elements to be considered in determining whether plaintiff held the book out as factual. There simply are no controverted facts. Moreover, this Court would deny summary judgment if the plaintiff were to show that whether the plaintiff held the book out to the public as factual is a question for the trier of fact. The Oliver case, barring the claim of the plaintiff therein for copyright infringement on an estoppel theory, was disposed of on summary judgment. Thus, this Court concludes that whether the book was held out to the public as factual is not a question of fact for the jury. The facts underlying a decision on that issue are not disputed and thus this Court can dispose of the matter summarily. See Jason v. Fonda, 526 F.Supp. 774.

Plaintiff spends a great deal of time arguing that the events in the book were, in actuality, fictional. The plaintiff argues that Dr. Helpern indicated before the book was published that the book was primarily nonfactual. Plaintiff also argues that book reviewers found that the book tended not to be factual. Opinions as to the actual factuality or fictitiousness of the book are irrelevant. As noted, the Court is not concerned with whether the stories in Where Death Delights are fact or fiction. The Court is only inquiring into how the book was held out to the public. Therefore, the author’s perception of the book before publication is irrelevant, as are the book reviewer’s comments. The single, dispositive determination is whether the book was presented to the public as factual.

Plaintiff also argues that the endorsement of the book by detective novel mavins is extrinsic evidence that the book was held out to the public as fiction and not fact, and thus there is a triable issue of fact as to how the book was held out. The Court finds that the book was expressly held out to the public as fact by the use of statements such as “these are true-life stories of Dr. Helpern” and “the book shows the truth can be more brutal than fiction.” The fact that a fiction writer might also have endorsed the book corresponds to the argument that an expert could have told that the stories in the book were fictionalized. The Court will not impose upon the public the obligation to discern every word, representation, and sentence to determine whether there is a representation that the book is fact or fiction. Given the express representation that the book is factual, the plaintiff will now be estopped from claiming it is not.

Lastly, plaintiff contends that in copyright estoppel, as in other forms of estoppel, reliance is part of the prima facie case. Plaintiff cites Hampton v. Paramount Pictures, 279 F.2d 100, 104 (9th Cir.1960), as authority for this proposition. In Hampton, Paramount and Krodascope contracted to give Krodascope the right to sell a 16mm. print from Paramount’s movie for commercial exhibition. Paramount, by its inaction, subsequently abandoned its rights to release substandard-sized prints of the movie. The court found that Paramount was therefore estopped to enjoin the exhibition of the film by Hampton. Hampton, 279 F.2d at 102. Hampton is a typical, pure estoppel case whose subject matter happens to be copyright; it is not a copyright estoppel case. In form, on the estoppel point, Hampton is indistinguishable from a securities case. See, e.g., Hecht v. Harris, 430 F.2d 1202 (9th Cir.1970). The estoppel resulted from defendant’s reliance on plaintiff’s inaction. In the case at bar, however, as in Marshall, Oliver, and every other copyright estoppel case that has come to this Court’s attention, the estoppel was created solely by plaintiff’s affirmative action and representation that the work was factual. In neither Marshall nor Oliver is “detrimental reliance” an element of copyright estoppel. See Marshall, CV 81-185-MML; Oliver, 41 F.Supp. at 296.

Accordingly, the Court finds that there are no triable issues of material fact and defendants are entitled to summary judgment. An order will be entered estopping plaintiff from claiming that Where Death Delights is a work of fiction.


author: SAMUEL P. KING, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. SIXTEEN ELECTRONIC GAMBLING DEVICES SEIZED ON AUGUST 5, 1983 FROM KEEAUMOKU AMUSEMENT, 825 KEEAUMOKU STREET, HONOLULU, HAWAII, Defendants. In re PACIFIC AMUSEMENT CO., LTD., Claimant.
    Civ. No. 83-0855.
    United States District Court, D. Hawaii.
    Oct. 3, 1984.
    Michael Chun, Asst. U.S. Atty., Daniel A. Bent, U.S. Atty., Honolulu, Hawaii, for plaintiff.
    Walter Horie, Honolulu, Hawaii, for Pacific Amusement Co., Ltd., claimant.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

SAMUEL P. KING, District Judge.

This is an action to forfeit sixteen (16) electronic gambling devices. This Court, having rendered on September 24, 1984 a decision in favor of the plaintiff, hereby adopts its Findings of Fact and Conclusions of Law as follows:

FINDINGS OF FACT

1. On August 5,1983, Special Agents of the Federal Bureau of Investigation and Police Officers of the Honolulu Police Department seized the sixteen (16) defendant electronic gambling devices from Keeaumoku Amusement, Honolulu, Hawaii.

2. None of the gambling devices were manufactured in the State of Hawaii.

3. Each device contains mini-computer components which generate electrical impulses to create images on a screen.

4. To initiate play on a machine a player inserts one or more coins, the player then activates the device by activating one or more buttons.

5. Some of the machines have additional features which require the player to perform additional functions.

6. The outcome of play produces a combination of images or symbols which do not occur in a predetermined sequence, but strictly at random.

7. Each machine has a meter or provision for a meter to cumulatively record the number of coins inserted into the device and additional meters to record credits awarded, games played and unused credits or a method to calculate unused credits removed.

8. Each machine pays off in additional credits for each winning combination displayed on the face of the device.

9. By betting additional credits or inserting additional coins a player can increase the payoff ratio for each winning combination displayed on the face of the device.

10. Each machine is designed and manufactured to retain a predetermined percentage of all coins inserted into the device. This retention ratio is commonly referred to as the “house percentage” and applies only to games of chance.

11. Each device can be set to retain greater percentages if the owner or operator so desires.

12. Several of the electronic video gambling devices attempt to duplicate some of the more popular casino-type games such as “Draw Poker,” “Five Card Stud”, “Black Jack,” “Keno,” “Joker’s Wild,” “slot machines (Wild Arrow)” to name a few.

13. “Credit,” when used in conjunction with electronic video display gambling devices that simulate casino-type games such as “poker,” “black jack,” or “keno,” is something of value.

14. When a coin is inserted into one of the defendant devices a “credit” will be recorded on a credit display meter which appears on the screen. For every coin inserted into the device a credit will be recorded.

15. When a player is awarded credits, for obtaining a winning combination, these credits will also be recorded on the same credit display meter. The credits recorded for coins and credits awarded for winning combinations are recorded accumulatively, on the same meter; therefore, since no distinction is made, they must be of the same value, namely the value of the coin required to begin play.

16. One exception to the previously stated process is if the device will accept only one coin. The credit for this coin is recorded on the bet meter. If the player should win, the credits awarded will be recorded on the credit display meter. When the players makes additional bets, these credits will be subtracted from the credit display meter and recorded on the bet meter. Even though the recording process of the credits is different, the value of the credit is the same as the value of the coin inserted to initiate play because both the coin credit and the awarded credit will be recorded on the bet meter when a wager is made.

17. A “credit” can apply only to a gambling device. A player may accumulate many credits, and use one or several credits on each play. Credits are used to increase pay-off ratios and to activate additional features.

18. The length of time required for the completion of each play on a gambling device is very short in duration, in most instances, it is just a matter of five to 10 seconds and a player cannot extend the length of play.

19. Each machine has meters, or provision in the wiring harness to accommodate meters, for recording the number of coins inserted and for recording the credits that are “knocked off” or erased.

20. Each machine has a knock-off switch or provisions for a knock-off switch by which the owner may remove unused credits.

21. Each machine has a credit meter which will register at least ninety-nine (99) credits and in some cases up to nine thousand nine hundred ninety-nine (9,999) credits.

CONCLUSIONS OF LAW

1. Evidence presented by an expert witness is sufficient to establish the characteristics of gambling devices. United States v. H.M. Branson Distributing Co., 398 F.2d 929 (6th Cir.1968). The characteristics of the defendant devices are established by the Declaration of William Holmes.

2. A “gambling device” is any machine designed and manufactured primarily for use in connection with gambling, and by the operation by which a person may be entitled to receive, as the result of the application of an element of chance, any money or property. 15 U.S.C. § 1171(a)(2).

3. Whether a machine was “designed and manufactured primarily for use in connection with gambling” and “by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, money or property,” can be determined by examining its characteristics or features. Among the characteristics or features to be found in gambling devices are a meter recording the number of credits earned by a player and a knockoff button to erase credits when he is paid off (United States v. 5 Gambling Devices, 346 F.Supp. 999, 1001 (W.D.La.1972); United States v. Various Gambling Devices, 368 F.Supp. 661, 663 (N.D.Miss.1973); United States v. 18 Gambling Devices, 347 F.Supp. 653, 656 (S.D. Miss.1972)), the provision for multiple coin insertion in order to increase the reward for successful play (United States v. Two Coin-Operated Pinball Machines, 241 F.Supp. 57, 59 (W.D.Ky.1965)), the great number of credits which can be achieved by players (Id.), and a meter which recorded only those credits which were knocked off. (United States v. 18 Gambling Devices, supra at 661; United States v. Two Coin-Operated Pinball Machines, supra at 59).

4. The characteristics and features rendering these machines “peculiarly and uniquely suited for gambling purpose” (United States v. Two Coin-Operated Pin Ball Machines, supra at 59) are built into each of the machines. They all have knock off switches to erase credits from the machines. They all have meters either in the circuitry or in the form of an electro-mechanical device which counts the number of credits erased from the machine. Most have multiple coin features by which the player can bet more than one coin or credit, thereby increasing the potential payoff. They all have credit meters with the capability of recording an excessive number of credits. The length of time required for completion of each play is very short in duration, in most instances, just a matter of five to ten seconds. A player cannot, regardless of alleged skill levels or capabilities, extend the length of play. All defendants have the capability of being programmed to retain a predetermined percentage of all coins inserted. The outcome of play occurs strictly at random.

5. The defendants are gambling devices, as defined in 15 U.S.C. § 1171, and they were transported into the State of Hawaii from a place outside, in violation of 15 U.S.C. § 1172; therefore, they are subject to forfeiture under the provisions of 15 U.S.C. § 1177.

Accordingly, the complaint of the United States for forfeiture is granted, judgment is entered in favor of the United States and the defendant gambling devices are hereby forfeited.