author: ORINDA D. EVANS, District Judge.

text:
    Louis C. INGRAM v. COX COMMUNICATIONS, INC., Formerly Known As Cox Broadcasting Corporation, d/b/a WSB-TV.
    Civ. No. C83-624.
    United States District Court, N.D. Georgia, Atlanta Division.
    June 5, 1985.

      Robert N. Meals, Meals & Parks, P.C., Atlanta, Ga., for plaintiff.
    Brent L. Wilson, Elabree, Thompson & Trapnell, Atlanta, Ga., for defendant.
   ORDER

ORINDA D. EVANS, District Judge.

This case under the Age Discrimination in Employment Act is before the court for certain findings and entry of final judgment. The issues of liability and backpay were tried to a jury on February 19-25, 1985. The jury responded to special interrogatories, finding that Plaintiff’s age was a determinative factor in the employer’s decision of which Plaintiff complains. The jury found that the discriminatory decision caused Plaintiff to lose $16,500 in income.

Prior to trial, the court announced the reservation of certain matters which would be decided by it in the event Plaintiff prevailed on the issue of liability. The reserved matters are Plaintiff’s claims for: (1) reinstatement; (2) front pay; (3) prejudgment interest on the backpay award; (4) adjustment of pension benefits (based on a percentage of the backpay award); and (5) an award of attorney’s fees.

To recapsule the facts, at relevant times Plaintiff has been and still is a commission paid account executive for WSB-TV (“WSB”) in Atlanta. WSB (also known as Channel 2) is owned by Defendant Cox Communications, Inc. Its account executives sell time on Channel 2 to companies desiring to advertise their products or services. In some cases, this is accomplished through advertising agencies which represent such companies. WSB assigns and reassigns accounts periodically to its account executives, according to its perception of who can best service the account.

For many years prior to mid-1982, WSB assigned the McCann-Erickson account to Mr. Ingram. McCann-Erickson is a large, prestigious advertising agency based in Atlanta. It handles the Coca-Cola account and other large corporate accounts. Mr. Ingram would negotiate with McCann-Erickson executives to try to get them to place clients’ ads on WSB-TV. At the time of the events in question, Plaintiff was in his early sixties. His immediate supervisor was Mrs. Grace Gilchrist, who was in her mid-forties. Mrs. Gilchrist was hired in late 1980 for the specific purpose of overhauling and upgrading WSB’s local sales department.

In December, 1980, WSB had a 30% share of the Atlanta viewing market, but it only was obtaining a 24% share of estimated local TV advertising revenues. Because the General Manager had set a goal of achieving a 33% share of the viewing audience, Mrs. Gilchrist set a sales goal for her local account executives of 33% of available advertising revenues. At this time, account executives’ compensation arrangements were changed to a commissions only basis. Frequent staff meetings were held to encourage better performanee. During 1981, WSB did increase its share of both viewership and available advertising revenues.

The evidence at trial showed that advertising time is frequently sold by Atlanta TV stations on a quarterly basis. Normally, the fourth quarters is a high-revenue quarter, because companies tend to advertise heavily then.

At the end of the third quarter of 1981, Mr. Ingram negotiated a contract with McCann-Erickson for the upcoming fourth quarter. Although WSB then had a 29% viewing share of the Atlanta audience, McCann-Erickson committed only 8% of its local TV advertising budget to WSB under that contract.

Mr. Ingram reported this admittedly disastrous turn of events to Mrs. Gilchrist. She attempted to reopen negotiations with McCann-Erickson, but was unsuccessful. She reported the matter to Mr. Garwood. He felt, in light of Mr. Ingram’s failure to give management advance notice of problems with the buy, that he should be terminated.

The matter was presented to Fred Barber, General Manager of WSB. Mr. Barber pointed out that Mr. Ingram was in his sixties and had worked for the station for many years. He vetoed Mr. Garwood’s suggestion that Mr. Ingram be fired. He told Mrs. Gilchrist to switch the account to another executive if she wished to do so.

Mrs. Gilchrist did not immediately reassign the McCann-Erickson account, although she told Mr. Ingram in March 1982 that this was a possibility. Mr. Ingram retained the account for the first and second quarters of 1982, at which respective times WSB obtained 34% and 22% shares of McCann-Erickson’s available business. Mrs. Gilchrist was still dissatisfied and in late June 1982, she reassigned the account to David Beckman, a 27 year old account executive. During the interview with Mr. Ingram in which he was informed of the account switch, Mrs. Gilchrist commented that she felt Mr. Ingram’s health was being adversely affected by tensions associated with handling the McCann-Erickson account. She assigned Mr. Ingram new accounts which had been switched from other account executives. Mrs. Gilchrist testified she chose these accounts by reference to their previous earnings records. She testified that she selected accounts which, when added to Mr. Ingram’s other accounts, plus his own estimate of new business he would bring in, would yield Mr. Ingram commissions roughly equal to those he had been receiving. The “substitute” accounts were the accounts of three large Atlanta churches, and the International House of Pancakes. The 1982 revenue to WSB from these accounts was about $360,000. McCann-Erickson had produced revenue of around $480,000 for WSB in 1981; it wound up producing 1982 revenue of over $800,000.

In 1983, Mr. Ingram also earned commissions from nine new accounts which he brought to WSB. The sales revenue produced by these accounts in 1983 was about $100,000. At the same time, however, the largest of the “substitute” accounts Mrs. Gilchrist had given Mr. Ingram in mid-1982 (First Baptist Church, producing revenue of $209,000 in 1982) discontinued advertising on WSB. Also, in 1984 International House of Pancakes failed to renew.

The evidence at trial showed without dispute that Mr. Ingram had the following income from WSB in each of the following years:

1977 - $36,606.48
1978 - 39,079.50
1979 - 43,524.73
1980 - 45,561.81
1981 - 53,320.91
1982 - 50,086.23
1983 - 51,188.37
1984 - 58,796.05

The evidence at trial did not reflect what incomes were earned by other WSB account executives during any of the years between 1977 and 1984. Also, since the trial occurred in February, 1985, the evidence did not reflect Mr. Ingram’s income level for 1985.

The post-trial affidavit of Louis C. Ingram, offered in connection with Mr. Ingram’s request for equitable relief now before the court, states that “every sales account executive in the local sales department at the television station who services a major advertising agency such as McCann-Erickson, Inc., J. Walter Thompson, or Darcy, McManus & Masius ... generates almost twice the amount of net revenue (upon which our sales commission income is based) as a person such as myself who does not have responsibility for any major agency.” Ingram Affidavit, ¶ 2. ■

The post-trial affidavit of Mrs. Grace Gilchrist indicates that during the first five months of 1985, Mr. Ingram has earned greater commissions than any other account executive at WSB. Specifically, during the first five months of 1985, he has earned $33,609.00. The same affidavit reflects that in March 1985, Mr. Ingram was assigned a new account which is estimated to produce $7,980 in commissions in addition to the $70,000 Plaintiff has otherwise been projected to earn this year.

The seeming inconsistency between the Ingram and Gilchrist affidavits may be resolved by the fact that different types of accounts carry different commission rates. The evidence at trial showed without dispute that agency accounts carry substantially lower commission rates than so-called direct accounts (i.e., an account in which no advertising agency is involved). For example, agency accounts carried a 3.2% commission rate in 1982, a 3.2% rate until June 1983, and a 2.8% rate from that time until the present. At all times since 1980 to the present, however, direct accounts have carried a 10% commission rate, as have new business accounts (for the first year only).

Since mid-1982, McCann-Erickson has substantially increased its local television advertising expenditures. Therefore, although WSB’s percentage of these revenues versus that of other local TV stations has not increased, its gross revenues from McCann-Erickson have, with concomitant benefits to the commission paid account executives who have handled that account. WSB’s sales revenue from McCann-Erickson exceeded $1,300,000 in 1984.

The decision which Plaintiff challenges in the instant suit is Defendant’s decision to reassign the McCann-Erickson account to David Beckman. Having found that this decision was motivated by age discrimination, the jury awarded Mr. Ingram $16,500. Plaintiff now asks the court to order Defendant to reassign (“reinstate”) the McCann-Erickson account to him or alternatively, award front pay until he regains the account. He asks the court to award prejudgment interest, order that a proper adjustment in his pension benefits be made based on a percentage of the backpay award, and make an award of reasonable attorney’s fees and expenses.

Claim for Reinstatement

Plaintiffs position is that since the jury-determined that reassignment of the McCann-Erickson account was motivated by age discrimination, that the court should now act to direct Defendant to reassign the account back to Plaintiff. Defendant, on the other hand, contends that such an order would interfere unduly with management prerogatives. Defendant argues that reshuffling of agency accounts in the television advertising business is a routine business matter, of an ongoing nature, such that injunctive relief pertaining to particular accounts would be inappropriate.

The court finds that directing Defendant to reassign the McCann-Erickson account to Mr. Ingram is not an appropriate form of relief. Certainly, it would not constitute a proper form of “reinstatement.” “Reinstatement” within the context of discrimination litigation means reinstatement to a particular position, not restoration of particular aspects of Plaintiffs job. In this case Plaintiff has never lost his position with Defendant. At all relevant times he has been a commission paid account executive. The most significant attributes of Plaintiffs position — duties performed and income received — have not been shown with reasonable certainty to have changed significantly — at least, not on a presently continuing basis. Therefore, the court cannot conclude that Mr. Ingram was demoted when the McCann-Erickson account was reassigned. Where there has been neither a termination nor a demotion, reinstatement is an inapplicable concept.

Even if reinstatement were an applicable concept, it does not appear that merely directing reinstatement of the McCann-Erickson account, standing alone, would be an equitable remedy. When Defendant switched that account from Plaintiff, it gave him substitute accounts. Furthermore, Plaintiff utilized some of the time he would have spent servicing the McCann-Erickson account to obtain new business which has produced additional income for him. The court could not equitably super-add the McCann-Erickson account to these other accounts; a wholesale review and possible reshuffling of all of Plaintiffs assigned accounts would be necessary. Plaintiff has not suggested what reassignment mix would be equitable, and the court will not speculate about this matter. Therefore, the court DECLINES to direct “reinstatement” of the McCann-Erickson account.

Front Pay

Plaintiff asks the court to consider front pay as an alternative to reinstatement. In other words, Plaintiff asks the court to award an increment of damages for future periods when he is not handling the McCann-Erickson account. This should be done, Plaintiff urges, by comparing his present earnings with those of David Beck-man from the McCann-Erickson account. Defendant opposes such request, arguing that any such award would be unduly speculative.

Front pay is a remedy sometimes utilized by courts where immediate reinstatement is not feasible, either because the position to which plaintiff seeks reinstatement is incumbered, see Cancellier v. Federated Dept. Stores, 672 F.2d 1312, 1319 (9th Cir.), cert. denied, 459 U.S. 859, 103 S.Ct. 131, 74 L.Ed.2d 113 (1982), or because plaintiff is justified in refusing reinstatement due to the circumstances, e.g., an acrimonious relationship with the employer, Goldstein v. Manhattan Industries, Inc., 758 F.2d 1435, 1449 (11th Cir.1985); Cancellier, supra. In both of these cases, plaintiffs entitlement to the position is recognized but placement in the position is deferred or excused, with front pay being added as a form of interim or substituted compensation. In such case, the salary for the position in question sets the standard for the proper amount of front pay. In O’Donnell v. Georgia Osteopathic Hos pital, Inc., 748 F.2d 1543 (11th Cir.1984), the Court of Appeals specifically held that front pay is an available remedy under the Age Discrimination in Employment Act.

The instant case, however, does not involve a situation where otherwise appropriate immediate reinstatement is contra-indicated by considerations of fairness to an incumbent employee or to the Plaintiff himself. Instead, here there is no viable claim for reinstatement of the sort requested by Plaintiff. In other words, even if the account were presently not assigned to anyone, it would be improper to direct that the account be reassigned to Plaintiff. To call reassignment of the McCann-Erickson account “reinstatement” is simply a misnomer. Accordingly, the court declines to enter an award of front pay based on a claim of entitlement to the McCann-Erickson account.

Prejudgment Interest on the Backpay Award

Prejudgment interest is awardable in the discretion of the court when such award is necessary to make Plaintiff whole. See O’Donnell, supra at 1552; Merriweather v. Hercules, Inc., 631 F.2d 1161, 1168 (5th Cir.1980). The court, in its discretion, determines that no prejudgment interest award is appropriate in this case.

Adjustment of Pension Benefits

Plaintiffs pension arrangements with Defendant call for Defendant to contribute certain amounts to a pension fund on a yearly basis based on employees’ earnings. When an employee retires, the amount he is entitled to draw is determined by a formula which is applied to his five highest consecutive years of earnings.

Defendant correctly points out that the court cannot at this point determine what Plaintiff’s pension benefit will be. This is because the date of Mr. Ingram’s retirement is presently unknown. However, the court does direct that Defendant cause the pension records to be corrected so as to reflect the additional $16,500 of income awarded by the jury to Mr. Ingram. This additional income shall be treated as income for the period from July 1, 1982 through December 31, 1984, evenly distributed throughout that period of time.

Award of Attorney’s Fees

As the prevailing party, Plaintiff is entitled to an award of reasonable attorney’s fees and expenses. Pursuant to local rule of this court, judgment will be entered at this time and consideration of the proper amount of attorney’s fees and expenses is DEFERRED.

The Clerk is hereby DIRECTED to enter final judgment in favor of the Plaintiff in the sum of $16,500.

The court further ORDERS and DIRECTS Defendant to properly mark its pension records so as to reflect additional earnings of $16,500 for the Plaintiff for the period from July 1,1982 through December 31, 1984, said amounts to be spread evenly over this period of time.

      . Mrs. Gilchrist’s hiring itself was part of an overall effort to upgrade station sales. This effort began in January, 1980, when Fred Barber became General Manager of WSB. Noting that WSB had lower local sales than its share of the viewing audience would indicate, he undertook a number of personnel changes. The existing General Sales Manager was replaced by John Garwood, who was hired away from one of Defendant's competitors in Detroit, Michigan. Mr. Garwood then replaced the incumbent Local Sales Manager with Mrs. Gilchrist. She had worked with Mr. Garwood at his former place of employment. When Mrs. Gilchrist assumed the position of Local Sales Manager, she replaced four of the local sales department’s account executives. Mr. Ingram was among those retained.

      . Two other local TV stations compete with WSB-TV.

      . Mr. Ingram testified that the station's high rates were the main reason the account was undersold. WSB countered with testimony that these rates had not impaired the performance of other account executives.

      . The evidence at trial showed that McCannErickson had assigned a different buyer to negotiate the fourth quarter contract from the one Mr. Ingram had previously dealt with. The buyer’s supervisor refused to renegotiate the contract but told Mrs. Gilchrist she would give the account more oversight in the future, and would let her know in advance if there were problems.

      . Mrs. Gilchrist testified that during the spring of 1982 she spent an undue amount of time working on the account herself. This testimony was controverted by Plaintiff’s witnesses. There was some evidence suggesting discord between Mr. Ingram and Mrs. Gilchrist during this time frame, although neither side argued this was so.

      . The third quarter McCann-Erickson buy was handled partly by Mr. Ingram and partly by Mr. Beckman.

      . This estimate had been noted on a planning sheet turned in by Mr. Ingram.

      . The court cannot be certain because the record does not make it clear which of Mr. Ingram’s accounts are "direct" accounts.

      . In 1984 the McCann-Erickson account was again reassigned, this time from David Beck-man to Mike McCord.

      . In some factual contexts the training one receives for future promotional opportunities could be a significant attribute of the position. However, the evidence did not show a promotional hierarchy within Defendant’s local sales department.


source: Caselaw Access Project

author: La PLATA, District Judge.

license: Public Domain

text:
    Signe CAMPBELL and Arthur Campbell, Plaintiffs, v. HILTON HOTELS CORPORATION, a Delaware corporation, Defendant.
    No. 85-CV-72073-DT.
    United States District Court, E.D. Michigan, S.D.
    June 6, 1985.

      Jeffrey N. Shillman, Southfield, Mich., for plaintiffs.
    Kenneth D. Wedes, Southfield, Mich., for defendant.
   ORDER GRANTING DEFENDANT’S MOTION FOR CHANGE OF VENUE

La PLATA, District Judge.

On April 9, 1985, Plaintiffs, Signe Campbell and Arthur Campbell, filed a Complaint in the Wayne County Circuit Court against Defendant, Hilton Hotels corporation, alleging that Signe Campbell sustained injuries in an accident that occurred at a hotel located in Ft. Lauderdale, Florida, on July 12, 1984. On May 8, 1985, Defendant caused the matter to be removed to this Court, based on diversity of citizenship of the parties. 28 U.S.C. § 1441(b).

On May 17, 1985, Defendant filed a Motion for Dismissal, maintaining that the case should be dismissed, under Fed.R. Civ.P. 12(b)(2), for lack of personal jurisdiction over Defendant. Alternatively, Defendant requested that the matter be transferred to a more convenient forum, the United States District Court for the Southern Division of Florida. The Court notes that Plaintiffs have not filed a brief in opposition to Defendant’s motion.

Appended to Defendant’s motion is an affidavit of Anthony F. Sigmore, Defendant’s current Claims’ Manager. Therein, Mr. Sigmore stated that Defendant (1) is incorporated in the State of Delaware, having its principal place of business in Beverly Hills, California; (2) has not acceded to service of process in Michigan; (3) neither owns nor leases personal or real property in Michigan; (4) does not manage or employ any personnel at a Michigan Hilton Hotel, for each hotel is a self-operating franchise; and (5) would incur great hardship if compelled to defend the lawsuit in Michigan, since the witnesses and sources of proof are located in Florida.

Under 28 U.S.C. § 1391(b), the statute prescribing venue for diversity of citizenship cases, a lawsuit between citizens of different states may be instituted in either the judicial district where all of the plaintiffs reside, all of the defendants reside, or where the claim arose. See, generally, Wright, Law of Federal Courts, § 42 (3d ed. 1976). In the matter at bar, either a Federal District Court in Florida or Michigan would be a proper forum, since the Plaintiffs and Defendant are residents of Michigan and Florida, respectively, along with the cause of action having arisen in Florida.

Pursuant to 28 U.S.C. § 1404(a), a District Court is empowered to transfer a civil case to another District Court:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

The above-cited statute has an underlying policy of facilitating the litigation of lawsuits in forums that provide convenience and fairness to the parties. See Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964). A transfer of a case under Section 1404(a) is possible only if venue and federal jurisdiction existed in the original forum. Viaggio v. Field, 177 F.Supp. 643 (D.C.Md.1959).

In Schneider v. Sears, 265 F.Supp. 257, 263 (S.D.N.Y.1967), the District Court delineated the factors to be considered by a Court in exercising its discretion in a motion for a change of venue:

* * * These include: (1) the convenience to parties; (2) the convenience of witnesses; (3) the relative ease of access to sources of proof; (4) the availability of process to compel attendance of unwilling witnesses; (5) the cost of obtaining willing witnesses; (6) the practical problems indicating where the case can be tried more expeditiously and inexpensively; and (7) the interests of justice, a term broad enough to cover the particular circumstances of each case, which in sum indicate that the administration of justice will be advanced by a transfer.

Courts have uniformly held that a significant factor to be considered in a transfer motion is the convenience of party and non-party witnesses. Gallen v. Howard D. Johnson Co., 271 F.Supp. 680 (S.D.N.Y.1967); 15 Wright, Miller & Cooper, Federal Practice and Procedure, § 3851 (1976). Contrariwise, the convenience and availability of counsel are given little weight in a change of venue motion. Simmons Ford, Inc. v. Consumers Union of the United States, Inc., 490 F.Supp. 106, 107 (W.D.Mich.1980).

In the matter at bar, the Court concludes that a transfer of the personal injury action to the United States District Court for the Southern District of Florida will advance the administration of justice. In exercising its discretion, the Court has considered the following factors: (1) Defendant is incorporated in Florida, with its principal place of business in Beverly Hills, California; (2) the incident giving rise to the cause of action occurred in Florida; (3) Defendant’s pertinent documents and records are maintained in Florida; (4) other than the Plaintiffs, there do not appear to be any witnesses who will be required to attend the trial in Florida and (5) the Florida Court would be more convenient for Defendant’s witnesses.

WHEREFORE, the motion of Defendant for transfer of the cause to the United States District Court for the Southern District of Florida is GRANTED. Defendant’s motion for costs is DENIED.

So Ordered.

      . In considering Defendant’s alternative motion to transfer the case to the Southern District of Florida, this Court will assume that Defendant has sufficient minimum contacts with the state of Michigan to empower this Court to exercise personal jurisdiction over it. Even if the action were filed in an improper venue, the Court is authorized to transfer the case to a proper venue under 28 U.S.C. 1406(a). See Goldlawr, Inc. v. Heiman, 369 U.S. 463, 467, 82 S.Ct. 913, 8 L.Ed.2d 39 (1962).


author: McCURN, District Judge.

text:
    TRIAD FINANCIAL ESTABLISHMENT, Plaintiff, v. The TUMPANE COMPANY, Defendant.
    No. 79-CV-437.
    United States District Court, N.D. New York.
    June 10, 1985.

      Hale & Dorr, Boston, Mass., Bond, Schoeneck & King, Syracuse, N.Y., for plaintiff; James D. St. Clair, Richard J. Innis, Thomas N. O’Connor, Boston, Mass., John J. Dee, Syracuse, N.Y., of counsel.
    Patterson, Belknap, Webb & Tyler, New York City, Coupe, Abend & Connors, Utica, N.Y., for defendant; Michael B. Mukasey, Eugene Gelernter, New York City, J. Leo Coupe, Utica, N.Y., of counsel.
   MEMORANDUM-DECISION AND ORDER

McCURN, District Judge.

Plaintiff, Triad Financial Establishment [“Triad”] brings this breach of contract action against defendant, The Tumpane Company [“Tumco”], seeking more than $3.5 million in commissions allegedly owed to Triad under the contracts between the parties. Presently before the court are cross-motions for summary judgment. For the reasons set forth below Triad’s motion for summary judgment is denied and Tum-co’s motion for summary judgment is denied in part and granted in part.

Background

Plaintiff Triad is a Liechtenstein entity controlled by Adnan Khashoggi, a well-known Saudi Arabian businessman. Triad describes itself as a “marketing and consulting organization” that “assists its clients in locating, identifying, and participating in international business ventures, particularly in Saudi Arabia.” Plaintiffs Memorandum at 9. Defendant Tumco is a New York corporation with its principal place of business in Vancouver, Washington. Tumco is primarily engaged in providing support services such as housing, transportation, food services and health facilities for large military projects.

In 1971 the United States agreed to equip and modernize the Royal Saudi Air Force of the Kingdom of Saudi Arabia [“Saudi Arabia”] through a long range, multibillion dollar program called “Peace Hawk” [“Peace Hawk” or “program”]. In accordance with the terms of the Foreign Military Sales [“F.M.S.”] Contract, the Northrop Corporation [“Northrop”] was designated the prime contractor for the entire program. Defendant Tumco was interested in being named as the sole-source subcontractor for support services on the Peace Hawk program. On December 1, 1971, Triad and Tumco entered into two agreements wherein Tumco appointed Triad as its marketing agent to assist Tum-co in obtaining the Peace Hawk support services subcontract from Northrop.

The Peace Hawk program proceeded in phases. In phases I, II, IV, and VI, Saudi Arabia purchased Northrop F-5 aircraft and related hardware from the United .States. In phases III, III Extension [“HIE”], V, and VII, Saudi Arabia contracted for support services related to the arms purchases. For each of the phases Northrop was the United States government’s prime contractor. Tumco was awarded the support services subcontract for phases III (covering the period from April 4, 1972 to August 15, 1975), phase HIE (covering the period from August 16, 1975 to February 15, 1976), and phase V (covering the period from February 16, 1976 to June 19, 1979).

Triad contends that it has performed all of its obligations under the agreement and is entitled to commissions in excess of $3.5 million. Tumco contends that it does not owe Triad any commissions and has counterclaimed for the return of $1.7 million already paid to Triad under the agreements.

Discussion

Federal Rule of Civil Procedure 56(c) provides that a court may enter summary judgment for a party if there are no genuine issues of material fact in dispute and the party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Project Release v. Prevost, 722 F.2d 960, 968 (2d Cir.1983); Quinn v. Syracuse Model Neighborhood Cory., 613 F.2d 438, 444 (2d Cir.1980). In discussing whether summary judgment is proper in cases involving interpretation of a contract the Second Circuit recently stated:

The law in this circuit is clear: “where a contract is not wholly unambiguous, summary judgment must be denied even where both parties move for pre-trial resolution.” Sobering Corp. v. Home Insurance Co., 712 F.2d 4, 10 (2d Cir.1983); Heyman v. Commerce and Industry Insurance Co., 524 F.2d 1317, 1320 (2d Cir.1975).

Long Island Airports Limousine Service Corp. v. Playboy-Elsinore Associates, 739 F.2d 101, 103 (2d Cir.1984); accord, Rothenberg v. Lincoln Farm Camp, Inc., 755 F.2d 1017, 1019 (2d Cir.1985); Grand Union Co. v. Cord Meyer Development Corp., 735 F.2d 714, 717 (2d Cir.1984). If a contract is ambiguous and therefore susceptible to more than one reasonable interpretation, a genuine issue of material fact exists as to the intent of the parties at the time the contract was entered into. Grand Union Co. v. Cord Meyer Development Corp., 735 F.2d at 717.

1. The Contract Interpretation Issues

As a preliminary matter the court notes that it is not clear from the record whether Triad performed any services for Tumco. Mr. Khashoggi claims that he “cemented” the relationship between Tumco and Northrop through his discussions with various Northrop officials. Those Northrop officials, however, do not recall Khashoggi advocating the use of Tumco as the support services subcontractor on the Peace Hawk program. Whether Triad actually performed its contractual obligations under the agreements is obviously a “genuine issue of material fact” that would preclude granting summary judgment for either party. Fed.R.Civ.P. 56(c). However, even if the court assumes arguendo that Triad is entitled to compensation for services rendered, the method of calculating Triad’s compensation cannot be determined from the face of the agreements and, thus, as outlined below, summary judgment must be denied.

In the course of its efforts to obtain a subcontract on the Peace Hawk project, defendant Tumco entered into two agreements with Triad. The first, more general agreement is termed a “Marketing Agreement”. It essentially provides that Triad will use its best efforts to develop specific projects to be delineated in more detailed “Product Agreements”, and will be compensated at a rate provided for in the individual product agreements.' The second, more specific agreement is captioned “Product Agreement # 1.” This agreement specifically relates to the “Northrop F-5 Aircraft Maintenance and Training Program as sold by Tumco as a subcontractor to Northrop under a United States Government F.M.S. Contract,” i.e. the Peace Hawk program.

Both parties contend that the agreements are plain on their face and that summary judgment should therefore be granted. However, the parties’ interpretations of key clauses in the contracts are diametrically opposed.

The Marketing Agreement establishes the nature of the relationship between the parties. Pursuant to the Marketing Agreement, Tumco appointed Triad as its marketing representative for the sale of “Tumco Products” on the projects delineated in the Product Agreements. Triad’s compensation was defined in ¶ 2(e) of the agreement as follows:

Compensation as used herein shall mean the consideration earned by TRIAD by reason of the performance of marketing services set forth in Paragraph 3, for which TRIAD is entitled to payment hereunder.

Under ¶ 3, Triad’s marketing services were defined as follows:

TRIAD shall devote its best efforts to the development of the specific projects agreed upon in the Product Agreement, and shall assist when requested, on any and all problems related to the successful performance and conclusion of the project or contract.
TRIAD shall submit reports to Tumco no less than once a month including such of the above information as is available. It shall further give its written opinion on specific marketing matters when requested.

The agreement also provided that the actual rate of compensation would be set forth in the Product Agreements [¶ 5(a) ]; that compensation would be paid on any addons, extensions, or supplements [¶ 5(c) ]; and that the agreement would continue for five years unless terminated by either party on 60 days written notice [¶ 7]. The agreement further provided that express provisions of a Product Agreement regarding termination would supersede the Marketing Agreement’s termination provision [¶ 7(c) ]. The Marketing Agreement also contained a forum selection clause stating that the validity and construction of the Agreement would be governed by New York State law [¶ 13].

The Product Agreement signed by the parties relates specifically to the Peace Hawk program. The “product” covered by the agreement is support services for the Peace Hawk project. The rate of Triad’s compensation is set forth in ¶¶ 6 and 7 of the Product Agreement as follows:

6. Payment and Compensation Rate:
(a) Marketing Compensation shall be five percent (5%) of contract price, plus a sum equivalent to one half (V2) of the gross profit realized by Tumpane in the performance of the contract of sale.
* * H* # *
7. Special Provisions
I. The price proposal submitted to the customer shall be prepared on the following basis:
(a) Marketing Compensation shown as a line item: two percent (2%) of contract price.
(b) Balance of Marketing Compensation of three percent (3%) of contract price to be included in the basic costs.
(c) A Management Fee for TUMCO equivalent to four percent (4%) of contract price to be included in the basic costs.
(d) Line item profit shall be included at fifteen percent (15%) of costs. Should negotiations with the customer result in a profit of less than nine percent (9%) of costs, the TRIAD compensation shall be subject to negotiation between TUMCO and TRIAD.

Tumco contends that the 5% Marketing Compensation payment to Triad set forth in ¶ 6 was to be generated from the proceeds of Tumco’s contract with Northrop by including 2% specifically designated “Marketing Compensation” as a line item of cost [¶ 7(I)(a) ] and including the additional 3% elsewhere in various items of “basic costs” [¶ 7(I)(b)]. In addition, Tumco was also to obtain a 4% management fee from various items of “basic costs” [¶ 7(I)(c) ]. Tumco contends that if its negotiations with Northrop resulted in a profit of less than 9% of cost, Triad’s compensation was to be “subject to negotiation” pursuant to ¶7(1)^). In other words, Tumco argues that, under ¶ 7 of the Product Agreement, it is required to pay Triad a specific compensation percentage unless Tumco’s negotiated profit from Northrop was less than 9% of costs, in which case Triad’s compensation is subject to negotiation between the parties. Tumco further argues that its final profit must be determined by taking its gross profit and subtracting its costs, which include the 5% Marketing Compensation payable to Triad and the 4% Management Fee payable to Tumco. In essence, Tumco contends that the “costs” contained in ¶¶ 7(I)(a), (b), and (c) must be subtracted “off the top” of its gross profit to determine its actual profit. Calculated this way, Tumco never realized a 9% profit in its contracts with Northrop because Northrop would not allow Tumco to include the “costs” listed in ¶¶ 7(I)(a), (b), and (c) in the Tumco-Northrop contract.

Not surprisingly, Triad’s interpretation of ¶¶ 6 and 7 is somewhat different than Tumco’s. Triad contends that its compensation is irrevocably set by ¶ 6 and that ¶ 7 only relates to price proposals. Triad further contends that Tumco realized more than 9% on its contract with Northrop and, accordingly, ¶ 7(I)(d) was never triggered.

Both Triad and Tumco have submitted voluminous documentation to support their interpretation of the disputed contract language, but the documents, including affidavits and depositions, are clearly in conflict. Tumco cites the deposition of Mr. Khashoggi alleging that Khashoggi conceded that Tumco’s interpretation of the agreement is correct. Triad cites the deposition of Mr. James J. Tumpane, Jr. alleging that Tumpane agreed with Triad’s interpretation of the contracts. In this court’s view, the question of the proper method of calculating Triad’s compensation is not clearly unambiguous and therefore summary judgment is improper. In addition, there are a number of other contractually based issues which are in dispute. For example, Triad maintains that it is entitled to commissions on phases III, HIE, and V because phases HIE and V were merely extensions of the original phase III contract. Tumco contends that even if Triad is entitled to commissions on phase III, it is not entitled to commissions on phases HIE and V as those were separate contracts. The parties also dispute which termination date governs the agreements. Where the contract language is susceptible of two fairly reasonable interpretations, the parties should be afforded an opportunity to present extrinsic evidence on the issue of their intent at the time of contracting. Schering Corp. v. Home Insurance Co., 712 F.2d 4, 9 (2d Cir.1983); Cibro Petroleum Products v. Sohio Alaska Petroleum Co., 602 F.Supp. 1520, 1546 (N.D.N.Y.1985). This court cannot conclude as a matter of law that either party is entitled to summary judgment and therefore both parties’ motions for summary judgment with respect to the contract interpretation issues are denied.

II. The Conflict of Law Issues

As noted previously, the Marketing Agreement between the parties contains a forum selection clause designating New York as the jurisdiction that would govern the interpretation of the contracts. New York courts will normally honor the parties’ choice of forum provided the forum selected has a substantial relationship to the parties or the transaction and the application of the forum’s law would not be contrary to a fundamental policy of a state with a materially greater interest than the forum state. Business Incentives Co. v. Sony Corporation of America, 397 F.Supp. 63, 67 (S.D.N.Y.1975); see also Southern International Sales Co. v. Potter & Brumfield Division of AMF Inc., 410 F.Supp. 1339 (S.D.N.Y.1976). Thus, New York courts do not consider themselves bound by a forum selection clause if its application would override the policies of a state with a materially greater interest in the controversy. See Keystone Leasing Corp. v. Peoples Protective Life Insurance Co., 514 F.Supp. 841, 847 (E.D.N.Y.1981); Southern International Sales Co. v. Potter & Brumfield Division of AMF Inc., 410 F.Supp. at 1341-42; Business Incen tives Co. v. Sony Corp., 397 F.Supp. at 67; Haag v. Barnes, 9 N.Y.2d 554, 216 N.Y.S.2d 65, 175 N.E.2d 441 (1961).

Tumco contends that Saudi Arabia has a far greater interest in this litigation than New York does and, consequently, Saudi law should apply notwithstanding the forum selection clause. Triad contends that Saudi Arabia has no interest in this controversy and accordingly, this court should honor the parties’ choice of forum.

In determining what law should apply, this court must weigh the relative interests of the states involved to determine which state has the greatest interest at stake in this litigation. The court must also consider which forum has the most significant relationship with the parties and transaction.

Plaintiff Triad is a Liechtenstein entity. Defendant Tumco is incorporated in New York with its main office in Vancouver, Washington. At the height of the Peace Hawk program Tumco had only two employees in New York compared with 3750 in Saudi Arabia, 500 in Montana, 250 in California, 200 in Spain, and 100 in Washington. None of the relevant agreements were negotiated, executed, or performed in New York. It appears that New York’s only significant contact with this litigation is via the forum selection clause contained in the Marketing Agreement.

In contrast, Saudi Arabia has a significant connection to this litigation and a compelling interest in the application of the law. Although Triad is a Liechtenstein entity, it has characterized itself as a “Saudi sales agent.” Its reputation as an effective marketing agent is based almost entirely on Mr. Khashoggi’s purported influence in Saudi Arabia. In addition, the Northrop-Tumco contracts, which are predicates to the Triad-Tumco contracts, were negotiated primarily in Saudi Arabia and call for performance entirely in Saudi Arabia. Moreover, Saudi Arabia has a compelling interest in having its law applied to this controversy. The Kingdom of Saudi Arabia prohibits the payment of agent’s fees on contracts for arms and related services. The Saudi prohibition was formally expressed in Decree No. 1275 which was issued on September 17, 1975. The Decree prohibits the payment of any agent’s fees in connection with the sale of armaments or related equipment:

1. No firm holding a contract with the Saudi Government for the supply of arms or equipment required by the Saudi Government may pay any sum as a commission to any intermediary, sales agent, representative, or broker. This prohibition shall apply regardless of the nationality of the firm or the nationality of the intermediary, sales agent, representative, or broker. It shall apply also whether the contract was concluded directly between the Saudi Government and the firm or through a third-party state. No recognition is accorded to any commission agreement previously concluded by any of such firm with any party, and such agreement shall have no validity vis-a-vis the Saudi Government.
2. If among the foreign firms mentioned in paragraph 1 above there are any that are obligated by commission agreements that they have made, they are to stop payment of the commissions due after having been warned by this decision____

The Saudis enacted Decree No. 1275 in an attempt to root out corruption and bribery in military contracts. To allow a forum selection clause to circumvent this strong Saudi policy would render Decree No. 1275 meaningless. In contrast, New York has no policy at stake in this litigation. New York has little or no interest in upholding Triad’s claim for fees. In view of the significant connection to Saudi Arabia, the fundamental Saudi policy against agent’s fees in military contracts, and the negligible relation between this case and New York, the court finds that Saudi Arabian law should apply. Keystone Leasing Corp. v. Peoples Protective Life Insurance Co., 514 F.Supp. at 847; Southern International Sales Co. v. Potter & Brumfield Division of AMF Inc., 410 F.Supp. at 1341-42; Business Incentives Co. v. Sony Corp., 397 F.Supp. at 67; Restatement (Second) of Conflict of Laws § 187.

Under the concept of depacage, Saudi law will only be applied after September 17, 1975 as the Saudi interest in this action did not arise until Decree No. 1275 was issued. There is no reason to displace the parties’ choice of forum prior to the issuance of the Decree.

Triad argues that even if the court finds that Saudi law applies here, there is a question of fact as to whether Saudi law would prohibit enforcement of Triad’s claims. Although foreign law was formerly treated as a question of fact, it is now considered a question of law for the court. Fed.R.Civ.P. 44.1, Bassis v. Universal Line, S.A., 436 F.2d 64, 68 (2d Cir.1970); Fleischmann Distilling Corp. v. Distillers Co., 395 F.Supp. 221, 231-32 n. 15 (N.D.N.Y.1975); First National Bank of Arizona v. British Petroleum Co., 324 F.Supp. 1348, 1355 (S.D.N.Y.1971); Instituto Per Lo Sviluppo Economico Dell’Italia Meridionale v. Sperti Products, Inc., 323 F.Supp. 630, 635 (S.D.N.Y.1971).

Triad advances five arguments in support of its position that Saudi law does not bar its claim for agent’s fees. First, Triad argues that it is not an “intermediary, sales agent, representative, or broker” within the meaning of Decree No. 1275. This argument is clearly untenable. Triad has characterized itself as a “Saudi sales agent” and the Marketing Agreement between the parties states that Turneo “appoints Triad as its representative for the sale of Tumco products in Saudi Arabia.” Judge Tashima of the Central District of California recently considered this identical question in litigation involving Triad’s claim for fees based on the Northrop-Triad Peace Hawk contract:

[Triad’s] interpretation is inconsistent with the circumstances surrounding adoption of the Decree, and with the plain language of the Decree itself____ It is clear that the Saudi Decree reflects a governmental policy formulated specifically with the Northrop-Triad agency relationship in mind. It stretches credibility beyond the breaking point to conclude, in this context, that the Decree was worded so as to exempt “service agents” such as Triad from its prohibitions.

Northrop Corporation v. Triad Financial Establishment, 593 F.Supp. 928, 939 (C.D.Cal.1984). Triad is clearly an “intermediary, sales agent, representative or broker” and thus subject to Decree No. 1275.

Triad also argues that the policy behind enactment of Decree No. 1275 is to avoid added costs in Saudi military contracts and thus, the Decree should be limited to prohibiting only agents’ fees that would be passed on to the Saudi government. The Decree, however, makes no distinction between agent’s fees to be passed on to the Saudi government and those to be absorbed by the parties. The Decree contains a broad prohibition on payment of any and all agent’s fees in arms-related contracts. Triad also raised this argument in the Northrop case. Judge Tashima stated:

While the Decree clearly reflects the Saudi government’s unwillingness to be charged for commissions paid to middlemen, that is not its sole intent or effect. The Decree also contains a broad prohibition against “go-betweens or commissions of any kind on arms contracts____” The words “No company ... shall pay,” cannot fairly be construed to preclude only those commissions charged to the Saudi government; rather the Decree imposes a flat ban upon commission agreements between suppliers and agents in U.S.-Saudi arms contracts.

Northrop Corporation v. Triad Financial Establishment, 593 F.Supp. at 938. In this court’s view Triad’s interpretation of the Decree is overly narrow and not supported by the plain language of the Decree. The Decree clearly prohibits all agents’ fees regardless of whether their ultimate cost is passed on to the Saudi government.

Triad next argues that Decree No. 1275 applies to contracts for the sale of arms, but not to related support services. The court finds this argument without merit. The Saudis’ own interpretation of Decree No. 1275 makes it clear that it was intended to apply to sales of arms, equipment, and services as shown in this official Diplomatic Note sent to the U.S. Embassy in Jidda:

[Decree No. 1275] ... banned payment of commissions on contracts for armaments and necessary related equipment whether the contents of such contracts were for arms, equipment or services without any exception, (emphasis added).

Official Diplomatic Note, dated Oct. 10, 1976.

To hold that service contracts are exempt from the Decree would be logically inconsistent since the support services are an indispensible part of an arms contract. For example, four of the eight phases of the Peace Hawk program involved support services for the Peace Hawk technicians, mechanics, pilots, and other support personnel. The Peace Hawk project was clearly an integrated military contract involving the sale of arms, equipment and services to Saudi Arabia. All the phases were necessarily interrelated. The Saudis apparently recognized the danger of allowing any exceptions to Decree No. 1275. A United States Department of State telegram discussing the reach of Decree No. 1275 stated:

Prince' [then-Deputy Prime Minister Abdullah] added that no distinction could be made in any case between services/arms and equipment. If you gave lawyers and agents that much of an opening they would confound the issue by their subtle distinctions to the point where anything would again be permitted. He repeated again that he would not [repeat] not agree to any payments to agents, commission brokers or middlemen in connection with ... modernization program.

In this court’s view the Decree was intended to apply to arms-related support services contracts.

Triad next argues that Decree No. 1275 does not apply to subcontracts. This position also finds no support in the language of the Decree. The Decree states that “there shall be no intermediation or commission of any kind in connection with arms contracts____” Moreover, the policy underlying the Decree, namely to eliminate the incentive for corruption in arms-related contracts, would be served by application of the Decree to subcontracts as well as prime contracts. Indeed to hold otherwise would allow parties to completely circumvent the strictures of Decree No. 1275 merely by subcontracting the majority of the contract. The Saudis were not inclined to allow exceptions to Decree No. 1275 and it is unlikely that subcontracts would be exempted from the Decree. The court finds that Decree No. 1275 applies to subcontracts as well as prime contracts.

Finally, Triad argues that Decree No. 1275 does not apply to a split of profits but only to straight commissions. This argument is also contrary to the language of the Decree which bans payment of “any sum as a commission.” The Decree does not distinguish between commissions, included in the gross or those based on a percentage of the net; Triad’s interpretation goes to the method of generating the commissions and not whether the Decree bars all commissions. There is little doubt that a payment made to a sales agent based on a split of the profits would still be considered a “commission” within the meaning of Decree No. 1275.

The court concludes that Saudi Arabian law, specifically Decree No. 1275, must be applied to this controversy. The language of the Decree states that obligated firms such as Turneo “are to stop payment of the commissions due after having been warned by this decision.” The only Peace Hawk phase commenced after the issuance of the Decree is phase V. Although the Decree might readily be interpreted to prohibit payment of fees for work performed prior to its issue, such retroactive application raises serious constitutional questions not heretofore briefed or put forth by the parties and which are better left for another day. Accordingly, the court grants summary judgment to Turneo dismissing Triad’s claim for fees with regard to phase V.

IT IS SO ORDERED.

      . In Foreign Military Sales contracts, the United States Department of Defense contracts to sell products and services directly to a foreign country pursuant to a "Letter of Offer and Acceptance." The Defense Department then enters into a second contract with an American company such as Northrop for delivery of the products and services to the foreign country. This arrangement allows the foreign government to look to the United States for compliance with the contract.

      . The parties actually entered into four separate product agreements. Only Product Agreement # 1 is relevant to the issues before the court.

      . The parties agree that New York’s policy with regard to this issue is based on the Restatement (Second) of Conflict of Laws § 187 which reads in pertinent part:
      (2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either
      (a) the chosen state has no substantial relationship to the parties or the transaction and díete is no other reasonable basis for the parties’ choice, or
      (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.
      Tumco contends that this case falls squarely within § 187(2)(b).

      . Since 1954 Tumco has never had more than two New York-based employees at any given time.

      . The Marketing Agreement states that “Triad is and has been since 1955 an established marketing organization in Saudi Arabia with offices in Riyadh and Jeddah____”

      . Depacage has been defined as "applying the rules of different states to different issues.” Reese, Depacage: A Common Phenomenon in Choice of Law, 73 Colum.L.Rev. 58 (1973). The court determines which law should apply with respect to each particular issue after weighing the appropriate choice-of-law factors. See E. Scholes & P. Hay, Conflict of Laws, § 2.15 at 40 (1982); R. Weintraub, Commentary on the Conflict of Laws, § 3.4 (2d ed. 1980).

      . Phases I, II, IV, and VI involved the sale of fighter planes and related hardware; phases III, IIIE, V, and VII involved the sale of support services.

      . As previously noted, Decree No. 1275 was issued on September 17, 1975. Phase V of the Peace Hawk program commenced on February 16, 1976.


author: KANE, District Judge.

text:
    FIREFIGHTERS INCORPORATED FOR RACIAL EQUALITY, a Colorado nonprofit corporation; Frank E. Quintana; Fred H. Fernandez; Andrew Archuleta; Richard Nuanes; Jose F. Archuleta; Phil Apodaca; Ernest B. Arellano; Karl Cordova; Leonard V. Cardenas; James Hicks; Michael Ramos; L.M. Cruz; Raymond Gabaldon; Richard Deherrera; Nick Nuanes; Richard L. Roach; John P. Drogheo; Onesio Cole and Margarito Franco, v. Ted BACH, Oseald C. Abernethy, Jesse Manzanares, individually and as Commissioners of the City and County of Denver Civil Service Commission; Merle K. Wise, individually and as Chief of the Fire Department for the City and County of Denver; Dan Cronin, individually and as Manager of Safety of the City and County of Denver; and the City and County of Denver..
    No. 78-K-119.
    United States District Court, D. Colorado.
    June 11, 1985.

      Paul A. Baca, Denver, Colo., for plaintiffs.
    Darlene Ebert, Asst. City Atty., Denver, Colo., for City and County of Denver.
    Walter C. Brauer, III, Denver, Colo., for intervenors.
   MEMORANDUM OPINION AND ORDER

KANE, District Judge.

In 1978, plaintiffs brought this class action on behalf of all mexican american and black firefighters in the Denver Fire Department. They allege that defendants have discriminated against them in violation of the Civil Rights Act of 1870, 42 U.S.C. § 1981; the Civil Rights Act of 1871, 42 U.S.C. § 1983; and in violation of Titles VI and VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000d through 2000e-17. Particularly, plaintiffs challenge the defendants’ seniority and promotion practices.

I previously held that the promotion practices of the Denver Fire Department have a discriminatory impact on minority firefighters. 522 F.Supp. 1120,1126 (1981). I found the defendants’ seniority policies violated Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e through 2000e-17 (1976). 522 F.Supp. 1120, 1126. On appeal, the Tenth Circuit reversed and remanded for a determination of whether the practices alleged by the plaintiffs are part of a bona fide seniority system under § 703(h) of Title VII. 731 F.2d 664, 669 (10th Cir.1984). If so, then “§ 703(h) exempts from Title VII the disparate impact of ... [such] system,” American Tobacco Co. v. Patterson, 456 U.S. 63, 75, 102 S.Ct. 1534, 1541, 71 L.Ed.2d 748 (1982), and the plaintiffs would have to establish discriminatory treatment.

The question before me today concerns the proper allocation of the burden of proof as to whether defendants’ practices are part of a seniority system and whether that system is bona fide. Plaintiffs have moved for a determination of who has the burden of proof on these issues. Specifically, plaintiffs assert that the burden of proof should be placed on defendants to establish that the seniority system in question was not created, maintained, or implemented with the intent to discriminate. In response, defendants and intervenors contend that plaintiffs have the burden of proving the seniority system is not bona fide.

Allocation of Burdens of Proof

The United States Supreme Court has established three-step formulations for allocating burdens of proof in disparate treatment and disparate impact cases. It has not, however, addressed the allocation of burdens of proof regarding bona fide seniority systems. Absent direction on this issue, the lower courts have allocated the burdens of proof; often without clearly indicating their approach. See, e.g., Broadnax v. Missouri Pac. R.R. Co., 20 Empl. Prac.Dec. (CCH) ¶ 30,132 (E.D.Ark.1978). Because the lower courts are • split and there is no controlling authority on the issue, I shall determine which of the prevailing theories should be applied based on considerations such as policy rationales and fairness.

The primary purpose of Title VII was “to assure equality of employment opportunities and to eliminate those discriminatory practices and devices which have fostered racially stratified job environments to the disadvantage of minority citizens.” McDonnell Douglas Corp. v. Green, 411 U.S. 792, 800, 93 S.Ct. 1817, 1823, 36 L.Ed.2d 668, (1973). Section 703(a) embodies this policy, prohibiting employers from discriminating “against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, ... or national origin____” 42 U.S.C. § 2000e-2(a)(1).

Another policy was recognized, however, during the congressional debate on Title VII, which conflicted with the overall purpose of Title VII. This “policy favor[s] minimal supervision by courts and other governmental agencies over the substantive terms of collective-bargaining agreements.” American Tobacco Co., 456 U.S. 63, 76-77, 102 S.Ct. 1534, 1541-42, 71 L.Ed.2d 748 (1982), citing California Brewers Assn. v. Bryant, 444 U.S. 598, 608, 100 S.Ct. 814, 820, 63 L.Ed.2d 55 (1980). Since seniority provisions “are universally included in [collective-bargaining] contracts,” Trans World Airlines, Inc. v. Hardison, 432 U.S. 63, 79, 97 S.Ct. 2264, 2274, 53 L.Ed.2d 113 (1977), opponents to Title VII were concerned that the proposed statute might have an adverse effect on established seniority systems and on the concept of seniority. See H.R.Rep. No. 914, 88th Cong., 1st Sess. 64-65 (1963); U.S.Code Cong. & Admin.News 1964, p. 2355; 110 Cong.Ree. 486-89 (1964) (statement of Sen. Hill). In response to these concerns, a compromise section was introduced clarifying Title VIPs effect on seniority systems. 110 Cong.Ree. 11,926,11,-931 (1964).

This section, 703(h), reflects the balance Congress struck between affording immediate equal employment opportunity for all and maximizing the freedom of employers and employees to set the terms and conditions of their employment relationship through collective bargaining. American Tobacco Co., 456 U.S. 63, 76-77, 102 S.Ct. 1534, 1541-42, 71 L.Ed.2d 748. Section 703(h) provides:

Notwithstanding any other provision of this subchapter, it shall not be an unlawful employment practice for an employer to apply different standards of compensation, or different terms, conditions, or privileges of employment pursuant to a bona fide seniority or merit system, ... provided that such differences are not the result of an intention to discriminate because of race, color, ... or national origin____

42 U.S.C. § 2000e-2(h) (1976).

Properly read, “bona-fide seniority system” embodies the strong national policy of affording considerable latitude to the collective bargaining process, while “intent to discriminate” marks the point at which equal employment opportunity concerns must dominate. The effect of § 703(h) is to immunize bona fide seniority systems from a challenge based on a disparate impact analysis. See American Tobacco Co., 456 U.S. 63, 75, 102 S.Ct. 1534, 1541, 71 L.Ed.2d 748. In order to show that a bona fide seniority system violates Title VII, the plaintiff would have to establish discriminatory intent under a disparate treatment analysis. See General Elec. Co. v. Gilbert, 429 U.S. 125, 137 n. 14, 97 S.Ct. 401, 409 n. 14, 50 L.Ed.2d 343 (1976) (the plaintiff has “the traditional civil litigation burden of establishing that the acts ... complain[ed] of constituted discrimination in violation of Title VII”).

However, this assumes it has been shown that the challenged practices of the defendant are part of a seniority system and that the seniority system is bona fide. Only upon such a showing is the disparate treatment theory applicable. If the challenged practices are not part of a seniority system or if that system is not bona fide, then there is no immunity under § 703(h), and the disparate impact analysis may be applied.

Allocation of burden of proof in seniority system cases has been the subject of several conflicting decisions. Some courts have placed the burden of proof on the plaintiff to show the system’s lack of bona fides. See, e.g., Day v. Patapsco & Back Rivers R. Co., 504 F.Supp. 1301 (D.Md.1981); Younger v. Glamorgan Pipe & Foundry Co., 20 Fair Empl.Prac.Cas. (BNA) 776 (W.D.Va.1979), aff'd, 621 F.2d 96 (4th Cir.1980) (per curiam); Trent v. Allegheny Airlines, Inc., 471 F.Supp. 448 (W.D.Pa.1979); Chrapliwy v. Uniroyal, Inc., 458 F.Supp. 252 (N.D.Ind.1977).

Other courts, however, have viewed § 703(h) as an affirmative defense, with the defendant having the burden of proof. See, e.g., American Tobacco Co., 456 U.S. 63, 86-87, 102 S.Ct. 1534, 1546-47, 71 L.Ed.2d 748 (Stevens, J., dissenting) (§ 703(h) is an affirmative defense); Jackson v. Seaboard Coast Line Railroad, 678 F.2d 992 (11th Cir.1982); Myers v. Gilman Paper Co., 527 F.Supp. 647, 25 Empl.Prac. Dec. (CCH) ¶ 31,692 (S.D.Ga.1981); Griffin v. Copperweld Steel Co., 22 Empl.Prac. Dec. (CCH) ¶ 30,637 (N.D.Ohio 1979); Swint v. Pullman-Standard, 17 Fair Empl.Prac.Cas. (BNA) 730 (N.D.Ala.1978), rev’d on other grounds, 624 F.2d 525 (5th Cir.1980), rev’d on other grounds, 456 U.S. 273, 102 S.Ct. 1781, 72 L.Ed.2d 66 (1982). Thus, resolution of the burden of proof and bona fides questions depend on whether § 703(h) is construed as a clarification of the general proscriptions of § 703(a) or as an affirmative defense.

Although the cases that allocate the burden of proving lack of bona fides on the plaintiff do not articulate the reasons for doing so, it appears that a statutory construction theory purportedly justifies this approach. See Hillman, Teamsters, California Brewers, and Beyond: Seniority Systems and Allocation of the Burden of Proving Bona Fides, 54 St. John's L.Rev. 706 (1980). According to this theory, the language of § 703(h) was not intended as an affirmative defense, but rather as an explanation or clarification of what constitutes an unlawful employment practice under section 703(a). See Franks v. Bowman Transp. Co., Inc., 424 U.S. 747, 761, 96 S.Ct. 1251, 1262, 47 L.Ed.2d 444 (1976) (“the thrust [of § 703(h)] is directed toward defining what is and what is not an illegal discriminatory practice____”).

As a clarification or definition of what constitutes an “illegal employment practice”, and since it closely follows the language in § 703(a), § 703(h) arguably could be read as part of the general clause which confers the substantive right. Where a statute creates a substantive right while simultaneously providing for exceptions to that right, application of the statute is conditioned on the nonexistence of the exception. See, e.g., Protective Life Ins. Co. v. Swink, 222 Ala. 496, 132 So. 728, 729 (1931). Therefore, as the argument goes, plaintiffs asserting rights under Title VII should have the burden of proving the nonexistence of the exception; that a seniority system is not bona fide.

I disagree that this statutory construction theory should be applied to allocate the burden of proving lack of bona fides on the plaintiff. See Swint, 17 Fair Empl.Prac. Cas. (BNA) 730, 732 (rejecting statutory construction theory). This theory fails to establish that Congress intended § 703(h) to be a part of the general clause, § 703(a), and not a separate exception; even though Senator Humphrey told Congress that § 703(h) “merely clarifies [Title VII’s] intent and effect.” 113 Cong.Rec. 12,723. It is also not shown that Congress intended that the nonexistence of the exception in § 703(h) act as a condition to the application of Title VII.

Moreover, this theory ignores those cases which have generally treated statutory exceptions from remedial statutes as affirmative defenses. See, e.g., County of Washington v. Gunther, 452 U.S. 161, 101 S.Ct. 2242, 68 L.Ed.2d 751 (1981) (considered other exemptions from Title VII found in Equal Pay Act, 29 U.S.C. § 206(d), and incorporated by reference into § 703(h), to be affirmative defenses); United States v. First City Nat. Bank of Houston, 386 U.S. 361, 87 S.Ct. 1088, 18 L.Ed.2d 151 (1967) (statutory exemption from the antitrust laws found in 12 U.S.C. § 1828(c)(5)(B) of the Bank Merger Act is an affirmative defense); Rachback v. Cogswell, 547 F.2d 502, 505 (10th Cir.1976) (statutory exemption from the operation of the Truth in Lending Act must be pled as an affirmative defense); Wirtz v. C & P Shoe Corp., 336 F.2d 21, 26 & n. 1 (5th Cir.1964) (statutory exception from the Fair Labor Standards Act must be pled as an affirmative defense).

Finally, § 703(h) itself has been held to constitute an affirmative defense. Jackson, 678 F.2d 992, 1013. The Eleventh Circuit Court of Appeals, in Jackson, decided that § 703(h) fell within the general rule that statutory exemptions from remedial statutes are affirmative defenses because “§ 703(h) serves to exempt from Title VII the disparate impact of a bona fide seniority system.” Jackson, 678 F.2d 992, 1013; see also Swint, 17 Fair Empl.Prac.Cas. (BNA) 730; Myers, 527 F.Supp. 647; Griffin, 22 Empl.Prac.Dec. (CCH) ¶ 31,692. Justice Stevens, in his dissenting opinion in American Tobacco Co., stated that “[section 703(h) provides an affirmative defense for an employer whose administration of a bona fide seniority or merit system has produced consequences that appear to discriminate against a member of a particular race, religion, or sex.” American Tobacco Co., 456 U.S. 63, 86-87, 102 S.Ct. 1534, 1546-47, 71 L.Ed.2d 748 (Stevens, J., dissenting).

Considerations of fairness also require that the defendant have the burden of proving its seniority system is bona fide. As the Eleventh Circuit stated in Jackson, “requiring the § 703(h) exemption to be pled as an affirmative defense promotes fairness ... [because] [i]t places the burden of pleading on the party who will be benefited by the departure from the normal operation of Title VII, and permits plaintiffs to proceed without the undue burden of having to anticipate a § 703(h) defense____” Jackson, 678 F.2d 992, 1013. Additionally, the employer may have superior access to proof on this issue. Presumptions shifting the burden of proof are often created to conform with a party’s superior access to the proof. See McCormick, Law of Evidence §§ 337, 343 (2d ed. 1972); James, Burdens of Proof, 47 Va.L.Rev. 51, 61 (1961).

For these reasons, I reject the statutory construction theory which allocates the burden to the plaintiff to prove lack of bona fides. Instead, I find that § 703(h) constitutes an affirmative defense. As an affirmative defense, the defendant may seek to establish that the personnel decisions involved were made pursuant to a bona fide seniority system. At this stage, the issues are limited to: (1) whether the practice is within the scope of § 703(h), see California Brewers Assn. v. Bryant, 444 U.S. 598, 100 S.Ct. 814, 63 L.Ed.2d 55; and (2) whether the system is bona fide.

On the issue of whether the seniority system is bona fide, I recognize that the test for bona fides requires that the system be judged in light of the “totality of circumstances,” James v. Stockham Valves & Fittings Co., 559 F.2d 310, 352 (5th Cir.1977),- with emphasis on the following factors:

First,' a court must determine whether the system “operates to discourage all employees equally from transferring between seniority units.” ... Second, a court must examine the rationality of the departmental structure, upon which the seniority system relies, in light of the general industry practice ... Third, a court had to consider “whether the seniority system had its genesis in racial discrimination,” ... by which it meant the relationship between the system and other racially discriminatory practices ... Finally, a court must consider “whether the system was negotiated and has been maintained free from any illegal purpose”.

Swint, 456 U.S. 273, 279-81,102 S.Ct. 1781, 1785-86, 72 L.Ed.2d 66 (citations omitted).

The first two factors, neutrality and rationality, are obviously related to the issue of bona fides and serve to promote the policy of minimal interference with collective bargaining. The third and fourth factors, however, are more appropriately related to discriminatory intent and to the conflicting congressional policy of affording immediate equal employment opportunity for all. By combining these factors, the issues of a seniority system’s bona fides and the defendant’s intent are merged and, therefore, blurred.

In order to help focus my decision making on the two conflicting policies expressed in § 703(h), it is necessary to separate the issues of bona fides and intent to discriminate. See Comment, Employment Discrimination — Seniority Systems Under Title VII, 62 N.C.L.Rev. 357, 376-80 (1984). Accordingly, in assessing the system’s bona fides, I will consider only whether the system is facially neutral and whether it rationally furthers some legitimate employer or employee purpose. If the system is bona fide, then the plaintiff will bear the burden of proving that the otherwise bona fide seniority system results from an intent to discriminate. At this point, the third and fourth factors of the above test become relevant. This allocation of the burden of proof is consistent with current practice under any theory of liability when intentional discrimination is an issue. See General Elec. Co., 429 U.S. 125, 137 n. 14, 97 S.Ct. 401, 409 n. 14, 50 L.Ed.2d 343 (the plaintiff has “the traditional civil litigation burden of establishing that the acts ... complained of constituted] discrimination in violation of Title VII”).

In sum, I employ a three-step analysis to allocate burdens of proof regarding bona fide seniority systems under § 703(h). First, the plaintiff is required to establish a prima facie case of discrimination under either a disparate treatment or impact theory. Second, as an affirmative defense, the defendant may seek to establish that the personnel decisions involved were made pursuant to a bona fide seniority system. At this stage, the issues are limited to: (1) whether the practice is within the scope of § 703(h); and (2) whether the system is bona fide. On the latter issue, defendant must establish that the system is facially neutral and that it rationally furthers some legitimate purpose. Third, the plaintiff bears the burden of proving that the otherwise bona fide seniority system results from an intent to discriminate.

By separating intent to discriminate from bona fide, this approach to allocation of burdens of proof gives each party the affirmative proposition. Further, it will help me to focus on the two conflicting policies expressed in § 703(h).

      . Disparate treatment is where an employer "treats some people less favorably than others because of their race, color, ... or national origin.” International Broth, of Teamsters v. United States, 431 U.S. 324, 335 n. 15, 97 S.Ct. 1843, 1854 n. 15, 52 L.Ed.2d 396 (1977). Disparate impact, on the other hand, involves "employment practices that are facially neutral in their treatment of different groups but that in fact fall more harshly on one group than another____” Teamsters, 431 U.S. 324, 336 n. 15, 97 S.Ct. 1843, 1854 n. 15, 52 L.Ed.2d 396.
      In McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), the United States Supreme Court enunciated a three-step process for distributing burdens among the parties and set forth the elements of proof necessary to establish a disparate treatment case under Title VII. The first step requires that the plaintiff establish a prima facie case of discrimination based on one or more of the prohibited classifications. McDonnell Douglas, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668. Second, if the plaintiff establishes a prima facie case, the burden of going forward reverts to the defendant to "articulate some legitimate, nondiscriminatory reason” that explains his conduct. McDonnell Douglas, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668. Assuming the defendant meets this burden, the burden of production shifts back to the plaintiff to show that the defendant’s presumptively valid justification was in fact merely a pretext for discriminatory conduct. McDonnell Douglas, 411 U.S. 792, 804, 93 S.Ct. 1817, 1825, 36 L.Ed.2d 668.
      The initial burden on plaintiffs in disparate impact cases is to establish a prima facie case which proves that the defendant's policy or practice has a substantial impact on members of a protected class. Albemarle Paper Co. v. Moody, 422 U.S. 405, 425, 95 S.Ct. 2362, 2375, 45 L.Ed.2d 280 (1975). The defendant must then come forward with proof that the practice is mandated by business necessity or that the practice has a manifest relationship to the defendant’s business. See Griggs v. Duke Power Co., 401 U.S. 424, 432, 91 S.Ct. 849, 854, 28 L.Ed.2d 158 (1971). If the defendant meets this burden, the plaintiff then must be given the opportunity to show that other practices or policies with a lesser differential impact on the protected class would serve the defendant’s legitimate interest. Albemarle, 422 U.S. 405, 425, 95 S.Ct. 2362, 2375, 45 L.Ed.2d 280. "Proof of discriminatory motive ... is not required under a disparate impact theory." Teamsters, 431 U.S. 324, 335 n. 15, 97 S.Ct. 1843, 1855 n. 15, 52 L.Ed.2d 396.


author: McLAUGHLIN, District Judge.

text:
    Arthur SHEINER, Plaintiff, v. The CITY OF NEW YORK, Defendant.
    No. 83 CV 2802.
    United States District Court, E.D. New York.
    June 12, 1985.

      Weg & Myers, P.C., New York City (Ira M. Myers, Harry Cummins and Jonathan Wilkofsky, New York City, of counsel), for plaintiff.
    Frederick A.O. Schwarz, Jr., Corp. Counsel of City of New York, New York City, Howard S. Weiss, Gary R. Tarnoff and Gabriel Taussig, New York City, (of counsel), for defendant.
   MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

This is an action under 42 U.S.C. § 1983, and under common-law theories of trespass and negligence, to recover for the alleged wrongful destruction of plaintiff’s house. Each party has moved for summary judgment. Fed.R.Civ.P. 56. Alternatively, plaintiff seeks leave to amend his complaint. Fed.R.Civ.P. 15. For the reasons developed below, summary judgment will be entered for defendant.

Facts

The undisputed material facts are as follows. Plaintiff, at all times relevant to this action, resided in Nassau County at 30 Vernon Avenue, Atlantic Beach, New York. During this time he was the record owner of real property located in New York City at 44-04 Hough Place, also known as 44-04 Norton Avenue, Queens, New York (the “property”). As of September 18, 1981 there was a one-story frame house on the property. Sometime in 1982, however, that house was demolished without plaintiffs knowledge or permission, pursuant to an Order of the New York Supreme Court, Queens County.

Razing defendant’s house was the culmination of proceedings instituted by defendant’s Department of Buildings (the “Department”). Article 8 of Part I of Chapter 26, Title C of the Administrative Code of the City of New York (the “Code”) governs the removal and repair of unsafe buildings within the City. Article 8 states defendant’s policy regarding the procedures to be followed for the demolition or removal of such unsafe buildings.

Section C26-80.0 of the Code provides that any vacant building not continuously guarded, or not sealed and secured against unauthorized entry, is deemed dangerous to human life, health and morals. When a Department employee reports that a building is unsafe within the meaning of Article 8, the Department must serve the owner with a notice containing, inter alia, an order requiring him to bring the building into conformity with the Code. Id. § 80.-5(a) (the “Notice and Order”). The notice must further state that upon the owner’s failure to comply, a survey will be made. If the surveyors report that the building is unsafe, then a trial upon the allegations of the report will take place in New York Supreme Court. Id.

The prescribed Notice and Order must be served personally on the owner if he can be found within the City of New York after diligent search. Id. § 80.5(b). If after such search the owner cannot be served, the Code requires that the Notice and Order be posted on the building to which they refer, and be mailed to the owner at his last known address. Id. §§ 80.5(b), 84.-5(d).

In December, 1981 a process-server employed by defendant visited the property three times in an attempt to serve plaintiff personally with a combined Notice of Unsafe Building and Structure, Order, Notice of Survey and Summons. Finally, having been unable to locate plaintiff, the server affixed the Notice and Order to the door of the building and mailed a second copy to plaintiff at his residence in Atlantic Beach.

The Notice and Order informed plaintiff that his house on Norton Avenue was unsafe because it was open, vacant and unguarded. The Order required plaintiff either to make the building safe by securing it or to take the building down. It also required plaintiff immediately to inform the Queens Borough Superintendent of Buildings whether he assented to the Order, otherwise a survey would be made on January 4, 1982. If the building was reported unsafe by the surveyors, a trial would be held in Supreme Court, Queens County, on January 27, 1982 to determine whether the building should be secured or demolished.

Plaintiff never contacted the Superintendent of Buildings, and on January 4, 1982 a survey of the building was made. The surveyors concluded that the building was unsafe in that it was open, vacant and unguarded, with rubbish and debris throughout. They recommended that the building be either restored to its last lawful occupancy, sealed, or demolished.

A trial on the allegations in the survey was held on January 27, 1982. In the Matter of the Application of the City of New York Against the Unsafe Building and Structure Located at Jfp-Ob Norton Avenue, No. 1243/82 (Supreme Ct. Queens County). Upon plaintiff’s default, the action was tried to the Court, which heard testimony from one of the surveyors and received an affidavit from defendant’s process-server.

That same day, the Court issued a precept finding that: (1) plaintiff had been duly served with the Notice and Order; (2) the building was open, vacant and unguarded; (3) windows and doors were broken or missing; (4) there was rubbish throughout the building; and (5) the.building was a “fire, health and moral hazard.” Exhibit 6 to Affidavit of Howard S. Weiss. The Court ordered the building demolished and the debris removed.

Sometime thereafter, the house was destroyed. Upon learning of this, plaintiff made an administrative claim to defendant. When that proved fruitless, plaintiff filed this action.

Discussion

1. Collateral Attack on the Prior State Judgment

Plaintiff claims he was never served with the Notice and Order, and that defendant’s procedure for notifying him of the condemnation proceedings against his property is constitutionally deficient. Thus, argues plaintiff, he was deprived of his property without due process.

Defendant contends that plaintiff is barred by res judicata and collateral estoppel from litigating the constitutionality of the Code’s notice provisions, and that, even if plaintiff is not so barred, he should first be required to raise this claim in the state court before filing a federal civil rights action.

Genera] principles of claim and issue preclusion apply in civil rights eases just as in any other civil action. See Migra v. Warren City School District Board of Education, 465 U.S. 75, 104 S.Ct. 892, 898, 79 L.Ed.2d 56 (1984); Allen v. McCurry, 449 U.S. 90, 97, 101 S.Ct. 411, 416, 66 L.Ed.2d 308 (1980). A predicate of any of kind of preclusion, however, is a valid prior judgment. Conway v. Samet, 59 Misc.2d 666, 300 N.Y.S.2d 243 (Supreme Ct. Nassau County 1969). If the Court rendering the challenged judgment never had jurisdiction over the person of the defendant or the res of the action, any such judgment is void and, therefore, subject to collateral attack. Bartels v. International Commodities Cory., 435 F.Supp. 865, 867 (D.Conn.1977). That attack may be made in any proceeding in any Court where the validity of the judgment comes in issue. Collins v. Foreman, 729 F.2d 108, 111 (2d Cir.), cert. denied, — U.S. -, 105 S.Ct. 218, 83 L.Ed.2d 148 (1984).

Plaintiff in this action, by alleging he was never served with process, and by challenging the constitutionality of the Code’s notice provisions, is claiming the state court judgment is void for want of jurisdiction. His claim may properly be raised for the first time in this action.

2. Plaintiffs § 1983 Claim

Plaintiff alleges that the state court never acquired jurisdiction over him or his property because he was never served with the Notice and Order. Defendant’s affidavits, however, establish that plaintiff was indeed served, notwithstanding plaintiff’s claim that he did not receive actual notice of the proceedings.

Defendant’s process-server visited plaintiff’s property three times in an effort to serve plaintiff personally. Exhibit 4 to Affidavit of Howard S. Weiss. Unable to find plaintiff, the process-server affixed the Notice and Order to the door of the property, and mailed another copy to plaintiff’s Long Island residence — 30 Vernon Avenue, Atlantic Beach, N.Y. Deposition of Alan Fields 24-25. A copy of a Post Office Certificate of Mailing appears on the affidavit of service. The correctness of plaintiff’s residence is not in dispute and the Notice and Order was not returned to the City undelivered.

Plaintiffs affidavits in opposition do not raise a serious issue as to whether the process-server actually visited the property, affixed the Notice and Order, and mailed them to plaintiff’s residence. Plaintiff merely alleges that sometime after the process-server visited the property, plaintiff visited the property but did not find the Notice and Order. He also denies receiving the Notice and Order at his residence. These allegations do not raise a genuine issue of fact as to whether the affixing and mailing actually occurred. The undisputed material facts establish that plaintiff was served with the Notice and Order within the meaning of the Code’s notice statutes.

Plaintiff next contends that, even if he was served in accordance with the City’s statutes, those statutes are unconstitutional. Defendant suggests that the Court need not address that question, because adequate state remedies exist to compensate plaintiff for any loss he has suffered, and thus plaintiff has not been deprived of property without due process. See Parratt v. Taylor, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981). Plaintiff counters that the existence of post-deprivation remedies does not bar this action.

When a person is deprived of his interest in property by a state official’s random, unauthorized act, procedural due process may be satisfied if there exists an adequate post-deprivation remedy. Parratt v. Taylor, 451 U.S. 527, 541-546, 101 S.Ct. 1908, 1916-1918, 68 L.Ed.2d 420 (1981); Holmes v. Ward, 566 F.Supp. 863, 864-865 (E.D.N.Y.1983). When the deprivation occurs because of an established state procedure, however, then due process requires the existence of adequate pre-deprivation safeguards. See Logan v. Zimmerman Brush Co., 455 U.S. 422, 436, 102 S.Ct. 1148, 1158, 71 L.Ed.2d 265 (1982); Holmes v. Ward, supra, 566 F.Supp. at 866-67.

There can be no question that the destruction of plaintiff’s house was the result of established state procedure. See Burtnieks v. City of New York, 716 F.2d 982, 988 (2d Cir.1983). Accordingly, the Court must address plaintiff's contention that the City’s pre-deprivation procedure for giving notice of pending condemnation proceedings is unconstitutional.

It is, of course, an axion of Due Process that a court cannot adjudicate a controversy without first notifying the defendant. What is required is “notice reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950). Actual receipt of notice ' is not constitutionally required; “[t]he sufficiency of notice must be tested with reference to its ability to inform people of the pendency of proceedings that affect their interests.” Greene v. Lindsey, 456 U.S. 444, 102 S.Ct. 1874, 1879, 72 L.Ed.2d 249 (1982).

In Greene v. Lindsey, 456 U.S. 444, 102 S.Ct. 1874, 72 L.Ed.2d 249 (1982), the Supreme Court struck down a Kentucky statute permitting service of process in forcible entry and detainer proceedings by posting a notice on the premises to be repossessed. Because the notice might be removed by someone other than the tenant interested in the proceedings, the Court held that posting alone did not give the reasonable assurance of actual notice required by the Due Process Clause. Id. 102 S.Ct. at 1879-80. The Court went on to endorse mailing the notice as “an ‘efficient and inexpensive means of communication.’ ” Id. 102 S.Ct. at 1880 (quoting Mullane v. Central Hanover Bank & Trust Co., 399 U.S. 306, 319, 70 S.Ct. 652, 660, 94 L.Ed. 865 (1950)). Cf. Mennonite Board of Missions v. Adams, 462 U.S. 791,103 S.Ct. 2706, 77 L.Ed.2d 180 (1983) (publication in county office and posting insufficient to provide mortgagee with notice of real property sale).

In the present case, the Notice and Order describing an allegedly unsafe condition were served in accordance with §§ C26-80.5(b) and 84.5(d) of the Administrative Code. Section 80.5(b) requires that the Notice and Order be personally served on the addressee, if that person can be found within the city. If personal service cannot be made, then § 84.5(d) authorizes posting the Notice and Order on the violative premises, and mailing a copy to the addressee’s last known place of residence. Unable to make personal service upon plaintiff, defendant’s process-server used this alternative method of “nail and mail.”

Measured against the Due Process standards articulated in Múlleme and Greene, the notice provisions in §§ C26-80.5(b) and 84.5(d) are constitutionally sufficient. Posting the notice on the premises itself creates a reasonable possibility that the owner will receive actual notice. Indeed, notwithstanding its holding in Greene, the Supreme Court has recognized that such service “would, in many or perhaps most instances, constitute not only a constitutionally acceptable means of service, but indeed a singularly appropriate and effective [means of ensuring actual notice].” Greene v. Lindsay, supra, 102 S.Ct. at 1879; see Mullane v. Central Bank & Trust Co., supra, 339 U.S. at 316, 70 S.Ct. at 658 (“[E]ntry upon real estate in the name of law may reasonably be expected to come promptly to the owner’s attention.”).

Though posting alone may in some cases be insufficient, when coupled with mailing to the owner’s last known residence — the correctness of which is not disputed in this case — it is reasonably calculated to give adequate notice to the property owner of proceedings affecting his interests. Accordingly, I hold that the Code’s notice provisions are constitutional. Cf. Sterling v. Environmental Control Board, No. 80 CV 1844, slip op. (E.D.N.Y.1982) (upholding New York City “nail and mail” statute used to serve notice of sanitation violations).

Plaintiff has failed to raise triable issues of fact, either as to the City’s compliance with its own procedures or as to the constitutionality of those procedures. Accordingly, he has failed to state a claim under § 1983, and summary judgment for defendant is appropriate.

In light of the dismissal of plaintiff’s federal claim, the Court will not exercise jurisdiction over the pendent common-law claims. I have reviewed plaintiff’s proposed amended complaint in light of my present holding. Because amending the complaint would be futile, the motion to amend is denied.

For the foregoing reasons, the Clerk of the Court is directed to enter summary judgment for defendant and to dismiss plaintiff’s complaint.

      . The City has a procedure for identifying when copies of Notices and Orders are returned undelivered by the Postal Service. The returned mail is sent to the borough office in which the property that is the subject of the unsafe buildings action is located. When the papers necessary for trial are filed in New York Supreme Court, a copy of the returned envelope is included, thus notifying the Court that the property owner did not receive notice by mail. Affidavit of Philip E. Olin, P.E. ¶¶ 5, 6.