author: SHAPIRO, District Judge.

text:
    Henry BLAIR v. PHILADELPHIA HOUSING AUTHORITY.
    Civ. A. No. 82-2466.
    United States District Court, E.D. Pennsylvania.
    May 22, 1985.

      David M. Still, Philadelphia, Pa., for plaintiff.
    James N. Penny, Jr. and Richard Geschke, Jr., Obermayer, Rebmann, Maxwell & Hippel, Philadelphia, Pa., for defendant.
   FINDINGS OF FACT and CONCLUSIONS OF LAW

SHAPIRO, District Judge.

Plaintiff, Henry Blair, brings this civil rights action against his former employer, the Philadelphia Housing Authority (“PHA”), under §§ 1981 and 1983 of the Civil Rights Act of 1866, as amended, 42 U.S.C. §§ 1981 and 1983. Plaintiff, an adult Black male, claims damages for wrongful termination of employment and failure to rehire because of defendant’s alleged racially discriminatory practices and policies. This matter was heard by the court sitting without a jury. Upon consideration of the evidence and the arguments and submissions of counsel, the court makes the following Findings of Fact and Conclusions of Law.

FINDINGS OF FACT

1. PHA is a corporate and political body, created and operating under the Pennsylvania Housing Authorities Law of May 28, 1937, P.L. 955, as amended 35 P.S. § 1541 et seq.

2. PHA is an employer within the meaning of 42 U.S.C. § 2000e(b); it is engaged in an industry affecting commerce and employs 15 or more persons.

3. Plaintiff was first employed by PHA in 1971 as a laborer.

4. Plaintiff was promoted to the position of maintenance aide in 1975, which position he held until his termination in 1980. However, he was earning mechanics pay. He worked in the Scattered Sites Department at the time of the relevant events.

5. On or about May 14, 1980, plaintiff was with his co-worker, Stanley Spratleyr Their job was to repair water meters in PHA residences. They were not authorized to go into any unit without a work slip (“Service Request”). They entered a non-PHA residence at 1919 North 19th Street, Philadelphia, Pennsylvania for which they did not have a work slip and detached a water meter. The tenant of the residence witnessed the incident and reported it to PHA; the supervisor believed she had told them it was not a PHA unit. Plaintiff claimed he was asked to enter to repair the meter and so took off the meter, but then left it there because it was not a PHA house.

6. Plaintiff consistently said Spratley did not enter the house with him. Blair and Spratley originally admitted to Superintendent Mascantonio the meter was taken from 1919 North 19th Street and sold for scrap but consistently denied removing meters from other units. The credible evidence supports the PHA position that Blair detached and removed the meter without authority, that Spratley was with him but less involved and that Blair replaced the meter probably on May 18 but certainly before May 23, 1980.

7. Plaintiff and co-worker Spratley, both Black, were fired on June 6, 1980 for stealing a water meter from a non-PHA home in order to sell it for scrap.

8. The PHA disciplinary guidelines are set out in the Standard Guide of Disciplinary Penalties, P-2. Suspension or discharge, as determined by the severity of the offense, is the appropriate discipline for destruction, abuse or misuse of PHA property; actual or attempted theft of PHA property; use of PHA authority, equipment, tools, vehicles for personal gain; or intentional misstatement or concealment of material fact in connection with employ-merit, or any investigation, inquiry or other proceeding.

9. PHA employment was governed by the Collective Bargaining Agreement entered into by PHA and Local 332, Building and Construction Trades Council of Philadelphia and Vicinity, of which plaintiff was a member.

10. Plaintiff’s termination was preceded by an investigation by PHA and a grievance hearing held in accordance with the Collective Bargaining Agreement. Plaintiff and his Union representative were present at the hearing and presented evidence.

11. As a result of the evidence presented at the hearing, PHA’s Personnel Director Wiliiam A. Gaughan, sustained plaintiff’s termination.

12. The Collective Bargaining Agreement contained a grievance procedure in paragraph 10© with arbitration the fourth and final step if the grievance were not satisfactorily adjusted; either party to the contract might submit the case to arbitration. Paragraph 18 provided that if any dispute or grievance of an employee covered by the Agreement were submitted to arbitration, the decision of the arbitrator would be final and binding.

13. The Union declined to pursue plaintiff’s grievance to arbitration.

14. On or about February, 1981, plaintiff and his co-worker Spratley each filed charges with the Equal Employment Opportunity Commission (“EEOC”). The charges alleged discriminatory termination on account of race because White employees of PHA accused of similar violations were suspended rather than terminated.

15. The EEOC found that there was no reasonable cause to believe that plaintiff’s termination was the result of discrimination because of his race and on May 13, 1981 issued its statutory notice of plaintiff’s right to sue in federal district court.

16. The EEOC did find reasonable cause to believe there was racial discrimination in Spratley’s ease. As a result of conciliation and settlement with the EEOC, Spratley was later reinstated by PHA; plaintiff was never reinstated.

17. White PHA employees similarly situated to plaintiff were discharged for similar conduct.

18. Disciplinary action was taken by PHA against Mario Salveggi, Danny Damiano, Vincent Latini, and Nicholas DeNicola, all White employees accused of stealing PHA equipment.

19. PHA has consistently terminated non-Black employees who were involved in the theft of PHA materials.

20. Reinstatement of these terminated employees, including Black employee Spratley, resulted only from third-party intervention, either from the Union or the EEOC.

21. Neither the Union nor the EEOC intervened on behalf of Blair.

22. Plaintiff has introduced no evidence that other Black employees have been terminated for racial reasons and has introduced no direct evidence of intentional discrimination by PHA against him.

23. PHA discharged plaintiff because of the water meter incident and did not discharge him on account of his race.

24. On this record, PHA did not engage in a pattern or practice of determining discipline on the basis of race.

25. On June 7, 1982, plaintiff instituted this action in the United States District Court for the Eastern District of Pennsylvania against PHA and five supervisory employees. In his complaint, plaintiff alleged that PHA’s racially discriminatory practices violated: a) Title VII of the Civil Rights Act, 42 U.S.C. § 2000(e); b) 42 U.S.C. §§ 1981 and 1983; and c) 42 U.S.C. § 1985. Count IV of the complaint was a pendent state claim for defamation and intentional interference with contractual relations.

26. The court has dismissed plaintiff’s complaint against the individual employees for failure to serve them properly, granted defendant’s motion for summary judgment as to Counts I and III and transferred Count IV to state court.

DISCUSSION

Plaintiff’s remaining claim is that PHA enforced its disciplinary rules in a racially discriminatory manner, in violation of 42 U.S.C. §§ 1981 and 1983. Section 1981 affords a federal remedy against intentional racial discrimination in making and enforcing contracts and in securing “equal benefit of all laws and proceedings.” 42 U.C.S. § 1981; Jones v. Alfred H. Mayer Co., 392 U.S. 409, 88 S.Ct. 2186, 20 L.Ed.2d 1189 (1968). Since § 1981 can only be violated by purposeful discrimination, plaintiff must prove actual discriminatory intent to establish an employment discrimination claim under § 1981. General Building Contractors v. Pennsylvania, et al., 458 U.S. 375, 102 S.Ct. 3141, 73 L.Ed.2d 835 (1982); Goodman v. Lukens Steel Co., 580 F.Supp. 1114 (E.D.Pa.1984). In many cases, it is rare to find direct evidence of discriminatory intent and purposeful discrimination must instead be inferred from the totality of the circumstances. Washington v. Davis, 426 U.S. 229, 96 S.Ct. 2040, 48 L.Ed.2d 597 (1976). Such factors as departure from normal procedures, history of discriminatory actions, and disparate impact upon a racial minority can be considered as evidence’ of discriminatory intent. Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977); Croker v. Boeing Co., 662 F.2d 975 (3d Cir.1981).

Plaintiff alleges that PHA intentionally discriminated against him and should be held liable under § 1981 for the racially motivated acts of its supervisory employees on a theory of respondeat superior. In Mahone v. Waddle, 564 F.2d 1018 (3d Cir.1977), cert, denied, 438 U.S. 904, 98 S.Ct. 3122, 57 L.Ed.2d 1147 (1978), the Court of Appeals found that allegations of racially motivated misconduct on the part of two Pittsburgh policemen stated a cause of action against the city itself under § 1981. Even though the city then had immunity under § 1983, Monroe v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961), the court held that the unique purpose and history of § 1981 permitted the imposition of respondeat superior under § 1981. The court viewed the broad language of § 1981 and its original purpose of implementing the Thirteenth Amendment’s mandate to remove the vestiges of slavery as evidence of Congressional intent that municipalities be subject to suit under the statute.

In Monell v. Department of Social Services of the City of New York, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978), the Supreme Court, reconsidering municipal immunity under § 1983, overruled Monroe. Monell held that a municipality cannot be held vicariously liable for the actions of its agents under a theory of respondeat superior but can be liable directly under § 1983 for constitutional deprivations inflicted upon private individuals pursuant to an official governmental custom, policy or practice of the governmental unit itself.

Although Mahone was decided prior to Monell, the vitality of Mahone’s holding that municipalities are vicariously liable for intentionally discriminatory acts of their employees, under § 1981 was not impaired by the Supreme Court’s decision in Monell. Miller v. Bank of America, 600 F.2d 211 (9th Cir.1979); Jones v. City of Philadelphia, 491 F.Supp. 284 (E.D.Pa. 1980); Pennsylvania v. Local 542, International Union of Operating Engineers, 469 F.Supp. 329 (E.D.Pa.1978); Preston v. City of York, 452 F.Supp. 52 (M.D.Pa. 1978). In General Building Contractors Assoc, v. Pennsylvania, et al., 458 U.S. 375, 102 S.Ct. 3141, 71 L.Ed.2d 835 (1982), the Supreme Court reaffirmed that § 1981 requires purposeful discrimination and assumed without deciding that respondeat superior is generally applicable to' suits under § 1981 where there exists an agency or employment relationship. This court accepts that PHA as a body “corporate and politic” can be vicariously liable under § 1981, but finds that plaintiff in this case has failed to prove his right to recover under § 1981.

The burden of proof for employment discrimination claims brought under § 1981 is similar to that for claims under Title VII, Lewis v. University of Pittsburgh, 725 F.2d 910 (3d Cir.1983), except plaintiff must establish discriminatory intent in his prima facie case (under Title VII, plaintiff need only show a discriminatory outcome or impact). Once plaintiff has made a prima facie case, the burden shifts to defendant to articulate a non-discriminatory reason for the actions complained of; if so articulated, then plaintiff must show that defendant’s reason is pretextual. Texas Department of Community Affairs v. Burdine, 450 U.S. 248,101 S.Ct. 1089, 67 L.Ed.2d 207 (1981); Goodman v. Lukens Steel Co., 580 F.Supp. 1114 (E.D.Pa.1984). Although the burden of production shifts from plaintiff to defendant and back again, the burden of persuading the trier of fact that defendant intentionally discriminated remains with the plaintiff throughout.

Plaintiff sought to establish a prima facie case of intentional racial discrimination by showing that he was Black, his employer terminated him for stealing a water meter, and he was treated more harshly than White employees accused of the same violation. But plaintiff failed to prove both that White employees who committed violations similar to plaintiff’s were disciplined less severely and that his own termination was due to his race.

In an attempt to prove that he was treated differently, plaintiff claimed that seven White PHA employees were caught stealing PHA equipment on prior occasions and that they were not terminated as was plaintiff. Plaintiff submitted documentary evidence regarding four of the seven disciplinary actions; these involved four White male PHA employees: Vincent Latini, Mario Salveggi, Nicholas DeNicola, and Daniel Damiano. The evidence of the remaining three incidents was neither supported by exhibits nor convincing.

Two eyewitnesses had observed Salveggi and Latini and reported questionable activities to PHA. Upon investigation, PHA found that materials were missing and Salveggi and Latini could not account for the missing equipment. PHA fired them for theft of its materials. The Union proceeded to arbitration with Salveggi’s grievance which resulted in an award in favor of Salveggi; he was later reinstated without back pay in accordance with the award. (Ex. D-5). The Union did not pursue the grievance procedure in Latini’s case and he was not rehired. (Ex. D-6).

In 1980, PHA investigated alleged irregularities in the Scattered Site Maintenance operation. The investigation revealed discrepancies between the amount of PHA materials withdrawn by Damiano and DeNicola for use and the amount of materials actually installed; as a result, Damiano and DeNicola were fired. (Ex. D-27). The Union advised PHA of its intent to submit the dismissal of both Damiano and DeNicola to arbitration. (Ex. D-8). There were no witnesses in the cases and PHA felt the evidence against the employees was equivocal, so PHA agreed to a settlement allowing both employees to return to work without loss of seniority but with transfer and five-week suspensions without pay. (Ex. P-10, D-ll).

PHA had a strong case against Blair. The tenant of the apartment saw him enter the non-PHA unit and disconnect the water meter and Blair admitted to Superintendent Richard Masciantonio and Henry Watkins of the Security Division that he took a water meter from 1919 North 19th Street. Furthermore, plaintiff had a history of violating PHA rules. In 1977 and again in 1978, plaintiff had been advised by his manager that he was abusing sick leave privileges. (Ex. D-24 and D-25).

Stanley Spratley, also a Black employee, was fired for the same incident as plaintiff. The EEOC found reasonable cause to believe there was racial discrimination as to him and he was later rehired as a result of its conciliation efforts. The fact that the EEOC found no reasonable cause to believe there was discrimination, racial or otherwise, against Blair is entitled to some probative effect. Chandler v. Roudebush, 425 U.S. 840, 863 n. 39, 96 S.Ct. 1949, 1961 n. 39, 48 L.Ed.2d 416 (1976).

Like Latini, Salveggi, Damiano, DeNicola and Spratley, plaintiff was fired for theft of materials. From the evidence, it is clear that PHA terminated all employees who committed offenses similar to plaintiffs. There is simply no evidence that PHA condoned theft by White employees. Employees have been reinstated only because of third-party intervention, as a result of arbitration, instituted by the Union under the Collective Bargaining Agreement, or EEOC intercession on behalf of the wronged employee. In plaintiffs case, neither the Union nor the EEOC interceded on his behalf so plaintiffs termination was undisturbed. Race played no part in PHA’s firing and rehiring of employees. ' Both Black and White employees were terminated for theft; both Black and White employees were reinstated only on the intervention of a third-party.

On the record as a whole, plaintiff has failed to prove that defendant intentionally disciplined him in a discriminatory manner because he was Black. Neither has plaintiff shown circumstances from which the court could infer discriminatory motive from differences in the treatment of White and Black employees.

Plaintiff might have had a complaint against his Union because of the Union’s perfunctory handling of the grievance or failure to proceed to arbitration on behalf of plaintiff. If this were due to racial discrimination or conduct otherwise arbitrary and capricious, plaintiff could have brought an action against the Union for breach of its duty of fair representation in mishandling his grievance or failing to take it to arbitration. Vaca v. Sipes, 386 U.S. 171, 186, 87 S.Ct. 903, 914, 17 L.Ed.2d 842 (1967). From the evidence it would appear that the Union did not represent Black employees as effectively as White employees. (For example, in addition to verbal evidence the documentary evidence suggests a disparity between the Union’s failure to require arbitration of Blair’s grievance in the spring of 1980 with its more vigorous defense of the conduct of Damiano and DeNicola in the summer of 1980 (Ex. P-10) and its pursuit to arbitration of the claim of Salveggi that same fall (Ex. P-5, P-7, D-5); cf. Latini who was fired, did not arbitrate and was not reinstated.) If an action against the Union had been timely filed, such evidence might have supported recovery of damages against the Union for actions discriminating against a Black member. But the six months limitation period in § 10(b) of the National Labor Relations Act, 29 U.S.C. § 160(b), governs claims against the Union and plaintiff was already barred from proceeding against the Union when this action was filed. DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983).

Plaintiff also asserts a claim against PHA under § 1983. In order to maintain a valid 42 U.S.C. § 1983 action, two prerequisites must be alleged and proved. First, the conduct complained of must have been committed by a person acting under color of state law. Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185 (1978); Parks v. “Mr. Ford”, 556 F.2d 132 (3d Cir.1977). Second, the conduct must have deprived a person of rights, privileges or immunities secured by the Constitution or laws of the United States. Maine v. Thiboutot, 448 U.S. 1, 100 S.Ct. 2502, 65 L.Ed.2d 555 (1980); Parratt v. Taylor, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981). Where the defendant is a governmental entity, plaintiff must prove that his rights were denied by a custom, pattern or practice of racially discriminatory treatment by defendant.

The first prerequisite was met because we have already determined that PHA is a state agency. However, plaintiff has failed to prove any pattern, policy or custom of discrimination for reasons of race under § 1983. The only Black employee mentioned in the case, aside from plaintiff, was terminated and reinstated in the same manner as White employees. Thus, plaintiff’s only evidence of PHA’s discriminatory custom was his own termination. One incident is insufficient to establish a custom, pattern or practice. Plaintiff has failed to sustain his burden of proof as to § 1983.

To the extent that findings of fact are made in this discussion which are not enumerated under the section so denominated, they are to be considered as if they were.

CONCLUSIONS OF LAW

1. This court has jurisdiction over the parties and subject matter of this action, pursuant to 28 U.S.C. § 1331.

2. PHA is an employer within the meaning of 42 U.S.C. § 2000e(b).

3. Plaintiff is a Black man; his termination by PHA and its failure to rehire him were “adverse.” But plaintiff failed to prove that the adverse action occurred because of his race.

4. Plaintiff has carried his burden of proving neither intentional racial discrimination nor a racially discriminatory pattern, practice or policy of defendant by a preponderance of the evidence. Thus, his causes of action under both 42 U.S.C. §§ 1981 and 1983 have not been sustained.

5. Judgment for defendant will be entered accordingly.


source: Caselaw Access Project

author: EDWARD WEINFELD, District Judge.

license: Public Domain

text:
    MARINE TRANSPORT LINES, INC., Plaintiff, v. INTERNATIONAL ORGANIZATION OF MASTERS; MATES & PILOTS, Defendant.
    No. 85 Civ. 1360 (EW).
    United States District Court, S.D. New York.
    May 22, 1985.

      Morgan, Lewis & Bockius, Washington, D.C., Morgan Lewis & Bockius, New York City, for plaintiff; Thomas K. Wotring, Eric A. Sisco, D. Michael Underhill, John F. Lauro, of counsel.
    Burton M. Epstein, e/o Steinberg & Tugendrajch, P.C., Vladeck, Waldman, Elias & Engelhard, P.C., New York City, Bredhoff & Kaiser, Washington, D.C., for defendant; Seymour M. Waldman, Daniel Engelstein, Michael H. Gottesman, George H. Cohen, Robert M. Weinberg, James D. Holzhauer, of counsel.
   OPINION

EDWARD WEINFELD, District Judge.

Plaintiff, Marine Transport Lines, Inc. (“Marine Transport” or “the Employer”), instituted this action for a declaratory judgment that its collective bargaining agreement with defendant, International Organization of Masters, Mates & Pilots, AFL-CIO (“the Union”), terminated at midnight June 15, 1984. The central issue raised by plaintiffs claim is the effect of a letter sent by the Union to Marine Transport on April 8, 1984. The Employer claims that, pursuant to the terms of its agreement with the Union, the April 8 letter prevented the automatic renewal of the collective bargaining agreement, resulting in its termination on June 15, 1984. The Union contends that the letter had no effect upon the automatic renewal provision and, hence, the collective bargaining agreement continued in full force and effect after June 15.

The Union interposed three counterclaims addressed to the central question whether or not the agreement terminated on June 15. However, in its fourth counterclaim, the Union alleges a separate claim that the Employer breached the collective bargaining agreement both before and after June 15. Generally, this counterclaim alleges that Marine Transport engaged in conduct violating an express provision of that agreement which prohibits the Employer from influencing members to withdraw from the Union, interfering with internal Union affairs, and undermining the status of the Union as sole bargaining representative for the Employer’s licensed deck officers. More specifically, it is alleged that prior to June 15, Marine Transport “prepared a letter to all ... its ... officers announcing that it would not” renew the collective bargaining agreement, offering reduced wages and terms and conditions of employment, and encouraging Union members to withdraw from the Union by, among other things, promising to pay any fines imposed by the Union for withdrawal. Defendant alleges that such conduct violated not only Section 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185, but, as alleged in its amended counterclaim, also violated state tort and contract law.

Marine Transport now moves to dismiss the Union’s fourth counterclaim upon the ground that the Union has not exhausted its contractual remedies. The Employer contends that the Union has failed to invoke the arbitral process provided for in the collective bargaining agreement for resolution of claimed breaches of that agreement occurring prior to June 15. However, as for acts alleged in the fourth counterclaim to have occurred after June 15, the Employer, based upon its contention that no agreement existed after that date, further argues it is not required to arbitrate any grievance arising after June 15.

The Union concedes that prior to June 15 it was bound by the terms of the collective bargaining agreement then in force, including its arbitration provisions, and that the claimed breach of the collective bargaining agreement by Marine Transport prior to June 15, as contained in its fourth counterclaim, is subject to arbitration. However, in resisting the Employer’s motion to dismiss, the Union contends that Marine Transport has waived its right to insist upon arbitration by initiating this litigation as a means of resolving their dispute as to the contract termination date — a dispute which the Union contends is arbitrable.

DISCUSSION

Given “the importance of arbitration as an instrument of federal policy” for resolving labor disputes, waiver of the right to invoke arbitral processes is not to be “lightly inferred.” Defendant bears a “heavy burden” in seeking a determination that its opponent has waived a conceded right to arbitration. It must show not only that Marine Transport’s resort to the courts evidences an intent to relinquish the right to arbitration, but also that such conduct has been to its prejudice.

Upon the facts presented, defendant has not borne its burden to show a waiver. Marine Transport’s resort to the courts does not clearly evidence an intent to relinquish its contractual right to arbitrate claimed breaches of the collective bargaining agreement arising prior to June 15 during the life of the agreement. Marine Transport contends, with some support which the defendant disputes, that the commencement of this declaratory judgment action is not inconsistent with its insistence on arbitration of the alleged breaches prior to June 15, since the issue whether the April 1984 letter effected a termination of the existing agreement is a legal issue to be decided by the courts, not arbitrators, and that this litigation was commenced accordingly. However, even assuming, as the Union contends, that the Employer’s termination claim is one to be resolved by the arbitrator and not by the courts, plaintiff’s resort to the courts does not clearly evidence an intent to relinquish the right to arbitrate defendant’s claims of breaches that are alleged to have occurred prior to June 15. The Union’s waiver argument fails to recognize that plaintiff’s termination claim does not put into dispute either the validity of the collective bargaining agreement prior to June 15, or that any issues arising thereunder are subject to the arbitral process. Plaintiff seeks a declaration that, after June 15, the agreement was no longer in force; it concedes, as does the defendant, that prior to that date the agreement remained in full force and effect, and that its arbitration provision must be honored for any claimed breaches arising thereunder. Since the initiation of this litigation is consistent with the existence of the collective bargaining agreement prior to June 15, it is equally consistent with plaintiff’s reliance on the arbitration provisions of that agreement as to disputes arising prior to that date.

Nevertheless, the Union insists that by the commencement of this action, the Employer has waived its right to arbitration since it brought suit and, then, changed its position and sought an arbitral forum. However, the Employer has never changed its position with respect to its own claim. Rather, upon the assertion of defendant’s counterclaims, it has made the instant motion seeking to enforce its conceded right under the contract to arbitrate disputes arising prior to June 15. It is important to note that with respect to the Union’s counterclaims, plaintiff is in the position of a defendant. To adopt the Union’s argument here would require the Court to find that prior to the time the fourth counterclaim had even been asserted, plaintiff waived its right to seek arbitration, though it has never disputed its contractual obligation to do so.

.Even assuming that “[a]s an abstract exercise in logic it may appear ... inconsistent for a party to participate in a lawsuit ... and later to ask the court [to order arbitration] ... the law is clear that such participation, standing alone, does not constitute a waiver.” Prejudice must be shown. However, defendant has not met its “heavy burden” to show prejudice. In the face of defendant’s counterclaims, plaintiff did not delay. It filed a reply asserting its contention that defendant was required to exhaust contractual remedies and proceeded to bring on this motion in timely fashion. Moreover, defendant has not offered any basis upon which this Court could conclude that there has been substantial litigation of either parties’ claims which even implicitly may constitute a waiver by plaintiff of its- right to resort to arbitration as to claims arising prior to June 15, 1984. The only judicial consideration of this case appears to have occurred in connection with the Union’s successful motion to transfer the litigation from the Eastern District of Pennsylvania to this Court.

Finally, any prejudice defendant claims to have resulted from its “unwilling” appearance in this action could have been avoided if defendant were to have enforced what it now claims to have been its right to bring plaintiff’s termination claim to arbitration. Instead, defendant ignored any claimed breach by plaintiff of the arbitration provisions of the collective bargaining agreement and, in fact, affirmatively invoked the resources of the Court in asserting counterclaims. Having ignored its alleged right to have plaintiff’s claim arbi-. trated, the Union may not now rely upon the purported arbitrability of that claim to justify a finding of waiver with respect to the separate claim it initiated and it now seeks to have adjudicated rather than sent to arbitration.

Accordingly, the Court finds that plaintiff has not waived its right to insist that defendant exhaust its contractual remedies with respect to that portion of defendant’s fourth counterclaim based upon the Employer’s alleged breach of the agreement prior to June 15, 1984. However, defendant contends that, even if plaintiff has not waived its right to arbitration, the amended counterclaims based on state law must remain before the Court, for no agreement was made to arbitrate such claims. Plaintiff responds that defendant’s state law claim for intentional interference by the Employer with the contractual relations between the Union and its members is merely derivative of its basic contract claim and is therefore preempted by Section 301 of the LMRA.

In response to plaintiff’s motion to dismiss, the Union amended its fourth counterclaim for the purpose of adding a claim based bn state tort law. The amendment, however, simply attaches a different legal label to what is clearly a claim for breach of the collective bargaining agreement, a claim cognizable under Section 301 of the LMRA and undoubtedly governed by federal law. No new conduct has been alleged in support of the tort claim. Only conclusory allegations that the same conduct allegedly breaching the collective bargaining agreement also constitutes a state tort have been added.

The collective bargaining agreement provision the Union relies upon in support of its Section 301 claim prohibits the Employer from engaging in activities or assisting or encouraging others to engage in activities calculated to undermine the status of the Union as sole bargaining representative. It also prohibits the Employer from even attempting to influence or persuade any Union member to withdraw or to interfere with internal Union affairs. If, as alleged in the counterclaim, the Employer engaged in the proscribed conduct, it was a clear breach of the contract. The fact that such conduct may give rise to a separate tort under state law does not serve to evade preemption of the claim under federal law. Defendant’s “tortious interference” allegations add nothing to its basic factual claim.

In such circumstances, the Court finds that defendant’s tortious interference claim is preempted by federal law. To permit the defendant to avoid grievance and arbitration procedures merely by attaching a tort label to an arbitrable contract dispute would, as the Supreme Court recently stated in Allis-Chalmers Corp. v. Lueck, “eviscerate a central tenet of federal labor-contract law.” It was precisely the need to maintain the effectiveness of arbitration that prompted the Court in Lueck to find that a derivative tort claim was preempted by federal law under Section 301 where the collective bargaining agreement imposed the same rights and obligations as would the derivative tort. Similarly, here, the Court finds that to allow defendant to proceed with “this particular ... tort, as applied, would frustrate the federal labor-contract scheme established in § 301,” and accordingly finds it is preempted by federal law.

To the extent that defendant’s fourth counterclaim is based on conduct arising during the conceded life of the agreement, i.e., prior to June 15, 1984, it is dismissed for failure to exhaust contractual remedies. However, to the extent that it is based on conduct arising after that date, it will be stayed pending judicial determination whether the collective bargaining agreement remained in force after June 15, 1984. This will serve the interests of the parties, saving them the expense and time involved in litigating in two different forums, and likewise conserve judicial and legal resources. If plaintiff fails to prevail on its declaratory judgment claim, so that the contract was in existence after June 15, 1984, then all claims are subject to arbitration; if plaintiff prevails, then the claims after June 15, 1984 are beyond the reach of arbitration.

So ordered.

      . The essence of this motion, as the parties appear to agree, is whether plaintiff has waived its right to rely upon the provisions of the collective bargaining agreement setting forth the grievance procedures for resolving disputes between the parties. To the extent that defendant has argued other grounds for excusing its failure to "exhaust” contractual grievance procedures, the Court finds them insufficient to justify allowing defendant to evade its contractual obligation to arbitrate.

      . Boys Markets, Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 243, 90 S.Ct. 1583, 1588, 26 L.Ed.2d 199 (1970); see Drake Bakeries, Inc. v. Local 50, 370 U.S. 254, 260-63, 82 S.Ct. 1346, 1350-52, 8 L.Ed.2d 474 (1962).

      . Sweater Bee by Banff, Ltd. v. Manhattan Indus., Inc., 754 F.2d 457, 461 (2d Cir.1985) (quoting Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2d Cir.1968)).

      . Sweater Bee by Banff, Ltd. v. Manhattan Indus., Inc., 754 F.2d 457, 466 (2d Cir.1985).

      . Janmort Leasing, Inc. v. Econo-Car Int’l, Inc., 475 F.Supp. 1282, 1290 (E.D.N.Y.1979) ("[t]o constitute a waiver, a party’s resort to the courts must evidence an intent to relinquish the right to arbitration") (quoting Auxiliary Power Corp. v. Eckhardt & Co., 266 F.Supp. 1020, 1022 (S.D. N.Y.1966)); see also Luckenbach Overseas Corp. v. Curran, 398 F.2d 403, 405 n. 3 (2d Cir.1968).

      . Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2d Cir.1968); accord Sweater Bee by Banff v. Manhattan Indus., Inc., 754 F.2d 457, 461 (2d Cir.1985); see ITT World Communications, Inc. v. Communications Workers of America, 422 F.2d 77, 82-83 (2d Cir.1970) (Carcich rule applies to labor as well as commercial disputes).

      . Plaintiff has consistently maintained that under a decision in the Eastern District of Pennsylvania, where it brought its action, Pullman, Inc. v. International Bhd. of Boilermakers, 354 F.Supp. 496 (E.D.Pa.1972), the question whether a notice to modify a collective bargaining agreement is sufficient to terminate the collective bargaining agreement is a question for the court, not the arbitrator. However, defendant has cited to contrary authority, both in the Third Circuit, see Wilkes-Barre Publishing Co. v. Newspaper Guild of Wilkes-Barre, Local 120, 647 F.2d 372, 382-83 (3rd Cir.1981), cert, denied, 454 U.S. 1143, 102 S.Ct. 1003, 71 L.Ed.2d 295 (1982); Becker Autoradio U.S.A., Inc. v. Becker Autoradiowerk GmbH, 585 F.2d 39, 46 (3rd Cir.1978), and in our Court of Appeals, see, e.g., Rochdale Village, Inc. v. Public Service Employees Union, Local No. 80, 605 F.2d 1290, 1295-96 (2d Cir. 1979).

      . See Kulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978, 989 (2d Cir.1942) (no repudiation or waiver of right to arbitration where defendant had consistently claimed it was not bound by the charter party upon which plaintiff based its claims and then, upon the eve of trial, sought to amend its answer to seek a stay pending arbitration); see also Drake Bakeries, Inc. v. Local 50, 370 U.S. 254, 263 n. 10, 82 S.Ct. 1346, 1351 n. 10, 8 L.Ed.2d 474 (1962).

      . Cf. Laborers Health & Welfare Trust Fund v. Kaufman & Broad of Northern California, Inc., 707 F.2d 412, 417 (9th Cir.1983) (change in position by plaintiff as to the proper forum for its own claims); Merrill Lynch Pierce Fenner & Smith, Inc. v. Lecopulos, 553 F.2d 842, 845 (2d Cir.1977) (same); Morales Rivera v. Sea Land of Puerto Rico, Inc., 418 F.2d 725, 726 (1st Cir. 1969) (same); Chatham Shipping Co. v. Fertex Steamship Corp., 352 F.2d 291 (2d Cir.1965) (same).

      . See Reid Burton Construction, Inc. v. Carpenters Dist. Council of Southern Colorado, 614 F.2d 698, 702 (10th Cir.) (relevant factors include whether counterclaim filed), cert, denied, 449 U.S. 824, 101 S.Ct. 85, 66 L.Ed.2d 27 (1980); see also Kulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978, 989 (2d Cir.1942) (discussing Radiator Specialty Co. v. Cannon Mills, 97 F.2d 318 (4th Cir.1938)).

      . Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2d Cir.1968).

      . Id.; accord Sweater Bee by Banff, Ltd. v. Manhattan Indus., Inc., 754 F.2d 457, 461 (2d Cir.1985); see American Broadcasting Companies, Inc. v. Ali, 434 F.Supp. 1108, 1112 (S.D.N. Y.), aff'd without opinion, 573 F.2d 1287 (2d Cir.1977).

      . The Union filed an answer to Marine Transport’s complaint, accompanied by four counterclaims, on December 6, 1984. On December 31, Marine Transport replied to the counterclaims, explicitly asserting an affirmative defense that the Union had not exhausted its contractual remedies. On January 2, 1985, the Union’s motion to transfer the action was granted. On January 9, 1985, Marine Transport filed this motion to dismiss the Union’s fourth counterclaim. Defendant’s Memorandum in Opposition at 1; Plaintiff’s Supplemental Memorandum in Support at 2.

      . Cf. Sweater Bee by Banff, Ltd. v. Manhattan Indus., Inc., 754 F.2d 457 (2d Cir.1985) (no waiver where arbitration sought two years after complaint filed and after motion to dismiss partly granted); Midwest Window Systems, Inc. v. Amcor Indus., Inc., 630 F.2d 535, 537 (7th Cir.1980) (waiver where party seeking arbitration brought related claim to judgment); Gutor Int'l AG v. Raymond Packer Co., 493 F.2d 938, 945 (1st Cir.1974) (waiver as to defendant’s counterclaims; plaintiff already moved for summary judgment); Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402 (2d Cir.1959), cert, dismissed, 364 U.S. 801, 81 S.Ct. 27, 5 L.Ed.2d 37 (1960) (no waiver where motion for stay not made until nine months after right to arbitration asserted in answer); Kulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978 (2d Cir.1942) (no waiver where arbitration question first raised after pretrial order filed and case on ready trial calendar).

      . Defendant’s fourth counterclaim also purports to state a claim for violation of state contract law. However, it is well-established that any claim for breach of the collective bargaining agreement is governed by federal law. See Local 174 v. Lucas Flour Co., 369 U.S. 95, 82 S.Ct. 571, 7 L.Ed.2d 593 (1962); Avco Corp. v. Aero Lodge No. 735, 376 F.2d 337, 340 (6th Cir.1967), affd, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968); Olguin v. Inspiration Consol. Copper Co., 740 F.2d 1468, 1474 (9th Cir. 1984). Thus, while the Court's discussion focuses on defendant’s tortious interference claim, its resolution of plaintiff’s motion with respect to that claim is equally applicable to any purported claim based on state contract law that plaintiff breached the collective bargaining agreement prior to June 15, 1984.

      . See Olguin v. Inspiration Consol. Copper Co., 740 F.2d 1468, 1474 (9th Cir.1984) (“The agreement provides the same or greater protection [as] state tort law"); Alameda Room, Inc. v. Pitta, 538 F.Supp. 1072, 1076 (S.D.N.Y.1982) (state law claim preempted where it “could have” been commenced on a federal law theory); Gilliard v. New York Public Library System, 597 F.Supp. 1069, 1079-80 (S.D.N.Y.1984) (tortious interference claim preempted).

      . -U.S.-, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985).

      . Id. at-, 105 S.Ct. at 1914; see id. at-, 105 S.Ct. at 1916 (“The requirements of § 301 as understood in Lucas Flour can not vary with the name appended to a particular cause of action").

      . See id. at---, 105 S.Ct. at 1912-16.

      . Id. at-, 105 S.Ct. at 1908.

      . See id. at-, 105 S.Ct. at 1916 ("This complaint should have been dismissed for failure to make use of the grievance procedure established in the collective-bargaining agreement ...”); Republic Steel Corp. v. Maddox, 379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965); see also Magnuson v. Burlington Northern, Inc., 576 F.2d 1367, 1369 (9th Cir.), cert, denied, 439 U.S. 930, 99 S.Ct. 318, 58 L.Ed.2d 323 (1978); Dinger v. Anchor Motor Freight, Inc., 501 F.Supp. 64, 71-72 (S.D.N.Y.1980).


author: RICHARD L. WILLIAMS, District Judge.

text:
    John A. FAIRCHILD, Plaintiff, v. John F. LEHMAN, Jr., Secretary of the Navy, et al., Defendants.
    Civ. A. No. 83-926-A.
    United States District Court, E.D. Virginia, Alexandria Division.
    May 22, 1985.

      Ronald L. Bub, Saul & Barclay, Fairfax, Va., Thomas B. Kenworthy, Morgan, Lewis & Bockius, Philadelphia, Pa., for plaintiff.

      Dennis Szybala, Asst. U.S. Atty., Alexandria, Va., for defendants.
   MEMORANDUM OPINION

RICHARD L. WILLIAMS, District Judge.

This matter comes before the Court on plaintiff’s and defendants’ cross motions for summary judgment. At issue is a decision by the Board of Corrections of Navy Records [BCNR], which upheld plaintiff’s discharge from the United States Marine Corps under less than honorable conditions. No facts are in dispute. Based on the reasons stated below, the Court reverses the BCNR decision, vacates plaintiff’s discharge and nonjudicial punishment, and remands the case to the Marine Corps for further proceedings consistent with this opinion.

I. FACTS

Plaintiff, John A. Fairchild, initially enlisted in the U.S. Marine Corps on September 28, 1978 for a period of four years. During his first term, Fairchild became a qualified air traffic controller with a Military Occupation Specialty [MOS] 7312. On September 29, 1981, plaintiff reenlisted in the Corps for five years, receiving a selective reimbursement bonus based on his MOS and reenlistment.

On April 28, 1983, plaintiff was suspected of off duty use of marijuana. Based on a positive urinalysis, on June 1, 1983, he admitted marijuana use and received nonjudicial punishment [NJP]. For minor offenses, military personnel may waive their right to a court martial proceeding and receive NJP from their commanding officer. See Article 15, Uniform Code of Military Justice, 10 U.S.C. § 815. Plaintiff’s NJP included a reduction in rank and a forfeiture of $854.00, which was the maximum penalty he could receive. His appeal of the NJP was denied.

Subsequent to his NJP, plaintiff received notice that his commanding officer recommended administrative discharge for misconduct due to drug abuse. In addition, the Marine Corps initiated an action to recoup the unearned portion of plaintiff’s reenlistment bonus. As a result, plaintiff did not receive basic pay beginning August 15, 1983. To remedy this situation, he filed both an application for redress of grievances under Article 138, Uniform Code of Military Justice, and a complaint in this Court. The Marine Corps granted his application for redress on September 21, 1983 and paid the amount due through September 15, 1983.

The administrative discharge board considered plaintiff’s case on August 26, 1983. With counsel, plaintiff attended the hearing. Based on the evidence submitted by both plaintiff and the Marine Corps, the board recommended discharge under less than honorable conditions. The Marine Corps voided plaintiff’s MOS on September 15, 1983 and, on September 29, 1983, the Navy discharged plaintiff from the Marine Corps under less than honorable conditions.

Upon discharge, the Navy withheld plaintiff’s final pay and allowances as an offset to the unearned portion of his reenlistment bonus. Plaintiff then filed an amended complaint in this Court seeking his final pay. In response, defendants filed a counterclaim seeking partial recoupment of the previously paid bonus. The case was stayed by agreement of the parties in order to allow plaintiff to petition the BCNR to review his NJP and discharge for error or injustice. See 10 U.S.C. § 1552(a); 32 C.F.R. § 723.2 (1979).

On September 11, 1984, the BCNR denied plaintiff’s request for relief. Jurisdiction to review the BCNR decision is based on 28 U.S.C. §§ 1346(a)(2) and 1361.

II. DISCUSSION

It is well established that a court plays a limited role when reviewing a BCNR decision. The actions and procedures of a military correction board are subject to judicial reversal only if they are arbitrary, capricious, unsupported by substantial evidence or erroneous in law. See Istivan v. United States, 689 F.2d 1034, 231 Ct.Cl. 671 (1983); Neal v. Secretary of the Navy, 639 F.2d 1029 (3rd Cir.1981); Peppers v. U.S. Army, 479 F.2d 79 (4th Cir.1973). Yet even under this deferential standard, a court may determine that the military has acted outside its sphere of authority. In this case, two of the 24 errors alleged by plaintiff demand a reversal of the BCNR decision.

1. The BCNR initially erred when it upheld the validity of plaintiff’s NJP. The correction board determined that NJP does not involve due process considerations and, even if it does, plaintiff was not misadvised as to the consequences of waiving his right to go to trial. These findings, however, lack support.

In United States v. Booker, 5 M.J. 238 (C.M.A.1977), the Court of Military Appeals held that a prior NJP could not be introduced into evidence at a later court martial proceeding if the defendant was not informed, by a legally trained person, of the consequences of proceeding with NJP rather than by trial. The explicit basis for this holding was that due process considerations attach to NJP. Id. at 243. In plaintiff’s case, the BCNR failed to adhere to the Booker decision. It distinguished the case by focusing on the evidentiary point rather than on the explicit holding that NJP involves due process. A correction board of military records must follow an on point decision by the Court of Military Appeals. Owings v. Secretary of U.S. Air Force, 298 F.Supp. 849 (D.D.C. 1969), rev’d. on other grds. 447 F.2d 1245 (D.C.Cir.1971), cert, denied 406 U.S. 926, 92 S.Ct. 1799, 32 L.Ed.2d 162, rehearing denied 409 U.S. 901, 93 S.Ct. 185, 34 L.Ed.2d 162. Because the BCNR failed to follow precedent, its decision was arbitrary and capricious.

Furthermore, the BCNR erred when it went on to consider plaintiff’s allegation of a due process violation. The BCNR found that no due process violation occurred at NJP because plaintiff was not misinformed as to the consequences of waiving his right to go to trial. This finding, however, is not supported by substantial evidence in the record.

By affidavit presented to the BCNR, plaintiff stated that at the time of his alleged marijuana offense he was told to confer with military defense counsel. He did so, and was advised that if he waived his right to go to trial he could not be subject to a less than honorable administrative discharge. Plaintiff stated that he relied on this misadvice and proceeded with NJP.

The BCNR, however, rejected plaintiff’s affidavit in favor of a letter submitted by Captain M.R. Osborn, the military defense counsel whom plaintiff consulted. In an unsworn statement, which was solicited by the BCNR unbeknownst to plaintiff, Captain Osborn could only assume that he advised plaintiff correctly. The captain did not remember counseling plaintiff. Moreover, he could not recall whether he told plaintiff of an important, recent change in Marine Corps regulation allowing a less than honorable discharge based on only one drug related NJP — a regulation change very pertinent to plaintiff’s case.

Given its very limited nature, Captain Osborn’s letter deserves little if any weight on the issue of whether he correctly advised plaintiff of the consequences of proceeding with NJP. Even under the deferential standard of review, the BCNR erred by upholding plaintiff’s NJP on the basis of this unsworn statement. The captain’s letter is not substantial enough evidence to support a finding that plaintiff’s NJP did not violate due process, especially in light of plaintiff’s own affidavit.

2. The second error by the BCNR that demands a reversal of its decision involves the adequacy of the notice plaintiff received prior to his administrative discharge hearing. The Marine Corps Separation and Retirement Manual (MARCORSEPMAN) regulates administrative discharge proceedings. In paragraph 6304.2, it requires that a servicemember receive notice of “all proposed reasons of separation.” The BCNR erred when it determined that plaintiff received such notice.

Both parties agree that plaintiff was notified that the sole basis for his discharge proceeding was misconduct due to drug abuse. However, one day prior to the hearing, plaintiffs commanding officer admitted at deposition that his “recommendation for discharge is based on that pattern ... [or] ... series of minor disciplinary infractions including the NJP for drugs.” A pattern of infractions and NJPs is a valid basis for administrative discharge. Plaintiff, however, did not receive notice of this proposed reason for separation.

Despite the commanding officer’s admission, the BCNR concluded that the Marine Corps did not violate its own regulation by notifying plaintiff that drug abuse was the sole proposed basis for discharge. A servicemember’s entire military record, including prior infractions, may be admissible before an administrative discharge board. Moreover, in plaintiff’s case, drug abuse may be a more substantial basis for imposing separation. Yet even if these assumptions are true, neither of them entitles the Marine Corps to ignore its own regulation. MARCORSEPMAN paragraph 6304.2 requires that notice be given of all proposed reasons for separation. Plaintiff’s commanding officer admitted a second basis for discharge, which plaintiff was not made aware of. The Marine Corps violated its own procedure. The BCNR lacked substantial evidence to conclude otherwise.

Furthermore, plaintiff’s lack of notice demands a reversal of the BCNR decision because it was not harmless error. Informing a servicemember of the proposed reasons for discharge is an important due process requirement. It gives that servicemember an opportunity to adequately prepare his defense. In this case, plaintiff received notice of the second proposed basis for separation only one day prior to his administrative discharge hearing. He was not given an adequate opportunity to prepare a defense.

Based on the two errors discussed above, the Court reverses the BCNR’s decision and vacates plaintiff’s NJP and administrative discharge under less than honorable conditions. Furthermore, the Court finds that none of the other 22 errors alleged by plaintiff demand a reversal of the BCNR decision. The majority of plaintiff’s arguments are misplaced. Only three deserve brief comment. The admission of exhibits 9 and 10 by the administrative discharge board was harmless error, if error at all, given the fact that the board allowed plaintiff to submit evidence from his prior enlistment. This is especially true if one of the proposed bases for discharge was a pattern of infractions. In addition, the Marine Corps was neither arbitrary nor capricious when it applied the May 1983 MARCORSEPMAN provisions to plaintiff’s case. The new provisions were in effect when the Corps received the first reliable evidence in support of plaintiff’s drug abuse (his urinalysis), as well as being in effect at the time of plaintiff’s NJP and discharge hearing. Finally, although the BCNR’s findings of fact were quite sparse, the board adequately complied with MARCORSEPMAN paragraph 6319 and the Administrative Procedure Act, 5 U.S.C. § 557(c). See Neal supra.


author: MacMAHON, District Judge.

text:
    MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, Plaintiff, v. Wilma Joyce RAJCHER, Wilma Joyce Rajcher M.D., Inc., Jarnel Financial Services, Ltd., Richard D. Fritz and Robert L. Boynton, Defendants.
    No. 84 Civ. 4044 (LFM).
    United States District Court, S.D. New York.
    May 22, 1985.

      Robert L. Boynton, pro se.
    Brown, Wood, Ivey, Mitchell & Petty, New York City by James R. Manning, New York City, for plaintiff.
   OPINION

MacMAHON, District Judge.

Defendant Robert L. Boynton (“Boynton”) moves, pursuant to Rule 12(b)(1), (2), (3) and (6), Fed.R.Civ.P., to dismiss the complaint or to quash the return of summons on the grounds of lack of subject matter jurisdiction, lack of personal jurisdiction, improper venue, and failure to state a claim upon which relief can be granted. Alternatively, Boynton seeks to transfer this action to the United States District Court for the Northern District of California, pursuant to 28 U.S.C. § 1404(a).

FACTS

Plaintiff brought this action for violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78j(b), and Rule 10b-5 of the Securities and Exchange Commission, 17 C.F.R. § 240.10b-5. Plaintiff alleges that defendants fraudulently schemed to acquire a significant portion of the outstanding common stock of Information Displays, Inc. and obtained $8.5 million in loans and/or lines of credit from the National Bank of Carmel, California, to effectuate their scheme. Boynton is alleged to be an aider and abettor because he knowingly and substantially assisted in the scheme by approving the loans and/or lines of credit with the knowledge that the funds would be used fraudulently to acquire the stock.

DISCUSSION

Boynton initially contends that personal jurisdiction is lacking because he is a resident of California and has had no contact with the State of New York regarding this transaction. Personal jurisdiction over Boynton is based on nationwide service of process, authorized by Section 27 of the Exchange Act, 15 U.S.C. § 78aa, which provides that process may be served in any district of which the defendant is an inhabitant or wherever the defendant may be found.

In asserting nationwide service, the constraints of the due process clause of the Fifth Amendment still apply. “Thus, the service authorized by statute must be reasonably calculated to inform the defendant of the pendency of the proceedings in order that he may take advantage of the opportunity to be heard in his defense.” Mariash v. Morrill, 496 F.2d 1138, 1143 (2d Cir. 1974). The contacts necessary for jurisdiction are between the defendant and the United States because it is the United States, and not the State of New York, which exercises its jurisdiction. Id. at 1143; Garner v. Enright, 71 F.R.D. 656, 660 (E.D.N.Y.1976). Since Boynton resides within the territorial boundaries of the United States and service of process was sufficiently effective, the requirements for personal jurisdiction over him are satisfied.

Boynton next contends that there is a lack of subject matter jurisdiction and that the complaint fails to state a claim upon which relief can be granted because he did not make, and there is no allegation that he made, any purchase or sale of a security, or use of interstate commerce or of the mails, as required by Section 78j(b). Boynton fails to recognize, however, that his liability is based on his status as an aider and abettor, which is sufficiently alleged in plaintiffs third cause of action. Somerville v. Major Exploration, Inc., 576 F.Supp. 902, 913 (S.D.N.Y.1983). Boynton’s claims here are without merit.

Boynton also contends that this action should be dismissed for improper venue. An action to enforce this statute may be brought in the district wherein any act or transaction constituting the violation occurred. 15 U.S.C. § 78aa. The alleged violations concern transactions executed by plaintiff through its New York trading desk and involve a registered securities exchange located in the Southern District of New York. Blau v. Lamb, 242 F.Supp. 151, 159-60 (S.D.N.Y.1965), affd, 363 F.2d 507 (2d Cir.1966), cert, denied, 385 U.S. 1002, 87 S.Ct. 707, 17 L.Ed.2d 542 (1967). Venue is proper here.

As an alternative, Boynton requests that this action be transferred to the United States District Court for the Northern District of California. The venue provision of the Exchange Act was designed to allow the plaintiff the widest possible choice of forum, which will not be disturbed unless the movant shows that the balance of convenience and justice weighs heavily in favor of transfer. Somerville, supra, 576 F.Supp. at 908. Boynton has failed to make that showing.

Accordingly, defendant Boynton’s motion to dismiss the complaint or to transfer this action is denied in all respects.

So ordered.


author: REYNOLDS, Chief Judge.

text:
    Margarita ANDINO, Plaintiff, v. Margaret HECKLER, Secretary of Health and Human Services, Defendant.
    Civ. A. No. 81-C-1309.
    United States District Court, E.D. Wisconsin.
    May 22, 1985.

      Thomas E. Bush, Milwaukee, Wis., for plaintiff.
    Joseph P. Stadtmueller, U.S. Atty. by Melvin K. Washington, Asst. U.S. Atty., Milwaukee, Wis., for defendant.
   DECISION AND ORDER

REYNOLDS, Chief Judge.

This is an action for judicial review of a final decision of the Secretary of Health and Human Services (“Secretary”), denying the plaintiff’s application for supplemental security income benefits provided under the Social Security Act, 42 U.S.C. § 1381a. On July 15, 1983, this Court remanded the matter to the Secretary for further proceedings. On remand, the Administrative Law Judge found the plaintiff disabled, and the Appeals Council adopted the decision of the Administrative Law Judge. The plaintiff received her past-due benefits on April 15, 1985.

The issue before the Court is the plaintiff’s motion for judgment, in which the plaintiff requests the Court to enter final judgment for the plaintiff based upon the Secretary’s decision to provide benefits after reconsideration on remand. The plaintiff is requesting the entry of final judgment as a preliminary step in her application for attorneys’ fees pursuant to the Equal Access to Justice Act (“EAJA”). 28 U.S.C. § 2412. The plaintiff notes that this procedure was suggested in Brown v. Secretary of Health and Human Services, 747 F.2d 878 (3d Cir.1984), which held that a social security claimant obtaining remand in the district court was not a prevailing party entitled to recover attorneys’ fees under the EAJA until the Secretary makes a final decision to award benefits.

The government does not oppose the plaintiff’s request for the entry of final judgment. Consequently, the plaintiff’s motion will be granted. In addition, because this is a matter of first impression in this court, and because the issue is likely to be raised in other cases, this order will set forth the procedure which will govern similar requests in the future.

The EAJA establishes two prerequisites to any award of attorneys’ fees. First, the Court must determine that the claimant was a “prevailing party.” Second, the Court must find that the position of the government was not “substantially justified” and that no “special circumstances” make an award of fees unjust. The courts which have considered the question have split on whether a social security claimant who obtains a remand in the district court is a “prevailing party” prior to reconsideration by the Secretary. See cases cited in Brown, at 881. This issue is not before the Court in this action, and I find that a claimant who is awarded and receives benefits after remand from the district court is entitled to the entry of final judgment as the prevailing party.

In future cases, a claimant who is awarded and receives benefits after remand from the district court and who seeks an award of attorneys’ fees under the EAJA shall file a single motion requesting the entry of final judgment and an award of fees under the EAJA. The motion shall be accompanied by a brief in accordance with Local Rule 6.01. The clerk of court will enter judgment accordingly, and the request for fees will be considered timely filed under the EAJA, 28 U.S.C. § 2412(d)(1)(B), if the motion is filed within thirty days of the claimant’s receipt of past-due benefits. Social security review cases which are remanded to the Secretary for further proceedings shall remain statistically closed unless a motion for entry of judgment and an award of fees under the EAJA is filed according to the procedure outlined above.

IT IS THEREFORE ORDERED that the clerk of court enter final judgment in favor of the plaintiff Margarita Andino.


author: SPRIZZO, District Judge:

text:
    NEWMONT MINES LIMITED and Esso Resources Canada Limited, Plaintiffs, v. ADRIATIC INSURANCE COMPANY, the Hanover Insurance Company, Utica Mutual Insurance Company, and Allendale Mutual Insurance Company, Defendants.
    No. 80 Civ. 1197 (JES).
    United States District Court, S.D. New York.
    May 23, 1985.
    Skadden, Arps, Slate, Meagher & Flom, New York City (William P. Frank, Thomas Lahiff, New York City, of counsel), for plaintiff Newmont Mines Ltd.
    Sullivan & Cromwell, New York City (Michael A. Cooper, William M. Dallas, Jr., William L. Farris, New York City, of counsel), for plaintiff Esso Resources Canada Ltd.
    Rein, Mound & Cotton, New York City (Arthur N. Brook, John Mezzacappa, New York City, of counsel), for defendants Hanover Ins. Co. and Utica Mut. Ins. Co.
   OPINION & ORDER

SPRIZZO, District Judge:

Plaintiffs, Newmont Mines Ltd. (“Newmont”) and Esso Resources Canada Ltd. (“Esso”), sued defendants, The Hanover Insurance Co. (“Hanover”.), Utica Mutual Insurance Co. (“Utica”), Adriatic Insurance Co., and Allendale Mutual Insurance Co., for payment under defendants’ insurance policies. The action involves the collapse of two sections of the roof of the Granduc concentrator mill building in British Columbia, Canada, which were caused by the accumulation of snow and ice on the roof. After trial, the jury found that the collapse of the two sections constituted two separate insured occurrences, upon which plaintiffs were entitled to recover 2,000,000 in Canadian dollars under the policy of defendant Utica and 500,000 in Canadian dollars under that of defendant Hanover.

Hanover and Utica moved pursuant to Fed.R.Civ.P. 50 and 59 for judgment notwithstanding the verdict or, in the alternative, to set aside the verdict as against the weight of the evidence. They argued that (1) the evidence adduced at trial demonstrated that there had been only one insurable occurrence under the terms of the policies; (2) the fact that plaintiff Newmont abandoned operation of the concentrator and turned off the heat in June 1978 constituted a material change in the risk which voided coverage; and (3) Hanover and Utica did not waive notification of any material change in risk. On the assumption that their motions were denied, defendants argued in the alternative that plaintiffs were entitled to pre-judgment interest from February 20,1980 at the rate provided by New York law.

At oral argument on the motions, held on December 7, 1984, the Court denied defendants’ motion to set aside the jury verdict, and concluded that the evidence was not insufficient as a matter of law to support the jury’s findings. See, e.g., Mallis v. Bankers Trust Co., 717 F.2d 683, 688-89 (2d Cir.1983); Mattivi v. South African Marine Corp., 618 F.2d 163, 168 (2d Cir. 1980). The Court also refused to set aside the jury verdict as against the weight of the evidence and to order a new trial, because the evidence did not weigh so heavily in defendants’ favor that the verdict could properly be regarded as seriously erroneous or a miscarriage of justice. See, e.g., Mallis, supra, 717 F.2d at 691; Bevevino v. Saydjari, 574 F.2d 676, 684 (2d Cir.1978)..

With respect to pre-judgment interest, the Court found that British Columbia law applied, both as to availability of pre-judgment interest and as to rate, because that law governed the substantive rights of the parties. See, e.g., Entron, Inc. v. Affiliated FM Insurance Co., 749 F.2d 127, 131 (2d Cir.1984), affg, 578 F.Supp. 334 (E.D.N.Y.1984); Patch v. Stanley Works (Stanley Chemical Co. Division), 448 F.2d 483, 494 n. 18 (2d Cir.1971) (dictum); Cain v. Trans World Airlines, Inc., 549 F.Supp. 963, 971 (S.D.N.Y.1982); cf. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941). The law of British Columbia provides for pre-judgment interest from the date the cause of action arose to the date of the court’s order, at the rate prescribed by the Registrar of the Supreme Court. See, e.g., Court Order Interest Act, R.S. B.C., c. 76, § 1(1) (1979); Harris v. Insurance Corp. of British Columbia, 48 B.C. L.R. 270, 272 (B.C.Sup.Ct.1983); Brooks v. Karapidakis, 35 B.C.L.R. 287, 289 (B.C. Sup.Ct.1982). The Court therefore ruled that pre-judgment interest would be awarded accordingly.

The insurance policies at issue herein, and the jury’s verdict based thereon, provide for payment in Canadian dollars. This Court’s judgment, however, must be expressed in United States dollars. See, e.g., Shaw, Savill, Albion & Co. v. The Fredericksburg, 189 F.2d 952, 954 (2d Cir. 1951); Meinrath v. The Singer Co., 87 F.R.D. 422, 428 (S.D.N.Y.1980). Therefore, the Court must determine the appropriate date for conversion of the jury’s award into United States dollars.

Plaintiffs argue that New York law governs conversion, citing, inter alia, Vishipco Line v. Chase Manhattan Bank, N.A., 660 F.2d 854 (2d Cir.1981), cert, denied, 459 U.S. 976, 103 S.Ct. 313, 74 L.Ed.2d 291 (1982). New York adheres to the breach-day rule, applying the rate of currency exchange applicable on the date of breach. See, e.g., Parker v. Hoppe, 257 N.Y. 333, 340-41, 178 N.E. 550, 551-52 (1931); Hoppe v. Russo-Asiatic Bank, 235 N.Y. 37, 39, 138 N.E. 497, 498 (1923). Defendants contend that British Columbia law governs, and requires application of the rate of exchange in effect on the date of judgment. However, the Court need not decide the choice of law issue, because both New York and British Columbia law would require application of the breach-day rule in this case.

Canadian law requires that all judgments rendered by Canadian courts be expressed in Canadian currency. See Section 11, Currency and Exchange Act, R.S.C.1970, c. C-39. In original actions, the Supreme Court of Canada adheres to the breach-day rule for converting obligations in foreign currency to Canadian dollars. See, e.g., Gatineau Power Co. v. Crown Life Insurance Co., [1945] S.C.R. 655, 658 (Can.); The Custodian v. Blucher, [1927] S.C.R. 420, 427 (Can.). The Supreme Court of British Columbia has almost universally followed that rule. See, e.g., Am-Pac Forest Products Inc. v. Phoenix Doors Ltd., 14 B.C.L.R. 63, 66-67 (B.C.Sup.Ct.1979); Sedam v. Whitehead, No. C791517, slip op. at 8-10 (B.C. Sup.Ct. Jan. 21,1981); Canadian Imperial Bank of Commerce v. Singh, No. C775814, slip op. at 1 (B.C.Sup.Ct. June 3,1980). See also Williams & Glyn’s Bank Ltd. v. Belkin Packaging Ltd., 28 B.C.L.R. 96, 115-16 (B.C.Ct.App.1981) (Hutcheon, J., dissenting); Agrex S.A. v. Canadian Dairy Commission, 24 B.L.R. 206, 239 (Fed.Ct.Can. 1984).

While it is true that courts of other Canadian provinces have applied the judgment-day rule, those cases. for the most part involved suits on a foreign judgment. See, e.g., Batavia Times Publishing Co. v. Davis, 88 D.L.R.3d 144, 154 (H.Ct.Ont.1978). Indeed, the court in Batavia Times expressly distinguished the case from Custodian, supra, and Gatineau, supra, because those were original actions and not subsequent suits on a foreign judgment. See 88 D.L.R.3d at 153; see also Williams & Glyn’s, supra, 28 B.C.L.R. at 115 (Hutcheon, J., dissenting). Moreover, the court adopted the judgment-day rule in Batavia Times so that plaintiff would not suffer due' to currency fluctuations. Id. at 152. Here the opposite is true. Canadian currency has depreciated as against United States currency since the date of breach, and therefore plaintiffs would recover less under the judgment-day conversion rule. Thus the effect of applying a judgment-day rule would be to allow the defendants to benefit from their failure to timely pay their debt.

The Court rejects defendants’ argument that the case of Williams & Glyn’s Bank Ltd. v. Belkin Packaging Ltd., 18 B.C.L.R. 279 (B.C.Sup.Ct.1979), rev’d on other grounds, 28 B.C.L.R. 96 (B.C.Ct.App.1981), affd, 147 D.L.R.3d 577 (Can.1983), is controlling and mandates application of the judgment-day rule. In that case, the Supreme Court of British Columbia did apply the judgment-day conversion rule in an original action. The Supreme Court failed, however, to even consider its earlier decision in Am-Pac, supra, and cited Batavia Times, supra, as authority for rejecting the breach-day rule, without noting that that case had been a suit to enforce a foreign judgment — the very basis upon which the Batavia Times court distinguished its holding from the breach-day rule cases.

The majority opinions of the two appellate courts which reversed the court on other grounds in the Williams & Glyn’s case did not reach the conversion issue. However, the dissenting judge on the Court of Appeals, who did address that issue, noted the distinction upon which the Batavia Times holding rested and stated that, contrary to the court’s ruling, the breach-day rule should apply, citing Am-Pac. See Williams & Glyn’s, 28 B.C.L.R. at 115-16.

Defendants have cited no other British Columbia cases to support their argument. They contend, instead, that the Supreme Court of Canada would probably adopt the judgment-day rule if presented with the issue, because in Miliangos v. George Frank (Textiles) Ltd.) [1976] A.C. 443 (H.L.(E.)), the British House of Lords abandoned the breach-day rule, and adopted the judgment-day rule in original actions.

There is, however, no present basis to believe that the Supreme Court of Canada will follow the British rule. The Supreme Court of British Columbia in AmPac, supra, decided subsequent to Miliangos, continued to adhere to the breach-day rule in original actions notwithstanding the change in British law. See 14 B.C.L.R. at 67. See also Sedam, supra, No. C7981517, slip op. at 9-10; Canadian Imperial Bank, supra, No. C775814, slip op. at 9-10; cf. Agrex, supra, 24 B.L.R. at 239. Therefore, the Court holds that the breach-day rule governs in this action. It follows that this Court must enter judgment for plaintiffs in the amount of 2,500,000 Canadian dollars, converted into United States dollars at the rate effective on February 20, 1980.

The parties shall submit an appropriate judgment.

It is SO ORDERED.

      . Defendants Adriatic Insurance Co. and Allen-dale Mutual Insurance Co. settled with plaintiffs prior to trial.

      . The parties agree that if liable, defendants’ obligation to pay arose on February 20, 1980, thirty days after Newmont submitted proof of loss, as provided in the policies.

      . Such a result would be inconsistent with the most current consensus of opinion in this area, which maintains that a debtor should not benefit by his failure to timely pay his debt. Cf. Proposed Restatement of Foreign Relations Law § 823 (April 12, 1985).

      . After Williams & Glyn’s, the Supreme Court of British Columbia has noted the distinction between original actions and suits on foreign judgments in refusing to apply the judgment-day rule in an original suit. See, e.g., Sedam, supra, No. C791517, slip op. at 10.

      . It is also significant that Miliangos, supra, reflects the fact that an English judgment may either be expressed in a foreign currency or converted into pounds sterling at the date of payment. This option is not available under Canadian law which, as noted above, requires all judgments to be stated in Canadian currency. See Section 11, Currency and Exchange Act, R.S.C.1970, c. C-39; see also Williams & Glyn’s, supra, 28 B.C.L.R. at 116 (Hutcheon, J., dissenting); Batavia Times, supra, 88 D.L.R.3d at 153— 54.

      . It should also be noted that, although the Court need not reach the issue, were this diversity case pending in the courts of New York state, it appears that the New York court would apply the breach-day rule of converting foreign currency into United States dollars even in a case where on the facts presented a New York court would apply foreign law to determine the substantive rights of the parties. See, e.g., Parker v. Hoppe, 257 N.Y. 333, 178 N.E. 550 (1931); Taubenfeld v. Taubenfeld, 198 Misc. 108, 97 N.Y. S.2d 158 (Sup.Ct.1950).


author: NANGLE, Chief Judge.

text:
    Complaint of VALLEY TOWING SERVICE as Owner of the M/V CITY OF GREENVILLE for exoneration from or limitation of liability. The VALLEY LINE COMPANY, et al., Plaintiffs, v. The M/V CITY OF GREENVILLE and Valley Towing Service, Inc., Defendants. The M/V CITY OF GREENVILLE and Valley Towing Service, Inc., Third-Party Plaintiff, v. UNITED STATES of America, Third-Party Defendant.
    Nos. 83-1149A(1), 83-808A(1).
    United States District Court, E.D. Missouri, E.D.
    May 24, 1985.

      See also 581 F.Supp. 1287.
    • Richard F. Johnson, Warren C. Ingersoll, Lord, Bissell & Brook, Chicago, Ill., John Scott Hoff, Lapin & Hoff, Chicago, Ill., Frank N. Gundlach, Armstrong, Teasdale, Kramer & Vaughan, St. Louis, Mo., for plaintiffs.
    Michael D. O’Keefe, Thompson & Mitchell, St. Louis, Mo., for Valley Line Co. and Flowers Transp. Co.
    Elmer Price, Hubert I. Binowitz, Gold-stein & Price, St. Louis, Mo., for Monsanto Co., Cons. Grain and Barge and American River Transp. Co.
    Paul B. Lee, St. Louis, Mo., for Archway Fleeting & Harbor Service.
   MEMORANDUM

NANGLE, Chief Judge.

This matter is now before the Court on the motion of third party defendant, United States of America for summary judgment. Third party plaintiff, the M/V City of Greenville and Valley Towing Service, Inc. brought a claim against the United States pursuant to the Suits in Admiralty Act, 46 U.S.C. § 741 et seq. The Government primarily relies in the instant motion upon an exception to its waiver of sovereign immunity for claims based upon the performance of a discretionary function contained in the Federal Torts Claim Act, 28 U.S.C. § 2680(a), and which has allegedly been extended to the Suits in Admiralty Act.

The cases before the Court are two consolidated admiralty actions arising from an accident on the Mississippi River. On April 2, 1983, the M/V City of Greenville which was owned and operated by Valley Towing Service collided with the Poplar Street Bridge in the St. Louis Harbor. Numerous claims for damages and exoneration from liability have been filed. On the night of the accident, one of three vertical white lights on the Poplar Street Bridge was not functioning. While the Poplar Street Bridge was maintained by the Missouri Department of Highways and Transportation, third party plaintiff alleges negligence on the part of the United States Coast Guard in failing to require the maintenance of three working visible lights; failing to determine that the vertical white lights on the main channel span were not fully functioning; failing to require that retroflective material be installed around the navigational lights in order to render them more clearly visible; and failing to timely notify any navigators or potential navigators on the Mississippi River that the white lights were not operational.

The Government argues that it is immune from liability in these actions because any involvement it had regarding the maintenance of the white lights on the bridge was discretionary in nature. The Government thus contends that it is entitled to the defense of discretionary function.

Under Rule 56 of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if he can “show that there is no genuine issue as to any material fact and that [he] is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). See also Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). In passing on a motion for summary judgment, a court is required to view the facts and inferences that may be derived therefrom in the light most favorable to the non-moving party. Butter v. Buechler, 706 F.2d 844, 846 (8th Cir.1983); Vette Co. v. Aetna Casualty and Surety Co., 612 F.2d 1076, 1077 (8th Cir.1980). The burden of proof is on the moving party and a court should not grant a summary judgment motion unless it is convinced that there is no evidence to sustain a recovery under any circumstances. Butter, 706 F.2d at 846. However, under Rule 56(e), a party opposing a motion for summary judgment may not rest upon the allegations of his pleadings but “must set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e). See also 10A Wright, Miller and Kane, Federal Practice and Procedure: Civil 2d, § 2739 (1983). The parties do not assert that there are any contested facts regarding the questions raised by the Government. These arguments are, therefore, ripe for summary judgment.

Applicability of the Discretionary Function Defense to the Suits in Admiralty Act

Third party plaintiff brings its claim against the Government under the Suits in Admiralty Act (SAA), 46 U.S.C. § 741 et seq. This Act allows parties to bring all maritime claims against the United States under the admiralty jurisdiction of the federal courts. Bearce v. United States, 614 F.2d 556, 558 (7th Cir.1980). Prior to certain amendments to the SAA, the maritime claims which are now covered by the Act were covered by the Federal Tort Claims Act (FTCA), 28 U.S.C. § 2680. The FTCA contains an exception to its waiver of sovereign immunity, however, for claims based on the performance of a discretionary function or duty on the part of a federal agency or employee. 28 U.S.C. § 2680(a). The SAA does not contain an express discretionary function exception, yet a number of courts have extended this exception to the SAA by implication. See, e.g., Faust v. South Carolina State Highway Department, 721 F.2d 934 (4th Cir.1983); Gemp v. United States, 684 F.2d 404, 408 (6th Cir. 1982); Magno v. Corros, 630 F.2d 224 (4th Cir.1980); Bearce v. United States, 614 F.2d at 559; Gercey v. United States, 540 F.2d 536, 539 (1st Cir.1976); Williams v. United. States, 581 F.Supp. 847 (S.D.Ga. 1983), affd. 747 F.2d 700 (11th Cir.1984); Doty v. United States, 531 F.Supp. 1024 (N.D.Ill.1982), affd. 712 F.2d 286 (7th Cir. 1983). While the Fifth Circuit has refused to extend this exception to the SAA in De Bardeleben Marine Corp. v. United States, 451 F.2d 140, 145-46 (5th Cir.1971), that particular holding was dictum. See Gercey v. United States, 540 F.2d at 539 n. 4. Nor have any other circuits which have addressed the matter followed De Bardeleben. This Court follows the majority of circuits and concludes that the discretionary function exception contained within § 2680(a) of the FTCA is applicable to the SAA.

Applicability of the Discretionary Function Exception to the Government’s Acts

The parties concede that the State of Missouri Department of Highways and Transportation retained the duty of maintaining the Poplar Street Bridge, while the Coast Guard retained a regulatory function regarding the navigational waters of the Mississippi River. Under 14 U.S.C. § 81, the Coast Guard has discretionary authority to establish aids to navigation. Pursuant to this authority, the Coast Guard promulgated regulations which require certain bridges to mark their main underlying channel span with a set of three white lights. 33 C.F.R. § 118.65. The Poplar Street Bridge is one such bridge, and the failure of one of the lights on April 2, 1983, was not in accordance with regulations. Therefore, while the Missouri Department of Highways and Transportation retains the duty of insuring compliance with these regulations, the Coast Guard is responsible for policing compliance. See United States v. Varig Airlines, — U.S. —, 104 S.Ct. 2755, 81 L.Ed.2d 660 (1984). The Coast Guard, however, does inspect the lights on the Poplar Street Bridge from time to time. Such inspections generally occur twice monthly, with weather permitting. In fact ten days prior to the accident at hand, the Coast Guard discovered that one of the white lights on the bridge was not working, and it notified the Missouri Department of Highways and Transportation. In addition, the Coast Guard broadcast to navigators that one of the white lights was not functioning properly on that date. The light was replaced by the Missouri Department on the day of notification.

It is clear that the discretionary function exception applies to the Government’s decision whether or not to erect navigational aids or warnings. Faust v. South Carolina State Highway Department, 721 F.2d at 939; Gemp v. United States, 684 F.2d at 408; Bearce v. United States, 614 F.2d at 560. Once the decision to construct such aids or warnings has been made, however, the Government can be liable for negligently maintaining its structures. Indian Towing Co., Inc. v. United States, 350 U.S. 61, 76 S.Ct. 122, 100 L.Ed. 48 (1955); Burgess v. M/V Tamano, 373 F.Supp. 839, 841 (D.Me.1974). Thus, the United States is immune from suit with respect to the exercise of discretion at the planning level of its decision making process, but may be sued for negligent decisions at the operational level. Madison v. United States, 679 F.2d 736, 739 (8th Cir.1982).

While the proper functioning of a light involves operational decisions relating to normal day to day routines, the United States is nonetheless entitled to the discretionary function exception under United States v. Varig Airlines, — U.S. —, 104 S.Ct. 2755, 81 L.Ed.2d 660 (1984). In Varig the plaintiffs charges the Federal Aviation Administration (FAA) with negligently certifying two aircrafts, despite the presence of deviations in the construction of the aircrafts from governmental regulations. The Court found that the duty to insure that the airplanes complied with regulations rested with the manufacturer, while the FAA retained the responsibility for policing compliance. The FAA chose to carry on this responsibility through a system of spot checks, which is a policy decision in and of itself.

Like the FAA in Varig Airlines, the Coast Guard in this action chose to require bridge owners to maintain three white lights under certain conditions. The Coast Guard further left the duty to insure compliance with this regulation with the bridge owner, while the Government twice monthly checked the lights. The parties do not dispute that the Coast Guard followed the dictates of their own policy in this action. Third party plaintiff merely alleges that the Government should have instituted a policy of patrolling the bridge with greater frequency. The facts of this case are very similar to those of Varig Airlines, which will be followed here. The Government thus, is entitled to the discretionary function exception set forth in 28 U.S.C. § 2860(a), and the action against it is dismissed.


author: HADEN, Chief Judge.

text:
    Connie Joan RAY, Petitioner, v. UNITED STATES of America, et al., Respondents.
    Civ. A. No. 2:85-0597.
    United States District Court, S.D. West Virginia, Charleston Division.
    May 24, 1985.
    Connie Joan Ray, pro se.
    Marye L. Wright, U.S. Atty., Charleston, W.Va., for respondent.
   MEMORANDUM OPINION AND ORDER

HADEN, Chief Judge.

Petitioner, Connie Joan Ray, has filed this action pursuant to 28 U.S.C. § 2255 seeking to vacate her conviction and sentence for escape in violation of 18 U.S.C. § 751(a). The Petitioner is proceeding pro se and also moves the Court for leave to proceed in forma pauperis.

I. Petitioner’s Financial Status

After having carefully considered the financial affidavit filed by Petitioner in support of her motion for leave to proceed in forma pauperis, the Court finds that the Petitioner is an indigent within the context of 28 U.S.C. § 1915(a) and, therefore, grants Petitioner’s motion for leave of Court to proceed in forma pauperis. The Clerk is directed to file Petitioner’s action without requiring prepayment of fees.

II. Petitioner’s Allegations

On July 14, 1983, Petitioner was serving multiple one to ten year sentences upon convictions in the Circuit Court of Lewis County, West Virginia. Pursuant to a contractual agreement between the State of West Virginia and the United States Bureau of Prisons Petitioner was serving her sentences at the Federal Correctional Institution at Alderson, West Virginia. On July 14, 1983, Petitioner escaped from F.C.I. Alderson, which escape resulted in her being named in a one-count indictment alleging a violation of 18 U.S.C. § 751(a). Petitioner entered a plea of guilty to the single-count indictment on October 3,1983, and' on that date was sentenced to a term of imprisonment of one year, which period of incarceration was to run consecutively with Petitioner’s state sentences.

Petitioner contends in support of her motion to vacate that she could not be convicted for an offense under Section 751(a) because at the time of the escape she was not in the custody of the Attorney General as required by that statute; Petitioner argues that, although she was incarcerated at F.C.I. Alderson, she was “a ward of the State of West Virginia.” The three cases Petitioner relies on in support of her argument, Williams v. U.S., 327 U.S. 711, 66 S.Ct. 778, 90 L.Ed. 962 (1946), U.S. v. Butler, 541 F.2d 730 (8th Cir.1976) and U.S. v. Howard, 654 F.2d 522 (8th Cir.1981) cert, denied 454 U.S. 944, 102 S.Ct. 484, 70 L.Ed.2d 253 (1981), are inapposite in that each involved application of the Assimilative Crimes Act, 18 U.S.C. § 13. For example, in Howard, the most factually similar of the three eases, the Defendant was convicted under the Assimilative Crimes Act for escaping from state custody pursuant to a state conviction. 654 F.2d at 523-24. The minimum security correctional facility from which Howard escaped was on a federal Indian reservation thereby giving rise to federal jurisdiction over the escape under the Assimilative Crimes Act. Howard did not involve a situation where a defendant convicted in state court was placed in the custody of the Attorney General for incarceration. The Eighth Circuit’s opinion itself distinguishes the Williams and Butler cases, which have no bearing whatsoever to the instant case. See 654 F.2d at 524-25.

The Court finds its rule of decision in this case from the statute itself. Section 751(a) provides:

“Whoever escapes or attempts to escape from the custody of the Attorney General or his authorized representative, or from any institution or facility in which he is confined by direction of the Attorney General, or from any custody under or by virtue of any process issued under laws of the United States by any court, judge, or commissioner, or from . the custody of an officer or employee of the United States pursuant to lawful arrest, shall [be guilty of an offense against the United States].” (emphasis added)

As the language of the statute makes abundantly clear, Section 751(a) does not require that the escapee be confined pursuant to a federal conviction, only that the escapee be in the “custody of the Attorney General”. There can be no serious question that while incarcerated at F.C.I. Aider-son Petitioner was in the “custody of the Attorney General”, the contract between the State of West Virginia and the Bureau of Prisons specifies as much. Paragraph No. 1 of that contract states that “The Government will undertake the custody, care and treatment ... of State prisoners committed to the Federal institution.” (emphasis added)

That Petitioner was in the custody of the Attorney General at the time of her escape from F.C.I. Alderson is also conclusively demonstrated by a reading of the statute which authorizes the Attorney General to contract for the incarceration of state prisoners, 18 U.S.C. § 5003. Section 5003(c) provides as follows:

“Unless otherwise specifically provided in the contract, a person committed to the Attorney General hereunder shall be subject to all the provisions of law and regulations applicable to persons committed for violations of laws of the United States not inconsistent with the sentence imposed.”

The contract between the Attorney General and the State of West Virginia contains no language modifying the import of § 5003(c). Rather, to the contrary, Paragraph 6 of the contract specifically incorporates the requirements of the above-quoted statute:

“6. State prisoners while in the custody of the Government shall be subject to all the provisions of law and regulations applicable to persons committed for violations of laws of the United States not inconsistent with the sentence imposed.”

Clearly then, by operation of Section 5003(c) and Paragraph 6 of the contract Petitioner was subject to the strictures of Section 751(a) while incarcerated at F.C.I. Alderson.

III. Conclusion

For the reasons discussed above, the Court concludes that Petitioner was in the custody of the Attorney General and subject to the provisions of 18 U.S.C. § 751(a) while incarcerated at F.C.I. Alderson, West Virginia. Petitioner’s conviction and sentence for her violation of Section 751(a) are, therefore, valid and the Court hereby denies her motion to vacate or set aside same. Accordingly, the Court ORDERS that Petitioner’s petition pursuant to 28 U.S.C. § 2255 is hereby dismissed pursuant to Rule 4(b) of the Rules Governing Section 2255 Proceedings in United States District Courts.

The Clerk is directed to send a certified copy of this Memorandum Opinion and Order to the Petitioner and to counsel of record.

      . Government is defined in unnumbered paragraph 1 of the contract to be "Government of the United States”.

      . Rule 4(b) provides in pertinent part that "If it plainly appears from the face of the motion and any annexed exhibits and the prior proceedings in the case that the movant is not entitled to relief in the district court, the judge shall make an order for its summary dismissal and cause the movant to be notified.” See also Carvell v. U.S., 173 F.2d 348-49 (4th Cir.1949).