author: McCURN, District Judge.

text:
    Paul M. KOLESA, Plaintiff, v. John F. LEHMAN, Jr., Secretary of the Navy, Defendant.
    No. 81-CV-545.
    United States District Court, N.D. New York.
    Nov. 20, 1984.
    John C. Scholl, Utica, N.Y., for plaintiff.
    Frederick J. Scullin, Jr., U.S. Atty., Syracuse, N.Y., Commander Donald M. Hill, Dept, of the Navy, Alexandria, Va., for defendant; Joseph A. Pavone, Asst. U.S. Atty., Syracuse, N.Y.
   MEMORANDUM-DECISION AND ORDER

McCURN, District Judge.

Plaintiff Paul M. Kolesa commenced this action in May of 1981, challenging an order of the Secretary of the Navy whereby Kolesa was disenrolled from the Naval Officers’ Training Corps (“NROTC”) program and directed to commence two years active duty in the Navy as an enlisted man. Presently before the court is the Secretary’s motion for entry of final order of dismissal or in the alternative for summary judgment. For reasons set forth herein, the court grants summary judgment for the Secretary.

Background

The events that preceded Kolesa’s commencement of this action are set forth in some detail in this court’s prior decision, Kolesa v. Lehman, 534 F.Supp. 590, 591-93 (NDNY 1982). Familiarity with the court’s prior decision is assumed. Summarized, in 1977 Kolesa executed an NROTC Scholarship Service Agreement in which he agreed to enlist in the Naval Reserve for a period of six years in exchange for a college education at the Navy’s expense. As part of the agreement, Kolesa acknowledged that “if I fail to complete the four year course of instruction ... I may be ordered to active duty by the Secretary of the Navy to serve in an enlisted status for a period not to exceed four years.” In addition, Kolesa executed a drug usage statement in which he denied ever having used either marijuana or other stimulants, and forswore “the abuse of drugs both now and in the future.”

In September of 1980, during a pre-commissioning physical examination, Kolesa informed the examining doctor that he had tried marijuana, hashish, and an over-the-counter stimulant. These admissions were reported to NROTC authorities, and in December Kolesa received notice that a Board of Review would be convened “to investigate the alleged use of illegal drugs and recommend to the professor of Naval Science a proper course of action.”

Allegedly acting upon the prior advice of Lt. Ballard, one of the Review Board members, Kolesa submitted a written statement to the Board in which he admitted having “tried” marijuana, but represented that “(t)his experimentation is now in my past____”

The Board of Review thereafter issued a decision in which it found that Kolesa had used illegal drugs, and that Kolesa had “acknowledged that he made a false statement while being processed for.a scholarship during his sophomore year in that he indicated no prior use of illegal drugs.” The Board then recommended that “based upon his use of illegal drugs and his marginal military performance that he be dis-enrolled from the NROTC Program and ordered to active duty upon completion of his degree in May of 1981.” On February 27, 1981, the Secretary affirmed the Board’s recommendation that Kolesa be disenrolled, and ordered him to report for two years active duty as an enlisted man, no later than May 31, 1981.

Kolesa then commenced this action and obtained a temporary restraining order, which has been continued by written consent of the parties. As stated in this court’s prior decision, Kolesa’s principal non-abandoned claims were that the Review Board hearing violated his right to procedural due process in that (1) the notice was inadequate because it did not inform him that his military performance and his 1978 drug use statement were at issue; (2) he was denied the right to have counsel represent him at the hearing; and (3) that Lt. Ballard improperly advised him before the hearing, yet continued to act both as witness and judge on the Review Board, thereby depriving plaintiff of the right to an impartial decision-maker.

Upon the Secretary’s earlier motion to dismiss or for summary judgment, the court held, first, that “due process,did not require that Kolesa be represented by counsel at the Board of Review hearing,” 534 F.Supp. at 594, and granted judgment in favor of the defendant as to that claim. Id. at 595. Secondly, the court discussed certain principles pertaining to Kolesa’s two remaining claims, but it refrained from deciding the Secretary’s motion with respect to such claims. Instead the court directed the plaintiff to apply for review of the Secretary’s decision in accordance with 32 C.F.R. § 723.1-11 before the Board for the Correction of Naval Records (“BCNR”). As the court explained:

It is the opinion of this Court that an airing of plaintiff’s claims in a BCNR hearing will cure any constitutional deficiencies that may have attended his Board of Review hearing, will provide the Secretary with a useful, second look at an important decision, and will accord with the accepted judicial practice of avoiding unnecessary resolution of constitutional issues.

534 F.Supp. at 595. The court- did, however, retain jurisdiction over this case, and provide for the continued effectiveness of the stipulated restraining order.

Now represented by counsel, Kolesa applied for correction of his naval records and obtained a hearing before the BCNR. At the hearing, Kolesa stated that he had used marijuana or hashish only two or three times, and only once after entering college; that he did not report his prior marijuana use on the NROTC application papers because the relevant question inquired about “use” of the drugs, and he considered himself an “experimenter,” not a “user.” Plaintiffs Exhibit A.

In its decision, issued February 14, 1983, the BCNR stated the following conclusions:

A. The Board concluded that the review board which originally heard Petitioner’s case was tainted by the actions of Lt. Ballard. The Board opined that it was improper for this individual to, in effect, act as Petitioner’s counsel and then sit as a member of the review board convened specifically to hear Petitioner’s case.
B. The Board further concluded, however, that adequate grounds for disenrollment existed. Petitioner, the Board opined, did use drugs on several occasions prior to and during his college years. It further appears to the Board that Petitioner should have used better judgment in answering the questions contained in NROTC application documents pertaining to drug usage.
C. The Board concluded that ordering Petitioner to active duty in an enlisted status would be unwise at this time. The Board noted, in this regard, that petitioner has admitted to past drug use. Considering the Navy’s policy concerning drug abuse, it does not appear to be in the Navy’s best interest to order an individual with .an admitted history of drug use to active duty. The Board further opined that, even if Petitioner does not use drugs while serving in an enlisted status, he might well be an unmotivated individual, who would probably serve without distinction.

Plaintiffs Exhibit A.

Accordingly, the BCNR recommended “(t)hat Petitioner’s naval record be corrected to show that the Secretary of the Navy approved the recommendation that Petitioner be disenrolled from the NROTC program ... but disapproved the recommendation that Petitioner be ordered to serve two years of active enlisted service.” Id.

The Secretary, however, directed the BCNR to reconsider conclusions A and C of its report. Specifically, the BCNR was instructed to request Lt. Ballard to comment on the finding regarding the impropriety of his actions, and to “identify the specific error or injustice that occurred which formed the basis for the Board’s conclusion C,” i.e., the conclusion that ordering Kolesa to active duty “would be unwise.” Plaintiffs Exhibit B.

After reviewing additional information submitted by Lt. Ballard, the BCNR issued a second decision on June 3, 1983. The decision recites that Lt. Ballard informed the Board “that he did not vote to disenroll Petitioner from NROTC program and that he dissented from the majority opinion which recommended that course of action.” The Board, therefore, modified its conclusion A by opining that,- although Ballard’s appointment to the Review Board was unwise, his service “appears to have worked to Petitioner’s advantage and hence constitutes harmless error.” Plaintiffs Exhibit C.

However, with respect to its prior recommendation that Kolesa not be ordered to active service, the Board adhered to its view. Indeed, the Board supported its conclusion in a detailed statement wherein it observed, inter alia, that Kolesa’s drug usage was “in the nature of infrequent episodes of experimentation,” and that requiring him to perform active service would “be more in the nature of a punishment rather than enforcement of a contractual obligation.” Id.

In a Memorandum dated July 8,1983, the Secretary rejected the Board’s recommendation that Kolesa not be ordered to active duty. The Memorandum, in its entirety, states:

The board’s recommendations that the subject petitioner’s record be corrected to show that he was not ordered to serve two years active enlisted service but rather was honorably discharged on 17 December 1980, which includes the recommendation that orders issued in contemplation of his active duty be can-celled, are disapproved. The Board’s conclusion that requiring the petitioner to perform active enlisted service is more in the nature of a punishment rather than enforcement of a contractual obligation is not supported by the record.
The facts of this case do not distinguish it from others in which the individual concerned has accepted educational assistance and subsequently failed to qualify for a commission. Former Midshipman Kolesa has not proved that he has suffered either an error or an injustice of that the action of the Under Secretary in terminating his appointment as a midshipman and ordering him to two years active enlisted service was other than proper and appropriate under the circumstances of his case.

Plaintiffs Exhibit D.

Subsequently, the Secretary filed the instant motion for entry of final order of dismissal or in the alternative for summary judgment.

Discussion

Pursuant to 10 U.S.C. § 1552, the Secretary of the Navy, “acting through boards of civilians of the executive part of that military department, may correct any military record ... when he considers it necessary to correct an error or remove an injustice.” Under applicable regulations, the BCNR, following a hearing, is required to make written findings, conclusions and recommendations, 22 CFR § 723.6, after which the Secretary “will consider the board’s submission” and “will direct such action ... as he deems to be appropriate.” 22 CFR § 723.7. The Secretary is, thus, authorized to overrule the Board’s recommendations although “he must act on either explicitly stated policy reasons, or upon evidence presented in the record made to the Board.” Horn v. Schlesinger, 514 F.2d 549, 553 (8th Cir.1975); Weiss v. United States, 408 F.2d 416, 418, 187 Ct.Cl. 1 (1969); Nelson v. Miller, 373 F.2d 474, 478 (3d Cir.) cert. denied, 387 U.S. 924, 87 S.Ct. 2042, 18 L.Ed.2d 980 (1967). That decision is then final and conclusive, unless upon judicial review it is found to be “arbitrary, capricious, in bad faith, unsupported by substantial evidence or contrary to applicable law or regulation.” Crispino v. United States, 3 Cl.Ct. 306, 312 (1983).

In his memorandum in opposition to the Secretary’s motion, Kolesa argues, first, that it is arbitrary and capricious for the Secretary to require him to serve as an enlisted man because there is substantial evidence for the Board’s findings that he had poor judgment, would be unmotivated, and would serve without distinction. Thus, Kolesa contends, not without irony, that .the Board’s findings demonstrate that the Navy is better off without his service as an enlisted man, and that there is no basis for the Secretary’s rejection of those findings.

Accepting plaintiff’s premise that there is substantial evidence for the Board’s findings, the court still cannot conclude for that reason that the Secretary’s rejection of the Board’s recommendation is arbitrary and capricious. Kolesa’s motivation or potential (or lack thereof) is not the Secretary’s only concern. The active duty requirement enables the Navy to recoup to some extent the government’s expenditure for the training and education of NROTC midshipmen. See generally, 1964 U.S.C.C. & A.M. 1764 et seq. (legislative history of Pub.L. 88-647, codified at 10 U.S.C. § 2107, which authorizes the Secretary’s action). As the Court of Appeals for the Fourth Circuit recently stated in the course of discussing the active duty requirement, “It would be a great waste for the government to lose its investment in training what proved to be unsatisfactory midshipmen if it could not put them in a lesser spot which they were capable of filling.” Wimmer v. Lehman, 705 F.2d 1402, 1403, 1408 (4th Cir.1983). The Board did not find, and nothing in the record indicates that Kolesa is “incapable” of serving as an enlisted man.

For similar reasons, the court cannot accept Kolesa’s argument that it is arbitrary and capricious to order “an admitted drug user, albeit an experimenter,” to active duty. Plaintiffs Memo at 6. As the Secretary points out, the Naval Recruiting Manual permits the enlistment of “[a]n individual who has abused dangerous drugs over one (1) year ago,” although it does not permit the enlistment of an individual who has been addicted or dependent on a drug, has been a “trafficer” [sic] of drugs, has abused narcotics within the past year or dangerous drugs within the past month. Defendant’s Exhibit B at 1-I-12. The Secretary’s assumption that Kolesa is eligible for enlistment under these standards is entirely consistent with the BCNR’s conclusions of June 3, 1983:

[T]he Board views Petitioner’s usage as being more in the nature of experimentation, and the result of poor judgment and impulsive behavior. The Board can readily distinguish Petitioner’s situation from the serious drug abuser whose use is far more regular and premeditated. The Board’s perception of Petitioner as an infrequent and impulsive experimenter is supported by the action of the disenrollment board in recommending that Petitioner be ordered to active duty. It is clear that under current Navy policy, the serious or regular drug abuser’s presence on active duty will not be tolerated regardless of his status as an officer or enlisted servicemember.

Plaintiffs Exhibit C.

Kolesa also contends that the Secretary’s decision is arbitrary and capricious in that it rejects the Board’s conclusion that the active service requirement would, as applied to Kolesa, “be more in the nature of punishment rather than enforcement of a contractual obligation.” The court would readily agree that ordering Kolesa to active service is a disproportionately harsh consequence of his minor drug experimentation; it is not, however, “punitive” in any sense that enables this court to overturn the order. As the Board itself stated in its initial report, “[S]cholarship students who default or disenroll during their third or fourth year are ordinarily ordered to active duty in an enlisted status for a period of two years.” Plaintiffs Exhibit A. Other courts have also recognized that “the Navy has followed a fairly consistent policy of imposing an active enlisted service obligation upon midshipmen disenrolled from the NROTC Scholarship Program in their third or fourth years.” Hickey v. Commandant of Fourth Naval District, 461 F.Supp. 1085 (E.D.Pa.1978), aff'd mem., 612 F.2d 572 (3d Cir.1979); McCourt v. Culkin, 473 F.Supp. 1247, 1250 (E.D.Pa.1979).

In rejecting the Board’s recommendations, the Secretary concluded that “the facts of this case do not distinguish it from others in which tbe individual concerned has accepted educational assistance and subsequently failed to qualify for a commission.” Plaintiffs Exhibit D. If this court had the power, it would substitute the Board’s judgment for that of the Secretary and excuse Kolesa from the ordinary active duty requirement. However, the court’s power is limited to determining whether that decision is arbitrary or capricious. In the final analysis, the Secretary’s decision is not a clear error in judgment, lacking support in the record. Therefore, this court cannot set aside the Secretary’s decision as “arbitrary or capricious.” See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971).

Kolesa also advances two additional arguments that challenge the Secretary’s action as violative of certain instructions promulgated by the Chief of Naval Education and Training. He maintains (1) that the Secretary failed to comply with CNETINST 1533.12A § 214(a), (f) by failing to obtain review of the enlisted service order by the Chief of Naval Personnel, or recommendations for such order from the Chief of Naval Personnel and the professor of Naval Science; and (2) that the Secretary failed to comply with CNETINST 1553.12A § 213(q) by failing to make a determination that Kolesa “willfully” violated his agreement with the Navy.

These contentions could have been, but were not, raised before the BCNR. Since this case was already referred once to the BCNR for the exhaustion of administrative remedies, it is especially inappropriate for these claims of noncompliance with naval procedures to be considered for the first time here on review of the Secretary’s action. As the court stated in Doyle v. United States, 220 Ct.Cl. 285, 599 F.2d 984, 1000-01 (1979):

[A] party Cannot raise an issue on appeal to a court when it failed to raise it before an administrative agency competent to hear it____ A party is not entitled to many independent chances to prevail, and his voluntary chpice will often determine the extent of a court’s review. Decision-making bodies normally have the power to correct their own errors, ... and the Correction Board is no exception____

Cf. Bd. of Ed. of City School Dist. of City of NY v. Harris, 622 F.2d 599 (2d Cir.), cert. denied, Hufstadler v. Bd. of Ed., 449 U.S. 1124, 101 S.Ct. 940, 67 L.Ed.2d 110 (1980).

Accordingly, defendant’s motion is granted, and the Clerk is directed to enter summary judgment for the defendant.

SO ORDERED.


source: Caselaw Access Project

author: LEIGHTON, District Judge.

license: Public Domain

text:
    Joseph GRECO, Plaintiff, v. MOBIL OIL CORPORATION, a corporation, and First American Service Corporation, a corporation, Defendants.
    No. 84 C 9382.
    United States District Court, N.D. Illinois, E.D.
    Nov. 20, 1984.

      Robert E. Kehoe, James M. Mulcahy, Wildman, Harrold, Allen & Dixon, Chicago, 111., for defendants.
    Joseph A. Malek, Joseph A. Malek, Assoc., Berwyn, 111., for plaintiff.
   Memorandum

LEIGHTON, District Judge.

This is a suit brought by Joseph Greco against Mobil Oil Corporation and First American Service Corporation seeking injunctive relief from Mobil’s termination of a gasoline station franchise, and enjoining First American from taking possession of the gasoline station premises. Greco alleges that Mobil’s conduct seeking to terminate the franchise violates the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. § 2801, et seq.; the jurisdiction of this court being founded on 15 U.S.C. §§ 2805(a) and (b).

The cause is before the court on plaintiff’s motion for a preliminary injunction. After hearing the parties on oral and written submissions, and after receiving evidence consisting of the testimony of witnesses and exhibits, this court concludes that under the provisions of § 2805(b)(2) of PMPA, Greco’s motion for a preliminary injunction should be granted. Accordingly, as will be stated in the court’s preliminary injunction order, defendant Mobil shall refrain, until further order of this court, from interfering with, altering, or discontinuing in any manner, the normal and usual business arrangements which plaintiff has enjoyed under the Retail Dealer Contract and Service Station Lease dated July 6, 1981. All services which have been terminated by defendant Mobil shall be resumed immediately; and defendant First American Service will be enjoined, until further order of this court, from in any way taking action to assume possession of the retail gasoline service station located at 1590 Lee Street, DesPlaines, Illinois. The following are the facts and the principles of law that compel this court to its conclusions.

I

Since November 12, 1980, Joseph Greco has been operating a Mobil service station at 1590 Lee Street, DesPlaines, Illinois, under franchise agreements with Mobil Oil Corporation. Mobil owns the service station premises; it is generally engaged in the petroleum industry, including the franchising of retail dealerships like the ones it entered into with Greco. First American Service Corporation has a contract to purchase the site of Greco’s service station from Mobil at the expiration of a franchise that, by its terms, was to expire on October 31, 1984. Mobil and First American intend to use the site as an outlet for changing motor oil. The terms of the franchise between Greco and Mobil were incorporated in a retail dealer contract and service station lease which described the franchised premises as consisting of the land “including the improvements and equipment now or hereafter placed hereon, listed on Schedule A..,The schedule listed a number of underground tanks, disc island light frames, dispensers, pumps, and other personal property.

Sometime near the end of 1982, Mobil decided to divest a number of service stations, including Greco’s. During 1983, Greco learned of Mobil’s intentions; and in conversations with representatives of the corporation, he learned that Mobil was willing to sell the gasoline station to him. However, no offer to sell was ever made by Mobil. Nonetheless, Greco obtained a $171,000 appraisal of the property during the summer-of 1983. During the first part of 1984, he contacted the resale marketing manager for Mobil, and in the presence of other corporation representatives, discussed possible purchase of the filling station.

On February 15,1984, Mobil wrote Greco a letter; the subject was “Notification of Non-Renewal of Service Station No. 15210.” Mobil stated that “The reason for this non-renewal is as follows: Mobil has determined, in good faith and in the normal course of business, to sell the premises.” The letter went on to say that “[w]ithin the next 90 days, Mobil will be in contact with you concerning your rights pursuant to Federal Law with respect to the purchase of the premises.” Then, during the early spring of 1984, Mobil representatives discussed with Greco his interest in purchasing the gasoline station. They-told Greco that the corporation was interested in selling the premises to him. A curbside appraisal was made to determine the approximate amount that Greco would have to pay for the station; the real estate was appraised at $185,000, and to the recollection of Mobil representatives, certain of the filling station equipment was appraised at around $19,000. Thereafter, Mobil had an MIA appraisal of the property which determined it had a value of $285,000. Sometime around March 15, 1984, Mobil received from First American an offer to purchase the land on which Greco’s filling station was located for $285,000; Mobil accepted the offer and entered into a contract, setting the closing of the transaction for a day after October 31, 1984, when Greco’s interest in the gasoline station was to expire with the end of his franchise term. Mobil and First American intend to proceed with the sale promptly, in accordance with the terms of their contract.

On April 16, 1984, Mobil wrote Greco, telling him that “In accordance with the provisions of the Petroleum Marketing Practices Act,” it was granting him “a Right of First Refusal regarding the [filling station] on the same terms and conditions, as the attached Third Party Offer dated March 15, 1984, which was made by First American Service Corporation to Mobil Oil Corporation.” The attachment was a contract by which First American agreed with Mobil to buy the site of Greco’s filling station for'the sum of $285,000; no personal property or gasoline station equipment was included in the sale. Greco was given forty-five days to exercise the offer. He did not reply to Mobil’s letter. In this suit, and to support his motion for preliminary injunctive relief, Greco contends that the right of first refusal of the First American offer did not discharge Mobil’s obligation under PMPA to have made him a bona fide offer to purchase the franchised premises because First American was only offering to purchase the land on which the filling station is located. Greco argues that the provisions of PMPA require that Mobil, his franchisor, in good faith, offer to sell him the franchised premises, including the personal property and equipment listed on Schedule A to his service station lease; that is, the underground tanks, dispensers, island light frames, and pumps. Greco insists that since Mobil has not complied with the provisions of PMPA and made him a bona fide offer under which he could purchase the franchised premises, he is entitled to preliminary injunctive relief restraining termination of his franchise by Mobil, and enjoining First American for interfering with his possession of the gasoline station.

II

Congress enacted the PMPA in an effort to protect “franchisees from arbitrary or discriminatory termination or non-renewal of their franchises.” S.Rep. No. 95-731, 95th Cong., 2d Sess. 15, reprinted in 1978 U.S.Code Cong. & Ad.News 873, 874. The Act provides a “single, uniform set of rules governing the grounds for termination and non-renewal of motor fuel marketing premises.” Id. at 19, U.S.Code Cong. & Ad. News at 877. When reviewing a question under the PMPA, the court is guided by the principle that as a “remedial legislation, the Act must be given a liberal construction consistent with its overriding purpose to protect franchisees.” Brack v. Amoco Oil Co., 677 F.2d 1213, 1221 (7th Cir.1982). A review of the applicable statutory provisions of the Act are essential to an evaluation of the issues raised in this action.

The PMPA prohibits the termination or nonrenewal of a franchise except on the basis of certain specifically enumerated reasons and upon the completion by the franchisor of certain notification requirements. Section 2802 sets forth the conditions and grounds on which a franchisor may terminate or not renew a franchise. As one ground, Section 2802(b)(3)(D)(i)(III) provides that a franchisor has a right not to renew a franchise if there is a “determination-made by the franchisor in good faith and in the normal course of business” to sell the premises. However, in addition to the franchisor’s obligation to make a determination in good faith and in the normal course of business to sell, Section 2802(b)(3)(D)(iii), requires a that:

in the case of leased marketing premises such franchisor, during the 90-day period after notification was given pursuant to section 2804 of this title, either—
(1) made a bona fide offer to sell, transfer, or assign to the franchisee such franchisor’s interest in such premises; or
(2) if applicable, offered the franchisee a right of first refusal of at least 45-days duration of an offer, made by another, to purchase such franchisor’s interest in such premises.

Section 2804 sets forth the notice requirements necessary for a franchisor to terminate a franchise. Generally, notice of termination or nonrenewal must be given no less than 90 days before the effective date. 15 U.S.C. § 2804(a)(2). Section 2804(c) provides that the notice shall be in writing, sent by certified mail and further provides that the notice shall contain:

(A) a statement of the intention to terminate the franchise or not to renew the franchise relationship, together with the reasons therefor;
(B) the date on which such termination or nonrenewal takes effect; and
(C) the summary statement prepared under subsection (d) of this section'

Strict compliance with the notice provision of the Act is required. Mobil Oil Corp. v. Vachon, 580 F.Supp. 153, 159 (D.Mass.1983); Davy v. Murphy Oil, 488 F.Supp. 1013 (W.D.Mich.1980); Blankenship v. Atlantic Richfield Co., 478 F.Supp. 1016 (D.Or.1979). Failure to comply with the notice provision, even if the defect is only a minor or technical one, is grounds to enjoin the termination or nonrenewal of the franchise relationship. Davy v. Murphy Oil, supra at 1016.

The Act provides franchisees with a cause of action for violation of its provisions. 15 U.S.C. § 2805(a). The court is empowered to grant such equitable relief as it determines is necessary “including declaratory judgment, mandatory or prohibitive injunctive relief, and interim equitable relief,” 15 U.S.C. § 2805(b)(1); as well as awarding actual and exemplary damages, and attorney and expert witness fees. 15 U.S.C. § 2805(d)(2).

The standard for granting injunctive relief is contained in Section 2805(b)(2), which provides that a court shall grant a franchisee a preliminary injunction if:

(A) the franchisee shows
(i) the franchise of which he is a party has been terminated or the franchise relationship of which he is a party has not been renewed, and
(ii) there exists sufficiently serious questions going to the merits to make • such questions a fair ground for litigation
(B) the court determines that, on the balance, the hardships imposed upon the franchisor by issuance of such preliminary injunctive relief will be less than the hardship which would be imposed upon such franchisee if such preliminary injunctive relief were not granted.

The standards for the issuance of a preliminary injunction are relaxed under the PMPA. Davy v. Murphy Oil Co., supra. No showing of irreparable harm is required. Mobil Oil Corp. v. Vachon, supra. A franchisee need not show a “probability” of success on the merits; all that he need show is “some reasonable chance” of success on the merits. Mobil Oil Corp. v. Vachon, supra at 156; Saad v. Shell Oil Co., 460 F.Supp. 114, 116 (E.D.Mich.1978). Thus, in order for the court to grant a preliminary injunction, there must exist a serious question which is fair ground for litigation; there must be a reasonable chance for success on the merits; and the balance of hardships must be in the franchisee’s favor.

Ill

Greco maintains that Mobil failed to comply with the Act because it did not make him a “bona fide” offer to sell the service station pursuant to Section 2802(b)(3)(D)(iii) of the Act. He contends that because he was never offered the right to purchase the personal property located at the service station, he was not made a bona fide offer.

The issue of what constitutes a bona fide offer under the PMPA was recently addressed by the Eighth Circuit Court of Appeals in Roberts v. Amoco Oil Co., 740 F.2d 602 (8th Cir.1984). There, a franchisee brought an action against Amoco alleging that the franchisor’s conduct violated the PMPA in that it had failed to make a bona fide offer to sell within the meaning of Section 2802(b)(3)(D)(iii) of the Act because the offer to sell did not include the gasoline pumps, storage tanks and dispensers. The court, after noting that the question presented was a novel one, looking at the language of the statute and the legislative history, concluded that “as a matter of law ... a bona fide offer to sell leased marketing premises under the PMPA must include the gasoline tanks, storage tanks, dispensers, and other equipment.” Id. at 607.

In this case, the contract between Mobil and First American was only for sale of the land on which the service station was located; it did not include any of the personal property in the service station, and which Greco “employed in connection with the sale, consignment, or distribution of motor fuel.” 15 U.S.C. § 2801(9). Therefore, when Mobil offered Greco the right of first refusal of First American’s contract, Greco was not given the opportunity to buy the underground tanks, dispensers, island light frames, pumps, and the other equipment listed in Schedule A of the Service Station Lease. Accordingly, Mobil never made Greco a “bona fide” offer to sell the leased marketing premises.

Mobil argues that Roberts is distinguishable because in that case there was no offer by a third party and, therefore, the court was only concerned with subsection I of 2802(b)(3)(D)(iii); while in this case, we have a third party offer, thus, subsection II of 2802(b)(3)(D)(iii) applies and this section does not contain a bona fide requirement. Although it is true that this action is different from Roberts because there is an offer by a third party, this court still concludes that under either provision of the PMPA a franchisor must present a franchisee with an offer to buy which must include the personal property owned and controlled by the franchisor.

Subsection II of 2802(b)(3)(D)(iii) provides that a franchisor must offer the franchisee the right of first refusal of an offer “made by another, to purchase such franchisor’s interest in such premises.” Thus, the third party’s offer in which the franchisee is given the right of first refusal must be an offer to purchase the “franchisor’s interest” in the premises. The franchisor’s interest in this case can be found by looking at what property it owns at the service station. Mobil owns not only the land, it also owns the personal property listed in Schedule A of the Service Station Lease. The land and the personal property is the “franchisor’s interest.” As the court in Roberts noted:

When Congress required a franchisor to make a bona fide offer to sell the leased marketing premises, Congress certainly intended the offer to include more than the real property. It explicitly required that the offer include the property controlled by the franchisor and used by the franchisee to distribute motor fuel.

Roberts v. Amoco Oil Co., 740 F.2d at 606. The property controlled by Mobil includes both the real and personal property. Because First American’s offer did not include any personal property it was not an offer to purchase the “franchisor’s interest” in the premises. Therefore, the right of first refusal Mobil gave to Greco did not comply with 2802(b) (3)(D) (iii)(II) of the PMPA. Accordingly, Mobil has violated the PMPA by never making Greco a bona fide offer to purchase the premises or giving him a right of first refusal of an offer to purchase Mobil’s interest (including the personal property) in the service station.

Greco next argues that the February 15, 1984 letter of notice of termination failed to comply with Section 2804(c). Greco contends that the simple reiteration in Mobil’s letter of the statutory language "... in good faith and in the normal course of business, to sell the premises,” does not satisfy the Section 2804(c)(3)(A) requirement that the reasons for nonrenewal be stated in the letter. The court agrees that the use of this self-serving language which just parrots the PMPA’s language raises serious questions as to Mobil’s compliance with Section 2804(c)(3)(A). ' In Mobil Oil Corp. v. Vackon, supra, an action which involved the same franchisor and similar language in the purported notice, the court found a serious question existed with the notice because, while it stated that Mobil wanted to sell the premises, it did not “give reasons as to why it desired to sell.” Id. at 157. Similarly, the notice in this case only states that Mobil wanted to sell the premises; it gives no reasons as to why Mobil wants to. sell. Because of this deficiency, a serious question exists as to Mobil’s compliance with the notice provision of the PMPA. Therefore, the court concludes that Mobil has violated the PMPA by not making Greco an offer to purchase which complies with the PMPA and that a serious question exists as to Mobil’s compliance with the notification requirement of the Act. Thus, Greco has more than a reasonable chance for success on the merits.

The balance of hardships, as they invariably do in such cases, weigh heavily in favor of granting the injunction. See e.g. Mobil Oil Corp. v. Vachon, 580 F.Supp. at 159; Wojciechowski v. Amoco Oil Co., 483 F.Supp. 109, 112 (E.D.Wisc.1980); Gilderhus v. Amoco Oil Co., 470 F.Supp. 1302, 1306 (D.Minn.1979). The harm to Greco of the loss of his franchise far outweighs any harm to Mobil if the franchise relationship is continued until the merits of this case are reached. As was aptly stated by one court:

In balancing the hardships, the Court is of the opinion that the harm to Plaintiff [the franchisee] will be great if an injunction is not issued while the harm to Defendant [the franchisor] will be small upon the issuance of an injunction.
Without an injunction, Plaintiff would lose his only source of income; he and his wife would be out of work; Plaintiff would have to dispose of his inventory and equipment at a deflated price and at a substantial loss; Plaintiff would have to dismiss his employees; and Plaintiffs business would be lost. In effect, without the injunction, Plaintiff would be placed on the brink of bankruptcy.
On the other hand, the effect of an injunction would be minimal on Defendant. Business and rent would continue as usual with Defendant realizing income from the premises as well as profit on goods sold Plaintiff.

Daniels v. Dilmar Oil Co., 502 F.Supp. 178, 181 (D.S.C.1980). The same reasoning applies in this case. While it is . true that Mobil has a contract to sell the property to First American, a fact not present in the cases cited above, this, the court concludes, does not shift the balance of hardships in Mobil’s favor.

Mobil argues that even if it did violate the PMPA by not making an offer to Greco to buy the service station, the court cannot, pursuant to Section 2805(e)(1), compel the continuation of the franchise relationship. This section provides, in pertinent part:

the court may not compel a continuation or renewal'of the franchise relationship if the franchisor demonstrates to the satisfaction of the court that—
(A) the basis for such nonrenewal is a determination made by the franchisor in good faith and normal course of business ... to sell such premises...
(B) the requirements of section 2804 of this title have been complied with.

This section is not applicable to this case. As noted above, there exists a serious question as to sufficiency of the Mobil’s notice of nonrenewal, thus, Mobil has failed to “demonstrate to the satisfaction of the court that ... the requirements of section 2804 have been met.”

Moreover, assuming.arguendo, that the notice in this case had complied with Section 2804, the court, in its discretion would still compel continuation of the franchise, pendent lite. Section 2805(e)(1) states that a “court may not compel” (emphasis added) the continuation of a franchise. “May” when used in a statute is a permissive word, Burglin v. Morton, 527 F.2d 486, 488 (9th Cir.1975), and will be construed to vest discretionary power in a court, unless the context of its use clearly indicates a purpose to use it in a mandatory sense. United States v. Bowden, 182 F.2d 251, 252 (10th Cir.1950). The clear purpose of the PMPA is to protect the franchisee, Brach v. Amoco Oil, supra; and to effectuate this purpose the court should be given the discretion when to order the continuation of a franchise relationship. Therefore, even if Mobil had given proper notice of nonrenewal, this court, in its discretion would still compel the continuation of the franchise relationship until the merits of the case have been decided.

IY

In conclusion, for the reasons stated, the court finds that Mobil has violated the PMPA by not making Greco a proper offer to purchase, that there exists Sufficiently serious questions going to the merits to make such questions fair ground for litigation; that Greco has more than a reasonable chance fop success on the merits; and that, on balance, the hardships imposed on Mobil by issuance of a preliminary injunction will be less than the hardship imposed on Greco if the injunction was not issued. Accordingly, Greco’s motion for a preliminary injunction is granted; an appropriate order will issue.


author: THOMAS F. HOGAN, District Judge.

text:
    PROFESSIONAL ASSOCIATION TRAVEL SERVICE, INC., Plaintiff, v. ARROW AIR, INC., et al., Defendants.
    Civ. A. No. 84-2599.
    United States District Court, District of Columbia.
    Nov. 20, 1984.
    Richard Leidl, Butler & Binion, Washington, D.C., for plaintiff.
    Richard Leidl, Butler & Binion, Washington, D.C., for PATS.
    Lawrence D. Wásko, O.D. Ozmet, Seam-on, Wasko & Ozmet, Washington, D.C., for Arrow Air.
    John M. Nannes, Skadden, Arps, Slate, Meagher & Flom, Washington, D.C., for Connecticut National Bank.
    James J. Bierbower, Bierbower & Bier-bower, Washington, D.C., Alvin B. Davis, Steel, Hector & Davis, Miami, Fla., for Southeast Bank, N.A.
    Harvey A. Levin, Freedman, Levy, Kroll & Simonds, Washington, D.C., for Frank B. Hall & Co.
    John Perazich, Matthew S. Watson, Perazich & Watson, P.C., Washington, D.C., Robert C. Keilson, Clayton P. Knowles, Jr., New York City, for Northwestern National Insurance and Value Vacations.
   MEMORANDUM OPINION

THOMAS F. HOGAN, District Judge.

Background

The Professional Association Travel Services, Inc. (PATS) filed suit in this district to recover damages on behalf of its clients who contracted with Value Vacations, Inc. PATS has alleged breach of contract in violation of federal law. Defendants have filed the following dispositive motions:

Arrow Air, Inc. has filed a motion to dismiss for lack of personal jurisdiction and improper venue;

Connecticut National Bank has filed a motion to dismiss Complaint and a motion to transfer or stay proceedings;

Frank B. Hall & Co. has filed a motion to dismiss and for reasonable expenses including attorney’s fee;

Northwestern National Insurance Company and Value Vacations, Inc. have filed motions to dismiss or in the alternative transfer this action to the Southern District of New York or stay this action;

Southeast First National Bank has filed a motion to dismiss complaint.

Oral argument was heard on November 15, 1984. At that time, this Court granted the motion to transfer this case to the United States District Court for the Southern District of New York but declined to rule on defendants’ other motions. This opinion supplements the Court’s ruling from the bench.

Analysis

As previously stated by the Court, venue is inappropriate in the District of Columbia. Pursuant to 28 U.S.C. § 1406(a) this Court may, in the interest of justice, transfer a case to any district in which an action could have been brought. Upon review of defendants’ motions and plaintiff’s opposition thereto, this Court found that a transfer of this case to the Southern District of New York would be in the interest of justice for the following reasons:

A class action is pending in the Southern District of New York arising out of similar if not the same facts and circumstances at issue in the complaint herein. All the defendants herein except Hall are defendants in the New York case.

A transfer of this case would eliminate the possibility of inconsistent findings of fact and conclusions of law with respect to the same issues.

A consolidation of this case with the New York action would reduce the burden of duplicative and wasteful discovery, and the New York class action would provide a more appropriate disposition of this case.

At oral argument plaintiff’s counsel argued that a transfer is premature since a class has not been certified in the New York action. Counsel also noted that if this action is transferred, plaintiff may find itself named as a defendant because as a travel agency it was responsible for selling the tickets which form the basis of the claim in this action.

Defendants note that the decision on whether to certify the class will be determined shortly and that the class shall constitute all ticket holders who were damaged by the alleged breach of contract. Defendants also note that there have not been any travel agents named as defendants in this dispute and it is not probable that any travel agents will be named as defendants.

Plaintiff argues that this case should not be transferred to New York because its customers will elect to opt out of the class action. However, at oral argument this Court noted that the customers in question may not be permitted to opt out in order to file suit in a separate action. Plaintiff dotes that there is a related matter on appeal from the Civil Aeronautics Board now pending in this Circuit. Disposition of this matter, plaintiff argues, would provide precedent in this jurisdiction and would be binding in the case at bar. These arguments are not persuasive when weighed against the overwhelming considerations to the contrary. Hence, it is in the interest of justice to transfer this action.

Defendants argue that this Court should rule on all of the dispositive motions — particularly the motions challenging jurisdiction — before transferring this action. However, in Goldlawr v. Heiman, 369 U.S. 463, 466, 82 S.Ct. 913, 915, 8 L.Ed.2d 39 (1962), the Court held that the language in 28 U.S.C. § 1406(a) is broad enough to authorize the transfer of cases whether the court in which it was filed had personal jurisdiction over the defendants or not.

This Court has based its decision to transfer this action on 28 U.S.C. § 1406(a). However, assuming arguendo that .this Court has personal jurisdiction over the instant action and venue is proper in this district, this Court would nevertheless transfer this action pursuant to 28 U.S.C. § 1404(a). The Court is aware that the burden of establishing that an action should be transferred is on the moving party. See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947); Koster v. Lumbermans Mutual Co., 330 U.S. 518, 67 S.Ct. 828, 91 L.Ed. 1067 (1947). Upon consideration of defendants’ motion to transfer and plaintiff’s opposition thereto and after oral argument, this Court finds that defendants have met that burden.

In Upjohn v. General Acc. Ins. Co. of America, 581 F.Supp. 432 (D.D.C.1984), the Court instructs that:

‘[t]o permit a situation in which two cases involving precisely the same issues are simultaneously, pending in different district courts lends to the wastefulness of timing, energy and money that § 1404(a) was designed to prevent’ [;] ... 'litigation of related claims in the same tribunal is strongly favored because it facilitates efficient, economical and expeditious pretrial proceedings and discovery and avoids duplicitous litigation and inconsistent results.’ Id. at 435 (quoting Continental Grain Co. v. Barge RBL-585, 364 U.S. 19, 26, 80 S.Ct. 1470, 4 L.Ed.2d 1540 (1960), and National Super Spuds, Inc. v. New York Mercantile Exchange, 425 F.Supp. 665, 667 (S.D.N.Y.1977), respectively).

Conclusion

There is a class action pending in New York raising quite similar claims. A consolidation of these cases will avoid inconsistent findings and will — for the reasons previously discussed — be in the interests of justice and will provide for a single, coherent, consistent judgment.

      . 28 U.S.C. § 1406(a) states that:
      The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.

      . See also Reyno v. Piper Aircraft Co., 630 F.2d 149, 164-65 (3rd Cir.1980) (transfer is proper even though the transferor state lacks personal jurisdiction); Davis v. Costa-Gavras, 580 F.Supp. 1082 (S.D.N.Y.1984). “A court ‘has power to transfer [a] case even if there is no personal jurisdiction over the defendants, and whether or not venue is proper in [the] district, if a transfer would be in the interest of justice’ ... The transferor court may act under either Section 1404(a) or 1406(a) to transfer an improperly venued action.” Id. at 1086 (brackets in original, quotation and citations omitted).


text:
    NORTH JERSEY SECRETARIAL SCHOOL, INC., et al., Plaintiffs, v. NATIONAL ASSOCIATION OF TRADE AND TECHNICAL SCHOOLS, et al., Defendants.
    Civ. A. No. 84-3232.
    United States District Court, District of Columbia.
    Nov. 20, 1984.

      Courts Oulahan, Washington, D.C., for plaintiffs.
    James M. Johnstone, Washington, D.C., for defendants.
   MEMORANDUM OPINION AND ORDER

THOMAS F. HOGAN, District Judge.

This matter is before the Court on plaintiffs’ motion for partial summary judgment or preliminary injunction and defendants’ cross-motion for summary judgment. Affidavits and relevant documents have been considered by the Court, as have the parties’ supporting memoranda of law. Oral argument was heard on November 8, 1984, at which time the Court granted summary judgment for the defendant on all counts. This opinion will supplement the Court’s ruling from the bench.

The underlying factual dispute in this case is somewhat complex, involving as it does the financial interrelationship of four or more parties including the North Jersey Secretarial School, Inc. (N.J.S.S.), the American Technical Institute School (A.T.I. School), and the past and present owners of the A.T.I. School. However, the Court need not, and in fact, may not, reach the underlying issue of the “financial stability” of A.T.I. School. Nevertheless, a brief synopsis of the undisputed factual background of this litigation is appropriate.

Factual Background

A.T.I. School is a trade and technical school in Pittsburgh, Pennsylvania. A.T.I. School, formerly operated by the American Technical Institute through its general partner Jerry Kokalis, was sold in February, 1984 to plaintiff Jean-Claude Levy, owner and operator of plaintiff N.J.S.S. of Passaic Park, New Jersey. At the time of the sale, the A.T.I. School was accredited by the defendant National Association of Trade, and Technical Schools, Inc. (NATTS). NATTS is a non-profit organization engaged in the process of evaluating and accrediting eligible trade and technical schools. Accreditation by NATTS, as a recognized national accrediting agency, is a prerequisite to the receipt of federal (Department of Education) financial assistance. See 34 C.F.R. § 603.1.

Unknown to plaintiffs, the continued accreditation of A.T.I. School was in jeopardy at the time of their purchase because of NATTS’ concern with the school’s financial stability. This uncertainty about the financial stability of A.T.I. originated at the time of the initial accreditation in 1982. See Declaration of Bernard H. Ehrlich at 4. Finally, based on a “major concern with apparent discrepancies between [A.T.I.’s] June 30 and September 30, 1983 statements,” NATTS issued a show cause order on February 13, 1984 directing A.T.I. School to submit balance sheets, operating statements and other financial data necessary to insure NATTS of the continued financial stability and reliability of the school. The penalty for failure to comply with these requests was immediate removal of accreditation. Following a review of the incomplete submission by A.T.I., NATTS deferred action on its show cause order and requested, by letter dated May 15, that A.T.I. supplement its original filing.

In response to these letters, Mr. Kokalis submitted a response notifying NATTS of the change in ownership. It is undisputed that neither Mr. Kokalis nor Mr. Levy supplied the requested balance sheets and operating statements. On May 30, approximately four months after the sale of the school, the new owner and plaintiffs in the present action, Mr. and Mrs. Levy, learned of the “true situation,” and began submitting voluminous change of ownership forms and supporting documentation. Plaintiffs submitted, inter alia, an unaudited A.T.I. School balance sheet, which, according to the preparing accountant, was “merely a representation of information supplied by management.” Current financial information on N.J.S.S. and other schools owned by Mr. Levy was also provided. However, plaintiffs do not dispute that certain information, including a proper balance sheet for A.T.I. showing its financial condition after the sale as well as the information requested in the show cause orders, was not provided to NATTS prior to the July, 1984 deadline.

Based on the “failure to satisfy the show cause order,” A.T.I. School was removed from the accredited list. In taking this action, the NATTS Accrediting Commission did not consider the information submitted in reference to the change of ownership. A.T.I. then submitted a notice of appeal as well as a motion to extend the time from August 29 to September 24, 1984 “to file a documented appeal, including [the] required financial statements.” The motion was denied. However, counsel for NATTS informed plaintiffs that “notwithstanding deadlines for perfecting the appeal, [plaintiffs] could and should bring whatever financial information [they] could develop concerning the operating and financial condition of the school under its ownership to the appeals panel hearing and that it would be considered.” Ehrlich Affidavit at 12.

An appeals panel was selected without objection and, following a short postponement, a hearing was held on October 17, 1984. Mr. and Mrs. Levy, as well their legal counsel and accountant, appeared at the hearing and presented oral and written information to the panel. Despite the efforts of the plaintiffs, the appeals panel voted unanimously to uphold the Commission. Perhaps the most important factor in this decision was the fact that the required financial data for the A.T.I. School had still not been submitted. See Janssen Affidavit.

The Proceedings In This Court

Within days after receiving notice of the appeals panel decision, plaintiffs filed their “Complaint for Damages, Declaratory Judgment, and Injunctive Relief.” The complaint asserts three causes of action: 1) Breach of contract; 2) Breach of fiduciary duty; 3) Intentional interference with contractual relations.

The first two counts of the complaint are based on the alleged breach of “Procedural Rules and Accreditation Standards” of NATTS. Essentially, plaintiffs claim that NATTS, as a “quasi-public” institution, owes its members a general duty to provide fair and impartial procedures, to base its decisions on the evidence, and to avoid arbitrary and capricious actions. The plaintiffs’ argument finds support in the case law, see Marjorie Webster Junior College, Inc. v. Middle States Association of Colleges and Secondary Schools, Inc., 432 F.2d 650, 655 (D.C.Cir.), cert. denied, 400 U.S. 965, 91 S.Ct. 367, 27 L.Ed.2d 384 (1970). See also Marlboro Corporation v. Association of Independent Colleges and Schools, Inc., 556 F.2d 78 (1st Cir.1977); Rockland Institute, Division of Amistad Vocational Schools, Inc. v. Association of Independent Colleges and Schools, 412 F.Supp. 1015 (C.D.Calif.1976); Parsons College v. North Central Association of Colleges and Secondary Schools, 271 F.Supp. 65 (N.D.Ill.1967); Wisconsin Avenue Associates, Inc. v. 2720 Wisconsin Avenue Cooperative Association, Inc., 441 A.2d 956, 963 (D.C.1982) (fiduciary concepts may apply to membership in voluntary association); Gashgai v. Maine Medical Association, 350 A.2d 571 (Me.1976) (bylaws of voluntary association may be judicially enforced as contract), and the defendants do not contest the plaintiffs’ position on the law. In fact, defendants have used the term “due process” to describe their duty to the plaintiffs during the accreditation process. The Court finds this analogy appropriate.

The flaw in the plaintiffs’ argument to the Court is that defendant has provided all the process due. Plaintiff argues that the accrediting commission wrongfully refused to consider the change of ownership in connection with its hearing on the disaccreditation proceeding.' However, it is clear that NATTS’ bylaws and procedural rules treat the disaccreditation process and change of ownership process differently, with the latter requiring an extensive investigation including on-site visits to the school. See Exhibit 1 to Plaintiffs’ Statement of Points and Authorities in Support of Motion for Restraining Order at 4 and Change of Ownership Form, Exhibit B of Erlich Declaration at 21. While NATTS could have postponed the hearing on disaccreditation for the months or weeks it would have taken to complete the change of ownership process, it was not bound to do so by its rules or by any generally accepted notion of due process. In fact, it is undisputed NATTS told plaintiff it would engage in an accelerated change of ownership review process, which offer plaintiff has failed to accept. Clearly, it is not the place of a federal court to instruct an experienced, professional body in the proper criteria to consider in an accreditation proceeding. NATTS is fully within its rights in treating the change of ownership application from A.T.I. in the manner provided in its rules; that is, it may process the application as an initial request for accreditation.

Plaintiffs also argue that the NATTS appeals panel treated them unfairly by failing to make the change of ownership information “part of the official file” and in failing to “consider the presentation” in reaching the decision. NATTS responds to this argument on two levels. According to NATTS’ procedural rules, the appeals panel “is limited to consideration of only the evidence in the record up to the time of the commission’s decision” in deciding whether to reverse the commission. Exhibit B of Ehrlich Declaration at 18. Additionally, the panel may, in its discretion, informally consider additional evidence in deciding whether to remand the case for additional consideration. Thus NATTS argues that it, did not have to consider the evidence received after the commission’s decision.

In any case, NATTS has demonstrated to the Court’s satisfaction that the “ownership material was in fact considered by the appeals panel.” See Janssen Affidavit at 2-3. For a variety of reasons, see id. at 4-7, the appeals panel believed that the necessary proof of financial reliability was lacking and that “it would require a new and complete accreditation process to determine all the facts____” Id. at 8. This conclusion is based upon fact and is well within the scope of the appeals panel’s expertise and authority. The Court will not challenge it.

The remainder of plaintiffs’ argument might be characterized as a generalized “lack of fairness” complaint. However, a careful examination of the statements of fact and supporting documents leads the Court to conclude that there is no redressable error in the procedures afforded to plaintiffs. NATTS provided plaintiffs with ample notice to enable them to prepare; a detailed written complaint was provided. Plaintiffs had repeated opportunities to present evidence and argument in writing; plaintiffs were afforded an oral hearing with the assistance of counsel. Finally, plaintiffs were given the opportunity to appeal both orally and in writing. This treatment satisfies the contours of due process as it applies to the workings of government; the Court believes that such procedural safeguards also satisfy whatever contractual or fiduciary responsibilities arise from the contracts, bylaws, and constitution of NATTS. Cf. Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). Thus NATTS has not violated the plaintiffs’ right to a fair hearing either by violating its own rules or by infringing the generalized standards of due process established by the courts.

The Court is not without sympathy for the difficult position in which the new owners of A.T.I. School find themselves. Nevertheless, the disaccreditation of the school is not the result of any unlawful procedural actions on the part of defendants. Nor can the Court say that the result reached was arbitrary, capricious or not based on substantial evidence. In fact, at the time of the argument in this case, NATTS had not yet received the operating statements and other A.T.I. School financial data which it had requested in May. Given the importancé of the school’s financial stability to the students, the motivation for NATTS’ decision to withdraw accreditation at this time is easily understandable. Defendants are entitled to summary judgment on the first two counts.

The Court will also enter summary judgment for the defendants on Count 3 of the complaint: intentional or improper interference with present or prospective contractual relations. Defendant NATTS, through the affidavits of its agents, has demonstrated that it acted without malice or intent to. injure plaintiffs. Because recovery under this claim requires a showing of intentional conduct undertaken with the desire or purpose of interfering or appropriating benefits for one’s self, see Glenn v. Point Park College, 441 Pa. 474, 272 A.2d 895, 899 (1971); W. Prosser, The Law of Torts, 938-42 (4th ed. 1971), and plaintiff has presented no affidavits or evidence in support of its position that such intent existed, summary judgment for the defendants is appropriate.

Moreover, even if plaintiffs could demonstrate the necessary intent on the part of the defendants, the conduct in question would as a matter of law fall within the “public interest” privilege. See Prosser, Torts at 944. NATTS, as an accrediting agency, operates to advance the public interest by upholding and enforcing the standards of its member schools. Although its actions may be harmful to an individual member who loses accreditation, the process as a whole is worthwhile and, as long as it is undertaken reasonably and with adequate safeguards, the accreditation process should be immune from attack.

Accordingly, it is this 20th day of November, 1984, hereby

ORDERED that defendants’ motion for summary judgment is granted; and it is

FURTHER ORDERED that judgment be, and is, entered for the defendants.

      . Counsel for plaintiff has argued that he believes this representation to be inaccurate. Plaintiffs’ Statement of Points and Authorities in Support of Motion for Partial Summary Judgment at 4. Of course, the Court is not technically bound by statements not made as affidavits based on personal knowledge. See Fed.R.Civ.P. 56(e). Nevertheless, accepting the representations of plaintiffs’ counsel as to his recollection, it is undisputed that plaintiffs in fact submitted additional financial information to the Appeals Panel and that that information was actually considered by that body. Affidavit of Charles P. Janssen. Plaintiff has never argued that pertinent information was withheld because of any statements by defendants. Because the information in question was actually received and considered, the question of whether defendant's counsel originally stated that such information would not be considered is not particularly important.

      . Plaintiffs also requested a Temporary Restraining Order be issued to prevent further action being taken with respect to the disaccreditation. At the hearing on plaintiffs’ motion for a TRO, the parties entered into an agreement whereby defendants would refrain from acting on or publicizing the disaccreditation and plaintiffs would agree to withdraw their motion for a TRO. Both parties also agree to an expedited hearing scheduling under which defendants’ motion for summary judgment would be consolidated with plaintiffs’ motion for a preliminary injunction. This compromise allowed the parties and the Court to develop the law and facts and to consider the issues in a more organized fashion.

      . There is some suggestion that the Commission, the Appeals Board, and NATTS are in some way biased or prejudiced against plaintiffs. Aside from insinuations to that effect made in the legal memoranda, there is no basis for the Court to consider these allegations. On the contrary, both General Counsel of NATTS and a member of the Appeals Panel have sworn under oath that they were unaware of the existence of (or basis for) any bias against plaintiffs. Neither NATTS itself nor any individual who acted upon plaintiffs' application was in competition' with plaintiffs. In fact, plaintiffs approved of the composition of the appeals panel. In light of this uncontroverted evidence, the Court finds no evidence sufficient to raise a genuine issue, of material fact with respect to bias or prejudice against plaintiffs.

      . The Court takes notice of the fact that plaintiffs have filed suit against the former owners of the school in the Pennsylvania state courts. It is possible that plaintiffs’ remedy lies with the seller who failed to disclose — and, according to allegations in this Court, actually covered up— A.T.I. School’s financial problems.


author: THEIS, District Judge.

text:
    Janice Lee ALLEN, Plaintiff, v. William F. BOLGER, Postmaster General, Defendant.
    Civ.A. No. 83-1780.
    United States District Court, D. Kansas.
    Nov. 20, 1984.

      J. Thomas Marten, McPherson, Kan., for plaintiff.
    Stephen K. Lester, Asst. U.S. Atty., D. Kansas, Wichita, Kan., Michael F. Lefkow, Asst. Regional Labor Counsel, Law Dept., Chicago, 111., for defendant.
   OPINION AND ORDER

THEIS, District Judge.

Plaintiff, Janice Lee Allen, has filed suit under Title VII of the Civil Rights Act, 42 U.S.C. § 2000e-16(c), alleging that the United States Postal Service has discriminated against her on the basis of her sex and has discriminated against her in the terms and conditions of employment by allowing her fewer hours of work than other employees. The case is currently before the Court on the motion of defendant, Postmaster General William F. Bolger, to dismiss for insufficient service of process, lack of jurisdiction and improper venue.

Initially, Bolger claims that Allen failed to file suit within 30 days following receipt of the final decision of the EEOC’s Office of Review and Appeals (ORA), as required by 42 U.S.C. § 2000e-16(c). Defendant contends that Allen’s Detroit attorney received ORA’s final decision on July 5, 1983, that the 30 days to file suit expired on August 4, and that on August 5 Allen submitted to the Court motions to proceed in forma pauperis and for appointment of counsel. Although Bolger argues that Allen’s attorney received the notice on July 5 and that receipt of the notice by her attorney is knowledge imputed to Allen, Allen testifies that the Detroit attorney was not representing her on July 5, 1983. It is undisputed that Allen received the ORA decision on July 8, 1983. Since Allen did not receive the ORA decision until July 8, 1983, the Court finds that her August 5 filing falls within the 30 day limit and is therefore timely.

In Bolger’s reply to plaintiff’s memorandum in opposition to the motion to dismiss, defendant shifts his argument and contends that the present suit was filed on November 14, 1983, which would be outside the 30 day period. The November 14 pleading was a more complete complaint filed by a court-appointed attorney. Bolger mischaracterizes the nature of Allen’s August 5 pleading. Although on August 19 this Court granted Allen leave to proceed in forma pauperis and on November 14 a more complete complaint was filed with the help of a court-appointed attorney, this Court finds that Allen’s August 5 filing can justly be characterized as a complaint.

Allen filed several documents on August 5, 1983: an application for leave to proceed in forma pauperis, a copy of the final decision of the EEOC, and a government form, XE-2, entitled “Civil Rights Complaint Pursuant to 42 U.S.C. § 1983.” The form contains a statement of jurisdiction, information concerning the nature of the case, a statement of the cause of action that includes supporting facts, and a request for relief. Not only is Allen’s pleading of August 5 entitled a complaint, it also contains all the information that Federal Rule of Civil Procedure 8 requires to be in a complaint. Rule 8 mandates that a claim for relief shall contain (1) a short and plain statement of jurisdiction, (2) a short and plain statement of the claim showing that the pleader is entitled to relief, and (3) a demand for judgment for relief.

Allen’s complaint of August 5 provides all of the requisite information. Other courts have confirmed that the filing of an in forma pauperis petition with an accompanying complaint commences an action. Move Organization v. Philadelphia, 530 F.Supp. 764, 765 (E.D.Pa.1982). The Court holds that Allen commenced the present action on August 5, 1983, which is within the 30 day limitations period prescribed by 42 U.S.C. § 2000e-16(c).

Bolger next argues that the complaint should be dismissed because Allen has failed to serve the Postmaster General. Defendant is correct in asserting that, under 42 U.S.C. § 2000e-16(c), the head of the agency, here the Postmaster General, must be the defendant and must be served with process. Bolger’s only allegation that the amended complaint against him should not related back under Federal Rule of Civil Procedure 15(c) is that actual notice of the suit was not received “within the period provided by law for commencing the action against him.” F.R.C.P. 15(c). Since the Court held above that the action was properly commenced within the 30 day time period, this argument is moot. Furthermore, in its scheduling order of April 6, 1983, the Court allowed the caption of the case to be amended and correctly allowed amendment of process as well. Quillen v. United States Postal Service, 564 F.Supp. 314, 322 (E.D.Mich.1983).

Next Bolger argues that Allen failed to exhaust her administrative remedies. Defendant contends that 29 C.F.R. § 1613.-214(a)(1) requires a plaintiff to bring the alleged discriminatory matter to the attention of the EEOC within .30 days of the date of the discrimination. Bolger reasons that the discrimination occurred in 1977 and that Allen did not complain until 1981. Allen counters that the discrimination which forms the subject of her action involved derogatory material in her file. She first saw the material on April 9, 1981, and she filed a complaint on April 13,1981, four days after the discovery.

Although the original discriminatory acts occurred in 1977, plaintiff did not discover the discrimination until April 9, 1981. Under the circumstances, equitable considerations require that Allen be allowed to proceed with her claim. In Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 393, 102 S.Ct. 1127, 1132, 71 L.Ed.2d 234 (1982), the Supreme Court held that “filing a timely charge of discrimination with the EEOC is not a jurisdictional prerequisite to suit in federal court, but a requirement that, lijte a statute of limitations, is subject to waiver, estoppel and equitable tolling.” The Tenth Circuit Court of Appeals in Martinez v. Orr, 738 F.2d 1107, 1109 (10th Cir.1984), extended the Zipes rationale to suits brought under § 2000e-16(c).

Equitable tolling is appropriate when a plaintiff, through no fault of her own, has been injured by fraud and remains in ignorance of it. Holmberg v. Armbrecht, 327 U.S. 392, 397, 66 S.Ct. 582, 585, 90 L.Ed. 743 (1946); Wilkerson v. Siegfried Insurance Agency, Inc., 683 F.2d 344, 348 (10th Cir.1982). Allen aptly notes that to comply with the exhaustion requirements urged by the defendant she would have had to request to review her file periodically while she was employed by the Postal Service to check for discriminatory acts. The Court finds that since Allen filed a complaint less than a week after her discovery of the acts of which she complains, the EEOC complaint was timely filed:

Finally, Bolger claims that Allen’s Michigan claim should be dismissed because venue in Kansas is improper. Venue over federal sector employees is governed by 42 U.S.C. § 2000e-5(f). Section 2000e-5(f) provides where venue may be established:

Such an action may be brought [1] in any judicial district in the state in which the unlawful employment practice is alleged to have been committed, [2] in the judicial district in which the employment records relevant to such practice are maintained and administered, or [3] in the judicial district in which the aggrieved person would have worked but for the alleged unlawful employment practice, [4] but if the respondent is not found within any such district, such an action may be brought within the judicial district in which the respondent has his principal office.

Bolger’s argument is that venue does not lie in the District of Kansas over the allegations about Title VII violations in Michigan. Bolger misanalyzes both Allen’s contentions and the applicable statute. Allen contends that the wage and hour discrimination in Michigan was a direct result of the insertion of derogatory material in her file, which insertion occurred in Kansas.

The issue is whether venue is properly located in Kansas. Affidavits submitted by Bolger establish that the pertinent records are not maintained in Kansas, but rather are kept in Chicago, Illinois and Plymouth, Michigan; thus, alternative [2] does not afford Allen Kansas as a choice of venue. Bolger is correct in asserting that Allen does not claim that she would have worked in Kansas but for the alleged unlawful practices in Michigan; thus, alternative [3] does not afford Allen Kansas as a choice of venue. Although Bolger suggests that Allen could have filed in the Eastern District of Michigan or the Northern District of Illinois, it is apparent that Michigan and Illinois are inconvenient forums for Allen, a Kansas resident.

Next Bolger analyzes alternative [4]. Defendant argues that “Congress has provided for cases which do not fit comfortably into one district by allowing the case to be filed in the district where the defendant has its principal office. With the Postal Service, as with most federal agencies, that is the District of Columbia.” Dk. no. 19, p. 6. Alternative [4] is not the catch-all that Bolger claims. The language of [4] specifically states that “if the respondent is not found within [(1), (2), or (3)] such an action may be brought within the judicial district in which the respondent has his principal office.” 42 U.S.C. § 2000e-5(f). Bolger makes no allegation that he cannot be found in districts [1], [2], or [3]. Several courts have strictly construed the ambit of alternative [4]: “Only where the putative employer cannot be brought before the court in one of those districts may the action be filed in the judicial district in which he has ‘his principal office.’" Stebbins v. State Farm Mutual Automobile Insurance Co., 413 F.2d 1100, 1102-03 (D.C.Cir.), cert. denied, 396 U.S. 895, 90 S.Ct. 194, 24 L.Ed.2d 173 (1969). See also Dubnick v. Firestone Tire and Rubber Co. of California, 355 F.Supp. 138, 140 (E.D.N.Y.1973). Since alternative [4] is not applicable to the present case, the Court is left to analyze alternative [1].

Because Allen contends that the wage and hour discrimination against her in Michigan resulted from the insertion of derogatory material in her file in Kansas, the Court must determine in which of these two districts the unlawful employment practice “is alleged to have been committed.” 42 U.S.C. § 2000e-5(f). Bolger contends an unlawful employment practice is alleged to have been committed in each district: the improper insertion of the material in Kansas and the improper use of the material in Michigan. Allen’s position apparently is that the Michigan wrongdoing was unwitting and would not have occurred but for the acts in Kansas. Thus, according to plaintiff, the seemingly discrete acts of wrongdoing are inextricably interrelated. Since Allen contends that the unlawful practicó was committed in Kansas and that subsequent events in Michigan were merely effects of that original unlawful practice, the Court finds that venue is proper in this district under the terms of alternative [1].

IT IS THEREFORE ORDERED that Bolger’s motion to dismiss is hereby denied.


author: ERWIN, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. Richard E. TUGWELL, Defendant.
    No. C-84-435-G.
    United States District Court, M.D. North Carolina, Durham Division.
    Nov. 21, 1984.
    Richard L. Robertson, Asst. U.S. Atty., Greensboro, N.C., for plaintiff.
    Richard M. Hutson, II, Durham, N.C., for defendant.
   MEMORANDUM OPINION

ERWIN, District Judge.

This matter is before the court on plaintiff’s motion for summary judgment and defendant’s motion for summary judgment. The court is of the opinion that defendant’s motion- should be granted and plaintiff’s motion should be denied.

Background

On or about February 22, 1983, defendant Richard E. Tugwell purchased a grain combine from Thurgood M. Bradshaw of Efland, North Carolina. Mr. Bradshaw represented at the time of the sale that the combine was in good, working order and that it could be used, with some adjustments, for either combining corn or other grains. Mr. Bradshaw also represented to the purchaser, defendant Tugwell, that Bradshaw had good title to the combine and was free to convey the same to the purchaser. Mr. Tugwell had no knowledge at the time of the purchase of any outstanding security interest held by plaintiff or any other person in the said combine.

In late April 1983, Farmers Home Administration (FHA) informed Tugwell of its security interest in the said combine. In its notice to defendant, plaintiff maintained that the FHA had rights to the combine and that defendant could possibly be obligated to pay to plaintiff the value of the combine at the time it was purchased by defendant.

Defendant admitted his purchase and possession of the combine and has repeatedly tendered the combine to the plain-. tiff.

Discussion

Plaintiff alleges that defendant wrongfully converted the combine by purchasing it from Mr. Bradshaw when Mr. Bradshaw was not authorized to sell it. Defendant asserts that there was no wrongful conversion and further that defendant would have a perfected security interest in the proceeds from the sale of the combine. The court agrees with the latter assertion.

A person who receives property by virtue of a sale from someone who is not entitled to sell the property may be held liable for conversion. The Restatement (Second) of-Torts § 299 (1965) states:

§ 229. Conversion by Receiving Possession in Consummation of Transaction
One who receives possession of a chattel from another with the intent to acquire for himself or for a third person a proprietary interest in the chattel which the other has not the power to transfer is subject to' liability for conversion to a third person then entitled to the immediate possession of the chattel.

Although this statement of the law is correct, its application in this case is diminished due to plaintiff’s perfected security interest in the combine.

Plaintiff and Bradshaw entered into a security agreement on May 13, 1982 which covered all crops, farm equipment, and livestock described therein, including the combine at issue in this case. Plaintiff had two previously filed financing statements dated January 30, 1980 and February 10, 1981 which served to perfect this security agreement. These financing statements were filed at the office of the Register of. Deeds, Orange County, North Carolina. The court holds that because the security interest in the combine was duly perfected, plaintiff’s security interest continues in the proceeds of that sale.

North Carolina General Statutes § 25-9-306 provides in pertinent part:

(1) “Proceeds” includes whatever is received upon the sale, exchange, collection or other disposition of collateral or proceeds. Insurance payable by reason of loss or damage to the collateral is proceeds, except to the extent that it is payable to a person other than a party to the security agreement. Money, checks, deposit accounts, and the like are “cash proceeds.” All other proceeds are “non-cash proceeds.”
(2) Except where this article otherwise provides, a security interest continues in collateral notwithstanding sale, exchange or other disposition thereof unless the disposition was authorized by the secured party in the security agreements or otherwise, and also continues in any identifiable proceeds including collections received by the debtor.
(3) The security interest in proceeds is a continuously perfected security interest if. the interest in the original collateral was perfected but it ceases to be a perfected security interest and becomes unperfected 10 days after receipt of the proceeds by the debtor unless
(a) a filed financing statement covers the original collateral and the proceeds are collateral in which a security interest may be perfected by filing in the office or offices where the financing statement has been filed and, if the proceeds are acquired with cash proceeds, the description of collateral in the financing statement indicates the types of property constituting the proceeds; or
(b) a filed financing statement covers the original collateral and the proceeds are identifiable cash proceeds; or
(c) the security interest in the proceeds is perfected before the expiration of the 10-day period. Except as provided in this section, a security interest in proceeds can be perfected only by the methods or under the circumstances permitted in this article for original collateral of the same type.

By virtue of Subsection 3(b) of this statute, the plaintiffs rights are adequately protected, in that the financing statement filed with the Orange County Register of Deeds covers the original collateral and the proceeds derived therefrom. This includes identifiable cash proceeds. The North Carolina Court of Appeals has ruled on the issue of identifiable cash proceeds:

While we have found no statutory definition of “identifiable proceeds” as that term is used in G.S. § 25-9-306(2), we also find no express limitation on the right of a secured party to trace proceeds subject to his security interest into a bank account of the debtor. This lack of limitation is not without significance. The U.C.C. provides that “[u]nless displaced by the particular provisions of this chapter, the principles of law and equity ... shall supplement its provisions.” G.S. § 25-1-103. One such principle, which by analogy has application to the present case, is the doctrine of trust pursuit under which a cestui que trust is enabled to follow the trust funds through changes in their state and form in the hands of the trustee. Trust Co. v. Barrett, 238 N.C. 579, 78 S.E.2d 730 (1953); see 7 Strong, N.C. Index 2d, Trusts, § 21. From application of this doctrine in cases throughout this country there has evolved the general rule that the act of a trustee in mingling trust funds in a mixed bank account will not destroy their identity so as to prevent their reclamation. See Annot., 102 A.L.R. 372 (1936) (Supplementing annotations in 26 A.L.R. 3 (1923); 35 A.L.R. 747 (1925); and 55 A.L.R. 1275 (1928); D. Dobbs, Handbook on the Law of Remedies, § 5.16 at 427-28 (1973)....

Michigan Nat. Bank v. Flowers Mobile Homes, 26 N.C.App. 690, 694, 217 S.E.2d 108, 111 (1975).

The court is of the opinion that although the combine was technically converted by defendant, to allow plaintiff to recover on a conversion theory would severely undermine the purpose and rationale of the Uniform Commercial Code. Plaintiff’s rights remain protected, in that plaintiff may act on its perfected security interest, in the proceeds. The record does not indicate why defendant did not check the office of the Orange County Register of Deeds to determine if any prior security agreement existed.

The court will enter an Order simultaneously herewith dismissing this action.


author: JOE J. FISHER, District Judge.

text:
    OIL, CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION LOCAL NO. 4-23 and Jack Elton v. AMERICAN PETROFINA COMPANY OF TEXAS.
    Civ. A. No. B-84-752-CA.
    United States District Court, E.D. Texas, Beaumont Division.
    Nov. 21, 1984.

      M. Diane Dwight, Provost, Umphrey, McPherson & Swearingen, Port Arthur, Tex., for plaintiffs.
    Durwood D. Crawford and Steve Kardell, Goins, Underkofler, Crawford & Langdon, Dallas, Tex., for defendant.
   MEMORANDUM ORDER GRANTING SUMMARY JUDGMENT

JOE J. FISHER, District Judge.

Before the Court is Defendant American Petrofina Company’s (FINA) Motion for Summary Judgment in the above-styled and numbered cause. FINA has moved to have judgment entered for it in this case on the grounds that this cause is identical to the lawsuit this Court adjudicated in OCAW Local No. 4-23 and Max Hildabridle v. American Petrofina Company of Texas (No. B-83-195-CA). This Court’s opinion in that case is published at 586 F.Supp. 643 (E.D.Texas 1984). The Plaintiff’s counsel in that cause, who is the same counsel as in the instant cause, has appealed this Court’s judgment. That appeal is currently pending in the Fifth Circuit Court of Appeals, and is docketed as Cause No. 84-2322 in that Court.

FINA’s Motion was file-marked in the Clerk’s Office on November 6, 1984; and a proper certificate of service was attached. To this date, however, more than fifteen days after the Motion was filed, no response from Plaintiff to the Motion has been received. It must be therefore assumed, in light of Fed.Rule Civ.P. 56(c) and Local Rule 6(e) of this District, that the Plaintiff has no response to the Motion, and indeed must not oppose it.

Nevertheless, this Court will explain why it feels summary judgment is appropriate in this case. In Cause No. B-83-195-CA, (OCAWI), this Court decided that FINA’s firing of one Leo Max Hildabridle was not an arbitrable matter. The grievance in OCAW I read in pertinent part:

I am grieving because of the company’s decision to terminate L.M. Hildabridle on May 27, 1982. I contend that the discharge of Mr. Hildabridle was discriminatory and without just cause and ask that he be reinstated immediately and that he be made whole for monies and benefits lost due to such termination.

The grievance in the present case (OCAWII) reads:

Due to the recently County Court trial 11/7-8/83 involving Mr. Max Hildabridle, in which he was found not guilty, the extenuating circumstances surrounding the discharge of Mr. Max Hildabridle, and the failure of management to even reconsider the discharge, I respectively grieve that the oppression imposed upon Mr. Max Hildabridle, his wife, and four children, by management of this company, be stopped, and that Mr. Max Hilda-bridle be reinstated, and be made whole. I believe that this is in violation of Management Rights, Article XV, Article XVII Section 1, Article XXI Section 1, any other related Article, past practice, and anything else related to these unjust actions.

Obviously, each grievance — and the subsequent lawsuits — sought the same relief: the reinstatement of Max Hildabridle. The only ascertainable difference between the grievances that this Court can find is that the grievance in OCAW II mentions the County Court acquital of Hildabridle as an apparently extenuating circumstance that should require his discharge to be arbitrated. It appears to the Court that the fact of Hildabridle’s acquital has already been presented to it. Indeed, the Court noted the fact of the acquital in Footnote One of its opinion. See OCAW I, 586 F.Supp. at 643 Fn. 1.

This Court believed then, and believes now, that Hildabridle’s acquital was irrelevant to the legal issue in the earlier lawsuit. If Plaintiff believes this Court to be wrong, then its avenue of appeal is to the Fifth Circuit Court of Appeals, where indeed, an appeal has been filed. The Plaintiff’s avenue does not lie in filing another lawsuit in a District Court which alleges the very same cause of action. Simply put, this is because the doctrine of res judicata bars the relitigation by the same parties of matters which were actually put in issue, litigated, and necessarily decided in the first action. See e.g. Southern Pacific Railroad Co. v. United States, 168 U.S. 1, 48-49, 18 S.Ct. 18, 27, 42 L.Ed. 355 (1897).

As FINA states in its Motion, the principles of res judicata are well-known to any practicing attorney. An examination of the Plaintiff's complaint reveals no attempt to distinguish the cause of action in OCAW II from OCAW I, other than that noted by the Court. Moreover, FINA’s denial of the arbitration request in OCAWII, (the basis of that lawsuit) states that “this issue is now and was at the time this grievance was filed, pending in the U.S. District Court in Beaumont, Texas. The company’s position will be litigated there.” See Plaintiffs Complaint Exhibit 1.

The Court has already decided the issue in this lawsuit. It does not wish to spend more time on it, nor does it wish to waste any more of this District’s judicial resources on the matter. Accordingly, the Motion for Summary Judgment of Defendant is granted. FINA’s attorneys have moved this Court, pursuant to 28 U.S.C. § 1927 (Supp v. 1982) to award attorney’s fees against Plaintiff’s attorney. This Court believes their position has merit; but in fairness to Plaintiff’s attorney, this Court, by separate order, will set a hearing to allow the Plaintiff’s attorney to show cause why these fees should not be assessed. It is therefore

ORDERED, ADJUDGED AND DECREED that judgment is hereby entered for Defendant AMERICAN PETROFINA COMPANY and against Plaintiff OCAW LOCAL NO. 4-23 and JACK ELTON pursuant to Fed.Rule Civ.P. 56(b).