author: MANSMANN, District Judge.

text:
    O’MARA ENTERPRISES, INC., Plaintiff, v. MELLON BANK, N.A., Equibank and Peoples Bank of Western Pennsylvania, Defendants, v. HERITAGE BANK, Third Party Defendant, Fourth Party Plaintiff, v. Timothy J. O’MARA, Vincent J. O’Mara and James P. O’Mara, Fourth-Party Defendants.
    Civ. A. No. 82-1735.
    United States District Court, W.D. Pennsylvania.
    Jan. 16, 1985.
    David M. Neuhart, Pittsburgh, Pa., James C. Carpenter, Columbus, Ohio, Adam Scurti, Steubenville, Ohio, for plaintiff and fourth-party defendants.

      Paul S. McGrath, Jr., Pittsburgh, Pa., for defendant Mellon Bank.
    James P. Ross, Pittsburgh, Pa., for defendant Equibank.
    • Stephen Ross Green, New Castle, Pa., for defendant Peoples Bank.
    Anthony P. Picadio, Pittsburgh, Pa., for defendant Heritage Bank.
   OPINION

MANSMANN, District Judge.

This matter comes before the Court on various Motions for Summary Judgment as well as Fourth-Party Defendants’ Motion to Dismiss. For the reasons set forth below, Mellon, Equibank and Peoples’ Motion against O’Mara is denied as is Heritage’s Motion against O’Mara. Additionally, Equibank and Peoples’ Motion against Mellon is granted as is Mellon’s Motion against Heritage. Also for the reasons stated herein, Fourth-Party Defendants’ Motion to Dismiss the Fourth Party Complaint is granted.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff, O'Mara Enterprises, Inc. (“O’Mara”), is a West Virginia corporation with its principal place of business in Steubenville, Ohio. Since 1972, O’Mara has operated fast food restaurants at various locations in Ohio, West Virginia and Pennsylvania.

During the time at issue, the last quarter of 1979 and the first half of 1980, either W. Gail Smith or Timothy J. O’Mara was the president of O’Mara. The other O’Mara brothers, Vincent J. and James. P., were also officers of O’Mara and Terry R. Thompson was its controller during this period.

The Gail Smith Development Company (“GSD”) had a contractual arrangement with O’Mara to manage its office, accounting and general finances. Among these services were the calculation, bookkeeping and check writing services regarding O’Mara’s employees’ weekly federal withholding taxes and social security payments. Terry R. Thompson was the controller of GSD.

During the period at issue, O’Mara maintained some of its corporate checking accounts with Defendants, Mellon Bank, N.A. (“Mellon”), Equibank and Peoples Bank of Western Pennsylvania (“Peoples”) at branches within close proximity to the various O’Mara restaurants.

Additionally, during this period, O’Mara utilized an Internal Revenue Service Trust Account at Heritage Bank (“Heritage”). By agreement with O’Mara, GSD was to calculate O’Mara’s employees’ weekly federal withholding and social security taxes, to write the checks and to deposit the appropriate funds into this trust account. These checks were made payable to the order of Heritage Bank, signed by Timothy J. O’Mara and drawn on the Mellon, Equibank and Peoples accounts referenced above.

This system apparently worked without difficulty until the third quarter of 1979 when GSD began having financial problems and diverted the funds intended by O’Mara to pay its employees’ federal taxes into a GSD account at Heritage. By August of 1980, over $400,000 had been so diverted, a small percentage of which is at issue instantly. Upon learning of this scheme, O’Mara obtained the resignations of Terry R. Thompson and W. Gail Smith, who later became the subject of bankruptcy proceedings. It is undisputed that this diversionary scheme was wholly unauthorized by O’Mara.

As noted above, the checks at issue were made payable to the order of Heritage Bank. Further, at the time Heritage was given possession, the checks were stamped on the reverse side with the following:

Pay to the Order of First National Bank & Trust Co. in Steubenville, Ohio
FOR DEPOSIT ONLY GAIL SMITH DEVELOPMENT
# 009-9215

Additionally, directly under the above was the signature facsimile of W. Gail Smith. It is also undisputed that Heritage credited GSD’s account the amount of each such check.

Prior to placing the checks in the collection process, Heritage stamped each check with its indorsement:

Pay any Bank, P.E.G. HERITAGE BANK, Toronto, Ohio

Each check was then sent to Mellon, which is Heritages’ correspondent bank for this geographical area.

With respect to the Equibank and Peoples checks, Mellon stamped the reverse side with the following indorsement:

Pay Any Bank
MELLON BANK, N.A.
Pittsburgh, Pa.

Mellon then forwarded to Equibank or Peoples their respective checks, while keeping its own.

Each of these three banks then paid these checks by debiting O’Mara’s respective checking accounts. The total amount of funds diverted from O’Mara and intended for deposit in the tax trust account which is at issue here is: $6,363.50 from the Mellon checking account; $7,211.75 from the Peoples checking account and $13,896.06 from the Equibank checking account, totalling $27,471.31.

Thereafter, in August of 1982, Plaintiff O’Mara filed the instant Complaint against Mellon, Equibank and Peoples, requesting that each bank pay it the aforementioned sums, plus interest, and claiming that each bank breached its contractual and statutory duties by improperly debiting O’Mara’s respective checking accounts and thereby converting these funds. Additionally, O’Mara alleges that the checks, which were drawn to the order of Heritage Bank, were not properly indorsed and that the banks failed to require the proper indorsement. O’Mara also claims that the Defendants failed to exercise due care and failed to act in a commercially reasonable manner.

Mellon, in answering the Complaint, denied liability and pleaded various affirmative defenses.

Equibank and Peoples answered separately; each denied liability and asserted various affirmative defenses and each interposed a Crossclaim against Mellon as the collecting bank based upon alleged breach of warranties, among other things.

Mellon replied to the Crossclaim against it by Peoples denying the averments contained therein and asserting various affirmative defenses. Mellon simultaneously impleaded Heritage as a third-party defendant, seeking indemnity in the event it is found liable to O’Mara and/or to Equibank and Peoples. Count II of the Third-Party Complaint was later amended to assert that the checks at issue contained Heritage’s indorsement.

Similarly, Mellon interposed its Reply to Equibank’s Crossclaim and included various affirmative defenses. Heritage answered the Amended Third-Party Complaint, denying liability and interposing various affirmative defenses.

Heritage then moved to stay all proceedings in the instant action until such time as the adversary proceeding instituted by O’Mara and arising out of the Chapter 11 Bankruptcy proceedings regarding W. Gail Smith d/b/a Gail Smith Development Company pending in the Southern District of Ohio, as well as the action against Heritage, et al. instituted by O’Mara pending in the Ohio State court system reach a final determination. This motion was denied.

Subsequently, O’Mara moved to strike Mellon’s Third-Party Complaint against Heritage due to Mellon’s failure to implead Heritage within the ten-day period set forth in FED.R.CIV.P. 14(a). Mellon responded with a motion to implead Heritage nunc pro tunc, noting that Heritage was impleaded within three days of FED.R. CIV.P. 14(c) requirements, which delay had not resulted in prejudice. O’Mara’s motion was denied.

Subsequently, Heritage moved to join Timothy J., Vincent J. and James P. O’Mara (“the O’Mara brothers”), in their individual capacities as fourth-party defendants. This motion was granted. 101 F.R.D. 668.

The Fourth-Party Complaint alleges, inter alia, that the O’Mara brothers failed to exercise due care as officers of O’Mara. Prior to the service of an answer, the O’Mara brothers moved to dismiss the action against them, claiming, inter alia, a lack of personal jurisdiction. This motion is pending before the Court.

The Cross-Motions for Summary Judgment

Various parties moved for summary judgment against various other parties. The contentions of the parties with respect to these motions are summarized below.

1. Mellon, Equibank and Peoples’ Motion for Summary Judgment against O’Mara.

The Defendant banks jointly moved for summary judgment against O’Mara, claiming, inter alia, although O’Mara alleges that each of them honored checks without the proper indorsement, i.e., the indorsement of Heritage, the named payee, that this is contrary to the undisputed fact that each such check contains the indorsement of Heritage.

2. Heritage’s Motion for Summary Judgment against O’Mara (joined by Mellon and Peoples).

Although Heritage and O’Mara have no direct claims running between them, Heritage, as Third-Party Defendant, seeks summary judgment, against O’Mara, claiming that all the checks at issue were paid over the proper and necessary indorsements. Heritage argues that when each check reached each respective defendant bank, the checks contained the necessary indorsement, i.e., the indorsement of Heritage, the named payee. Accordingly, Heritage argues that the Defendants should not be held liable, and therefore, it should not be as well.

Alternatively, Heritage argues that since it followed O’Mara’s instructions set forth in its corporate resolution, neither Heritage nor its transferees can be held liable. Heritage also claims that, at the very least, Smith and Thompson possessed apparent authority vis-a-vis Heritage.

O’Mara submitted a single brief in opposition to these two motions for summary judgment against it and has not itself applied for summary judgment. In its papers O’Mara asserts that Mellon, Equibank and Peoples are liable to it because, as drawee banks, they are obligated under 13 PA. CONS.STAT. § 4401 not to pay items which are not properly payable. O’Mara further asserts that the checks in question were not “properly payable” as they were not indorsed by the named payee in an “unbroken sequential chain” pursuant to 13 PA.CONS.STAT. § 3201(C).

With respect to Heritage, O’Mara asserts that Heritage was not a holder and consequently, negotiation never took place pursuant to 13 PA.CONS.STAT. §§ 3201(c) and 3202(a). O’Mara also asserts that Heritage’s payment of the checks to GSD was a violation of its order since the indorsement of the named payee was missing. O’Mara claims that because these checks were not payable to GSD and Heritage’s “pay any bank” stamp is not under these circumstances a proper indorsement, Mellon, Equibank and Peoples are strictly liable to O’Mara and must recredit its accounts.

With respect to O’Mara’s corporate resolution, O’Mara asserts that it cannot exculpate Heritage from liability as the Heritage tellers did not consider it when they deposited the checks into the GSD account, relying on 13 PA.CONS.STAT. §§ 4103(a) and 1102(c). O’Mara also disputes Heritage’s argument that the corporate resolution transformed the checks in question to “bearer paper.” In any event, O’Mara argues that the terms of § 1(B) of the resolution are not complied with by the GSD restrictive indorsement “for deposit only.”

Although O’Mara fails to articulate clearly which facts are in dispute, it also asserts that there exists a factual dispute regarding due care so as to preclude the granting of summary judgment in Heritage’s favor.

Concerning the Mellon, Equibank and Peoples motions, O’Mara claims, without any substantiation, that FED.R.CIV.P. 56(c) precludes the granting of their motions against it. .Rather, O’Mara claims that it should be granted summary judgment. This is asserted notwithstanding that O’Mara did not apply to the Court for this relief, that it claims factual issues are in dispute so as to preclude summary judgment and that it simultaneously requests that this matter be set down for trial.

Additionally, Heritage submitted a reply brief in which it argues that it followed the instructions of the authorized agent of O’Mara by depositing the funds into the GSD account. Further, Heritage asserts “[bjecause O’Mara was the maker of the check and Heritage was the payee, no indorsement was necessary to transfer title.” Reply Brief at 2. Heritage also asserts that negotiation took place when the checks were delivered, in conformity with 13 PA.CONS.STAT. § 3202.

Moreover, Heritage asserts that since its indorsement appears on the check, and it is the payee, the “necessary” indorsement was on the checks and Mellon, Equibank and Peoples properly debited O’Mara’s accounts and therefore the Defendant Banks are not liable to O’Mara.

With respect to the corporate resolution, Heritage asserts that it cannot be found negligent when it simply followed O’Mara’s instructions, and that the tellers’ lack of knowledge of the resolution is not relevant.

3. Equibank and Peoples’ Motion for Summary Judgment Against Mellon.

The basis of this motion is that Mellon, as collecting bank, extended certain warranties to Equibank and Peoples, as payor banks. More specifically, pursuant to 13 PA.CONS.STAT. §§ 4207 and 3417, these warranties included: (1) that Mellon had good title; (2) that Mellon was authorized to obtain payment; (3) that all signatures were genuine or authorized; and (4) that no defense of any party was good against Mellon.

In opposition, Mellon asserts that even if Equibank and Peoples are entitled to judgment against Mellon, should the indorsements be determined improper, it is Heritage that has the ultimate liability.

Further, Mellon contends that Equibank and Peoples should be estopped from claiming that Mellon breached any warranties because any irregularity on the checks should have been more apparent to Equibank and Peoples since they were the pay- or banks. In this connection, Mellon asserts that the two banks had either actual or constructive knowledge and failed to exercise good faith in the páyment of the checks as required under 13 PA.CONS. STAT. §§ 4207 and 3417, notwithstanding that Mellon also paid checks drawn on its account.

Additionally, Mellon asserts that Heritage, as the first bank in the collecting chain, should bear the ultimate liability to O’Mara as it breached its warranties to Mellon as well as to Equibank and Peoples. According to Mellon, Heritage warranted under 13 PA.CONS.STAT. §§ 4207 and 3417, among other things: (1) that it had good title to the checks and (2) that all signatures were genuine and authorized.

In reply, Equibank and Peoples again assert that Mellon is liable to them since Mellon guaranteed all prior indorsements when it forwarded the checks to Equibank and Peoples. Further, with respect to Mellon’s argument that Equibank and Peoples failed to exercise good faith, these banks contend that this argument is lacking in factual substantiation.

4. Mellon’s Motion for Summary Judgment against Heritage.

In support of this motion, Mellon asserts that in the event that O’Mara prevails against Mellon on its Complaint, and if Equibank and Peoples prevail against Mellon on their Crossclaim, then Heritage is liable to Mellon for all these claims. More specifically, Mellon claims that Heritage, as the first bank in the collection chain and by virtue of its indorsement “Pay Any Bank, P.E.G. Heritage Bank” on each check, warranted to Mellon when it presented the checks for collection that all prior indorsements were proper. Mellon further asserts that by virtue of this indorsement Heritage gave warranties to Mellon and if it is determined that any prior indorsements were improper, Heritage must be determined to have breached those warranties. Mellon also contends that, as between banks, the ultimate liability should be placed on the bank first honoring the check, i.e., Heritage, as it is in the best position to ascertain whether the indorsements are proper, and Mellon, as the second bank in the collecting chain, is entitled to rely on Heritage’s warranties.

In opposition, Heritage initially asserts that it is premature for the Court to determine if Heritage is liable to Mellon, as there exist factual disputes with regard to O’Mara’s claim against Mellon [which liability is not before the Court presently]. With respect to the Third-Party claim, Heritage asserts that factual issues raised by its affirmative defenses are in dispute i.e., the claimed lack of good faith by Mellon, whether Mellon should be estopped from claiming breach of warranty and whether Mellon failed to assert its breach of warranty claim against Mellon in a reasonable period of time. Heritage further contends that it is entitled to develop factually its “fictitious payee” defense along with its “holder in due course” defense.

In reply, Mellon asserts that the viability of these purported defenses has not been supported by the proffering of any factual assertions, and under FED.R.CIV.P. 56(e) the party opposing the motion may not simply “rest upon the mere allegations or denials of his pleadings, but ... must set forth specific facts.”

The O’Mara Brothers’ Motion to Dismiss The Fourth-Party Complaint

In addition to the applications set forth above, also before this Court is the O’Mara brothers’ Motion to Dismiss Heritage’s Fourth-Party Complaint. The motion asserts that this Court lacks in personam jurisdiction over Timothy J. O’Mara, a resident of Ohio, and Vincent M. O’Mara and James P. O’Mara, residents of West Virginia, under both the Pennsylvania long-arm statute and the due process clause of the Constitution. Movants admit that as corporate officers of O’Mara they have contacts with this state, but assert that they do not have these contacts as individuals. Movants have also supplied affidavits regarding the nature of their contacts in Pennsylvania which, apart from occasional social activities in this state, are related to the business of O’Mara.

Alternatively, the O’Mara brothers have moved to dismiss the action for failure to state a cause of action for indemnity under Ohio law, which they claim applies.

In opposition, Heritage asserts that since the O’Mara brothers’ out-of-state actions caused harm in Pennsylvania, this Court may invoke its jurisdiction in conformity with the current long-arm statute and with the constitutional requirements of due process. Additionally, Heritage asserts that Pennsylvania law regarding indemnity and contribution should apply to the fourth-party action, and under its application, the Fourth-Party Complaint states a cause of action.

DISCUSSION

The Cross-Motions For Summary Judgment

In accordance with FED.R.CIV.P. 56(c), the district court, in order to grant a motion for summary judgment, must determine that “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” See also, e.g., Sames v. Gable, 732 F.2d 49, 51 (3d Cir.1984). Moreover, the district court must “ ‘resolve any doubts as to the existence of genuine issues of fact against the moving parties’ ” and “ ‘inferences to be drawn from the underlying facts ... must be viewed in the light most favorable to the party opposing the motion.’ ” Continental Insurance Co. v. Bodie, 682 F.2d 436, 438 (3d Cir.1982) (citations omitted). However, under FED.R. CIV.P. 56(e), a party opposing a motion for summary judgment may not simply rest upon the allegations or denials contained in the pleadings. See also, e.g., Ness v. Marshall, 660 F.2d 517, 519 (3d Cir.1981). Rather, in resisting the motion, the party “must set forth specific facts showing that there is genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.” FED.R.CIV.P. 56(e). See also, e.g., Ness v. Marshall, 660 F.2d at 519.

While keeping cognizant of the above-noted standards, the Court will decide which, if any, of the moving parties are entitled to summary judgment.

13 PA.CONS.STAT. (“Uniform Commercial Code”) § 3201(c) (Purdon 1980) provides, inter alia, that “[negotiation takes effect only when the indorsement is made and until that time there is no presumption that the transferee is the owner.” Further, negotiation is defined in § 3202(1) of the Uniform Commercial Code as “the transfer of an instrument in such form that the transferee becomes a holder.” A holder, as defined by § 1201 of the Uniform Commercial Code is a “person who is in possession of an ... instrument ... issued or indorsed to him or to his order or to bearer or in blank.” Moreover, “[t]he holder of an instrument whether or not he is the owner may transfer or negotiate it...” § 3301 of the Uniform Commercial Code.

in the case at bar, although the checks at issue were payable to the order of Heritage, prior to the time Heritage gained possession and placed its indorsement on these checks, GSD placed the restrictive indorsement — “FOR DEPOSIT ONLY GAIL SMITH DEVELOPMENT” — on these same checks.

GSD did this notwithstanding that it was not a holder since the checks were not “issued or indorsed to [it] or to [its] order or to bearer or in blank,” in conformity with § 1201 of the Uniform Commercial Code.

Since GSD was not a holder, it could not transfer or negotiate the checks pursuant to § 3301. Moreover, by placing its indorsement on the checks, it destroyed the negotiability of the checks, even vis-a-vis Heritage, the named payee. Therefore, because of GSD’s indorsement, Heritage did not become a holder, notwithstanding that the checks were originally payable to Heritage’s order. Additionally, Heritage could not become a holder pursuant to § 3201 of the Uniform Commercial Code as “[transfer of an instrument vests in the transferee such rights as the transferor has therein ----” Therefore, because GSD was not a holder, Heritage, its immediate transferee, was not a holder.

As noted above, after Heritage had possession of the checks at issue, the checks were indorsed by it and then sent to Mellon, the collecting bank. With respect to checks other than its own, Mellon forwarded the respective checks to Equitable or Peoples after Mellon indorsed the checks. (Each drawee bank then paid these checks by debiting the respective O’Mara account.)

Section 3417(2) of the Uniform Commercial Code provides that the transferor of an instrument warrants to his transferee (and to any subsequent holder acting in good faith if the transfer is by indorsement) the following:

(1) he has a good title to the instrument or is authorized to obtain payment or acceptance on behalf of one who has a good title and the transfer is otherwise rightful;
(2) all signatures are genuine or authorized;
(3) the instrument has not been materially altered;
(4) no defense of any party is good against him and
(5) he has no knowledge of any insolvency proceeding instituted with respect to the maker or acceptor or the drawer of an unaccepted instrument.

Since in this case the transferees are banks, Article 4 of the Uniform Commercial Code, “Bank Deposits and Collections,” also applies.

In this situation, Heritage is the collecting bank (as is Mellon) which is defined as “[a]ny bank handling the item for collection except the payor bank” (payor bank is defined as “[a] bank by which an item is payable as drawn or accepted”). § 4105 of the Uniform Commercial Code.

Pursuant to § 4207(2) of the Uniform Commercial Code, a collecting bank which transfers an item warrants the following to its transferee and subsequent collecting bank:

(1) he has a good title to the item or is authorized to obtain payment or acceptance on behalf of one who has a good title and the transfer is otherwise rightful;
(2) all signatures are genuine or authorized;
(3) the item has not been materially altered;
(4) no defense of any party is good against him and
(5) he has no knowledge of any insolvency proceeding instituted with respect to the maker or acceptor or the drawer of an unaccepted item.

At the time Heritage transferred the checks to Mellon, Heritage’s transferee and subsequent collecting bank, Heritage warranted to Mellon under §§ 4207(2) and 3417(2) of the Uniform Commercial Code, inter alia, that it had good title, and that the transfer is otherwise rightful, that all signatures were genuine or authorized and that no defense was good against it. As set forth above, these checks were not capable of negotiation. Due to these transfer warranties, as between Mellon and Heritage, the first bank in the collection chain bears the liability, should O’Mara prevail against the Defendant Bank(s).

As noted above, after Mellon received the checks from Heritage, with respect to those drawn on the Peoples and Equibank accounts, Mellon placed its indorsement thereon and forwarded the checks to the respective drawee bank.

Similarly, at the time Mellon transferred the respective checks to Peoples and Equibank, under § 4207(2) of the Uniform Commercial Code it made the same warranties to these transferee banks as Heritage had made to it. It is because of these transfer warranties that Mellon bears the liability as between it and Peoples and Equibank under their respective Crossclaims, should O’Mara prevail against the latter two banks. However, should this transpire, it is Heritage that bears this liability, as it is liable to Mellon under the Third-Party Complaint. Additionally, should O’Mara prevail against Mellon, it is Heritage that bears this liability, as it is also liable to Mellon under the Third-Party Complaint for this aspect of the case.

For the reasons set forth above, with respect to the Motions for Summary Judgment of Mellon, Equibank and Peoples against O’Mara, these motions are denied. In support of these motions the banks ignore the fact that the GSD indorsement is on the checks, which indorsement, as noted above, changes the situation dramatically by preventing all subsequent transferees from becoming holders and destroying negotiability. Therefore, this Court cannot grant the requests for summary judgment of the Defendant banks against O’Mara.

Similarly, Heritage’s Motion for Summary Judgment against O’Mara (joined by Mellon and Peoples) is denied. Initially, this Court notes that there is no direct claim running between O’Mara and Heritage. Further, although as Heritage asserts, the checks at issue did contain the indorsement of Heritage, the fact that the GSD indorsement precedes the Heritage indorsement alters the situation, as set forth above. Accordingly, for these reasons it would be inappropriate to grant the Motion for Summary Judgment by Heritage (or Mellon or Peoples) against O’Mara, and the motion is denied.

For the reasons set forth above, Equibank and Peoples’ Motion for Summary Judgment against Mellon is granted. Therefore, with respect to' the Crossclaims of Equibank and Peoples against Mellon, judgment is entered in favor of Peoples and Equibank against Mellon. Accordingly, in the event O’Mara prevails against Peoples and/or Equibank, Mellon is liable for any such judgment.

Also for the reasons set forth above, Mellon’s Motion for Summary Judgment against Heritage is granted. Therefore, with respect to the Third-Party Complaint of Mellon against Heritage, judgment is entered in favor of Mellon and against Heritage. Accordingly, in the event that O’Mara prevails against Mellon (and/or Peoples and/or Equibank since judgment is entered against Mellon on the Equibank and Peoples Crossclaims), then Heritage is liable to Mellon for any such judgment.

The O’Mara Brothers’ Motion to Dismiss the Fourth-Party Complaint

The Fourth-Party Complaint seeks indemnification and/or contribution from the O’Mara brothers in their individual capacities for allegedly failing to exercise due care as officers of O’Mara.

The O’Mara brothers, in moving to dismiss the Fourth-Party Complaint, do not dispute that they have certain contacts with the Commonwealth of Pennsylvania. However, they assert in affidavits that these activities, apart from occasional social ones (which are not relevant here), are conducted by them in their capacities as corporate officers of O’Mara. The O’Mara brothers assert that these contacts are insufficient to permit this Court to invoke personal jurisdiction over them on a “transacting business” theory. (The O’Mara brothers do not address the “tortious injury” theory.)

In response, Heritage essentially concedes that this Court cannot assert jurisdiction over the O’Mara brothers on the theory of “transacting or doing business”, but asserts that jurisdiction may be exercised over the O’Mara brothers on a “tortious injury” theory.

In determining whether it is proper to exercise in personam jurisdiction over a nonresident, the district court must address the matter in a two-step process: (1) it must determine whether the activity of the nonresident falls within the ambit of the long-arm statute; and if so, (2) the Court must then determine whether this activity comports with the due process requirements of the Constitution. See, e.g., Columbia Metal Culvert Co. v. Kaiser Industries Corp., 526 F.2d 724 (3d Cir.1975).

Pennsylvania’s long-arm statute, 42 PA. CONS.STAT. § 5322 (Purdon 1981), provides in pertinent part as follows:

(a) General rule. — A tribunal of this Commonwealth may exercise personal jurisdiction over a person ... who acts directly or by an agent, as to a cause of action or other matter arising from such person
(4) Causing harm or tortious injury in this Commonwealth by an act or omission outside this Commonwealth.

(Emphasis added.)

Conspicuously absent from the Fourth-Party Complaint, in which Heritage seeks to recover against the O'Mara brothers on the basis of “tortious injury,” is any allegation that the alleged actions of the O’Mara brothers “caus[ed] harm or tortious injury in this Commonwealth.” Without any such allegations, the Fourth-Party Complaint is fatally deficient. In its present form the Fourth-Party Complaint does not permit the Court to ascertain whether the conduct complained of falls within the ambit of the long-arm statute. Cf., Miller v. American Telephone & Telegraph Co., 394 F.Supp. 58 (E.D.Pa.1975), aff'd without published opinion, 530 F.2d 964 (3d Cir.1976). Accordingly, the Motion to Dismiss the Fourth-Party Complaint is granted and the Fourth-Party Complaint is dismissed. However, if Heritage so desires, it may file an amended fourth-party complaint within ten days of this Opinion and Order. Failure to do so by this time will constitute a waiver.

An appropriate Order shall issue.

ORDER

And now, this 16th day of January, 1985, in conformity with the foregoing Opinion, it is hereby ORDERED that the Motion for Summary Judgment by Mellon, Equibank and Peoples against Plaintiff is DENIED. It is further ORDERED that the Motion for Summary Judgment by Heritage (joined by Mellon and Peoples) against Plaintiff is DENIED.

It is further ORDERED that the Motion for Summary Judgment by Equibank and Peoples against Mellon is GRANTED. It is further ORDERED that the Motion for Summary Judgment by Mellon against Heritage is GRANTED.

Accordingly, with respect to the Cross-claims of Equibank and Peoples, Judgment is ENTERED in favor of Peoples and Equibank and against Mellon. Therefore, in the event that Plaintiff prevails against Peoples and/or Equibank, then Mellon is liable for any such judgment. Further, with respect to the Third-Party Complaint of Mellon against Heritage, Judgment is entered in favor of Mellon and against Heritage. Therefore, in the event that Plaintiffs prevail against Mellon (and/or Peoples and/or Equibank since Judgment is entered against Mellon on these two banks’ Cross-claims), then Heritage is liable for any such judgment.

It is further ORDERED that the Fourth-Party Defendants’ Motion to Dismiss the Fourth-Party Complaint is GRANTED and the Fourth-Party Complaint is DISMISSED. However, if Heritage so desires, in conformity with this Opinion, it may file an amended fourth-party complaint within ten days of this Opinion and Order. Failure to do so by this time will constitute a waiver.

      . Timothy J. O’Mara’s signature on these checks was actually a facsimile, i.e., created from a stamp entrusted to GSD.' This signature or use of the stamp is not at issue currently.

      . This is the predecessor to Heritage.

      . Heritage states that the corporate resolution "provided to Heritage Bank to pay to Thompson or W. Gail Smith proceeds of any checks payable to Heritage Bank so long as the checks were signed or endorsed by Smith or Thompson.” Heritage's Brief at 15.

      . O’Mara asserts that since GSD, Heritage’s immediate transferee, was not a holder it therefore could not transfer more rights than it had, pursuant to 13 PA.CONS.STAT. § 3201(a).

      . This Court rejects Heritage’s arguments that no indorsement was necessary "because O’Mara was the maker of the check and Heritage was the payee”, and that negotiation took place when the checks were delivered. Heritage's Reply Brief at 2. As set forth above, the GSD indorsement prevented further negotiation, and, in any event, these checks were not "bearer paper” as also asserted by Heritage.

      . By the terms of § 4207, the ultimate burden is placed on the first bank honoring the instrument. See also, Commonwealth Federal Savings & Loan Ass’n v. First National Bank of New Jersey, 513 F.Supp. 296, 303 (E.D.Pa.1979).

      . The court need not and will not address Heritage’s argument regarding the corporate resolution as it would not alter the result.

      . In doing so, this Court rejects Heritage’s argument that there are certain factual issues raised by its affirmative defenses which should preelude the granting of summary judgment since it did not submit any factual substantiation; FED.R.CIV.P. 56(e) does not permit the party opposing the motion to “simply rest upon the mere allegations or denials of his pleadings".


source: Caselaw Access Project

author: MacMAHON, District Judge.

license: Public Domain

text:
    In the Matter of the Application of Raymond J. DONOVAN for Removal of the State Criminal Proceeding Brought Against Him in Bronx County Entitled: PEOPLE of the State of New York v. SCHIAVONE CONSTRUCTION COMPANY, Raymond J. Donovan, Ronald A. Schiavone, Richard C. Callaghan, Joseph A. DiCarolis, Morris J. Levin, Albert J. Magrini, Gennaro Liguori, Robert Genuario, Jopel Contracting and Trucking Corporation, Joseph L. Galiber, and William P. Masselli, Defendants.
    No. 84 Civ. 8254 (LFM).
    United States District Court, S.D. New York.
    Jan. 16, 1985.

      Pierson Ball & Dowd by William O. Bittman, Judith L. Harris and Richard D. Lerner, Washington, D.C. and Kaye, Scholer, Fierman, Hays & Handler by Paul J. Cur-ran and Bruce Margolius, New York City, for petitioner Raymond J. Donovan.
    Mario Merola, Dist. Atty., Bronx County by Stephen R. Bookin, Mark L. Freyberg and Jeremy Gutman, Asst. Dist. Attys., New York City, for respondent People of the State of N.Y.
    Lowenstein, Sandler, Brochin, Kohl, Fisher, Boylan & Meanor, P.C. by Theodore V. Wells, Jr. and Robert L. Krakower, Rose-land, N.J., for intervenors Schiavone Const. Co., Ronald A. Schiavone, Richard C. Callaghan, Joseph A. DiCarolis, Morris J. Levin, Albert J. Magrini, Gennaro Liguori and Robert Genuario.
    Julien & Schlesinger, P.C. by Stuart A. Schlesinger, New York City, for intervenor Joseph L. Galiber.
   OPINION

MacMAHON, District Judge.

Petitioner Raymond J. Donovan, United States Secretary of Labor, seeks removal to this court of a state criminal prosecution pending against him and eleven codefendants under Indictment No. 3571/84, filed on September 24, 1984 in the Supreme Court of the State of New York, Bronx County. Seventy-two counts of the 137-count indictment charge petitioner with the commission of state felonies while serving as Secretary of Labor. On October 1,1984, petitioner, due to his indictment, took a leave of absence without pay from his cabinet office.

Since it did not appear on the face of the petition that it should be dismissed summarily as insufficient, we held an evidentiary hearing on December 12, 13, 17 and 18, 1984, pursuant to the mandate of 28 U.S.C. § 1446(c)(5).

Invoking the protection of 28 U.S.C. § 1442(a)(1), petitioner asserts that he is entitled to removal on three grounds. First, the indictment, on its face, charges petitioner with acts which he took, or refrained from taking, under color of his federal office. Second, one of his primary defenses arises out of his duties under federal conflict of interest laws. Third, respondent Mario Merola, District Attorney, Bronx County, is wrongfully attempting to interfere with the operations of the federal government.

Respondent opposes the petition, contests petitioner’s allegations of fact, and denies any wrongful interference with the federal government. He contends that the indictment, as clarified by a supplemental bill of particulars and the evidence upon the hearing, charges petitioner solely with private acts which have no connection with his federal office, and that the federal conflict of interest laws provide petitioner with no colorable defense. Intervenors, petitioner’s codefendants, oppose removal of the prosecution against them, as urged by respondent, if we grant removal of the case against petitioner.

Having observed the witnesses, considered the documents, and heard the arguments of the parties, we now make the following findings of fact and conclusions of law.

FACTS

Petitioner was employed by Schiavone Construction Company (“SCC”) from 1959 until February 1981, and during his later years with SCC served as executive vice president and owned 40% of the company. SCC is a heavy construction company engaged in large projects, such as building bridges, roads, subways, and sewage and water treatment plants. In late 1978, SCC, as part of a joint venture, obtained a contract on a project to construct a portion of a subway line running from Third Avenue and 63rd Street in Manhattan to the East River, known as “the 5-B job.” The contract was 80% funded by the Urban Mass Transit Authority (“UMTA”) at a fixed price of $186 million.

In 1981, petitioner was nominated for the office of Secretary of Labor. The Senate confirmed petitioner’s nomination after holding hearings, and, on February 4, 1981, he was sworn in as Secretary of Labor. As required by applicable federal laws and regulations concerning conflicts of interest, petitioner resigned from all his positions with SCC, its subsidiaries and affiliates, their pension and profit sharing trusts, and the joint venture. Petitioner, however, has retained his stock interest in SCC and its affiliated companies but has placed it in trust. He served as Secretary of Labor from February 4, 1981 until October 1, 1984.

On December 29, 1981, the United States Department of Justice applied to the United States Court of Appeals for the District of Columbia Circuit for the appointment of a Special Prosecutor, pursuant to 28 U.S.C. § 591, to investigate whether petitioner had violated any federal criminal laws. The court designated Leon Silverman, Esq., an experienced and able member of the bar of this court, to investigate allegations of criminal conduct concerning petitioner, SCC, the 5-B job, and Jopel Contracting and Trucking Corporation (“Jopel”). Early in 1982, Mr. Silverman began presenting evidence to a federal grand jury in the Eastern District of New York, and after six months concluded that there was insufficient credible evidence to take any action against petitioner.

On September 24, 1984, the Bronx County grand jury, on the basis of evidence similar to that considered by Mr. Silver-man, returned the subject indictment against petitioner and his codefendants. The indictment, on its face, charges petitioner and his codefendants with grand larceny (N.Y. Penal Law § 155.35 (one count)), falsifying business records (N.Y. Penal Law § 175.10 (125 counts)), and offering a false instrument for filing (N.Y. Penal Law § 175.35 (11 counts)), all during the period October 1,1979 through September 24, 1984.

The indictment, as clarified by the bill of particulars and the evidence upon the hearing, stems from the SCC-New York Transit Authority (“TA”) contract for the 5-B job and a related subcontract between SCC and Jopel to haul away excavated materials. The TA contract required that 10% of the $186 million bid price be paid to minority business enterprise (“MBE”) subcontractors. Allegedly, before petitioner became Secretary of Labor but continuing thereafter, he and his codefendants, acting in concert, defrauded the TA by falsely representing that Jopel, a sham MBE and the creation of SCC, was a genuine and independent MBE. It is charged that money which appeared to be paid to Jopel and which was allocated falsely to the MBE 10% requirement was actually kept by or passed to SCC. Specifically, it is alleged that an SCC check, payable to Jopel for $200,000 and co-signed by petitioner, evidences an interest-free loan to start Jopel’s operations; that SCC financed Jopel’s payroll; that Jopel had no responsibility for work in the tunnel and no contact with the workers; that defendants created false business records which purported to reflect Jopel’s payment of rent to SCC for Jopel’s use of SCC equipment; and that, based on these false records, documents were submitted to the TA and, in turn, to UMTA which falsely reported that Jopel was paid certain amounts of the MBE 10% requirement.

DISCUSSION

We emphasize at the outset that the sole question before us is whether petitioner has adequate grounds for removal, and we make no findings or conclusions as to any other issue, such as the validity of the indictment, the sufficiency of the evidence before the Bronx grand jury, and alleged prosecutorial misconduct.

The right of removal under the applicable statute, § 1442(a)(1), is absolute whenever a state criminal prosecution is brought against “any officer of the United States ... for any act under color of such office.” In Willingham v. Morgan, 395 U.S. 402, 89 S.Ct. 1813, 23 L.Ed.2d 396 (1969), an inmate at a federal penitentiary brought a civil action against the warden and chief medical officer claiming they had assaulted and tortured him. Confronted with an assertion that “they were on a frolic of their own,” petitioners countered that their only contact with respondent was in the performance of their official duties as warden and as chief medical officer. Holding that this satisfied the “color of office” requirement, the Supreme Court taught that:

The federal officer removal statute is not “narrow” or “limited.” Colorado v. Symes, 286 U.S. 510, 517 [52 S.Ct. 635, 637, 76 L.Ed. 1253] (1932). At the very least, it is broad enough to cover all cases where federal officers can raise a colorable defense arising out of their duty to enforce federal law. One of the primary purposes of the removal statute — as its history clearly demonstrates — was to have such defenses litigated in the federal courts____ In fact, one of the most important reasons for removal is to have the validity of the defense of official immunity tried in a federal court. The officer need not win his case before he can have it removed. In cases like this one, Congress has decided that federal officers, and indeed the Federal Government itself, require the protection of a federal forum. This policy should not be frustrated by a narrow, grudging interpretation of § 1442(a)(1).

Id. at 406-07, 89 S.Ct. at 1815-16.

As we have seen, the indictment here charges petitioner with larceny, falsifying business records, and filing false reports. It does not specify, on its face, any act showing how petitioner stole money or falsified business records or filed false reports. Nor does it in any way limit the allegations to private conduct. Petitioner, like the petitioners in Willingham, asserts and has testified that his only contact involving UMTA and the only reports he “made to UMTA since becoming Secretary of Labor were in the course of his official duties.” He further testified and introduced documentary evidence showing that, in compliance with the federal conflict of interest laws, he wholly disassociated himself from the business activities of SCC since becoming Secretary of Labor.

Relying on Willingham, petitioner asserts that the breadth of the indictment does not limit the acts charged to private conduct, and that, since becoming Secretary of Labor, his only possible connection with the acts charged was in the course of his official duties. Consequently, he concludes that the state prosecution is brought for acts “under color of office.” This argument is tenable enough to preclude summary dismissal of the petition and to raise issues requiring a hearing. In light of the evidence upon the hearing, however, petitioner’s reliance on Willingham is misplaced. Willingham was a civil case, and, in holding that the allegations there were sufficient to satisfy the “color of office” requirement, the Court was careful to note that a more detailed showing is necessary in a criminal case before granting removal because of the compelling state interest in conducting state criminal trials in state courts. Id. at 409 n. 4, 89 S.Ct. at 1817 n. 4.

The supplemental bill of particulars and the evidence upon the hearing make clear that, although 72 counts of the indictment charge petitioner with crimes committed after he became Secretary of Labor, none of the 72 counts charge him with any personal act, either under color of office or otherwise. Rather, all 72 impute the alleged criminal conduct of others to him as a member of a continuing conspiracy which began in 1979. Thus, petitioner is not charged, directly or indirectly, with crimes based on any act relating to his official duties.

Moreover, the evidence establishes that petitioner’s only direct personal involvement with SCC, Jopel and the contract with the TA on the 5-B job arose solely through his affiliation with SCC — an affiliation that pre-dated and was entirely independent of his role as Secretary of Labor. Petitioner himself testified that he has taken no action in his official capacity which in any way affected SCC or any contracts, business transactions, or reports referred to in the indictment.

Petitioner thus has failed to meet his burden of showing that any of the crimes charged against him arose from performance of his official duties, or, indeed, that there is the slightest nexus between his official duties and the charged crimes. On the contrary, the instant indictment, as limited by the bill of particulars and clarified by the evidence upon the hearing, charges petitioner with crimes defined by state law arising solely from unofficial acts.

Petitioner next contends that he could raise a colorable defense arising out of his duties under federal conflict of interest laws. Willingham established that the “color of office” test of § 1442(a)(1) covers “all cases where federal officers can raise a colorable defense arising out of their duty to enforce federal law.” Id. at 406-07, 89 S.Ct. at 1815-16. Petitioner asserts that upon a trial, if the case survived a motion to dismiss at the close of the prosecution’s evidence, he would prove that he complied with federal conflict of interest laws and thus necessarily withdrew from the alleged conspiracy. Although evidence of such compliance may well be relevant to a defense of renunciation under N.Y.Penal Law § 40.10, the significance of such evidence would depend upon petitioner’s actions, not whether those actions were motivated by a duty to comply with federal laws. It is the fact of withdrawal, not the duty which prompted it, that may constitute a defense to conspiracy. United States v. Steele, 685 F.2d 793 (3d Cir.1982); United States v. Goldberg, 401 F.2d 644 (2d Cir.1968), cert. denied, 393 U.S. 1099, 89 S.Ct. 895, 21 L.Ed.2d 790 (1969). Thus, petitioner’s duties to comply with conflict of interest laws do not provide him with a colorable defense arising out of his duty to enforce federal law.

Finally, petitioner alleges that the Bronx District Attorney is hostilely attempting to interfere with the operations of the federal government. Willingham teaches that one of the purposes of removal under § 1442(a)(1) is to safeguard the operations of the federal government through its officers and agents against interference by hostile state courts. Id. 395 U.S. at 405-06, 89 S.Ct. at 1815. Those operations would be jeopardized if federal officers, acting “within the scope of their authority ... can be arrested and brought to trial in a State court, for an alleged offense against the law of the State, yet warranted by the Federal authority they possess____” Tennessee v. Davis, 100 U.S. (10 Otto) 257, 263, 25 L.Ed. 648 (1880), cited with approval in Willingham, 395 U.S. at 406, 89 S.Ct. at 1815.

Unquestionably, the indictment of a cabinet officer interferes with the administration and operation of the executive branch of the federal government. It strikes such a crippling blow to the officer’s effectiveness that it compels his temporary, if not his permanent, removal from office. The longer the indictment remains unresolved, the greater the disruption of the Department of Labor. This creates a strong federal interest in the prompt disposition of the case which would be ensured by removal and a prompt trial mandated by the Speedy Trial Act. That interest, however, is neither a ground for removal under § 1442(a)(1) nor one which overrides the interest of the state in enforcing its criminal laws.

Petitioner claims that hostility on the part of the Bronx District Attorney is evidenced by the circumstances surrounding the indictment. He points to the prior federal investigation, based on substantially the same evidence and involving related issues, which concluded that there was insufficient credible evidence to take action against petitioner. Petitioner also claims that the indictment was timed by the Bronx District Attorney to influence a presidential election. He complains also of cursory and unfair treatment when he appeared before the Bronx grand jury and of prejudicial publicity and false characterization of the charges against him by the Bronx District Attorney. These contentions, if established, may have some relevance to other issues in this case, but they are immaterial to the issue of removal.

We recognize that the policy of providing federal officers with the protection of a federal forum “should not be frustrated by a narrow, grudging interpretation of § 1442(a)(1).” Willingham, 395 U.S. at 407, 89 S.Ct. at 1816. It is not our province, however, to expand upon the present statute, and we find that even the most liberal interpretation does not warrant removal here. The doctrines of federalism and comity mandate that federal courts act with restraint with respect to ongoing state criminal prosecutions and interfere with such prosecutions only when necessary to protect overriding federal interests. Younger v. Harris, 401 U.S. 37, 44-45, 91 S.Ct. 746, 750-51, 27 L.Ed.2d 669 (1971). A court considering a removal petition must, therefore, appreciate that misapplication of the removal statute bears severe consequences to the federalist system, for:

[I]t is axiomatic that the right of the States, consistently with the Constitution and laws of the United States, to make and enforce their own laws is equal to the right of the federal government to exert exclusive and supreme power in the field that by virtue of the Constitution belongs to it. The removal statute under consideration is to be construed with highest regard for such equality. Federal officers and employees are not, merely because they are such, granted immunity from prosecution in state courts for crimes against state law.

Colorado v. Symes, 286 U.S. 510, 518, 52 S.Ct. 635, 637, 76 L.Ed. 1253 (1932). Accord, Dixon v. Georgia Indigent Legal Services, Inc., 388 F.Supp. 1156, 1162 (S.D. Ga.1975), aff'd, 532 F.2d 1373 (5th Cir. 1976).

The charges confronting petitioner in no way pertain to his performance of official duties; nor do his duties as Secretary of Labor provide any explanation or excuse for the crimes charged. Moreover, petitioner has specifically testified that he took no action in his official capacity with regard to the subject matter of the indictment. Since this prosecution is not brought against petitioner “for any act under color of such office,” we are compelled to conclude that the right of the states to enforce and execute their own laws must be respected.

The foregoing opinion constitutes this court’s findings of fact and conclusions of law, in accordance with Rule 52, Ped.R. Civ.P.

Accordingly, the petition for removal is denied. This disposition moots the issue of removal as to the intervenors.

So ordered.

      . Also indicted were Secretary Donovan's former company, Schiavone Construction Company ("SCC”); seven SCC officials or former officials; Jopel Contracting and Trucking Corporation (“Jopel") and its two principal shareholders, William P. Masselli and Joseph L. Galiber. This petition is filed only on behalf of Secretary Donovan.

      . Petitioner no longer urges the arguments set forth in Sections III and IV of his Memorandum of Law in Support of Petition for Removal, i.e., (1) that the acts charged, including the filing of reports, were committed under the authority of a federal agency, and (2) that the acts charged were committed under the authority of federal laws providing for equal rights.

      . SCC, Ronald A. Schiavone, Richard C. Callaghan, Joseph A. DiCarolis, Morris J. Levin, Albert J. Magrini, Gennaro Liguori, Robert Genuario, and Joseph L. Galiber.

      . Executive Order 11,625, reported at 3 C.F.R. 616 (1971), requires that all federal agencies encourage full participation in federal programs by minority business enterprises ("MBE”s). MBEs are defined in the Executive Order as businesses "owned and controlled” by "socially and economically disadvantaged persons."

      . See People v. McGee, 49 N.Y.2d 48, 399 N.E.2d 1177, 424 N.Y.S.2d 157 (1979).

      . A bill of particulars gives the defendant a more specific definition of the nature and character of the crimes charged to avoid surprise at trial and to enable him to prepare his defense. People v. Raymond G., 54 A.D.2d 596, 387 N.Y.S.2d 174 (3d Dept.1976). The bill of particulars here specifies in detail the charges against petitioner and limits the crimes charged to unofficial acts.

      . Petitioner's criminal liability must be determined under the substantive criminal law of New York. Arizona v. Manypenny, 451 U.S. 232, 241-42, 101 S.Ct. 1657, 1664, 68 L.Ed.2d 58 (1981). Whereas an affirmative act of withdrawal constitutes a complete defense under federal law, United States v. Steele, 685 F.2d 793, 803-04 (3d Cir.1982), a defendant seeking to establish the affirmative defense of renunciation under N.Y.Penal Law § 40.10(1) must meet the additional burden of demonstrating that he made a "substantial effort" to prevent the commission of the conspiratorial plan. People v. Ozarowski, 38 N.Y.2d 481, 344 N.E.2d 370, 381 N.Y.S.2d 438 (1976). Thus, under the applicable law, petitioner’s claims regarding his withdrawal from SCC, if proven, may not constitute a defense at all.

      . The mere fact, however, that the present prosecution may be based substantially on the same evidence previously rejected in a federal investigation is no bar to the state’s subsequent prosecution charging violations of state laws. This is true even if the prior federal case resulted in an acquittal by a jury. Bartkus v. Illinois, 359 U.S. 121, 79 S.Ct. 676, 3 L.Ed.2d 684 (1959). In Bartkus, the Supreme Court held that the double jeopardy clause would not bar a state from prosecuting a defendant for a robbery that had previously been the subject of a federal prosecution. The Court recognized "the historic right and obligation of the States to maintain peace and order within their confines" and therefore declared that "it would be in derogation of our federal system to displace the reserved power of States over state offenses____” Id. at 137, 79 S.Ct. at 685.


author: BARRINGTON D. PARKER, District Judge:

text:
    John DOE, Plaintiff, v. William CASEY, Defendant.
    Civ. A. No. 82-2016.
    United States District Court, District of Columbia.
    Jan. 16, 1985.

      Mark H. Lynch, Susan W. Shaffer, American Civil Liberties Union Foundation, Washington, D.C., for plaintiff.
    J. Paul McGrath, Asst. Atty. Gen., Stanley S. Harris, U.S. Atty., David H. White, Vincent M. Garvey, Dept, of Justice, Washington, D.C., for defendant.
   MEMORANDUM OPINION

BARRINGTON D. PARKER, District Judge:

The plaintiff John Doe claims that after nine years of service with the Central Intelligence Agency (“CIA” or “Agency”) his employment was unlawfully terminated because he voluntarily acknowledged to his superior that he had engaged in homosexual practices. Following that disclosure, the CIA Director, William Casey, decided that it was “necessary and advisable in the interests of the United States to terminate [Doe’s] employment ... pursuant to section 102(c) of the National Security Act of 1947 [50 U.S.C. § 401] ,..”

John Doe asserts that the Director provided no reasons for his decision, thus, rendering him unable to respond to the charges. In his complaint seeking declaratory and injunctive relief, plaintiff alleges that he was deprived of the elements of fundamental fairness, that he was the victim of procedural deficiencies and irregularities arising from the refusal of the Director to supply reasons for his dismissal and a reasonable and fair opportunity to respond to those reasons. He charges that in dismissing him, the Director violated Agency regulations and provisions of both the National Security Act and the Administrative Procedure Act (“APA”), 5 U.S.C. § 706. He further charges that the Director violated his Fifth Amendment due process and equal protection rights, his liberty interest, as well as his right to privacy under the First, Fourth, Fifth and Ninth Amendments of the Constitution. The CIA Director is sued in his official capacity.

Plaintiff seeks a judicial declaration that Director Casey abused his discretion, acted arbitrarily and improperly, and violated his rights secured by the Constitution. Injunctive relief, requiring the Director either to reinstate him to his former position, or alternatively, to provide him with a statement of reasons for termination of his employment, and an adequate opportunity to respond to those reasons is also sought.

At the outset, the defendant moved to dismiss Doe’s complaint asserting insufficiency of service of process, improper venue, lack of subject matter jurisdiction, and failure to state a claim upon which relief can be granted. The parties also filed cross motions for summary judgment.

The legal memoranda submitted by counsel were exhaustive, ably presented, and have been fully considered. For the reasons set forth below, the Court determines that this proceeding should not be dismissed and that the decision of the CIA Director to terminate the plaintiffs employment was improper, unreasonable, an abuse of discretion and both procedurally and substantively flawed. The Court also determines that under the circumstances the plaintiff is entitled to declaratory and limited injunctive relief. The proceeding should be remanded to the Agency for further consideration consistent with the conclusions set out in this Memorandum Opinion and the accompanying Order.

BACKGROUND

The affidavits and statement of material facts presented in the plaintiffs motion for summary judgment stand unchallenged by the Government. They are briefly recounted.

In June 1973, at the age of 17, John Doe began employment with the CIA as a clerk typist. Four years later he was promoted to an electronics technician position, and, in 1978, he was selected for participation in the Agency’s upward mobility program. By that time, he had acquired a non-probationary employee status. Throughout his employment he received acceptable performance ratings and there was no dissatisfaction with his work reported by any supervisor.

Doe became aware of his homosexuality in 1976 and his orientation was known to his family and immediate friends. His homosexuality was never publicized and he never made advances toward fellow- employees. During the course of his employment there was no indications that, at any time, he disclosed classified information to unauthorized persons, that he ever engaged in any conduct with any one individual which compromised security with foreign nationals or anyone else, or that his homosexuality disrupted or affected his duties and responsibilities in any manner.

In January 1982, plaintiff voluntarily informed a security officer of his homosexuality. He was then told that he was in violation of CIA regulations; and on February 2, 1982, he was placed on administrative leave. Plaintiff was interviewed extensively about his homosexuality and his risk to security. Later, a polygraph test was administered covering that matter. Doe was advised that his responses to questions on that test were truthful. An Adjudication Report on his case was prepared by the Office of Security and then forwarded to Director William Casey. The Deputy General Counsel of the CIA informed Doe’s counsel that homosexuality was not a per se ground for dismissal but that it was a security concern which would be evaluated on a case-by-case basis.

On April 14, 1982, a security officer informed Doe that the Office of Security had determined that the “circumstances of his homosexuality” posed a security threat. Plaintiff sought an explanation of the reasons why the “circumstances” posed such a threat; but his request was denied and no further explanation was provided. Doe was asked to resign and he declined to do so. Later, his counsel also sought a statement of the reasons why the determination was made that Doe’s homosexuality posed a security threat.

On May 11, 1982, the Deputy General Counsel wrote to plaintiff’s counsel that Director Casey “deemed it necessary and advisable in the interests of the United States to terminate” Doe’s employment, “pursuant to ... the National Security Act ... § 403(c).” No further explanation was given and Doe received no other statement of reasons. He was placed on administrative leave for the three months prior to his termination. He received full pay but was not required to report for duty.

The plaintiff also was notified that he was obliged to inform the CIA whenever he applied for a job requiring a security clearance, so that the prospective employer could be informed that the CIA had determined that he was a security threat due to his homosexuality. The May 11 letter, marked the termination of Doe’s administrative leave status. All efforts of his counsel to secure both a statement of reasons and a copy of the Adjudication Report from the CIA were denied.

ANALYSIS

While several grounds for dismissal of the complaint are asserted, only two are considered meritorious and warrant consideration: improper venue and failure to state a claim upon which relief can be granted. Those problems will first be considered and followed by a discussion of the merits.

A.

Venue

The defendant argues that venue is improper in the District of Columbia and, therefore, that this proceeding should be dismissed or transferred to the Eastern District of Virginia where, it is claimed, the CIA Director officially resides. The venue of a civil action involving federal question jurisdiction is governed by 28 U.S.C. § 1391(b); the venue of an action against an officer of the United States sued in his official capacity is governed by § 1391(e). Both sections provide that venue is proper in the judicial district where the defendant resides.

In advancing the improper venue argument, the government was confronted with somewhat of a dilemma because in three earlier proceedings before this District of Columbia District Court, the CIA explicitly and affirmatively admitted to the official residency of the CIA Director in the District of Columbia. Indeed, in those cases, no question or challenge of improper venue was presented in the government’s pleadings. McGehee v. Casey, C.A. No. 81-0734 (D.D.C.1981); McGehee v. Turner, C.A. No. 78-2407 (D.D.C.1978); Jordan v. Turner, C.A. No. 78-2036 (D.D.C.1978). When confronted with these inconsistencies, the Government’s attempts to explain were strained and implausible. Indeed, with respect to the two McGehee cases, the inconsistency could not be explained or defended at all. Defendant’s Motion to Dismiss or Transfer on the Grounds of Improper Venue at 4, (Motion filed June 8, 1984).

Following argument and submission on the government’s motion to dismiss and the cross motions for summary judgment, plaintiff’s counsel was allowed to pursue discovery on the question of venue and the CIA Director’s official presence in the District of Columbia. The results of that discovery clearly demonstrated that Mr. Casey as the Director of Central Intelligence (DCI) performed a significant portion of his official duties in both the District of Columbia and the State of Virginia. The discovery focused on a 13-month period ending in March 1984. During that period, the DCI spent 226 days in the Washington, D. C. Metropolitan area. Of these, 190 were spent in both Virginia and the District, 32 were spent solely in Virginia and 4 solely in the District. Mr. Casey spent time in the District of Columbia in order to fulfill his DCI duties, his responsibilities imposed by statute and Executive Orders, and his duties connected with his position as a designated member of both the National Security Council and the President’s Cabinet.

A review of the Director’s statutory functions, permits a reasonable conclusion that he performs a significant amount of his official duties in the District of Columbia. The National Security Act of 1947, 50 U.S.C. § 401 et seq. created the CIA and the position of the Director of Central Intelligence. Section 101(a) of the Act establishes a National Security Council. The President, Vice President, Secretary of State and the Secretary of Defense are members of the Council. Section 403(a) provides that “there is established under the National Security Council a Central Intelligence Agency with a Director ... who shall be the head thereof____” The duties of the Agency and the DCI, set out in section 403(d), establish the CIA as an instrument of the National Security Council. That section together with section 1.5 of Executive Order 12333, 3 C.F.R. 200 (1982), provide that the DCI advise the President and the National Security Council on intelligence matters and coordinate intelligence activities of other government agencies. Further, pursuant to 50 U.S.C. § 413, the DCI is required to keep the congressional intelligence committees fully and currently informed on all intelligence matters. Since 1981, Director Casey has also served as a member of the President’s Cabinet.

As a Cabinet officer, advising both the President and the National Security Council, and as an advisor to intelligence committees of the Congress, the DCI resides in the District where both the Cabinet, the Council, and the Congress sit. While the physical facilities of the CIA are located in Virginia, Director Casey’s duties in the District are such that he maintains offices at two locations in the District, at the Old Executive Office Building and at the Intelligence Community Headquarters Building.

It is not unusual for public officials to have more than one designated place of official residence. When a public agency undertakes much of its business in a district different from that in which the agency is headquartered, venue is proper in the former district. Florida Nursing Home Ass’n v. Page, 616 F.2d 1355, 1360 (5th Cir.), cert. denied, 449 U.S. 872, 101 S.Ct. 211, 66 L.Ed.2d 92 (1980), rev’d on other grounds, 450 U.S. 147, 101 S.Ct. 1032, 67 L.Ed.2d 132 (1981) reh’g denied, 451 U.S. 933, 101 S.Ct. 2008, 68 L.Ed.2d 319 (1981); Lamont v. Haig, 590 F.2d 1124, 1128 n. 19 (D.C.Cir.1978) (drawing a distinction between the residence where official duties are performed and the personal residence of the defendant).

In determining the residence of a public official sued in his official capacity, the test of residence is where official duties are performed. When, as here, Director Casey performs a substantial portion of his duties in the District, although a larger proportion in Virginia, it is appropriate to conclude that the District of Columbia is a proper place for venue. In Buffalo Teachers Federation, Inc. v. Helsby, 426 F.Supp. 828, 830 (S.D.N.Y.1976), venue was held proper in a district where a state agency conducted a substantial portion of its business even though the headquarters’ location was in a different district.

Failure to State a Claim

Various grounds are advanced to support the government’s argument that Doe’s complaint fails to state a claim upon which relief can be granted. The two considered most important are: that because Doe seeks an award of damages the doctrine of sovereign immunity precludes the claim, and; that assuming the Government has consented to be sued by virtue of the Administrative Procedure Act, review of the Director’s dismissal action is foreclosed by section 701(a)(1), (2); that the CIA Director is empowered by statute, 50 U.S.C. § 403(c), with unreviewable authority to terminate an employee and that the decision is committed by law to agency discretion.

The argument that sovereign immunity bars the plaintiff’s claim is flawed and misplaced. In 1976, the APA was amended, and the “Right of review” provision, 5 U.S.C. § 702, authorized non-monetary relief against a federal agency or officer. The section provides in relevant part

A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer ... thereof acted or failed to act in an official capacity or under color of legal authority shall not be dismissed nor relief ... denied on the ground that it is against the United States----

In this proceeding the plaintiff does not pursue a monetary claim, but rather, Doe requests declaratory and injunctive relief, specifically, a judicial declaration that Director Casey abused his discretion in dismissing him and a determination that the Director violated his procedural rights. The plaintiff also seeks either reinstatement or, alternatively, a statement of reasons for his dismissal and a full opportunity to respond to those reasons. He relies upon 28 U.S.C. § 1361 which grants relief in the nature of mandamus to compel a federal officer to perform a duty owed to a plaintiff. When read together, section 702 of the APA and section 1361 of Title 28 may be considered as statutory waivers of sovereign immunity. At this point in time, it can scarcely be contended that when a government official is charged with superseding his or her authority the doctrine of sovereign immunity may be invoked.

But more importantly, the argument that the doctrine of sovereign immunity bars the plaintiff’s efforts has been undermined and discredited by two recent decisions of our Circuit Court, Clark v. Library of Congress, No. 83-1510 (D.C.Cir. Dec. 11, 1984) and Dronenburg v. Zech, 741 F.2d 1388 (D.C.Cir.1984), rehearing en banc denied, 746 F.2d 1579 (D.C.Cir.1984). In Clark, the plaintiff sued the Library of Congress, his former employer, seeking reinstatement as an employee, and an injunction prohibiting any further investigation of his political beliefs and associations which led to his leaving the Library. He charged the Library with violations of his First Amendment rights. He also sought compensatory and punitive damages. The Court of Appeals held that while sovereign immunity barred any relief for damages it was no obstacle to a claim for reinstatement, correction of his personnel records and an injunction against infringement of constitutional rights. The matter was reversed and remanded to the district court for consideration on the plaintiff’s claims for specific non-monetary relief. Dronenburg involved a naval petty officer’s challenge to his administrative discharge for homosexual conduct and a claim that his constitutional rights to privacy and equal protection of laws had been violated. The Navy raised threshold questions — lack of subject matter jurisdiction and sovereign immunity, contending that plaintiff’s complaint was essentially one for damages that should be pursued in the Court of Claims under the Tucker Act and, therefore, that the District Court lacked jurisdiction.

In rejecting the government’s argument, the Circuit Court noted that “5 U.S.C. § 702 was intended to waive the sovereign immunity of the United States in suits for injunctive relief,” 741 F.2d at 1390. “We are further bound by another decision of this court holding that ‘the United States and its officers ... are [not] insulated from suit for injunctive relief by the doctrine of sovereign immunity.’ Schnapper v. Foley, 667 F.2d 102, 107 (D.C.Cir.1981), cert. denied, 455 U.S. 948, 102 S.Ct 1448, 71 L.Ed.2d 661 (1982).” Id. In discussing the legislative history of section 702, the Schnapper court noted

The legislative history of this provision could not be more lucid. It states that this language was intended ‘to eliminate the defense of sovereign immunity with respect to any action in a court of the United States seeking relief other than money damages and based on the assertion of unlawful official action by a federal official____’ S.Rep. No. 996, 94th Cong., 2d Sess. at 2 (1976).

Schnapper, 667 F.2d at 108.

B.

In reviewing Director Casey’s actions, the basic inquiry is whether the plaintiff was afforded procedural due process— namely: was he given adequate notice of the agency action, was he informed of the rationale of the agency’s final decision or at least a statement of reasons; was he given an opportunity to respond or to comment or was he given a hearing where he could address the agency’s rationale and present his position and defenses? See Nat’l Ass’n of Recycling Industries v. Interstate Commerce Commission, 627 F.2d 1328, 1334 (D.C.Cir.1980) vacated in part, consolidated Rail Corp. v. Nat’l Ass’n of Recycling Industries, Inc., 449 U.S. 609, 101 S.Ct. 775, 66 L.Ed.2d 776 (1981). The answers to these questions as reflected in the record show that plaintiff Doe was not afforded such opportunities and indeed, at no time was there a recognition of such rights.

In failing to observe even the most minimal due process procedures, the CIA failed to acknowledge and follow its own regulations. When Doe was terminated in May 1982, he was a non-probationary career employee. By virtue of that status he was entitled to various procedural safeguards before the agency made a final decision to terminate his employment.

At the time, a controlling document— Headquarters Regulation — was in effect within the CIA. Section HR 27 of the Regulation entitled “Separation By The Agency,” spelled out the procedure to be followed when termination of a non-probationary employee was involved. Sections HR 27b-i dealt with eight grounds for involuntary separation. None of these grounds related to an employee’s sexual activities. Section HR 27e provided for termination of an employee because of failure to meet standards of conduct. But no regulation established a standard relating to sexual conduct or matters. The matters covered related only to conflict of interest, acceptance of gifts and decorations, and participation in riots and civil disturbances.

While 27m permitted exceptions when the procedures were “impractical or undesirable” and when the DCI “considers it necessary or advisable in the interests of the United States,” subsequent sections provide that an employee be given reasons for the proposed actions and an opportunity to respond orally or. in writing, HR 27m(2), and an opportunity for final appeal to the Director, HR 27m(4). The plaintiff contends that he was not afforded any of the benefits or safeguards conferred by the Headquarters Regulation.

When a government agency promulgates and establishes regulations conferring procedural due process rights on its employees, it must adhere to its promulgated rules to avoid any injustice even though they may not be statutory or constitutional requirements. Bartholomew v. United States, 740 F.2d 526 (7th Cir.1984); Mazaleski v. Treusdell, 562 F.2d 701, 719 (D.C.Cir.1977); Doe v. Hampton, 566 F.2d 265, 281 (D.C.Cir.1977). Those appellate rulings adhere to long-recognized Supreme Court precedents. Vitarelli v. Seaton, 359 U.S. 535, 79 S.Ct. 968, 3 L.Ed.2d 1012 (1959); Service v. Dulles, 354 U.S. 363, 77 S.Ct. 1152, 1 L.Ed.2d 1403 (1957). “An executive agency must be rigorously held to the standards by which it professes its actions to be judged. Accordingly, if dismissal from employment is based on a defined procedure ... that procedure must be scrupulously observed.” Vitarelli, 359 U.S. at 546, 79 S.Ct. at 976 (Frankfurter, J., concurring in part and dissenting in part).

Moreover, within the context of the specific facts presented in this proceeding— concerned with homosexuality and federal employment, rulings from this Circuit support Doe’s claim that he was entitled to invoke and rely upon the procedures prescribed by the CIA Headquarters Regulations. On more than one occasion our Appeals Court has ruled that when a federal employee is dismissed for reasons associated with homosexuality he is entitled to fair treatment and should be afforded all available and prescribed procedural safeguards. Ashton v. Civiletti, 613 F.2d 923 (D.C.Cir. 1979); Matlovich v. Secy. of the Air Force, 591 F.2d 852 (D.C.Cir.1978); Norton v. Macy, 417 F.2d 1161 (D.C.Cir.1969).

The facts in Matlovich were not remarkably different than those which plaintiff Doe confronted. An Air Force serviceman, after 12 years of service, acknowledged his homosexual preferences to his superiors. Air Force regulations permitted exceptions to the general policy of discharging homosexuals and, in fact, such individuals had been retained in the past. In discharging Matlovich, the Air Force provided no statement of reasons why the exception was not invoked.

Because the Air Force Secretary failed to supply reasons and further explanations, his actions were determined to be unlawful, arbitrary and capricious. In reversing the district court and remanding the matter to the Air Force for proper consideration, the Appeals Court ruled “the absence of any reasoned explanation in this particular case — makes it impossible to decide whether or not there has been an abuse of discretion in this instance or whether improper factors have played a material role,” 591 F.2d at 856. At a further point, the Court was even more explicit:

The normal rule where a discretionary administrative decision is to be reviewed by a court (other than on a de novo basis) is that the agency must give sufficient indication of the grounds for its exercise of discretion that the reviewing tribunal can appraise that determination under the appropriate standards of review (and the applicant for relief can challenge it). This basis concept has been reiterated time and again — in differing formulations and contexts but always centering on the need for the court, and the complaining party, to be given some helpful insight into the agency’s reasoning.
The fundamental principle of reasoned explanation embodied in these (and comparable) decisions serves at least three interrelated purposes: enabling the court to give proper review to the administrative determination; helping to keep the administrative agency within proper authority and discretion, as well as helping to avoid and prevent arbitrary, discriminatory, and irrational action by the agency; and informing the aggrieved person of the grounds of the administrative action so that he can plan his course of action (including the seeking of judicial review).

Id. at 857 (emphasis added; citations omitted). But aside from the problem of homosexuality presented in this proceeding, our Court of Appeals has consistently recognized that while deference should be afforded to an agency’s interpretation and implementation of its regulations, it nonetheless must supply adequate reasons for its decisions. Moon v. United States Department of Labor, 727 F.2d 1315 (1984). “[A]n agency must provide a reasoned explanation for its actions and articulate with some clarity the standards that govern[] its decisions.” Id. at 1318, citing Matlovich, 591 F.2d 856-61.

1.

In justifying his actions the Director relies principally upon section 102(c) of the National Security Act. The section authorizes termination of a CIA employee and provides in pertinent part:

Notwithstanding the provisions of [Section 652 of Title 5], or the provisions of any other law, the [DCI] may, in his discretion, terminate the employment of any officer or employee ... whenever he shall deem such termination necessary or advisable in the interests of the United States.

50 U.S.C. § 403(c).

A review and analysis of this provision presents troublesome and unresolved questions of statutory review. Counsel for the CIA argues with assurance that the plain language of the statute establishes that the decision to terminate an employee is committed to the uncontrolled discretion of the DCI and that in the absence of any statutory limitation, his exercise of discretion is unlimited and intended by the Congress to be unreviewable. He further contends that there is no procedural requirement that Doe be supplied with a statement of reasons explaining his termination because neither section 102(c) of the National Security Act nor section 27m of the Headquarters Regulation require the DCI to give such a statement. To support these arguments, the CIA’s counsel relies confidently upon several Circuit and Court of Claims decisions which subscribe and adhere to the exact language of the statute. Torpats v. McCone, 300 F.2d 914, 915 (D.C.Cir.1966), cert. denied, 371 U.S. 886, 83 S.Ct. 182, 9 L.Ed.2d 121 (1962); Baker v. United States, 650 F.2d 288, 224 Ct.Cl. 760, 761-62 (Ct.Cl.1980), cert. denied, 450 U.S. 1040, 101 S.Ct. 1757, 68 L.Ed.2d 237 (1981); Rhodes v. United States, 156 Ct.Cl. 31, 37 cert. denied, 371 U.S. 821, 83 S.Ct. 39, 9 L.Ed.2d 61 (1962); see also Kochan v. CIA, C.A. No. 2728-58 (D.D.C. May 20, 1958).

However, it has long been established that language conferring such discretion does not in and of itself preclude preview. And even if the argument is accepted that the DCI has broad discretion under section 403(c), judicial review cannot be denied where there is a claim that discretion has been abused. Section 706(2)(A) of the APA, was intended to and unmistakably provides for such review when agency action is excessive. In the language of the statute, judicial review is appropriate when action has been “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Moreover, it should be noted that section 701(a)(2) of the APA, upon which the government relies, has been narrowly interpreted by the courts as well as by authoritative commentaries. Citizens to Preserve Overton Park v. Collins, 397 U.S. 159, 166, 90 S.Ct. 832, 837, 25 L.Ed.2d 192 (1970); U.S. Lines, Inc. v. Federal Maritime Commission, 584 F.2d 519, 525 (D.C.Cir.1978); Adams v. Richardson, 480 F.2d 1159, 1161-62 (D.C.Cir.1973); B. Schwartz, Administrative Law at 610-11 (1976); K.C. Davis, Administrative Law of the Seventies § 28.19 (Supp.1980).

Finally, section 102(c) of the Act says nothing about judicial review nor does its language suggest in any way that courts are ousted from reviewing agency action. To determine whether a statute precludes judicial review, courts are bound to recognize that the APA affords a “basic presumption of judicial review” that “will not be cut off unless there is persuasive reason to believe that such was the purpose of Congress.” Abbott Laboratories v. Gardner, 387 U.S. 136, 140, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). The Supreme Court addressed this subject during its last term in Block v. Community Nutrition Institute, — U.S. -, 104 S.Ct. 2450, 81 L.Ed.2d 270 (1984), and held that “specific language or specific legislative history,” “contemporaneous judicial construction barring review and congressional acquiescence in it,” “the collective import of legislative and judicial history behind a particular statute” or “inferences of intent drawn from the statutory scheme as a whole” may overcome the presumption of reviewability. 104 S.Ct. at 2456. None of these factors are present with respect to section 403(c). In the absence of such, the DCI’s exercise of discretion must be set aside as arbitrary, capricious, and as a denial of procedural due process.

CONCLUSION

The Court is not unmindful of the position occupied by and the role played by the CIA in accomplishing its statutory mission. The Court is also aware that because of the facts and sensitive nature of some Agency personnel decisions, they should be shielded from full public scrutiny. But the record at this point does not reflect or even suggest that overriding national security concerns are at stake or that affording the plaintiff Doe the relief he seeks, might disclose matters that would place at risk such concerns and interests. In sum, the state of this record does not support the government's position that the DCI should have carte blanche authority and limitless discretion, free of judicial review.

This opinion does not address the several constitutional claims pressed by the plaintiff. Those claims present difficult and unsettled issues of law, made even more uncertain by shifting views of appellate tribunals. Because of the stated reasons and bases upon which it is determined that relief should be granted to the plaintiff on other grounds, the Court foregoes at this time a discussion and review of his constitutional claims.

The plaintiff is entitled to his procedural due process rights as provided by the Agency’s regulations, statutory authority and judicial precedent. Pending the granting of such rights he should be reinstated to the administrative leave status that he held before he was terminated by the DCI, supra, p. 584.

ORDER AND JUDGMENT

On basis of the Court's Memorandum Opinion filed on this date, it is

ORDERED

That the motions of the Central Intelligence Agency to dismiss the plaintiff’s complaint and for summary judgment are denied;

That the plaintiff’s motion for summary judgment is granted on the grounds that he was denied and deprived of procedural due process rights, and judgment is entered for the plaintiff;

That the plaintiff shall be afforded all procedural due process rights as provided in the Court’s Memorandum Opinion of this date;

That the Director of the Central Intelligence Agency is enjoined to reinstate the plaintiff Doe, within 30 days from the date of this order, to the administrative leave status formerly occupied by plaintiff, until such time he is granted procedural due process.

      . Letter dated May 11, 1982 from CIA Deputy General Counsel, Ernest Mayerfeld, to Mark H. Lynch, Esq: Plaintiff’s Motion for Summary Judgment, Ex. B.

      . In an amended complaint, filed November 4, 1982 the plaintiff restricted his claim to declaratory and injunctive relief, omitting any claim for monetary relief and back pay.

      . Plaintiffs counsel does not urge that the government is collaterally estopped by its admissions but does urge that they are persuasive and convincing evidence to be considered along with the facts secured in subsequent discovery.

      . The language of HR 27m tracks almost verbatim the provisions of 50 U.S.C. § 403(c). That statutory provision provides that the Director "may, in his discretion, terminate the employment of any ... employee ... whenever he shall deem such termination necessary or advisable in the interests of the United States____”
      While section 27m provides that an employee “may be separated immediately and without regard to any suggested procedural steps when the Director ... considers it necessary or advisable in the interest of the United States” the immediacy and urgency of Doe’s employment status is belied by the fact that his voluntary disclosures were made in January 1982, but it was not until five months later — May 1982, that the Director decided to fire him.

      . Section 701(a)(2) provides for an exception to the extent that "agency action is committed to agency discretion by law.”