author: JUNE L. GREEN, Senior District Judge.

text:
    BETH ROCHEL SEMINARY, Plaintiff, v. William J. BENNETT, et al., Defendants, United States of America, Intervenor-Defendant.
    Civ. A. No. 84-2062.
    United States District Court, District of Columbia.
    Dec. 19, 1985.

      Michael B. Goldstein, James M. McElfish, Jr., Blain B. Butner, Dow, Lohnes & Albertson, Washington, D.C., for plaintiff.
    A. Patricia Frohman, Asst. U.S. Atty., Washington, D.C., for intervenor-defendant.
   OPINION

JUNE L. GREEN, Senior District Judge.

Plaintiff brings this action seeking a declaratory judgment that the United States Department of Education (“ED”) acted without authority when it determined that plaintiff did not satisfy the statutory definition of an institution of higher education pursuant to section 1201(a) of the Higher Education Act of 1965, as amended (“HEA”), 20 U.S.C. § 1141(a) (1985), for the period of November 1980 through December 1981. Plaintiff also seeks an injunction barring the ED from requiring plaintiff to repay student aid funds disbursed to plaintiff under the Pell Grant Program, 20 U.S.C. § 1070a (1985), for the 1980-81 academic year. Intervenor-defendant United States of America counterclaims against plaintiff for the $52,268.00 disbursed to the plaintiff under the Pell Grant Program for the 1980-81 academic year, plus interest. Before the Court are cross-motions for summary judgment. For the reasons stated below, the Court grants defendants’ motion for summary judgment and denies plaintiffs motion for summary judgment.

I. Statement of Facts

Beth Rochel Seminary (“Beth Rochel”) is a private, not-for-profit educational institution for Jewish women located in Monsey, New York. Since 1973, Beth Rochel has offered postsecondary education in Judiac studies and currently has certificate programs in Religious Education and Teachers Education. Plaintiffs Statement of Material Facts Not in Dispute (“Plaintiffs Statement”) ¶¶ 1, 2.

In order for a student attending Beth Rochel to receive student financial assistance under the student financial assistance programs authorized by Title IV of the HEA, sections 1070 et seq. (1985), Beth Rochel must qualify as an eligible “institution of higher education.” That term, for a private nonprofit educational institution, is defined in section 1141(a) (1985).

Beth Rochel is not accredited by an agency or association recognized by the ED. Plaintiffs Statement ¶ 3. However, if an institution satisfies the requirements of the provisions of section 1141(a)(1) through (a)(4), it may still qualify as an eligible institution of higher education if it can meet the requirements of section 1141(a)(5)(B). That section provides:

The term “institution of higher education” means an educational institution in any State which
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[if not accredited,] is an institution whose credits are accepted on transfer, by not less than three institutions which are so accredited, for credit on the same basis as if transferred from an institution so accredited.

The statutory definition was carried forward in the duly promulgated regulations published in the Code of Federal Regulations. The regulation defines an eligible institution under the 3IC method as:

An institution whose credits are determined by at least three accredited institutions on the same basis as transfer credits from fully accredited institutions.

34 C.F.R. § 668.2(a)(5)(iv). This alternative to accreditation is known as the “three-institutional-certification method alternative to accreditation” or the “3IC method.”

The Office of Education of the Department of Health, Education, and Welfare (the predecessor of the ED) published a rule in the Federal Register of August 20, 1970, 35 Fed.Reg. 13324 (“August 20, 1970, rule”), setting forth the procedures that an unaccredited institution must follow to qualify as an eligible institution of higher education under the above statutory provision. The rule provides in pertinent part:

The U.S. Commissioner of Education hereby adopts the following procedure by which an unaccredited institution may meet the alternative requirement ... of being an institution whose credits are accepted on transfer by not fewer than three institutions which are accredited by a nationally recognized accrediting agency or association on the same basis as if transferred from an accredited institution. This alternative is referred to as “three-institutional-certification.”
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Procedure for institutional qualification under tkree-institutional-certification method, (a) To initiate the procedure an applicant unaccredited institution must submit to the U.S. Commissioner of Education: (1) The names and addresses of not fewer than three institutions of higher education accredited by an accrediting agency or association currently listed in the FEDERAL REGISTER as being nationally recognized agencies or associations, each of which while so accredited and not more than 5 years prior to such submission has accepted the transfer credits (and continues to accept such credits) earned at such unaccredited institution; and (2) the names and dates of transfer of their credits, of at least three students or graduates of the applicant unaccredited institution who have subsequently been enrolled in each of such accredited institutions.

On June 12, 1979, plaintiff applied to have its eligibility determined as a private nonprofit institution of higher education under the 3IC method. Defendants’ Statement of Material Facts Not in Dispute (“Defendants’ Statement”) ¶ 3. In accordance with the requirements set forth in the August 20,1970, rule, plaintiff stated on its application that Hofstra University, Adelphi College, and Touro College accepted Beth Rochel credits on transfer on the same basis as they accepted credits on transfer from accredited institutions. "Plaintiff further provided, as required by the August 20, 1970, rule, the names of the Beth Rochel students whose credits were accepted on transfer by the accredited institutions and the dates of transfer. Defendants’ Statement ¶ 3.

Adelphi College, Hofstra University, and Touro College indicated that they accepted the credits on transfer of students attending Beth Rochel on the same basis as they accepted the credits of students transferring from accredited institutions. Each also indicated that the listed students enrolled at that institution. Defendants’ Statement HU 3, 4. On the basis of these representations, plaintiff was determined to be an eligible institution of higher education and was so notified by letter dated October 19, 1979. Defendants’ Statement 1Í5.

On November 29, 1979, the ED received a letter from Hofstra University which indicated that contrary to its October 9,1979, letter, the three listed students from Beth Rochel never enrolled in Hofstra University. Since these three students failed to enroll in Hofstra University, plaintiff failed to qualify as an eligible institution under the August 20, 1970, rule. By letter dated December 13, 1979, the ED informed plaintiff that it failed to qualify as an eligible institution and was never eligible. The letter informed plaintiff that the reason for its failure to qualify was that its former students did not enroll at Hofstra University. Defendants’ Statement ¶¶ 6, 7.

In a second application dated October 15, 1980, plaintiff reapplied for institutional eligibility under the 3IC method. In this application, plaintiff substituted Marywood College for Hofstra University and stated that Marywood College, Touro College, and Adelphi University accepted its credits on transfer on the same basis as they accepted the credits on transfer of students transferring from accredited institutions. Plaintiff’s Statement ¶ 8. In its application, plaintiff provided the names of the students whose credits were accepted on transfer and the dates of transfer. Defendants’ Statement f 8.

The ED contacted each of these institutions using a form verification letter. The form requested, “Please verify from your official records that the following students and credits from the unaccredited postsecondary institution cited above have been accepted upon' transfer by your accredited postsecondary institution on the same basis as if they were transferred from an accredited college or university.” Touro College, Marywood College, and Adelphi University answered the question in the affirmative, and each verified that “the items checked above represent the true practice of this accredited institution.” Plaintiff’s Statement ¶¶ 9, 10.

On November 17, 1980, the ED certified plaintiff as an eligible institution for a period of three years. As a result of this certification, financially qualified Beth Rochel students became eligible to apply for Basic Educational Opportunity Grants under Title IV of the HEA. In the spring of 1981, plaintiff submitted to the ED student eligibility reports for 32 of its students who qualified for federal financial aid awards. Plaintiff received $52,268 in aid funds, which it then disbursed. Plaintiff’s Statement ¶¶ 11, 12.

In October 1981, Joseph M. Hardman, Chief of the College Eligibility Unit within the Office of Postsecondary Education of the ED, wrote Touro College to inquire whether the Beth Rochel students accepted on transfer by Touro had also enrolled and attended at Touro following their admission. By letter dated November 9, 1981, Norman Twersky, Dean of Admissions of Touro College, confirmed that the Beth Rochel students had been “duly accepted.” Dean Twersky advised that the students did not, however, register or attend Touro College. Plaintiff’s Statement ¶¶ 13, 14.

Upon receipt of Dean Twersky’s letter, the ED notified plaintiff, by letter dated December 13, 1981, that it failed to qualify as an eligible institution of higher education and had never so qualified because the three students never enrolled at Touro College in accordance with the requirements of the August 20, 1970, rule. Plaintiffs Statement ¶ 15.

Based on its determination in December 1981, that plaintiff never qualified under the 3IC method as an eligible institution, the ED requested on July 13, 1982, that Beth Rochel repay the student financial aid funds it had requested and received, plus interest. Defendants’ Statement till 12, 15, 16, 17. Beth Rochel officials subsequently met with the Under Secretary of the ED,' the Assistant Secretary for Postsecondary Education and the Director of Eligibility and Agency Evaluation to appeal its loss of eligibility and liability. Plaintiff’s attorney twice requested the Assistant Secretary for Postsecondary Education to review the original determinations of its loss of eligibility and liability. Each time the Assistant Secretary acceded to that request and carried out that re-evaluation. Plaintiff’s Statement 11 ¶ 19, 20.

Defendants recertified plaintiff on September 12, 1983, under the 3IC method as eligible to participate in student financial aid programs under Title IV. Beth Rochel is presently recognized as an eligible institution and is drawing and disbursing federal financial aid funds to its students. Plaintiff's Statement 1118.

Plaintiff attacks defendants’ actions revoking Beth Rochel’s institutional eligibility and demanding repayment of student financial aid funds along a wide front. They argue that the ED’s actions were contrary to the statute and regulation thereunder, i.e., section 1141(a) and 34 C.F.R. § 668.2; that defendants’ action was arbitrary and capricious; that the August 20, 1970, rule is substantively and procedurally defective; and that defendants’ actions violated due process and applicable ED procedures. The Court addresses each issue below.

II. Conclusions of Law

A. Section 1141(a)

In 1965 Congress enacted the HEA of 1965, sections 1001 et seq. This legislation established certain student financial aid programs and created a comprehensive system for administering those programs. Congress was concerned with providing student financial aid to a broad range of postsecondary institutions. At the same time, Congress sought to ensure that federal aid funds went only to support educational institutions of high academic calibre. To that end, section 1141(a) was promulgated, establishing the 3IC method of eligibility. The 3IC method permits students at nontraditional or specialized post-secondary educational institutions to participate in federal student aid programs by providing an alternative means of determining the academic quality of education offered there. S.Rep. No. 673, 89th Cong., 2d Sess., reprinted in 1965 U.S.Code Cong. & Adm.News 4027, 4067.

From November 17,1980, to December 7, 1981, plaintiff did not qualify as an eligible institution of higher education under the statutory definition of that term set forth in section 1141(a)(5)(B). Three Beth Rochel students applied for admission to Touro College, and they were accepted. These students, however, did not actually transfer to Touro College. That is, they never enrolled and took classes at Touro College. Indeed, the three 'Beth Rochel students who were listed as having transferred to Touro College, remained as students at Beth Rochel.

Section 1141(a)(5)(B) and 34 C.F.R. § 668.2(a)(5)(iv) clearly state that an eligible institution is one whose credits are “... accepted on transfer____" Touro College accepted the three Beth Rochel students as prospective undergraduates only. Touro College was prepared to accept the academic credits that these three individual students earned at Beth Rochel but could do so only if these accepted students actually transferred, i.e., enrolled there. Touro College could not apply the Beth Rochel credits toward the “transferee” students’ degree requirements unless they actually moved from Beth Rochel to Touro College.

The Court finds that this is the only reading of section 1141(a)(5)(B) that is consistent with the HEA’s concern with the quality of education provided by postsecondary institutions. 1965 U.S.Code Cong, and Adm.News at 4067. The interpretation urged by plaintiff that mere acceptance of a student, without transfer, as that term is commonly understood, is sufficient to meet the 3IC requirements, is contrary to the words of the statute.

Congress must have considered that an accredited institution would scrutinize carefully the educational quality of an unaccredited institution when it determined whether to accept the credits of a student transferring from that institution on the same basis as it accepts credits of students transferring from an accredited institution. When a school accepts the credits of a transferring student, it does so for the purpose of counting those credits towards satisfying its degree requirements. To prevent its degree from being cheapened and its reputation or prestige from being tarnished, an institution of higher learning would make a careful evaluation of the credits being transferred, as well as the institution the student is transferring from, before accepting those credits, especially if that institution is unaccredited.

B. The August 20, 1970, Rule

The details for implementing the 3IC accreditation method were spelled out in the August 20, 1970, rule. 35 Fed.Reg. 13324. The purpose of the procedure was set forth in the third paragraph of the rule:

The procedure set forth herein has as its objective the verification of the fact that the credits earned in an unaccredited institution of higher learning actually have been and are regularly accepted on transfer by not less than three educational institutions which are directly accredited by nationally recognized accrediting agencies or associations, on the same basis as if transferred from an institution so accredited.

Under the procedure set out in the August 20, 1970, rule, an applicant unaccredited institution must include in its application the names of at least three accredited institutions that accept its credits on transfer on the same basis as they accept the credits on transfer of students transferring from accredited institutions. Additionally, in order to give meaning to the statutory term “on transfer,” the rule requires submission of,

(2) [T]he names and dates of transfer of their credits, of at least three students or graduates of the applicant unaccredited institution who have subsequently been enrolled in each of such accredited institutions.

Plaintiff argues that defendants’ interpretation of the August 20, 1970, rule is inconsistent with section 1141(a)(5)(B) and 34 C.F.R. § 668.2(a)(5)(iv) insofar as the August 20, 1970, rule adds an enrollment requirement. It is well settled that an agency’s “interpretation of [a] statute cannot supersede the language chosen by Congress.” Mohasco Corp. v. Silver, 447 U.S. 807, 825, 100 S.Ct. 2486, 2496, 65 L.Ed.2d 532 (1980); see also Morton v. Ruiz, 415 U.S. 199, 237, 94 S.Ct. 1055, 1075, 39 L.Ed.2d 270 (1974) (agency interpretation must be consistent with congressional purpose, as well as language). It is also well settled that “the construction of a statute by those charged with its execution should be followed unless there are compelling indications that it is wrong.” Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381, 89 S.Ct. 1794, 1801, 23 L.Ed.2d 371 (1969). The Court finds that the August 20, 1970, rule, is perfectly consistent with the language of section 1141(a)(5)(B) and 34 C.F.R. § 668.2(a)(5)(iv) and well in keeping with Congress’ purpose of assuring that student financial assistance be directed toward postsecondary institutions of recognized quality. Supra at 915-916.

Plaintiff presses on, claiming that the August 20,1970, rule is procedurally defective since it was never published as a proposed rule, was not subject to public comment, and was not submitted to Congress for review under 20 U.S.C. § 1232 (1985). All these contentions must fail.

In August of 1970, the Office of Education was subject to the rulemaking requirements of the Administrative Procedure Act (“APA”), 5 U.S.C. § 553 (1985). The August 20, 1970, rule was exempt from the general notice provision of 5 U.S.C. § 553(b) as “[a] matter relating to agency management or personnel or to public property, loans, grants, benefits or contracts.” 5 U.S.C. § 553(a)(2) (emphasis added).

Plaintiff cites Guardian Federal Savings and Loan Association v. Federal Savings and Loan Insurance Corp., 589 F.2d 658 (D.C.Cir.1978) and Vigil v. Andrus, 667 F.2d 931 (10th Cir.1982) in an effort to show that the August 20, 1970, rule did not come with the “grants and benefits” exception of 5 U.S.C. § 553(a)(2). The Guardian case is inapposite as it dealt with the “contract” exception to 5 U.S.C. § 553. The Andrus case concerned a regulation regarding free lunches for Indian children which was not published and did not become effective until after the Department of the Interior had adopted voluntarily an internal rule requiring agency compliance with 5 U.S.C. § 553 rulemaking provisions regarding changes in grants, benefits, and contracts. By contrast, the August 20, 1970, rule was published and took effect before the ED issued a similar internal rule on October 12, 1970, requiring compliance with APA procedures for grants and benefits.

Plaintiff further claims that the August 20, 1970, rule did not amount to a “rule” because it was captioned “Procedures” and was published in the notice section of the Federal Register. Under the definition section of the APA, 5 U.S.C. § 551(4), the term “rule” is defined as follows:

“rule” means the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency____

5 U.S.C. § 551(4). The August 20, 1970, rule involved a statement of general applicability and future effect designed to implement and interpret section 1141(a)(5)(B). It thus qualifies as a rule under 5 U.S.C. § 551(4).

Furthermore, since adoption and publication of the August 20, 1970, rule, Congress has made three major revisions of the HEA, in the Education Act Amendments of Í972, Pub.L. No. 92-318; Education Act Amendments of 1976, Pub.L. No. 94-482, and Education Act Amendments of 1980, Pub.L. No. 96-374. In none of these revisions has Congress sought to alter the August 20, 1970, rule, or deemed it necessary to clarify or change the words in the statute setting forth the 3IC method in section 1141(a)(5)(B). It is hornbook law that reenactment of a statute by Congress without change approves and adopts the prior administrative construction. See annotation at 39 L.Ed.2d 942, 975, and cases cited therein. Finally, the requirement that ED rules and regulations be submitted for congressional review was not added until enactment of the Education Amendments of 1974. Pub.L. No. 93-380, § 509(a)(2), 88 Stat. 567-568.

C. Plaintiffs Due Process Rights

The ED mistakenly certified plaintiff as an eligible institution in November 1980, relying upon representations made by Touro College that the three Beth Rochel students actually enrolled there. More than $52,000 in student financial aid funds were then disbursed to Beth Rochel. Touro College later notified the ED that the Beth Rochel transfer students listed pursuant to the August 20, 1970, rule never, in fact, attended Touro College. Plaintiff was notified promptly that it was never an eligible institution under section 1141(a)(5)(B) because the three listed students never enrolled at Touro College. In addition, the ED requested that plaintiff repay the student aid funds disbursed subsequent to this mistaken certification. Plaintiff asserts a property interest in the funds it received and claims that the sudden revocation of its eligible institution status without an opportunity for a hearing was a violation of its due process rights.

The determination that plaintiff failed to satisfy the definition of the term “institution of higher education” is not a “termination” requiring a “hearing on the record” as called for in section 1094(b)(1)(D); see also 34 C.F.R. § 668.71(e)(1) (no right to notice and hearing for failure to meet eligibility requirements of section 1141). Nevertheless, Beth Rochel officials did meet with ED officials who entertained several appeals concerning Beth Rochel’s loss of eligibility and liability. Supra at 915.

The Court finds the application and verification forms issued by the ED in October 1980, were somewhat unclear in setting out the requirements for 3IC eligibility. The Court also notes that ED officials were concerned enough to clarify later 3IC verification forms to note expressly the requirement that transfer students enroll and attend classes. See Plaintiffs Exhibits 13, 18, 19. None of this, however, provides plaintiff any defense. Significantly, plaintiff had applied for 3IC eligibility once before, in 1979, and was rejected for the same reason that plaintiffs eligibility was revoked in 1981. In 1979, the ED was advised that the three students who were listed as having transferred to Hofstra University never enrolled there. Supra at 914.

Plaintiff had been through the 3IC process once before and was familiar with the various forms and requirements. Beth Rochel’s 3IC eligibility was rejected by the ED for the same reason in 1981 as in 1979. It is clear, therefore, that there is no basis to plaintiffs claims that defendants acted arbitrarily and capriciously in retroactively imposing new eligibility requirements on Beth Rochel. The ED acted in accordance with section 1141(a)(5)(B), 34 C.F.R. § 668.-2(a)(5)(iv), and the August 20, 1979, rule on both occasions.

The Constitution does not require a hearing where there is no dispute of fact to decide. Codd v. Velger, 429 U.S. 624, 97 S.Ct. 882, 51 L.Ed.2d 92 (1977) (per curiam). There is no dispute as to the critical facts of this case. Plaintiff admits that none of the three students it listed in its October 1980 3IC application actually transfered and enrolled in Touro College. Plaintiffs Statement ¶ 13. Plaintiff was never in compliance with section 1141(a)(5)(B), 34 C.F.R. 668.2(a)(5)(iv), and the August 20, 1970, rule and, accordingly, never had a right to receive student financial aid funds under the HEA. Plaintiff must return the mistakenly disbursed student financial aid funds to the ED.

      . This opinion will cite to Title 20 (in the form "section _"), rather than to HEA's internal numbering.


source: Caselaw Access Project

author: SWEET, District Judge.

license: Public Domain

text:
    Julian SHERRIER, Plaintiff, v. Bernice RICHARD, Defendant.
    No. 82 Civ. 3723 (RWS).
    United States District Court, S.D. New York.
    Dec. 19, 1985.
    See also, 600 F.Supp. 527.
   MEMORANDUM OPINION

SWEET, District Judge.

Defendant Bernice Richard (“Richard”) has brought a motion pursuant to Fed.R. Civ.P. 60(b)(3) seeking to vacate the judgment in this action on the basis of “fraud ..., misrepresentation, or other misconduct on the part of [the] adverse party” Julian Sherrier (“Sherrier”). Sherrier has brought a cross-motion seeking amendment of the judgment. As set forth below, Richard has raised a factual issue regarding the alleged fraudulent use of forged documents in the trial of this action which requires a factual hearing before the underlying motions can be resolved.

Prior Proceedings

The bitter and protracted proceedings in this action began with the filing of Sherri-er’s complaint on June 7, 1982, alleging that he owned five pieces of Gandharan art which were being withheld by Richard. After expedited discovery pursuant to an order to show cause for a preliminary injunction, a consolidated hearing and non-jury trial on the merits was held during October, 1982. Judgment rendered by this court’s opinion of March 16, 1983 held that Richard and Sherrier had entered into a joint venture for the purchase of Gandharan art and that the four pieces of art obtained through this partnership should be divided between the two parties. The court further found that one large piece was solely owned by Sherrier subject to Richard’s security interest and that another bronze piece was solely owned by Richard. An equitable judgment was accordingly rendered.

The final judgment of the court was subjected to several assaults which are fully set forth in the subsequent opinions of April 27, June 22, July 10, in 1984 and January 4, January 22, and May 14 of 1985. Briefly, this post-trial peregrination was commenced by an order granting Richard permission to take additional testimony from the witnesses which directly contradicted Sherrier’s claimed expenditure of $50,000.00. Upon this finding, the judgment was amended but not fully reopened. The Court of Appeals affirmed this amendment, holding that the false testimony regarding the alleged $50,000.00 downpayment did not require that the judgment be vacated in light of the independent evidence establishing the joint venture and the rights of the parties. Following further applications by Richard to take additional testimony which were granted, several additional depositions have now been completed and the present motions have been submitted following oral argument on October 11, 1985.

Facts

A. Forged Exhibits

In support of the order to show cause which initiated this action, Sherrier submitted an affidavit dated June 3, 1982 which set forth his version of the facts underlying his claim. Together with his affidavit, Sherrier submitted several exhibits which purported to be receipts for the purchases of Gandharan statuary in 1979 and 1980. These pieces — the Standing, Seated, Elongated and Princely Buddhas— were later found by the court to have been purchased by Sherrier using the funds of Richard within the scope of the joint venture. The receipts were written on the stationery of the “Oriental Import and Export Agency”, in Peshawar, Pakistan and contained either the signature or typewritten acknowledgement of Mohammed Sid-dick (“Siddick”), the proprietor of that business.

In addition to these receipts, Sherrier produced for the court an affidavit dated August 11, 1982 which purported to be a statement by Siddick setting forth a list of the four Gandharan pieces and their prices. The affidavit further stated that Siddick had given Sherrier a silver collection on consignment but that Sherrier, unable to sell the silver, had returned the silver to Siddick’s representative in December, 1980.

Each of these documents were introduced at trial after a foundation had been laid by Sherrier. Sherrier testified that he was familiar with Siddick’s signature, having often seen invoices signed by Siddick in connection with his business in Peshawar. The authenticity of these documents have been challenged by Richard on this motion. In response to the post-trial issuance of letters rogatory to Siddick which were executed before the High Court of Peshawar on April 2, 1985, Siddick denied any knowledge of Sherrier or of the transactions which formed the basis of this action. More significant than these bare denials is the fact that Siddick’s signatures on the letters rogatory appear to differ markedly from the signatures on the documents offered at trial.

Richard has submitted the opinions of three experts in handwriting analysis which conclude that the signatures on the receipt and affidavit submitted at trial were not written by the same person who responded to the letters rogatory. Sherri-er’s response has been two-fold. Sherrier offers another expert who reaches the opposing conclusion that there exist sufficient similarities in the signatures to conclude that the same person signed each document. The expert for Sherrier suggests that the signatures on the trial documents were written in a distorted manner and hypothesizes that the writer was attempting to disguise his signature. Sherrier supports this conclusion by arguing on this motion that Siddick must have desired to avoid detection of his trading in Gandharan objects by attempting to disguise his signature. Alternatively, Sherrier argues that any discrepancy in signatures may be explainable on the hypothesis that Siddick may have sought to avoid detection by taking the further step of having a surrogate sign the documents in his stead.

As further indication of the forged nature of Siddick’s affidavit, Richard notes that the affidavit was notarized by a Pakistani Notary Public at Rawalpindi, located 150 kilometers distant from the Peshawar address of Siddick. Richard argues that there exist numerous notaries in Peshawar who are competent in the English language and, therefore, the execution of the document in Rawalpindi raises the inference that the affidavit was executed by another person.

The resolution of this alleged use of fraudulent evidence cannot be made on the basis of the papers submitted by the parties but rather must be determined after a factual hearing on this issue.

B. False Testimony

Richard further asserts that Sherrier’s testimony at trial was perjured in many material respects, and specifically focuses on Sherrier’s testimony regarding his dealings with Siddick, his possession of a silver collection in 1980, his relationship with Bedar Shah (“Shah”), and his possession of several other Gandharan art objects in 1980.

After preliminary examination of the evidence setting forth the basis for alleging the perjured testimony of Sherrier, the court finds no need to request any additional fact-finding on these issues since the evidence is fully set forth in the excerpts from post-trial depositions and exhaustive analysis by skilled counsel. However, since at least one issue — the relationship between Sherrier and Siddick — may be influenced by the evidence relating to the Siddick exhibits, the court will reserve its findings on these matters until the factual hearing on the allegedly forged exhibits has been presented.

For the foregoing reasons, a hearing on the veracity of the documents allegedly prepared by Mohammed Siddick will be held during the week of January 6-10,1986 or as soon thereafter as permitted by the schedules of counsel for both parties.

IT IS SO ORDERED.


text:
    Lal R. BHAYA, Richard Carner, William J. Haessler, Henry A. Parzick, and Earle Williams v. WESTINGHOUSE ELECTRIC CORPORATION.
    Civ. A. No. 84-5381.
    United States District Court, E.D. Pennsylvania.
    Dec. 20, 1985.
    Alan B. Epstein, Philadelphia, Pa., for plaintiffs.
    Dona S. Kahn, Alison Pease, Philadelphia, Pa., for defendant.
   MEMORANDUM AND ORDER

JOSEPH S. LORD, III, Senior District Judge.

Plaintiffs brought suit against their former employer, Westinghouse Electric Co., alleging that their discharge from defendant’s employ was in violation of the Age Discrimination in Employment Act (“ADEA”). 29 U.S.C. §§ 621-634. The case was bifurcated for trial. On November 13,1985, the jury returned a verdict for plaintiffs on the issue of liability. On November 19, the jury returned its verdict on damages in the form of special interrogatories which were designed to allow the court to mold a verdict after further briefing of the legal issues involved. Because the jury found that defendant’s violation of ADEA was willful, I asked counsel to brief how liquidated damages should be calculated. In addition, I requested that counsel provide the court proposed calculations of the front pay award and its reduction to present value.

A. Back Pay

At trial, the parties presented evidence on the salaries plaintiffs would have earned at Westinghouse until the time of trial had they not been discharged, and on the fringe benefits lost by plaintiffs because of their discharge, i.e., medical insurance. They also presented evidence on the income received by plaintiffs that would properly be offset against a back pay award, i.e., interim earnings and severance pay. In special interrogatories, the jury was asked to determine the amount of back pay, if any, to which each plaintiff was entitled. The jury found each plaintiff entitled to back pay in the following amounts: Lai Bhaya, $133,-315; Henry Parzick, $81,889; William Haessler, $106,118; Earle Williams, $123,-583; and Richard Carner, $90,239.

B. Front Pay

In their complaint, plaintiffs requested that the court require defendant to reinstate them to positions comparable to those from which they were discharged. Mindful that reinstatement is the preferred remedy to avoid future lost earnings, Maxfield v. Sinclair Int’l, 766 F.2d 788, 796 (3d Cir. 1985), I nonetheless determined that reinstatement would not be a feasible remedy in this case. Defendant represented to the court that there are presently no jobs available to which plaintiffs could be reinstated. Defendant’s Memorandum of Law in Support of a Directed Verdict on Remedies at 1. Defendant’s assertions at trial were consistent with , this representation. Plaintiffs were laid off when defendant eliminated the job classification in which they worked. Defendant steadfastly maintained throughout the trial that to have placed plaintiffs in another job classification would have violated its contract with the union. Also, defendant submitted uncontroverted evidence that there has been a drastic reduction in force over the last three years at the Concordville plant where plaintiffs were formerly employed. For these reasons, I did not order reinstatement.

As an alternative, I allowed the parties to submit evidence on plaintiffs’ entitlement to front pay. Counsel agreed, or represented to the court that they would agree, on the following: the monthly income each plaintiff would have earned at Westinghouse in the future had he not been discharged; for each plaintiff, the appropriate amounts to be offset against any award of front pay; and the reduction of any award of front pay to present value at a discount rate of 4%. The jury was asked in special interrogatories to determine whether each plaintiff was entitled to be compensated for a loss of future earnings and, if so, for how long into the future compensation should be given. The jury determined that four of the plaintiffs were entitled to front pay for the following periods of time: Lai Bhaya, 3 years, 11 months; Henry Parzick, 10 months; William Haessler, 3 years, 11 months; and Richard Carner, 4 years, 9 months.

Counsel’s agreements and the jury’s determination gave counsel the basis upon which their experts could calculate, for inclusion in the parties’ briefs on molding the verdict, the amount of front pay to be awarded to each plaintiff and the reduction of these amounts to present value. However, only plaintiffs included these calculations in their brief. Given that defendant has neither objected to plaintiffs’ calculations nor submitted calculations of its own, I accept plaintiffs’ calculations of the amount of front pay, as reduced to present value at a 4% discount rate, to be awarded each plaintiff. I will award compensation for future loss of earnings in the following amounts: Lai Bhaya, $171,715.36; Henry Parzick, $38,880.29; William Haessler, $151,303.21; and Richard Carner, $134,-943.19.

C. Liquidated Damages

Relief under ADEA is governed by section 626(b), 29 U.S.C. § 626(b), which provides that:

The provisions of this chapter shall be enforced in accordance with ... section[ ] ... 216 ... of this title____ Amounts owing to a person as a result of a violation of this chapter shall be deemed to be unpaid minimum wages or unpaid overtime compensation for purposes of section[ ] 216 ... of this title: Provided, That liquidated damages shall be payable only in cases of willful violations of this chapter. In any action brought to enforce this chapter the court shall have jurisdiction to grant such legal or equitable relief as may be appropriate to effectuate the purposes of this chapter, including without limitation judgments compelling ... reinstatement____

The relevant part of section 216, 29 U.S.C. § 216(b), provides that:

Any employer who violates the provisions of ... this title shall be liable to the ... employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation ... and in an additional equal amount as liquidated damages.

Because the jury found, in answer to a special interrogatory, that defendant’s violation of ADEA was willful, plaintiffs are entitled under these provisions to liquidated damages. The calculation of liquidated damages in this case raises two issues not expressly addressed by the courts in most ADEA eases: whether offsets against back pay should be taken before or after the back pay award is doubled as a measure of liquidated damages, and whether the plaintiffs’ front pay award should be doubled based upon the finding that defendant willfully violated ADEA.

I conclude that offsets against back pay must be taken before the award is doubled as a measure of liquidated damages. In Rodriguez v. Taylor, 569 F.2d 1231 (3d Cir.1977), cert. denied, 436 U.S. 913, 98 S.Ct. 2254, 56 L.Ed.2d 414 (1978), the Third Circuit held that the district court had erred in not offsetting wages earned by the plaintiff during the back pay period against the plaintiff’s back pay award. Id. at 1236. In a footnote, the court instructed that “insofar as the district court on remand may reduce the back pay award by setting off interim earnings, the equivalent liquidated damages penalty must be likewise reduced.” Id. at 1236 n. 9. Recently, in McDowell v. Avtex Fibers, Inc., 740 F.2d 214 (3d Cir.1984), vacated and remanded on other grounds, — U.S. -, 105 S.Ct. 1159, 84 L.Ed.2d 312 (1985), the Third Circuit again interpreted ADEA to require this method of calculation. Id. at 218. Therefore, plaintiffs’ interim earnings and severance pay will be deducted from their lost past earnings before liquidated damages based on the amount of their back pay awards are calculated.4

I conclude also that plaintiffs’ front pay awards should not be doubled as liquidated damages. Front pay is a remedy which may be awarded in lieu of reinstatement when special circumstances make reinstatement infeasible. Often, the circumstances which make reinstatement infeasible, such as economic conditions requiring a reduction in force, are beyond the defendant’s control. Because they are punitive in nature, see Trans World Airlines, Inc. v. Thurston, — U.S. -, 105 S.Ct. 613, 624, 83 L.Ed.2d 523 (1985), it would be inequitable to award liquidated damages under these circumstances.

Moreover, as a matter of statutory construction, ADEA should not be interpreted to allow the doubling of front pay awards as liquidated damages. Although section 626 of ADEA provides that “amounts owing” as a result of violations of ADEA shall be deemed unpaid minimum wages or unpaid overtime compensation under section 216, and section 216 in turn provides that the amount of unpaid minimum wages or unpaid overtime compensation shall be doubled as liquidated damages, the courts’ authority to award front pay in lieu of reinstatement does not derive from these provisions. Rather, it is based on the courts’ authority under ADEA to order equitable remedies, including reinstatement. See Maxfield, 766 F.2d at 795-96. Therefore, the reference in ADEA’s liquidated damages provision to amounts owing should not be deemed to include front pay. Furthermore, properly construed, front pay is not an amount presently owing, as it is compensation for future losses; this is precisely why a front pay award must be reduced to present value. For these reasons, the amount of plaintiffs’ front pay awards will not be included in the calculation of their liquidated damages.

Finally, I reject defendant’s suggestion that this issue would most equitably be resolved by reducing plaintiffs’ front pay awards by the amount of their liquidated damages. While I recognize that defendant is correct in stating that other courts have made such a reduction or suggested that it might be appropriate to do so under certain circumstances, I need look no further than McDowell, in which the Third Circuit emphasized the importance of giving plaintiffs the full benefit of ADEA’s liquidated damages provision, 714 F.2d at 218, to conclude that such a reduction should not be made in this case.

In accordance with the foregoing, I will award liquidated damages in the following amounts: Lai Bhaya, $133,315; Henry Parzick, $81,889; William Haessler, $106,118; Earle Williams, $123,583; and Richard Carner, $90,239.

D. Attorney’s Fees

Plaintiffs request that they be permitted to move for attorney’s fees and costs after the completion of final briefing and argument on all motions presently before the court. I will grant plaintiffs’ request.

      . Although each of the plaintiffs received pension benefits during all or part of the back pay period, these benefits are not properly deducted from ADEA back pay awards. McDowell v. Avtex Fibers, Inc., 740 F.2d 214, 217-18 (3d Cir. 1984), vacated and remanded on other grounds, — U.S. -, 105 S.Ct. 1159, 84 L.Ed.2d 312 (1985).

      . The jury found that age was a determinative factor in defendant’s decision to eliminate the negotiation engineer job classification in which plaintiffs held positions.

      . At trial, I ruled that pension benefits received by plaintiffs would not be offset against any award of front pay. In McDowell, the Third Circuit held that collateral benefits, specifically pensions and unemployment compensation, should not be deducted from ADEA back pay awards. 714 F.2d at 217-18. Pension benefits are no less collateral to front pay than to back pay awards. In each case, the benefits are paid from a fund to which the employer and/or the employees made contributions before the employees' discharge. As with back pay awards, the failure to deduct pension benefits from a front pay award will not make plaintiffs more than whole; the rationale that “[sjince no consideration ... should be given to collateral losses in framing an order to reimburse employees for their lost earnings, manifestly no consideration need be given to collateral benefits which employees may ... receiv[e],’’ id. (quoting NLRB v. Gullett Gin Co., 340 U.S. 361, 364, 71 S.Ct. 337, 339-40, 95 L.Ed. 337 (1951)), applies equally well to front pay and back pay awards.
        See also Maxfield, 766 F.2d at 793-95 (applying rationale of McDowell to social security benefits).

      . Ironically, the use of this method of calculation in the instant case results in the same type of inequity that the Third Circuit sought to avoid in McDowell. Two of the plaintiffs in the instant case, both former engineers, accepted low paying jobs because they were not able to find work in their field after being discriminatorily discharged. The result of their efforts to return to gainful employment is that they will lose two dollars in damages for every one dollar they earned. In McDowell, the Third Circuit deemed this type of inequity a reason not to offset pension benefits against ADEA back pay awards. 714 F.2d at 218.

      . These amounts have already been offset against lost past earnings in the jury’s back pay awards.


author: WEXLER, District Judge.

text:
    TRI-STATE JUDICIAL SERVICES, INC., Plaintiff, v. Richard MARKOWITZ and Markowitz-Irwin Process Server, Inc., Defendants.
    No. CV 84-0477.
    United States District Court. E.D. New York.
    Dec. 20, 1985.
    McLaughlin & Stern, Bailen & Bailen, New York City, for plaintiff.
    Hayt, Hayt & Landau by Laurence May, Clifford J. Chu, Great Neck, N.Y., for defendants.
   AMENDED MEMORANDUM AND ORDER

WEXLER, District Judge.

The order of this Court, dated December 2, 1985, is hereby vacated. This order supersedes and modifies that order in all respects.

In this diversity case plaintiff Tri-State Judicial Services, Inc. (“Tri-State”) seeks monetary and injunctive relief from defendants Richard Markowitz and Markowitz-Irwin Process Server, Inc. (“M-I”) for a breach of contract arising out of an agreement between the parties made on October 20, 1983. Tri-States now seeks to amend the complaint pursuant to Fed.R.Civ.P. 15(a) to (1) add defendant’s wife, Penny Sue Markowitz and Southeast Lawyers Services, Inc. (“Southeast”) as defendants and (2) assert claims for fraud and conversion against both Richard Markowitz and the proposed defendants. Plaintiff’s motion is denied in all respects.

Rule 15(a) allows a party to amend the complaint with leave of the court and states that “leave shall be freely given when justice so requires.” Fed.R.Civ.P. 15(a). The Supreme Court ruled in Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962) that this rule shall be construed liberally, but the Court also held that the grant or denial of a request to amend is within the discretion of the District Court and enumerated a number of bases upon which a court may deny a motion to amend. 371 U.S. 178, 182, 83 S.Ct. 227, 230 (1962). Specifically, the Court stated that a trial court, in its discretion, may deny leave to amend a pleading because of undue delay, prejudice to the non-moving party, bad faith, or futility of amendment. Foman, 371 U.S. at 182, 83 S.Ct. at 230. See C. Wright & A. Miller, Federal Practice and Procedure: Civil § 1487 (1971). In this Circuit, an amendment is considered futile if the amended pleading fails to state a claim, S.S. Silberblatt, Inc. v. East Harlem Pilot Block, 608 F.2d 28, 42 (2d Cir.1979); Freeman v. Marine Midland Bank-New York, 494 F.2d 1334, 1338 (2d Cir.1974); Johnson v. Partrederiet Brovigtank, 202 F.Supp. 859 (S.D.N.Y.1962), or would be subject to a motion to dismiss on some other basis. See, e.g., DeLuca v. Atlantic Refining Co., 176 F.2d 421, 424 (2d Cir.1949) (statute of limitations); Jancyn Manufacturing Corp. v. County of Suffolk, 583 F.Supp. 1364, 1377 n. 14 (E.D.N.Y.1984) (res judicata).

Defendants argue that the court should not grant the motion to amend the complaint because the amended complaint would not survive a motion to dismiss pursuant to Rules 12(b)(2) and 12(b)(6), Fed.R. Civ.P. Specifically, defendants contend that: (1) Mrs. Markowitz is not subject to the personal jurisdiction of a New York court; (2) Richard Markowitz is not subject to personal jurisdiction for claims in tort; (3) the amended complaint does not state a claim in tort against any of the present or proposed defendants; and (4) there is no basis for joining Southeast as a defendant.

1. JURISDICTION OVER MRS. MARKOWITZ

Mrs. Markowitz, a Floridian since birth who has never been in New York, is neither a party nor signator to the October 20, 1983 agreement between Tri-State and M-I/Richard Markowitz. She has no agent for service in New York, no bank account, telephone listing, post office box, or property in New York, and has never done business in New York. Mrs. Markowitz has no connection to her husband’s business and has neither solicited business in New York nor derived substantial revenue from goods used or services rendered in New York. Finally, Mrs. Markowitz has no connection with Southeast, the proposed co-defendant. Affidavit of Penny Sue Markowitz, ¶¶ 2-4.

As a federal court sitting in diversity, this Court must look to local law to determine the existence of in personam jurisdiction. Gelfand v. Tanner Motor Tours, Ltd., 385 F.2d 116 (2d Cir.1967). Mrs. Markowitz must be subject to the jurisdiction of a New York Court under either CPLR § 301 or § 302(a) in order for this Court to exercise personal jurisdiction over her. N.Y.Civ.Prac.Law §§ 301, 302(a) (McKinney 1972). Quite clearly, Mrs. Markowitz is not amenable to jurisdiction under § 301. She is not a New York resident; she does no business here; she has not consented to New York’s jurisdiction; she had no agent for process in New York; and so long as she does not travel to New York, she cannot be served here.

Turning then to § 302(a), the long-arm statute, it is equally apparent there is no basis for the exercise of long-arm jurisdiction by a New York court over Mrs. Markowitz. In relevant part, § 302(a) provides that:

(a) As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary, or executor or administrator, who in person or through an agent:
1. transacts any business within the state or contracts anywhere to supply the goods or services in the state; or
2. commits a tortious act within the state except as to a cause of action for defamation of character arising from the act; or
3. commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he (i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or
4. owns, uses or possesses any real property situated within the state.

N.Y.Civ.Prac.L. § 302(a) (McKinney 1972). Jurisdiction over Mrs. Markowitz does not exist under § 302(a)(1) because she has neither transacted business within New York nor contracted to supply goods or services here. Mrs. Markowitz has never been in New York and therefore she cannot have committed a tort here under § 302(a)(2). Equally, § 302(a)(3) is inapplicable because there is absolutely no evidence that Mrs. Markowitz committed any tortious conduct with respect to plaintiff. Bearing in mind that plaintiff bears the burden of demonstrating the existence of the Court’s personal jurisdiction, Lehigh Valley Industries v. Birenbaum, 527 F.2d 87, 92 (2d Cir.1975), there is no allegation that Mrs. Markowitz had anything to do with either New York or her husband’s business dealings. Mrs: Markowitz is merely the wife of her defendant husband. Even if Mrs. Markowitz committed a tort, it is unlikely that there was an injury in New York. In addition, she owns no property in New York and therefore § 302(a)(4) is unavailable to plaintiff.

Finally, the exercise of personal jurisdiction over Mrs. Markowitz would surely violate the Due Process Clause. Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

Accordingly, plaintiff’s motion to amend the complaint to add Mrs. Markowitz as a defendant is denied because of a lack of in personam jurisdiction. Fed.R.Civ.P, 15(a); Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962); N.Y.Civ. Prac.L. §§ 301, 302(a) (McKinney 1972).

2. JURISDICTION OVER MR. MARKOWITZ

Richard Markowitz, a native Floridian, has lived in Florida all his life except for a short time during his childhood when he resided in New York with his parents. Mr. Markowitz has never appointed an agent for service of process in New York and he did not consent to in personam jurisdiction in his October 20, 1983 agreement with Tri-State. Like his wife, Mr. Markowitz has no post office box, bank account, office, or telephone listing in New York. He claims he has neither “engaged in any regular solicitation of business or persistent course of conduct in New York nor have I ever derived substantial revenue from goods used or services rendered or used in that state.” Affidavit of Richard Markowitz, ¶¶ 4, 5. Mr. Markowitz admits that he has been in New York on two occasions since the beginning of his relationship with Tri-State; once on October 20, 1983 to sign the agreement with Tri-State and a second time in February 1984 to attend a hearing before this Court on a preliminary injunction.

Plaintiff contends that Mr. Markowitz is present in New York because he was “doing business” here under CPLR § 301, and this “presence” would subject him to a cause of action for fraud and deceit. In this case, Mr. Markowitz is not subject to jurisdiction under § 301 because he is not a New York domiciliary, was not served in New York, has no agent for service here, and has not consented to jurisdiction in New York. With respect to M-I under New York law if a defendant corporation “is here, not occasionally or casually, but with a fair measure of permanence and continuity, then, whether its business is interstate or local, it is within the jurisdiction of our courts.” Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267, 115 N.E. 915 (1917). But even the application of the “doing business” test enunciated in Bryant v. Finnish Airlines, 15 N.Y.2d 426, 260 N.Y.S.2d 625, 208 N.E.2d 439 (1965), to Mr. Markowitz’s activities in New York does not reveal a “presence” here. See Miller v. Surf Properties, Inc., 4 N.Y.2d 475, 176 N.Y.S.2d 318, 151 N.E.2d 874 (1958). Mr. Markowitz has no office or telephone listing in New York. He owns no property here and does not maintain a post office box in New York. Therefore, Tri-State cannot establish jurisdiction over Mr. Markowitz or M-I by virtue of § 301.

Turning to § 302(a), it should first be noted that if in personam jurisdiction can only be established over Mr. Markowitz by virtue of the long-arm statute, CPLR § 302(a), then each of Tri-State’s proposed tort claims against Mr. Markowitz must have an independant jurisdictional basis under § 302. N.Y.Civ.Prac.L. § 302(c) (McKinney 1972). Tri-State contends that Richard Markowitz’s conduct makes him subject to the jurisdiction of a New York court pursuant to CPLR § 302(a)(3) because he committed a tortious act outside New York causing injury within the state.

Plaintiff must overcome the threshold requirement that there was an injury within New York. An injury does not occur in New York merely because a plaintiff is domiciled here or does business here. In suits involving personal injury or property damage, where the locus of the injury can be determined easily, merely because the New York plaintiff returns to New York and suffers an economic loss here after an out-of-state personal injury will not give rise to in personam jurisdiction under 302(a)(3). Black v. Oberle Rentals, Inc., 55 Misc.2d 398, 285 N.Y.S.2d 226 (Sup.Ct. Onondaga Cty.1967). Perhaps relying more on the Due Process Clause than statutory interpretation, that Court reasoned that § 302(a)(3)

looks to the imprinting of the original injury within the State of New York and not resultant damage, in order that jurisdiction might be effectuated. To hold otherwise would open a veritable Pandora’s box of litigation subjecting every conceivable prospective defendant involved in an accident within a New York domiciliary to defend actions brought against them in the State of New York. This is hardly the minimal contact with the state prerequisite to the exercise of its power over a prospective defendant.

Black, 285 N.Y.S.2d at 229. The reasoning of the Court in Black has won wide approval in this Circuit in the context of commercial litigation even though Black was a personal injury case. See American Eutectic Welding Alloys Sales v. Dytron Alloys Corp., 439 F.2d 428, 432-35 (2d Cir. 1971); Friedr. Zoellner (New York) Corp. v. Tex Metals Company, 396 F.2d 300, 302-03 (2d Cir.1968); Trafalgar Capital Corp. v. Oil Producers Equipment Corp., 555 F.Supp. 305, 312-13 (S.D.N.Y.1983); Chemical Bank v. World Hockey Association, 403 F.Supp. 1374, 1379-80 (S.D.N.Y. 1975); Sybron v. Wetzel, 46 N.Y.2d 197, 413 N.Y.S.2d 127, 385 N.Y.S.2d 1055 (1978).

In Chemical Bank, Judge Griesa held that there was no injury in New York under § 302(a)(3) when plaintiff alleged fraud and conversion by a Maryland defendant on acts occurring outside New York. After analyzing the relevant precedent, Judge Griesa determined that the domicile of the plaintiff, there a national bank, was less significant in a commercial tort situation than “the place where the critical events associated with the dispute took place.” 403 F.Supp. at 1380 (citations omitted). Judge Griesa concluded that “in connection with the tort of conversion the injury must be deemed to occur in the place where the defendant’s acts respecting the property are committed.” Id.

Turning then to the facts of this case, it is clear Tri-State suffered no injury in New York. The agreement between the parties required Tri-State to supervise the billing and invoicing of all customers. Payments for services rendered by defendant would be sent by a customer directly to Tri-State in New York. After deducting an agreed-upon percentage, Tri-State would remit the balance to defendant as compensation. Defendant agreed to pay all of its own expenses incidental to the operation of its business. In the proposed amended complaint, Tri-State alleges that Richard Markowitz diverted funds belonging to TriState toward the purchase of a house and other personal expenses. The basis of this allegation comes from balance sheets supplied by M-I’s Florida accountants detailing that firm’s disbursements during February and March of 1984. If these disbursements constituted the conversion and/or fraud complained of, then the "place of the defendant’s acts” could only be Florida and not New York. Tri-State’s unspecified and unsupported allegation that Mr. Markowitz “caused injury to a corporation within ... New York” is insufficient to establish in personam jurisdiction over defendant under § 302(a)(3). See Trafalgar Capital Corp. v. Oil Producers Equipment Corp., 555 F.Supp. 305, 313 (S.D.N.Y.1983) (mere loss of profits by a New York corporation does not constitute an injury in New York for the purposes of § 302(a)(3)). As noted earlier, this discussion is equally applicable to Tri-State’s attempt to assert jurisdiction over Mrs. Markowitz under § 302(a)(3).

Although this Court need not reach the constitutional issue, it is unlikely that TriState’s attempt to exercise jurisdiction over Richard Markowitz on the tort claims would also exceed the parameters of the Due Process Clause. Worldwide Volkswagen Corp. v. Woodsen, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

Accordingly, plaintiff’s motion to amend the complaint to add claims in conversion and deceit against defendant Richard Markowitz is denied because of a lack of in personam jurisdiction. Fed.R.Civ.P. 15(a). Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962); N.Y.Civ. Prac.L. §§ 301, 302(a) (McKinney 1972).

3. FAILURE TO STATE A CLAIM IN FRAUD AND/OR CONVERSION

Assuming, however, that there is in personam jurisdiction over either Mr. or Mrs. Markowitz, the Court turns to the question of whether the proposed amended complaint states a cause of action in fraud and/or conversion. Paragraphs 15-17 of Tri-State’s proposed amended complaint state that defendants used funds belonging to M-I to pay for the purchase of a home and other personal expenses, that these funds belonged to plaintiff, and that this constituted a conversion. Paragraphs 19-20, which form the third claim, also state that defendants diverted funds of M-I for personal use, that these funds belonged to Tri-State, and that this diversion constituted a fraud and deceit on Tri-State. Defendants contend that the proposed amended complaint fails to state a claim in either conversion or fraud.

The Court begins with the principle that a motion to dismiss for failure to state a claim on which relief can be granted tests only the sufficiency of the complaint. Fed. R. Civ.P. 12(b)(6), Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). For the purpose of a Rule 12(b)(6) motion, the well-pleaded material allegations of the complaint are taken as admitted, along with such reasonable inferences as must be drawn in plaintiff’s favor. Kirshner v. United States, 603 F.2d 234, 236 (2d Cir.1978); Murray v. City of Milford, 380 F.2d 468, 470 (2d Cir.1967). The motion should not be granted “unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102, 2 L.Ed.2d 80 (1957).

The Court must first determine what law should apply in this case. Klaxon v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Defendants contend that the Court should apply Florida law. Tri-State argues that New York law should apply or, in the alternative, the issue is irrelevant because there are no substantive differences between New York and Florida law in conversion and fraud. At this stage of the proceedings, the Court is reluctant to decide which state’s law controls. Given the ambiguities of New York’s choice of law doctrines for tort cases, O’Rourke v. Eastern Air Lines, Inc., 730 F.2d 842, 847 (2d Cir.1984), the limited fashion in which the parties have addressed the choice of law question, the apparent similarity between New York and Florida law of conversion, compare Goodrich v. Malowney, 157 So.2d 829 (Fla.App. 1963) with Meyer v. Prize, 250 N.Y. 370, 165 N.E. 814, (1929), and the inappropriateness of a Rule 15(a) motion as a setting for determining the law of the case, the Court will defer a decision on the law to be applied in the tort claim.

A. FRAUD CLAIM

Turning first to the proposed fraud claim, Tri-State’s proposed amended complaint quickly runs afoul of Rule 9(b), which states that “in all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” Fed.R.Civ.P. 9(b). This rule, which codifies the long-standing practice under the common law, holds the defrauded plaintiff to a higher standard of pleading than other tort plaintiffs. Zerman v. Ball, 735 F.2d 15, 20-23 (2d Cir. 1984); Armstrong v. McAlpin, 699 F.2d 79, 88-89 (2d Cir.1983); Segal v. Gordon, 467 F.2d 602, 607 (2d Cir.1972). Assuming but not deciding that because the injury occurred there, Florida law would apply with respect to the fraud claims, Tri-State would have to “allege (1) that defendant made a representation on which plaintiff was meant to act; (2) that the representation was false and defendant knew that fact, and (3) that plaintiff relied on the representation to his injury.” American International Land Corporation v. Hanna, 323 So.2d 567 (Sup.Ct.1976) (citing Mizell v. Upchurch, 46 Fla. 443, 35 So. 9 (1903)). Applying the specificity requirement of Rule 9(b), Tri-State must plead: (1) the representation upon which it relied; (2) defendant knew the representation was false when made; (3) the actions taken in reliance on the misrepresentation; and (4) the nature of the detriment suffered.

Even given the liberal construction afforded the complaint in the context of a 12(b)(6) motion to dismiss, Tri-State’s proposed amended complaint falls far short of the requirements of Rule 9(b). Tri-State’s proposed amended complaint merely reiterates the allegation of the conversion claim and adds a paragraph stating, “This diversion of funds belonging to plaintiff by these defendants constitute [sic] a deceit and fraud by the defendants on the plaintiff.” Proposed Amended Complaint, ¶ 21. Despite the liberal pleadings allowed under the Federal Rules, see Rule 8(e) (allowing alternative or hypothetical pleadings), Rule 9(b) augments the requirements of notice pleading in fraud actions. In the words of the late Circuit Judge Leonard Moore “Rule 9(b)’s specificity requirement stems ... from the desire to protect defendants from the harm that comes to their reputations or to their goodwill when they are charged with serious wrongdoing.” Segal v. Gordon, 467 F.2d at 607 (citations omitted). Tri-State’s conclusory allegations of fraud do not meet this standard, either under Florida or New York law. In any event, there is no personal jurisdiction over either defendant for fraud.

B. CONVERSION CLAIM

The Court now turns to Tri-State’s motion to add a claim for conversion against Richard Markowitz. Again, assuming but not deciding that the place of the injury was in Florida and therefore Florida law would apply, the Court is persuaded that the proposed amended complaint would state a claim for conversion. Under Florida law, a complaint states a claim for conversion if an act of dominion is asserted over another’s property inconsistent with ownership of it. Goodrich v. Malowney, 157 So.2d 829, 831 (Fla.Dist.Ct.App.1963). Florida courts have held that money can be a subject of conversion so long as it consists of specific money capable of identification. Florida law does not require that the money be earmarked, but there must be an obligation to keep the money intact or deliver it. Aero International Corporation v. Florida National Bank of Miami, 437 So.2d 156, 159 (Fla.Dist.Ct.App. 1983) (citations omitted); Allen v. Gordon, 429 So.2d 369, 371 (Fla.Dist.Ct.App.1983).

In the instant case, Tri-State alleged that Richard Markowitz was in possession of money belonging to Tri-State and wrongfully converted it when he used the money for personal expenses. Proposed Amended Complaint, ¶¶ 14-17. From the pleadings, the Court cannot determine how Mr. Markowitz and M-I came into possession of money belonging to Tri-State. The October 20, 1983 agreement enabled Tri-State to bill M-I’s customers directly. Payment was to be sent directly to Tri-State where, only after deducting a percentage as a commission, would any money be forwarded to M-I in Florida as payment. The agreement made no provision for M-I to collect payments or do anything on behalf of TriState with respect to money belonging to Tri-State.

Nevertheless, taking the proposed amended complaint as true, as the Court must in a motion to dismiss for failure to state a claim, Mr. Markowitz’s expenditure of Tri-State’s money for matters unrelated to their agreement and without Tri-State’s consent constitutes a conversion under Florida law and probably under New York law as well. See 23 N.YJur. Conversion § 12 (1982).

Defendant contends that the proposed amended complaint does not state a claim for conversion under Florida law because this is an action to pay money. Defendant’s citation to Belford Trucking Co. v. Zagar, 243 So.2d 646 (Fla.Dist.Ct.App.1970) is inapposite. There is no indication from the pleadings that Mr. Markowitz or M-I had an “open account” with Tri-State, as was the case in Belford or that the October 20, 1983 agreement created a debtor-creditor relationship. The proposed amended complaint alleges that defendant possessed and wrongfully used funds belonging to Tri-State, not that defendant was indebted to Tri-State. See All Cargo Transport Inc. v. Florida East Coast Railway, 355 So.2d 178 (Fla.Dist.Ct.App.1978) (failure to return overpayment on account due was conversion). Although the Court is persuaded that the proposed amended complaint states a claim against Mr. Markowitz in conversion, granting leave to amend would be futile because of a lack of in personam jurisdiction.

4. SOUTHEAST LAWYERS SERVICES, INC.

Finally, Tri-State has sought to join Southeast as a defendant and assert claims in both contract and tort against it. For a myriad of reasons, the motion to join Southeast is denied. First, Southeast is not mentioned anywhere in the proposed amended complaint, except in Paragraph 4, the jurisdictional statement. Second, Southeast was dissolved as a corporation under Florida law in 1984. Third, Southeast is not a party to the October 20, 1983 agreement and cannot be liable for breach of contract. Fourth, there is no showing that a New York court has in personam jurisdiction over Southeast. Finally, fifth, there is no allegation that the now-dissolved Southeast was in any way associated with or a successor or predecessor in interest to M-I or Richard Markowitz. Consequently, there is no allegation of wrongdoing by Southeast.

Accordingly, this Court’s order of December 2, 1985 is vacated and superseded by this order in all respects. Plaintiff’s motion pursuant to Rule 15(a) to amend the complaint to add Mrs. Markowitz and Southeast as defendants is denied. In addition, plaintiff’s motion to add claims in fraud and conversion against Richard Markowitz is denied.

SO ORDERED.

      . Section 301 states that "[a] court may exercise jurisdiction over persons, property, or status as might have been exercised heretofore.” N.Y. Civ.Prac.L. § 301 (McKinney 1972).

      . Mr. Markowitz was not served on either occasion and, in any event, he would be immune from service with respect to the February 1984 visit. See D. Siegal, Handbook on New York Practice § 68 at 71 (1978).

      . Mr. Markowitz is not a corporation, but Markowitz-Irwin Process Server, Inc. (“M-I”) is a corporate defendant. It is unclear, however, whether Tri-State is seeking to establish personal jurisdiction through § 301 over Mr. Markowitz, M-I or both. Though Tri-State’s notice of motion seeks leave to amend only against Mr. Markowitz, their papers speak to the activities of both Mr. Markowitz and M-I. Construing the pleadings most favorably to plaintiff, the Court assumes, however, that Mr. Markowitz would present in New York for the purpose of CPLR § 301 if Tri-State demonstrates that M-I were found to be "doing business” here. For example, Mr. Markowitz could be considered an agent for M-I. Similarly, M-I could be considered the alter ego of Mr. Markowitz. Accordingly, the Court will look to the acts of both M-I and Mr. Markowitz for the purposes of § 301.

      . The Court is also sensitive to the problem in determining which law to apply with respect to the breach of contract claim. In the area of contract law, New York’s choice of law doctrine is hardly clearer than those in tort. Compare 19 N.Y.Jur. Conflict of Laws § 35 (modern rule in contracts cases) and § 39-41 (torts) (1982). It is not unlikely that the Court would be referred to Florida law to resolve the tort claims and New York law to resolve the contract claims. Id. Compare Cousins v. Instrument Flyers, Inc., 44 N.Y.2d 698, 405 N.Y.S.2d 441, 376 N.E.2d 914 (1978) ("lex loci deliti remains the general rule in tort cases to be displaced only in extraordinary circumstances") with Inter-Continental Planning Limited v. Daystrom, Inc., 24 N.Y.2d 372, 382, 300 N.Y.S.2d 817, 825, 248 N.E.2d 576, 581 (1969) (applying “interest” analysis in a contract case).


author: CROW, District Judge.

text:
    Louvenia MITCHELL and Wilma Crayton, Plaintiffs, v. SAFEWAY STORES, INC.; Richard “Dick” Knight; and Robert Tush, Defendants.
    No. 83 1753.
    United States District Court, D. Kansas.
    Dec. 20, 1985.

      Fred W. Phelps, Jr., Topeka, Kan., for plaintiffs.
    Alan L. Rupe, Wichita, Kan., for defendants.
   MEMORANDUM AND ORDER

CROW, District Judge.

This suit was brought pursuant to 42 U.S.C. § 1981 and 42 U.S.C. §§ 2000e et seq. Plaintiffs claim they were discriminated against on the basis of race and on the basis of retaliation, and this impermissibly motivated discrimination affected their terms and conditions of employment and ultimately resulted in their termination of employment. Defendants move for summary judgment, claiming that plaintiffs have failed to present a prima facie case because the uncontroverted facts show that plaintiffs were not qualified to perform their job duties. Defendants further claim that if plaintiffs have made a prima facie case, then plaintiffs have failed to allege sufficient facts to meet the defendants’ articulated nondiscriminatory reason for their discharge. For the reasons stated below, the defendants’ motion for summary judgment is granted.

The plaintiffs, Louvenia Mitchell and Wilma Crayton, are sisters. Louvenia Mitchell began employment with defendant Safeway Stores on or about June 9, 1976, and Wilma Crayton began employment with Safeway on or about July 14, 1975. The plaintiffs had each formerly filed suits against Safeway for alleged race-based discrimination in employment. Ms. Crayton settled her case filed January 27, 1981, with Safeway, dismissing the suit with prejudice on February 12, 1982, and releasing Safeway of all potential claims in consideration of $7,500. Ms. Crayton released any and all claims she may have had against Safeway accruing prior to February 2, 1982. Ms. Mitchell released all claims she might have had against Safeway accruing prior to September 20, 1982, and dismissed with prejudice her suit against Safeway on September 23, 1982, in consideration of $17,500. This action now before the court was filed on August 5, 1983, and pertains to Ms. Crayton’s claims accruing after February 2, 1982, and Ms. Mitchell’s claims accruing after September 20, 1982.

Ms. Crayton suffered a job-related injury, underwent surgery, and was off work from September 13, 1982, to January 17, 1983. She filed a worker’s compensation claim which she settled for $40,000 plus medical expenses upon a stipulated 75% work disability. Ms. Mitchell suffered a job-related injury, underwent surgery, and was off work from September 30, 1982 to January 17,1983. Her worker's compensation claim was heard by the District Court of Sedgwick County, which found a 67% permanent partial, general bodily disability. She was awarded $8,011 for temporary total disability, and further compensation at the rate of $194 per week not to exceed $75,000.

While plaintiffs were on medical leave from September 1982 through January 17, 1983, the Safeway meat processing plant made significant changes in production and job assignments. Production was changed from a “table” to a “rack” type of line, and the line speed was increased. In addition,’ defendants reduced the number of workers at the stations along the line. Plaintiffs’ work load, consequently, had increased from the time they left their jobs in September and October of 1982 to the time they returned to work in January of 1983. These production changes affected all workers involved.

When plaintiffs returned to work, there is some question as to whether they were released to perform their former jobs or only “light duty” work. Plaintiffs allege they were released for light duty but that defendants did not allow plaintiffs such work. Defendants note that only one of the physicians recommended any limitation which was a slower paced job for a week or two, thereafter released to perform full duties. Both plaintiffs admitted they were physically incapable of performing their former jobs which had increased in work load.

The personnel records of Wilma Crayton reveal that she was counseled in May 1983 for her absenteeism problem and was informed if her performance did not improve she would be discharged. Before her medical leave, plaintiff Louvenia Mitchell was confronted about her excessive absenteeism. After her return to work, her absenteeism problem continued and failed to improve. Plaintiffs do not controvert they were an absenteeism problem and do not offer excuses for their particular absences.

Plaintiffs, nevertheless, contend that they were discharged for the discriminatory reasons of their race and in retaliation for their previous discrimination lawsuits. Plaintiffs also assert that this impermissibly motivated conduct affected their terms and conditions of employment. Defendants, on the other hand, contend that plaintiffs were terminated for excessive absenteeism, that they were physically unable to perform their job duties, and that any increase in job duties from the time they left employment on medical leave to the time they resumed employment was due to efforts to increase production and did not impact on plaintiffs differently than other employees.

Defendants argue that plaintiffs have failed to present a prima facie case because plaintiffs were not qualified for employment due to their excessive absenteeism and their physical inabilities to perform the work. Defendants additionally contend that if a prima facie case has been presented, plaintiffs still have failed to allege sufficient facts to meet defendants’ nondiscriminatory reasons for the terms and conditions of their employment and for their ultimate terminations.

In considering defendants’ motion for summary judgment, the court is mindful of the following standards. As summary judgment is to be granted with caution, the record must be read in a light most favorable to the party opposing summary judgment. Lindley v. Amoco Production Co., 639 F.2d 671 (10th Cir.1980). The movant must establish its entitlement to summary judgment beyond a reasonable doubt. Ellis v. El Paso Natural Gas Co., 754 F.2d 884, 885 (10th Cir.1985). Where circumstantial evidence or factual inferences tend to show genuine issues for trial, summary judgment is inappropriate. Barber v. General Electric Co., 648 F.2d 1272, 1278 (10th Cir.1981). A party resisting a motion for summary judgment cannot rest on eonclusory allegations; it must set forth specific facts showing a genuine issue remains for trial. Dart Industries, Inc. v. Plunkett Company of Oklahoma, 704 F.2d 496, 498 (10th Cir.1983).

The basic prima facie guideline of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668 (1973) is applicable to both Title YII cases and Section 1981 cases. Conner v. Fort Gordon Bus Co., 761 F.2d 1495, 1498 (11th Cir.1985); Adams v. McDougal, 695 F.2d 104, 109 (5th Cir.1983). The McDonnell Douglas test requires a showing of the following elements to present a prima facie case of discrimination with regard to termination from employment: (1) plaintiff is a member of a protected class; (2) plaintiff is qualified for the job he was performing; (3) despite plaintiffs qualifications, he was discharged; and (4) after his discharge the job remained available and the employer sought people with his qualifications to fill his job.

Plaintiffs filed a grievance procedure after their terminations and the matter was submitted to an arbitrator. An arbitrator’s decision is not entitled to collateral estoppel or res judicata effect, but the decision may be admitted as evidence. McDonald v. City of West Branch, Michigan, 466 U.S. 284, 292, 104 S.Ct. 1799, 1804, 80 L.Ed.2d 302, 310 (1984). The arbitrator concluded “There is no doubt that the grievants are ineffective employees because of their alleged physical limitations and chronic absenteeism. They were not dependable in appearing for work and placed unnecessary burdens on fellow workers.”

Courts have recognized excessive absenteeism as a legitimate nondiscriminatory reason for terminating an employee. Friends v. Coca-Cola Bottling Co., 37 F.E.P. Cases 1153, 1158-59 (D.Kan.1983); McClain v. Mack Trucks, Inc., 532 F.Supp. 486, 32 F.E.P. Cases 1889, 1891 (E.D.Pa. 1982); But see Stewart v. MBPXL, 32 F.E.P. Cases 1866, 1867 (D.Kan.1983) (plaintiff explained away 2 of 3 alleged unexcused absences). Excessive absenteeism may render an employee “unqualified” for purposes of the required prima facie showing. McClain, 532 F.Supp. 486, 32 F.E.P. Cases at 1891.

This court finds that there is no issue of material fact with respect to the qualifications of these plaintiffs to perform the duties of their position. Plaintiffs’ excessive absenteeism, as defined by the Safeway employment manual, and their physical limitations rendered them unqualified to perform the tasks required. Plaintiffs allege that because of the increased workload they were physically unable to remain on the job without absenteeism. The court finds this bare allegation of a nexus between the increased workload and the absences does not raise a question of material fact as to preclude summary judgment. Instead, the affidavit of the Safeway supervisor supports an inference that plaintiffs’ absenteeism was not related to their physical incapability to perform the increased work. Therefore, plaintiffs’ claim of unlawful termination of employment because of racial discrimination is fatally defective for failing to present a prima facie showing at this summary judgment stage.

Plaintiffs have failed to present a prima facie case that they were not promoted or accorded their seniority rights because of their race. Plaintiffs would have to show: (1) that they were members of a racial minority; (2) that they were qualified for the job openings; (3) that they were not promoted to the available positions; and (4) that the positions were filled by another. Mohammed v. Callaway, 698 F.2d 395, 398 (10th Cir.1983). Plaintiffs’ injuries can hardly be said to qualify them for a promotion. The fact that plaintiffs held higher level jobs and were demoted thereby giving rise to their first lawsuit does not show their present qualifications and nor does it warrant the court’s sifting through the allegations which were never litigated in these former lawsuits. Besides their counsel’s argument, plaintiffs have not offered facts to support the conclusion that other positions were available.

Plaintiffs also claim they received no light duty work after their medical leave, whereas white employees were given light work upon their return from medical leave. Defendants respond that only one of plaintiffs’ doctors recommended light duty and all other work releases authorized full job duties. In addition, one of the defendants testified before the arbitrator that if an opening existed, because of absences or other- reasons, then an employee returning from extended leave might be placed in that opening, depending on his or her seniority rights. Plaintiffs have not presented any evidence upon which the court could infer that other positions were available when plaintiffs returned to work. Since defendants have articulated a legitimate and nondiscriminatory reason which is undisputed, and plaintiffs have not come forward with evidence from which a pretext can reasonably be inferred, summary judgment is appropriate.

The court next addresses the issue of whether there exist any issues of material fact with respect to plaintiffs’ claim for discriminatory termination of employment in retailiation for their previous lawsuits. The Tenth Circuit, in Burrus v. United Telephone Company of Kansas, Inc., 683 F.2d 339, 343 (10th Cir.1982), cert. denied, 459 U.S. 1071, 103 S.Ct. 491, 74 L.Ed.2d 633 (1983), rephrased the McDonnell Douglas test for retaliation as follows:

A plaintiff must first establish a prima facie case of retaliation by showing that: (1) she engaged in protected opposition to Title VII discrimination or participated in a Title VII proceeding; (2) she was disadvantaged by an action of her employer subsequent to or contemporaneously with such opposition or participation; and (3) there is a causal connection between the protected activity and the adverse employment action.

Of course, once a plaintiff has established a prima facie case, the burden of production shifts to the employer to articulate a legitimate nondiscriminatory reason for the job action. Once the employer produces such a reason, plaintiff then must establish that the reason was a mere pretext for discrimination. Id.

The question in this case is whether there is a causal connection between plaintiffs’ prior lawsuits and their subsequent termination after returning from medical leave. Safeway has presented uncontroverted facts that the increased workload was due to a change in the production process of the plant. There are no facts in the record which would support an inference that the change in the production process was instituted for the purpose of retaliating against these two plaintiffs. The increased workload applied to all workers and not solely to plaintiffs. Therefore, plaintiff’s claim of discrimination in terms and conditions of employment and in termination on the basis of unlawful retaliation must also be dismissed at this summary judgment stage.

Therefore, as to the claims of racial discrimination and unlawful retaliation as affecting the terms and conditions of employment, a failure to promote, and their termination, this court finds that the facts are uncontroverted that plaintiffs were not qualified due to excessive absenteeism and physical limitations. Thus, plaintiffs have failed to present a prima facie case and summary judgment is appropriate. Further, even if plaintiffs had presented controverted factual allegations with regard to their prima facie case, the plaintiffs have not alleged any fact to controvert defendants’ explanation that the increased workload was a legitimate business, nondiscriminatory decision to increase productivity in the Safeway plant. Plaintiffs have failed to allege any facts to suggest Safeway’s actions were a mere pretext for unlawful racial discrimination or retaliation.

IT IS THEREFORE ORDERED that the motion for summary judgment of defendants is granted with respect to all of plaintiffs’ claims herein, including discrimination in the terms and conditions of employment, and discrimination in the ultimate termination of employment, on the basis of racial discrimination and on the basis of retaliation.