author: EDWARD B. DAVIS, District Judge.

text:
    Louis Frank LEONARD, Plaintiff, v. CARMICHAEL PROPERTIES & MANAGEMENT CO., INC., Defendant.
    No. 83-1156-Civ.
    United States District Court, S.D. Florida, Miami Division.
    Aug. 8, 1985.

      ■ Ira Kurzban, Kurzban & Kurzban, Miami, Fla., for plaintiff.
    Henry Latimer, Richard J. Weiss, Fine Jacobson Schwartz Nash Block & England, Jeffrey H. Rosenthal, Resnick, Rosenthal & Weiss, Miami, Fla., for defendant.
   MEMORANDUM OPINION

EDWARD B. DAVIS, District Judge.

THIS ACTION to recover unpaid overtime compensation under the Fair Labor Standards Act of 1938, as amended (“FLSA” or “Act”), 29 U.S.C. § 201 et seq., was tried-.without a jury. Jurisdiction is founded upon 29 U.S.C. § 216(b) and 28 U.S.C. § 1331. After careful consideration of the evidence and testimony adduced at trial, post-trial memoranda submitted by the parties, and in light of the entire record in this cause, the court makes the following findings of fact and conclusions of law.

FINDINGS OF FACT

Sabal Palm Villas (“Sabal Palm”) is an apartment complex which is composed of five hundred twelve (512) units spread throughout one hundred twenty-eight (128) separate buildings. It is located in the northeast section of Miami, Florida, known as “Little Haiti.”

Prior to July 1, 1981, plaintiff, Louis Frank Leonard, was employed to work at Sabal Palm by Southern Properties Services, Inc. (“Southern Properties”), a property management group. On July 1, 1981, defendant, Carmichael Properties and Management Company, Inc., replaced Southern Properties as the management company at Sabal Palm. During this transition, the former employees of Southern Properties were offered to continue in their same positions at Sabal Palm as employees of defendant. Plaintiff accepted defendant’s offer.

Plaintiff was employed by defendant from July 1, 1981 through August 31, 1982. During his tenure, plaintiff had two job functions: a “day job” and a “night/weekend job.”

The “day job” required plaintiff to perform general maintenance from 8:00 a.m. to 5:00 p.m. on weekdays. These duties consisted of, inter alia, “getting apartments ready” for new tenants as the old tenants moved out. His responsibilities included checking and cleaning the apartments and performing repairs. Plaintiff’s work performance was good enough for him to be promoted from a maintenance and repair employee to supervisor of maintenance at Sabal Palm. For the day job, plaintiff was paid on an hourly basis and was fully compensated for overtime.

The “night/weekend job” required plaintiff, a resident of Sabal Palm, to be on call to, inter alia, perform emergency repairs from 5:30 p.m. to 8:00 a.m. on weekdays and all day Saturdays and Sundays. As part of the night/weekend job, plaintiff was also responsible for changing light bulbs throughout the common areas of the complex, which took approximately one hour of his time each weekday and every Saturday. On Sundays plaintiff was on call but did not change light bulbs.

Defendant required plaintiff to carry a telephone beeper so that he could be reached for emergency repairs on the night/weekend job. Defendant set up an after-hours emergency call system whereby residents could call the Sabal Palm answering service which would “beep” plaintiff. Plaintiff would then call the answering service which would notify him of the apartment number and nature of the call. Plaintiff also performed emergency repairs that were brought to his attention via his personal telephone. The calls for repairs were primarily to remedy emergency plumbing problems, i.e., broken water pipes, which required plaintiff to rapidly respond to the affected units at unpredictable times. Plaintiff stayed close to his home at Sabal Palm in order to respond to the calls on a timely basis. He was never given a vacation from the night/weekend job but was allowed sick leave when necessary.

For the night/weekend job, plaintiff was paid in kind with a rent-free apartment having an approximate rental value of two hundred fifty dollars ($250) per month. The parties stipulated that between July 1981 and the termination date of August 31, 1982, plaintiff was paid on an hourly basis which varied from $5.75 to $6.75 per hour. (Joint Pretrial Stipulation, Par. 5.) Plaintiff was never compensated on an hourly basis for overtime he put in on the night/weekend job.

The arrangement that plaintiff would receive a rent-free apartment as compensation for the night/weekend job was initially approved by Louisa Quinn, Southern Properties’ supervisor, in 1980. Testimony at trial conflicted as to the exact terms of this oral agreement. Plaintiff testified that overtime compensation was promised by Quinn in addition to the apartment. That pursuant to Quinn’s instructions, he began keeping a record of those hours. James Henderson, who replaced Quinn at Southern Properties in 1980, and later became defendant’s vice-president, testified that Quinn never informed him that plaintiff was to receive anything other than the apartment. Quinn did not testify. The agreement was never reduced to writing.

Plaintiff testified that he logged the hours spent on the night/weekend job in a personal notebook (“notebook”) (Plaintiff’s Exhibit 1), pursuant to Quinn’s instructions and spent up to three hours per day changing light bulbs on weekdays and Saturdays. Further, that when he asked Henderson to pay overtime, Henderson refused and told plaintiff that if he quit the night/weekend job, he would lose the day job.

Gerald Batroni was a former day job co-worker of plaintiff’s and resident of Sabal Palm. He testified that he saw plaintiff changing light bulbs, rushing to repair jobs, and carrying a ladder and tools during the evening hours.

Donald Carmichael, owner of defendant, testified that he hired some of Southern Properties’ employees, including plaintiff, to manage Sabal Palm in July 1981. He further stated that plaintiff was furnished the apartment “in lieu of payment” of overtime. Henderson testified that he viewed the apartment as compensation for plaintiff’s night/weekend job and that plaintiff never complained about working overtime.

Defendant did not maintain records of hours worked at night and on weekends by plaintiff. Although he was asked to leave the defendant’s employ on August 19,1982, plaintiff continued to work and was paid through August 31, 1982 for the day job.

On September 9, 1982, plaintiff filed a complaint for unpaid overtime .compensation with the Wage and Hour Division, United States Department of Labor. (Defendant’s Exhibit 2.) The exact disposition of the complaint is unknown.

CONCLUSIONS OF LAW

The main issues raised by the facts herein are the appropriate method for reconstructing an employee’s overtime hours where an employer has failed to keep proper records; whether an employer is entitled to a credit against overtime compensation where it fails to prove the cost of lodging; and whether liquidated damages are warranted where an employer pays an employee overtime compensation for one job function, but not for the employee’s second job function.

RECONSTRUCTION OF EMPLOYEE’S HOURS

The test for determining the amount of overtime hours for which plaintiff is to be compensated is set forth in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946). In Anderson, the Supreme Court established a shifting burden of proof for cases in which an employer’s records of time worked are inaccurate or inadequate. The Supreme Court reasoned that in such cases, “The solution ... is not to penalize the employee by denying him any recovery on the ground that he is unable to prove the precise extent of uncompensated work. Such a result would place a premium on an employer’s failure to keep proper records in conformity with his statutory duty; it would allow the employer to keep the benefits of an employee’s labors without paying due compensation as contemplated by the Fair Labor Standards Act.” 328 U.S. at 687, 66 S.Ct. at 1192. In these cases, the employee must prove “that he has in fact performed work for which he was improperly compensated,” id., and must produce “sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.” Id. The burden then shifts to the employer to come forward with evidence of the exact number of hours worked “or with evidence to negative the reasonableness of the inference to be drawn from the employee’s evidence.” Id.

A prima facie case can be made through an employee’s testimony giving his recollection of hours worked, e.g., Reeves v. International Tel. & Tel. Corp., 616 F.2d 1342, 1351-52 (5th Cir.1980), cert. denied, 449 U.S. 1077, 101 S.Ct. 857, 66 L.Ed.2d 800 (1981), although the court need not accept every element of the plaintiff’s case simply because the employer fails to produce records. Marshall v. Hope Garcia Lancarte, 632 F.2d 1196, 1197-98 (5th Cir.1980). A FLSA case is not to be dismissed nor should recovery be denied because proof of the number of hours worked is inexact or not perfectly accurate. Marshall v. Mammas Fried Chicken, Inc., 590 F.2d 598, 599 (5th Cir.1979) (per curiam); Mitchell v. Mitchell Truck Line Inc., 286 F.2d 721, 725-26 (5th Cir.1961). Where the inaccuracy is due to the employer’s failure to keep adequate records as required by statute, 29 U.S.C. § 211(c), § 215(a)(5), and the employee has demonstrated that some work was performed for which he was improperly compensated, there is a right to recovery, even though the amount may be uncertain and damages difficult to calculate. Hodgson v. Ricky Fashions, Inc., 434 F.2d 1261, 1263-64 (5th Cir.1970) (emphasis in original). Under these circumstances, the court may “award damages to the employee, even though the result be only approximate.” Anderson, 328 U.S. at 688, 66 S.Ct. at 1193.

In its analysis, the court must make a preliminary finding as to whether plaintiff should be compensated for idle time. As in all approximation cases, “this is basically a fact question, to be gleaned from all the facts and circumstances of each case.” Armour & Co. v. Wantock, 323 U.S. 126, 133, 65 S.Ct. 165, 168, 89 L.Ed. 118 (1944). “In determining whether idle time is compensable, two factors to be considered are whether the time is spent predominantly for the employer’s or employee[’s] benefit, and whether the time is of sufficient duration and taken under such conditions that it is available to employees for their own use and purposes disassociated from their employment time.” Blum v. Great Lakes Carbon Corp., 418 F.2d 283, 284 (5th Cir.1969). The court rejects plaintiff’s contention that he should be compensated on a twenty-four (24)-hour “on-call” basis, or in the alternative, for all “standby time” save for eating and sleeping. Contrary to the picture he has attempted to paint, plaintiff was not held hostage at Sabal Palm during his more than two years’ employment. The testimony, including his own, shows that plaintiff was free to come and go as he pleased; that he, inter alia, went grocery shopping, attended church, and entertained friends while “on call.” Surely, plaintiff’s shopping and entertaining was for his own benefit and disassociated from employment time. Based on the facts presented at trial, particularly the fact that plaintiff was largely unfettered except for hours actually worked, the court concludes that plaintiff’s idle time while waiting for emergency calls is not compensable for overtime under the Act. E.g., Brennan v. Williams Investment Co., Inc., 390 F.Supp. 981 (W.D.Tenn.1975); Petrlik v. Community Realty Company, 347 F.Supp. 638 (D.Md.1972).

The court must now consider whether plaintiff is entitled to overtime compensation in light of the Anderson standard. Upon review of the facts adduced at trial, the court finds that plaintiff has met his burden by demonstrating he performed work for which he was not compensated, and producing sufficient evidence which shows the extent of that work. Plaintiff has done so via the testimony and his notebook of emergency hours worked. On the other hand, defendant has failed to come forward with evidence of the exact number of hours worked or with proof to negate the reasonableness of the inference drawn from plaintiffs evidence. Rather than rebutting plaintiffs evidence, the testimony of defendant’s principal, Don Carmichael, and former vice-president, James Henderson, corroborates plaintiff’s claim. Indeed, both Carmichael and Henderson testified that plaintiff did in fact work the night/weekend job and that he was furnished an apartment “in lieu of payment” for these overtime hours. Plaintiff’s testimony is further bolstered by former coworker and Sabal Palm resident, Gerald Batroni, who stated that he witnessed plaintiff changing light bulbs and responding to emergency calls during the evenings and on weekends. In essence, the trial revealed that there is no dispute as to whether plaintiff did in fact perform the night/weekend job. Instead, the issue has become the number of overtime hours for which plaintiff is entitled to compensation under the Act.

Considering all the evidence, the court holds that it is just and reasonable to reconstruct the hours worked by accepting the emergency call hours contained in the notebook and allowing one hour per day (except Sundays) for changing light bulbs. The court finds one hour per day, as opposed to plaintiff’s claim of three hours, for light-bulb changing to be reasonable due to plaintiff’s inability to provide more specific starting and stopping times. Likewise, one hour is reasonable because it took between twenty (20) and thirty (30) minutes just to walk the property. In light of the foregoing, the court finds that plaintiff is entitled to overtime compensation for hours actually worked.

CREDIT AGAINST OVERTIME COMPENSATION

Defendant asserts that it is entitled to a credit against plaintiff’s overtime based on the retail value of an apartment furnished to plaintiff while employed at Sabal Palm. Defendant sets the retail value of the apartment at a flat two hundred fifty dollars ($250) per month, apparently not allowing for any rental increase or decrease during plaintiff’s tenure. Section 3(m) of the FLSA, 29 U.S.C. § 203(m), allows employers to include the reasonable cost of meals, lodging, or other facilities in employee wages for purposes of the Act. The regulations promulgated by the Secretary of Labor require employers to keep certain records of the cost incurred furnishing board, lodging or other facilities, 29 C.F.R. § 516.27(a), and also require the employer to maintain, on a work-week basis, records reflecting additions to wages or deductions from wages for board, lodging, or other facilities. Id. § 516.28(b). The regulations define “reasonable cost” to be not more than the actual cost to the employer of the board, lodging, or other facilities customarily provided by him to his employees. Id. § 531.3(a). “ ‘Reasonable cost’ does not include a profit to the employer or any affiliated person.” Id. § 531.3(b).

The employer has the burden of showing that it is entitled to the credits claimed under § 3(m) of the Act. Donovan v. New Floridian Hotel, Inc., 676 F.2d 468, 473-76 (11th Cir.1982). Here the court finds defendant has not met that burden. It is impossible for the court to determine what was the reasonable cost of the apartment because defendant has failed to proffer any evidence as to the expenses of providing it for plaintiff. Furthermore, at trial and in its post-trial memorandum, defendant insists that the retail value, rather than cost, is the appropriate measure. (See Defendant’s Exhibit 6.) The court finds defendant’s argument unpersuasive.

This is not to say that the facilities furnished had no value. However, to separate the reasonable cost of the apartment from the total cost plus profit “would require the court to speculate on the basis of an inadequate and inaccurate record. Under these circumstances, the New Floridian ease requires that the defendant be denied credit for the [apartment].” Washington v. Miller, 721 F.2d 797, 803 (11th Cir.1983) (per curiam); See also Davis Bros., Inc., v. Donovan, 700 F.2d 1368 (11th Cir.1983).

LIQUIDATED DAMAGES

In addition to unpaid overtime compensation, plaintiff seeks an equal amount of liquidated damages under Section 11 of the Portal to Portal Act, 29 U.S.C. § 260. Defendant, citing its good faith and that it had reasonable grounds for believing nonpayment of overtime was not a violation of the FLSA, contends there is no basis for the assessment of liquidated damages under 29 U.S.C. § 216(b). The court disagrees. Section 11 of the Portal to Portal Act imposes “upon .the employer who would escape the payment of liquidated damages a plain and substantial burden of persuading the court by proof that his failure to obey the statute was both in good faith and predicated upon such reasonable grounds that it would be unfair to impose upon him more than a compensatory verdict.” Barcellona v. Tiffany English Pub, Inc., 597 F.2d 464, 468 (5th Cir.1979). The law in this circuit provides that there is a presumption of defendant’s willful violation, “absent positive and compelling proof of good faith.” Reeves, 616 F.2d at 1353. Knowledge will generally be imputed to the offending employer. Id. It is not enough to plead and prove ignorance of the overtime requirements. Id. Nor does complete ignorance of the possible applicability of the Act shield the employer from liability for liquidated damages. Id. “[G]ood faith requires some duty to investigate potential liability under the FLSA.” Washington v. Miller, 721 F.2d at 804; Barcellona, 597 F.2d at 469.

In the instant case, the evidence is insufficient to demonstrate that defendant’s failure to pay overtime wages in accordance with the Act was in reasonable good faith. Defendant did not present evidence which even hinted it attempted to investigate its liability under the FLSA. In its post-trial memorandum, defendant contends it acted in good faith because its first encounter with the Wage and Hour Division was in response to the complaint filed by plaintiff, and that it was never advised of the complaint’s disposition. The court finds these reasons inapposite to the good faith defense. Plaintiff was paid through August 31, 1982. The complaint was filed September 9, 1982. Clearly the implication that defendant relied in good faith on the Department of Labor’s silence during plaintiff’s tenure is without merit. Equally without merit is defendant’s claim of good faith because it inherited plaintiff’s arrangement from Southern Properties, for “[e]ven inexperienced businessmen cannot claim good faith when they blindly operate a business without making any investigation as to their responsibilities under the labor laws. Apathetic ignorance is never the basis of a reasonable belief.” Barcellona, 597 F.2d at 469.

Lack of good faith is demonstrated when an employer “knows, or has reason to know” that his conduct is governed by the Act. Reeves, 616 F.2d at 1353. Here, defendant wants the court to believe it knew the Act’s provisions governed the day job, but not the night/weekend job. This proposition is unacceptable. In light of the entire record, especially its payment of overtime for the day job, the court finds implausible defendant’s assertion that it did not know or, at a minimum, did not have reason to know, that overtime compensation was required for the night/weekend job under the Act. Accordingly, pursuant to 29 U.S.C. § 260, plaintiff shall be awarded liquidated damages in the additional amount equal to his award of unpaid overtime compensation.

CONCLUSION

The court finds that plaintiff was not paid for one thousand three hundred sixty-five (1,365) hours he worked at the night/weekend job and, thus, is entitled to overtime compensation in the amount of twelve thousand five hundred forty-four dollars and twenty-nine cents ($12,544.29), plus liquidated damages in an equal amount, for a total of twenty-five thousand eighty-eight dollars and fifty-eight cents ($25,088.58), together with post-judgment interest and costs.

APPENDIX

The parties stipulate that, “Between July 1981 and termination date of August 31, 1981, the plaintiff had an hourly rate which varied from $5.75 to $6.75 per hour.” (Joint Pretrial Stipulation, Par. 5.) The following calculations are based on the wage information provided by defendant insofar as it comports with the Joint Pretrial Stipulation. (Defendant’s Exhibit 3.) The award is based on the period from July 1, 1981 through August 31, 1982.

July 1, 1981 — March 18, 1982 ($5.75 per hour)
Emergency call notebook: 643 hours x $ 8.65 = $ 5,561.95
Light bulb changing: 224 hours x $ 8.65 = $ 1,937.60
March 19, 1982-August 31, 1982 ($6.75 per hour)
Emergency call notebook: 356 hours X $10.13 = $ 3,606.28
Light bulb changing: 142 hours X $10.13 = $ 1,438.46
Total Unpaid Overtime Compensation: $12,544.29
Liquidated Damages: $12,544.29
Total Due Plaintiff: $25,088.58

      . Plaintiff was fully compensated for overtime with respect to the day job. Thus, the following conclusions relate solely to unpaid overtime compensation due plaintiff for the night/weekend job.

      . The FLSA provides in pertinent part that "[n]o employer shall employ any of his employees ... for a workweek longer than forty hours ... unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a).

      . Both § 3(m) of the FLSA and the regulations provide for requests by employers for a determination of reasonable cost by the Administrator of the Wage and Hour Division. The regulations, 29 C.F.R. § 531.4(a), establish a specific procedure to facilitate such determinations. The burden of invoking the administrator’s asststance is on the employer. New Floridian Hotel, Inc., 676 F.2d at 475, n. 13. Where, as here, the employer has failed to comply with the record-keeping provisions, 29 C.F.R. § 516.27, and there has been no determination of reasonable cost by the Wage and Hour Division, the employer does not satisfy its burden. Id. at 475.

       In its t.trial memorandum) defendant lists seven other reasons for ;ts failure t0 pay over. time, none of which speaks directly to its duty to investigate potential liability under the FLSA.

      . At trial, defendant attempted to repudiate the stipulation and, for the first time, asserted that plaintiff was paid a salary for the night/weekend job, rather than on an hourly basis. The court rejects defendant's attempt to deviate from the stipulation and finds the parties are bound by it. Fed.R.Civ.P. Rule 16; Mary S. Krech Trust v. Lakes Apartments, 642 F.2d 98, 101 n. 6 (5th Cir. Unit B 1981); Local Rule 14D.

      . Plaintiff seeks to recover overtime compensation for the period from May 1, 1980 through August 31, 1982 on the theory that defendant, Southern Properties, and Sabal Palm constitute an enterprise under the Act, 29 U.S.C. § 203(r). Upon review of the evidence, the court finds that plaintiff has failed to demonstrate the elements that must co-exist for entities to be considered a single enterprise. See e.g., Brennan v. Arnheim & Neely, Inc., 410 U.S. 512, 513, 93 S.Ct. 1138, 1139, 35 L.Ed.2d 463 (1973); Brennan v. Veterans Cleaning Service, Inc., 482 F.2d 1362 (5th Cir.1973).


source: Caselaw Access Project

author: EDWARD C. REED, Jr., District Judge.

license: Public Domain

text:
    John M. TWEET, Donna P. Tweet, Danniele Middleton and David Middleton, Plaintiffs, v. Raymond A. WEBSTER, California State Automobile Association, and Farmers Insurance Exchange, Defendants.
    No. CV-R-84-47-ECR.
    United States District Court, D. Nevada.
    Aug. 8, 1985.
    G.C. Backus, Reno, Nev., for plaintiffs.
    David R. Grundy, Hibbs, Roberts, Lemons & Grundy, Reno, Nev., for Farmers Ins. Exchange.
    Bruce R. Laxalt, Beckley, Singleton, De-Lanoy & Jemison, Reno, Nev., for California Auto. Ass’n and Raymond A. Webster.
   ORDER

EDWARD C. REED, Jr., District Judge.

Plaintiffs move this Court for reconsideration of its order (Document # 28) filed May 15, 1985, 610 F.Supp. 104, granting summary judgment in favor of defendant California State Automobile Association (“CSAA”) and dismissing the complaint in the above-entitled matter. Plaintiffs’ motion is made on the grounds that the Court’s decision is contrary to state court holdings and to state law.

Defendant (CSAA) opposes plaintiffs’ motion for reconsideration with respect to CSAA on the grounds that this Court correctly interpreted existing Nevada law and its unfair claims settlement practices statute, that unpublished lower state court holdings have no precedential value, that claims presented for the first time in a petition for rehearing cannot be considered, and that summary judgment in favor of CSAA was appropriate and supported by long-standing authority from the Nevada Supreme Court.

Plaintiffs have presented no new evidence in connection with their motion for reconsideration. The unpublished state district court decisions filed with the motion for reconsideration may not be considered by this Court as they have no precedential value here.

In reconsidering our previous order, we will take another look at the evidence already presented in connection with the motion for summary judgment, the applicable Nevada state law and its interpretation and, in particular, Nevada’s unfair claims settlement practices statute. In addition, we will consider any modification in controlling state law enunciated before or during this reconsideration. See Walker v. Jim Dandy Co., 97 F.R.D. 505 (N.D.Ala.1983) ; Yuclan Enterprises, Inc. v. Nakagawa, 583 F.Supp. 1574 (D.Hawaii 1984).

Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Ybarra v. Reno Thunderbird Mobile Home Village, 723 F.2d 675, 677 (9th Cir.1984) . Although the initial burden of showing no issue of material fact is on the proponent, Int. Un. of Bricklayers Etc. v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir.1985), the opponent must present some significant probative factual evidence tending to support his complaint. Compton v. Ide, 732 F.2d 1429, 1434 (9th Cir.1984).

With respect to the complaint against CSAA, before us under diversity jurisdiction, we have found that Nevada law applies. The complaint arose out of an automobile accident in California between plaintiffs and a non-party alleged tortfeasor who was insured by defendant CSAA. Plaintiffs are residents of Nevada and negotiated their alleged claim against CSAA out of CSAA’s Reno, Nevada district office. Therefore, any alleged tort of bad faith refusal to settle on the part of CSAA took place in Nevada, and this Court previously correctly interpreted Nevada’s lex loci rule. See Mitrovich v. Pavlovich, 61 Nev. 62, 114 P.2d 1084 (1941) and progeny.

As discussed in our previous order, the issue in this case is whether the Nevada Insurance Code creates a private right of action in favor of third party claimants against insurers for bad faith refusal to settle a reasonably clear claim. Plaintiffs contend that the Nevada statutes and, in particular, NRS 686A.310 (unfair claims settlements practices), are identical to those of California as far as is relevant to this case, and should be interpreted by this Court as have those of California. Under its statutory scheme, California recognizes such a private right of action. Royal Globe Inc. Co. v. Superior Court, etc., 23 Cal.3d 880, 153 Cal.Rptr. 842, 592 P.2d 329 (1979). Our conclusion remains that the Nevada statutes differ in significant ways and that it was not the intention of the Nevada legislature in enacting its statutes to create a private right of action. The discussion below will focus on these differences.

Section 790 of the California Insurance Code, enacted in 1959, enumerates certain unfair and deceptive practices in the business of insurance (§ 790.03) and gives the insurance commissioner the power to investigate, prosecute and punish violators through cease and desist orders and fines (§§ 790.04-790.08). Section 790.09 specifically provides that in an enforcement proceeding by the commissioner,

“[n]o order to cease and desist issued under this article directed to any person ... shall in any way relieve or absolve such person from ... civil liability or criminal penalty under the laws of this State arising out of the methods, acts or practices found unfair or deceptive.” (emphasis added)

In 1972, subdivision (h) was added to Cal. Ins.Code § 790.03, listing fifteen specific claims settlement procedures considered to be unfair practices when knowingly committed or performed “with such frequency as to indicate a general business practice.” § 790.03(h)(5) lists as one of these practices:

(5) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear, (emphasis added)

In 1979, a divided California Supreme Court held that the preservation of an insurer’s “civil liability” in § 790.09, considered in conjunction with § 790.03(h)(5), created a private right of action in a third party claimant against an alleged tortfeasor’s insurer for that insurer’s failure to attempt in good faith to effectuate a prompt, fair settlement of a claim in which liability had become reasonably clear. Royal Globe Ins. Co. v. Superior Court, Etc., supra. See also Avila v. Travelers Ins. Co., 481 F.Supp. 431 (C.D.Cal.1979), aff'd, 651 F.2d 658 (1981) (discussing Royal Globe.)

Nevada law is different. Title 57, the Nevada Insurance Code, with 42 chapters, is a comprehensive plan by the State of Nevada to regulate the insurance industry. Chapter 679B sets forth the duties and powers of the insurance commissioner, which are, among other things, the power to enforce the provisions of the code (679B. 120(3)), investigate fraudulent claims (679B.154-55), enjoin violators of the code and turn information of such violation over to the district attorney or attorney general for appropriate proceedings (679B.180) and hold hearings on matters within the scope of the code (679B.310). Appeal from the findings of the commissioner is available in state district court (679B.370). NRS 679B.310 et seq., in setting forth a comprehensive administrative hearing procedure to be followed in the event of violations of the code, has provisions for notice to and intervention by all those whose pecuniary interests might be affected by the commissioner’s orders. Those with pecuniary interests may also appeal directly to the state courts.

NRS 679A.180 (“General Penalties”) provides that, unless defined by state law as a felony, violations of the code are misdemeanors. 679A.180(2) states that:

Every penalty imposed by this code shall be in addition to any applicable suspension, revocation or denial of a license or certificate of authority.

However, nowhere in Title 57, NRS, is there a provision analogous to Cal.Ins.Code § 790.09. NRS 679A.180 contains no reference to the existence of “civil liability,” the words which were the basis of the California court’s decision holding that a private cause of action existed in favor of third parties against insurers who commit unfair claims settlement acts. Royal Globe, 592 P.2d at 332.

NRS 686A.310 was added to the Nevada Insurance Code in 1975, defining twelve specific activities considered to be unfair claims settlement practices when engaged in “with such frequency as to indicate a general business practice.” The unfair claims activities listed in NRS 686A.310 are identical to those listed in Cal.Ins.Code § 790.03(h), with two exceptions: subdivision (5) has a different wording and subdivisions (13) through (15) of § 790.03(h) (relating to failure to provide an explanation for the basis relied on in denying a claim or offering a compromise settlement, directing a claimant not to obtain the services of an attorney and misleading a claimant as to the applicable statute of limitations) are omitted from the Nevada statute. Subdivision (5) of NRS 686A.310, with which we are concerned in the present case, provides that one unfair claims settlement practice is:

(5) Failing to effectuate prompt, fair and equitable settlements of claims in which liability of the insurer has become reasonably clear.

Unlike Cal.Ins.Code § 790.03(h)(5), NRS 686A.310(5) contains no mention of “good faith.” Since Nevada’s statute was passed three years after California’s and both statutes appear to be patterned after the National Association of Insurance Commissioners’ model legislation which contains language identical to California’s, {See NAIC Model Unfair Trade Practices Act § 4(9)(f); Royal Globe 592 P.2d at 332; Cal.Ins.Code § 790.03(h)(5)), NRS 686A.310(5), it appears to this Court that the Nevada legislature intended to omit the good faith wording from this statute. Where plaintiffs’ cause of action against CSAA is based on a non-existent statutory requirement that CSAA make a good faith attempt to settle, it fails.

Where the statutes do not specifically create a private cause of action, we must focus on legislative intent. Touche Ross & Co. v. Reddington, 442 U.S. 560, 568, 99 S.Ct. 2479, 2485, 61 L.Ed.2d 82 (1979), and progeny. Based on its statutes, the California court concluded that the California legislature intended to create a private right of action in third party claimants. Where the Nevada statutes do not include the positive indicia relied on in California, and absent any other indications, it is our conclusion that the Nevada legislature intended to create only the penalties and remedies it did in enacting the Nevada Insurance Code and to foreclose any additional private right of action. See Middlesex County Sewage Authority v. Sea Clammers, 453 U.S. 1, 21, 101 S.Ct. 2615, 2627, 69 L.Ed.2d 435 (1980) (the existence of express remedies demonstrates that Congress intended to foreclose other implied private actions); Holter v. Moore and Co., 681 P.2d 962, 965 (Colo.App.1983) (absent strong indicia of intent to the contrary, courts are compelled to conclude that the legislature provided precisely the remedies it considered appropriate). As the Nevada Supreme Court has observed, defendants “urge that if civil liability is to be imposed, it should be accomplished by legislative act after appropriate surveys, hearings, and investigations to ascertain the need for it and the expected consequences to follow. We prefer this point of view.” Hamm v. Carson City Nugget, Inc., 85 Nev. 99, 101, 450 P.2d 358 (1969) (advocating judicial restraint). See also Bell v. Alpha Tau Omega, 98 Nev. 109, 111, 642 P.2d 161 (1982) (approving the point of view in Hamm).

Other jurisdictions have considered the question of whether their insurance codes create a private right of action against insurers for third party claimants. See list in Patterson v. Globe American Cas. Co., 101 N.M. 541, 685 P.2d 396, 397 (1984). States recognizing such a right under their statutory schemes include Louisiana, California, Montana, West Virginia and Arizona. States in which a private right of action is not recognized under the applicable statutes include Illinois, Iowa, New Jersey, Pennsylvania, Texas, Vermont, Wisconsin and New Mexico. Washington does not recognize such a right of action in third parties based on principles of contract. See Bowe v. Eaton, 17 Wash.App. 840, 565 P.2d 826 (1977).

The court in Patterson commented that the statutes construed in cases recognizing an implied cause of action in favor of third party claimants against insurers differed from New Mexico’s. As outlined by the court, New Mexico’s statute was comprehensive giving the Superintendent of Insurance investigative, regulatory and hearing powers and providing for administrative, injunctive and civil penalties and for appeal to the court of appeals. Patterson, 685 P.2d at 398. Discussing other New Mexico statutes in which private rights of action had been expressly created, the court concluded that the legislature knew how to create such a right if it intended to do so, and where it failed to provide for private actions in the insurance code, it did not intend to create them. Id.

In Tufts v. Madesco Inv. Corp., 524 F.Supp. 484, 486 (E.D.Mo.1981), the federal district court compared Missouri’s insurance code “savings clause” to California’s and found that the Missouri statute contained a “similar but critically different provision.” Missouri’s § 375.942(5) provides that:

“No order of the director ... or order of a court to enforce the ... [code] shall in any way relieve or absolve any person affected by such order from any liability under any other laws of this state.”

Id. at 486-87. This was contrasted with Cal.Ins.Code § 790.09 which says that “[n]o order to cease or desist issued under this article directed to any person ... shall in any way relieve or absolve such person from ... civil liability or criminal penalty under the laws of this State.” While the language of the two “savings clauses” is somewhat different, the thrust of the statutes sees to be the same. Nevertheless, the Tufts court found that a reasonable interpretation of the language “liability under any other laws of this state” meant that civil liability would not arise from a violation of the Missouri insurance statute and that the statute, therefore, did not provide for a private right of action in third party claimants. Id. at 487.

The Tufts court also observed that an Illinois court had construed an identical “savings” provision in the Illinois insurance code in the same way, finding no private right of action for third parties, citing Scroggins v. Allstate Ins. Co., 74 Ill.App.3d 1027, 30 Ill.Dec. 682, 393 N.E.2d 718 (1978). Tufts, 524 F.Supp. at 487.

By contrast, the Arizona Supreme Court construed an Arizona insurance code provision which is similar to Missouri’s to mean that there was a private right of action against an insurer by third parties irrespective of governmental action. Sparks v. Republic Nat. Life Ins. Co., 132 Ariz. 529, 647 P.2d 1127, 1139 (1982), cert. denied, 459 U.S. 1070, 103 S.Ct. 490, 74 L.Ed.2d 632 (1982). The reasoning of the Sparks court was that it had to be consistent with an earlier court’s interpretation of an identical section in Arizona’s consumer fraud act under which a private right of action was recognized. The issue in Sparks was deceptive sales practices and not bad faith refusal to settle claims.

The Wisconsin statute is different still in that it expressly provides that an insurance carrier may be sued directly but only where the insurance policy was issued or delivered in the state and the accident, injury or negligence also occurred in the state. Uebelacker v. Horace Mann Ins. Co., 500 F.Supp. 180, 182 (E.D.Wis.1980). Even in this event, a third party’s right to maintain an action for bad faith refusal to settle against an insurer is recognized in Wisconsin only where the claimant has a vested claim, as the result of statutory entitlement (workman’s compensation) or an unsatisfied judgment against the insured. Id. at 183.

Nevada’s insurance code has no “savings clause” similar to those found in the statutes of California, Arizona, Missouri or Illinois. NRS 697A.180(2) simply provides that penalties imposed by the code shall be “in addition to any applicable suspension, revocation or denial of a license or certificate of authority.” It is the language of the “savings clauses” on which the courts in California and Arizona relied in finding that private rights of action in favor of third party claimants would lie against insurers. The courts in Missouri and Illinois found the language in the “savings clauses” of the statutes of these states was not inclusive enough to preserve an insurers’ civil liability and so to create a private right of action in third party claimants. Where Nevada’s insurance code has no language relating to other liability of insurers, none can be read in. The reasoning in Patterson v. Globe American Cas. Co., supra, that where a legislature writes an insurance code with specific penalties and remedies for violation thereof, the code is as the legislature intended, applies equally to Nevada. Had the legislature also intended to create a private right of action in third party claimants, it would have done so.

Furthermore, in the present ease, plaintiffs do not present probative evidence supporting their allegation that their claim against CSAA had become “reasonably clear.” See e.g., Beckhan v. Safeco Ins. Co. of America, 691 F.2d 898, 903 (9th Cir.1982) (applying California law) (there must be some objective factual basis for disputing liability to defeat a motion for summary judgment on the ground that liability is not reasonably clear). Where the plaintiffs do not make an adequate showing of the existence of a triable issue of fact with respect to CSAA’s liability, summary judgment is appropriate. Avila v. Travelers Ins. Co., 651 F.2d 658, 660 (9th Cir.1981).

Where third party claimants have no private cause of action against an alleged tortfeasor’s insurer under statutory scheme in Nevada, they also have no cause of action under any theory of contract or tort. State ex rel Allen v. District Court, 69 Nev. 196, 245 P.2d 999 (1952). Allen, holding that a third party claimant does not have a discoverable interest in the value of a liability policy insuring an alleged tortfeasor where Nevada statutes do not create a contractual relationship between the insurer and such third party, still is good law. In addition, although the Nevada Supreme Court has found that an implied covenant of good faith and fair dealing exists between an insurer and his insured based on a special element of reliance, U.S. Fidelity v. Peterson, 91 Nev. 617, 540 P.2d 1070 (1975), the court has refused to find this implied covenant in other situations not based on this reliance. See e.g. Aluevich v. Harrah’s, 99 Nev. 215, 660 P.2d 986 (1983) (not found between lessor and lessee). Where the tort of bad faith refusal to settle has been recognized, it has had its genesis in these contractual obligations which give rise to a fiduciary duty. Uebelacker v. Horace Mann Ins. Co., 500 F.Supp. at 184 (E.D.Wis.1980) (finding no such duty extended to third party claimants absent express legislative creation). Since there is no contractual relationship in the present case between plaintiffs and defendant CSAA, there also is no cause of action in tort for alleged breach of this fiduciary duty.

Therefore, we do not find any facts or evidence presented by plaintiffs to persuade us that a Nevada court would grant a third party claimant a cause of action directly against an insurer for bad faith refusal to settle a reasonably clear claim, based on statute, implied contract, or common law tort, under Nevada law as it stands today. Commercial Union Ins. Co. v. Ford Motor Co., 640 F.2d 210 (9th Cir.1981).

Plaintiffs argue that a cause of action against CSAA exists where CSAA allegedly did not comply with the provisions of Nevada insurance regulation # 686A.670(2), which plaintiffs state requires an investigation by an insurer of a claim within thirty days following receipt of notice of the claim. Plaintiffs also claim that CSAA did not comply with the provisions of insurance regulation # 686A.675 which, they state, requires that an insurer may not delay settlement of a claim with a claimant not an attorney or not represented by one by extending negotiations until the claimant’s rights may be affected by a statute of limitations and that the insurer must give the claimant sixty days’ written notice prior to the expiration of the applicable time limit. Although this latter issue was not addressed in our May 15, 1985 order, it initially was raised and briefed by both parties. Defendant CSAA argues, and we agree, that NRS 679B, 686A.160 and 686A.170 set forth a fully-developed scheme of sanctions and remedies in a “comprehensive enforcement procedure to be used by the Commissioner in insuring [insurance company] compliance with the standard of conduct set forth in the Nevada Insurance Code.” Motion for Summary Judgment, Document # 22 at p. 21. Although plaintiffs were not notified by CSAA that the applicable statute of limitations on their cause of action was about to expire until sixteen days before the fact, and plaintiff were not represented by counsel until one day before this notice was received, any remedy for this alleged violation lies initially with the insurance commissioner. Plaintiffs also ask us to take judicial notice of a disputable presumption that an unlawful act was done with an unlawful intent (NRS 47.250(1)). This we refuse to do.

Finally, in their original complaint, plaintiffs alleged fraud on the part of CSAA in settlement negotiations, but offered no probative evidence that the elements of fraud under NRS 205.380 existed in this case. Plaintiffs claimed that CSAA entered into negotiations without the intent to make a reasonable settlement but stated no facts showing this to be true. We .found that where plaintiffs presented no evidence tending to support their complaint on this issue, summary judgment for CSAA was appropriate. Compton v. Ide, supra.

For all of the above reasons, this Court found that summary judgment in favor of CSAA was appropriate. The Court now finds no reasons to alter its order of May 15, 1985.

IT IS, THEREFORE, HEREBY ORDERED that plaintiffs’ motion for reconsideration of the order of this Court (Document ■# 28) filed May 15, 1985, is DENIED.


author: EDELSTEIN, District Judge:

text:
    Arnold CLEMENTE and Gloria V. Clemente, Plaintiffs, v. PHILIPPINE AIRLINES, Defendant.
    No. 84 Civ. 4645.
    United States District Court, S.D. New York.
    Aug. 9, 1985.

      Antonio M. Flores, New York City, of counsel, for plaintiffs.
    Condon & Forsyth, New York City (Edward C. Dial, Jr., New York City, of counsel), for defendant.
   OPINION AND ORDER

EDELSTEIN, District Judge:

This is an action for breach of contract of carriage. The verified complaint, originally filed in state court, was removed to this court on June 29, 1984, pursuant to 28 U.S.C. § 1441(d). Plaintiffs have made no motion to remand to state court. Jurisdiction is predicated on 28 U.S.C. § 1330(a), which confers jurisdiction upon the district courts of any nonjury civil action against “a foreign state.” 28 U.S.C. § 1603(b)(2) defines a foreign state as any entity which has a majority of its shares owned by a foreign state or a political subdivision of a foreign state. Defendant has demonstrated that the majority of defendant Philippine Airline’s (“PAL”) capital stock is owned by the Government Service Insurance System and the National Development Company, which are owned and were created by the government of the Republic of the Philippines. Affidavit of Eduardo J. Berenguer, June 25, 1985. Accordingly, this court has subject matter jurisdiction over the action.

On May 28, 1985, the case was tried without a jury before this court. After the plaintiffs presented their case, the court granted defendant’s motion to dismiss, pursuant to Rule 41(b) of the Federal Rules of Civil Procedure and directed defendant to submit proposed findings of fact and conclusions of law. The only witnesses called by plaintiffs’ counsel were the plaintiffs themselves. Having heard the testimony and examined the proof offered by the plaintiffs, the court makes the following findings of fact and conclusions of law, pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

FINDINGS OF FACT

On March 26, 1984, plaintiffs, Arnold Clemente and his wife Gloria V. Clemente, purchased from defendant’s New York office PAL tickets numbered 079-44011794610 and 079-44011794606, for round trip transportation from New York to Manila, Philippines and back. The tickets were issued pursuant to defendant’s “Fiesta Fare,”, a package deal, by which plaintiffs were provided a hotel room and which had a maximum validity of fifteen days running from the date of departure from the United States. Plaintiffs departed for the Philippines on March 27, 1984.

The tickets and the advice to international passengers annexed to the tickets provide that a passenger on an international flight must reconfirm his reservation at least seventy-two hours prior to departure and that failure to reconfirm within the required time entitles the airline to cancel the reservation. In addition PAL’s Passenger Rules Tariff on file with the Civil Aeronautics Board provides that PAL will:

cancel the reservation of an international portion of an itinerary (including the complete remaining international itinerary) of any passenger on a flight operated by it: (b) unless the passenger advises the carrier of his intention to use his reservation by communicating with a reservations or ticket office of the carrier at least 72 hours before scheduled departure of the flight.

Plaintiffs had booked reservations aboard PAL flight No. 106 from Manila to the United States, scheduled to depart on April 11, 1984 at 3:00 p.m. Plaintiffs, therefore, were required to reconfirm their reservation before April 8, 1984 at 3:00 p.m., at least seventy-two hours in advance of scheduled departure. After considering plaintiffs’ testimony, the court finds that plaintiffs did not reconfirm their reservation seventy-two hours in advance. Arnold Clemente testified that he called PAL three days before the scheduled departure, although he was unsure of the dates. Mr. Clemente also testified, however, that by his computations, April 9 is three days before April 11. Tr. at 43 & 44. Based on this erroneous computation, he testified several times that he made the call on April 9, 1984, which is less than the required seventy-two hours. Mrs. Clemente also testified that her husband called PAL on April 9, 1984. Tr. at 79. Mr. Clemente testified that he made the call from his room at the Manila Hotel. Tr. at 53. The Clementes’ hotel bill contains an itemized list of all the phone calls made from the room. The hotel bill contains no listing for phone calls made on April 8, 1984. The bill, however, shows that one phone call was made from the Clementes’ room on April 9, 1984. Based on the testimony and exhibits the court finds that the Clementes did not call PAL seventy-two hours in advance of their scheduled flight back to the United States.

PAL did not allow plaintiffs to board when they arrived at the airport on. April 11, 1984, because plaintiffs’ reservations had already been cancelled. Plaintiffs’ tickets were honored aboard PAL flight No. 106 to Los Angeles, California on April 25, 1984.

CONCLUSIONS OF LAW

The weight of credible evidence adduced at trial conclusively demonstrates that PAL did not breach its contract of carriage by refusing to allow plaintiffs to board flight 106 to the United States on April 11, 1984. Plaintiffs’ tickets, the advice to international passengers annexed to these tickets and PAL’s tariffs on file with the Civil Aeronautics Board constitute the contract of carriage. Under this contract, plaintiffs were required to reconfirm at least seventy-two hours in advance in order to be entitled to carriage back to the United States. Plaintiffs failed to reconfirm in a timely fashion. Accordingly, PAL did not breach the contract of carriage.

Plaintiffs allege that when they bought the tickets at PAL’s New York office, Cynthia Gonzalez, a PAL employee, told them that they did not have to reconfirm their flight. In the joint pretrial order prepared by the parties for this case, however, plaintiffs did not state any intention to call Ms. Gonzales as a witness. In fact, Ms. Gonzales was listed as one of defendant’s witnesses to testify as to the instructions given to plaintiffs when they purchased the tickets. Accordingly, the court assumes that Ms. Gonzales would not have provided testimony favorable to the plaintiffs. The court does not find plaintiffs’ uncorroborated testimony credible, particularly in view of their strong bias. Indeed, the Clementes’ testimony demonstrates that, despite any statements made by Ms. Gonzales, the Clementes were aware of the seventy-two hour reconfirmation requirement, but miscalculated the deadline for calling the airline.

Moreover, even if Ms. Gonzales had told plaintiffs that they did not need to reconfirm seventy-two hours in advance, PAL would still not be liable for breach of contract. It is well settled that tariffs filed with the Civil Aeronautics Board constitute the contract of carriage between passenger and airline and, if valid, conclusively determine the rights and liabilities between the parties. Tishman & Lipp, Inc. v. Delta Airlines, 413 F.2d 1401, 1403 (2d Cir.1969); Mao v. Eastern Airlines, Inc., 310 F.Supp. 844, 846 (S.D.N.Y.1970). “ ‘The tariffs are both conclusive and exclusive; they may not be added to through reference to outside contracts or agreements or understandings or promises.’ ” North American Philips v. Emery Air Freight, 432 F.Supp. 519, 524 (S.D.N.Y.1977) (quoting United States v. Associated Air Transport, Inc., 275 F.2d 827, 833 (5th Cir.1960)), aff'd, 579 F.2d 229 (2d Cir.1978). In this case, the tickets themselves contained the same seventy-two hour notice provision as the tariff. Plaintiffs were certainly on notice of the seventy-two hour provision, despite any contrary expressions by Ms. Gonzales.

Plaintiffs also testified that when Mr. Clemente called on April 9, 1984 to reconfirm the reservation, he was told by a PAL employee that he did not need to reconfirm and that his reservation was still valid. Plaintiffs were not informed that their reservations had been cancelled until they arrived at the airport on April 11, 1984. The court finds plaintiffs’ uncorroborated testimony in this regard not credible. Plaintiffs have not so much as identified the PAL employee who allegedly made this statement. Moreover, plaintiffs’ hotel bill does not indicate that they cheeked out of their hotel room on April 11, 1984. If plaintiffs were assured, as they claim, that their reservations would be honored, they would have checked out of the Manila hotel on April 11, 1984. In any event, this testimony is not relevant to the cause of action for breach of contract of carriage. After April 8, 1984, PAL had an absolute right under the contract to cancel plaintiffs’ reservation. Plaintiffs might have suffered additional damages because of the representations of the PAL employee, however, these damages cannot be redressed by a cause of action based on breach of contract.

The majority of plaintiffs’ testimony at trial was devoted to proof of their damages. This, of course, is unavailing, because plaintiffs did not establish that PAL was liable. Plaintiffs’ counsel also asked several questions designed to suggest that in spite of plaintiffs’ failure timely to reconfirm their reservation, PAL would have honored their reservation had plaintiffs offered a bribe. Again, these factual allegations are not relevant to the breach of contract claim, but to an unpleaded cause of action in tort. Moreover, stipulated fact number seven in the joint pre-trial order is that “[n]o PAL employee in the Philippines or the United States sought, requested, or obtained any illegal payments from plaintiffs in order to their [sic] reconfirm their reservations with PAL.” This conforms with Mr. Clemente’s testimony on cross-examination. Tr. at 49. Plaintiffs’ attempt to prove by innuendo the Filipinos’ “custom” of bribery is irrelevant, and improper.

CONCLUSION

Plaintiffs have failed to demonstrate that defendant breached the contract of carriage. The complaint is dismissed in all respects.

SO ORDERED.

      . In Anderson v. City of Bessemer City, N.C., — U.S.-, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985), the Supreme Court warned of "the potential for overreaching and exaggeration on the part of attorneys preparing findings of fact when they have already been informed that the judge has decided in their favor.” This court is aware of such danger. However, after plaintiffs rested, it was clear that they had not made out a prima facie claim for breach of contract of carriage. The court gave plaintiffs' counsel the opportunity to state why the case should not be dismissed. Plaintiffs’ counsel had no argument to make, except for the declaration "plaintiffs have incurred damages and they should be compensated for that.” Tr. at 89. Under the circumstances, the court saw no reason to allow plaintiffs to file proposed findings of fact and conclusions of law. However, this court has not “uncritically accepted [defendants] findings,” id., but has made its own determination based on the record and the pretrial memoranda submitted by the parties.

      . This fact was brought out by the Clementes’ counsel on redirect examination. Tr. at 53.

      . Plaintiffs have not challenged the validity of the tariffs. In any event, the Civil Aeronautics Board has primary jurisdiction to determine the validity of a filed tariff. Danna v. Air France, 463 F.2d 407, 409 (2d Cir.1972). Because plaintiffs have not sought administrative review of the applicable tariff, they are bound by its provisions for the purposes of this action.

      . Plaintiffs’ complaint states one cause of action for breach of contract of carriage. Even if by a liberal reading of the complaint, the complaint could be construed as containing a cause of action based on another theory of relief, plaintiffs have admitted in the joint pre-trial order that they seek recovery only for breach of contract of carriage. The joint pretrial order clearly states that the pleadings are amended in accordance with the provisions of the order. Accordingly, the court cannot allow recovery based on another theory of relief.


author: TERENCE T. EVANS, District Judge.

text:
    Curtis A. BREIDER and Adela Breider, Plaintiffs, v. UNITED STATES of America, Defendant.
    Civ. A. No. 85-C-902.
    United States District Court, E.D. Wisconsin.
    Aug. 9, 1985.

      Thomas E. Mountin, Robert E. Meldman, Meldman, Case & Weine, Milwaukee, Wis., for plaintiffs.
    Jeffrey D. Snow, Trial Atty., Tax Div., U.S. Dept, of Justice, Washington, D.C., for defendant.
   DECISION and ORDER

TERENCE T. EVANS, District Judge.

Curtis Breider had a secret room. Not as elaborate as some — no removing of a book that causes a bookcase to slide, exposing a passageway through a dingy tunnel to a real secret kind of room — but a secret room nonetheless.

Breider’s secret room was in the basement of his home on Imperial Drive in Franklin, Wisconsin. It was hidden behind a pegboard wall, the door to which was camouflaged by hanging tennis rackets, snow shovels, and tools. Breider conducted business in his secret room. At least he conducted business there until November 10, 1984, when his secret room stopped being secret. On that date, some gentlemen from the Milwaukee Police Department came to visit with a search warrant. Breider’s business, you see, was bookmaking — not the Publisher’s Clearing House type but commercial gambling, prohibited by Wisconsin law.

Breider was charged with commercial gambling. He probably thought his problems were over when he pled guilty to the charge in a Wisconsin court on February 8, 1985 and received a fine of $1,500.00 plus three years of probation supervision. Unfortunately for Breider, his troubles were only beginning.

On March 29,1985 and again on April 11, 1985, the Internal Revenue Service made jeopardy assessments against Breider for wagering, registry and income taxes alleged to be due. The assessments of wagering tax were for monthly periods ending May 31, 1982 through September 30, 1984. The assessments for the registry tax were for the periods ending April 30, 1982, July 31, 1982, and July 31, 1983. The income tax assessments were for the taxable years ending 1982 and 1983. Petitions for administrative review of these assessments were filed by Breider on April 29, 1985. The petitions for review were denied on May 15, 1985. This suit for judicial review pursuant to Title 26, United States Code, § 7429(b) was filed on June 13, 1985. A hearing was conducted on August 5, 1985. For the reasons that follow, Mr. Breider is entitled to some but not all of the relief that he seeks.

As a result of the search on November 10, 1984, the police found numerous papers containing recorded sports bets and an envelope with ten “Doc’s Sports Journals.” Mr. Breider, also on November 10, 1984, was interviewed by Milwaukee police detectives and, after being advised of his constitutional rights, said (a) that the betting slips found at his house were bets taken by him for his own financial gain and were in his handwriting; (b) that he had been in the gambling business for two and one-half years, and had been taking bets because he was without a job for the past three years; (c) that he had an average of $20,000.00 in gross bets per week; and (d) that he charged his bettors ten per cent on all losses. This information is contained in a statement that Breider signed. Upon this information, the IRS assessed Breider for unpaid federal taxes.

Title 26, United States Code, § 6861 authorizes the Secretary of the Treasury to immediately assess a deficiency in tax if he believes that the assessment or collection of the deficiency will be jeopardized by delay. Treasury Regulation § 1.6851-l(a) requires a determination that at least one of the following conditions exists for a jeopardy assessment to be made:

(i) the taxpayer is or appears to be designing quickly to depart from the United States or to conceal himself or herself;
(ii) the taxpayer is or appears to be designing quickly to place his, her, or its property beyond the reach of the Government either by removing it from the United States, by concealing it, by dissipating it, or by transferring to other persons;
(iii) the taxpayer’s financial solvency is or appears to be imperiled.

Given the facts at hand, the IRS could conclude that Breider:

(1) was conducting an illegal commercial gambling business,
(2) made profits from the business
(3) failed to report the profits on his tax returns
(4) had in fact concealed both his business and his profits, and
(5) was of questionable solvency because news of his secret room was out and he would no longer be able to engage in the illegal enterprise, for to do so would be a violation of the terms of his probation.

While the Code itself does not set forth specific guidelines as to what constitutes “reasonableness under the circumstances,” for purposes of judging the propriety of a jeopardy assessment the term means something more than “not arbitrary or capricious,” and something less than “supported by substantial evidence.” See Loretto v. United States, 440 F.Supp. 1168 (E.D.Pa.1977). With the facts at hand here it was reasonable for the IRS to make a jeopardy assessment. Breider’s first objection is denied.

In addition to having a reasonable basis for making a jeopardy assessment, the amount of the assessment, to stand, must be “appropriate.” Even giving to the Service the deferential nod that it is entitled to receive, I believe the amounts assessed in this case to be excessive and thus not appropriate.

The IRS claims that Breider was engaged in a commercial gambling business for at least two and one-half years prior to the date of the execution of the search warrant. Evidence about the duration of the enterprise comes from Breider himself who told Detective Gary Byers of the Milwaukee Police Department about it during his interview following the arrest. Breider seems to contend that Byers misunderstood his comments, and that he had only been involved in illegal gambling for about two months prior to November of 1984. On this point the government’s interpretation of the evidence is more logical, and I have no trouble concluding that there is a reasonable basis for believing the illegal business was in operation since at least May of 1982.

The IRS has reviewed Breider’s gambling records for a 16-day period in October of 1984, and determined that the average amount of wagers received during each of those days was $10,825. The IRS has then taken that figure and multiplied it by 365 days to determine the dollar value of a year’s worth of wagers received. The IRS then calculated that 4.5% of the wagers received is a reasonable bookmaker’s profit and accordingly, it determined that Breider had unreported income of $119,751.76 for 1982 and $178,409.75 for 1983.

Based on this projection of unreported income, the IRS has determined that Breider owes $134,296 for back income taxes, $92,529 in penalties, and $23,903, for a total of $250,728 to cover the taxable periods January 1, 1982 through December 31, 1982, and January 1, 1983 through December 31,1983. A much smaller sum, slightly over $6,000, has been assessed on the wagering and registry claims.

I agree that calculating a bookmaker’s profit at 4.5% of gross bets (a method that will produce a result very close to 10% of losing wagers) is reasonable. However, I do not believe it appropriate to arrive at Breider’s gross bets by taking an average day’s activities during a 16-day period in October and multiplying it through the entire year. Gimbels’ sales volume is up during the two middle weeks of December and down during the middle two weeks of March. Bookies are no different. They do a greater business in October, during the height of the professional and college football season than they do in August during the dog days of the baseball season, strike or no strike. Also, it is interesting to note that the government wants me to believe Breider’s statement about the duration of his business (two and one-half years) but

apparently not his statement, made during the same interview with Detective Byers, that he took in an average of $20,000 per week in wagers.

I believe here that the police swooped down on Breider during a high time of his business, and that the assessments should reflect that the volume of his business is subject to fluctuations. Also, I presume that even bookies take some time off during the year, and to base an assessment on 365 days of business per year is unfair. Given the fluctuation of the seasons, the popularity of different sports for betting purposes (no bookie could feed his family on what he gets from USFL football games!), Breider’s statements and finally his records, I believe that the assessments can be sustained at only 55% of the sums that have been determined. Thus, the assessments are ORDERED reduced by 45%, and as so modified they are AFFIRMED.


author: McMILLAN, District Judge.

text:
    Beaty Mae GILLIARD, et al., Plaintiffs, v. Phillip J. KIRK, et al., Defendants.
    Civ. A. No. 2660.
    United States District Court, W.D. North Carolina, Charlotte Division.
    Aug. 9, 1985.
    Shelley Blum, Donald A. Gillespie, Jr., Marvin B. House and James A. Long, IV, Legal Aid Soc. of Mecklenburg County, Charlotte, N.C., Jane R. Wettach, East Cent. Community Legal Services, Raleigh, N.C., Lucie E. White, Jean M. Cary, Civil Legal Assistance Clinic, UNC School of Law, Chapel Hill, N.C., for plaintiffs.
    James O. Cobb, Ruff, Perry, Bond, Cobb & Wade, Charlotte, N.C., for defendants Kuralt and Mecklenburg County Dept, of Social Services.
    L.P. Covington, Staff Atty., and Steven Shaber, North Carolina Dept, of Justice, Raleigh, N.C., for all other defendants.
   ORDER

McMILLAN, District Judge.

Defendants have filed a motion for a three-judge court, pursuant to 28 U.S.C. § 2281, repealed in 1976, to hear the merits of plaintiffs’ motion for further relief and defendants’ motion for relief from judgment. At the time this case was heard and judgment was entered in 1971, 28 U.S.C. § 2281 provided:

An interlocutory or permanent injunction restraining the enforcement, operation or execution of any State statute by restraining the action of any officer of such State in the enforcement or execution of such statute or of an order made by the administrative board or commission acting under state statute, shall not be granted by any district court or judge thereof upon the ground of the unconstitutionality of such statute unless the application therefor is heard and determined by a district court of three judges under Section 2284 of this title.

The present statute requiring three-judge courts in certain voting rights cases does not apply. 28 U.S.C. § 2284.

The complaint was filed on May 5, 1970. The ease was assigned to this judge, who requested a three-judge court to decide the merits of the case, pursuant to 28 U.S.C. § 2281. The complaint raised constitutional challenges to defendants’ practice of calculating AFDC (Aid to Families with Dependent Children) benefits by presuming that child support payments belonging to one or more, but not all, members of the family were available to the entire family.

After a hearing on the merits, the three-judge court, two to one, held that defendants’ practice violated the Social Security Act. An injunction was entered against defendants. The decision was affirmed by the Supreme Court on direct appeal in 1972, Gilliard v. Craig, 331 F.Supp. 587 (W.D.N.C.1971), 409 U.S. 807 (1972). The constitutional grounds raised by plaintiffs were never reached by the court; the decision was made on statutory grounds only. Therefore, in retrospect, the three-judge court was not required for the decision that was made, although it was warranted by the constitutional claims.

This court entered an order on October 17, 1974, finding that defendants had complied with the injunction.

There was no activity in the case between October of 197b and May 30, 1985, when plaintiffs filed a motion for further relief, raising both statutory and constitutional grounds. Plaintiffs allege that defendants have resumed the enjoined practice. Defendants have moved for relief from the judgment, arguing that an amendment to the Social Security Act, effective October 1, 1984, 42 U.S.C. § 602(a)(38), requires them to reinstitute the enjoined practice. Plaintiffs say that the statute does not require such a result and that if it does, the statute is unconstitutional.

Defendants contend that because a three-judge court decided the issues in the original proceedings, only a three-judge court can decide subsequent questions in this action. They rely upon that portion of the legislation repealing 28 U.S.C. § 2281, which states that the repeal does not “apply to any action commenced on or before the date of enactment.” Pub.L. 94-381, § 7, 90 Stat. 1120, quoted in United States v. State of Texas, 523 F.Supp. 703, 728 (E.D.Tex.1981).

The legislative history of the repealing bill shows a thorough dissatisfaction with the operation of three-judge courts, finding the procedure to be confusing and inefficient. The Senate report states that “three-judge court procedure has recently been termed by one scholar, ‘the single worst feature in the Federal judicial system as we have it today.’ It has imposed a burden on the Federal courts and has provided a constant source of uncertainty and procedural pitfalls for litigants.” Leg. History, Act of August 12, 1976, Pub.L. 94-381, 1976 U.S.Code of Cong, and Ad.News (90 Stat.), pp. 1988-89.

The Senate reports explains the savings clause as follows:

This section provides that the act shall not apply to any action commenced on or before the date of enactment. It is merely added to make clear that cases filed prior to the enactment of this bill shall proceed to final disposition under the law existing on the date they were commenced. (Emphasis added.)

Id. at 2001.

The Supreme Court in dicta has characterized the savings clause as applying to actions “filed before repeal” on or before the date of enactment (Rostker v. Goldberg, 453 U.S. 57, 62, n. 2, 101 S.Ct. 2646, 2650, n. 2, 69 L.Ed.2d 478 (1981)) and alternatively to actions “pending” on the date of repeal (Morales v. Turman, 430 U.S. 322, n.*, 97 S.Ct. 1189, n.*, 51 L.Ed.2d 368 (1977)). Defendants are correct that technically this action was “commenced” and that suit was filed prior to 1976. However, it can not be said to have been “pending” in 1976. The case had reached final disposition in 1972, when the Supreme Court affirmed the decision of the three-judge court. An order finding compliance was filed in 1974. There was no activity between 1974 and 1985. Given the legislative history showing an intent to allow commenced actions to proceed to final disposition under the law at the time of filing, the court concludes that the savings clause does not apply to this action, in which final disposition was made in 1972.

This interpretation of the savings clause is consistent with case law. See, e.g., United States v. State of Texas, supra; Concerned Citizens of Vicksburg v. Sills, 567 F.2d 646 (5th Cir.1978). Citizens of Vicksburg is especially instructive for this case. The court there remanded a decision of a three-judge court which had dismissed the complaint. However, because the appellate decision was made after the repeal of 28 U.S.C. § 2281, the court noted that a single judge could address the issues on remand. Citizens of Vicksburg, 567 F.2d at 648, n. 1. The cases cited by defendants, see, e.g., Rostker, supra; Gary-Northwest Indiana Women’s Service v. Bowen, 496 F.Supp. 894 (N.D.Ind.1980), aff'd. 451 U.S. 934, 101 S.Ct. 2012, 68 L.Ed.2d 321 (1981), do not squarely address the issue of the application of 28 U.S.C. § 2281 to cases in which a final judgment was entered prior to the repealing legislation.

The issue raised in the present motions, the effect and constitutionality of a 1984 amendment to the Social Security Act, was, of course, never raised before the three-judge court sitting in 1971. The fact that the issue now presented could not have been considered at the time of the repeal of 28 U.S.C. § 2281 in 1976 further militates against applying the savings clause to the present dispute. See, e.g., United States v. State of Texas, 523 F.Supp. at 728, n. 11.

This case was not pending at the time of repeal of 28 U.S.C. § 2281, and the issues now raised were never before the three-judge court nor were they addressed by the three-judge court. Legislative history and case law show that the savings clause relied upon by defendants should be applied narrowly. The court therefore finds that a three-judge court is not required for the present motions.

IT IS THEREFORE ORDERED that defendants’ motion for a three-judge court pursuant to 28 U.S.C. § 2281 is DENIED.


author: SHADUR, District Judge.

text:
    Cecelia WOLFF, Plaintiff, v. A.H. ROBINS COMPANY, INC., et al., Defendants.
    No. 85 C 07028.
    United States District Court, N.D. Illinois, E.D.
    Aug. 12, 1985.

      Abraham Goldman, John R. Wylie, Abraham Goldman & Associates, Ltd., Chicago, Ill., for plaintiff.
   MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

Cecelia Wolff (“Wolff”) sues A.H. Robins Company, Inc. (“Robins”), two- of its principal shareholders and several other defendants under a number of theories, claiming damages from the use of Robins’ Daikon Shield intrauterine contraceptive device. Because Wolff’s Complaint does not establish the complete diversity of citizenship necessary for federal jurisdiction, this Court dismisses the Complaint sua sponte.

Wolff’s counsel has introduced several apparently inadvertent flaws into the Complaint:

1. Complaint 114 refers to the residence but not the state of citizenship of defendant Dr. Hugh Davis.
2. Complaint H 6 refers to the St. Margaret Hospital as “located in Hammond, Indiana” (which may be read broadly as, though it does not speak specifically of, its principal place of business), but it does not identify the Hospital’s place of incorporation.
3. Two named defendant doctors and two “John Doe” defendant doctors are not identified in citizenship terms at all.
4. Three “John Doe” defendant nurses are also not identified in citizenship terms.

All those omissions are odd, given the Complaint’s proper care in identifying the citizenship of Wolff, Robins and its two shareholder defendants. But oddity aside, the Complaint’s flaws are fatal.

Those pleading defects deprive this Court of independent subject matter jurisdiction over this action, for federal courts can deal with cases only as Congress specifies (see 28 U.S.C. § 1332(a) and (c)) and as a plaintiff’s express allegations bring the case within those specifications. See, e.g., 5 Wright & Miller, Federal Practice and Procedure: Civil § 1208, at 85 & n. 96, 87 & n. 99, and cases cited in both notes (1969 ed. and 1985 pocket part); 13 B id. § 3611, at 516-18 & nn. 27-29, § 3624, at 610 & n. 20, and cases cited in all those notes (1984 ed. and 1985 pocket part).

Moreover the special problems posed by the John Doe defendants compound the error. Here the Doe defendants are real people whose identity is simply not yet known to Wolff — not hypothetical people who may or may not exist — and that independently defeats diversity. See Fifty Associates v. Prudential Insurance Co. of America, 446 F.2d 1187, 1191 (9th Cir.1970); John Hancock Mutual Life Insurance Co. v. Central National Bank in Chicago, 555 F.Supp. 1026 (N.D.Ill.1983).

Accordingly the Complaint is dismissed for lack of subject matter jurisdiction, subject to Wolff’s possible filing of a proper amended complaint to cure the jurisdictional defects on or before August 23, 1985 (see 28 U.S.C. § 1653). . By definition this dismissal is also without prejudice to Wolff’s possible filing of this action in a state court of competent jurisdiction.


author: GUNN, District Judge.

text:
    Lee Christian LOWES, Plaintiff, v. Homer E. SAYAD, et al., Defendants.
    No. 83-2965C(6).
    United States District Court, E.D. Missouri.
    Aug. 15, 1985.

      Anne O. McCarthy, St. Louis, Mo., for plaintiff.
    James J. Wilson, City Counselor, Kathleen A. Gormley, Asst. City Counselor, St. Louis, Mo., for defendants.
   MEMORANDUM

GUNN, District Judge.

This matter is before the Court on defendants’ motion for summary judgment on plaintiff’s claim that he was denied employment in violation of his rights under the equal protection clause of the fourteenth amendment.

In May 1981 plaintiff applied for a position as a police reserve officer with the reserve unit of the St. Louis Metropolitan Police Department. Reserve officers are assigned to the Bureau of Field Operations for duties on parade details, traffic control and special events. Based upon plaintiff's written application and a medical examination it was determined that plaintiff suffered from heat sensitivity. Plaintiff was denied employment on the ground that he was not physically fit for reserve officer work.

Under Rule 56(c) of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if he can “show that there is no genuine issue as to any material fact, and that (he) is entitled to judgment as a matter of law.” In the present case the duties police reserve officers are called upon to perform are not in dispute, nor, for purposes of plaintiff’s equal protection claim, is it disputed that plaintiff does suffer from sensitivity to high temperatures.

The Court concludes that the classification of prospective reserve police officers into those who pass the medical examination and those who do not is rationally related to the legitimate goal of insuring the employment of individuals who can perform the required tasks. The classification here does not operate to disadvantage a suspect class or interfere with a fundamental right. Thus, the proper analysis is rationality rather than strict scrutiny. See Frontiero v. Richardson, 411 U.S. 677, 93 S.Ct. 1764, 1768, 36 L.Ed.2d 583 (1973). See also Simon v. St. Louis County, 656 F.2d 316, 322-23 (8th Cir.1981) (no equal protection violation in refusing to reinstate former police officer because of physical handicap); Carmi v. Metropolitan St. Louis Sewer District, 620 F.2d 672, 676 (8th Cir.1980) (no equal protection violation in denying employment to applicant for job of storekeeper based on applicant’s physical condition).

Accordingly, summary judgment is entered in favor of defendants on plaintiff’s equal protection claim.

      . Defendants have previously been granted summary judgment on plaintiffs claim under the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., and on plaintiff's due process claim. Order and Memorandum, March 1, 1985.