author: SHAPIRO, District Judge.

text:
    FISHER BROTHERS, Goldberg Plumbing Supply Company, Inc., Standard Plumbing Supply Co., Inc., Big D Building Supply Company, Elbo Industrial Supply Co., Amity Plumbing & Heating Supply Corp., Pipeline Supply, Inc., Sherby and Sherby, Inc. t/a Cobbs Supply Co., J. Heller & Sons, Inc., Gunhill Plumbing Supply, Inc., and Kamen Supply Co., Inc., Plaintiffs, v. PHELPS DODGE INDUSTRIES, INC., Defendant.
    Civ. A. No. 83-2457.
    United States District Court, E.D. Pennsylvania.
    July 26, 1985.

      Franklin Poul, Seymour Kurland, Burt M. Rublin, Wolf, Block, Schorr & Solis-Cohen, Leonard Barrack, Philadelphia, Pa., for plaintiffs.
    Henry T. Reath, Judith Renzulli, Duane, Morris & Heckscher, Philadelphia, Pa., for defendant.
   MEMORANDUM AND ORDER

SHAPIRO, District Judge.

INTRODUCTION

Before the court is the motion of defendant Phelps Dodge Industries, Inc. (“Phelps Dodge”) to enforce its settlement agreement with plaintiff class. Phelps Dodge contends that plaintiff class violated the most favored nations clause of this settlement agreement by settling with similarly situated defendant Cerro Copper Products, Inc. (“Cerro”) on more favorable terms than plaintiff class had settled with Phelps Dodge. Phelps Dodge seeks as relief a partial refund with accumulated interest of the amount it has paid in settlement. Plaintiff class concedes that Cerro obtained more favorable settlement terms but argues that Phelps Dodge’s most favored nations clause was rendered inoperative by a material change in circumstances surrounding this antitrust litigation between Phelps Dodge’s August 23, 1983 settlement and Cerro’s February 7, 1985 settlement. This court held an evidentiary hearing on May 24 and May 28, 1985, and now denies Phelps Dodge’s motion to enforce the most favored nations clause of its settlement agreement.

PROCEDURAL HISTORY

A federal grand jury in the Eastern District of Pennsylvania began investigating alleged price-fixing in the copper water tubing industry in the summer of 1981. While this investigation was proceeding, Fisher Brothers filed against four copper water tubing manufacturers and wholesalers, including Cerro, and certain individual defendants, a civil complaint alleging that these defendants and their as yet unnamed co-conspirators had engaged in a nationwide conspiracy to fix, raise, maintain or stabilize the price of copper water tubing in violation of Section I of the Sherman Act, 15 U.S.C. § 1 (Civil Action No. 82-4921). Phelps Dodge was not named as a defendant.

On March 18, 1983, the grand jury returned an indictment against six corporate defendants, including both Cerro and Phelps Dodge, and six present or former employees of some of these companies. The indictment alleged that the corporate and individual defendants had engaged in an unlawful conspiracy to fix the prices of copper water tubing from at least 1975 until June, 1981. After the indictment but prior to the criminal trial, Fisher Brothers and a number of other plaintiffs filed a joint complaint (Civil Action No. 83-2457) against Phelps Dodge on May 23, 1983, and moved for class certification in this action on June 20, 1983. Before this motion was ripe for decision, Phelps Dodge reached a settlement with plaintiffs; the Agreement of Settlement was executed on August 23, 1983.

This Agreement provided that Phelps Dodge would place $2.5 million in escrow for the benefit of a settlement class designated as:

All individuals, proprietorships, partnerships, corporations and other business entities in the United States (excluding defendants, their parents, subsidiaries and affiliates, and their alleged co-conspirators) who have, during the time period 1975 through November, 1982 (the ‘covered period’), purchased copper water tubing directly from one or more of the defendants (including defendants’ subsidiaries and affiliates) or their alleged co-conspirators.

The $2.5 million settlement fund represented approximately 2.4% of Phelps Dodge’s $102.7 million in copper water tubing sales during 1979-1982. This agreement also contained a most favored nations clause giving Phelps Dodge the right to terminate the settlement or seek a partial refund of its settlement fund if plaintiffs subsequently settled with a “similarly situated” defendant on more favorable terms unless circumstances materially changed so that plaintiffs reasonably concluded that the prospect or amount of ultimate recovery from an otherwise similarly situated defendant had been substantially reduced. Favorability of settlement terms would be determined by calculating for each settling defendant the amount of settlement as a percentage of that defendant’s dollar sales of copper water tubing during 1979-82 inclusive and comparing this figure to Phelps Dodge’s 2.4% settlement ratio.

Consideration of preliminary approval of this settlement was delayed pending termination of the criminal trial of United States v. Cambridge-Lee Industries, Inc., et al. After a nine-week trial, all remaining defendants were acquitted on December 22, 1983.

A hearing on whether to grant preliminary approval of the Phelps Dodge settlement and notify the settlement class was held on January 25, 1984. See Memorandum and Order dated January 18, 1984 (finding it appropriate to hold a hearing on preliminary approval at that time). At this hearing there was extensive discussion of the meaning of the most favored nations clause. This court preliminarily approved the Phelps Dodge settlement on October 31, 1984 and approved it as fair, reasonable and adequate on February 20, 1985. See Fisher Brothers, et al. v. Phelps Dodge Industries, Inc., 604 F.Supp. 446 (E.D.Pa.1985). With regard to the most favored nations clause, the court there noted that:

... the subsequent acquittals of Cambridge-Lee and Cerro might have had an ‘obvious, significant, and substantial impact on the progress of the settlements in the civil class action,’ In re Corrugated Container Antitrust Litigation, 1983-1 Trade Reg.Rep. (CCH) 1165,451 (S.D.Tex. February 2, 1983). Whether or not these subsequent acquittals in the criminal trial constituted a material change in circumstances that would render the most favored nations clause inoperative may be determined by the court if the remaining defendants settle on terms to which Phelps Dodge objects. While the most favored nations clause is frequently considered undesirable, see Manual for Complex Litigation, § 1.46 (5th ed. 1981), in these circumstances, the presence of a most favored nations clause does not suggest disapproval of this settlement agreement.

Id. at 452.

Following prolonged negotiations, plaintiffs entered into a settlement with defendant Cerro on February 7, 1985 for the sum of $3,285,000. The court preliminarily approved the proposed Cerro settlement at a hearing held on March 29, 1985. (3/29/85 Tr. p. 15). At this hearing, and also by letter dated April 5, 1985, Phelps Dodge notified the court and plaintiffs of its contention that the Cerro settlement violated Phelps Dodge’s most favored nations clause. On April 29, 1985, Phelps Dodge filed a motion to enforce the most favored nations clause of its settlement agreement.

This court scheduled an evidentiary hearing on Phelps Dodge’s motion for May 24, 1985. See In re Corrugated Container Antitrust Litigation, 752 F.2d 137 (5th Cir.), cert. denied, — U.S.-, 105 S.Ct. 3536, 87 L.Ed.2d 660 (1985) (reversing the district court for not conducting an evidentiary hearing where there existed factual disputes concerning the applicability of a most favored nations clause, but not critieizing the district court’s ruling that acquittais in a criminal antitrust trial were a material change in circumstances influencing the prospect and amount of settlement in the related civil litigation.)

Prior to the hearing, this court allowed some discovery; one of plaintiff’s co-lead counsel responded in expedited fashion to three of four contention interrogatories filed by Phelps Dodge. Phelps Dodge also requested leave to depose plaintiffs’ co-lead counsel, other counsel for plaintiff class, and at least one named plaintiff. The court denied these depositions on the ground that, if the court were to determine that Phelps Dodge had the right to terminate its settlement and the case against Phelps Dodge then went to trial, plaintiffs would be unduly prejudiced if Phelps Dodge had compelled testimony under oath concerning plaintiffs’ litigation strategy, estimated potential recovery, and so on. On May 21, 1985, Phelps Dodge formally abandoned its option to seek termination and thereafter contended only that it was entitled to partial refund of the $2.5 million paid in settlement plus accrued interest; it renewed its request to take depositions of plaintiffs’ counsel -and compel plaintiffs to respond fully to the unanswered contention interrogatory. But this court did not permit additional discovery because plaintiffs might still proceed to trial against those defendants whose settlements have not been finally approved. Additionally, because Phelps Dodge had an ample opportunity to decide to seek a partial refund rather than terminate its settlement agreement, this court viewed Phelps Dodge’s untimely renewal of its discovery requests as a delaying tactic designed to undermine the court’s decision not to postpone the evidentiary hearing. The court remains of the view that determination of the Phelps Dodge status prior to the final hearing on approval of settlement and attorneys’ fees is in the interest of the members of the class.

The evidentiary hearing was held on May 24 and May 28, 1985. At this hearing the court took judicial notice of proceedings in the related criminal trial and of prior proceedings in this civil litigation.

ENFORCEMENT OF THE MOST FAVORED NATIONS CLAUSE

There are two types of most favored nations clauses. The traditional most favored nations clause is an unconditionally worded clause that prohibits plaintiffs from making a later settlement with remaining defendants on terms more favorable than the settlement plaintiffs made with an early-settling defendant, without giving the early-settling defendant a refund to equalize the earlier and later settlements. The Manual for Complex Litigation criticizes this type of most favored nations clause as an impediment to subsequent settlements. Manual for Complex Litigation § 1.46 (5th Ed.1982). See also, In re Chicken Antitrust Litigation, 560 F.Supp. 943 (N.D.Ga.1979) (granting motion to strike unconditional most favored nations clauses from settlement agreements).

A qualified or conditional most favored nations clause permits flexibility because of financial or other differences among defendants, or a material change in circumstances relevant to the litigation. The purpose of a qualified or conditional clause is to ensure an early settling defendant that plaintiffs will vigorously pursue their case against remaining defendants. This type of most favored nations clause is not considered in The Manual for Complex Litigation; it was enforced by the district court in In re Corrugated Container Antitrust Litigation, 1983-1 Trade Reg. Reports (CCH) ¶ 65,451 (S.D.Tex.1983), rev’d, 752 F.2d 137 (5th Cir.) (remanding for evidentiary hearing), cert. denied, — U.S. -, 105 S.Ct. 3536, 87 L.Ed.2d 660 (1985).

The clause at issue here is of the latter type; Phelps Dodge’s option to enforce the clause applies only to similarly situated defendants and only if circumstances have not materially changed. Plaintiffs concede (and Cerro does not dispute this concession) that Phelps Dodge and Cerro were similarly situated defendants. It is also undisputed that Phelps Dodge’s $2.5 million settlement represents a 2.4% ratio of settlement to 1979-82 sales of $102.7 million, and that Cerro’s $3,825,-000 settlement represents a .88% ratio of settlement to 1979-82 sales of $434.3 million. The only issue before this court is whether Phelps Dodge can enforce its most favored nations clause to obtain a partial refund of its settlement amount, or whether the most favored nations clause is inoperative because circumstances had materially changed from August 23, 1983 (when Phelps Dodge entered into its settlement agreement) to February 7, 1985 (when Cerro entered into its settlement agreement) so that plaintiffs could reasonably conclude that the prospect or amount of ultimate recovery from Cerro was substantially reduced.

Plaintiffs contend that the December 22, 1984 acquittals of Phelps Dodge, Cerro and other remaining defendants in the criminal antitrust trial constituted a material change in circumstances that substantially reduced the ultimate value of the civil antitrust cases arising out of the same allegations of unlawful price fixing in the copper water tubing industry. Phelps Dodge responds that whatever detrimental effect the acquittals might have had on plaintiffs’ case was not material and was more than compensated for by additional evidence of an unlawful conspiracy involving Cerro that plaintiffs obtained through discovery conducted after the criminal trial.

To explicate the parties’ interpretation of the most favored nations clause, we examine the record of correspondence between counsel for plaintiff class and counsel for Phelps Dodge. On June 28, 1983, Seymour Kurland, Esquire, co-lead counsel for plaintiff class, confirmed in a letter to Andrew Hartzell, Jr., Esquire, who with Henry Reath, Esquire was counsel for Phelps Dodge, that the parties agreed to settle Phelps Dodge’s potential liability in this antitrust litigation for $2.5 million. Mr. Kurland also wrote that Mr. Hartzell would prepare the first draft of the settlement agreement and enclosed for his use a copy of a settlement agreement used in the Corrugated Container case. (PI. Ex. 3). The Corrugated Container settlement contained a conditional most favored nations clause.

Mr. Hartzell sent to Mr. Kurland on July 12, 1983 a draft settlement agreement containing a traditional, unconditional most favored nations clause. (PI. Ex. 4). On July 26, 1983, Mr. Hartzell sent to Mr. Kurland a revised version of the settlement agreement; this version contained a partially conditional most favored nations clause. It provided that Phelps Dodge’s option to terminate the settlement or seek a refund would exist only if plaintiffs settled more favorably with a similarly situated defendant but contained no provision rendering the clause inapplicable on account of changes in material circumstances.

Mr. Kurland responded on August 4, 1983 and enclosed plaintiffs’ “final draft” of the settlement agreement. This draft contained a conditional most favored nations clause:

Plaintiffs agree that, unless present circumstances materially change so that plaintiffs reasonably conclude that the prospect or amount of ultimate recovery from any similarly situated defendant is substantially lessened or reduced, they will not enter into a settlement of the class actions in Master File No. 82-4921 with any such similarly situated defendant that is more favorable to such defendant insofar as it relates to the payment provided for in paragraph 5 of the Agreement (such determination to be based upon the ratio of the amount paid by a defendant in settlement of such actions to the defendant’s sales of copper water tubing during the calendar years 1979-82), without offering similar terms to PDI [Phelps Dodge]; provided, however, that if PDI [Phelps Dodge] accepts said offer, it agrees to pay such additional amount as necessary to make the aggregate amount paid by PDI [Phelps Dodge] proportionately equal to the aggregate amount paid by such other similarly situated defendant.

In his accompanying letter, Mr. Kurland wrote, “[w]ith respect to the most favored nations clause, we are willing to give you a stronger clause if it is limited solely to Cerro.” (PI. Ex. 6). Mr. Hartzell testified he did not agree to limit the clause to Cerro because he wanted to “keep it open [to include other defendants].” (5/28/85 Tr. p. 252).

The final agreement contained Kurland’s qualified clause, applicable to all defendants, but the proviso subjecting Phelps Dodge to the risk of having to increase its settlement amount was eliminated. The final clause stated:

Plaintiffs agree that, unless present circumstances materially change so that plaintiffs reasonably conclude that the prospect or amount of ultimate recovery from any similarly situated defendant is substantially lessened or reduced, they will not enter into a settlement of the class actions in Master File No. 82-4921 with any such similarly situated defendant that is more favorable to such defendant insofar as it relates to the payment provided for in paragraph 5 of the Agreement (such determination to be based upon the ratio of the amount paid by a defendant in settlement of such actions to the defendant’s sales of copper water tubing during the calendar years 1979-82) or to any other protective provisions based on federal legislation which effectively overrules Illinois Brick Co. v. Illinois, 431 U.S. [720] 729 [97 S.Ct. 2061, 2066, 52 L.Ed.2d 707] (1977), without offering similar terms to PDI [Phelps Dodge]. In such event, PDI [Phelps Dodge] shall have the option of accepting such more favorable terms and receiving proportionate reimbursement from the Fund, or terminating this Agreement.

At the May 28, 1985 hearing, Mr. Hartzell testified that he understood Mr. Kurland’s reference to a “stronger clause” to mean “one with no qualifications.” (5/28/85 Tr. p. 251). He also testified that the clause contained in the final agreement was the qualified form, “basically if not literally the same [as the Corrugated clause].” (Tr. at 252). However, Mr. Hartzell stated that he never agreed that the district court holding in Corrugated Container, that plaintiffs could reasonably conclude that acquittals in the criminal case were a material change in circumstances substantially lessening the prospect or amount of ultimate recovery from the non-settling defendants, would govern the interpretation of Phelps Dodge’s most favored nations clause. (5/28/85 Tr. at 252). But Mr. Hartzell did confirm at the hearing that “I’m quite certain that I know I was familiar with that opinion.” (Id.).

By the time of the January 25, 1984 hearing on preliminary approval of the Phelps Dodge settlement, the criminal case had resulted in acquittals of all defendants going to trial. The parties were permitted to state their positions on the applicability of the most favored nations clause to the acquitted defendants. But the court determined that the matter was not then before the court and declined to rule.

Mr. Kurland stated for plaintiffs that:

The most favored nations clause in this case follows the one of proof by Judge Singleton [in Corrugated Container ] almost word for word and on which there was a judicial approval of the most favored nations clause, and Judge Singleton in that case found that it was obviated when there was an acquittal in the criminal case____ So there is precedent that that is so.

(1/25/84 Tr. p. 47-48). Lowell Sachnoff, Esquire, counsel for Cerro, stated emphatically his opinion that the acquittals constituted a material change in circumstances:

I can’t conceive of anything that could happen in a litigation like this that’s more substantial, more germane, more, to use the term in the settlement agreement, more material, than having an acquittal.

(1/25/84 Tr. p. 57). Mr. Hartzell’s terse response was, “I just want to be sure my silence wasn’t taken as acquiescence. I’m not taking any position on that.” (1/25/84 Tr. p. 61).

Certainly, counsel for Phelps Dodge had no obligation to address the applicability of the most favored nations clause at that hearing but they were clearly on notice as to the meaning plaintiffs ascribed to the clause. Perhaps Phelps Dodge’s silence in light of plaintiffs’ and Cerro’s strong remarks reflected Phelps Dodge’s oft-stated desire to terminate its involvement in the litigation as promptly as possible. Counsel for Phelps Dodge continually reminded the court that their client greatly valued a speedy resolution. For example, Henry Reath, Esquire, stated on behalf of Phelps Dodge at a pretrial conference held on February 28, 1984, that:

... Phelps Dodge decided at a time when the criminal case was yet to be tried that for a number of reasons it was in their best interest to get this case settled, and the reason for the settlement and the motivation of the settlement was to avoid further expense, delay, risk of litigation, uncertainty as to where they stand, and it was also motivated in part by the fact that the company then had plans to completely get out of the business and dispose of it and obviously take their lumps, whatever they were, and be done with the whole problem and, frankly, it was our hope then as I think Your Honor knows from the various statements that I have made, and Mr. Hartzell, that we were very anxious to have settlement approved, have it go out and get people on board if necessary, even ■ before the criminal case was tried, but the fact of that matter is that as soon as the criminal case was over, it then became doubly apparent that it was really very important to have it done.

(2/28/84 Tr. pp. 43-44).

In light of plaintiff’s evident reliance on the Corrugated Container clause and the district court’s interpretation of that clause, and Phelps Dodge’s predominant desire to end its case promptly (and presumably avoid the risk that a conviction would undoubtedly delay settlement) and counsel’s stated familiarity with the district court holding in Corrugated Container, we find that plaintiffs believed and Phelps Dodge was on notice that a criminal acquittal would constitute a material change in circumstances.

It therefore remains only to determine whether plaintiffs’ belief that the acquittals diminished their prospect of recovery from Cerro was reasonable. In Corrugated Container, Judge Singleton found that criminal acquittals resulted in a “dramatic reduction in settlement value of the class case.” ¶ 65,451 Trade Reg.Rep. at 70,581. The reason was that a criminal conviction evidences a prima facie case of civil liability, while an acquittal indicates that,

The United States Justice Department, with all its resources, failed to convince a jury that there existed a price-fixing conspiracy____ Even though there exists a different standard of proof in civil cases, the failure of the Justice Department to prove its case presented a harbinger for the plaintiffs in this civil litigation.

II 65,451 Trade Reg.Rep. at 70,581-82. In Corrugated Container, the defendants who settled after the acquittals were unindicted co-conspirators who had not stood trial in the criminal case. In this case, Cerro stood trial in the criminal case and was exonerated by a jury. Therefore, the “dramatic reduction” in settlement value which Judge Singleton found was even more pronounced here.

Statements of Mr. Kurland also indicate the importance of a criminal verdict in settlement negotiations. Mr. Kurland stated that “whether there would be an acquittal or conviction was one of the negotiating points in determining the [Phelps Dodge] settlement.” (1/25/84 Tr. p. 28). The other defendants waited until after the criminal trial to discuss settlement; only Phelps Dodge did not wait to find out whether its negotiating position would be bolstered by an acquittal or weakened by a criminal conviction. Phelps Dodge made a business decision to settle prior to the criminal verdict; it was terminating its copper water tubing manufacturing and wanted this case “wrapped up.” Phelps Dodge’s settlement for 2.4% of 1979-82 sales took account of the risk that it might be acquitted and able to settle for less, or that it might be convicted and unable to settle without paying significantly more. Mr. Kurland testified at the evidentiary hearing,

... we tried to negotiate with Phelps Dodge a settlement prior to the roll of the dice in the criminal case, to see if we could make a substantial settlement with them and then hold over their head the fact that if the criminal case was lost, it was a different ball game.

(5/28/85 Tr. p. 49). The most favored nations clause was not inserted in the Phelps Dodge settlement agreement to insulate Phelps Dodge from the risk that other defendants might be acquitted; the clause’s purpose was only to ensure that plaintiffs acted fairly and with equal vigor in pursuing settlement with other defendants.

The reasonableness of considering a criminal conviction, and analogously an acquittal, a material change in circumstances is also evidenced by plaintiffs’ protracted and hard-fought negotiations with Cerro, some of which are personally known to the judge. Negotiations with Cerro stretched out over many months and settlement was achieved only after the court actively intervened at the parties’ request. The court met with principals of Cerro, in the presence of Mr. Sachnoff, in an effort to resolve the lawsuit.

Cerro did eventually settle, but there is no question in this judge’s mind that both plaintiffs and Cerro recognized the acquittals as vastly reducing the amount plaintiffs could demand or would receive in settlement. At the January 25, 1984 hearing, Mr. Sachnoff stated:

... I’m indicating on the record ... that we also acknowledge that it [acquittal] is a material change in circumstances which when the time comes that we sit down with the plaintiffs and see whether or not there is a common ground upon which we can resolve this litigation, that fact is going to be one of the principal factors that’s going to be discussed in the context of our settlement negotiations.

(1/25/84 Tr. pp. 58-59). At the May 24, 1985 evidentiary hearing, Mr. Kurland testified,

The fact that we might have a criminal conviction against the defendants was the single most important bargaining tool that was recognized by us and by the defendant Phelps Dodge____ By the time I was settling with Cerro ... [t]here was an acquittal.

(5/24/85 Tr. pp. 48, 63). The behavior of counsel for plaintiffs and for Cerro confirmed these observations.

Phelps Dodge takes issue with the rationality of Mr. Sachnoff’s observations; it argues that since an indicted criminal defendant is presumed innocent, Phelps Dodge was in the same position when it settled as formerly indicted but then acquitted Cerro when it settled. However, the grand jury indictment showed plaintiffs and defendants that the grand jurors believed the government had sufficient evidence to indicate that a crime probably had been committed by the corporations and individuals named in the indictment. Therefore, as a practical matter plaintiffs were clearly in a stronger bargaining position against Phelps Dodge when indicted than against Cerro when acquitted.

Phelps Dodge’s argument that discovery revealed information sufficiently incriminating to Cerro to “cancel out” the effects of the acquittal is also not persuasive. Without this discovery information, Cerro may well have viewed it so unlikely that a jury would find it civilly liable that it might not have settled at all or settled for a lesser amount. To both plaintiffs and Cerro, the acquittal remained a material factor having a major impact on settlement prospects.

Phelps Dodge also argued that plaintiffs could not have reasonably concluded that the prospect or amount of ultimate recovery was lessened or reduced because plaintiffs calculations were all based on the settlement value rather than the ultimate value of the case. Plaintiffs responded that unless it became likely that a trial could not be avoided, they did not attempt to calculate the exact amount of damages against Cerro but instead relied on general parameters. We find it reasonable to rely on general liability figures while involved in settlement discussions. Moreover, on two occasions, plaintiffs provided the court with settlement guidelines it had prepared. These guidelines convinced the court that plaintiffs were making reasonable judgments regarding the basis for settlement with defendants other than Phelps Dodge. (The court was not involved in negotiations culminating in the Phelps Dodge settlement). Plaintiffs’ and Cerro’s experienced antitrust counsel eventually agreed to settle for .88% of Cerro’s 1979-82 sales (as opposed to 2.4% for Phelps Dodge); this is sufficient to indicate plaintiffs’ believed the acquittal caused an approximate two-thirds reduction in their likely recovery.

The evidence introduced at the May 24 and May 28, 1985 evidentiary hearing, as well as prior proceedings in this case of which the court takes judicial notice, persuades the court that plaintiffs could and did reasonably conclude that the criminal acquittals constituted a material change in circumstances so that the value of the civil case against Cerro was substantially lessened. Phelps Dodge’s assertion that the Cerro settlement triggered its option to invoke the most favored nations clause and obtain a partial refund of its settlement amount fails to convince the court.

An appropriate Order follows.

ORDER

AND NOW, this 26th day of July, 1985, upon consideration of the motion of Phelps Dodge Industries, Inc. to enforce its settlement agreement, the responses thereto, and for the reasons set forth in the foregoing Memorandum, it is ORDERED that said motion is DENIED. Phelps Dodge may not exercise its option under the most favored nations clause and must comply with all other terms of its settlement agreement, which remains in full force and effect.

      . Initially, Phelps Dodge also alleged that defendant Cambridge-Lee Industries, Inc. was similarly situated to Phelps Dodge and that Cambridge-Lee’s settlement with plaintiff class violated the most favored nations clause. However, Phelps Dodge withdrew this contention after reviewing confidential documents provided to it by Cambridge-Lee. Therefore, only considerations regarding Phelps Dodge and Cerro are relevant to the court’s decision on this aspect of this antitrust litigation.

      . Individual defendants were severed and actions against them stayed; Civil Action No. 82-4921 (the Master File case) proceeded against four corporate defendants on behalf of a stipulated class.

      . None of the indicted individuals was a Phelps Dodge employee; two were Cerro employees.

      . On April 4, 1983, plaintiffs had moved for leave to file a joint consolidated amended complaint naming Phelps Dodge and the indicted individuals as additional defendants in Civil Action No. 82-4921. The court denied this motion but coordinated the Phelps Dodge case with Civil Action No. 82-4921 (the Master File case) for pretrial purposes.

      . Paragraph 14 of the Phelps Dodge Agreement of Settlement states:
      Plaintiffs agree that, unless present circumstances materially change so that plaintiffs reasonably conclude that the prospect or amount of ultimate recovery from any similarly situated defendant is substantially lessened or reduced, they will not enter into a settlement of the class actions in Master File No. 82-4921 with any such similarly situated defendant that is more favorable to such defendant insofar as it relates to the payment provided for in paragraph 5 of the Agreement (such determination to be based upon the ratio of the amount paid by a defendant in settlement of such actions to the defendant’s

        sales of copper water tubing during the calendar years 1979-82) or to any other protective provisions based on federal legislation which effectively overrules Illinois Brick Co. v. Illinois, 431 U.S. [720] 729 [97 S.Ct. 2061, 2066, 52 L.Ed.2d 707] (1977), without offering similar terms to PDI [Phelps Dodge], In such event, PDI [Phelps Dodge] shall have the option of accepting such more favorable terms and receiving proportionate reimbursement from the Fund, or terminating this Agreement.

      . Prior to trial, three corporate defendants, Reading Industries, Revere Copper and Brass, Inc., and Revere Copper Products, Inc., entered pleas of nolo contendere.

      . On April 26, 1985, Phelps Dodge, moving for a postponement of this hearing, argued that its motion was not ripe for adjudication until after the court gave final approval to the Cerro settlement. The court denied this motion because the most favored nations clause permitted Phelps Dodge to seek termination of its settlement or a refund in the event that plaintiffs "enter[ed] into” (Paragraph 14, Phelps Dodge Agreement of Settlement) a settlement with a similarly situated defendant. See Pretrial Order No. 62.

      . In In re Corrugated Container Antitrust Litigation, 752 F.2d 137 (5th Cir.), cert. denied, — U.S.-, 105 S.Ct. 3536, 87 L.Ed.2d 660 (1985), the Fifth Circuit Court of Appeals did not decide whether discovery must be allowed prior to an evidentiary hearing on enforcement of a most favored nations clause. But in reversing the district court, the Court of Appeals noted that "Green Bay also served interrogatories and a document production request. Plaintiffs objected to these discovery efforts and Green Bay filed a motion to compel discovery, but the district court has never ruled on the motions." 752 F.2d at 140. Green Bay did not request any depositions.

      . Of course, this same assurance can be provided by the court which is obligated by Federal Rule of Civil Procedure 23 to approve only those class action settlements that it finds fair, reasonable, and adequate; reliance on the court rather than a most favored nations clause has the advantage of eliminating the potential for just the sort of litigation we are now here engaged in.

      . If Phelps Dodge prevailed on its motion, it would be entitled to a refund of $1,591,040 (the difference between 2.4% x $102.7 million sales and .88% x $102.7 million sales, or $2,464,800 minus $903,760 which equals $1,561,040), plus a proportionate share of the interest earned to date on its $2.5 million payment.

      . The Corrugated Container most favored nations clause would apply "unless present circumstances materially change so that plaintiffs reasonably conclude that the prospect or amount of ultimate recovery from any similarly situated defendant is substantially lessened or reduced____" 752 F.2d at 139 n. 3.

      . Title 15 U.S.C. § 16(a) provides:
      A final judgment or decree heretofore or hereafter rendered in any civil or criminal proceeding brought by or on behalf of the United States under the antitrust laws to the effect that a defendant has violated said laws shall be prima facie evidence against such defendant in any action or proceeding brought by any other party against such defendant under said laws as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto____

      . On April 29, 1983, this court approved a stipulation of plaintiffs and Cerro (and other defendants in the Master File cases) deferring all but third-party discovery pending the conclusion of the criminal trial.

      . Phelps Dodge ceased to manufacture copper water tubing in late 1983.


source: Caselaw Access Project

author: SAROKIN, District Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff, v. STATE OF NEW JERSEY, et al., Defendants, and Robert M. Sheridan, et al., Intervenors.
    Civ. A. Nos. 950-73, 77-2054 and 79-184.
    United States District Court, D. New Jersey.
    July 26, 1985.
    Gerald F. George, U.S. Dept, of Justice, Civil Rights Div., Washington, D.C., for plaintiff.
    Mark Fleming, Deputy Atty. Gen., Trenton, N.J., for State of N.J.
    Thomas Calligy, Hoboken, N.J., for Hoboken.
    Schneider, Cohen & Solomon by David Grossman, Jersey City, N.J., for intervenors Sheridan, et al.
   OPINION

SAROKIN, District Judge.

The court is, once again, confronted with the claim of persons who have taken and passed a civil service examination for firefighter and now stand on the brink of appointment. The court reiterates its recognition of the frustration and the sense of unfairness experienced by persons who may be denied an opportunity because of the need to protect the rights of minorities.

However, the need for affirmative action has not diminished, nor does this court perceive any change in the applicable law which would authorize it to retreat from the conditions of the consent decree entered in this matter and the principles which underly it.

This court stated in an earlier opinion: This case and others involving the same issues represent a turning point in our society. We cannot either through legislation or court edict, drive bias and prejudice from the hearts and minds of the people. We can, however, condemn such bias and prejudice and prohibit them from denying constitutional rights and equality to any of our citizens. Affirmative action plans, with all of their imperfections, deficiencies and weaknesses, are a symbol of this country’s willingness to correct the inequities of the past and to express a commitment to their elimination in the future.

Vulcan Pioneers, Inc. v. New Jersey Department of Civil Service, 588 F.Supp. 716, 727 (D.N.J.1984). The foregoing continues to be the view of this court.

In this particular case, those affected will be required to take the test again and, therefore, they will have the same opportunity to be appointed as they now have. Minorities, on the other hand, will now be afforded an equal opportunity denied to them in the past. Any interim steps which deny or minimize that opportunity should be and must be rejected by the court in the absence of a clear emergency warranting such action.

Twenty-one candidates for the position of firefighter in Hoboken, New Jersey here move to intervene and for preliminary injunctive relief against the expiration of an eligibility list for such position on June 8, 1985. Plaintiff United States opposes the latter application, and has heretofore refused permission either to hire intervenors, or to extend the life of the eligibility list upon which intervenors are numbers twenty through forty. Intervenors contend that plaintiff’s position violates Title VII of the Civil Rights Act of 1964, as well as their constitutional rights, and that it will have serious adverse consequences for the City of Hoboken. For the reasons set forth below, intervenors’ application for relief is denied.

By Consent Decree entered into on May 30,1980, plaintiff United States of America and defendants, including Hoboken, agreed that defendants would

... refrain from engaging in any act or practice which has the purpose or effect of unlawfully discriminating against any black or Hispanic employee of, or any black or Hispanic applicant or potential applicant for employment with their respective fire departments because of such individual’s race, color, or national origin. Specifically, the defendants shall not discriminate against any individual in hiring, assignment, training, discipline, promotion or discharge because of race, color, or national origin.

Consent Decree ¶ 1. To this end, the defendant municipalities were barred from making appointments to the rank of firefighter from certain 1978 and 1979 examination lists, except where in accord with affirmative action goals, or where necessitated by emergency. 112. For "Hoboken, “the goal shall be to fill at least forty (40) percent of all vacancies with qualified minority applicants.” II 3(b). The defendant State of New Jersey was to establish new firefighter eligibility lists based upon state statutes and regulations “or such other less restrictive and nondiscriminatory standards as may subsequently be adopted.” 114(a). A written examination could be “used solely on a qualifying basis” with job-related physical performance or other selection devices utilized for selection. ¶ 4(b). “The cut-off score on the written examination, the weights assigned to ranking devices and the duration of eligibility lists” were to be “set at a point consistent with assuring qualified candidates and with facilitating compliance with the [affirmative action] goals ____” Ibid. In the meantime, New Jersey was to perform a new validity study, the results of which were to be utilized in developing a new examination, to be approved by plaintiff. If 4.

Additionally, the defendant cities were to step up recruitment and training of minority candidates, with the help of the state. 115(a). All defendants were to provide racial breakdowns of test applicants, ¶ 5(b)(1), scores, II 5(b)(2), and the resulting eligibility lists. II 5(b)(3). Paragraph six of the Consent Decree then provides:

Should plaintiff United States, at any stage of the selection process set forth in paragraphs 4 and 5 above, or thereafter, determine that a city will be unable to meet its interim hiring goals based upon that selection process, the plaintiff shall expeditiously notify the affected defendants, and the affected parties including the State shall meet within a reasonable period to discuss alternative methods by which the affected fire departments could meet its goal. If the parties fail to resolve the matter, any affected party may move the Court for resolution. If an objection is made by plaintiff, no persons shall be certified for appointment pending resolution by the court.

116.

Intervenors herein took an October, 1982 examination for the position of firefighter. Such examination caused concern on the part of the plaintiff United States. Indeed, in a January 21,1983 letter, counsel for the United States noted that such examination, which was administered in Hoboken, Trenton, New Brunswick, Jersey City and Camden, “eliminates minorities at a rate at least twice that of whites. As a result, the percentage of minorities eligible for the next step in the selection process is quite low, and well below the goals for these cities in the consent decree and well below the applicant flow.” Aff. of Gerald F. George, Exh. 10 (letter dated 1/21/83). Though plaintiff thus found the evidence “not adequate to support use of the examination,” it did not insist on administration of a new test. Counsel wrote:

The new eligibility lists will be in effect for only one year, and there may well be little or no hiring by these cities in that time period. While the composition of the lists as a whole will certainly be inadequate in terms of the obligations of the consent decree, the composition of the first few positions, which will be determined by veteran preference and physical agility test score, may be sufficient for the amount of hiring actually contemplated. Accordingly, administering a new examination at this point might be an expensive and impractical exercise.

Ibid. No appointments were made during the first year of the list; accordingly, on August 19, 1983, plaintiff indicated that it “would certainly consider extension of the list for a second year,” particularly since there were “six minorities among the first fifteen names on the list.” George Aff., Exh. 10. On December 30, 1983, plaintiff, in fact, agreed to such extension “if no more than ten appointments were to be made.” Id. Notwithstanding this caveat, plaintiff approved nineteen appointments in late 1984; seven of the nineteen appointees were black or Hispanic. George Aff. 119.

On January 28, 1984, the Director of Public Safety of Hoboken, James W. Giordano, requested that the eligibility list, denominated M0018D, be extended an additional year, to June 8, 1986. Director Giordano stated that “[t]he first 20 eligible candidates have contacted me and they informed me that they are interested in this position as Hoboken firefighters now and in the near future.” George Aff., Exh. 8. Plaintiff responded that, while it had approved a one-year extension to June 8, 1985, a further extension ought to “wait until early 1985.” George Aff., Exh. 9. However, despite pleas from the City Administrator, George Aff., Exh. 2, the Director of Public Safety, id., Exh. 3, and the Fire Chief, id., Exh. 4, plaintiff rejected such request, by letter dated May 31, 1985. Counsel wrote:

We have received the letters of Mr. Chi-us, Director Giordano and Chief Houn concerning the City’s request for the appointment of additional firefighters.
The letters primarily set out the concern of City officials that sufficient personnel be appointed and trained before February 1, 1986, to assure an experienced firefighting force when several persons retire on that date. While we are not unsympathetic to the concern, we question the need to hire prior to June, 1985, twenty persons for whom vacancies will not exist until February 1986, where that hiring appears inconsistent with the City’s obligations under the Consent Decree. In particular, we question that need when the City left unfilled for several months in 1984-85 at least eleven vacancies at a time when it was free to use the list. We also note that the City expressly stated in its April 3, 1985, quarterly report that it had no intention of filling any firefighter vacancies within the ensuing sixty (60) days.
We have expressed from the outset concern over the validity of the examination used by the State for this eligibility list, and we made the City aware quite sometime ago of our position that approval of the use this eligibility list [sic] was contingent upon its not being used for an unusually large number of appointments. Although in our letter of December 30, 1983 approving an extension of the list we indicated a limit of ten (10) appointments, we in fact agreed to permit twenty appointments last fall. However, we also informed the City that we would not accede to any additional extension of this list____
As you know, the State tests for firefighters on a regular basis. Given our expressed reservation over the use of this list, if the City anticipated a large number of additional vacancies, it should have made certain it was included in the firefighter examination announced by the State last fall, so that a new eligibility list would be available this summer.
Under the foregoing circumstances, we cannot accede to the City’s request that • an additional twenty appointments be permitted from the current eligibility list. We will be happy, of course, to work with the City and the State to accelerate, if possible, the administration of the upcoming firefighter examination.

George Aff., Exh. 10.

Intervenors now move for an injunction to prevent the expiration of the June 8, 1985 eligibility list, and to prevent efforts by the government to bar Hoboken from hiring such intervenors. Additionally, intervenors’ prayer for relief asks that the court “[e]njoin and restrain the plaintiff and Defendant from enforcing the Consent Decree entered on or about May 30, 1980.” Complaint, Prayer for Relief II 1(e). In support of such application, intervenors point to both the need for additional firefighters in Hoboken, see Aff. of James Houn (6/6/85) MI 2-5; Aff. of Alfred N. Arrezzo (6/6/85) ¶ 4, and the harm to themselves should the relief sought not be granted. Aff. of Roary M. Miller (6/20/85) MI 3-8; Aff. of William J. Lemonie (6/20/85) MI 8-10; Aff. of Christopher L. Lyons (6/20/85) MI 3-7; Aff. of Robert Falco (6/6/85) MI 4-6, 9.

The court is extremely sympathetic to the plight of intervenors. Indeed, it is apparent that many of them have made changes in their lives based upon their having been informed by the City of Hoboken that they would be hired as firefighters by the City. However, the Consent Decree voluntarily entered into by Hoboken allows plaintiff to object to the utilization of eligibility lists which have an adverse impact upon minority candidates, or which disenable a municipality from reaching the goals set forth in paragraph 3 of the Decree. Plaintiff has so objected here, and it is for the court to determine whether such objection is in accord with the Decree.

The court finds that it is. As plaintiff United States points out, the court has decided an issue almost identical to this one approximately one year ago. Then, the court enjoined the extension, under state law, of an East Orange promotional list, in light of the fact that another list, not then in effect, was likely to have less of an adverse impact upon minority candidates. The court wrote that “[t]he list has been utilized; those at its top promoted. It is now time to move to a new list, one with an impact more advantageous to the minorities who are the intended beneficiaries of the Consent Decree.” Vulcan Pioneers, Inc. v. New Jersey Department of Civil Service, 588 F.Supp. 727, 731 (D.N.J.1984), reconsideration denied, unpub. op. (D.N.J. July 10, 1984), stay denied, unpub. op. (D.N.J. Oct. 29, 1984), aff'd mem., (3d Cir. May 3, 1985). The court held that, while it was “not unmindful of either the rights or expectations of those who might otherwise receive promotions in the near future, but for this ruling,” 588 F.Supp. at 731, such rights did not rise to the level of property for purposes of analysis under the takings clause or a property interest for purposes of the due process clause. Id. at 731-32 n. 6. It wrote:

The court here merely opens up the competition for specific positions. It does not foreclose any particular person from attaining such position, nor deprive any person of a vested economic benefit or an existing position. Here, the rights and opportunities of minority firefighters are advanced, but not necessarily at the expense of particular nonminority firefighters who may yet succeed in obtaining the desired promotions. That they must take another test before doing so, and thereby risk the loss of some advantage now held, is a small price to pay for the protection and advancement of the rights of persons so long the victims of discrimination.

588 F.Supp. at 732.

This case proceeds a fortiori from the East Orange matter. As in East Orange, the Hoboken list here at issue has been utilized, and those at its top promoted. Moreover, as in East Orange, a new test is likely to yield more minority candidates; in East Orange, this was because there were to be a greater number of minority candidates taking the test, 588 F.Supp. at 729, while in Hoboken, it will be because the new test will, presumably, not have the adverse impact on minorities which plagued the test that yielded eligibility list M0018D. And, as in East Orange, those candidates now on the Hoboken list set for expiration are not being deprived of rights already gained, but rather, are merely being asked to take another test should they continue to be interested in becoming firefighters.

Indeed, if anything, the situation in Hoboken makes the relief here requested less appropriate than it was in East Orange. Here, no state statute is at issue, as was the case in East Orange, where the extension of the pertinent eligibility list was arguably mandated by state law. 588 F.Supp. at 731 and n. 4. Moreover, in East Orange, the court was required to resolve the factual question of whether a promotional freeze had, in fact, been in effect. No such factual issue is presented in Hobo-ken, where numerous appointments — indeed, more than contemplated by plaintiff — have been made from the pertinent list, and no specific harm to intervenors is cited, other than that engendered by the failure to appoint. Finally, in East Orange, the court noted the importance of promotions to the affirmative action plan in effect.

Merely providing minorities with employment in the public sector does not satisfy the goals of the Constitution in general or the Consent Decree in particular. They must also have the opportunity to advance within their chosen career paths and, as the court has observed elsewhere, to retain their jobs in the face of layoffs that threaten to eradicate their gains.

588 F.Supp. at 731. Much more important is the initial hiring process, here at issue in Hoboken. It is the crucial first step, without which promotional issues are obviously rendered academic. Such process also redresses a problem explicitly recognized by defendants, like Hoboken, in the Consent Decree. Though no such admission exists with respect to promotions, the Consent Decree states:

The defendants recognize that the proportion of black and Hispanic firefighting personnel on the respective municipal fire departments of the defendant cities is below the representation of blacks and Hispanics in the labor force of said municipalities, and they also recognize the need to undertake affirmative action to increase substantially the proportion of black and Hispanic personnel on their respective fire departments.

¶ 3. Based upon this recognition, annual interim hiring goals were set forth, such as did not exist for promotions. The reason is clear: hiring policy is a far more fundamental aspect of an affirmative action plan than is promotional policy. The Consent Decree, as well as the statutory and constitutional rights which underlie it, thus require the court to scrutinize adverse impact in hiring even more closely than in promotions. The relief sought by the Hobo-ken intervenors poses a greater threat to the Decree than that sought by the East Orange intervenors. The court must be particularly careful to stave off that threat.

For this reason, the court must reject intervenors’ application for relief at this time. Intervenors may, at some future point, be able to prove that the test given was valid notwithstanding its adverse impact upon minorities, and that the basis for the government’s action, i.e., that the October, 1982 examination was of doubtful validity, is not supported. Here, however, they have not even alleged that such is the case; rather, they leave plaintiff’s allegations of invalidity unrefuted. As such, they have failed to bear their burden of showing the likelihood of success on the merits necessary to sustain the type of preliminary relief requested. See, e.g., SI Handling Systems, Inc. v. Heisley, 753 F.2d 1244, 1254 (3d Cir.1985), citing Klitzman, Klitzman and Gallagher v. Krut, 744 F.2d 955, 958-59 (3d Cir.1984); Continental Group v. Amoco Chemicals Corp., 614 F.2d 351, 356-57 (3d Cir.1980).

Nor does the fact that Hoboken needs additional firefighters justify the relief sought. Indeed, while the reasons cited by the Fire Chief and Construction Code Official/Zoning Officer of Hoboken as to why additional firefighting personnel would be desirable for the city, it notes that as in East Orange, the city does not, apparently, join in intervenors’ application for relief. See Vulcan Pioneers, Inc. v. New Jersey Department of Civil Service, Civil Action No. 950-73, unpub. op. at 11 (D.N.J. Oct. 29, 1984). That the city also failed to inform plaintiff United States that it required, and intended, to hire additional firefighters and, in fact, informed plaintiff as late as April 3, 1985, that it “[did] not anticipate any appointments within the next 60 day period (April and May, 1985),” see George Aff., Exh. 1(a), casts further doubt on the city’s need for the relief here sought by intervenors and grounded, in large part, upon a public interest which the city ought to take responsibility for vindicating. That such interest does not exist is, finally, reinforced by the fact that the city also failed to request inclusion in the firefighter examination announced by the defendant State of New Jersey in the fall of 1984. Had it done so, and been candid with intervenors and others in their position regarding plaintiff’s serious reservations concerning list M0018D, then the city would now be in a position to fill its purported needs and intervenors, possibly, would be in the position to be hired from a new list, based on a more valid examination. That such is not the case is purely the fault of the City ,of Hoboken, particularly in that the needs cited by its Fire Chief and Construction Code Official/Zoning Officer are needs which could and should have been identified by the city long ago, or at least as early as the fall of 1984. The increase in residential units, development of the waterfront and demographic changes discussed are trends of which the city must have been aware for some time: that they did not heretofore identify an increased need for firefighting personnel, and act on such need, leaves the court unable to find the emergency situation now invoked by intervenors in support of their application for court-ordered employment.

The court thus finds the public interest cited by intervenors to be belied by the city’s actions. Moreover, to the extent that intervenors have relied on the city’s representations that they would be hired, notwithstanding the city’s knowledge that the approval of such appointments by plaintiff was far from assured, intervenors have a legitimate grievance with the city. Such grievance may not, however, undermine the operation of the Consent Decree, and the civil rights goal upon which it is based.

Nor does the court find intervenors’ facial attack on the Decree to justify the relief sought here. First, as plaintiff notes, intervenors’ application suffers for its late date: applications for equitable relief should, indeed must, be made at the earliest possible moment. See, e.g., Abbott Laboratories v. Gardner, 387 U.S. 136, 155, 87 S.Ct. 1507, 1519, 18 L.Ed.2d 681 (1967). That intervenors waited until relief was absolutely necessary to prevent the harm they feared, while attacking the Consent Decree on grounds present much earlier is inexcusable and may alone constitute laches, sufficient to defeat intervenors’ application. More important, while the court does not here address the applicability of the Supreme Court’s decision in Firefighters Local Union No. 1784 v. Stotts, — U.S. -, 104 S.Ct. 2576, 81 L.Ed.2d 483 (1984), to the entire range of issues arising under the Consent Decree, it has already made clear its belief that the issue raised here is not governed by Stotts. As the court wrote with respect to East Orange:

... Stotts concerned the effect of §§ 703(h) and 706(g) of Title VII of the Civil Rights Act of 1964. The Supreme Court held that they limit “the authority of the trial court to disregard a seniority system in fashioning a remedy” under Title VII; only identifiable victims of discrimination can obtain relief in contravention of such a system. [104 S.Ct. at 2588-90]. Seniority is not here implicated and Title VII’s strictures against its disruption do not therefore apply.

Vulcan Pioneers, Inc. v. New Jersey Department of Civil Service, Civil Action No. 950-73, unpub. op at 4 n. 1 (D.N.J. July 10, 1984). Since the court’s holding to this effect, every Court of Appeals to have considered the scope of Stotts, including that of the Third Circuit, has agreed that it is to be limited to the problems presented by a court order creating a conflict between a bona fide seniority system and an affirmative action plan. See Commonwealth of Pennsylvania v. Local Union 542, International Union of Operating Engineers, 770 F.2d 1068, slip op. at 8-9, 12 (3d Cir.1985); Deveraux v. Geary, 765 F.2d 268 (1st Cir.1985); Turner v. Orr, 759 F.2d 817, 824 (11th Cir.1985); E.E.O.C. v. Local 638 ... Local 28 of Sheet Metal Workers’ International Union, 753 F.2d 1172, 1186 (2d Cir.1985); Vanguards of Cleveland v. City of Cleveland, 753 F.2d 479, 486-93 (6th Cir.1985); Diaz v. American Telephone & Telegraph, 752 F.2d 1356, 1360 n. 5 (9th Cir.1985); Van Aken v. Young, 750 F.2d 43, 45 (6th Cir.1984) (“... here we deal with a remedy applied voluntarily by a public employer at the point of hiring. Thus contrary to the facts of Stotts, no employers with vested seniority rights were deprived of them.”); Kromnick v. School District of Philadelphia, 739 F.2d 894, 911 (3d Cir.1984), cert. denied, — U.S. -, 105 S.Ct. 782, 83 L.Ed.2d 777 (1985); Grann v. City of Madison, 738 F.2d 786, 795 n. 5 (7th Cir.), cert. denied, — U.S.-, 105 S.Ct. 296, 83 L.Ed.2d 231 (1984). See also Lujan v. Franklin County Board of Education, 766 F.2d 917, 925 n. 7, (6th Cir. June 17, 1985) (Stotts limited to court-ordered relief, and does not apply to voluntary affirmative action plans); Wygant v. Jackson Board of Education, Jackson, Mich., 746 F.2d 1152, 1159 (6th Cir.1984) (same), cert. granted, — U.S. -, 105 S.Ct. 2015, 85 L.Ed.2d 298 (1985). The goals here challenged by intervenors were, of course, voluntarily arrived at; the City of Hoboken signed the Consent Decree here at issue, recognizing “that the proportion of black and hispanic firefighting personnel is below the representation of blacks and Hispanics in the labor force ... and ... the need to undertake affirmative action to increase substantially the proportion of black and Hispanic personnel____” ¶ 3. Moreover, the hiring issues here presented do not implicate the seniority concerns specifically addressed by Title VII, which concerns motivated the Supreme Court in Stotts. Hence, the court finds that Stotts does not govern the instant dispute, or require the relief sought by intervenors.

Finally, the court also disagrees' with intervenors that the provisions of the Decree here at issue overstep the bounds of Title VII established by the Supreme Court in United Steelworkers of America v. Weber, 443 U.S. 193, 99 S.Ct. 2721, 61 L.Ed.2d 480 (1979), to govern voluntary affirmative action plans. There, the Court held that voluntary race-conscious affirmative action plans were not impermissible per se; it found the plan there at issue to “[fall] on the permissible side of the line” because it “was designed to break down old patterns of racial segregation and hierarchy;” because it did not “unnecessarily trammel the interests of the white employees;” and because it was “a temporary measure” designed not “to maintain racial balance, but simply to eliminate a manifest racial imbalance.” 443 U.S. at 208, 99 S.Ct. at 2730. Since Weber, courts have consistently evaluated voluntary affirmative action plans utilizing these criteria of remedial nature, the interests of nonminority applicants, and temporariness. See, e.g., Vanguards of Cleveland, supra, 753 F.2d at 484; Johnson v. Transportation Agency, Santa Clara County, California, 748 F.2d 1308, 1311 (9th Cir.1984); Kromnick, supra, 739 F.2d at 911-12; Williams v. City of New Orleans, 729 F.2d 1554, 1560-61 (5th Cir.1984) (en banc), Kirkland v. New York State Department of Correctional Services, 711 F.2d 1117, 1132 (2d Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 997, 79 L.Ed.2d 230 (1984); Sisco v. J.S. Alberici Construction Co., Inc., 655 F.2d 146, 149 (8th Cir.1981), cert. denied, 455 U.S. 976, 102 S.Ct. 1485, 71 L.Ed.2d 688 (1982); Parker v. Baltimore and Ohio Railroad Co., 652 F.2d 1012, 1014 (D.C.Cir.1981); Hammon v. Barry, supra, 606 F.2d at 1090-94.

Here, however, intervenors attack the Consent Decree based upon but one prong of the Weber analysis: that the Decree “does not have an expiration date, and is not a temporary remedy.” Intervenors’ Reply Brief at 4. Intervenors assert that, as such, the Decree “fails to take account of changes in the racial composition of the community and the available work force.” Intervenors’ Brief at 7. In so arguing, intervenors completely ignore the final paragraph of the Decree, which states:

Defendants may move, with plaintiff United States having forty-five (45) days notice and right to oppose any such motion, for termination of this Order as to any particular defendant upon showing that the combined proportion of blacks and Hispanics in the uniformed ranks as a whole of that defendant’s fire department approximates their proportion in the relevant labor market for that city.

¶ 12. This paragraph meets the specific requirements of Weber, see 443 U.S. at 208-09, 99 S.Ct. at 2730, and its progeny, cited by intervenors. If it is true, as intervenors assert, that the goal applicable to Hoboken, “is not reflective of the present racial composition of the community,” Intervenors’ Brief at 6, then they, and/or Hoboken, should so move under the Decree. Currently, however, there are no facts before the court which would indicate that such is the case; hence, intervenors have failed to demonstrate any likelihood of success on the merits of the Weber claim, so as to justify the relief sought here.

For all of these reasons, intervenors’ application for relief must be denied. That intervenors have a legitimate grievance cannot be gainsaid. As always, however, litigation under the instant Consent Decree requires such grievance to be balanced with the greater social good which the Decree seeks to further. Here, that balancing, as conducted under the applicable law, and in light of the particular facts presented, favors the preservation of affirmative action towards the end of eradicating age-old discrimination over the extension of a particular hiring list resulting from an examination which had an adverse impact upon minority candidates.

An appropriate order will issue.

      . There is no opposition to the application to intervene and it is accordingly granted, pursuant to Federal Rule of Civil Procedure 24(a).

      . In particular, 71% of the white applicants, but only 35% of the blacks and 41.5% of the Hispanic applicants passed the 1982 Hoboken firefighter examination.

      . On the other hand, the fact that no test has yet been administered lessens the harm to intervenors of having to take another test. It is not true, as at least two of intervenors imply, that they thus missed taking a civil service examination that would otherwise have made them eligible for a firefighter position at this point. See Lyons Aff. ¶ 4; Miller Aff. ¶¶ 4, 6. Of course, in light of the circumstances of this case, the city and state should take whatever action is necessary to include intervenors on the list, to be utilized for upcoming appointments. If they do so, the situation that existed in East Orange, in which intervenors were left with only one week, from the time of the court's Opinion, to study for the examination, will be prevented. See 588 F.Supp. at 729.

      . This is particularly so in that the next retirements in Hoboken will apparently become effective on February 6, 1986; those nineteen firefighters retiring effective June 1, 1985 seem to have been replaced already, by the city’s late 1984 hires.

      . District courts have construed Stotts in a similarly narrow fashion. See, e.g., United States v. City of Buffalo, Civ.-73-41C, slip op. (W.D.N.Y. June 5, 1985); Massachusetts Association of Afro-American Police, Inc. v. Boston Police Dept., 106 F.R.D. 80 (D.Mass.1985); Dougherty v. Barry, 607 F.Supp. 1271, 1286-87 (D.D.C.1985); Hammon v. Barry, 606 F.Supp. 1082, 1094-95 (D.D.C.1985). See also Morgan v. Nucci, 612 F.Supp. 1060 (D.Mass.1985) (Stotts does not apply where there are findings of discrimination and where the rights of third parties, i.e., students, are involved); Britton v. South Bend Community School Corp., 593 F.Supp. 1223, 1231 (N.D.Ind.1984) (Stotts does not apply to voluntarily undertaken affirmative action plans); N.A.A.C.P. v. Detroit Police Officers Association (DPOA), 591 F.Supp. 1194, 1202-03 (E.D.Mich.1984) (Stotts does not apply to cases brought under the fourteenth amendment, rather than Title VII); Vulcan Pioneers, Inc. v. New Jersey Department of Civil Service, 588 F.Supp. 732, 734 (D.N.J.1984) (Stotts does not prohibit voluntary affirmative action).


author: LEISURE, District Judge:

text:
    Samuel E. FRIEDAR, Plaintiff, v. The GOVERNMENT OF ISRAEL, Ministry of Defense of Israel, and the Consulate General of Israel in New York, Defendants.
    No. 84 Civ. 9134 (PKL).
    United States District Court, S.D. New York.
    July 26, 1985.

      Berney & Zweben, New York City (Andrew P. Zweben, New York City, of counsel), for plaintiff.
    Novack & Richter, P.C., New York City (Martin Novack, New York City, of counsel), for defendants.
   LEISURE, District Judge:

Samuel Friedar, a citizen of New York, brought this action under 28 U.S.C. §§ 1330, 1605 against the Government of Israel and branches thereof (“Government”). Friedar alleges that, after he was injured while serving in the Israeli Army in 1948, the Government failed to compensate him, as promised, for his medical costs and other related expenses incurred from 1948 to 1975. The Government has moved to dismiss on the grounds that, first, it is immune from the jurisdiction of this Court under 28 U.S.C. § 1604 and, second, the action is barred under the Act of State doctrine. The Government has also suggested that this action would more appropriately be brought in Israeli courts. I find that the Government is entitled to sovereign immunity under 28 U.S.C. §§ 1604-1607 and that, even if the Court had jurisdiction, the action should be dismissed under the Act of State doctrine. The Government’s motion to dismiss is hereby granted.

BACKGROUND

For the purposes of this motion, I will accept Friedar’s allegations of material facts as true. Asociacian de Reclamantes v. United Mexican States, 561 F.Supp. 1190, 1192 (D.D.C.1983), aff'd, 735 F.2d 1517 (D.C.Cir.1984). In 1948, the Government recruited Friedar in the United States to join the Israeli Army. The Government promised Friedar that he would be compensated for his losses if he were injured. Friedar was subsequently injured and incurred medical expenses and other losses. According to Friedar’s attorney, the Government expressly promised on several occasions to reimburse Friedar for these medical expenses. The Government ratified Friedar’s claim but did not compensate him retroactively for expenses incurred from 1948 to 1975.

In Friedar’s four-count amended complaint, he alleges that 1) the Government’s refusal to reimburse Friedar for his expenses violates international, American and Israeli law; 2) the Government intentionally withheld information regarding Friedar’s eligibility for compensation; 3) the Government negligently allowed its files on Friedar to be lost or destroyed; and 4) the Government wrongfully converted the sum Friedar claims.

The Government argues in support of its motion that the Government is immune, under 28 U.S.C. § 1604, from the jurisdiction of the United States courts. The Foreign Sovereign Immunities Act of 1976 (“FSIA”), 28 U.S.C. §§ 1330, 1332(a)(2)-1332(a)(4), 1391(f), 1441(d), 1602-1611 (1982), codifies the principle of restrictive sovereign immunity. Section 1605 describes several categories of cases in which a foreign state will not be immune from the jurisdiction of United States courts. The Government asserts that the circumstances of this ease and the allegations in the complaint do not fall into any of the exceptions to sovereign immunity listed in § 1605. The Government alternatively argues that the Act of State doctrine would bar this action.

In reply, Friedar argues that neither § 1604 nor the Act of State doctrine bar this action. Friedar suggests several bases for a § 1605 exception to sovereign immunity. First, representations made to the plaintiff and the letters from the Israeli Consul constitute explicit and implicit waivers of sovereign immunity. Second, the Government was acting within the scope of commercial activity in contracting with Friedar for his services. Third, the Government was acting as an insurer that wrongfully withheld property from Friedar. Friedar also argues that the Act of State doctrine is inapplicable because the case involves actions occurring outside of Israel.

DISCUSSION

A. Sovereign Immunity.

Congress intended, in enacting FSIA, to codify current standards of international law regarding sovereign immunity. Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300, 310 (2d Cir.1981), cert. denied, 454 U.S. 1148, 102 S.Ct. 1012, 71 L.Ed.2d 301 (1982). Under these standards, foreign governmental entities are subject to suit for their private or commercial acts, but are immune from suit for their public acts. E.g., Eastern Europe Domestic International Sales Corp. v. Terra, 467 F.Supp. 383, 386 (S.D.N.Y.1979). Section 1605, the pertinent provision here, lists the situations in which a foreign state will not be immune from suit. The criteria contained in § 1605 also serve to establish that minimum contacts exist for purposes of in personam jurisdiction. Id. at 387. Each of the categories that Friedar alleges are applicable here will be addressed in turn.

Section 1605(a)(1) states that a foreign state relinquishes its claim to immunity when the foreign state “waive[s] the immunity either explicitly or by implication.” Friedar argues that the Government’s alleged representations that it would pay for his medical expenses constitute both explicit and implied waivers. The link between an agreement to pay expenses and a waiver of immunity is, however, tenuous at best. Entering into a contract does not, by itself, constitute waiver of immunity. Castro v. Saudi Arabia, 510 F.Supp. 309, 312 (W.D.Tex.1980). To construe implied waiver so expansively would be inconsistent with the legislative history of FSIA and the relevant case law. See, e.g., Maritime International Nominees Establishment v. Republic of Guinea, 693 F.2d 1094, 1102-04 (D.C.Cir.1982), cert. denied, — U.S.-, 104 S.Ct. 71, 78 L.Ed.2d 84 (1983) (agreement to submit to arbitration did not constitute implied waiver of immunity); Paterson, Zochonis (U.K) Ltd. v. Compania United Arrow, 493 F.Supp. 621, 629 (S.D.N.Y.1980) (designation of agent in the United States to receive service of process did not amount to an implied waiver, when the appointment was made in order to comply with Federal Maritime Commission regulations); Harris v. Vao Intourist, Moscow, 481 F.Supp. 1056, 1058 (E.D.N.Y.1979) (“the legislative history [of FSIA] suggests that implied waivers by commercial action are not consonant with the Act’s purposes; implicit waivers are reflected in actions relating to adjudication and explicit waivers are found in treaties.”). I therefore find that the Government did not waive its sovereign immunity.

Section 1605(a)(2) describes three situations where the commercial activity of the foreign state disqualifies the state from immunity. The applicability to the present case of all three categories described in § 1605(a)(2) hinges on whether the Government’s conduct can be considered commercial. Sectiqn 1603(d) states that “the commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than reference to its purpose.” The distinction between nature and purpose, however, in determining whether conduct is commercial or governmental, is often elusive. See Note, Foreign Sovereign Immunity and Commercial Activity: A Conflicts Approach, 83 Colum.L.Rev. 1440, 1480-1482 (1983).

Traditionally, a country’s internal administrative activity and management of its armed forces were deemed governmental acts, over which it would be improper for another country’s courts to sit in judgment. Heaney v. Government of Spain, 445 F.2d 501, 503 (2d Cir.1971). Under FSIA, however, a government would no longer have sovereign immunity when it enters the market place to purchase supplies for its military. See, e.g., Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300 (2d Cir.1981), cert. denied, 454 U.S. 1148, 102 S.Ct. 1012, 71 L.Ed.2d 301 (1982). In Castro v. Saudi Arabia, 510 F.Supp. 309 (W.D.Tex.1980), the court considered whether an agreement to train Saudi soldiers in the United States could be considered “commercial activity” for immunity purposes. The court determined that while the agreement could be characterized broadly as a commercial sale of services, a narrower characterization was more appropriate, i.e., that the nonprofit transaction involved a sovereign function of training its military. Id. at 312.

Friedar attempts to characterize the Government’s alleged conduct as a breach of contract for services and emphasizes that Friedar’s original contract was with private groups prior to the existence of Israel. Since the purpose of the contract is irrelevant under FSIA, a contract for services, Friedar argues, is necessarily commercial. I disagree. In straining to fit the Government’s activities into the categories of § 1605, Friedar isolates the form of the alleged transaction while ignoring its nature. Under the broadest characterization, whereby only the contracted form of the initial transaction is considered, the alleged activity conceivably might be labeled commercial. However, when the nature of the activities is analyzed — recruiting an army, no matter from what source, and determining eligibility for veterans’ benefits — the acts clearly involve sovereign functions. As in Castro, the broadest conceivable characterization would be inappropriate.

Leaving aside the purposes of the Government’s alleged acts, it is clear to me that the nature of the activities in question here is purely governmental. Unlike the purchase of supplies that eventually may be used for military purposes, recruiting soldiers and determining eligibility for veterans’ benefits are activities conducted only by governments. Cf. Mol, Inc. v. Peoples Republic of Bangladesh, 572 F.Supp. 79, 84-85 (D.Ore.1983), aff'd, 736 F.2d 1326 (9th Cir.1984) (entering a license agreement to export monkeys involved sovereign capacities and therefore was non-commercial for immunity purposes). I therefore decline to find that the Government’s alleged activity in this case can be characterized as commercial.

Friedar further alleges that the Government wrongfully withheld property in violation of international law, in reference to § 1605(a)(3) & (4). Again, the exceptions to sovereign immunity described in these provisions are inapplicable to the Government’s alleged activity. Section 1605(a)(3) was intended to apply only to the expropriation of property, not to the failure to make payments. Canadian Overseas Ores Ltd. v. Compania de Acero del Pacifico S.A., 528 F.Supp. 1337, 1346 (S.D.N.Y.1982) (the “language of § 1604(a)(3) [1605(a)(3)], applicable to tangible property, is on its face inapplicable to a contractual right to be paid”), aff'd., 727 F.2d 274 (2d Cir.1984). Similarly, the language of § 1605(a)(4) on its face bears no relation to the circumstances of this case. Friedar again has labeled the activity wholly out of context in an attempt to'establish a § 1605 exception.

Friedar’s allegations that jurisdiction may be based on the exceptions to sovereign immunity enumerated in § 1605 are without merit. The Government is entitled to sovereign immunity under § 1604.

B. Act of State Doctrine.

Had I found that the Government was not entitled to immunity under §§ 1604-1605,1 would nevertheless dismiss the case under the Act of State doctrine, which holds that one country’s courts should not judge the acts of a foreign state executed within the foreign state’s borders. The Act of State doctrine, unlike a determination of jurisdiction under FSIA, is discretionary in its application. Asociacian de Reclamantes v. United Mexican States, 561 F.Supp. 1190, 1199 (D.D.C.1983) , aff'd., 735 F.2d 1517 (D.C.Cir.1984). The doctrine developed from the recognition of the politically sensitive nature of judging the validity of acts by a foreign state and the relative institutional competence of the judiciary to make such a determination. International Assoc. of Machinists and Aerospace Workers v. OPEC, 649 F.2d 1354, 1358 (9th Cir.1980).

A determination regarding veterans’ benefits in the United States is precluded from judicial review. 38 U.S.C. §211. It would be presumptuous for a United States court to review a foreign state’s internal administrative activity, especially when identical activity by the United States government would not be subject to judicial review. I find this suit inappropriate for adjudication by United States courts.

Accordingly, the Government’s motion to dismiss is granted.

SO ORDERED.

      . Attached to the attorney’s affidavit are copies of letters from the Israeli Consul in New York bearing July, 1983 and January, 1984 dates, but these letters merely authorize examinations and consultations of Friedar and state that treatment will require separate authorization.

      . Section 1605 provides in part:
      (a) A foreign state shall not be immune from the jurisdiction of the courts of the United States ... in any case — ...
      (2) in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a foreign commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.

      . Section 1605(a)(3) & (4) denies immunity in cases:
      (3) in which rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in commercial activity in the United States;
      (4) in which rights in property in the United States acquired by succession or gift or rights in immovable property situated in the United States are in issue.

      . Indeed, the Second Circuit recently held that, where the Court affirms the district court’s dismissal of the complaint on Act of State grounds, it need not consider whether the defendant is immune from suit under FSIA. Braka v. Bancomer, S.N.C., 762 F.2d 222, 224 (2d Cir.1985).

      . I further note that the difficulty of trying this case in United States courts would justify a dismissal on forum non conveniens grounds.


author: FOREMAN, Chief Judge:

text:
    David VAN RYN, et al., Plaintiffs, v. The COUNTY OF FRANKLIN, a body politic and corporate, et al., Defendants.
    Civ. No. 84-4289.
    United States District Court, S.D. Illinois, Benton Division.
    July 26, 1985.
    Robert P. Schulhoff, Robert P. Schulhoff & Assoc., Carbondale, Ill., for plaintiffs.
    Terry M. Green, State’s Atty., Benton, Ill., Charles R. Jelliffe, Jelliffe, Ferrell & Morris, Harrisburg, Ill., for defendants.
   MEMORANDUM AND ORDER

FOREMAN, Chief Judge:

Before the Court is defendants’ Motion to Dismiss. On June 20, 1984, plaintiffs filed this action alleging that their civil rights were violated when the Franklin County Sheriff terminated their employment on November 25, 1980. According to plaintiffs, they were discharged for having filed a grievance with the Department of Labor. Count I is brought under 42 U.S.C. § 1983; Counts II and III invoke pendent jurisdiction over claims involving the Illinois Constitution and the tort of retaliatory ■ discharge. Defendants, relying on Wilson v. Garcia, — U.S.-, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985), contend that the § 1983 claim is barred by Illinois’ two-year limitations period for personal injuries. For the following reasons, this Court holds that plaintiffs’ § 1983 claim is time-barred under the limitations period for personal injuries found at Ill.Rev.Stat. ch. 110, 1113-202.

As Congress has not established a specific statute of limitations applicable to § 1983 actions, courts are directed to borrow and apply the most appropriate state statute of limitations. Burnett v. Grattan, — U.S. -, 104 S.Ct. 2924, 82 L.Ed.2d 36 (1984); Board of Regents v. Tomanio, 446 U.S. 478, 100 S.Ct. 1790, 64 L.Ed.2d 440 (1980); Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 95 S.Ct. 1716, 44 L.Ed.2d 295 (1975). The United States Supreme Court has held that for the purpose of § 1983 claims, the state limitations statute governing personal injury action constitutes the most appropriate statute of limitations to be borrowed. Wilson v. Garcia, — U.S. -, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985). In Illinois, a two-year limitations period has been adopted for personal injury claims. 111. Rev.Stat. ch. 110, ¶ 13-202.

Prior to the clarification in Wilson v. Garcia, — U.S.-, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985), the Seventh Circuit Court of Appeals, in an attempt to determine the most analogous state limitations period, considered claims such as those of plaintiffs in the instant case to be governed by Illinois’ five-year catch-all period found in Ill.Rev.Stat. ch. 110, If 13-205. See, e.g., Kolar v. County of Sangamon, 756 F.2d 564 (7th Cir.1985); Sack Brothers Loan Co., Inc. v. Cunningham, 578 F.2d 172 (7th Cir.1978); Teague v. Caterpillar Tractor Co., 566 F.2d 7 (7th Cir.1977); Beard v. Robinson, 563 F.2d 331 (7th Cir.1977). The Seventh Circuit appears to recognize that, even as to actions initiated prior to Wilson v. Garcia, — U.S.-, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985), the “state statute of limitations that the federal courts must borrow in a section 1983 suit is the statute of limitations for personal-injury suits.” Bailey v. Faulkner, 765 F.2d 102, 103 (7th Cir.1985). This position is consistent with recent decisions rendered in other circuits which have applied personal injury limitations periods to actions filed prior to the Supreme Court’s decision in Wilson. See, e.g., Jones v. Preuit & Mauldin, 763 F.2d 1250 (11th Cir.1985); Johnson v. Swyka, 763 F.2d 602 (3d Cir.1985); Burkhart v. Randles, 764 F.2d 1196 (6th Cir.1985); Serrano v. Torres, 764 F.2d 47 (1st Cir.1985); Smith v. City of Pittsburgh, 764 F.2d 188 (3d Cir.1985); Acoff v. Abston, 762 F.2d 1543 (11th Cir.1985); Knoll v. Springfield Township School District, 763 F.2d 584 (3d Cir.1985).

In Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07, 92 S.Ct. 349, 355-56, 30 L.Ed.2d 296 (1971), the Supreme Court advanced a three-part analysis to determine whether rulings as to applicable statutes of limitations should be applied retrospectively. The factors to be considered include: the extent of change from established prior law; the purpose and effect of the rule in question and whether retrospective application would advance or retard this purpose; and the equities of retrospective application. Although the Seventh Circuit has not yet specifically addressed these factors in light of the Supreme Court’s decision in Wilson, the Third Circuit, in Smith v. City of Pittsburgh, 764 F.2d 188, at 194-197, considered these factors in depth and determined that restricting the holding in Wil son to prospective application was not warranted.

Regarding the first factor, the change from prior law, the rationale set forth in Wilson clearly indicates that Congress originally intended to characterize § 1983 as providing a remedy for personal injuries sounding in tort. In rejecting the theory that the choice of the statute of limitations depends on the particular facts of each claim, the Wilson Court noted, “there is no reason to believe that Congress would have sanctioned this interpretation of its statute.” — U.S.-, 105 S.Ct. at 1946. In light of the Wilson rationale, as well as the mass confusion and general lack of consistency regarding the selection of state statutes of limitation under § 1988, it cannot be said that the Wilson Court’s decision overruled clear past precedent or decided an issue of first impression whose resolution was not clearly foreshadowed. The Supreme Court’s intention that its decision in Wilson should be applied retrospectively is further evinced by its remanding of two cases to the Third Circuit for further consideration in light of Wilson v. Garcia, — U.S. -, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985). Swyka v. Johnson, — U.S.-, 105 S.Ct. 2108, 85 L.Ed.2d 474 (1985); Springfield Township School District v. Knoll, — U.S. -, 105 S.Ct. 2065, 85 L.Ed.2d 275 (1985).

The Wilson Court was also clear that the purpose of its decision is to provide for “uniformity within each state ... consistent with the borrowing principle contained in § 1988.” — U.S. -, 105 S.Ct. at 1947. To hold that claims for relief which accrued before April 17, 1985, or actions filed before April 17,1985, are viable under various statutes of limitations, but that identical claims are subject to only the personal injury limitation by virtue of the time of filing, would certainly not advance the purpose underlying the ruling in Wilson and would, in fact, retard this purpose.

In reference to the third factor in the Chevron analysis, the equities of retrospective application, it cannot be said in the instant case that plaintiffs relied on a five-year limitations period. According to plaintiffs, immediately upon their discharge from employment they took their cases to an attorney who was later disbarred before having filed an action on their behalf. In 1984, upon finding that their suit had not been filed, they approached another attorney, who filed the instant action. It appears that plaintiffs’ reliance was misplaced as regards the conduct of their initial attorney, not as regards the limitations period. In any event, the Supreme Court in Wilson noted that “Plaintiffs may be denied their just remedy if they delay in filing their claims, having wrongly postulated that the courts would apply a longer statute.” — U.S.-, 105 S.Ct. at 1947 n. 34.

The above application of the Chevron factors is consistent with a similar Seventh Circuit analysis regarding retroactive application of a Supreme Court statute of limitations decision. The court in Landahl v. PPG Industries, Inc., 746 F.2d 1312 (7th Cir.1984), held that the six-month limitations period prescribed in DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983), should be applied retroactively. The Landahl court examined the Chevron factors and determined that the confusion and conflict among the circuits regarding the appropriate statute of limitations to be applied in employment discharge cases involving violations of § 301 of the Labor Management Relations Act was merely clarified by DelCostello, which did not therefore represent a “clean break” with past precedent. Landahl, 746 F.2d at 1314-15. Further, the DelCostello rule had been adopted to provide uniformity; giving retroactive, effect to the DelCostello rule would further this purpose. Id., at 1315. Finally, although plaintiff in Landahl had filed his suit within fifteen months, the court found “no equitable factor that would support a nonretroactive application.” Id., at 1316. The Landahl court also found persuasive the fact that other courts of appeals had decided in favor of retroactive application. An analysis parallel to the above would apply to the instant case.

The Court is convinced that the principles set forth in Wilson v. Garcia, — U.S. -, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985), are applicable to the instant action. As this claim was filed approximately three-and-one-half years after it accrued, it is time-barred under the two-year personal injury limitations period set forth at Ill.Rev.Stat. ch. 110, ¶ 13-202.

Accordingly, defendants’ Motion to Dismiss (Document No. 20) is hereby GRANTED; this action is hereby DISMISSED.

IT IS SO ORDERED.