author: TURK, Chief Judge.

text:
    Brenda E. WRIGHT, et al., Plaintiffs, v. CITY OF ROANOKE REDEVELOPMENT AND HOUSING AUTHORITY, Defendant.
    Civ. A. No. 82-0908.
    United States District Court, W.D. Virginia, Roanoke Division.
    Dec. 21, 1984.

      Henry L. Woodward, Claude M. Lauck, Legal Aid Society of Roanoke Valley, Roanoke, Va., for plaintiffs.
    Thomas T. Lawson, Bayard E. Harris, Mary M. Hutcheson, Woods, Rogers, Muse, Walker & Thornton, Roanoke, Va., for defendant.
   MEMORANDUM OPINION

TURK, Chief Judge.

On December 8, 1982, Plaintiffs, who are tenants of public low-cost housing, filed suit in this court against their landlord, the City of Roanoke Redevelopment and Housing Authority (“RRHA”). In their complaint, Plaintiffs alleged that RRHA violated the Brooke Amendment of the United States Housing Act of 1937, 42 U.S.C. § 1437a (1983), and its implementing regulations, 24 C.F.R. §§ 865.470-.482 (1983), in that it had set the utility allowances unreasonably low and failed to revise them, so that RRHA might collect greater excess consumption surcharges from the majority of tenants. They also claimed that RRHA had disregarded federal law prescribing how such allowances are to be maintained. The Brooke Amendment provides that public housing tenants be charged no more than twenty-five to thirty percent of their adjusted income for rent, which by definition includes an established amount of utilities. Plaintiffs based their claims for relief upon 42 U.S.C. § 1983 and the lease contracts between Plaintiffs and Defendant RRHA.

On May 14, 1984, Defendant RRHA moved for judgment on the pleadings, pursuant to Rules 12(c) and (h)(2) of the Federal Rules of Civil Procedure. In its motion, RRHA challenges the legal sufficiency of plaintiffs’ cause of action. RRHA asserts that: 1) the plaintiffs have no private right of action under the Brooke Amendment and that enforcement depends solely on the action of the United States Department of Housing and Urban Development (“HUD”), 2) the Housing Act does not create any substantive rights which would allow the plaintiffs to proceed under § 1983, and 3) HUD is an indispensable party to the action and the plaintiffs’ failure to join it mandates dismissal. Since matters outside the pleadings have been submitted to and considered by this court, the defendant’s motion shall be treated as one for summary judgment and disposed of in accordance with Rule 56 of the Federal Rules of Civil Procedure. See Fed.R.Civ.P. 12(c), 56.

I.

INTRODUCTION

In Home Health Services, Inc. v. Currie, 706 F.2d 497 (4th Cir.1983), a provider of home health services brought suit against a physician and the state medical university for alleged violations of the Medicare Act, 42 U.S.C. § 1395a (1983), and federal civil rights statutes. The Fourth Circuit Court of Appeals found that Home Health had no implied right of action under the Medicare Act, and went on to state that “the conclusion that Home Health has no right of action ... under 42 U.S.C. § 1395a compels the conclusion that Home Health likewise has no cause of action under §§ 1983 and 1985.” Home Health, 706 F.2d at 498. Thus this court feels that under the Fourth Circuit’s analysis, a determination of whether the plaintiffs have been deprived of “rights, privileges, or immunities” within the meaning of § 1983 should begin with a determination of whether an implied right of action exists under the Brooke Amendment.

II.

PRIVATE RIGHT OF ACTION UNDER THE BROOKE AMENDMENT

In determining whether a private right of action may be implied from a statute when legislation does not provide expressly for such a remedy, a court must focus on congressional intent. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 377, 102 S.Ct. 1825, 1838, 72 L.Ed.2d 182 (1982). Since 1975, the prevailing standard for determining whether Congress intended to imply such a right of action is that set forth in Cort v. Ash:

First, is the plaintiff “one of the class for whose especial benefit the statute was enacted” ... that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? ... Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? ... And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal laws?

422 U.S. 66, 78, 95 S.Ct. 2080, 2088, 45 L.Ed.2d 26 (1975) (citations omitted). Although later cases favored a somewhat different but related approach, see, e.g., Transamerica Mortgage Advisor, Inc. (TAMA) v. Lewis, 444 U.S. 11, 15-16, 100 S.Ct. 242, 245, 62 L.Ed.2d 146 (1979); Touche Ross & Co. v. Redington, 442 U.S. 560, 568, 99 S.Ct. 2479, 2485, 61 L.Ed.2d 82 (1979), the Supreme Court has recently reaffirmed the use of the Cort analysis. Daily Income, Inc. v. Fox, 464 U.S. 523, 104 S.Ct. 831, 839, 78 L.Ed.2d 645 (1984).

The first inquiry under Cort is whether Congress intended to create a special class of beneficiaries which includes the plaintiffs, and, if so, whether Congress intended to confer federal rights upon such beneficiaries. In construing sections 1437c and 1441, two general policy sections of the Housing Act, the Fourth Circuit Court of Appeals determined that: “First, the purpose of the legislation was to help the states; second, the purpose in helping the states was ultimately to benefit low income families. Thus the legislation had two beneficiaries-states as direct beneficiaries and low-income families as indirect beneficiaries.” Perry v. Housing Authority of City of Charleston, 664 F.2d 1210, 1213 (4th Cir.1981). The Perry court also found that “[t]here is clearly no indication in the legislation or in [the] history [of the Housing Act] that Congress intended to create in public housing tenants a federal right of action against their municipal landlords.” Id.

The court, combining factors three and four of the Cort analysis, determined that:

it would plainly be inconsistent with any legislative scheme in the federal legislation to imply a private cause of action where the legal right involved is one traditionally left to state law. It would be hard to find an area of the law in which the states have a greater interest or have had greater involvement than in the legal area of landlord-tenant.

Id. at 1216. Thus, the court held that there was no implied cause of action under the Housing Act against a local housing authority.

In applying the Cort analysis to the provisions of the Brooke Amendment, this court sees no reason to deviate from the conclusions reached by the Fourth Circuit in Perry. The Brooke Amendment provided, at the time this suit was filed:

(a) Dwelling units assisted under this Act shall be rented only to families who are lower income families at the time of their initial occupancy of such units. A family shall pay as rent for a dwelling unit assisted under this Act the highest of the following amounts, rounded to the nearest dollar:
1) 30, per centum of the family’s monthly adjusted income;
2) 10 per centum of the family’s monthly income; or
3) if the family is receiving payments for welfare assistance from a public agency and a part of such payments, adjusted in accordance with the family’s actual housing costs, is specifically designated by such agency to meet the family’s housing costs, the portion of such payment which is so designated.

42 U.S.C. § 1437a(a) (1983). This relevant portion of the Brooke Amendment sets a limit on rent chargeable to tenants of low income housing. By definition, this rent includes utilities in an amount not to exceed that set by the Housing Authority, 24 C.F.R. §§ 860.403(a), 865.472 (1983), and approved by HUD. 24 C.F.R. § 865.473 (1983). The Brooke Amendment provisions apply only to lower income families who rent “dwelling units assisted under [the United States Housing] Act [of 1937].” 42 U.S.C. § 1437a(a) (1983) (emphasis added). Plaintiffs concede that the Housing Authority operates “its projects with federal subsidy pursuant to an Annual Contribution Contract” from HUD, and that “HUD retains general enforcement authority.” Plaintiffs’ Brief in Support of Summary Judgment p. 3, 18. Thus, although low income families are certainly one of the beneficiaries of the Brooke Amendment, they are not the only beneficiaries. Consistent with the other provisions of the Housing Act, “the legislation had two beneficiaries—states as direct beneficiaries and low-income families as indirect beneficiaries.” Perry, 664 F.2d at 1213.

Although finding that an implied right of action existed under the Brooke Amendment against HUD, the United States Court of Appeals for the Sixth Circuit, in Howard v. Pierce, 738 F.2d 722 (6th Cir.1984), “could discern no justification for extending such a cause of action to a public housing agency....” Id. at 730. In so holding, the Sixth Circuit, applying the second Cort factor, found that “nowhere in the legislative history ... [was there] an expression of intent either to provide or deny a private means of enforcing the Brooke Amendment.” Id. at 727. As the Fourth Circuit determined in Perry, “Congress need not fear that unless it specifically denies a cause of action, the courts will automatically imply one; when Congress is silent there is no presumption in favor of a legislatively created cause of action.” Perry, 664 F.2d at 1213. Thus, under the Cort analysis, this court holds that there exists no implied right of action under the Brooke Amendment against a public housing authority such as RRHC.

III.

CAUSE OF ACTION UNDER 42 U.S.C. § 1983

42 U.S.C. § 1983 provides for the redress of deprivations of rights secured by the United States Constitution or statutes under color of state law. Though there is no constitutional right to the housing involved here and thus no constitutional violation, Lindsey v. Normet, 405 U.S. 56, 74, 92 S.Ct. 862, 874, 31 L.Ed.2d 36 (1972), the Supreme Court has recognized that a § 1983 action may be based solely upon a violation of a federal statutory right. Maine v. Thiboutot, 448 U.S. 1, 100 S.Ct. 2502, 65 L.Ed.2d 555 (1980). In order to prevail under a purely statutory-based § 1983 claim, however, the court must determine “[f]irst, whether Congress, in enacting the statute, manifested in the statute itself an intent to foreclose its private enforcement [and] [s]econd, whether the statute is of a kind aimed at creating enforceable ‘rights’ under § 1983.” Phelps v. Housing Authority of Woodruff, 742 F.2d 816, 820 (4th Cir.1984); Middlesex City Sewage Authority v. National Sea Clammers Association, 453 U.S. 1, 17, 20, 101 S.Ct. 2615, 2624-2626, 69 L.Ed.2d 435 (1981). Failing either of these, there can be no cause of action under § 1983. Pennhurst State School and Hospital v. Halderman, 451 U.S. 1 at 18, 101 S.Ct. 1531 at 1540, 67 L.Ed.2d 694 (1981).

An analysis of the language of the statute itself shows that there is no explicit denial of private enforcement; however, this court is of the opinion that Congress has evinced, in the implementing regulations of the Brooke Amendment, an intent to foreclose private enforcement. The implementing regulations provide two means by which utilities may be provided: PHA-Furnished Utilities and Tenant Purchased Utilities.

Allowances for PHA-Furnished Utilities represent the maximum consumption units (e.g., kilowatt hours of electricity), which may be used by a dwelling unit without a surcharge for excess consumption against the tenant. Allowances for Tenant-Purchased Utilities represent fixed dollar amounts which are deducted from the Gross Rent otherwise chargeable to a tenant who pays the actual Utility charges directly to the Utility suppliers whether they be more of [sic] less than the amounts of the Allowances.

24 C.F.R. § 865.470 (1983). These regulations provide for relief from excess charges of both PHA-Furnished and Tenant Purchased Utilities where a possible defect in the utility meter or error in the meter reading is involved, and in the case of PHA-Furnished utilities, if there is a defect in the dwelling. 24 C.F.R. § 865.481(a)(1), (a)(2) (1983). However, requests for relief from excess consumption on the grounds “that the utility consumption exceeds the applicable Allowance by 20 percent or more for reasons other than wasteful or unauthorized usage” are permitted “[i]n the case of Tenant-Purchased utilities only.” 24 C.F.R. § 865.481(a)(3) (1983). Since the HUD regulations permit such requests for relief to be submitted to the PHA solely in the case of Tenant-Purchased Utilities, it is clear that such requests are foreclosed in a case such as this involving PHA-Furnished Utilities. Because Congress has “manifested an intent” to foreclose private enforcement, the plaintiffs have no enforceable rights within the meaning of section 1983 against a public housing authority such as RRHC.

Secondly, although the Brooke Amendment clearly manifests congressional intent to benefit generally tenants of public housing, its chosen means of accomplishing that end is for HUD, rather than the tenants themselves, to enforce the statutory requirements. RRHA operates its projects with federal subsidies pursuant to an Annual Contributions Contract [“ACC”] “whereby HUD agrees to provide financial assistance and [RRHA] agrees to comply with HUD requirements for the development and operation of a public housing project.” 24 C.F.R. § 841.103. Plaintiffs allege that RRHA has failed to follow federal law prescribing how utility allowances are to be set and maintained. If RRHA has indeed breached any of the conditions of the Annual Contributions Contract, HUD has “the right ... to maintain any and all actions at law or in equity against the Local Authority to enforce the correction of any such default or to enjoin any such default or breach.” HUD Annual Contributions Contract § 508. “In sum, the whole of the legislative scheme ... indicates Congress’s intention that HUD should continue to enforce required conditions by means of asserting its rights under the ACC, thereby intending ‘to foreclose private enforcement’ of the requirements of the Housing Act.” Phelps v. Housing Authority of Woodruff, 742 F.2d 816, 821 (4th Cir.1984).

Even were the implementing regulations of the Brooke Amendment and the provisions of the ACC found not to foreclose private enforcement, the Fourth Circuit Court of Appeals has determined that in order for a violation of a federal statute to create “rights, privileges, or immunities” within the meaning of § 1983, it must at the least be of a kind that gives rise to an implied cause of action. In Perry, the court determined that the Housing Act did not create rights enforceable in private actions under § 1983. Although it could be argued that the provisions involved here are more specific than those in Perry and thus create such enforceable rights, this court must reject such a narrow interpretation of Perry in view of the fact that the Court of Appeals did not specifically limit its ruling to the provisions involved. If there were any doubt as to the principle enunciated in Perry, it was dispelled by the holding in Home Health that “the conclusion that Home Health has no [implied] right of action ... under 42 U.S.C. § 1395a compels the conclusion that Home Health likewise has no cause of action under §§ 1983 and 1985.” Home Health, 706 F.2d at 498. (emphasis added).

Because this court finds that the plaintiffs have failed to state a cause of action under 42 U.S.C. § 1983, the defendant’s Motion for Summary Judgment must be GRANTED. Each side shall bear its own taxable costs. An accompanying order shall be entered this day.

The Clerk of Court is directed to send certified copies of this opinion to counsel of record.

      . On August 10, 1983, this action was certified as a class action, the class being comprised of tenant families in seven projects of public housing in the City of Roanoke.

      . Gross rent is the amount of rent chargeable to a tenant for the use of the dwelling accommodation, equipment, ... services, and Utilities not to exceed the Allowances for PHA-Furnished Utilities.... 24 C.F.R. § 865.472. Allowances for Public Housing Authority ("PHA”)-Furnished Utilities represent the maximum consumption units (e.g. kilowatt hours of electricity) which may be used by a dwelling unit without a surcharge for excess consumption against the tenant. 24 C.F.R. § 470.

      . The Fourth Circuit cited Perry v. Housing Authority of City of Charleston, 664 F.2d 1210, 1217-18 (4th Cir.1981) as standing for this conclusion.

      . 42 U.S.C. § 1983 provides, in relevant part, that:
      Every person who under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.

      . Annual Contributions Contract ("ACC”)
      A contract (in the form prescribed by HUD) for loans and annual contributions whereby HUD agrees to provide financial assistance and the PHA agrees to comply with HUD requirements for the development and operation of a public housing project.
      24 C.F.R. § 841.103 (1983).

      . Other courts have reached a similar conclusion. See Howard v. Pierce, 738 F.2d 722 (6th Cir.1984); McGhee v. Homing Authority of City of Lanett, 543 F.Supp. 607 (M.D.Ala.1982); Jackson v. Housing Authority of City of Fort Myers, No. 82-136-CIV-A.N.-17 (M.D.Fla. April 4, 1984).

      . Section 5(1) of the Annual Contributions Contract between HUD and RRHA also provides that ‘‘[t]he Local Authority shall ... operate all Projects covered by this Contract in compliance with all provisions of Contract and all applicable provisions of the [United States Housing] Act [of 1937]....” Section 311 allows HUD to inspect and to audit all the books, documents, papers, and records of the Local Authority that are pertinent to its operations with respect to financial assistance under the Act.

      . In Phelps, the Fourth Circuit Court of Appeals also declined to limit its holding in Perry, when it stated that "[a]lthough it might be argued that Perry is distinguishable, since the preference and notice rights [here] are more specific ... we are not persuaded that this distinction is of sufficient moment to alter our conclusion that the defendants’ actions did not deprive the plaintiffs of any ‘rights secured by the ... laws of the United States.’ ”

      . Since this court finds that the plaintiffs have failed to state a claim under § 1983, it is unnecessary to determine whether HUD is an indispensable party to the action. This court also dismisses the plaintiffs’ cause of action based on the defendant's alleged breach of its lease agreements with the plaintiffs, under the doctrine of pendant jurisdiction as set forth in United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966).


source: Caselaw Access Project

author: JUNE L. GREEN, District Judge.

license: Public Domain

text:
    TEXAS INDEPENDENT PRODUCERS LEGAL ACTION ASSOCIATION, Plaintiff, v. INTERNAL REVENUE SERVICE, et al., Defendants.
    Civ. A. No. 83-1029.
    United States District Court, District of Columbia.
    Dec. 21, 1984.
    As Amended April 18, 1985.

      Stephen M. Sacks, James X. Dempsey, Arnold & Porter, Washington, D.C., James Craig Dodd, Jones, Gungoll, Jackson, Collins & Dodd, Enid, Okl., for plaintiff.
    J. Brian Ferrel, Michael J. Kearns, Tax Div., U.S. Dept. of Justice, Washington, D.C., for I.R.S. and Dept. of Treasury.
    Barbara L. Gordon, Christopher A. Kerosky, Civil Division, U.S. Dept. of Justice, Washington, D.C., for Office of Management and Budget, Dept. of Energy, and Presidential Task Force for Regulatory Relief.
   MEMORANDUM OPINION

JUNE L. GREEN, District Judge.

This matter is before the Court on defendants’ respective motions for summary judgment regarding plaintiff’s request for documents under the Freedom of Information Act (“FOIA”), plaintiff’s opposition thereto, defendants’ mutual reply, and the parties’ supplemental responses; plaintiff’s motion for further limited discovery, and defendants’ opposition thereto; plaintiff’s motion to amend its complaint, defendant Department of the Treasury’s (“Treasury”) opposition thereto, and plaintiff’s reply; and the entire record herein.

For the reasons stated below, the Court grants defendants’ motions for summary judgment, and denies plaintiff’s motions for further limited discovery and to amend its complaint.

I.

Statement of Facts

On March 7, 1983, plaintiff filed a written FOIA request with defendants Internal Revenue Service (“IRS”) and Treasury, and five other federal agencies. Plaintiff requested access to agency documents pertaining to the development of two proposed Treasury regulations: (1) a proposed regulation defining oil from a stripper well property for purposes of the windfall profit tax, 48 Fed.Reg. 2552 (1983) (to be codified at 26 C.F.R. § 51); and (2) a proposed regulation defining “property” for purposes of the windfall profit tax, 47 Fed. Reg. 50,924 (1982) (to be codified at 26 C.F.R. § 51).

The request was specifically for, inter alia, “all written documents of whatever type or kind, including, but not limited to, all correspondence, notes, position papers, reports and memoranda generated by, received by, or relied upon by any designated agencies in any manner whatsoever in connection with the consideration or promulgation of the proposed rule[s].” Plaintiff’s Memorandum in Opposition to the Motions for Summary Judgment by the IRS and the Treasury, and in Support of Plaintiff’s Motion for In Camera Inspection and Request for Further Limited Discovery (“Plaintiff’s Opposition”) at 2.

Having received no response from the agencies, plaintiff filed the instant action on April 8, 1983, seeking injunctive and declaratory relief. Complaint for Injunctive and Declaratory Relief ¶¶ 22-38. Concurrently, plaintiff filed a motion for preliminary injunction and thereafter a motion for a temporary restraining order to enjoin defendant IRS from conducting a public hearing on the proposed regulation defining oil from a stripper well. Plaintiffs Motion for Preliminary Injunction at 1-2.

The Court denied the motions to enjoin, but granted plaintiffs companion motion for a Vaughn index and required defendants to prepare expeditiously a detailed justification, itemization, and index of the withheld documents.

On May 9, 1983, defendants IRS and Treasury answered the complaint and claimed as affirmative defenses that the documents were withheld properly under the deliberative process privilege, 5 U.S.C. § 552(b)(5) (1977), and that five documents also were protected from disclosure as taxpayer return information, 26 U.S.C. § 6103 (1980). Answer of IRS at 4; Answer of Treasury at 3.

Plaintiff thereafter filed a motion for in camera inspection of the withheld documents and requests for admissions and interrogatory against defendant IRS. Defendant admitted each request, claiming that it did not possess any documents relating to the proposed regulations that contained technical or scientific information, potential economic impact studies, cost/benefit analysis, potential revenue enhancement capacity studies, an intention to generate additional tax revenue, or ongoing or troublesome litigation of the June 1979 Energy Regulations. Responses to Requests for Admissions of Fact (filed July 8, 1983).

Defendants IRS and Treasury then filed the instant motions for summary judgment. Subsequently, plaintiff filed a motion to amend its complaint and opposition to defendants’ motions. To assist the Court in its consideration of the summary judgment motions, the Court granted plaintiff’s motion for in camera inspection.

Since the filing of the instant action, defendants have released several requested documents in whole or in part. Statement of IRS of Material Facts as to Which There is No Genuine Issue ¶ 40; Statement of Treasury of Material Facts as to Which There is No Genuine Issue ¶ 40. Another 156 documents or portions thereof remain withheld by defendants.

In their motions, both defendants contend that the requested documents have been withheld properly pursuant to the deliberative process privilege, 5 U.S.C. § 552(b)(5) (1977) (“Exemption 5”). Additionally, defendant IRS claims that five of its documents are protected under the statutory exemption for taxpayer return information, 26 U.S.C. § 6103 (1980).

Plaintiff, however, asserts that the adequacy of defendants’ identification and search processes are genuinely in issue. Specifically, plaintiff argues that material questions are raised by: (1) inadequate Vaughn indices describing the documents; (2) inadequate proof of segregation and disclosure of purely factual information and expert names and opinions; (3) inadequate affidavits describing the retrieval process; (4) inconsistencies in the Vaughn indices and defendant IRS’s answers to the requests for admissions; and (5) defendants’ creation of “secret” working agency law to avoid compliance with Executive Order 12,291, 46 Fed.Reg. 13,193 (1981).

Plaintiff contends that these FOIA violations preclude the Court from granting the motions for summary judgment and require further limited discovery by plaintiff.

II.

Conclusions of Law

As in other Federal cases, the Court may grant summary judgment in a FOIA case only if the moving party proves that no substantive and material facts are in dispute and that the movant is entitled to summary judgment as a matter of law: Fed.R.Civ.P. 56; Perry v. Block, 684 F.2d 121, 126 (D.C.Cir.1982).

To meet this standard, the burden is on defendants to prove that all the requested documents either have been produced, are unidentifiable, or are wholly or partially exempt from disclosure. The Court must rely on government affidavits and Vaughn indices describing the withheld documents to determine the adequacy of agency identification and retrieval efforts. Accordingly, the affidavits and in-dices “ ‘must be relatively detailed and noneonclusory and must be submitted in good faith.’ ” Perry v. Block, 684 F.2d at 126 (quoting Goland v. Central Intelligence Agency, 607 F.2d 339, 352 (D.C.Cir.1978), cert. denied, 445 U.S. 927, 100 S.Ct. 1312, 63 L.Ed.2d 759 (1980)).

“[I]f the sufficiency of the agency’s identification or retrieval procedure is genuinely in issue, summary judgment is not in order.” Founding Church of Scientology of Washington, D. C. v. National Security Agency, 610 F.2d 824, 836 (D.C.Cir.1979). Even if the agency submits sufficiently detailed affidavits and indices, the requester of documents may nonetheless produce countervailing evidence that places the agency’s identification or retrieval process genuinely in issue. Id.

The Court will consider whether defendants have met their burden of establishing proper nondisclosure under Exemption 5 and section 6103, and will address each of plaintiff’s challenges to defendants’ identification and retrieval procedures.

A. Exemption 5

Exemption 5 of FOIA permits agencies to withhold “inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency." 5 U.S.C. § 552(b)(5) (1977).

The United States Supreme Court has held that this exemption protects the “ ‘decision making processes of government agencies’ ” and includes documents “ ‘reflecting advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated.’ ” National Labor Relations Board v. Sears, Roebuck & Co., 421 U.S. 132, 150, 95 S.Ct. 1504, 1516, 44 L.Ed.2d 29 (1975) (citations omitted).

The policy behind the exemption is to avoid inhibiting the “ ‘frank discussion of legal or policy matters’ in writing” and thus adversely affecting the quality of agency decisions and policies. Id. (Citation omitted).

But the exemption is limited to prevent unnecessary withholding of agency documents. Congress “expressly intended ‘to delimit the exception [5] as narrowly as consistent with efficient Government operation.’ ” Environmental Protection Agency v. Mink, 410 U.S. 73, 89, 93 S.Ct. 827, 837, 35 L.Ed.2d 119 (1973) (quoting S.Rep. No. 813, p. 9); see H.R.Rep. No. 1497, p. 10, U.S.Code Cong. & Admin.News 1966, pp. 2418, 2427. Therefore, Exemption 5 does not protect post-decisional communications, which explain agency action already taken or a decision already made. Nor may the agency withhold documents that have the force or effect of agency law. “Exemption 5, properly construed, calls for ‘disclosure of all opinions and interpretations which embody the agency’s effective law and policy, and the withholding of all papers which reflect the agency’s group thinking in the process of working out its policy and determining what its law shall be.’ ” National Labor Relations Board v. Sears, Roebuck & Co., 421 U.S. at 153, 95 S.Ct. at 1517 (quoting Davis, The Information Act: A Preliminary Analysis, 34 U.Chi.L.Rev. 761, 797 (1967)).

In Coastal States Gas Corporation v. Department of Energy, the Court of Appeals for the District of Columbia required documents protected under Exemption 5 to be both predecisional and deliberative. “In deciding whether a document should be protected by the privilege we look to whether the document is ‘predecisional’— whether it was generated before the adoption of an agency policy—and whether the document is ‘deliberative’—whether it reflects the give-and-take of the consultative process.” 617 F.2d 854, 866 (D.C.Cir.1980) (emphasis in original). This analysis requires the Court to consider the purposes of the privilege and decide whether the document is: (1) “so candid or personal in nature that public disclosure is likely in the future to stifle honest and frank communication within the agency;” (2) a recommendation or draft of a final agency decision; or (3) a document weighing the pros and cons of alternative viewpoints. Id.

Important to the Court’s decision is the role that the protected documents play in the administrative process. The documents more likely will be predecisional and deliberative if they are part of a clear decision-making process, if the review procedure flows from subordinate to superior agency officials, and if the documents are neither formally or informally adopted by the agency nor used in dealing with the public. Id. at 866-68; Taxation With Representation Fund v. Internal Revenue Service, 646 F.2d 666, 678-81 (D.C.Cir.1981).

In the instant case, the affidavits submitted with defendants’ motions for summary judgment describe in great detail the agencies’ decision-making processes and the function and significance of the withheld documents. Affidavits of John G. Schmalz and Douglas W. Chamas (attached to Motion by IRS for Summary Judgment); Declaration of Moshe Schuldinger (attached to Motion by Treasury for Summary Judgment).

In summary, the affidavits state that the proposed regulations in question were initially drafted by staff attorneys in the IRS Office of Chief Counsel, Legislation and Regulation Division. Each draft was circulated for review by officials within the IRS, Office of Chief Counsel, and Treasury. After receiving comments on several drafts, final drafts of the Notice of Proposed Rule-making, Policy Memorandum, and Transmittal Memorandum were submitted to and approved by the IRS Commissioner and Assistant Secretary for Tax Policy. The Notice of Proposed Rulemaking was published in the Federal Register. Defendants released the final drafts to plaintiff. Affidavit of John G. Schmalz ¶ 9; Affidavit of Douglas W. Chamas ¶ 11.

Formulation of the proposed regulation defining “property” for purposes of the Windfall Profit Tax Act involved several additional steps because of a disagreement among agency officials as to the proper definition. The IRS Commissioner ordered a survey of the cost and ease of administration of alternative definitions. The issue was resolved by a policy committee for which a memorandum was drafted outlining the various positions. Affidavit of Douglas W. Chamas HU 8-10.

In the Treasury, the Assistant for Energy Tax Policy reviewed and commented on the initial drafts prepared by the IRS attorneys. He forwarded the final drafts to the Deputy Assistant Secretary for Tax Policy and then to the Assistant Secretary for Tax Policy for their successive review and approval. Once approved, the final drafts were submitted to the Executive Secretary to the Secretary of the Treasury to determine if the proposed regulations needed review by the Secretary. Declaration of Moshe Schuldinger ¶ 4.

The affidavits also specifically indicate where each withheld document fits into this decision-making process. In addition, the Vaughn indices more fully describe each document, indicating the source and recipient of the document, the general nature of the contents, and the exemption claimed by the agency. In camera review of a sample of the documents supports defendants’ description of the decision-making process and documents.

Many of the instant documents are similar to the drafts in Arthur Andersen & Co. v. Internal Revenue Service, 679 F.2d 254 (D.C.Cir.1982), which the appellate court upheld as properly exempt.

On [the] face [of the documents] there appear the number, identities and titles of the various persons in successively higher positions to whom the drafts were submitted for “approval” and the alterations these persons made in the text.... Thus, the flow of the documents was from subordinate to superior. Because approval was required at each higher level, all the participants up to the Commissioner were without authority to make a final determination.... A comparison of the successive drafts with each other and with the final revenue ruling reveals no policy or reasons explained in these drafts that were not contained in the ruling ultimately published. The inference we draw from, this is that these documents could not and do not serve as agency “working law,’’ providing substantive guidance in future decisions.

Id. at 259 (emphasis added).

Similarly, the successive drafts with accompanying comments in the instant case do not serve as agency “working law.” Nor do the other withheld documents containing discussions of alternative viewpoints, analyses of key facts supporting a particular position, or personal opinions concerning the content of the proposed regulations. All of these documents were developed and utilized in the decision-making process. Plaintiff presents no evidence that any of these documents will be indexed and consulted as final agency opinions. See Taxation With Representation Fund v. Internal Revenue Service, 646 F.2d at 682-84.

Plaintiff claims that one document described in the supplemental Treasury index is “clear evidence of the defendants’ [secret] working law policies ... to avoid regulatory review of their proposed regulations” under Executive Order 12,291, 46 Fed.Reg. 13,193 (1981). Plaintiff’s Opposition at 34. The document, 17-TD 7690, is described in the index and Treasury affidavit as “the author’s opinion that no regulatory impact statement is required for Treasury regulations under the Crude Oil Windfall Profit Tax Act.” Declaration of Moshe Schuldinger ¶ 11; Supplemental Index by Treasury of Documents at Issue (“Supplemental Index by Treasury”), Document Number 17-TD 7690. The author was was a staff attorney in the Office of the Assistant Secretary for Tax Policy. Id.

In the published Notice of Proposed Rulemaking, the IRS Commissioner stated that a regulatory impact statement was not required under Executive Order 12,291 for the proposed regulation defining oil from a stripper well property. 48 Fed.Reg. 2552, 2553. This, however, is insufficient to prove that the agencies adopted the staff attorney’s opinion that all regulations under the Windfall Profit Tax Act do not require a regulatory impact statement. The document “was prepared to assist Treasury and the Internal Revenue Service in deciding which tax regulations should be subject to regulatory analysis.” Supplemental Index by Treasury, Document Number 17-TD 7690. The Treasury’s affidavit denies that this document constitutes “secret law” of the agency, Affidavit of Mosche Schuldinger ¶ 11, and plaintiff presents no further evidence to the contrary.

The Court, therefore, rejects plaintiff’s contention that secret agency law exists to avoid compliance with Executive Order 12,291.

Although plaintiff does not directly attack the predecisional and deliberative nature of the withheld documents, plaintiff raises several issues concerning the sufficiency of defendants' identification and retrieval procedures.

1. Vaughn Index

First, plaintiff asserts that defendants’ Vaughn indices fail to justify adequately the withholding of requested documents. Plaintiff’s Opposition at 23-28.

To meet the summary judgment standard in FOIA eases, an agency’s Vaughn index “must provide a relatively detailed justification, specifically identifying the reasons why a particular exemption is relevant and correlating those claims with the particular part of a withheld document to which they apply.” Mead Data Central, Inc. v. United States Department of Air Force, 566 F.2d 242, 251 (D.C.Cir.1977).

In the instant case, each defendant submitted a Vaughn index describing the source and recipient, subject matter, and nature of each document. The index also identified the particular exemption claimed and the reasons that the exemption applied. See, e.g., Partial Index by IRS of Documents at Issue.

The Court agrees with plaintiff that the justifications for the exemptions in the Vaughn indices are generally “conclusory statements” consisting of “boilerplate” language. Plaintiff’s Opposition at 25-26. The Court, however, need not rely solely on the indices. The affidavits filed with defendants’ motions for summary judgment detail the decision-making process and identify how each document fits into that process. See supra text at 544.

In addition, in camera review of a sample of the withheld documents indicated that the index and affidavit assertions were “reasonably accurate and specific.” Ash Grove Cement Company v. Federal Trade Commission, 511 F.2d 815, 817 (D.C.Cir.1975). Each document contained the information asserted in the Vaughn indices and fell within the agencies’ decision-making process.

The purpose of detailed identification of the documents is to provide plaintiff with sufficient information to argue effectively against the agencies’ exemption claims. “[L]ack of access of the party seeking disclosure undercuts the traditional adversarial theory of judicial dispute resolution.” Mead Data Central, Inc. v. United States Department of Air Force, 566 F.2d at 250 (citing Vaughn v. Rosen, 484 F.2d 820, 824-25 (D.C.Cir.1973), cert. denied, 415 U.S. 977, 94 S.Ct. 1564, 39 L.Ed.2d 873 (1974)).

The Court finds that defendants’ in-dices and affidavits together identify sufficiently the withheld documents. The agencies need not provide such a detailed justification that the potentially exempt material would be disclosed. Id. at 261.

2. Segregability

Plaintiff also challenges defendants’ proof of the nonsegregable nature of the withheld documents. Plaintiff does not allege, however, that any of the documents specifically contain segregable material. Plaintiff’s Opposition at 18-23.

Exemption 5 is limited to information that would not be available to a private party in litigation with the agency. Purely factual material, therefore, generally would not be protected. Environmental Protection Agency v. Mink, 410 U.S. at 86-88, 93 S.Ct. at 835-836.

But the line between factual and advisory material is not always clear. Exemption 5 protects the deliberative process, not just deliberative material. “In some circumstances, ... the disclosure of even purely factual material may so expose the deliberative process within an agency that it must be deemed exempted by Section 552(b)(5).” Mead Data Central, Inc. v. United States Department of Air Force, 566 F.2d at 256.

Thus, factual material intertwined with the deliberative process is protected. In Brockway v. Department of Air Force, the court upheld the withholding of statements by accident witnesses used to establish appropriate Air Force safety policies. 518 F.2d 1184, 1193-94 (8th Cir.1975). The court based its decision in part on the need to encourage the flow of factual material on which opinions and recommendations are based. Id. Similar reasoning was followed by the Court of Appeals of the District of Columbia in Montrose Chemical Corporation of California v. Train, 491 F.2d 63, 67-68 (D.C.Cir.1974) cert. denied, 421 U.S. 963 (1975) (factual summaries revealing internal selection and judgment process protected by Exemption 5).

In addition, technical or scientific material and expert names and opinions generally are not protected. Opinions of experts outside the agency must be disclosed “unless [they] somehow [reflect] the deliberative process of decision or policy making.” Parke, Davis & Co. v. Califano, 623 F.2d 1, 6 (6th Cir.1980). If the withheld documents are generated by outside parties at the agency’s request, however, the information may be protected. Soucie v. David, 448 F.2d 1067, 1078 n. 44 (D.C.Cir.1971).

Defendants claim that all portions of the withheld documents reflect the decision-making process and, therefore, are exempt. Plaintiff argues that “[i]t is extremely unlikely that none of these pages contain any segregable factual material, technical or scientific information, or comments, opinions or names of expert consultants.” Plaintiff’s Opposition at 21.

Plaintiff’s argument is based on pure speculation and assumptions. Plaintiff has presented no evidence other than titles and sources of documents listed in the Vaughn indices to support its argument. For example, plaintiff assumes a document from the Engineering and Valuation Branch of the IRS contains segregable scientific or technical material. Plaintiff’s Opposition at 7. In contradiction, defendants filed affidavits denying the existence or reliance on scientific or technical information or expert opinions. Affidavit of John G. Schmalz ¶1¶ 6-7, 12-13, 15 (filed Apr. 18, 1983); see Exhibit A to Reply Brief of IRS and Treasury (“Reply Brief”).

In addition, defendants have released factual background material contained in several documents, see, e.g., Documents P28, P38, P48, and in camera review supports defendants’ assertion of nonsegregability.

3. Search Affidavits

Plaintiff’s third contention involves the adequacy of defendants’ search procedure. Plaintiff alleges that defendants failed to submit any affidavits detailing the scope of the search. Plaintiff’s Opposition at 28.

This statement clearly is in error. Defendants submitted two affidavits in April 1983 describing the offices searched in response to plaintiff’s FOIA request. Affidavit of David Mora (filed Apr. 18, 1983); Affidavit of Mary Hevener (filed Apr. 18, 1983). Defendants submitted additional affidavits with their Reply Brief. These new affidavits describe in more detail the search procedure. Exhibits A-B to Reply Brief.

Agency affidavits detailing the method and scope of a search for documents must be sufficiently detailed for appropriate reliance by the Court. The standard, however, is not “meticulous documentation [of] the details of an epic search.” Perry v. Block, 684 F.2d at 127. Rather, the agency need only provide affidavits explaining in “reasonable detail” the scope and method of the search, in absence of countervailing evidence. Id.

Defendants’ affidavits reasonably describe the offices searched and the types of documents sought from each office. Plaintiff presents no countervailing evidence of an inadequate search, other than alleged inconsistencies between the Vaughn indices and IRS responses to requests for admissions. As outlined below, these allegations are either unsubstantiated assumptions or raise immaterial issues of fact.

4. Inconsistencies

Plaintiff contends lastly that defendants’ motions for summary judgment should be denied because alleged inconsistencies between the Vaughn indices and IRS responses to requests for admissions raise substantive questions concerning the sufficiency of the identification and retrieval processes.

Defendant IRS specifically denied the existence of several types of documents in its answers to plaintiff's requests for admissions. Responses to Requests for Admissions of Fact (filed July 8, 1983); see supra text at 542. Plaintiff argues that the titles, sources, and description of certain documents listed in defendants’ Vaughn indices indicate that the denials by the IRS are false. Although not clearly stated, plaintiff apparently concludes that other documents must exist which defendants failed to retrieve or identify. Therefore, summary judgment should be denied and further discovery permitted to determine the existence of additional documents. See Plaintiff’s Opposition at 6-18.

Plaintiff’s argument as to the existence of inconsistencies, however, is not based on facts, but rather on assumptions and speculation that the Vaughn indices contain documents which the IRS denied existed.

Defendants submitted affidavits that documents containing technical or scientific information or an agency intent to increase revenues do not exist. Affidavit of John G. Schmalz (filed Apr. 18, 1983); Declaration of Peter Karpoff (attached to Defendants’ Response to Plaintiff’s Supplemental Memorandum in Opposition to Motion for Summary Judgment). In camera review of the questioned documents further supports the inadequacy of plaintiff’s allegation of inconsistencies. None of the documents reviewed contained information which the IRS denied existed.

Even if some or all of the denied documents existed, the inconsistencies would be insufficient to raise a genuine issue of material fact. Defendants identified the documents retrieved and claimed exemptions. The possible existence of other documents does not necessarily place the retrieval and identification processes in issue. “The issue [is] not whether any further documents might conceivably exist but whether [the agencies’] search for responsive documents was adequate.” Goland v. Central Intelligence Agency, 607 F.2d 339, 369 (D.C.Cir.1978), cert. denied, 445 U.S. 927, 100 S.Ct. 1312, 63 L.Ed.2d 759 (1980) (emphasis omitted). An agency need only conduct a “reasonable” search for documents and is not responsible for “reorganiz[ing] its filing system in response to each FOIA request.” Id. at 370; Founding Church of Scientology of Washington, D.C., Inc. v. National Security Agency, 610 F.2d at 837. The Court has found defendants’ search affidavits to be sufficient proof of adequate retrieval procedures.

B. Section 6103

Defendant IRS also claims exemption of five documents pursuant to 26 U.S.C. § 6103 (1980). All but one of the documents is covered under the deliberative process privilege of Exemption 5. See Document P62.

Defendant IRS claims that the documents contain taxpayer return information, which is protected from disclosure under section 6103. Motion by IRS for Summary Judgment at 10.

Section 6103 prohibits the disclosure of tax returns and return information except as specifically authorized by the statute. 26 U.S.C. § 6103(a). Return information is defined as, inter alia, a taxpayer’s identity, information that a particular return is being examined, and any other information received, gathered, or developed during an audit or investigation. Id. at § 6103(b)(2). The statute does not authorize disclosure to plaintiff. Id.

The proper statutory construction of section 6103 has been debated in the courts. Although the decisions are not uniform, this Court has held that release of tax return information does not fall under FOIA, but is governed exclusively by section 6103. Zale Corporation v. United States Internal Revenue Service, 481 F.Supp. 486, 490 (D.D.C.1979) (Gesell, J.); but c.f. Kanter v. Internal Revenue Service, 433 F.Supp. 812, 824 n. 21 (N.D.Ill.1977). Under the statute, the agency has the duty to determine what information falls under the exemption provisions. Thereafter, the requester of documents has the burden of showing that the agency’s determination was arbitrary or capricious. Zale Corporation v. United States Internal Revenue Service, 481 F.Supp. at 490.

Plaintiff does not dispute the agency’s determination that the five documents contain privileged tax return information. Plaintiff’s challenges to the sufficiency of the identification and retrieval processes do not apply to section 6103.

The Court finds that defendants’ have met their burden for summary judgment as to all requested documents. Plaintiff’s arguments each standing alone fail to raise any substantive material questions of fact. Nor is the cumulative effect sufficient to deny defendants’ motions for summary judgment.

The Court, therefore, grants the motions for summary judgment and denies the motions of plaintiff for further discovery and to amend the complaint.

      . A public hearing on the proposed regulation defining oil from a stripper well occurred on April 27, 1983. Plaintiffs representative was present and spoke in behalf of plaintiff. Answer of IRS ¶ 40. A hearing on the proposed regulation defining "property” took place on March 1, 1983, before plaintiff filed the instant action.

      . An index of withheld documents detailing the justification for exemption claims is required under Vaughn v. Rosen, 484 F.2d 820 (D.C.Cir.1973), cert. denied, 415 U.S. 977, 94 S.Ct. 1564, 39 L.Ed.2d 873 (1974).

      . Pursuant to Executive Order 12,291, the Treasury signed a Memorandum of Agreement which requires the agency to alert the Office of Management and Budget to any major regulation, or "non-major regulation that reasonably could be expected to have a significant economic impact.” Exhibit 34 to Plaintiff’s Opposition.


author: RICHARD C. FREEMAN, District Judge.

text:
    Dann S. SHEFTELMAN, Individually and on behalf of all others Similarly Situated, Plaintiff, v. Allen O. JONES, et al., Defendants. Allen O. JONES and James E. Dorsey, Third-Party Plaintiffs, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Third-Party Defendant.
    No. C84-472A.
    United States District Court, N.D. Georgia, Atlanta Division.
    Dec. 26, 1984.

      J. Vernon Patrick, Jr., Patrick & Associates, Birmingham, Ala., Emmet J. Bondurant and Karen B. Bragman, Bondurant, Miller, Hishon & Stephenson, Atlanta, Ga., for defendants Holland and Knight.
    Jack H. Watson, Jr., Phillip A. Bradley; Long & Aldridge, Atlanta, Ga., for defendants Kutak, Rock and Huie.
    C.B. Rogers and James W. Beverage, Rogers & Hardin and Richard H. Sinkfiel, Atlanta, Ga., for defendants Royal Care Communities, Ltd., Royal Care Communities, Inc., Jones, Clark, Dorsey, Fortune & Foundation Investors.
    Harold Wilson Whiteman, Jr., Michael Gorby, Fain, Gorby, Reeves & Moraitakis, P.C., Atlanta, Ga., R. Bruce McNew, Nicholas E. Chimicles, Greenfield, Chimicles & Lewis, Haverford, Pa., for plaintiff.
    Mary E. Mann, J. Alexander Porter, As-bill, Porter, Churchill, & Nellis, Atlanta, Ga., for defendants Hereth, Orr and Jones, Jack Hereth and Finerock Corp.
    F. Carlton King, Doster, Allen & King, Atlanta, Ga., for defendants Rice and McElroy.
    Peyton S. Hawes, Jr., Cofer, Beauchamp & Hawes, Atlanta, Ga., Richard P. McElroy, Alexander D. Bono, Blank, Rome, Comisky & McCauley, Philadelphia, Pa., Ian M. Comisky, Blank, Rome, Comisky & McCauley, West Palm Beach, Fla., for defendants Laventhol and Horwath.
    H. Sanders Carter, Jr., Carter, Ansley, Smith & McLendon, Atlanta, Ga., for defendants Cobb and Cole.
    John T. Marshall, Thomas S. Richey, Powell, Goldstein, Frazer & Murphy, Atlanta, Ga., for defendants Arnold, Golden and Grego and James E. Dorsey.
    Richard H. Martin, Pittsburgh, Pa., for defendant Mahai Marcu.
    John A. Howard, Andrew J. Hinton, Fortson & White, Atlanta, Ga., for plaintiff D. Sheftelman.
    David A. Handley, Smith, Gambrell, Russell, Martin, Atlanta, Ga., for Nat. Union Fire Ins.
    J. Kirk Quillian, Troutman, Sanders, Lockerman & Ashmore, Atlanta, Ga., for defendants Yankelovich, Skelly and White.
    Kirk M. McAlpin, Jr., Peter J. Anderson, Louise Bailey, Peterson, Young, Self & Asselin, Atlanta, Ga., for defendant Newton.
   ORDER

RICHARD C. FREEMAN, District Judge.

This is an action by a purchaser of certain bonds sold to finance the development of a life care project in Winter Haven, Florida. In the Amended Complaint the plaintiff asserts claims against all the defendants pursuant to Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b); Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a); the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq. Plaintiff also presents claims based upon negligent misrepresentation. As to some defendants the plaintiff alleges violations of the controlling person provision of section 15 of the Securities Act of 1933 and Section 20(a) of the Securities Exchange Act of 1934. The action is now before the court on the joint motions of defendants to dismiss certain portions of the amended complaint, the plaintiffs opposition thereto, and the third-party defendants’ motion for a more definite statement.

I. Claim Under Section 17(a) of the Securities Act of 1933

In Count I of the Amended Complaint the plaintiff asserts that he is entitled to recover from the defendants pursuant to an implied remedy under section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a). Section 17(a) provides:

It shall be unlawful for any person in the offer or sale of any securities by the use of any means or instrument of transportation or communication in interstate commerce or by use of the mails, directly or indirectly
(1) To employ any device, scheme or artifice to defraud, or
(2) To obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, or
(3) To engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceipt upon the seller.

Defendants argue that this claim should be dismissed because the prevailing rule in this district is that there is no private right of action under section 17(a). Defendants contend that the courts in this Circuit have consistently held that section 17, which contains no express remedy or right of action, cannot serve as the basis for an implied private claim. See, e.g. Delta Coal Program v. Libman, 554 F.Supp. 684, 687 (N.D.Ga.1982) (Forrester, J.); In re North American Acceptance Corporation Securities Cases, 513 F.Supp. 608 (N.D.Ga.1981) (Moye, C.J.); Platt v. Thomson McKinnon Auchincloss Kohleyer, Inc., Civil Action No. 74-1135A (N.D.Ga. November 3, 1977) (Freeman, J.). Although neither the United States Supreme Court nor the Eleventh Circuit Court of Appeals has made a definitive ruling on this issue, see Herman & MacLean v. Huddleston, 459 U.S. 375, 103 S.Ct. 683, 685 n. 2, 74 L.Ed.2d 548 (1983); Gordon v. Terry, 684 F.2d 736, 739 n. 2 (11th Cir.1982), the defendants point out that the Fifth Circuit has considered the question and held that no private cause of action exists under section 17(a). Landry v. All American Assurance Co., 688 F.2d 381 (5th Cir.1982).

Plaintiff argues that the decisions relied on by the defendants represent a minority position which this court should decline to adopt. Plaintiff asserts that the Ninth, Second, Fourth, and Seventh Courts of Appeals have recognized an implied right of action under section 17(a), while only the Fifth and Eighth Circuits have rejected the claim. Plaintiff maintains that the major argument in favor of private actions under section 17(a) is the fact that similar actions are allowed under section 10(b) of the Exchange Act and Rule 10b-5. See Dorfman v. First Boston Corp., 336 F.Supp. 1089, 1094-95 (E.D.Pa.1972).

In determining whether a private right of action should be implied under section 17(a), the plaintiff contends that the court should apply the two-pronged test announced by the Supreme Court in Merrill Lynch, Pierce, Fenner & Smith v. Curran, Inc., 456 U.S. 353, 102 S.Ct. 1825, 72 L.Ed.2d 182 (1982) and Herman & MacLean v. Huddleston, 459 U.S. 375, 103 S.Ct. 683, 74 L.Ed.2d 548 (1983). Plaintiff asserts that the first prong of the Curran and Huddleston test requires a finding that at the time of Congress’ 1975 revision of the securities laws, an implied cause of action existed under section 17(a) as interpreted by the courts which had decided the issue. The second prong of the test requires a finding that when Congress amended the securities laws, it intended to preserve the pre-existing section 17(a) cause of action.

Plaintiff argues that section 17(a) meets both requirements of this test, and thus a private right of action should be implied. The first prong of the test is satisfied, the plaintiff contends, because although the decisions in the district courts were not unanimous, at the time of the 1975 amendment all the circuit courts which had addressed the issue had upheld the existence of a private right of action under the section. Plaintiff argues that the fact that no amendments were made to the Securities Act in 1975 demonstrates that Congress ratified the existence of a cause of action under section 17(a).

Although the decision not to imply a private right of action under section 17(a) is difficult, the court is not persuaded to alter its position and allow the plaintiff to maintain such a claim in this action. Supreme Court decisions establish that the question of whether Congress intended to grant a private right of action in a particular statute requires close scrutiny. See Touche Ross & Co. v. Redington, 442 U.S. 560, 575, 99 S.Ct. 2479, 2489, 61 L.Ed.2d 82 (1979); see also Landry, 688 F.2d at 391. The language of section 17 gives no indication that Congress intended to create a private cause of action for violation of section 17. Gunther v. Hutcheson, 433 F.Supp. 42 at 47. As the court explained in Blumberg v. Berland, [1981-82] Fed.Sec.L. Rep. 1198,389 at 92,362 (N.D.Ga. December 9, 1981) (Murphy, J.).

Having legislated specifically on the issue [of relief], Congress can be presumed to have considered the merit of private remedies for the wrongs defined in the Act.... Plaintiff must look solely to the civil remedies that Congress has made available. With respect to Section 17, there is no evidence that “Congress absentmindedly forgot to mention an intended private action.”

Even applying the test set forth in Curran and Huddleston leaves the court unconvinced that a private cause of action should be implied under section 17(a). Because the courts that addressed the question before 1975 were divided as to whether a private right of action existed under section 17(a), the court cannot determine whether Congress intended to permit a private right of action under this section when it revised the securities laws in 1975 without altering the language of section 17. Compare Hardy v. Sanson, 356 F.Supp. 1034 (N.D.Ga.1973) with Caesars Palace Securities Litigation, 360 F.Supp. 366, 384 (S.D.N.Y.1973).

In light of the language of section 17(a), the absence of a clear showing of Congressional intent to create or recognize an implied private action under the section, and the authority in this district and the Fifth Circuit refusing to recognize such a claim, the court finds that the plaintiff cannot maintain this claim in this action. The motion to dismiss this claim will be granted.

II. RICO Claim

In Count III of the Amended Complaint the plaintiff alleges that the defendants have violated the Racketeer Influence and Corrupt Organizations (RICO) provisions of the Organized Crime Control Act of 1970, 18 U.S.C. §§ 1961-1968. RICO makes illegal the (a) use or investment, in an interstate “enterprise”, of income or its proceeds derived from “a pattern of racketeering activity,” (b) the acquisition or maintenance of any interest in, or control of, any interstate “enterprise” through a “pattern of racketeering activity;” (c) the conduct, or participation in the conduct, of the affairs of an interstate “enterprise”, by a person employed by or associated with that “enterprise”, through a “pattern of racketeering;” and (d) conspiracy to do any of (a), (b), or (c). 18 U.S.C. § 1962.

To state a claim for damages under RICO a plaintiff has two pleading burdens. He must allege that the defendant has violated the substantive RICO statute, 18 U.S.C. § 1962, and that he was injured in his business or property by reason of a violation of section 1962, 18 U.S.C. § 1964. Moss v. Morgan Stanley, Inc., 719 F.2d 5, 17 (2d Cir.1983).

Plaintiff must allege the existence of seven elements to satisfy the pleading burden under the substantive RICO statute: (1) that the defendant (2) through the commission of two or more acts (3) constituting a “pattern” (4) of “racketeering activity” (5) directly or indirectly invests in, or maintains an interest in, or participates in (6) an “enterprise” (7) the activities of which affect interstate or foreign commerce. Id. at 17; Taylor v. Bear Stearns & Co., 572 F.Supp. 667, 682 (N.D.Ga.1983).

Plaintiff’s RICO claim, in its entirety, reads as follows:

Count III
(Violation of RICO Against All Defendants)
95. On behalf of himself and the Plaintiff Class, plaintiff repeats and realleges paragraphs 1 through 94 hereof as if fully set forth herein.
96. Royal Regency, the Developer, and the underwriting syndicate by which the Bonds were sold are enterprises within the definition of 18 U.S.C. § 1961(4), and each affects interstate commerce.
97. Each defendant was employed by and/or associated with each of the above enterprises and participated in the conduct of the affairs of such enterprise.
98. Each defendant has engaged in racketeering activity in at least the following manner:
a. fraud in the sale of securities (18 U.S.C. § 1961(1)(D)).
b. mail fraud (18 U.S.C. § 1961(1)).
c. wire fraud (18 U.S.C. § 1961(1)).
Each defendant has engaged in a pattern of racketeering activity in that at least two acts of racketeering activity as described above have been performed by each defendant.
99. Plaintiff and the Plaintiff Class have suffered substantial financial loss as a direct and proximate result of defendants [sic] racketeering activities and defendants are liable therefor.

Defendants move to dismiss the RICO claim on several grounds. Defendants argue that the RICO claim should be dismissed because the plaintiff has failed to state a claim; failed to plead and prove that he suffered a cognizable injury under RICO; failed to sufficiently allege criminal violations by the defendants; failed to properly plead and prove every enterprise on which he bases his claims; failed to sufficiently plead and prove the association of each defendant with an alleged RICO enterprise; failed to plead and prove each defendant’s role in conducting the affairs of the enterprise; failed to satisfy the requirement of a nexus between the enterprise and the racketeering—the “through” requirement of RICO; and failed to plead the underlying fraud with particularity as required by Rule 9(b), Fed.R.Civ.P. Plaintiff denies that the amended complaint is deficient in any of these respects. For the reasons that follow the court finds it unnecessary to discuss each of the above contentions.

The court finds that the plaintiff’s RICO count in the Amended Complaint contains two glaring and fatal defects: a failure to allege a violation of section 1962 and a failure to allege an injury by reason of a violation of section 1962. Plaintiff alleges that the defendants have participated in enterprises by which they were employed or to which they were affiliated; the plaintiff also alleges that the defendants engaged in a “pattern” of acts enumerated in section 1961(1); the plaintiff further alleges that the plaintiff suffered injury from the defendants’ racketeering acts. Construing the plaintiff’s allegations with reference to the RICO statutes, it is clear that the plaintiff accuses the defendants of committing acts enumerated in section 1961(1); of engaging in a pattern of racketeering activity as defined in section 1961(5); and of causing injury to the plaintiff by [defendants’] acts that fall within the definition of section 1961(1) and (5).

Plaintiff, however, does not even suggest in the Amended Complaint a violation of section 1962. Section 1962 contains the only operative provisions of the RICO statute; section 1961 only provides definitions that help supply the content of section 1962. Section 1962 makes criminal, and provides the basis of civil liability for, the acquisition, maintenance, conduct, or participation in the conduct of an enterprise (that affects interstate commerce) through, or as a consequence of, a pattern of racketeering activity. Section 1964, which provides the only cause of action for a private plaintiff, affords a remedy solely for violation of section 1962. Because the plaintiff has not alleged a violation of section 1962, and because he has not alleged injury by reason of a violation of section 1962, he has failed to state a cause of action under section 1964. Count III of the Amended Complaint must be dismissed. Rule 12(b)(6), Fed.R.Civ.P.

If this were a close case, the court might be inclined to dismiss the claim with leave to amend. A careful review of the pleadings, however, convinces the court that the plaintiff’s RICO claim is so far from providing sufficient allegations of the elements of a RICO cause of action that the normal operation of a dismissal under Rule 12(b)(6), as an adjudication on the merits should apply here. Given an opportunity to plead with particularity the frauds alleged as examples of racketeering activity in the Amended Complaint, the plaintiff has done nothing more than allege facts that would amount to civil fraud. All of the types of racketeering activity enumerated in section 1961(1) involve criminal acts. Failure to make clear the criminal nature of the acts alleged to constitute racketeering activity and a pattern of racketeering activity renders a RICO remedy unavailable.

III. Motion for a More Definite Statement

Third-party defendant National Union Fire Insurance Company of Pittsburgh, PA., moves the court to require third-party plaintiffs, Allen D. Jones and James E. Dorsey, to provide a more definite statement of the alleged claims contained in the third-party complaint. See Rule 12(e), Fed. R.Civ.P. Third-party plaintiffs oppose the motion.

Movant argues that the third-party complaint, as amended, is so vague and ambiguous as to the identity of the contract or contracts of insurance upon which the third-party complaint is based, that the third-party defendant cannot reasonably be required to frame a responsive pleading. Movant asserts that because it issued more than one policy of insurance to the corporate entities described in the third-party complaint, it cannot determine which of the plaintiff’s claims in the main case may be covered under any policy issued by the movant. Third-party plaintiffs oppose the motion on the grounds that a motion under Rule 12(e) should not be used to obtain discovery and is not appropriate if the movant, in light of its own knowledge, can respond to the complaint.

The court, in its discretion under Rule 12(e), United States v. Metro Development Corp., 61 F.R.D. 83, 85 (N.D.Ga.1973), will grant the motion for a more definite statement. Third-party plaintiffs will be directed to file a statement identifying the insurance policies which form the basis for the third-party complaint.

Accordingly, the motion to dismiss the section 17(a) claim is GRANTED. The motion to dismiss the RICO claim is GRANTED. The motion for a more definite statement is GRANTED; third-party plaintiffs are directed to file a statement providing the information, as described above, within twenty (20) days of the date of entry of this order.

      . The following defendants have joined in the motion to dismiss: Allen 0. Jones; Royal Care Communities, Ltd., Holland & Knight; Royal Care Communities, Inc.; Kutak Rock & Huie; Hereth, Orr & Jones; Cobb & Cole, P.A.; Laventhol & Horwath; Arnall Golden & Gregory; Yankelovich, Skelly & White, Inc.; Finerock Corporation; A.O. Jones & Co.; Foundation Investors, Ltd.; James E. Dorsey; Jack R. Hereth; J. Milton Newton, Incorporated; Mahai Marcu; Arthur M. Rice, Jr.; and Robert W. McElroy.