author: LASKER, District Judge.

text:
    Dessaleng BEYENE and Jean M. Hanson, Plaintiffs, v. IRVING TRUST COMPANY, Defendant.
    No. 83 Civ. 4067(MEL).
    United States District Court, S.D. New York.
    Oct. 31, 1984.
    William L. Borden, Washington, D.C., and Maurice M. Krolik, New York City, for plaintiffs.
    Winthrop, Stimson, Putnam & Roberts, New York City, for defendant; Stephen A. Weiner, Aileen Meyer, New York City, of counsel.
   LASKER, District Judge.

The issue presented is whether Irving Trust Company (“Irving”) acted properly in refusing to honor a letter of credit issued on behalf of plaintiff Dessaleng Beyene. Irving moves for summary judgment to dismiss the complaint against it on the grounds that it complied with the obligations which apply under the Uniform Customs and Practice for Documentary Credits (“UCP”) of the International Chamber of Commerce, and that plaintiff Jean Hanson lacks standing to maintain this action. Beyene and Hanson oppose the motion on the grounds that there exist material questions of fact which cannot be resolved on a motion for summary judgment. For the reasons set forth below, Irving’s motion is granted.

I.

In March of 1978 Beyene, executive director of the Lynx International Group, Inc., a general merchandising and exchange corporation located in Arlington, Virginia, agreed to sell and to export to Mohammed Sofan, a resident of the Yemen Arab Republic, two prefabricated houses known as “O’Domes.” Sofan attempted to finance the purchase through the use of a letter of credit in the amount of $62,400 which was issued by the Yemen Bank for Reconstruction and Development (“YBRD”) in August of 1978 in favor of Beyene. YBRD designated Irving as the confirming bank for the letter of credit and Irving subsequently notified Beyene of the letter’s terms and conditions. The letter’s expiration date was intitially set as October 19, 1978, but it was ultimately extended until May 31,1979. During the intervening period, Beyene designated the National Bank of Washington (“NBW”) as the collecting bank and he notified Irving that he had made assignments to NBW from the letter’s proceeds totaling $50,000. The complaint alleges that Irving was also aware that Hanson was entitled to receive $40,000 of the credit, although Irving disputes this proposition and contends that it was unaware until July of 1979, that Han-

son played a role in any of these transactions after the letter had expired.

On May 4,1979 NBW mailed to Irving all of the documents required under the terms of the letter of credit. According to a summary of events prepared in October 1979 by Paul D. Shaffer, the NBW official responsible for submitting these documents, Ragai S. Nasser, an employee in Irving's letter of credit section, telephoned Shaffer on May 10, 1979 to inform him of five discrepancies in the submitted documents. The two which are relevant in resolution of the issues presented here were (1) that the bill of lading for the O’Domes issued on April 16, 1979 was not presented to Irving within 21 days from that date as required under UCP Article 42 and (2) that the bill of lading listed the party to be notified as Mohammed Soran instead of Mohammed So/an.

Shaffer’s summary states that Nasser agreed to waive the late presentment of the bill of lading discrepancy because he could not confirm the actual date of the bill’s receipt by Irving. However, Nasser’s affidavit in support of the summary judgment motion makes no mention of any waiver.

Shaffer also testified at his deposition that both he and Nasser discussed the fact that the Soran-Sofan misspelling was “an extremely minor discrepancy,” that Nasser was going to look into the possibility that Irving might honor the credit in spite of the discrepancy but that Irving never waived the discrepancy and continued to maintain that one existed, and that Irving would send to YBRD a cable noting the single misspelling discrepancy and requesting authorization to pay the letter of credit.

As to three remaining discrepancies noted by Irving, NBW mailed to Irving corrected documents on May 25, which Irving claims it did not receive until June 4, after the letter of credit had expired. On June 5, 1979, Irving cabled YBRD for authorization after noting the late presentation of the bill of lading, a discrepancy which Shaffer claims Irving waived, and the misspelling of Sofan’s name. Irving subsequently sent three follow up cables to the Yemen bank on June 8, 13, and 21.

According to Shaffer’s prepared summary, he spoke with Irving’s Nasser on June 25 and was told, in effect, that Sofan had refused to pay due to the discrepancies in the documents presented by NBW to Irving. In an effort to cure the misspelling discrepancy, NBW sent to Irving a corrected bill of lading — identifying So/an as the party to be notified — on July 25, although the buyer continued to refuse to authorize payment. Subsequent efforts by Beyene to obtain payment proved unrewarding. Beyene and Hanson then filed suit against Irving and NBW for wrongful dishonor of the letter of credit in the District of Columbia Superior Court but after that case was dismissed as to Irving for lack of personal jurisdiction, they instituted this action against Irving alone in this district.

II.

Irving argues that it is entitled to summary judgment on the grounds that, inter alia, it complied with its obligations under the UCP as a confirming bank and that it was under a duty to pay the proceeds of the letter of credit only if Beyene fully complied with the credit’s terms and conditions. Irving contends that three discrepancies in the documents presented by NBW each support its decision not to honor the letter of credit: (1) some corrected documents were received by Irving after the May 31, 1979 expiration date for the letter of credit; (2) NBW presented documents to Irving more than 21 days after the bill of lading was issued on April 16, 1979, contrary to UCP Article 41; and (3) the misspelling of Sofan’s name in the bill of lading was a material discrepancy. Plaintiffs respond that the deposition testimony of Paul Shaffer establishes material facts in dispute, as to whether documents were timely presented to Irving and concerning the misspelling of Sofan’s name, and that the disputed facts bar an award of summary judgment in Irving’s favor.

Plaintiffs are correct that Shaffer’s deposition and summary of events differ sharply from Irving’s statement of facts and raise questions of fact with regard to whether Irving waived the timeliness discrepancies and whether it is estopped from raising the untimely presentment of the documents in support of its motion. See Voest-Alpine International Corp. v. Chase Manhattan Bank, 707 F.2d 680, 684-85 (2d Cir.1983); Barclays Bank D.C.O. v. Mercantile National Bank, 481 F.2d 1224, 1237 (5th Cir.1973), cert, denied, 414 U.S. 1139, 94 S.Ct. 888, 39 L.Ed.2d 96 (1974). However, review of the Shaffer deposition does not reveal any factual dispute between the parties as to whether the Sofan-Soran misspelling was a material discrepancy. Inasmuch as this discrepancy alone supports granting Irving’s motion, plaintiffs’ arguments pertaining to this issue are examined in detail.

III.

The plaintiffs contend that Irving implicitly waived the misspelling discrepancy because Shaffer testified at his deposition that he expected Irving to honor the letter of credit because he considered the misspelling to be “an extremely minor discrep-

ancy.” Plaintiffs also assert it is possible to infer that Irving did not believe the misspelling warranted dishonoring the letter of credit because the cable which Irving sent to the YBRD on June 5, 1979 noted not only the misspelling but the fact that the bill of lading was not presented within the 21 days required under UCP Article 41. Shaffer testified that Irving’s Nassér waived the latter discrepancy and that he and Nasser agreed that the Soran-Sofan misspelling was the only discrepancy to be included in Irving’s cable to YBRD. Plaintiffs go on to argue that late presentment of the bill of lading was included in the Irving cable to YBRD because Irving “felt foolish about cabling Yemen for authorization to pay” due to the misspelling discrepancy alone. Plaintiffs also dispute the materiality of the misspelling discrepancy by relying upon Beyene’s affidavit which states that the error could have had no practical effect because an Arab name like Sofan’s is not translatable into English in a meaningful way and that in Yemen it would not be possible to locate and notify Sofan of delivery of the goods in question based upon his name alone.

Review of the transcript of Shaffer’s deposition reveals that Irving did not implicitly waive the misspelling discrepancy. At the outset, Shaffer’s testimony regarding his view of the spelling error does not affect Irving’s position. Although both Nasser and Shaffer did discuss the fact that the error was a minor one, it is clear that Nasser continued to maintain that a discrepancy existed and that at no time did he waive the mistake. If Shaffer’s version of events is assumed to be true, then Irving’s act of mentioning in its June 5 cable to YBRD a discrepancy which it waived raises questions about its good faith in dealing with NBW and Beyene. Nevertheless, even if plaintiffs are correct that Irving “felt foolish” about raising the single spelling error with the Yemeni bank, there can be no dispute that Irving treated the misspelling as a discrepancy.

The law is clear that a single discrepancy, including one involving the misspelling of a party’s last name, is sufficient to excuse a confirming bank from paying the proceeds of a letter of credit. The court of appeals for this circuit has discussed the “strict compliance” requirements for letters of credit in Marino Industries v. Chase Manhattan Bank, N.A., 686 F.2d 112 (2d Cir.1982). Its analysis is particularly enlightening as to the facts of this case.

“[T]he essential requirements of a letter of credit must be strictly complied with by the party entitled to draw against the letter of credit, which means that the papers, documents and shipping descriptions must be as stated in the letter.” Venizelos, S.A. v. Chase Manhattan Bank, 425 F.2d 461, 465 (2d Cir. 1970); accord Courtaulds North America, Inc. v. North Carolina National Bank, 528 F.2d 802, 805-06 (4th Cir. 1975); Anglo-South American Trust Co. v. Uhe, 261 N.Y. 150, 156-57, 184 N.E. 741, 743 (1933); Eximetals Corp. v. Guimaraes, S.A., 73 A.D.2d 526, 422 N.Y.S.2d 684 (1st Dep’t 1979), affd, 51 N.Y.2d 865, 414 N.E.2d 399, 433 N.Y.S.2d 1019 (1980); H. HARTFIELD, BANK CREDITS & ACCEPTANCES 73 (5th ed. 1974).
The Courtaulds ease illustrates the operation of the rule. There a bank was held properly to have refused payment under a letter of credit because, although the letter required that the draft be accompanied by an invoice stating that it covered “100% acrylic yarn,” the invoice stated only that the goods were “Imported Acrylic Yarn.” 528 F.2d at 803.
The rule of strict compliance reflects the fact that a letter of credit is a contract between the bank and the beneficiary of the letter that is separate and distinct from the commercial contract between the beneficiary (usually the seller) and the bank’s customer (usually the buyer). The letter of credit is not tied to or dependent upon the underlying commercial transaction. Venizelos, 425 F.2d at 464-65; United Bank Ltd. v. Cambridge Sporting Goods Corp., 41 N.Y.2d 254, 259, 360 N.E.2d 943, 948-392 N.Y.S.2d 265, 270 (1976); Maurice O’Meara Co. v. National Park Bank, 239 N.Y. 386, 395, 146 N.E. 636, 639 (1925). In determining whether to pay, the bank looks solely at the letter and the documentation the beneficiary presents, to determine whether the documentation meets the requirements in the letter.
It is the complete separation between the underlying commercial transaction and the letter of credit that gives the letter its utility in financing transactions. The parties to the commercial contract bring in a third party — the bank — to finance the transaction for them. The bank’s sole function is the financing; it is not concerned with or involved in the commercial transaction. This restriction simplifies the bank’s role and enables it to act quickly and surely. Because the bank is not involved in the commercial transaction, however, all its rights and duties are set out in and defined by the letter of credit. The bank is not expected or required to be familiar with or to consider the customs of, or the special meaning or effect given to particular terms in, the trade.

Marino Industries v. Chase Manhattan Bank, N.A., supra, 686 F.2d at 114-15. See also Voest-Alpine Corp. v. Chase Manhattan Bank, supra, 707 F.2d at 682-83.

Here, the Soran-Sofan misspelling in the bill of lading meant that the documents submitted by NBW did not strictly comply with the terms of the letter of credit. As a result, assuming Irving acted improperly when it made note of an additional discrepancy, the fact remains that the undisputed spelling mistake alone was sufficient to excuse Irving’s obligation to pay the letter of credit’s proceeds to Beyene.

Moreover, the quotation above from Marino highlights the fact that a confirming bank need not ascertain the magnitude of each discrepancy before its obligation to pay is relieved. Under the rule of “strict compliance,” Irving did not have to scrutinize the underlying transaction between Beyene and Sofan, nor did it have to establish whether the misspelling of an Arab name was a meaningful mistake or find that it was a major error before it could claim that a discrepancy in the documents existed. Irving was therefore under no duty to honor the letter of credit.

Defendant’s motion for summary judgment is accordingly granted. The complaint is dismissed.

It is so ordered.

      . International Chamber of Commerce, Uniform Customs and Practice for Documentary Credits, Publication No. 290 (1975).

      . Article 41 provides:
      Notwithstanding the requirement of Article 37 that every credit must stipulate an expiry date for presentation of documents, credits must also stipulate a specified period of time after the date of issuance of the Bills of Lading or other shipping documents during which presentation of documents for payment, acceptance or negotiation must be made. If no such period of time is stipulated in the credit, banks will refuse documents presented to them later than 21 days after the date of issuance of the Bills of Lading or other shipping documents.

      . Shaffer Deposition at 101, filed Jan. 14, 1984.

      . Id. at 48-49, 74, 107.

      . Id. at 101-04. This procedure was required under UCP Article 3(c) which provides in relevant part: "[U]ndertakings [by an advising or confirming bank, Irving in this instance,] can neither be amended or cancelled without the agreement of all parties thereto."

      . Irving also asserts that Hanson lacks standing to sue because she had no contractual relationship with Irving.

      . See Shaffer Deposition, supra note 3, at 48, 74, 107. The deposition transcript contains the following colloquy between Shaffer and Irving’s counsel:
      Q. [By Irving’s counsel] Did Mr. Nasser ever waive the misspelling of the name Sofan?
      A. [By Shaffer] Not specifically, no.

        Id. at 107. In addition, Shaffer acknowledged, in response to a question by plaintiffs’ counsel, that Irving did not have to honor the letter of credit due to the misspelling.
      Q. [By plaintiffs’ counsel] Now, did you yourself believe that Irving Trust should have paid this credit as of your June 1, 1979 conversation with Mr. Nasser ...?
      A. [By Shaffer] I felt it was a matter of judgment on Irving Trust’s part. I myself had mixed feelings. However, I acknowledged that they had the right to not pay it because, no matter how minor the discrepancy, it was a discrepancy. ... In thinking that the discrepancy on the misspelling was a very minor discrepancy, I thought that Irving Trust could have made a judgment call which would have waived the discrepancy, but I felt it was their judgment, because there were valid points on both sides.

        Id. at 74-75.

      . Even if a compliance rule of arguably greater liberality applied in this case, see, e.g., Flagship Cruises Ltd. v. New England Merchants National Bank, 569 F.2d 699, 705 (1st Cir.1978) ("variance between documents specified and documents submitted is not fatal if there is no possibility that the documents could mislead the paying bank to its detriment.”), plaintiffs have not established with sufficient certainty that there was no possibility that Irving could have been misled to its detriment by paying Beyene. For example, it is conceivable that the spelling error could have led to the non-delivery or mis-delivery of the O'Domes. To support this theory Irving points out that a June 28, 1979 cable from Beyene to Irving noted that Sofan had not been alerted to the goods’ arrival.


source: Caselaw Access Project

author: CLIFFORD SCOTT GREEN, District Judge.

license: Public Domain

text:
    HAHNEMANN UNIVERSITY v. DISTRICT 1199C, NATIONAL UNION OF HOSPITAL AND HEALTH CARE EMPLOYEES, and American Arbitration Association.
    Civ. A. No. 84-4231.
    United States District Court, E.D. Pennsylvania.
    Oct. 31, 1984.
    David F. Girard-Dicarlo, Ronald H. Surkin, Michael A. Davis, Blank, Rome, Comisky & McCauley, Philadelphia, Pa., for plaintiff.
    Miriam L. Gafni, Philadelphia, Pa., for defendants.
   MEMORANDUM

CLIFFORD SCOTT GREEN, District Judge.

Plaintiff, Hahnemann University (“Hahnemann”), sues to enjoin District 1199C, National Union of Hospital and Health Care Employees (“District 1199C”) and the American Arbitration Association (“AAA”) from proceeding with an attempted arbitration sought by District 1199C concerning provisions of a .collective bargaining agreement (“cba”) between District 1199C and Hahnemann. Additionally, Hahnemann seeks declaratory relief. Jurisdiction is based on section 301 of the Labor Management Relations Act, 29 U.S.C. § 185.

On September 14, 1984, a hearing on plaintiff's motion for a preliminary injunction was held. Since the factual basis for permanent injunctive relief would not be changed by the addition of further evidence, trial on the merits will be advanced and consolidated with the aforementioned hearing pursuant to Rule 65(a)(2) Fed.R. Civ.P.

Hahnemann operates a medical college and teaching hospital in Philadelphia, Pennsylvania. District 1199C is a labor union representing certain of Hahnemann’s employees. Among these are Hahnemann’s dietary department employees who work 20 hours per week or more.

Until July of 1983, the hospital operated and managed its dietary department using its own staff. During this time there were two full time shifts and most of the employees in the bargaining unit worked full time hours. (35-40 hours/week).

After July of 1983, Hahnemann contracted with ARA food services to manage the dietary department. As a result of the ARA takeover of the dietary department, staffing changes with regard to that department’s employees were made. Among these were the reduction of 11 full-time employees from 35 hours a week or more, to less than 20 hours/week thereby rendering them non-bargaining unit employees. Simultaneously, Hahnemann hired 46 new dietary employees, all of whom worked less than 20 hours per week, thereby significantly increasing the number of non-bargaining unit employees, while substantially reducing the number of bargaining unit employees.

After proceeding through steps one and two of the grievance procedure outlined in the cba, the union sought arbitration, the final step. District 1199C’s grievance termed the hospital’s action in reducing the number of hours of bargaining unit members, a layoff. It claimed that the “layoff” was in violation of Article IX of the cba which requires that in the event of layoffs, non-bargaining unit employees are to be laid off first. The union claimed further that Hahnemann violated the provisions of the recognition clause of the cba by eroding the bargaining unit work and creating non-bargaining unit personnel to do the work which existed. Finally, the union claimed that laid off employees who are now working less than 20 hours a week have been denied their right to have additional hours, constituting overtime, granted to them in accordance with the provisions encompassing overtime under Article XII of the cba.

Hahnemann countered that under Article XXXII of the cba, the management’s rights provisions, it had the right to schedule the number of hours to be worked and it was merely exercising that right as justified by business necessity.

The parties proceeded to arbitration on the issues listed above. At the hearing before arbitrator Joan Weitzman they stipulated to a postponement of the arbitration while settlement of the matter was attempted. Failing settlement, Hahnemann has brought this action challenging the arbitrator’s jurisdiction to decide the above listed issues.

Presently pending before this court is Hahnemann’s action for injunctive relief. It seeks to enjoin defendants District 1199C and AAA from arbitrating the underlying dispute, and to have this court declare the dispute non-arbitrable. The hospital maintains that this dispute is not arbitrable because the provision that it claims covers arbitration in the cba is not the typical broad arbitration provision. The hospital claims that the provision contains a clear and unambiguous exclusionary clause providing that no arbitrator can hear and decide a case if it requires a determination that any provision of the cba establishes an implied limitation upon Hahnemann which is not specifically set forth in an express provision of the cba. Set forth below is the provision and the clause on which plaintiff relies:

Authority of Arbitrator. The arbitrator will make his findings and render his decision to resolve the disagreement. The arbitrator shall not have jurisdiction to add to, modify, vary, change or remove any terms of this Agreement or to determine that any provision of this Agreement establishes an implied limitation upon Hahnemann which is not herein specifically set forth____
cba at 14. (Emphasis added.)

The hospital maintains further that because in the cba’s management’s rights provisions it is given certain sole rights among those the right to schedule the number of hours worked, which are not expressly abridged by a specific provision of the cba, that necessarily the defendants are seeking to have the arbitrator imply some limitation upon Hahnemann which is not expressly set forth, and, thus, expressly excluded from her jurisdiction.

District 1199C counters that the provisions in dispute, i.e., layoff, overtime and recognition, do expressly and specifically abridge management rights. These clauses, particularly the layoff provisions, it is argued, require management to act in a certain prescribed manner when it engages in actions which can be categorized thereunder. The union’s position is that when management lays people off it must do so in accordance with the provisions of the cba governing such action. The layoff provision provides in pertinent part: “In the event of a layoff within a job classification, all non-bargaining unit employees in the classification affected shall be laid off first.” cba at 18.

The critical question in determining the outcome of this action is did the reduction in hours from 40 or 35 per week to less than 16 hours per week, constitute, as claimed by the union, a layoff in violation of the agreement; or, was such action, as urged by the hospital, merely an exercise of a management right consistent with the agreement. Both interpretations of Hahnemann’s actions in the instant case are plausible. The hospital’s interpretation would preclude arbitration, while District 1199C’s would compel it. Since either formulation is possible, I cannot say “with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” United Steelworkers of America v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 1352-53, 4 L.Ed.2d 1409 (1960).

In order to find a dispute non-arbitrable it must be said with such “positive assurance.” United Steelworkers, supra; Federated Metals Corp. v. United Steelworkers, 648 F.2d 856 (3d Cir.1981). This is because of the strong federal policy favoring arbitration. See United Steelworkers v. American Manufacturing Co., 363 U.S. 564, 566, 80 S.Ct. 1343, 1345, 4 L.Ed.2d 1403 (1960); United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960) (the steelworkers trilogy)-

Moreover, doubts concerning arbitrability must be resolved in favor of arbitration. Moses H. Cove Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 23-6, 103 S.Ct. 927, 941-42, 74 L.Ed.2d 765 (1983); Federation of Westinghouse Ind. v. Westinghouse Elect. Corp., 736 F.2d 896 (3d Cir.1984).

Finally, the fact that the merits of the underlying dispute and the question of arbitrability are interrelated, as they are in this case, does not enlarge this court’s authority to resolve the grievance. Federation of Westinghouse Ind., supra at 903; Sharon Steel Corporation v. Jewell Coal & Coke Company, 735 F.2d 775, 778 (3d Cir.1984). Thus, I find the dispute arbitrable; deny the plaintiffs motion for an injunction enjoining the arbitration; and, dismiss its complaint.

      . This memorandum sets forth the court’s findings of fact and conclusions of law in accordance with Fed.R.Civ.P. 52(a).

      . Alternatively, District 1199C claims that Hahnemann is estopped from claiming nonarbitrability of the dispute because of the hospital’s failure to assert that claim earlier in the grievance procedure.

      . This finding makes it unnecessary to reach the issues presented by District 1199C's estoppel argument.


author: BALDOCK, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. Ronnie ROMERO, Defendant.
    No. CR 84-170.
    United States District Court, D. New Mexico.
    Nov. 2, 1984.

      William L. Lutz, U.S. Atty., Robert J. Baca, Asst. U.S. Atty., Albuquerque, N.M., for plaintiff.
    Tova Indritz, Federal Public Defender, Albuquerque, N.M., for defendant.
   MEMORANDUM OPINION

BALDOCK, District Judge.

The narrow issue before the court is whether a defendant who committed an offense prior to the repeal of the Youth Corrections Act on October 12, 1984, may be sentenced under the Act, notwithstanding that the defendant’s date of conviction is subsequent to the repeal of the Act.

On October 26, 1984, the Indian defendant entered a plea of guilty to aggravated assault with a deadly weapon, N.M. StatAnn. § 30-3-2(A) (1984 Repl.Pamp.), pursuant to the Assimilative Crimes Act, 18 U.S.C. § 13. Aggravated assault is a fourth degree felony. N.M.Stat.Ann. § 31-18 — 15(A)(4) (1981 Repl.Pamp.). The basic sentence of imprisonment for a fourth degree felony is eighteen months and the fine may not exceed $5,000. After a sentencing hearing, the court may alter a basic sentence by one-third upon a finding that aggravating or mitigating circumstances were involved. N.M.Stat.Ann. 31-18-15.1 (1983 Repl.Pamp.). Any sentence which might be imposed under the Youth Corrections Act, 18 U.S.C. ch. 402, could not be for a term greater than that allowed under the above state law. United States v. Dunn, 545 F.2d 1281 (10th Cir.1976).

Normally, a youth offender could be sentenced under the Youth Corrections Act to a six year indeterminate sentence with conditional release under supervision not later than four years after the date of conviction, 18 U.S.C. §§ 5010(b), 5017(c). Where the underlying offense is punishable by imprisonment exceeding six years, the court may sentence the youth offender for an indeterminate term not exceeding the maximum for the underlying offense with conditional release not later than two years before the expiration of the term set by the court. 18 U.S.C. §§ 5010(c), 5017(d). Of course, probation under the Youth Correetions Act also is an alternative. 18 U.S.C. § 5010.

The Comprehensive Crime Control Act of 1984,-Pub.L. No. 98-473, 98 Stat. 1837 (Title II) repealed the Youth Corrections Act. See Comprehensive Crime Control Act of 1984 §§ 218(a)(8) (repealing ch. 402 of Title 18 — Federal Youth Corrections Act) & 235(a)(1)(A) (making repeal effective on the date of enactment (October 12, 1984)). At first blush, it appears that the Youth Corrections Act would not be available where a defendant was convicted after its repeal, notwithstanding that the defendant’s offense was committed while the Youth Corrections Act was still in force.

A “youth offender” is defined as “a person under the age of twenty-two years at the time of conviction.” 18 U.S.C. § 5006(d). Conviction for purposes of the Youth Corrections Act means the pronouncement of guilt whether by plea or verdict. 18 U.S.C. § 5006(d); Jenkins v. United States, 555 F.2d 1188, 1190 (4th Cir.1977). The classification scheme in the Act revolves around the date of conviction, as opposed to the date of the offense, or of the sentence. United States v. Branic, 495 F.2d 1066, 1070 (D.C.Cir.1974); compare 18 U.S.C. § 5006(d) with 18 U.S.C. § 4216 (time of conviction controls for classification as “youth offender” or “young adult offender”).

At the defendant’s date of conviction, the Youth Corrections Act had been repealed and ostensibly its provisions would not be available at the defendant’s later sentencing. The difficulty with that conclusion, however, is that the Act was in effect at the date of the offense as a potential sentencing option.

The ex post facto clause of the Constitution prohibits Congress from passing ex post facto laws. U.S. Const, art. I, § 9, cl. 3. Thus, a law which “imposes punishment for an act which was not punishable at the time it was committed; or imposes additional punishment to that then prescribed” may not be enacted. Cummings v. Missouri, 71 U.S. (4 Wall.) 277 at 326-27, 18 L.Ed. 356 (1867). Similarly, a law which eliminates an advantageous sentencing option available at the date of the offense may be an ex post facto law. Lindsey v. Washington, 301 U.S. 397, 401-402, 57 S.Ct. 797, 799, 81 L.Ed. 1182 (1973). Any ex post facto analysis must focus upon the law in effect at the date of the offense for which the defendant is being sentenced. United States ex rel. Forman v. McCall, 709 F.2d 852, 856 (3rd Cir.1983).

The Supreme Court in Weaver v. Graham, 450 U.S. 24 at 29, 101 S.Ct. 960 at 964, 67 L.Ed.2d 17 (1981), said that two critical elements must be present for a criminal law to be ex post facto: “[I]t must be retrospective, that is, it must apply to events occurring before its enactment, and it must disadvantage the offender affected by it.” (footnote omitted). This test must be applied to the repeal of the Youth Corrections Act to determine whether that repeal is constitutional as applied to the defendant in this case.

A law is retrospective if it “changes the legal consequences of acts completed before its effective date.” Id. at 31, 101 S.Ct. at 965. Merely because a law, such as the law repealing the Youth Corrections Act, applies only after its effective date does not end the inquiry because the effect of the law on a previous occurrence must be considered. Id. In this case, on the date of the offense, the defendant could have been sentenced under the Youth Corrections Act, but now may not be if the repeal is effective. Of course, the trial court may sentence a youth offender to a regular determinate sentence upon a finding that he will not benefit from being sentenced under the Act. 18 U.S.C. § 5010(d); Watts v. Hadden, 651 F.2d 1354, 1357 (10th Cir.1981). But the repeal of the Act certainly eliminates sentencing options that were available at the date of the offense and, therefore, the law repealing the Act is retrospective.

The more difficult question is whether the repeal of the Act disadvantages a defendant. In making this determination, the court takes an objective look at the potential sentences associated with an offense both at the date of the offense and at the date of conviction.

In theory, the purpose of confinement under the Act is for rehabilitation rather than punishment. Dorszynski v. United States, 418 U.S. 424, 483, 94 S.Ct. 3042, 3048, 41 L.Ed.2d 855 (1974). Defendants are sentenced to treatment and supervision under the Act rather than imprisonment. 18 U.S.C. §§ 5010(b) & (c). See also H.R. Rep. No. 2979, 81st Cong. 2d Sess., reprinted in, 1950 U.S.Code Cong. & Admin. News 3983-3993 (Act “departs from the mere punitive idea of dealing with criminals and looks primarily to the objective idea of rehabilitation” (at 3985)). Treatment is defined as “corrective and preventive guidance and training designed to protect the public by correcting the antisocial tendencies of youth offenders.” 18 U.S.C. § 5006(f). ,

Notwithstanding the laudable objectives of the Act, many defendants would rather receive a regular determinate sentence than an indeterminate six year sentence under the Act. Watts v. Hadden, 651 F.2d 1354, 1357 n. 2 (10th Cir.1981). This especially is true where the defendant is convicted of a misdemeanor or of a felony offense carrying a maximum term of imprisonment substantially less than four years. United States v. Donelson, 695 F.2d 583 (D.C.Cir.1982); United States v. Van Lufkins, 676 F.2d 1189 (8th Cir.1982) (youth offender convicted of misdemeanor sentenced to six years indeterminate sentence).

A defendant would not be disadvantaged by the repeal of those provisions in the Youth Corrections Act which increase his potential for confinement and, accordingly, those provisions are repealed and no longer available. A defendant who committed an offense prior to repeal would be disadvantaged by the repeal of those provisions in the Act which might work in his favor should the court find that he would benefit under the Act. Those provisions include: 1) probation with the conviction set aside after early unconditional discharge, 18 U.S.C. §§ 5010(a), 5021(b), 2) treatment with the conviction set aside after early unconditional discharge, 18 U.S.C. §§ 5010(b) or (c), 5017(a) & (b), 5021, 3) conditional release at any time with no minimum time served, 18 U.S.C. 5017(a), 4) unconditional release after one year from conditional release, 18 U.S.C. § 5017(c), 5) response to treatment considered in conditional release decisions, Watts v. Hadden, 651 F.2d 1354, 1375-78 (10th Cir.1981) and 6) segregation of youth offenders from adult offenders insofar as practical, 18 U.S.C. § 5011.

The repeal of the Youth Corrections Act is an ex post facto law to the extent that it precludes the court from considering the above provisions in sentencing a youth offender who committed an offense prior to the repeal of the Act. There are two reasons. The repeal is retrospective because it changes the potential sentencing options that were available at the date of the offense. As to certain provisions in the Act, the repeal is to the disadvantage of a defendant because the opportunity to be sentenced under those provisions is eliminated. Consequently, subject to the power of the court to find that the defendant will not benefit from treatment under Act, 18 U.S.C. § 5010(c), I will consider the Act in sentencing the defendant.


author: McCURN, District Judge.

text:
    James F. ADAMS, Plaintiff, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant.
    No. 82-CV-1443.
    United States District Court, N.D. New York.
    Nov. 2, 1984.

      Fitzgerald, Taylor, Pomeroy & Armstrong, Cortland, N.Y., for plaintiff; Donald C. Armstrong, Cortland, N.Y., of counsel.
    Frederick J. Scullin, Jr., U.S. Atty., Syracuse, N.Y., for defendant; Edward R. Bro-ten, Asst. U.S. Atty., Syracuse, N.Y., of counsel.
   MEMORANDUM-DECISION AND ORDER

McCURN, District Judge.

The present action was brought under sections 205(g) and 1631(e)(3) of the Social Security Act, as amended, 42 U.S.C. §§ 405(g) and 1383(c)(3), to review the Secretary of Health and Human Services’ (Secretary) final determination terminating claimant’s supplemental security income (SSI) benefits. This court held in claimant’s favor and remanded the action to the Secretary for calculation of benefits. Presently before the court is claimant’s motion for attorney fees under 42 U.S.C. § 406(b)(1). For the reasons discussed below the court finds that attorney fees pursuant to section 406 are available in SSI cases, and the court grants claimant’s motion.

BACKGROUND

On October 28, 1980 an Administrative Law Judge (ALJ) found that claimant was entitled to SSI benefits. The ALJ’s decision was based on his finding that claimant was psychologically disabled. On August 20, 1982 a second AU held that claimant was no longer entitled to supplemental benefits because claimant’s “kidney problem” had improved. On October 26, 1982 the Appeals Council approved the second AU’s decision, and it became the Secretary’s final determination. Claimant subsequently appealed. This court adopted the Magistrate’s Report and Recommendation and reversed the Secretary’s decision for failure to show the necessary medical improvement. The matter was remanded to the Secretary for calculation of benefits.

Claimant now moves for attorney fees under 42 U.S.C. § 406(b)(1). The Secretary opposes claimant’s motion on the ground that the court has no jurisdiction to grant attorney fees in SSI cases.

DISCUSSION

Title II of the Social Security Act provides benefits to disabled individuals who cannot engage in substantial gainful activity. 42 U.S.C. § 423 et seq. In 1972 the Act was amended to provide supplemental benefits to those disabled individuals whose income falls below subsistence levels. 42 U.S.C. § 1383 et seq. A claimant may be eligible for SSI benefits under Title XVI even though he is not eligible for disability benefits under Title II. Reid v. Heckler, 735 F.2d 757, 760 (3d Cir.1984).

42 U.S.C. § 406(b)(1) authorizes the court to grant a prevailing claimant attorney fees not in excess of 25% of the past-due benefits to which the claimant is entitled. Section 406(b)(1) provides:

Whenever a court renders a judgment favorable to a claimant under this title who was represented before the court by an attorney, the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of such judgment, and the Secretary may, notwithstanding the provisions of section 205(i) [42 USCS § 405(i) ], certify the amount of such fee for payment to such attorney out of, and not in addition to, the amount of such past-due benefits. In case of any such judgment, no other fee may be payable or certified for payment for such representation except as provided in this paragraph.

Attorney fees under section 406 are deducted directly from the claimant’s past-due benefits and are only available for services rendered before the court. Burgo v. Harris, 527 F.Supp. 1157 (E.D.N.Y.1981).

Section 406 is contained in Title II of the Social Security Act and is applicable to disability cases. The issue before the court is whether section 406 also applies to SSI cases under Title XVI. The Secretary contends that the court has no authority to grant attorney fees in SSI cases because Title XVI contains no express language incorporating section 406. She also argues that awarding attorney fees from claimant’s recovery would violate the legislative intent of Title XVI. In support of her position the Secretary asserts that SSI payments are subsistence benefits which Congress intended to protect from depletion by outside sources. The Secretary cites 42 U.S.C. § 407(a), which is applicable to Title XVI through 42 U.S.C. § 1383(d)(1). This provision precludes assignment of a claimant's benefits. The Secretary also cites language in the House Report on the original Title XVI amendments which provides:

Where an individual who has requested a hearing is represented before the Secretary by an attorney, the provisions of the cash social security program (pertaining to attorney fees) would be applicable except that there would be no withholding of attorney fees from such individual’s benefits. Your committee believes that to withhold such fees would be contrary to the purpose of the program.

H.R. No. 231, 92d Cong., 1st Sess. 3 (1971). Finally, the Secretary cites 42 U.S.C. § 1383(c)(3), § 1383(d)(1) which incorporates several Title II provisions into Title XVI. Section 1383 does not list section 406.

Surprisingly little case law exists on whether attorney fees pursuant to section 406 are available in SSI cases. The court has only found one circuit and a few district courts that have considered this issue. The Northern District of Ohio, the Eastern District of Michigan, the Southern District of Iowa, and the Western District of Virginia have held that section 406 attorney fees are not available in SSI cases because Title XVI contains no specific language incorporating section 406. See Baim v. Harris, 515 F.Supp. 227 (N.D.Ohio 1981); Franklin v. Sec. H. & H.S., 525 F.Supp. 398 (E.D.Mich.1981); Priebe v. Harris, No. 79-302-D, slip op. (S.D. Iowa July 27, 1981) ; Childress v. Harris, No. 77-0352(A), slip op. (W.D.Vir. Dec. 3, 1979). The Third Circuit, the District of Maryland, and the Eastern District of Tennessee have held that judicial review under section 405(g) gives the court implied authority to grant attorney fees in SSI cases. See Reid v. Heckler, 735 F.2d 757 (3d Cir.1984); Dolin v. Harris, 501 F.Supp. 97 (D.Md.1980); Vaughn v. Califano, 442 F.Supp. 185 (E.D. Tenn.1977). See also Hornal v. Schweiker, 551 F.Supp. 612, 614 n. 1 (M.D.Tenn. 1982) . The court finds the reasoning in Reid and Vaughn persuasive.

In 1976 Title XVI was amended to include judicial review of the Secretary’s final determinations in SSI cases. 42 U.S.C. § 1383(c)(3) provides:

The final determination of the Secretary after a hearing under paragraph (1) shall be subject to judicial review as provided in section 205(g) (42 U.S.C. § 405(g)) to the same extent as the Secretary’s final determinations under section 205 (42 U.S.C. § 405).

This amendment was designed to alleviate the “hearing crisis” that had developed in SSI cases. Prior to being amended section 1631(c) provided that the Secretary’s determinations “as to any fact shall be final and conclusive and not subject to review by any court.” The Secretary could set maximum fees for representation before the agency, but no provision for direct payment to the claimant’s attorney existed. The legislative history cited by the Secretary refers to this provision. The Civil Service Commission interpreted section 1631(c) to mean that the Administrative Procedure Act (APA) did not apply to SSI hearings. As a result, non-APA hearing officers who were appointed to hear SSI cases could not also hear social security disability and medicare cases that were subject to the APA. Social security cases became backlogged. SSI hearings were also being challenged in court as “second class justice”. To correct this problem Congress amended section 1631(c) to make “the final determinations of the Secretary subject to the ‘substantial evidence rule’ upon judicial review”. S.R. No. 550, 94th Cong., 1st Sess. 3-4 (1975), U.S. Code Cong. & Admin. News 1975, pp. 2347, 2350. According to the legislative history, Title XVI was specifically amended to “apply the same rules of judicial review to title XVI cases as apply to title II cases”. Id. at 4, U.S.Code Cong. & Admin. News 1975, p. 2350.

The attorney fee provision in 42 U.S.C. § 406(b)(1) is an integral part of section 405(g) judicial review. In Vaughn the Eastern District of Tennessee stated:

By explicit language, the Congress authorized this court to review title XVI claims “... to the same extent ...” as its review of title II claims under 42 U.S.C. § 405(g). 42 U.S.C. § 1383(c)(3). An integral part of the Court’s review under 42 U.S.C. § 405(g) relates to the attorney’s fee provisions of 42 U.S.C. § 406(b) ____ To construe this act in such a manner as to exclude the attorney fee provisions of 42 U.S.C. § 406(b) from application where, as here, the plaintiff’s claim is for supplemental security income benefits, would be to ignore the clear legislative intent that this Court’s review of title XVI claims be “... virtually identical ...” with its review of title II claims.

Vaughn, 442 F.Supp. at 187. See also Reid, 735 F.2d at 761.

The court finds the Secretary’s arguments unpersuasive. Section 407(a), which applies to Title II cases, does not preclude payment of attorney fees in disability cases. There is no reason why section 407(a) should preclude attorney fees in SSI cases. The Secretary’s contention that Congress did not intend to provide attorney’s fees in SSI cases because section 1383(d)(1) does not expressly incorporate section 406 into Title XVI lacks merit because section 1383(d)(1) was enacted in 1972 before Congress amended title XVI to include judicial review under section 405(g). Rejecting the Secretary’s argument in Vaughn the Eastern District of Tennessee stated:

The defendant is obviously correct in its assertion that the Congress has expressly incorporated by reference certain sections of title II into title XVI. See 42 U.S.C. § 1383(d)(1). However, this incorporation was not a part of the aforementioned 1976 amendment to title XVI, which provided for the judicial review of final administrative determinations denying this category of benefits. These statutory sections were incorporated thereinto by reference long before the Congress acted to grant this Court jurisdiction to review title XVI claims. Accordingly, such expressed incorporation cannot be viewed as a congressional expression that the attorney fee provisions of 42 U.S.C. § 406(b) should not be applicable to the title XVI review procedure. Had the Congress, in passing the 1976 amendments to title XVI, then expressly incorporated by reference certain provisions of title II, but without mentioning § 406(b), supra, then the defendant’s contention in this regard might have merit.

Vaughn, 442 F.Supp. at 187. Similarly, the Secretary’s reliance on legislative history concerning the 1972 amendments cannot outweigh the clear legislative intent of the 1976 amendment making SSI cases subject to the same judicial review as disability cases.

Moreover, the public policy for authorizing attorney fees in Title II cases is as strong, if not stronger, in Title XVI cases. Like Title II, Title XVI is benevolent legislation. Provision for attorney fees will promote adequate representation of SSI claimants by assuring lawyers that their fees will be paid.

The need for competent representation is perhaps even more acute than in Title II cases because the claimants in Title XVI matters are, by definition, in financial straits. If no provisions are made for fixing of a reasonable fee and assuring payment, the claimants will be deprived of the representation so often necessary to assure protection of their rights.

Reid, 735 F.2d at 762. Section 406’s ceiling on attorney fees also protects the claimant from “oppressive and improvident arrangements”. See Id. at 760; Vaughn, 442 F.Supp. at 187 (“the Social Security Act is benevolent legislation to be liberally construed to effectuate its remedial purposes”).

The Secretary urges the court to leave attorney fees to private arrangement between a claimant and his attorney. To adopt the Secretary’s position, however, would contravene Congress’ intent to make judicial review in SSI cases identical to judicial review in disability cases. It would also tend to discourage competent attorneys from representing SSI claimants for reasonable fees. The court, therefore, finds that 42 U.S.C. § 405(g), incorporated into Title XVI by 42 U.S.C. § 1383(c)(3), gives the court implied authority in SSI cases to grant reasonable attorney fees, up to 25% of the prevailing claimant’s past-due benefits.

Claimant’s attorney has submitted an affidavit showing 9% hours prosecuting claimant’s case before this court. He requests $50 per hour for a total of $487.50. The Secretary does not contest the reasonableness of the fees requested. After reviewing the attorney’s work in this case, the court finds that the fees requested are reasonable.

Accordingly, the court holds that attorney fees pursuant to 42 U.S.C. § 406(b)(1) may be awarded to prevailing claimants in SSI cases, and the court hereby awards $487.50 or 25% of claimant’s past-due SSI benefits, whichever is less, to claimant’s attorney.

IT IS SO ORDERED.


author: KISER, District Judge.

text:
    BASSETT FURNITURE INDUSTRIES, INC., Plaintiff, v. James S. SEXTON and Reps West Sales, Inc., Defendants.
    Civ. A. No. 83-0172-D.
    United States District Court, W.D. Virginia, Danville Division.
    Nov. 8, 1984.
    L. Dale McGhee, Philpott & McGhee, Bassett, Va., for plaintiff.
    Harry S. Rhodes, Bersch & Rhodes, Roanoke, Va., James O. Devereaux, Law Offices of Ronald M. Abend, Inc., Oakland, Cal., for defendants.
   MEMORANDUM OPINION

KISER, District Judge.

This diversity action was brought to recover payments allegedly due on the sale of furniture. Jurisdiction over the Defendant was asserted pursuant to Va.Code § 8.01-328.1(A)1(1950), which the Defendant asserts is improper. This matter is ripe for disposition.

Plaintiff Bassett Furniture Industries, Inc. (hereinafter “Bassett”) is a Virginia corporation engaged in the manufacture of furniture. The Weiman Company (hereinafter “Weiman”), who is directly involved in this action, is not an independent company but is a division of Bassett. Reps West Sales, Inc. (hereinafter “RWS”) is a small, closely held Californian corporation engaged in the sale and display of furniture. Mr. James Sexton, also a Defendant in this action, is a shareholder and director of RWS and serves as the corporation’s Vice President.

The evidence presented to this Court indicates that sometime in the Fall of 1980 Mr. Dick Shaw and Mr. Dan Farr, acting as Weiman representatives, entered into a business relationship with Mr. James Sexton and RWS whereby RWS agreed to act as Weiman’s representative in the states of California, Oregon and Washington. Although the initial contact between the parties occurred at a furniture show in High Point, North Carolina, and the confirmation of the agreement was by a call to High Point, the majority of the performance was to occur on the West Coast, and the goods, which were to be displayed and sold, were to be manufactured in Virginia. This agency relationship continued for approximately three years when it was terminated around November, 1983.

There is little dispute that RWS’s activity associated with this relationship fits into one of four categories: (1) showroom display of furniture; (2) contacts with dealers; (3) contacts with independent designers; (4) and control over rejected goods. A more detailed examination of these individual activities is required in order to fully understand the relationship.

The merchandise to be displayed in the RWS showroom was selected by Mr. Sexton at the semi-annual furniture show in High Point, North Carolina and shipped to the showroom in California. Title, however, to the goods remained in Weiman. Payment would only be due once the furniture was sold. Normally, there would be some type of telephone communication with Weiman prior to sale. Payment would be by RWS’ check mailed to Virginia. RWS also solicited orders from dealers on the West Coast for Weiman furniture. After the initial solicitation, the orders would usually be placed by the dealer on their own forms to Weiman and the furniture would be shipped directly to the dealers. RWS would then receive a commission on the sale. The evidence also indicates that RWS would occasionally place orders for independent designers. The designer would specify their preference, and RWS would place the order on its own forms. Payment for this furniture would be made by a RWS check mailed to Weiman in Virginia. As a final part of the relationship, RWS would take possession of Weiman goods which were shipped to the West Coast and rejected by the purchasers. RWS would communicate by telephone with Weiman to determine what to do with the rejected goods. Although the present action involves a dispute as to amounts due as a result of the alleged disposal of showroom samples and rejected goods, the evidence establishes that the business relationship between the parties was essentially that of an agency relationship and that there were several facets to the services offered by RWS as the manufacturer’s representative.

The central issue in this case is whether the Court has personal jurisdiction over the Defendants such that they can be hailed into a court in Virginia to answer for these claims. Normally, the question of in personam jurisdiction would require a two step analysis. Peanut Corporation of America v. Hollywood Brands, Inc., 696 F.2d 311, 313 (4th Cir.1982). First, an inquiry would have to be made into whether the activity falls within the state’s long-arm statute. Should this be the case, the assertion of jurisdiction would have to comport with the Due Process Clause of the United States Constitution. The Virginia long-arm statute (Va.Code § 8.01-328.1), however, has been construed to extend in personam jurisdiction to the full extent permitted by due process. Danville Plywood Corp. v. Plain and Fancy Kitchens, Inc., 218 Va. 533, 238 S.E.2d 800, 802 (1977); John J. Kolbe, Inc. v. Chromodern Chair Co., 211 Va. 736, 740, 180 S.E.2d 664, 667 (1971); August v. HBA Life Insurance Company, 734 F.2d 168, 171 (4th Cir.1984); Brown v. American Broadcasting Co., 704 F.2d 1296, 1301 (4th Cir.1983). More specifically, the scope of the “transacting business” requirement of § 8.01-328.1(A)1, Va.Code 1950 has been construed to be limited only by the parameters of due process. Medeco Security Locks, Inc. v. Fichet-Baushe, 568 F.Supp. 405 (W.D.Va.1983). Given this interpretation, the only real issue is whether the Defendants’ activities satisfy the requirements of due process, therefore, I will dispense with the traditional two step analysis and examine the due process issue.

The cornerstone of in personam jurisdiction over a non-resident defendant is that he have certain minimum contacts with the forum such that the “maintenance of the suit does not offend traditional notions of fair play and substantial justice.” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). The Supreme Court focused on the quality and nature of the activity to determine whether it was “reasonable and fair” to require a defense in the forum state. Id. 326 U.S. at 317, 66 S.Ct. at 158. As the Supreme Court has noted in subsequent opinions, this reasonableness standard precludes a mechanical application of the minimum contacts test and requires that the facts and circumstances of each case be considered and weighed to determine whether the requisite contacts are present. Kulko v. California Superior Court, 436 U.S. 84, 92, 98 S.Ct. 1690, 1696, 56 L.Ed.2d 132 (1978); Hanson v. Denckla, 357 U.S. 235, 246, 78 S.Ct. 1228, 1235, 2 L.Ed.2d 1283 (1958). “[T]his determination [minimum contacts] is one in which few answers will be written in black and white. The grays are dominant and even among them the shades are innumerable.” Kulko, 436 U.S. at 92, 98 S.Ct. at 1697. Notwithstanding this fact, the crucial factor in every case is that “there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protection of its laws.” Hanson, 357 U.S. at 253, 78 S.Ct. at 1240.

In order to determine whether the assertion of jurisdiction over this party is fair and just, we must undertake to examine their contacts and relationship in its entirety to determine whether, through their activities, there was a purposeful availment of the protections of the laws of the Commonwealth.

Although this is an action for the payment of goods, the relationship between the parties was significantly more involved than that of a normal purchaser-seller. The parties here were engaged in a continuing business relationship whereby the Defendants acted as the Plaintiff’s representative on the West Coast for three years. RWS displayed, promoted, and sold Weiman’s products which were manufactured in Virginia. RWS solicited orders for Weiman products to be sold on the West Coast and also placed orders on their own forms for independent designers which were mailed to Virginia. The goods were paid for by RWS’ checks and mailed to Weiman in Virginia. In addition to the numerous orders placed through the mail, the parties also communicated frequently by the telephone regarding the disposal of showroom merchandise and rejected goods. The Defendants agreed by contract to assume the responsibility of representing the Plaintiff on the West Coast and did fulfill these contractual duties for three years. This was not a single, isolated contract for the purchase of goods but rather a continuing business transaction whereby the Defendants provided their services to the Plaintiff over a period of three years.

I find this present action factually similar to I.T. Sales, Inc. v. Felix L. Dry, 222 Va. 6, 278 S.E.2d 789 (1981). In I.T. Sales, the plaintiff was a Virginia corporation that acted as a manufacturer’s representative. The defendant entered into an employment contract with the plaintiff to promote the merchandise on the West Coast. This agreement, which was made in Virginia, required the defendant to move to California, and substantially all the contractual terms were to be performed on the West Coast. The Court found that there were sufficient contacts to assert personal jurisdiction over the Defendant so as not to offend traditional notions of fair play and justice. Although the actual agreement in this action was negotiated and finally approved in High Point, North Carolina, I do not believe that to be dispositive. RWS agreed to represent a Virginia corporation and promote, display, order, and purchase good manufactured in Virginia. The parties communicated frequently between California and Virginia via the telephone and mail, and most importantly this series of transactions lasted for over a period of three years. The mere fact that this agreement by chance was finalized in North Carolina is not persuasive.

Another case which I find helpful is John G. Kolbe, Inc. v. Chromodem Chair Co., 211 Va. 736, 180 S.E.2d 664 (1971) where jurisdiction over a non-resident defendant was upheld when an agent for the defendant approached the plaintiff in Virginia and requested a purchase order be mailed to the defendant's out-of-state offices. The plaintiff mailed the purchase order and paid for the goods. If the solicitation of a single purchase order while in the boundaries of Virginia is sufficient to sustain assertion of personal jurisdiction, I am of the opinion that the mailing of purchase orders to Virginia over a three year period would also sustain in personam jurisdiction. I do not find the lack of physical presence to be problematic. The consequences and ramifications of the contacts are the same regardless of whether made in person or by mail. In fact, I believe that a series of purchase orders and calls over a period of three years is even more a “purposeful availment of the benefits and protections of the laws” of Virginia than a single purchase order made within the Commonwealth.

I find the Fourth Circuit’s recent opinion in August v. HBA Life Ins. Co., 734 F.2d 168 (4th Cir.1984) of assistance in addressing this question. In August, the plaintiffs purchased an insurance contract from the defendants while a resident of Arizona. The plaintiffs later moved to Virginia and continued to remit premiums by mail to the defendants. While the plaintiffs were in Virginia, the defendants mailed to the plaintiffs a rider to the policy which would have expanded the terms of the contract. The rider was not executed. The Fourth Circuit held that “HBA’s solicitation of the execution of the rider, mailed to Mr. August in Virginia, was a sufficient predicate for exercise of long-arm jurisdiction over HBA, resulting in the state court judgment.” Id. at 173. Analogizing this interpretation to the present ease, each purchase order and telephone call made to Virginia in effect expanded and reaffirmed that original contract of representation finalized in North Carolina.

Considering the facts and circumstances of this relationship in its entirety, it is my opinion that there are sufficient minimum contacts with the forum state so as to sustain the assertion of in personam jurisdiction without offending traditional notions of due process. No single activity standing alone would be sufficient, however, the nature and duration of this relationship along with the individual acts taken as a whole are such that RWS should have reasonably anticipated being brought before a Virginia court. Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). I find due process satisfied and in personam jurisdiction over these Defendants proper.

The Clerk is directed to send certified copies of this Memorandum Opinion to all counsel of record.


author: COFFRIN, Chief Judge.

text:
    John H. STUART, individually and on behalf of all similarly situated plaintiffs v. FEDERAL ENERGY SYSTEMS, INC., George L. Yost, Jr. and Vernon L. Williams.
    Civ. A. No. 82-261.
    United States District Court, D. Vermont.
    Nov. 14, 1984.

      Robert P. Davison, Jr., Stowe, Vt., for plaintiff.
    David H. Greenberg, Bloomberg & Greenberg, Burlington, Vt., for defendants.
   OPINION AND ORDER

COFFRIN, Chief Judge.

This action was initially filed by a Vermont citizen against a California corporation known as Federal Energy Systems, Inc. (FES). Plaintiff has alleged that he was defrauded in the purchase of a franchise to sell energy management technology in Vermont. Plaintiff subsequently amended his complaint to add as defendants the corporation’s Treasurer/Secretary Vernon Williams and its National Marketing Director, George Yost. Yost and Williams have now moved to dismiss the complaint against them individually for lack of personal jurisdiction. A hearing was held on this issue, and the court heard arguments based on defendants’ affidavits and plaintiff’s testimony. For the reasons stated below, defendants’ motion is denied.

In an earlier decision regarding personal jurisdiction over the defendant corporation, the court found sufficient minimum contacts based on the fact that defendant shipped goods to Vermont, advertised in a national publication, and received royalties on plaintiff’s sales in Vermont. Stuart v. Federal Energy Systems, Inc., No. 82-261, slip op. at 6 (D.Vt. Dec. 20, 1983). The court held defendant’s contacts with Vermont sufficient to support jurisdiction based on its view that defendant’s conduct was purposefully directed towards Vermont and inevitably affected persons there. Id. (citing Braman v. Mary Hitchcock Memorial Hospital, 631 F.2d 6, 9 (2d Cir. 1980)).

Background

Defendants Yost and Williams argue that the contacts of the corporation have not been their own personal contacts with Vermont, and that it is not otherwise sufficient for personal jurisdiction that they have received economic benefit from the corporation’s activities in Vermont. More specifically, in their affidavits they maintain that they have never been in the State of Vermont. Neither owns property in Vermont, nor has an office in the state. Further, they contend that they have never sent agents or representatives into the state for any purpose. Although the plaintiff claims that he received four pieces of equipment from California, neither defendant admits to having sent it. They contend, rather, that the corporation shipped the equipment. Both defendants deny having responsibility for advertising franchises in the State of Vermont. They admit that they discussed details surrounding plaintiff’s purchase of an FES franchise with the plaintiff when he visited them in California. Williams admits to having spoken with plaintiff on the phone on numerous occasions, but insists that he only initiated one call. Yost, on the other hand, maintains that he has never had an occasion to speak with the plaintiff on the telephone. Defendants’ claim that their contact with the plaintiff arose only after he contacted their corporation following up an advertisement in a national publication.

Plaintiff testified that he read an FES advertisement in a periodical published by the National Society for Professional Engineers. The periodical has a national circulation of approximately 30,000-40,000 copies per month. He is a member of the Vermont Society of Engineers, an affiliate of the national group, of which there are approximately 200 or 300 members. After seeing the advertisement, plaintiff claims that he telephoned FES to inquire about the benefits of purchasing an FES energy management franchise. Plaintiff disputes defendant Yost’s contention that Yost never spoke with him by telephone. Plaintiff maintains that defendant Yost spoke with him on the telephone prior to his February, 1982 trip to California, talking of the tremendous financial gains to be had from purchasing a franchise and encouraging him to come to California. On another occasion in the spring of 1982 plaintiff claims that defendant Yost called him and plaintiff questioned him regarding FES’s lack of exclusive rights. Plaintiff agrees with defendant Williams’ assertion that they spoke on the telephone on several occasions and that only one phone call was initiated by Williams. Plaintiff’s essential claim is that the defendants perpetrated a fraud on him in their individual capacities with full knowledge that their activities were directed at the State of Vermont and that the harm would occur in Vermont. He maintains that in phone calls and discussions with him, defendants, in furtherance of their own motives, intentionally misrepresented facts to induce him to purchase a spurious franchise.

Discussion

When considering a 12(b) motion for lack of jurisdiction a district court has considerable procedural leeway. Visual Sciences, Inc. v. Integrated Communications, Inc., 660 F.2d 56, 58 (2d Cir.1981). The court may consider affidavits, conduct a hearing on the merits, or grant discovery. Id. In ruling on this motion, we have considered defendants’ affidavits, plaintiff’s testimony and the Consolidated Amended Complaint.

The burden of proving the facts necessary to sustain jurisdiction is on the plaintiff. However, when a determination of the jurisdictional facts is intertwined with and may be dispositive of questions of ultimate liability, a “threshold” showing of jurisdiction is all that is required. See Vermont Castings, Inc. v. Evans Products Co., 510 F.Supp. 940, 944 (1981).

As this is a case under diversity jurisdiction, federal jurisdiction over a nonresident defendant may be asserted only to the extent permitted by Vermont’s “long-arm” statute. Braman v. Mary Hitchcock Memorial Hospital, 631 F.2d 6, 7 (2d Cir. 1980) (citing Arrowsmith v. United Press International, 320 F.2d 219, 229 (2d Cir. 1963) (en banc)). The Vermont long-arm statute provides for suit against an out-of-state defendant who has, or to whom may be imputed, contacts or activities within the state “sufficient to support a personal judgment against him.” Vt.Stat.Ann. tit. 12 § 913(b). The Vermont long-arm statute extends to the outer limits permitted by the Due Process Clause of the Fourteenth Amendment. Braman, supra, at 7.

Jurisdiction over the defendants may be thus asserted only if there exist “minimum contacts” between defendants and Vermont, such that the maintenance of the suit “does not offend the ‘traditional notions of fair play and substantial justice.’ ” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 (1940)). Under Vermont law the cause of action need not “arise out of” the minimum contacts of the defendant with the state, provided that the defendant’s activities are reasonably sufficient to support jurisdiction. Braman, supra, at 8. If the defendant has purposely availed himself of the privileges and protections of a state’s laws, and he ought reasonably to foresee that his activities may have potential consequences in that state that would require him to defend an action there, he will be amenable to in personam jurisdiction. World-Wide Volkswagen Corporation v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980); Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1948).

To assert personal jurisdiction over the defendants in their individual capacities, we must find an independent basis apart from our earlier determination of jurisdiction over the corporation. Escude Cruz v. Ortho Pharmaceutical Corp., 619 F.2d 902, 907 (1st Cir.1980). “What is required is some showing of direct personal involvement by the corporate officer in some decision or action which is causally related to plaintiffs injury.” Id. Because the issue of personal jurisdiction is intertwined with issues of liability, this showing requires us to consider the substantive law pertaining to personal liability of corporate officers. Under Vermont law a corporate officer can be held liable for a tort in which he personally participated and the person wronged may proceed against him, although the corporation may also be liable. MacMillan Co., supra note 1. See also Donsco, Inc. v. Casper Corp., 587 F.2d 602, 605-06 (3d Cir.1978) (corporate officer held liable where he was the “central figure” in the alleged illegal activities of the corporation;- Marks v. Polaroid Corp., 237 F.2d 428, 435 (1st Cir.1956) (corporate officer held liable where he “not only actively participated in the business of the corporation but also directly contributed to the corporation’s [patent] infringement”). Thus, for this court to have the power to assert jurisdiction over the defendants, the plaintiff must allege sufficient facts to establish that the defendants personally participated in the transaction causing his injury. Having considered defendants’ affidavits and plaintiff’s testimony, along with the Consolidated Amended Complaint, we conclude that the plaintiff has made such a showing of jurisdiction.

In Colder v. Jones, — U.S. -, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), the Supreme Court had occasion to decide whether a California court could exercise personal jurisdiction over two Florida residents, a reporter and an editor for a national magazine that had published an allegedly libelous article about an entertainer in California. The article had been written and edited by the Florida defendants. The Court found sufficient contacts under the “effects” test established in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98, 100 S.Ct. 559, 567-68, 62 L.Ed.2d 490 (1980). Although the story was written by two Florida residents in the State of Florida, the court determined that the “brunt of the harm” occurred in California where the plaintiff/entertainer resided and where her reputation was impugned.

It is significant to point out that while the Court rejected the suggestion that the First Amendment enter into the analysis, it based its decision on an intentional tort analysis. The unanimous decision rested on the Court’s finding that the defendants had engaged in “intentional, and allegedly tortious, actions expressly aimed at California.” Colder, 104 S.Ct. at 1487. Moreover, it found that the defendants knew that the article would have a “potentially devastating impact” upon the plaintiff in California since the magazine had a large circulation there and the plaintiff was a celebrity residing there. Rejecting defendants’ arguments that they were mere employees and, thus, had no economic stake in the newspaper, the Court held that personal jurisdiction over them in California was proper “because of their intentional conduct in Florida calculated to cause injury to respondent in California.” Id. at 1488.

We believe that Colder dictates the result in this case. Plaintiff’s amended complaint alleges that defendants Williams and Yost perpetrated a fraud aimed at Vermont. “[Defendants] are correct that their contacts with [the forum state] are not to be judged according to their employer’s activities there. On the other hand, their status as employees does not somehow insulate them from jurisdiction.” Id. at 1487. Neither party disputes that defendants Williams and Yost at some point made personal contact with the plaintiff. Whether they spoke with him via telephone or in person in California is irrelevant. We know of no doctrine which permits fraudulent conduct whenever the defrauded party initiates discussion. The critical fact is that the defendants, once they had knowledge that plaintiff resided in Vermont and that he was opening up an FES franchise covering the State of Vermont, knew that they were engaging in “intentional, and allegedly tortious, actions expressly aimed at” Vermont. Id.

The fact that plaintiff visited defendants in California or that some of the discussions surrounding plaintiffs purchase of a franchise took place in California does not take away the power of this court to assert jurisdiction over them. The Colder test looks to where “the brunt of the harm occurs.” Id. Just as the plaintiff in Colder “[was] the focus of the activities of the defendants out of which the suit arises,” so, too, is the plaintiff in the instant case. Id. at 1486. Once the defendants knew that plaintiff was a Vermont resident who planned to open up a Vermont franchise, they knew that their alleged misrepresentations “would have a devastating impact” on him and that the harm would occur in Vermont. Id. at 1487.

Defendants’ contention that they did not participate in the alleged fraud perpetrated on the plaintiff individually but only in their capacity as corporate representatives is no more persuasive than defendants’ analogy in Colder. Defendants in that case characterized their situation as that of a hypothetical welder employed in Florida who works on a boiler which later explodes in California. They argued that the welder should not be held liable because he “has no control over and derives no direct benefit from his employer’s sales ____” Id. The Supreme Court rejected that argument outright, reminding the defendants that they were not charged with “mere untargeted negligence.” Id. We think the Supreme Court analysis is especially appropriate here where the defendants were not mere employees, but the primary promoters of the franchise and the moving spirit of the corporation.

The essence of Colder is that intentional tortfeasors should be prepared to defend themselves in any jurisdiction where they direct their alleged tortious conduct. To paraphrase the Supreme Court, an individual injured in Vermont need not go to California to seek redress from persons who, though remaining in California, knowingly cause the injury in Vermont. Id. Like the editor and the reporter in Colder, defendants in the instant case “are primary participants in an alleged wrongdoing intentionally directed at [the forum state].” Id. As such, they must reasonably anticipate being haled into court in Vermont.

We hold that the plaintiff has made a prima facie showing of jurisdiction. We do not base personal jurisdiction on the uncontested jurisdiction over defendants’ corporation. Rather, defendants’ personal participation in the actions which caused plaintiff harm provides a distinct basis for this court’s assertion of personal jurisdiction over them. Defendants may, of course, raise the jurisdictional issue again at trial should the facts then appear significantly different than as alleged.

Conclusion

Accordingly, it is hereby ORDERED that defendants Yost and Williams’ motion to dismiss for lack of personal jurisdiction is denied.

      . Defendants’ motion also listed failure to state a claim as a ground for dismissal. Although defendants' memorandum in support of their motion addressed only the jurisdictional question, the court notes that plaintiff has indeed stated a claim. It is well established that "[a] corporate officer can be held liable for a tort in which he personally participated, and the person wronged may proceed against him, although the corporation may also be liable.” MacMillan Co. v. I.V.O.W. Corp., 495 F.Supp. 1134, 1137 (D.Vt. 1980) (citing New England Acceptance Corp. v. Nichols, 110 Vt. 478, 8 A.2d 665 (1939)).

      . Mr. Yost has never been in Vermont except to appear in court in this matter.

      . Defendants’ claim that plaintiff is improperly advocating a piercing of the corporate veil under the guise of a jurisdictional analysis is misdirected. A court may properly assert personal jurisdiction over individuals who are joint tortfeasors with the corporation. Fraud is an intentional tort, and personal jurisdiction may be had over individuals who commit a tort in furtherance of personal motives, wholly apart from a determination of jurisdiction over the corporation which they represent. MacMillan Co., supra note 1, at 1137.


author: FORD, Judge:

text:
    UST, INC., and Tsubakimoto Chain Company, Ltd., Plaintiffs, v. UNITED STATES, Defendant.
    Court No. 81-10-01392.
    United States Court of International Trade.
    Aug. 3, 1984.
    Barnes, Richardson & Colburn, Chicago, 111. (Robert E. Burke on the brief; David A. Riggle and Thomas M. Keating, Chicago, 111., of counsel), for plaintiffs.
    Richard K. Willard, Acting Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Washington, D.C. (Sheila N. Ziff, Washington, D.C., on the brief), for defendant.
   Opinion and Order

FORD, Judge:

Plaintiffs have moved, pursuant to Rules 1 and 7 of the Rules of this Court, for an order remanding this matter to the International Trade Administration (ITA) of the Department of Commerce. It is the contention of plaintiffs that its submissions, dated August 18, 1981 and September 19, 1981, which were returned by the ITA, constitute part of the Administrative Record and should have been considered by the ITA in its annual review made by virtue of Section 751 of the Trade Agreements Act of 1979, 19 U.S.C. § 1675.

The submissions, defendant contends, were untimely and, therefore, rejected. Defendant has cross-moved for an order, under Rules 7 and 56.1, supra, directing this action be submitted for judgment on the Agency record. Plaintiffs contend such motion is premature and should be denied, since the material they had submitted is not part of the Agency record. Defendant has also asserted, as affirmative defenses, that: (1) plaintiffs have failed to state a cause of action upon which relief can be granted; (2) the findings and order requested in plaintiffs’ prayer for relief are outside the scope of relief available in this action; and (3) plaintiffs, to the extent that their complaint is not limited to a challenge of the final results of 19 U.S.C. § 1675, have failed to invoke the jurisdiction of this court.

The affirmative defenses are without merit. Plaintiffs have instituted this action to contest the “Final Results of Administrative Review of Antidumping Finding” concerning roller chain, other than bicycle, from Japan (46 Fed.Reg. 44488, September 4, 1981), conducted pursuant to 19 U.S.C. § 1675.

The motion before the court was made by virtue of the invocation of such jurisdiction. It is, therefore, apparent that all of the affirmative defenses fail, since the court’s jurisdiction has been invoked and the relief requested is within the jurisdiction of the court. Therefore, plaintiffs have instituted a cause of action upon which relief can be granted.

This action was the result of an initial antidumping finding published in the Federal Register on April 12, 1973 (38 Fed. Reg. 9226), T.D. 73-100. The issue raised by the complaint in the instant case involves the scope of the finding, i.e., the types of chain which were covered by the 1974 dumping finding. The administrative record is replete with requests by plaintiffs for a specific definition which would clearly indicate the types of chain intended to be covered by the review of the dumping finding. This was necessary because a party who failed to provide information with respect to a particular type of chain covered by the review would have its liability determined by the “best information available”, which is the individual firm’s margin on reported sales or two percent, whichever is higher. (R 628, Fed.Reg. Vol. 46, No. 172, Page 44488, September 4, 1981).

The court is convinced that a specific definition was not provided prior to the final review of the Administrative Review of September 4, 1981. As a matter of fact, the court has reviewed the letters of counsel for plaintiffs requesting a specific definition or replying to so-called definitions during the period from March 27, 1980, to January 1, 1981. In addition to the four letters during the above period, there were additional correspondences and discussions at a public hearing, as well as at a meeting of August 18, 1981 (R. 534), relative to a definition to indicate the scope of the review. A draft definition was provided to plaintiffs in a letter dated July 1, 1981, but it was not until September 4, 1981, when the ITA published its final determination, that a revised definition of the scope was included. It provided as follows:

The term “roller chain, other than bicycle chain” as used in this finding includes chain, with or without attachments, whether or not plated or coated, and whether or not manufactured to American or British standards, which is used for power transmission and/or conveyance. Chain of this type which complies with one of the following description is included in the finding:
A series of alternately assembled roller links and pin links in which the pins articulate inside the bushings and the rollers are free to turn on the bushings. Pins and bushings are press fit in their respective link plates. Chain may be single strand having one row of roller links, or multiple strand having more than one row of links. The center plates are located between the strands of roller links. Such chain may be either single or double pitch and may be used as power transmission or conveyor chain.
This finding also covers leaf chain, which consists of a series of link plates alternately assembled with pins in such a way that the joint is free to articulate between adjoining pitches.

Notwithstanding the lack of a definitional scope of the review, plaintiffs submitted information to the ITA on August 19, 1981, approximately two weeks prior to the final determination, which included certain chain subsequently found not to be covered. Plaintiff also sent a revised letter dated September 19, 1981, which excluded such information on the chains not covered by the review. This was the data rejected and returned by the ITA as “untimely” by its letter of October 1, 1981 (R. 534-544).

By virtue of their uncertainty of the scope of review, plaintiffs’ submission of information, while filed prior to the final determination, was delayed. It is evident to the court that plaintiffs’ delay was through no fault of their own. Indeed, plaintiffs’ action in requesting from the ITA a definition of the merchandise being reviewed was not merely perfunctory, but rather sought after with tenacity.

Parties to the administrative proceedings are entitled to notice of the following under the provisions of 5 U.S.C. § 554(b):

(b) Persons entitled to notice of an agency hearing shall be timely informed of—
(1) the time, place, and nature of the hearing;
(2) the legal authority and jurisdiction under which the hearing is to be held;
(3) the matters of fact and law asserted.

In Hide-Away Creations, Ltd. v. United States, 577 F.Supp. 1021, 6 CIT-(1983), the court held a lack of notice of commencement of an administrative review under 19 U.S.C. § 1675 so seriously prejudiced the rights of plaintiff as to warrant a remand.

The requirement to specify the matter of fact and law was addressed in Rodale Press, Inc. v. Federal Trade Commission, 407 F.2d 1252 (D.C.Cir.1960). See also, North Alabama Express v. United States, 585 F.2d 783 (5th Cir.1978); Bendix v. Federal Trade Commission, 450 F.2d 534 (6th Cir.1971).

An opportunity to be heard encompasses a notice of hearing, as well as the opportunity to know the claims of the appearing party. In Morgan v. United States, 304 U.S. 1, 58 S.Ct. 773, 82 L.Ed. 1129 (1937) the following comment was made:

The right to a hearing embraces not only the right to present evidence but also a reasonable opportunity to know the claims of the opposing party and to meet them. The right to submit argument implies that opportunity; otherwise the right may be but a barren one. Those who are brought into contest with the Government in a quasi-judicial proceeding aimed at the control of their activities are entitled to be fairly advised of what the Government proposes and to be heard upon its proposals before it issues its final command.

Defendant, having returned the information submitted by plaintiff, could not have considered such evidence in its review and calculations and, therefore, does not have a complete record before it for the annual review prescribed by 19 U.S.C. § 1675. The motion for review under Rule 56.1 by defendant must, therefore, be denied, and plaintiff’s motion for remand is granted.

In view of the foregoing, it is hereby

ORDERED that defendant’s cross motion be, and the same is hereby denied; and it is further

ORDERED that plaintiffs’ motion for remand to the Commerce Department for completion of the administrative record is granted; and it is further

ORDERED that plaintiffs’ submissions of August 18, 1981 and September 19, 1981, with all original attachments, are found to be, and are hereby deemed, part of the original record in this case and that plaintiffs shall file the original documents with the court and serve a copy on the defendant’s attorneys within five (5) days of receipt of this order; and it is further

ORDERED that all materials, submitted to the court under the terms of this order, designated as confidential by the plaintiffs when originally submitted to the Commerce Department, are deemed part of the confidential record; and it is further

ORDERED that the Commerce Department will complete its calculations under 19 U.S.C. § 1675 et seq. on the products set forth in said documents within forty-five (45) days from the date of entry of this order. In the interests of uniformity, such calculations will apply the same methodologies as were used during the general annual review involving the plaintiffs’ transactions for the period 4/1/79 through 11/30/79 as incorporated in the final determination published on September 1, 1981. Plaintiffs will have twenty-five (25) days thereafter to comment on the calculations. Thereafter, the Commerce Department will report the data it gathered and its findings to the court no later than ninety (90) days following the date of this order.