author: McLAUGHLIN, District Judge.

text:
    TILE, MARBLE, TERRAZZO, FINISHERS, SHOP WORKERS, GRANITE CUTTERS INTERNATIONAL UNION, AFL-CIO, Plaintiffs, v. GRANITE CUTTERS AND MARBLE SETTERS AND HANDLERS OF GREATER NEW YORK AND VICINITY, LOCAL 106, Rocco Barone, Louis Nappo, Michael Scorcia, Harvey Consor and Anthony Magrone, Defendants.
    No. 85 CV 3256.
    United States District Court, E.D. New York.
    Nov. 20, 1985.
    Jubelirer, Pass & Intrieri (Joseph J. Pass, Jr., of counsel), Pittsburgh, Pa., Stephen H. Kahn, New York City, for plaintiffs.
    Cohen, Weiss & Simon (Eugene S. Friedman, Richard M. Seltzer, April D. Harris, of counsel), New York City, for defendants.
   MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

The plaintiff in this case is an international union that seeks an injunction enforcing a trusteeship it imposed on the defendant local union. I have read the briefs and affidavits submitted by both sides, and after considering the testimony at the hearing of October 10, 1985, I have reached the following findings of fact and conclusions of law.

Findings of Fact

1. This Court has jurisdiction over this dispute under section 301 of the Labor-Management Relations Act of 1947, 29 U.S.C. § 185.

2. The plaintiff, Tile, Marble, Terrazzo, Finishers, Shop Workers, Granite Cutters International Union, AFL-CIO (“the International”), is an unincorporated labor organization and was at least at one point the parent organization of the defendant.

3. Defendant Granite Cutters and Marble Setters and Handlers of Greater New York and Vicinity, Local 106 (“Local 106”) is a labor union which represented employees in the craft of cemetery monument cutters and setters in the New York metropolitan area. The following officers of Local 106 are also defendants in this action: Louis Nappo, President; Rocco Barone, Treasurer; Michael Scorcia, Vice President; Harvey Consor, Recording Secretary; and Anthony Magrone, Business Agent. The defendant Local contends that it voted in March 1984 to disaffiliate from the plaintiff International, and that on August 2, 1985 its members voted to merge into Local 282, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (“Local 282”).

4. The defendant Local claims that it notified the International of the 1984 disaffiliation vote in March of that year. The International contends that it did not receive that notification, and did not see a copy of the letter dated March 16, 1984 until July 8, 1985.

5. The parties agree that in April 1984, Local 106 ceased paying per capita taxes to the International. The per capita tax must be paid in order for the Local members to be eligible for death benefits provided by the International Union. The Local contends that when it submitted this final payment, which covered the period through February 1984, it again informed the International of Local 106’s decision to disaffiliate.

6. During the spring of 1985, the leadership of Local 106 met several times with Robert A. Sasso, President of Teamsters Local 282. The International learned of the Local’s desire to become affiliated with Local 282. On July 16, 1985, the plaintiff International placed the defendant Local under a temporary trusteeship. The letter from the president of the International cited three reasons for imposing the trusteeship. It alleged that Local 106 had failed to pay per capita taxes since February 1984. It further alleged that the Local had not answered the International’s letter of April 22, 1985, which had requested information about the collective bargaining agreements of the Local. Finally, the International asserted that on July 8, 1985 it had received Local 106’s notification dated March 16, 1984 that the Local membership had voted to disaffiliate from the International.

7. Plaintiff contended at the hearing and in its memorandum filed the day before the hearing that the trusteeship was imposed not to prevent the disaffiliation, but rather to ensure that the members were fully informed about the pros and cons of disaffiliation before voting on the proposed merger with Teamsters Local 282. I find, however, that this is merely an after-the-fact rationalization for the International’s action. In various documents discussing the trusteeship — including the letter imposing it, other letters sent to various union personnel, the LM-15 form submitted to the Department of Labor, and the initial brief filed in this Court — not once did the International mention this concern with the democracy of union procedures. I find that the third reason for the imposition of the trusteeship was in fact to prevent disaffiliation, and that the concern with disseminating information to the members before the vote is, as defendants phrase it, a “litigation-related afterthought.” Defendant’s Post-Hearing Memorandum at 3.

8. Article VII of the International constitution governs the imposition of trusteeships on locals. It provides that the General President

may file charges against any officer or member with the General Executive Council for hearing, or appoint a temporary trustee to take charge and control of the affairs of such subordinate body provided, however, that prior to the appointment of such trustee he shall cause to be issued a notice setting a time and place for hearing for the purpose of determining whether such temporary trustee shall be appointed, but provided further, however, that where in the judgment of the General President, Secretary —Treasurer, an emergency situation exists within the subordinate body, a temporary trustee may be appointed prior to such hearing, but such hearing shall then commence within 30 days and a decision made within 60 days after the appointment of such temporary trustee.

The International notified the members of Local 106 by a letter dated July 29, 1985 that a hearing would be held on August 13, 1985. The notice stated that the hearing would be held at 7902 Metropolitan Avenue, Middle Village, Queens, at 8:00 p.m. All interested parties were invited to participate. The International alleges that this hearing took place on August 13, 1985 and that the Hearing Officer subsequently recommended that the trusteeship be continued in accordance with the union constitution and by-laws.

9. Meanwhile, the leadership of Local 106 decided to have a secret ballot election. This appears to have been motivated by the Local’s doubts about the validity of the March 1984 vote to disaffiliate. It appears that National Labor Relations Board procedures were not followed at that time; in any case, the Local had continued to do business with the International. Thus, on the advice of counsel, the Local resubmitted the disaffiliation question to its membership. The election was held on August 2, 1985, about two weeks after the imposition of the trusteeship. Over eighty percent of the members voted to leave the plaintiff International and merge with Teamsters Local 282.

10. The president of the Local notified the president of the International of the election and its results by letter dated August 5, 1985. He stated in his letter that the International could have the books, records, and property of the Local, and whatever per capita assessments were claimed as due, if the International was willing to abide by the wishes of the employees to merge into Teamsters Local 282.

11. On August 24, 1985 the Local opened a bank account in which it deposited certain funds to be held in trust for the plaintiff International. The amount placed in the account was the amount of per capita tax assessments that would have accrued between March 1984 and August 1985.

12. Plaintiff International now seeks a preliminary injunction directing the defendant Local to turn over all funds, books, records, papers and other assets of the Local to the Trustee appointed by the International and to cease interfering with the Trustee’s administration of Local 106.

Conclusions of Law

1. Any discussion of the validity of a trusteeship must start with the Labor-Management Reporting and Disclosure Act (“LMRDA”). At 29 U.S.C. § 462, it provides:

Trusteeships shall be established and administered by a labor organization over a subordinate body only in accordance with the constitution and bylaws of the organization which has assumed trusteeship over the subordinate body and for the purpose of correcting corruption or financial malpractice, assuring the performance of collective bargaining agreements or other duties of a bargaining representative, restoring democratic procedures or otherwise carrying out the legitimate objects of such labor organization.

Thus § 462 prescribes the proper method for imposing a trusteeship and the proper reasons for doing so. The inquiry does not end there, however. 29 U.S.C. § 464(c) states, in pertinent part, that

[in] any proceeding pursuant to this section a trusteeship established by a labor organization in conformity with the procedural requirements of its constitution and bylaws and authorized or ratified after a fair hearing ... shall be presumed valid for a period of eighteen months from the date of its establishment and shall not be subject to attack during such period except upon clear and convincing proof that the trusteeship was not established or maintained in good faith for a purpose allowable under section 462 of this title.

Thus, if the trusteeship was imposed in conformity with the International’s constitution, it is presumed to be valid absent clear and convincing evidence that the International did not act in good faith for a proper purpose.

2. The Second Circuit has made clear, in National Association of Letter Carriers, AFL-CIO v. Sombrotto, 449 F.2d 915 (1971), that Congress’ decision to afford the trusteeship a presumption of validity means that the ordinary standard for a preliminary injunction must be modified in this context. Ordinarily a preliminary injunction will issue only

where the plaintiff establishes possible irreparable harm and either (1) probable success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the movant’s favor.

Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200, 206-07 (2d Cir.1979). Application of this standard to the trusteeship situation, however, would place the burden on the plaintiff International, when the statute clearly states that the burden should be on the defendant Local to prove invalidity by clear and convincing evidence. The Second Circuit has concluded, therefore, that the parent union “is entitled to a preliminary injunction imposing a trusteeship on application unless the local comes forward with adequate proof that the trusteeship is not being sought in good faith.” Sombrotto, supra, 449 F.2d at 921.

3. All this presumes, however, that the trusteeship was imposed in conformity with the International’s constitution. If this procedural regularity is absent, the presumption of validity does not arise. See 29 U.S.C. § 464(c).

4. As noted earlier, the International’s constitution requires that in an ordinary situation, a hearing is to take place prior to the appointment of the trustee. If the General President or Secretary-Treasurer determines that an emergency situation exists, however, the trusteeship may be imposed before the hearing, as long as the hearing takes place within thirty days and a decision is rendered within sixty days. No prior hearing was held in this case, so presumably the International was relying on the emergency provision.

5. “Where ‘emergency circumstances’ are relied upon to justify the imposition of a trusteeship without a prior fair hearing, the courts will look behind the parent organization’s decision to determine whether there actually were ‘emergency’ circumstances.” T. Kheel, Labor Law § 45.-04[2], at 45-33; see Retail Clerks Union, Local 770 v. Retail Clerks International Association, 479 F.2d 54 (9th Cir.1973); Local Union 13410, United Mine Workers of America v. United Mine Workers of America, 475 F.2d 906 (D.C.Cir.1973).

6. This brings us back to the International’s three reasons for imposing the trusteeship: the local’s failure to pay the per capita tax, its failure to provide information about collective bargaining, and its impending affiliation with Teamsters Local 282. I shall address each in turn.

a. Failure to pay the per capita tax

As Judge Sand pointed out in Retail, Wholesale, Department Store Union, AFL-CIO-CLC v. National Union of Hosp. & Health Care Employees, 577 F.Supp. 29, 32 (S.D.N.Y.1984), the word “emergency” “connotes a situation ‘developing suddenly and unexpectedly and demanding immediate action.’ ” Id. at 33 (quoting American Heritage Dictionary). In the instant case Local 106 has not paid per capita assessments to the International since April 1984, and any effect of that non-payment on death benefits of Local 106 members has existed for the same period of time. Thus, this hardly presented an emergency in July 1985.

b. Failure to provide information about collective bargaining agreements

Although assuring the performance of collective bargaining agreements is a legitimate object of a trusteeship, see 29 U.S.C. § 462, the withholding of information by the Local does not necessarily constitute an emergency. In its trusteeship report to the NLRB, the International reports that the last contract of which it was aware had expired in April 1984 and that the Local had not informed it of the signing of any new contract. The International did not make any request in writing, however, until April 1985, a year later. Thus, in the absence of any evidence suggesting that the Local abdicated its responsibility as bargaining agent for its members, I conclude that the Local’s withholding of the information did not constitute an emergency in July 1985.

c. The Local’s affiliation with Local 282

Whether the Local’s impending merger with Local 282 constituted an emergency justifying a pre-hearing trusteeship is a slightly more complicated question. Although the Second Circuit has found that prevention of disaffiliation can be a legitimate reason for imposing a trusteeship, see Executive Board Local 1302, United Bhd. of Carpenters and Joiners of America v. United Brotherhood of Carpenters and Joiners of America, ATI F.2d 612 (2d Cir.1973); National Ass’n of Letter Carriers v. Sombrotto, 449 F.2d 915 (2d Cir. 1971), I am persuaded by the defendant’s effort to distinguish those cases from the situation here. The cases cited by plaintiff involved attempts by locals to remain in their internationals and to withdraw from multi-union bargaining units, actions which directly affect the collective bargaining relationship. The Court allowed those trusteeships in order to prevent adverse affects on collective bargaining obligations.

Here, however, the Local — which was and intended to remain the local bargaining unit — was attempting to break off from the International. This action would not affect any bargaining responsibilities of the International or any other entity, because those responsibilities were at all times in the hands of the Local. This is simply not a situation where a local attempts to withdraw from a bargaining unit and is disciplined by a parent with whom it wants to remain affiliated.

Plaintiff argues, however, that the threat of disaffiliation can constitute an emergency even in the absence of an immediate threat to the bargaining unit. It points to C.A.P.E. Local Union 1983, IBPAT, AFL-CIO, of Cape May County, N.J. v. International Bhd. of Painters & Allied Trades, 598 F.Supp. 1056 (D.N.J.1984), as support for that contention. The Court in that case stated that while “disaffiliation, in and of itself, is [not] a sufficient ground for a continuing trusteeship, ... the threat of imminent disaffiliation, when combined with other possible problems within the Local, suffices for the imposition of a temporary trusteeship.” Id. at 1069-70 (emphasis in original).

In that case, however, there were several “other problems” not present here, including an alleged breach of fiduciary duty by local officers, a possibly illegal change in the bargaining agent, and a genuine concern — reflected in the LM-15 form submitted by the international involved in that case — that the members making the disaffiliation decision were not receiving sufficient information.

Here there is no allegation of corruption on the part of the Local officers, the International had never been involved with collective bargaining, and, as noted above, any concern about democratic procedures within the Local “appears more as an afterthought justifying abrupt and arbitrary action taken.” Local Union 13410, United Mine Workers of America v. United Mine Workers of America, 475 F.2d 906, 913 (D.C.Cir.1973). Accordingly, I find that in this case, the imminent disaffiliation of Local 106 did not constitute an emergency warranting imposition of a trusteeship without a hearing.

7. I thus conclude that there was no emergency justifying the imposition of a trusteeship prior to a hearing. Because this means that the trusteeship was not imposed in conformity with the International’s own Constitution, the presumption of validity does not arise. It may also be that, in the absence of an emergency, the failure to hold a pre-imposition hearing means that the trusteeship is void from its inception. That was the view of the District of Columbia Circuit in Local 13410, United Mine Workers of America v. United Mine Workers of America, supra, 475 F.2d at 915.

The Second Circuit has not had occasion to go as far. In Sombro tto, supra, 449 F.2d at 920, the Court held that post-hoc ratification is permissible under the LMRDA if the union’s constitution or bylaws provide for that procedure. There, however, the Court presumed the existence of the factual predicate for the invocation of such a provision. It did not state what the effect on the trusteeship would be if the constitution contained a provision for pre-hearing imposition in an emergency, but the “emergency trusteeship” at issue was imposed when there was in fact no emergency. Presumably, however, the Second Circuit would agree with the District of Columbia Circuit that in such circumstances a trusteeship imposed without a hearing is void.

I need not decide that issue today, however, because even if the trusteeship is not void as a matter of law, the plaintiff has not carried the burden it must meet in order to obtain a preliminary injunction. Thus, even if we assume that the absence of an emergency does not void the trusteeship altogether, it at least means that the trusteeship was not imposed in conformity with the International’s own constitution. This in turn means at minimum that the presumption of validity does not arise. Accordingly, whether the trusteeship is to be enforced is to be determined according to the ordinary standards governing the issuance of preliminary injunctions.

8. The plaintiff has failed to establish the possibility of irreparable harm if the injunction is denied. The Local has always functioned as bargaining agent without participation by the International, and since June 1985 it has signed seventeen collective bargaining agreements. The International has not demonstrated what harm could come from allowing the Local to continue to do so. Nor has the plaintiff raised any other potential hardships. The claimed per capita assessments are safely in escrow, and there is no indication that the Local officers are behaving improperly in any other respect. I therefore conclude that there is no risk of irreparable harm if the Local' is allowed to continue to function without the supervision of the International. The motion for a preliminary injunction is denied.

SO ORDERED.

      . This presents an apparent conflict. The trusteeship is proper only if it is imposed in accordance with the union’s constitutional procedures. Where the parent organization relies on a provision allowing pre-hearing imposition of a trusteeship in an emergency situation, the procedural regularity of the imposition depends on whether the plaintiffs had a good faith belief that an emergency existed. Retail, Wholesale, Department Store Union, AFL-CIO-CLC v. National Union of Hospital and Health Care Employees, 577 F.Supp. 29, 32 (S.D.N.Y.1984). It could be argued that the Second Circuit’s mandate that the burden be on the defendant to prove the parent’s bad faith in imposing the trusteeship means that the plaintiff is entitled to the presumption of good faith on the issue of the existence of an emergency as well.
      Judge Sand of the Southern District of New York faced this problem in Retail, Wholesale, supra. That situation was complicated by the fact that a preliminary injunction hearing and a trial on the merits were combined. Judge Sand solved the problem by holding that even if the burden were on the defendants, they had met it in that case. The facts in this case are less clear, so I must proceed to determine whether the presumption of validity applies to the International’s determination that an emergency existed.
      The pieces fall into place fairly easily when one remembers that the Second Circuit shifted the burden to the defendant in order to effectuate the statutory presumption. That presumption only arises if it is determined that the trusteeship has been imposed properly. It logically cannot apply to the decision whether the trusteeship has been imposed properly. Any other result would allow the parent organization to bootstrap its trusteeship into a presumption of validity: it could invoke the presumption to support its contention that the presumption ought to arise. In other words, while as a general proposition deference should be given a union’s interpretation of its own rules, see Drywall Tapers & Painters of Greater New York, Local 1974 v. Operative Plasterers' and Cement Masons’ Int'l Ass’n, 601 F.2d 675, 679 (2d Cir. 1979), cert. denied, 444 U.S. 1073 100 S.Ct. 1018, 62 L.Ed.2d 755 (1980), I conclude that the Court has the discretion to determine independently the existence of an emergency justifying the imposition of a trusteeship prior to a hearing. See T. Kheel, supra, § 45.04[2]; Retail Clerks, supra, 479 F.2d at 55; Local Union 13410, supra, 475 F.2d at 914-15.

      . The Local says that it did not turn over any contracts because the new contracts were not yet signed when the International requested them.

      . I should add at this point that the Local contends that the International constitution provides for automatic suspension of a local that fails to pay its per capita tax for three months. If the local does not apply for reinstatement within 30 days, the local’s charter is to be recalled. The Local argues that the revocation of the charter is also automatic and that because the Local was technically disaffiliated as of August 1984 because of Its failure to pay the per capita tax, the threat of disaffiliation in July 1985 can hardly be viewed as an emergency. The Local also argues that this automatic disaffiliation means that the Local is not a "subordinate body” over which the International can impose a trusteeship. I need not address these issues today.

      . It emerged at the hearing that some of these contracts are with employers who are themselves members of the union. This seems to be rather irregular, but that issue, and the matter of the validity of the disaffiliation elections, appear to be better left to the National Labor Relations Board.


source: Caselaw Access Project

author: LUONGO, Chief Judge.

license: Public Domain

text:
    MANTUA OIL, INC. d/b/a Seaview Lubricants v. C.J. MARKETING COMPANY, Christopher J. Markey and Wanda Markey, h/w.
    Civ. A. No. 85-1097.
    United States District Court, E.D. Pennsylvania.
    Nov. 21, 1985.

      David E. Stern, Blue Bell, Pa., for plaintiff.
    Robert Igrisan, Farmington, Mich., for defendants.
   OPINION

LUONGO, Chief Judge.

In 1983, plaintiff Mantua Oil, Inc., a New Jersey corporation with its principal place of business in Pennsylvania, and defendant C.J. Marketing Company, a Michigan corporation with its principal place of business in Michigan, entered into an oral agreement concerning the sale and purchase of petroleum products. According to the complaint, Mantua Oil agreed to sell petroleum products to C.J. Marketing on credit. C.J. Marketing agreed to pay for the products after receiving invoices from Mantua Oil. Defendants Christopher and Wanda Mar-key, both Michigan residents, signed a suretyship agreement making them liable for C.J. Marketing’s obligations to Mantua Oil. Plaintiff alleges that defendants have failed to pay for the petroleum products supplied to C.J. Marketing under the oral contract.

Presently before me is defendants’ motion to dismiss for lack of personal jurisdiction and for improper venue. Defendants have submitted an affidavit, allegedly signed by Christopher J. Markey, which states that Markey is the principal officer, shareholder and employee of C.J. Marketing and has personal knowledge concerning the business relationship between the parties. The affidavit states that plaintiff initiated the relationship and that all negotiations were conducted over the telephone with the parties remaining in their respective offices. Defendants contend that they have conducted no business in Pennsylvania and could not have foreseen that their oral agreement with plaintiff would subject them to suit in this forum.

The affidavit of John J. Tyrrell, Mantua Oil’s Vice President of Marketing, presents a different picture. Tyrrell asserts that Christopher Markey made the first contact between the parties and attended several negotiation sessions in Pennsylvania. Other C.J. Marketing employees also came to Pennsylvania in connection with the negotiations, and the agreements were substantially finalized in Pennsylvania.

Plaintiff has also submitted evidence which raises serious doubts as to the authenticity of Markey’s affidavit. William Bonner, Esquire, a member of the bar of the Supreme Court of Pennsylvania, has stated in an affidavit that he was present at an arbitration hearing held in this case on September 20, 1985. Bonner asserts that Patricia Holsomback appeared as a witness for defendants and testified that she has been the sole officer of C.J. Marketing for the last three years. She stated that Markey is not an officer of the corporation as alleged in the affidavit, that the signature appearing on the affidavit is a forgery, and that she had never authorized defendants’ attorney to prepare or notarize the document. Defendants have submitted nothing to contradict Bonner’s affidavit.

Although the plaintiff bears the burden of establishing that jurisdiction exists, “a plaintiff whose factual record consists only of the pleadings and supporting affidavits need simply establish a prima facie case of jurisdiction.” Kyle v. Continental Capital Corp., 575 F.Supp. 616, 619 (E.D.Pa. 1983). See also Pharmaceutical Group Services, Inc. v. National Pharmacies, Inc., 592 F.Supp. 1247, 1248 (E.D.Pa.1984). In light of the questions concerning the authenticity and accuracy of defendants’ evidence, together with the fact that plaintiff’s submissions provide ample support for a conclusion that this is a proper forum, I will deny defendants’ motion to dismiss. If at trial defendants can produce legitimate evidence in support of their factual assertions, plaintiff may be required to bear its full burden of proving jurisdictional facts by a preponderance of the evidence. See Kyle, 575 F.Supp. at 619.

Under Fed.R.Civ.P. 4(e), a district court may assert jurisdiction over a nonresident defendant to the extent permitted under the law of the state where the district court sits. Pennsylvania has authorized the exercise of jurisdiction “to the fullest extent allowed under the Constitution of the United States.” 42 Pa.C.S.A. § 5322(b).

The Constitution permits the exercise of jurisdiction over a defendant who has “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 Pennsylvania courts have established a three-part analysis for determining whether sufficient contacts exist:

First, the defendant must have purposefully availed itself of the privilege of acting within the forum state thus invoking the benefits and protections of its laws____ Second, the cause of action must arise from defendant’s activities within the forum state____ Lastly, the acts of the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over it reasonable.

Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 63 (3d Cir.1984) (quoting Proctor & Schwartz v. Cleveland Lumber Co., 228 Pa.Super, 12, 19, 323 A.2d 11, 15 (1974)).

Under the facts as presented by plaintiff, these requirements are satisfied in the instant ca.se. By entering into contracts with a corporation centered in Pennsylvania, defendants purposefully availed themselves of the privilege of doing business here. See, e.g., Erie Press Systems v. Shultz Steel Co., 548 F.Supp. 1215, 1220 (W.D.Pa. 1982); B.J. McAdams, Inc. v. Boggs, 426 F.Supp. 1091, 1102 (E.D.Pa.1977). Moreover, plaintiff’s claims arise out of defendants’ contacts with Pennsylvania. The agreements upon which the complaint is based — the oral agreement between Mantua Oil and C.J. Marketing and the surety-ship agreement signed by the Markeys— were negotiated and substantially consummated in Pennsylvania. Defendants allegedly breached their agreements when they failed to submit payments due to Mantua Oil in Pennsylvania. See Kyle, 575 F.Supp. at 621; Erie Press Systems, 548 F.Supp. at 1220.

Finally, if plaintiff’s factual assertions are correct, defendants’ contacts with this forum are sufficient to make the exercise of jurisdiction fair and reasonable. Christopher Markey, on behalf of C.J. Marketing, initiated the dealings between the parties by contacting Mantua Oil’s Pennsylvania offices. Negotiations for the agreement between Mantua Oil and C.J. Marketing were conducted in Pennsylvania, and C.J. Marketing personnel visited Pennsylvania on several occasions in connection with the parties’ business transactions. These contacts clearly justify the exercise of jurisdiction over C.J. Marketing. See, e.g., Pharmaceutical Group Services, 592 F.Supp. at 1249; Webb Research Corp. v. Rockland Industries, 580 F.Supp. 990, 993 (E.D.Pa.1983); Kyle, 575 F.Supp. at 621.

Markey also transacted business in Pennsylvania on his own and his wife’s behalf when he negotiated the suretyship agreement, which provided for payments to be made to Mantua Oil in Pennsylvania. I conclude that Christopher and Wanda Mar-key “could reasonably anticipate being haled into [a Pennsylvania] court” in connection with their agreement, and that they are therefore subject to this court’s jurisdiction. Lieb v. American Pacific International, Inc., 489 F.Supp. 690, 694 (E.D.Pa.1980).

Defendants have also moved to dismiss for improper venue. Venue in this diversity case is governed by 28 U.S.C. § 1391(a), which provides that a civil action may be brought “in the judicial district where all plaintiffs or all defendants reside, or in which the claim arose.” I conclude that venue is proper as to all defendants on the ground that plaintiffs claim arose in this district.

A claim arises for purposes of the venue statute in the district where “ ‘the contacts weigh most heavily.’ ” Lieb, 489 F.Supp. at 695 (quoting Philadelphia Housing Authority v. American Radiator & Standard Sanitary Corp., 291 F.Supp. 252, 260 (E.D.Pa.1968)). See also Pennwalt Corp. v. Horton Co., 582 F.Supp. 438, 440 (E.D.Pa.1984); B.J. McAdams, 426 F.Supp. at 1103. Defendants in the instant action reside in the Eastern District of Michigan, and Mantua Oil shipped petroleum products to Michigan under its contract with C.J. Marketing. The bulk of the activities relating to the negotiation and formation of the agreements, however, occurred in Philadelphia and Montgomery County, in the Eastern District of Pennsylvania. The payments due under the agreements were to be sent to plaintiff’s offices in the Eastern District of Pennsylvania, and defendants’ alleged breaches of contract caused plaintiff to suffer economic loss in this district. Of the possible forums, “the Eastern District of Pennsylvania was the site of the most significant contacts since the operative events which gave rise to plaintiff’s cause of action took place here.” Id. See also Pennwalt Corp., 582 F.Supp. at 440; Lieb, 489 F.Supp. at 696. The claim thus arose here and venue is proper.

Defendants’ motion to dismiss is denied.

      . I will also reserve for the trial the question of whether sanctions under Fed.R.Civ.P. 11 should be imposed against defendants and their counsel.


author: RODRIGUEZ, District Judge.

text:
    Richard LINDES, Plaintiff, v. Edward SUTTER, et al., Defendants.
    Civ. A. No. 84-4960.
    United States District Court, D. New Jersey.
    Nov. 21, 1985.

      John J. Pribish, North Brunswick, N.J., for plaintiff.
    Chana Barron, Haber & McGowan, South Amboy, N.J., for Monmouth County defendants.
    David G. Lucas, Jr., Wolff, Helies & Duggan, Red Bank, N.J., for Foodarama defendants.
   OPINION

RODRIGUEZ, District Judge.

In this action, brought pursuant to 42 U.S.C. §§ 1983, 1985 and various state law tort theories, plaintiff Richard Lindes sues (1) two detectives in the Monmouth County Prosecutor’s Office and the County of Monmouth (“county defendants”); (2) several employees and corporate officers of Foodarama Supermarkets, Inc., as well as the store itself (“store defendants”); and (3) Local 1262 of the Retail Store Employees Union and two of its officers (“union defendants”) for damages allegedly sustained by him as the result of a criminal investigation and grand jury indictment which resulted in the termination of his employment with Foodarama. The matter is before the Court on motions for summary judgment by the store and county defendants. All claims against the union defendants were dismissed with prejudice by Order of the Hon. John W. Bissell, U.S.D.J., filed March 13, 1985.

The following facts are undisputed. Plaintiff was an employee of Foodarama Supermarkets between March 1965 and February 1982. As the result of investigations into a shortbilling scheme at Foodarama conducted by Foodarama and the Monmouth County Prosecutor’s Office, plaintiff was terminated from his employment with Foodarama in February of 1982 and was indicted on April 30, 1982 by a Monmouth County Grand Jury. Plaintiff subsequently was admitted into a Pretrial Intervention Program pursuant to N.J.S.A. 20:43-12, et seq. (West 1982). After completion of that program in accordance with the provisions of that statute, the indictment against plaintiff was dismissed on January 20, 1984.

In his complaint, plaintiff alleges that the store and county defendants willfully, intentionally and maliciously pursued the criminal investigation against him. He alleges that as a result of their tortious acts, he was wrongfully discharged from his employment and improperly and illegally indicted by the grand jury. Plaintiff’s only federal claims are a § 1983 claim of intentional deprivation of constitutional rights under color of state law and a § 1985(2) claim of conspiracy. His state claims originally included defamation, breach of the duty of fair representation, recklessness and negligence, and malicious prosecution. However, all of these state tort claims, except the claim of malicious prosecution, were dismissed voluntarily.

Defendants argue in support of their motions for summary judgment that plaintiffs claim of malicious prosecution should be dismissed for failure to state a claim for which relief can be granted because plaintiff cannot establish the requisite element of a termination of the criminal prosecution in his favor. They argue that his federal claims, which are based on similar allegations of malicious prosecution, also should be dismissed for the same reason, or, in the alternative, are time barred by applying the appropriate limitations period for the most analogous state claims.

For the reasons set forth below, the remaining counts of plaintiffs complaint are dismissed with prejudice.

DISCUSSION

Summary judgment will only be granted where there are no genuine issues of material fact and when the movant is entitled to summary judgment as a matter of law. The Court in deciding a motion for summary judgment must view the evidence in the light most favorable to the non-moving party. Hollinger v. Wagner Mining Equipment Co., 667 F.2d 402, 405 (3d Cir.1981). The movant bears the burden of establishing the absence of any genuine issues of material fact. Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir.1983); Scott v. Plante, 532 F.2d 939, 945 (3d Cir.1976). Here defendants contend that they are entitled to judgment as a matter of law. This Court agrees.

The § 1983 Claim and State Claim of Malicious Prosecution

In Count I of plaintiffs complaint, he alleges that the store and county defendants, without probable cause or factual support, willfully, intentionally and maliciously instituted and pursued a criminal investigation into his conduct and wrongfully secured an indictment against him. He further alleges that contemporaneous with the indictment he was terminated from his employment. He contends that all of these acts were done under color of state law to deprive him of the following constitutional rights guaranteed by the First and Fourteenth Amendments:

A. The right to property and the right to be employed and the pursuit of one’s vocation; and
B. The right of liberty and freedom from unlawful arrest, unlawful presentation of tainted evidence to a Grand Jury; and
C. Freedom from coercion and intimidation; and
D. A fair presentation of competent and truthful evidence fairly obtained which is competently presented to a Grand Jury; and
E. The right to hold a job without illegal interference and harrassment [sic]; and
F. The right to enter into contracts without unjustifiable interference and/or harrassment [sic].

(Complaint, at 10, ¶ 30).

Although it is possible to interpret Count I as incorporating a number of claims, including wrongful discharge, intentional interference with contract and malicious prosecution, the predominate wrong alleged is malicious prosecution. The other allegations are better categorized as harm stemming from the prosecution. Indeed, if plaintiff were unable to establish a wrongful prosecution, he would have no claim for wrongful discharge or tortious interference with contract. For the following reasons, plaintiffs § 1983 claim which is based on allegations of malicious prosecution, as well as his state law claim in Count IV based on the same theory, must be dismissed with prejudice.

In order to establish either a § 1983 action for malicious prosecution or a state tort claim based on that same cause of action, plaintiff must prove that the criminal proceeding at issue was terminated in his favor. Singleton v. City of New York, 632 F.2d 185, 194-95 (2d Cir.1980), cert. denied, 450 U.S. 920, 101 S.Ct. 1368, 67 L.Ed.2d 347 (1981); Konon v. Fornal, 612 F.Supp. 68, 69 (D.Conn.1985); Bell v. Brennan, 570 F.Supp. 1116 (E.D.Pa.1983); Lind v. Schmid, 67 N.J. 255, 262, 337 A.2d 365 (1975); Williams v. Page, 160 N.J.Super. 354, 361-62, 389 A.2d 1012 (App.Div.1978); Thomas v. N.J. Institute of Technology, 178 N.J.Super. 60, 62-63, 427 A.2d 1142 (Law Div.1981).

In this case, the indictment against plaintiff was dismissed when plaintiff completed a pretrial intervention program. In other words, instead of having to proceed to trial on the charges for which he was indicted, plaintiff applied for and was admitted into pretrial intervention (“P.T.I.”) pursuant to N.J.S.A. 2C:43-12, 13. P.T.I. is designed to divert certain individuals from the ordinary course of prosecution into programs which provide rehabilitative services and supervisory treatment. The statute provides for supervisory treatment, instead of prosecution, where such treatment would serve the following policies:

(1) Provide applicants, on an equal basis, with opportunities to avoid ordinary prosecution by receiving early rehabilitative services or supervision, when such services or supervision can reasonably be expected to deter future criminal behavior by an applicant, and when there is apparent causal connection between the offense charged and the rehabilitative or supervisory need, without which cause both the alleged offense and the need to prosecute might not have occurred; or
(2) Provide an alternative to prosecution for applicants who might be harmed by the imposition of criminal sanctions as presently administered, when such an alternative can be expected to serve as sufficient sanction to deter criminal conduct; or
(3) Provide a mechanism for permitting the least burdensome form of prosecution possible for defendants charged with “victimless” offenses; or
(4) Provide assistance to criminal calendars in order to focus expenditure of criminal justice resources on matters involving serious criminality and severe correctional problems; or
(5) Provide deterrence of future criminal or disorderly behavior by an applicant in a program of supervisory treatment.

N.J.S.A. 2C:43-12(a)(1)-(5).

That statute further provides that the complaint, indictment or accusation against the participant may be dismissed with prejudice “[u]pon completion of supervisory treatment, and with the consent of the prosecutor.” N.J.S.A. 2C:43-13(d). Nowhere in this statute is the intent expressed to equate successful completion of P.T.I. with a finding of not guilty or a “termination favorable” to the accused.

Although neither the Third Circuit nor the New Jersey appellate courts have dealt with the issue of whether successful completion of P.T.I. constitutes a termination favorable to the accused for purposes of bringing a lawsuit for malicious prosecution, this Court is persuaded by the (1) reasonings of those courts which have addressed the issue and (2) the policies behind the very existence of the P.T.I. program that disposition of a case through N.J.S.A. 2C:43-12 and 13 is not a termination favorable to the accused. Therefore, plaintiff has failed to state a claim for malicious prosecution either pursuant to 42 U.S.C. § 1983 or under a state tort theory of recovery.

In Singleton, in evaluating New York’s “adjournment in contemplation of dismissal” — the equivalent of New Jersey’s P.T.I. —the Second Circuit held that this program could not form the basis of a § 1983 action for malicious prosecution. In reaching this result, the Court concluded that because in most instances judges set behavioral requirements for defendants to meet during the adjournment period in order to avoid having their cases restored to the trial calendar, adjournments in contemplation of dismissal were far from being “in all respects favorable to defendant[s].” Singleton, 632 F.2d at 194. The Court also concluded that a contrary holding would result either in a reluctance by prosecutors to consent to such adjournments, or, in instances where adjournments were granted, in the later litigation of the accused’s guilt or innocence in the civil, rather than criminal, forum. Id.

The District of Connecticut has reached the same result with reference to that state’s analogous program entitled the “accelerated rehabilitation law.” Konon, 612 F.Supp. at 70. In Konon, the plaintiff in a prior criminal case was charged with assault and breach of the peace. He applied for and was granted accelerated rehabilitation. As a condition of that program, plaintiff was placed on probation for 30 days. The criminal charges against defendant were dismissed when he completed the probationary period. He subsequently filed a civil lawsuit. In the context of that suit, the district court held that disposition of a case through Connecticut’s accelerated rehabilitation law is not a termination favorable to the accused for purposes of bringing a later § 1983 action for malicious prosecution. Konon, 612 F.Supp. at 71.

There is also a clear indication that the New Jersey courts would reach this same conclusion. In Thomas v. N.J. Institute of Technology, 178 N.J.Super. at 62, 427 A.2d 1142, the Superior Court held that “acceptance in P.T.I., even where the program is successfully completed, cannot be regarded as the equivalent of a judgment of acquittal or an otherwise favorable termination of the criminal proceeding.”

This Court holds that to maintain either a § 1983 action for malicious prosecution or a state common law action based on the same theory of recovery, plaintiff must establish a favorable termination of the criminal proceeding, and completion of P.T.I. does not constitute such a favorable termination. To hold otherwise would be to allow a criminal defendant to side-step criminal prosecution, to forego litigation of his guilt or innocence, to benefit from a rehabilitative program, and then to turn around and to use this process which was designed to help him as a sword against the state in a civil action. This cannot be the result intended by the legislature in creating P.T.I. Accordingly, Count I which alleges a violation of § 1983 and Count IV which alleges a common law claim of malicious prosecution are dismissed with prejudice.

§ 1985(2) CLAIM

Plaintiffs claims under 42 U.S.C. § 1985(2) also must be dismissed. In Count VI, plaintiff has alleged violations of § 1985(2); however, he has not identified which portion of that statutory provision was allegedly violated. Presumably he is asserting a violation of the second clause of § 1985(2) which prohibits conspiracies designed to deprive persons of equal protection of the law. This section prohibits persons from conspiring

for the purpose of impeding, hindering, obstructing, or defeating, in any manner, the due course of justice in any State or Territory, with intent to deny to any citizen the equal protection of the laws, or to injure him or his property for lawfully enforcing, or attempting to enforce, the right of any person, or class of persons, to the equal protection of the laws.

The courts in this Circuit have held con-, sistently that a requisite element of an action pursuant to this section is class-based, invidiously discriminatory animus. Brawer v. Horowitz, 535 F.2d 830 (3d Cir.1976); Snead v. Kirkland, 462 F.Supp. 914 (E.D.Pa.1978); Diulus v. Churchill Valley Country Club, 601 F.Supp. 677 (W.D.Pa. 1985); see also Kush v. Rutledge, 460 U.S. 719, 103 S.Ct. 1483, 75 L.Ed.2d 413 (1983). In other words, plaintiff must allege that he is part of a protected class based upon immutable characteristics, such as race or gender. Plaintiff has made no such allegation. Therefore, plaintiff has not .alleged conduct which would state a claim under § 1985. Accordingly, defendants are entitled to summary judgment as a matter of law and Count VI of plaintiffs complaint is dismissed with prejudice.

CONCLUSION

Summary judgment is granted in favor of defendants as to the remaining counts of plaintiffs complaint. Counts I and VI alleging federal causes of action brought pursuant to 42 U.S.C. § 1983 and 1985(2) are dismissed with prejudice. Count IV alleging the common law tort of malicious prosecution also is dismissed with prejudice. The Court notes that Count I contains a vague reference to violations of rights guaranteed by the “Constitution of the State of New Jersey.” (Complaint, at ¶ 31). However, no actual state constitutional claims are set forth or have been pursued by plaintiff. To the extent that plaintiff may have intended to raise state constitutional claims, this Court declines to exercise pendent jurisdiction over them as no federal causes of action remain. See United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966).

      . Although plaintiff's complaint does not allege violations of 42 U.S.C. § 1983, plaintiff’s counsel in his brief in opposition to these motions and in his argument before this Court referred to those allegations in Count I as stating claims under 42 U.S.C. § 1983, not 42 U.S.C. § 1985 as set forth in the complaint. Accordingly, the Court will address these claims in Count I as § 1983 claims.

      . Counts II (defamation), III (breach of duty of fair representation) and V (recklessness and negligence) were dismissed by stipulation on September 3, 1985.

      . In raising the statute of limitations as a defense, none of the parties addressed the applicability of the recent United States Supreme Court decision in Wilson v. Garcia, — U.S. -, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985) in which the Supreme Court held that federal interests in uniformity, certainty and the minimization of unnecessary litigation require a single characterization of all § 1983 claims for statute of limitations purposes as actions to recover damages for injuries to the person. As this motion is decided on alternate grounds, this Court need not address the question of whether the rule enunciated in Wilson v. Garcia should be applied retroactively to this case.

      . This Court realizes that state tort law does not define or limit the scope of liability under § 1983, however, the federal courts consistently have applied the common law rule that termination of the criminal proceedings in favor of the accused is an essential element of a malicious prosecution action. See Singleton, 632 F.2d at 194-95 (Court stated that the essence of the § 1983 claim is the alleged groundless prosecution, without which there would be no basis for the claim); Tucker v. Duncan, 499 F.2d 963, 965 (4th Cir.1974) (Court stated in the context of a § 1983 action for malicious prosecution that it was "not inappropriate to borrow from state law a developed body of rules governing actionable wrongs and a procedural bar to the assertion of a federal claim of relative triviality"); Sullivan v. Choquette, 420 F.2d 674, 676 (1st Cir.1969), cert. denied, 398 U.S. 904, 90 S.Ct. 1691, 26 L.Ed.2d 62 (1970) (Court held that since a state court judgment of eviction still stood against plaintiff, he could not establish the requisite element of a termination in his favor).

      . Similarly, Rule 3:28 of the New Jersey Court Rules, which sets forth the "guidelines” for operation of P.T.I. programs, does not indicate that a successful P.T.I. participant is innocent of the crimes alleged. In fact, the opposite conclusion can be drawn from the guidelines. For example, although Guideline 4 makes it clear that admission of guilt is not a condition of P.T.I., Guideline 2 stresses that eligibility for P.T.I. should be based on a demonstration of “sufficient effort to effect necessary behavioral change” and a showing that "future criminal behavior will not occur.” If anything, these factors imply "guilt with amenability to rehabilitation,” not innocence.

      . Plaintiff contends that Thomas is inapplicable to the instant case because the plaintiff in Thomas did not successfully complete P.T.I. This Court does not find this distinction relevant.

      . The first clause of § 1985(2) proscribes conspiracies to intimidate or retaliate against parties, jurors or witnesses in federal court proceedings. No such allegations appear in plaintiffs complaint.


author: GENE CARTER, District Judge.

text:
    Samantha BOLSTRIDGE and Nona Bolstridge, Plaintiffs, v. CENTRAL MAINE POWER COMPANY, Defendant.
    Civ. No. 84-0128-P.
    United States District Court, D. Maine.
    Nov. 21, 1985.

      Vicki S. Roundy, Charles B. Doleac, William C. Scott, Boynton, Waldron, Doleac, Woodman & Scott, Portsmouth, N.H., for plaintiffs.
    Peter W. Culley, Andrea L. Cianchette, John J. O’Leary, Pierce Atwood Scribner Allen Smith & Lancaster, Portland, Me., for defendant.
   ORDER DENYING PLAINTIFFS’ MOTION FOR ADMISSION OF THE VIDEOTAPE “DAY IN THE LIFE OF SAMANTHA BOLSTRIDGE”

GENE CARTER, District Judge.

Plaintiffs filed a motion on October 24, 1985 to admit a “Day in the Life” videotape into evidence. The videotape is intended to depict a typical day in the life of Plaintiff Samantha Bolstridge in order to demonstrate to the jury the impact of her injuries on her day-to-day activities. Defendant objects to Plaintiffs’ motion on the grounds that the videotape is hearsay and will provide only cumulative evidence. In addition, subsequent to viewing edited and unedited versions of the videotape, Defendant’s counsel, in a hearing on this motion held November 14, 1985, made several specific objections to the contents of the tape regarding its representational character and potential for undue prejudice.

The question of permitting the showing of a motion picture film or videotape at trial is one for the sound discretion of the Court. Szeliga v. General Motors Corp., 728 F.2d 566, 567 (1st Cir.1984). The propriety of allowing videotapes of this type into evidence is questionable for several reasons. Almost always an edited tape necessarily raises issues as to every sequence portrayed of whether the event shown is fairly representational of fact, after the editing process, and whether it is unduly prejudicial because of the manner of presentation. Further, the fact that a plaintiff is aware of being videotaped for such a purpose is likely to cause self-serving behavior, consciously or otherwise. See Haley v. Byers Transportation Corn pany, 414 S.W.2d 777, 780 (Mo.1967). Next, use of a videotape for such purposes is troublesome because it dominates evidence more conventionally adduced simply because of the nature of its presentation. “[T]he very obvious impact of these films would have been to create a sympathy for the plaintiff out of proportion to the real relevancy of the evidence.” Id. Finally, such a videotape may serve to distract the jury from other cogent issues which properly must be considered to produce a fair verdict conscientiously derived from an impartial consideration of the evidence with strict attention to applicable principles of law.

For all of the above reasons, the Court concludes that videotapes should be admitted as demonstrative evidence only when the tapes convey the observations of a witness to the jury more fully or accurately than for some specific, articulable reason the witness can convey them through the medium of conventional, in-court examination. Such is not shown to be the case in this instance. Szeliga v. General Motors Corp., 728 F.2d 566, at 567. Samantha Bolstridge appears to be able to testify on her own behalf. She can demonstrate to the jury in open court activities similar to those depicted in the videotape. Further, relatives and physicians of the Plaintiff Samantha Bolstridge may offer similar testimony. Thus, the videotape, in any event will be merely cumulative of testimonial evidence which is available to the Plaintiff. See Johnson v. William C. Ellis & Sons Iron Works, 604 F.2d 950, modified on other grounds, 609 F.2d 820 (5th Cir.1979); Finn v. Wood, 178 F.2d 583 (2d Cir.1950); DeCamp v. United States, 10 F.2d 984 (D.C.Cir.1926); Also, admission of the tape into evidence will create the risk of distracting the jury and unfairly prejudicing the Defendant, principally though not exclusively, because the benefit of effective cross-examination is lost. See Haley v. Byers Transportation Company, 414 S.W.2d 777 (Mo.1967). Therefore, it should be excluded under Fed.R.Evid. 403; Johnson, 604 F.2d at 958. See also Foster v. Crawford Shipping Co., Ltd., 496 F.2d 788 (3d Cir.1974); Finn, 178 F.2d at 584; DeCamp, 10 F.2d at 985; 5 J. Weinstein, M. Berger, Weinstein’s Evidence 1001-36 (1983) (“where the motion picture is not necessary to prove or disprove a material proposition, it should not be allowed into evidence.”)

This policy is consistent with that set in Fed.R.Civ.P. 32(a)(3), which provides for the admission of videotaped depositions only in instances where the witness is unavailable or “such exceptional circumstances exist as to make it desirable, in the interest of justice and with due regard to the importance of presenting the testimony of witnesses orally in open court.” (Emphasis added.)

. Accordingly, it is ORDERED that Plaintiffs’ Motion for Admission of the Videotape “Day in the Life of Samantha Bolstridge,” filed October 24, 1985, be, and is hereby, DENIED.

      . Defendant contends that several-aspects of the film indicate that the day depicted is not typical for the Plaintiff and is unduly prejudicial toward the Defendant. For example, Defendant suggests that the filming of the Plaintiff ordering a wheelchair focuses on the Plaintiffs injuries, while it is actually an activity Plaintiff must perform only once every several years. Defendant also contends that conversation in the unedited version of the Him suggests that the Plaintiff does not go shopping very often, although it is depicted in the film, and does not exit the house in the manner depicted in the film. Defendant also asserts that the edited version of the film focuses only on the difficulties Plaintiff encountered in eating that day and does not fairly convey the totality of her actual experience. Finally, Defendant asserts that the manner in which Plaintiff is depicted washing her face at the end of the day is simply not believable. (Defendant also contends that the sound track has been altered, however, Plaintiff has offered to play the tape without sound.) Since the Court holds that the entire film is inadmissible, it does not reach these objections.

      . Fed.R.Evid. 1001(2) defines "photographs” as inclusive of videotapes and motion pictures, and therefore properly authenticated tapes do not appear to be inadmissible on'grounds of hearsay. See abo Grimes v. Employers Mutual Liability Insurance Co., 73 F.R.D. 607, 610-11 (D. Alaska) (1977). However, policy issues akin to hearsay are also raised even if the tapes are not hearsay. Even in instances where the videotaping is attended by opposing counsel, the conduct filmed is not subject to cross-examination at the time it is made and, therefore, lacks some of the safeguards of the adversary system.


author: NANGLE, Chief Judge.

text:
    KOCH ENGINEERING CO., INC., Plaintiff, v. MONSANTO COMPANY, Defendant.
    No. 85-1578C(1).
    United States District Court, E.D. Missouri, E.D.
    Dec. 6, 1985.

      William E. Shull, Koch Engineering Co., Wichita, Kan., Thomas Lake, St. Louis, Mo., for plaintiff.
    John S. Sandberg, Paul N. Venker, St. Louis, Mo., for defendant.
   MEMORANDUM

NANGLE, Chief Judge.

This case is now before the Court on defendant’s motion to dismiss or, in the alternative, to transfer and plaintiff’s motion to enjoin defendant from proceeding in the United States District Court for the Southern District of Texas. For the reasons stated herein, defendant’s motion to dismiss is granted. Accordingly, plaintiff’s motion to enjoin is denied and defendant’s alternative motion to transfer is denied as moot.

This action arises out of an agreement between Koch Engineering Company, Inc. (Koch) and Monsanto Company (Monsanto) entered into on or about June 23, 1982. Under the terms of the agreement, Koch would supply Monsanto internal components for refurbishing an ethyl benzene-styrene monomer distillation column (the tower). The tower is located at Monsanto’s plant in Texas City, Texas. Monsanto, in a separate agreement, contracted with Brooks Erection and Construction Company to install the components furnished by Koch.

During August, 1983, following the completion of the refurbishment, Monsanto informed Koch that the tower was not performing properly. Monsanto made demands on Koch under the warranty provisions of the contract. For the next two years, the parties took various actions and made a variety of demands in attempts to resolve the dispute. The parties met most recently in Wichita in July, 1985. At that meeting, Monsanto informed Koch that it had suffered damages of 11.2 million dollars. According to Monsanto, Koch was also informed that the Texas statute of limitations required Monsanto to file suit in early August.

On July 11, 1985, following two unsuccessful attempts to resolve the dispute, Koch filed this declaratory judgment action in the Eastern District of Missouri. Koch requests this Court to declare the rights of the respective parties under the contract between Koch and Monsanto. Jurisdiction is based on diversity of citizenship of the parties. 28 U.S.C. § 1332.

On July 25, 1985, two weeks after Koch filed this action, Monsanto filed a five count complaint in the United States District Court for the Southern District of Texas. Monsanto’s complaint alleges inter alia, breach of contract, breach of warranties, negligence and deceptive trade practices under the Texas Deceptive Trade Practices-Consumer Protection Act. Tex.Bus. & Com.Code Ann. § 17.41 et seq. Neither action has progressed past the initial pleading stage. Monsanto has not yet answered Koch’s complaint but instead seeks to have it dismissed, or in the alternative, transferred to the Southern District of Texas. Koch on the other hand, seeks an injunction against further proceedings in the Texas action, pending resolution of the declaratory judgment suit filed in this Court. The parties and this Court are in agreement that only one action is necessary to resolve this dispute. The question for this Court is which of the two actions should proceed. For the reasons stated below, this Court finds that the action pending in the Southern District of Texas is the appropriate and proper suit to resolve the parties’ dispute.

The Declaratory Judgment Act, 28 U.S.C. § 2201, provides that “any court of the United States, upon filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration.” There is no dispute that this Court has the authority to entertain Koch’s petition for declaratory judgment. This decision however, is within the discretion of the district court. The Declaratory Judgment Act “gave the federal courts competence to make a declaration of rights; it did not impose a duty to do so.” Public Affairs Associates, Inc. v. Kickover, 369 U.S. 111, 112, 82 S.Ct. 580, 581, 7 L.Ed.2d 604 (1962) (per curiam). It is clear that this discretion is not without limits. “[A] district court cannot decline to entertain such an action as a matter of whim or personal disinclination.” Id.

In deciding whether to allow Koch to proceed in this lawsuit, the court must look to the purpose of the Declaratory Judgment Act. The Act was intended to provide a remedy which would “minimize the danger of avoidable loss and the unnecessary accrual of damages and to afford one threatened with liability an early adjudication without waiting until his adversary should see fit to begin an action after the damage has accrued.” 10A C. Wright, A. Miller and M. Kane, Federal Practice and Procedure § 2751 at 569 (1983). In reviewing the facts of this case in a light most favorable to Koch, it is clear to this Court that allowing this suit to proceed under these circumstances would not promote any of the purposes of the Declaratory Judgment Act.

The plaintiff has not identified any loss that can be avoided through the use of the Declaratory Judgment remedy. The breach of contract, if it occurred at all, took place on or about August, 1983. At that time, Monsanto informed Koch that the tower’s output was not up to the specifications as required by the contract. Neither Monsanto nor Koch has alleged any continuing damages arising from this alleged breach of contract. Therefore, this Court’s decision to refuse to entertain Koch’s petition will not cause additional loss or result in the unnecessary accrual of damages.

The Act’s purpose of providing an early adjudication to one threatened with liability would also not be promoted by a use of the declaratory judgment remedy in this case. The parties agree that settlement negotiations took place as late as July, 1985. This Court will assume that the parties undertook those and prior negotiations in good faith. In view of the fact that Koch participated in settlement negotiations for almost two years, Koch could not, nor does it, argue that declaratory judgment is necessary to insure that Koch is afforded an early adjudication. Again, this Court finds that the decision to refuse to entertain Koch’s petition will not frustrate the purpose of the Declaratory Judgment Act.

Koch, in its memorandum in opposition to Monsanto’s motion to dismiss, attaches great weight to the fact that Koch’s suit for declaratory judgment was the first suit filed. Generally, the doctrine of federal comity and efficient judicial administration indicate that when “two identical actions are filed in courts of concurrent jurisdiction, the court which first acquired jurisdiction should try the lawsuit and no purpose would be served by proceeding with a second action.” Pacesetter Systems, Inc. v. Medtronic, Inc., 678 F.2d 93 (9th Cir. 1982). The first to file rule however, is not one of absolutes. The Eighth Circuit has specifically avoided fashioning a rigid or inflexible rule for determining the priority of cases pending in federal courts involving identical claims or subject matter. Orthmann v. Apple River Campground, Inc., 765 F.2d 119, 121 (8th Cir.1985); Florida v. United States, 285 F.2d 596, 604 (8th Cir.1960). In a time of an increasingly crowded federal docket, the courts must consider each case individually in deciding questions of concurrent jurisdiction. In considering this case, it is clear to this Court that the first to file rule should not be applied.

As an initial matter, it is important to note that the two actions are not identical. Koch’s action in this Court seeks a declaration of the parties’ rights under the contract. Monsanto’s action, filed in the Southern District of Texas, seeks damages for breach of contract, breach of warranty, negligence and a violation of the Texas Deceptive Trade Practices Act. Had it not been for the Declaratory Judgment Act, Koch could not have filed this or any other lawsuit. It is this use of the Act, to which this Court objects. Koch’s suit, while furthering none of the goals of the Declaratory Judgment Act, represents only a race to the courthouse. This type of procedural fencing denies the injured party his right to choose the forum in which to seek redress.

This Court is not the first court to object to this use of the Declaratory Judgment Act. In a similar situation involving a personal injury claim, the Seventh Circuit noted that “to compel potential personal injury plaintiffs to litigate their claims at a time and in a forum chosen by the alleged tort-feasor would be a perversion of the Declaratory Judgment Act.” Cunningham Brothers, Inc. v. Bail, 407 F.2d 1165, 1167 (7th Cir.1969) cert. denied, 395 U.S. 959, 89 S.Ct. 2100, 23 L.Ed.2d 745 (1969). Koch, in response to this argument, cites this Court to numerous cases wherein the Declaratory Judgment Act was used to resolve a breach of contract dispute. In those cases, the declaratory judgment defendant counterclaimed for its breach of contract damages and the cases proceeded to trial in that posture. The cases do not support Koch’s argument that this Court should uphold Koch’s choice of forum over the objection of Monsanto. In none of the cases cited by Koch was this issue raised and decided upon by the court.

This Court must also consider which of the two actions will best serve the needs of the parties by providing a comprehensive solution to the entire controversy. Ven-Fuel, Inc. v. Dept. of the Treasury, 673 F.2d 1194, 1195 (11th Cir.1982); Hypro, Inc. v. Seeger-Wanner Corp., 292 F.Supp. 342, 344 (D.Minn.1968). Koch contends that Monsanto will be required to raise all its claims against Koch as compulsory counterclaims pursuant to Rule 13 of the Federal Rules of Civil Procedure. Regardless of whether this is true or not, Koch’s request for an injunction is premature until such time as this Court is convinced that this suit will completely resolve the controversy. This leaves the parties with two lawsuits involving the same controversy in two different federal courts. On the other hand, it is quite obvious to this Court even at this early stage in the proceedings that Monsanto’s suit in the Southern District of Texas will fully resolve the controversy between the parties. By dismissing Koch’s petition for declaratory judgment, this Court avoids both the uncertainty of a possibly premature injunction and/or the burden and expense on the courts and the parties associated with duplicate lawsuits.

Upon consideration of the facts in this case, this Court finds that the best interest of comity and judicial economy are served by dismissing Koch’s complaint for declaratory judgment. Accordingly, defendant’s motion for a transfer of venue is moot and the arguments for said transfer were not considered in rendering this decision. This Court is certain that the Texas Court will give full and adequate consideration to any motion for a change of venue.

ORDER

Pursuant to the memorandum filed herein this day,

IT IS HEREBY ORDERED that defendant’s motion to dismiss plaintiff’s complaint be and is granted.

IT IS FURTHER ORDERED that plaintiff’s motion to enjoin defendant from proceeding in the United States District Court for the Southern District of Texas be and is denied.

IT IS FURTHER ORDERED that defendant’s motion to transfer be and is denied as moot.

      . Monsanto is a corporation organized under the laws of Delaware and its principal place of business is St. Louis, Missouri. Koch is organized under the laws of Kansas and its principal place of business is also Kansas.