author: BATTISTI, Chief Judge.

text:
    Carrie HAMILTON, Plaintiff, v. CUYAHOGA COUNTY WELFARE DEPT. et al., Defendants.
    No. C77-1280.
    United States District Court, N.D. Ohio, E.D.
    July 3, 1985.

      Kenneth Montlack, Cleveland Heights, Ohio, for plaintiff.
    Richard A. Hoenigman, Asst. Pros. Atty., Cleveland, Ohio, for defendants.
   ORDER

BATTISTI, Chief Judge.

Plaintiff on May 11, 1984 moved for reasonable attorney fees and legal expenses pursuant to 42 U.S.C. §§ 1988 and 2000e-5(k). Plaintiff states he is the prevailing party in the above-captioned action which sought to “vindicate the rights of Plaintiff under 42 U.S.C. § 1981 and Title VII of the 1964 Civil Rights Act, as amended.” As of February 22, 1985, plaintiff’s counsel claimed he had expended 197 hours and incurred $237.20 in costs in this case.

I.

Plaintiff filed the complaint in the above action on December 20, 1977. On May 1, 1984, this Court issued a memorandum opinion and order declaring that plaintiff was entitled to backpay through July 18, 1977 in the amount of $23,266.80; that plaintiff was entitled to additional contributions to the Public Employees Retirement System; that pre-judgment interest on plaintiff’s award of back pay would be imposed at the adjusted prime rate; that plaintiff was entitled to be promoted to a position of responsibility and salary within the Cuyahoga County Welfare Department at the level of “Social Services Administrator 2”; and that if no such position currently existed, the Welfare Department was to compensate plaintiff at pay range “333” and promote her at the earliest possible time an opening occurred. Finally, the Court denied plaintiff’s claim for punitive damages.

On May 31, 1984, Defendant filed its Notice of Appeal to the Sixth Circuit Court of Appeals. On Defendant’s Motion, the Court of Appeals dismissed the appeal on November 23, 1984.

II.

Title 42, section 1988 of the United States Code provides in pertinent part that “In any action or proceeding to enforce a provision of sections 1981, 1982, 1983, 1985 and 1986 of this title, title IX of Public Law 92-318, or title VI of the Civil Rights Act of 1964, the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney’s fee as part of the costs.”

It is clear that plaintiff is indeed the prevailing party in this action, having been awarded not only backpay but a declaration of entitlement to promotion and additional contributions to a retirement fund. In light of Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), the Sixth Circuit has clarified the determination of the “prevailing party” in Kelley v. Metropolitan County Board of Education, 755 F.2d 67 (6th Cir.1985). Reconciling its decision in Northcross v. Board of Education of Memphis City Schools, 611 F.2d 624 (6th Cir.1979), cert. denied, 447 U.S. 911, 100 S.Ct. 3000, 64 L.Ed.2d 862 (1980) with Hensley, the Sixth Circuit stated that “the overall results will still be the primary factor in determining attorneys fees.” Kelley, 755 F.2d at 74. “Instead the district court should focus on the significance of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation.” Hensley, 461 U.S. at 435, 103 S.Ct. at 1940. Examining the overall record, the grant of a motion for summary judgment and the subsequent relief received by plaintiff clearly establishes the plaintiff succeeded and is the “prevailing party.” There has been no objection received from defendant to this point.

As the Supreme Court most recently noted in Webb v. Board of Education of Dyer County, Tennessee, — U.S. ---, ---, 105 S.Ct. 1923, 1928, 85 L.Ed.2d 233 (1985), “the most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.” In addition, the burden of submitting evidence to establish the hours worked and the rates claimed is on the party seeking the fees award. Id.

Instead of using a series of twelve factors to determine an appropriate award, see Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.1974), the Sixth Circuit has adopted “an analytical approach” Kelley v. Metropolitan County Board of Education, 755 F.2d 67, 72 (6th Cir.1985). Quoting from its earlier opinion in Northcross v. Board of Education of Memphis City Schools, 611 F.2d 624, 642-43 (6th Cir.1979), the Sixth Circuit stated:

We conclude that an analytical approach, grounded in the number of hours expended on the case, will take into account all of the relevant factors and will lead to a reasonable result. The number of hours worked will automatically reflect the “time and labor involved,” “the novelty and difficulty of the question,” and “preclusion of other employment.” The attorney’s normal hourly billing rate will reflect “the skill requisite to perform the legal services properly,” “the customary fee,” and the “experience, reputation and ability of the attorney.” Adjustments upward may be made to reflect the contingency of the fee, unusual time limitations and the “undesireability” of the case.

Kelley, 755 F.2d at 72.

Plaintiff’s initial accounting of hours in his Motion for Attorney Fees does not include any time spent in state administrative proceedings. In Webb v. Bd. of Education of Dyer County Tennessee, — U.S. ---, 105 S.Ct. 1923, 85 L.Ed.2d 233 (1985), the Court held that 42 U.S.C. § 1988 does not authorize fee awards to prevailing parties for time spent in state administrative proceedings. Since plaintiff has not included any such time in his request, the entire 184 hour total at the district court level may be used to determine the fee award.

Plaintiff also claims an additional 13 hours for appellate work. In Buian v. Baughard, 687 F.2d 859, 861 (6th Cir.1982), the Court stated:

In the absence of express statutory mandate, respect for the three levels at which costs have traditionally been awarded pursuant to court rule directs the conclusion that a prevailing party is not entitled to attorney’s fees for appeals as part of district court costs. Instead, a party must be entitled to receive costs on appeal as a result of the appellate court’s award of costs before it is eligible to receive attorney’s fees as a part of those costs under section 1988.

Id. at 861.

The Sixth Circuit’s order granting defendant/ appellant’s voluntary motion for dismissal on November 26, 1984 does not explicitly state that plaintiff is entitled to costs. However, since Federal Rule of Appellate Procedure 39 provides that appellant will bear the costs on dismissal, plaintiff is entitled to costs. Hence, under Buian, the 13 hours of appellate work may also be included in the fee determination.

III.

Having determined the number of hours expended, the Court must determine the “reasonable rates” to be charged for those hours. In Blum v. Stenson, — U.S. ---, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984), the Supreme Court stated that such rates are to be determined “according to the prevailing market rates in the relevant community.” 104 S.Ct. at 1547. Plaintiff has stated that his “customary fee for representation in civil rights litigation is at the rate of $100.00 per hour.” Plaintiff’s Motion for Attorney Fees, at 4.

Although plaintiff has not submitted any materials to establish the prevailing market rate for civil rights attorneys in the greater •Cleveland area, the Court takes judicial note that “customary fees” for similar work have been awarded in other cases in this district at rates ranging from $80 per hour in 1980 to $200 per hour currently. Therefore, the Court concludes that plaintiff’s attorney is entitled to a minimum rate of $100.00 per hour.

In Kelley, as noted above, the Sixth Circuit noted that the hourly billing rate could be adjusted upward to reflect the contingent nature of the award, “unusual” time limitations and the “undesirability” of the ease. Kelley, 755 F.2d at 72. Another factor to be considered is whether the case involves an “unusually unpopular cause” and inflation. Northcross, 611 F.2d at 638, 640.

Plaintiff contends that the contingent fee arrangement in this case is a “real element” in support of upward adjustment of the reasonable hourly rate. Supplemental Brief in Support of Motion for Attorney Fees, at 2. Noting that the burden of establishing a prima facie case of discrimination is heavy and that plaintiff’s likelihood of prevailing was uncertain given defendant’s position in Common Pleas court, this Court is guided by Northcross to give an upward adjustment of 10% in the hourly rate to accommodate the contingent nature of the proceeding. Northcross, 611 F.2d at 641.

The Court does not consider plaintiff’s “novelty and difficulty” arguments convincing enough to merit an upward adjustment; this factor has already been considered by permitting counsel to receive compensation for all the hours billed. In addition, it would be a windfall to plaintiff to allow him to collect additional amounts for the “delay” he asserts defendants caused by resisting discovery. Plaintiff’s Motion at 4; Supplemental Motion at 2. In the absence of proof that defendants acted maliciously and made frivolous objections to discovery as well as no finding on the record by this Court that defendants violated a discovery order, this Court is reluctant to, in effect, penalize defendant for exercising his rights regarding discovery by granting plaintiff an additional award. The “delay” which plaintiff notes is not unusual for federal court litigation; indeed between November 5, 1980 and May 6, 1983, not a single document was filed by either party. Once the case became “active” again in July 1983, the Court disposed of it on summary judgment in less than a year. Hence, plaintiff cannot contend that during the entire period of “delay” that he was working on the case. Nor, in this court’s discretion, was this case particularly unpopular or undesireable. Therefore, including the 10% increase as a contingency factor, plaintiff’s counsel will receive an hourly rate of $110 per hour.

Using 197 hours as the reasonable hours of service and $110. per hour as the reasonable hourly rate, plaintiff’s counsel is entitled to an attorneys fees award of $21,-670.00.

IV.

COSTS AND OUT-OF-POCKET EXPENSES

Federal Rule of Civil Procedure 54(d) provides that “costs shall be allowed as of course to the prevailing party unless the court otherwise directs.” Pursuant to 28 U.S.C. § 1920, certain costs may be taxed in the court’s discretion. Section 1988 of title 42 has also been interpreted to permit the award of reasonable “out-of-pocket expenses incurred by the attorney which are normally charged to a fee-paying client, in the course of providing legal services. Reasonable photocopying, paralegal expenses and travel and telephone costs are thus recoverable pursuant to the statutory authority of § 1988.” Northcross, 611 F.2d at 639. Plaintiff’s costs and out-of-pocket expenses at the district court level of $204.70 are reasonable, within the permissible categories of 28 U.S.C. § 1920 and out-of-pocket expenses, and are hereby granted.

As for costs incurred after May 11, 1984 with regard to the appellate proceedings, Federal Rule of Appellate Procedure 39 provides that “[ejxcept as otherwise provided by law, if an appeal is dismissed, costs shall be taxed against the appellant unless otherwise agreed by the parties or ordered by the court ...” The Sixth Circuit’s dismissal order does not specify the terms as to payment of costs. Nor is this Court aware of any agreement between the parties regarding costs. Therefore, plaintiff is entitled to an additional $32.50 in photostating expenses.

V.

IT IS HEREBY ORDERED that plaintiff is entitled to $21,670 in attorney fees and $237.20 in costs and expenses.

IT IS SO ORDERED.

       A rehearing has been granted in this case.


source: Caselaw Access Project

author: BARBOUR, District Judge.

license: Public Domain

text:
    M.P. PAUL, Plaintiff, v. INTERNATIONAL PRECIOUS METALS CORPORATION, Defendant.
    Civ. A. No. J84-0877(B).
    United States District Court, S.D. Mississippi, Jackson Division.
    July 3, 1985.

      Larry D. Moffett, Debra M. Robbins, Jackson, Miss., for plaintiff.
    Neil P. Olack, Watkins, Ludlam & Stennis, Jackson, Miss., Craig Edward Stein, Arky, Freed, Stearns, Watson, Greer & Weaver, Miami, Fla'., for defendant.
   MEMORANDUM OPINION AND ORDER

BARBOUR, District Judge.

This matter is before the Court on the Motion to Dismiss for lack of in personam jurisdiction and for insufficiency of service of process pursuant to F.R.Civ.P. 12(b)(2) and 12(b)(4), respectively, to dismiss or transfer venue for improper venue pursuant to 28 U.S.C. § 1406(a), to transfer venue pursuant to 28 U.S.C. § 1404(a), and to dismiss counts V and VI for failure to state a claim upon which relief can be granted pursuant to F.R.Civ.P. (12)(b)(6).

The Defendant, International Precious Metals Corporation (IPMC) is a Michigan corporation with its sole place of business in Fort Lauderdale, Florida. The Defendant is engaged in the business of offering to enter into and entering into transactions for the delivery of commodities under standardized “leverage contracts.” In May 1983, the Defendant placed an advertisement in the Wall Street Journal which was circulated and read by the Plaintiff in the State of Mississippi. The advertisement gave a national toll-free number and urged prospective customers to contact the Defendant for the purpose of entering into leveraged contracts for the purchase of precious metals. On or about May 11, 1983, the Plaintiff made a telephone call from his residence in Jackson, Mississippi, to the Defendant’s place of business in Fort Lauderdale, Florida. As a result of this conversation and various alleged misrepresentations made by the Defendant’s agents, the Plaintiff agreed to purchase 2,000 ounces of silver on that date. The Plaintiff mailed the Defendant a check in the amount of $6,368.97, drawn on the Plaintiff’s Jackson, Mississippi bank on May 18, 1983. As a result of falling prices in the silver market, the Plaintiff was requested to meet a “margin call” of $2,600.00 shortly thereafter. The Plaintiff sent a check in the amount of $2,535.52 to IPMC on or about June 2, 1983, drawn on the Plaintiff’s bank account in Jackson, Mississippi to meet this “margin call.” Shortly thereafter the Plaintiff allegedly told the Defendant’s agents that he wished to liquidate his position at a break-even point at the earliest opportunity. IPMC informed the Plaintiff that he would have to fill out a standard customer account agreement and summary risk disclosure statement in order to close out his account and sent the agreement to the Plaintiff. The Plaintiff signed and returned the Customer Account Agreement on June 14, 1983. In the fall and winter of 1983-84, the Plaintiff was required to meet several margin calls by checks drawn on his account maintained in Jackson, Mississippi. The Plaintiff’s account was finally liquidated by IPMC on or about January 9, 1984.

The Plaintiff filed a six-count complaint in the Circuit Court for the First Judicial District of Hinds County, Mississippi, alleging fraud, negligent misrepresentation, breach of fiduciary duties and violations of the federal commodities laws. Service of process was effected upon the Defendant pursuant to Mississippi’s “long arm statute,” Miss.Code Ann. § 13-3-57 (Supp. 1984). The Defendant removed this action to this Court in a timely manner.

The Defendant’s Motions will be discussed separately hereinafter.

1. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION AND INSUFFICIENCY OF SERVICE OF PROCESS

IPMC contends that it is not doing business in the State of Mississippi and that it has not committed a tort or entered into a contract to be performed in whole or in part in Mississippi so as to fall within the reach of Mississippi’s long arm statute. IPMC attaches the affidavit of Harvey Rochen, its assistant Vice-President/Director of Compliance, in support of its Motion. The Kochen affidavit avers that IPMC has never employed sales agents or representatives in the State of Mississippi, has no bank accounts or tangible assets located in the State of Mississippi, and that all business transactions conducted on behalf of IPMC's customers are transacted through IPMC’s sole office in Fort Lauderdale, Florida.

The Plaintiff correctly notes that physical presence in the state is not a prerequisite to the assertion of jurisdiction over the Defendant. The Plaintiff alleges that his economic loss in the State of Mississippi causes the tort to have occurred in Mississippi and urges this Court to hold that the Wall Street Journal advertisement in the State of Mississippi, the telephone calls to and from Mississippi and the fact that the Plaintiff’s checks were drawn on his Mississippi account suffice for the exercise of in personam jurisdiction over the Florida Defendant. The Plaintiff’s arguments and authorities are not persuasive.

In Collins v. Truck Equipment Sales, Inc., 231 So.2d 187 (Miss.1970) a non-resident corporation’s sending representatives into a state to solicit sales did not support jurisdiction under Mississippi’s long-arm statute. Where there is no personal instate solicitation at all, as in the instant case, the rationale for assertion of in personam jurisdiction is even less. Likewise, telephone calls to and from the plaintiff’s forum state have been held insufficient to extend long-arm jurisdiction over non-resident defendants. See, e.g., Reed-Joseph Co. v. DeCoster, 461 F.Supp. 748, 750 (N.D.Miss.1978); R. Clinton Construction Co. v. Bryant & Reaves, Inc., 442 F.Supp. 838 (N.D.Miss.1977). Plaintiff’s reliance upon Brown v. Flowers Indus., Inc., 688 F.2d 328 (5th Cir.1982) for the proposition that a single telephone call made by a non-resident defendant may be sufficient for the exercise of long-arm jurisdiction under § 13-3-57 (Supp.1984), is misplaced. Brown dealt with a defamatory telephone call. The torts of libel and defamation are unique torts which courts have consistently held to have occurred simultaneously in the locales of transmission and receipt. See, e.g., Keeton v. Hustler Magazine, 466 U.S. 770, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984). With regard to the Plaintiff’s contention that checks drawn on his Mississippi bank account suffice to create in personam jurisdiction, the United States Supreme Court has recently held:

Common sense and every day experience suggest that, absent unusual circumstances, the bank on which a check is drawn is generally of little consequence to the payee and is a matter left to the discretion of the drawer. Such unilateral activity of another party or a third person is not an appropriate consideration when determing whether a defendant has sufficient contacts with a forum State to justify an assertion of jurisdiction.

Helicopteros Nacionales de Columbia v. Hall, 466 U.S. 408, ---, 104 S.Ct. 1868, 1873, 80 L.Ed.2d 404, 412 (1984) (dismissal for lack of in personam jurisdiction).

2. TRANSFER OF VENUE

IPMC argues that since the Plaintiffs claim is predicated in part upon the Commodity Exchange Act, venue is controlled by 28 U.S.C. § 1391(b). Section 1391(b) provides:

A civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendants reside, or in which the claim arose, except as otherwise provided by law.

Similar actions invoking the Commodity Exchange Act have been held to have risen where the misrepresentations were made, not where they were received. See, e.g., Leech v. First Commodity Corporation of Boston, 553 F.Supp. 688 (W.D.Pa.1982); Commodities Futures Trading Commission v. First National Monetary Corp., 565 F.Supp. 30, 32 n. 4 (N.D.Ill.1983).

But for the Defendant’s removal of this action pursuant to 28 U.S.C. § 1441(a), this Court might be inclined to agree that venue is improper in the Southern District of Mississippi. Venue in actions removed pursuant to § 1441(a) however are governed by the venue provisions of that section and not by § 1391.

But even on the question of venue, § 1391 has no application to this case because this is a removed action. The venue of removed actions is governed by 28 U.S.C. (Supp. V) § 1441(a), and under that section venue was properly laid in the Southern District of Florida____ Section 1391(a) limits the district in which an action may be “brought.” Section 1391(c) similarly limits the district in which a corporation may be “sued.” This action was not “brought” in the district court, nor was respondent “sued” in there; the action was brought in a state court and removed to the District Court. Section 1441(a) expressly provides that the proper venue of a removed action is “the district court of the United States for the district and division embracing the place where such action is pending.” ...
Therefore, the question whether respondent was “doing business” in Florida within the meaning of § 1391(c) is irrelevant, and the discussion of that question is beside the point.

Polizzi v. Cowles Magazines, 345 U.S. 663, 665-66, 73 S.Ct. 900, 902-903, 97 L.Ed. 1331 (1953). As noted in Wright & Miller, “The general venue statutes, Section 1391 through Section 1393, do not apply to cases that have been initiated in a state court and removed to a federal court. It therefore is immaterial that the federal court to which the action is removed would not have been in a district of proper venue if the action had been brought there originally.” Wright, Miller & Cooper, Federal Practice & Procedure Jurisdiction 2d § 3726, at 436-37 (1985).

Since the Defendant’s removal of this action to this Court makes venue proper in this district, the Court will now consider the Motion to Transfer in light of 28 U.S.C. § 1404(a), which allows for transfer from a proper venue. 28 U.S.C. § 1404(a) permits transfer “for the convenience of parties and witnesses, in the interest of justice” to a more convenient venue. Of primary importance to the determination of the most convenient and proper venue in this case is the Venue selection clause contained in the Customer Account Agreement signed by the parties to this litigation. The Agreement specifically provides:

You further acknowledge and agree that any proceedings concerning disputes, claims or controversies arising out of this agreement, or any transaction with IPMC shall be submitted to the jurisdiction of the Courts of the State of Florida or the United States District Court for the Southern District of Florida. It is further acknowledged and agreed that the venue for any action arising from this Agreement or any transactions with IPMC shall be in Broward County, Florida. (The foregoing shall not preclude you from submitting any claim that you may have under any federal law or under the Commodity Exchange Act.)

The seminal case in construing the enforceability of venue selection clauses is the United States Supreme Court decision in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). In The Bremen, the Court held that, absent fraud or a showing that the party objecting to the venue selecting clause would be effectively deprived of his day in court, venue selecting clauses would be enforceable. The Plaintiff’s attempt to cast this particular venue selection clause within the exceptions set out by The Bremen is unconvincing. The Plaintiff alleges that he was in an unequal bargaining position and that he was forced to enter into the Customer Account Agreement due to the misrepresentations of the Defendant. According to the Complaint, however, the Plaintiff had invested in a commodities program with a competitor of the Defendant prior to initially contacting the Defendant and it does not appear that the Plaintiff was entirely unsophisticated in the type of investment into which he entered with the Defendant. Furthermore, the misrepresentations of which the Plaintiff complains in his Complaint deal with margin-calls and leverage fees and not with the venue clause itself. Therefore, this exception set out in The Bremen is not applicable. Since The Bremen, venue selection clauses have been almost uniformly upheld, see, e.g., D’Antuono v. CCH Computax Systems, Inc., 570 F.Supp. 708, 711 (D.R.I.1983), citing In Re Fireman’s Fund Ins. Cos., Inc., 588 F.2d 93-95 (5th Cir.1979); Fireman’s Fund American Ins. Cos. v. Puerto Rican Forwarding Co., Inc., 492 F.2d 1294, 1296-97 (1st Cir.1974); Richardson Engineering Company v. International Business Machines Corp., 554 F.Supp. 467, 468-69 (D.Vt.1981), aff'd. 697 F.2d 296 (2d Cir.1982); Kline v. Kawai America Corp., 498 F.Supp. 868, 871 n. 1 (D.Minn.1980).

In determining the propriety of a transfer pursuant to Section 1404(a) for the convenience of the parties, the witnesses and the administration of justice, the Plaintiff’s choice of forum is generally “highly esteemed” and entitled to great weight. Time, Inc. v. Manning, 366 F.2d 690, 698 (5th Cir.1966); Kane v. Halmark Ins. Co., 409 F.Supp. 467, 468 (S.D.Fla.1976). This is particularly true when the plaintiffs choice of forum is his own home state. Ronco, Inc. v. Plastics, Inc., 539 F.Supp. 391, 401 (N.D.Ill.1982). Residence for venue purposes is determined as of the time of the commencement of the action and not the time when the action allegedly arose, however. Lipp v. Janson, 198 F.Supp. 195 (E.D.Pa.1961). In the Plaintiffs original Complaint, he claimed to be “an adult resident citizen of the State of Pennsylvania.” After objection by the Defendant on the grounds of venue, the Plaintiff amended his Complaint to allege that he “is an adult resident citizen of the First Judicial District of Hinds County, Mississippi, with his place of domicile at 110 Field Tree Court, Jackson, Mississippi 39212.” Discovery conducted in the case indicates that the Plaintiff has moved to Pennsylvania and is working in Pennsylvania and has placed his Mississippi residence up for sale. Merely owning property in Mississippi does not make one a Mississippi resident for venue purposes. See Junior Spice, Inc. v. Turbotville Dress, Inc., 339 F.Supp. 1189 (E.D.Pa.1972). The Court is of the opinion that the Plaintiffs choice of forum is entitled to little consideration where, as in the instant case, he has sued in a district other than the district in which he resides. See, e.g., Pesin v. Goldman, Sachs & Co., 397 F.Supp. 392 (S.D.N.Y.1975); Wibau v. American Hoist, 293 F.Supp. 273 (S.D.N.Y.1968); Kellner v. Saye, 306 F.Supp. 1041 (D.Neb.1969); Ross v. Tioga General Hospital, 293 F.Supp. 209 (S.D.N.Y.1968); Glenn v. TransWorld Airlines, Inc., 210 F.Supp. 31 (E.D.N.Y.1962).

The Defendant lists seven, apparently key witnesses, in addition to its Assistant Vice-President/Director of Compliance, Harvey Kochen, who reside in the Southern District of Florida. It has been held that “the most significant factor [in passing on a motion to transfer under Section 1404(a)] is the convenience of party and non-party witnesses.” Saminski v. Occidental Petroleum Corp., 373 F.Supp. 257, 259 (S.D.N.Y.1974). Accord, Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1947). In fact, the key witness in the Plaintiffs fraud action against the Defendant is a Mr. Locigno who no longer is employed by the Defendant and is not subject to subpoena should this action be tried in the Southern District of Mississippi. In view of the importance of this testimony and the credibility determinations to be made based upon it, the Plaintiffs suggestion that his testimony be presented through videotaped deposition is particularly unappealing. While a Southern District of New York decision has referred to the availability of videotaped depositions in denying a motion to transfer under section 1404(a), Somerville v. Major Exploration, Inc., 576 F.Supp. 902 (S.D.N.Y.1983), this case dealt with an expert witness, not the alleged central figure in a fraud case. Traditionally, the convenience of expert witnesses is entitled to little consideration on a motion to transfer venue, see Wibau v. American Hoist, 293 F.Supp. 273 (S.D.N.Y.1968), and the Defendant should not be deprived of the opportunity to present the live testimony of the individual designated by the Plaintiff as the key figure in his fraud case.

Furthermore, the disruption to the Defendant’s business operations by requiring seven or eight key employees to appear for trial in the Southern District of Mississippi is a significant factor counselling in favor of transfer. See, e.g., SEC v. Page Airways, Inc., 464 F.Supp. 461 (D.D.C.1978); Trans-United Industries, Inc. v. Renard Linoleum & Rug Co., 212 F.Supp. 373 (E.D.Pa.1962); United States v. General Motors Corp., 183 F.Supp. 858 (S.D.N.Y.1960). Finally, the Defendant argues that the vast bulk of documentary evidence in the Southern District of Florida is an additional factor in favor of transfer to that venue. The Defendant argues that the Plaintiff has had more than one attorney in the Defendant’s Florida offices for more than one week researching thousands of documents just on the jurisdictional question. It may be assumed that the documentation pertaining to the merits of the Plaintiff’s claim is even more voluminous. While it would not be impossible for the Defendant to transfer these documents to the Southern District of Mississippi, the ease of access to voluminous documents is a factor to be considered and it weighs in favor of transfer of this action to the Southern District of Florida. SEC v. Page Airways, Inc., 464 F.Supp. 461 (D.D.C.1978); Polin v. Conductron Corp., 340 F.Supp. 602 (E.D.Pa.1972).

Finally, the Plaintiff objects to transfer of this action to the Southern District of Florida since this will interfere with his choice of' Mississippi counsel. While the Plaintiff’s choice of Mississippi counsel is to be considered on a motion to transfer, Austin v. Johns-Manville Corp., 524 F.Supp. 1166, 1169 (E.D.Pa.1981), the ease with which foreign counsel may be admitted to practice in other districts indicates that this factor should be given little consideration. Simmons Ford, Inc. v. Consumers Union of U.S., Inc., 490 F.Supp. 106 (W.D.Mich.1980); Poney v. Johnson & Johnson, 414 F.Supp. 551 (S.D.Fla.1976); Blender v. Sibley, 396 F.Supp. 300 (E.D.Pa.1975).

Against the manifest inconvenience to the Defendant of trying this action in the Southern District of Mississippi, we must weigh the inconvenience to a Pennsylvania resident of travelling to the Southern District of Florida as opposed to the Southern District of Mississippi to try this case. After weighing all of the factors argued by the parties on this issue, the Court is convinced that the Defendant’s Motion to Transfer for the convenience of the parties and the witnesses pursuant to 28 U.S.C. § 1404(a) is well taken and should be sustained.

Even though at the onset of the Opinion the court ruled that the lack of contacts between IPMC and the State of Mississippi precluded the exercise of in personam jurisdiction over the Defendant, that result does not necessitate an outright dismissal of this action. This Court is convinced that the interests of justice would best be served in this case by a transfer of this action to the Southern District of Florida rather than a dismissal on the grounds of lack of in personam jurisdiction. In Haire v. Miller, 447 F.Supp. 57 (N.D.Miss.1977), the District Court noted:

The court’s ruling that it lacks personal jurisdiction over the defendants does not automatically moot plaintiff’s motion to transfer. A court having subject matter jurisdiction, as this court does, but lacking personal jurisdiction over the defendant, still has authority under 28 U.S.C. § 1404(a) or 28 U.S.C. § 1406(a) to order a transfer to another district. Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466, 82 S.Ct. 913 [915], 8 L.Ed.2d 39 (1962) (transfer under section 1406(a)); Koehring Co. v. Hyde Construction Co., 324 F.2d 295, 297-98 (5th Cir.1963) (transfer under section 1404(a)).

Id. at 59.

In light of this Court’s transfer of venue to the Southern District of Florida, the Court declines to rule on the Defendant’s Motions to Dismiss counts V and VI of the Complaint for failure to state a claim upon which relief can be granted. These are matters properly to be considered by the transferee court.

Accordingly, the Defendant’s Motion to Transfer to the Southern District of Florida pursuant to 28 U.S.C. § 1404(a) is hereby granted.

      . In Blanton v. American Tool and Grinding Co., 472 F.Supp. 257 (N.D.Miss.1979) the fact that several telephone calls were received by plaintiff in Mississippi, plaintiff’s assets included real and personal property located in Mississippi and "the economic consequences of the fraudulent acts of defendants showed their effect in the State of Mississippi and not in any other state,” were held to have "no bearing whatsoever upon the question [of personal jurisdiction].” Id. at 258.

      . The Plaintiff further attempts to show peripheral facts constituting a nexus between the Florida Defendant and Mississippi by affidavit stating that an examination of the Defendant’s records for the relevant time period reveals the Defendants have had 39 Mississippi customers with total contracts valuing $1,124,121.21. The Plaintiff argues that this shows a sufficient continuing contact with Mississippi residents so as to constitute "doing business” in Mississippi. In response the Defendant contends the dollar figure is inflated since it reflects the total value of the commodities options, rather than the actual amount invested by the customers. Secondly, the Defendant argues that the 39 customers merely indicate individuals giving the Defendant Mississippi addresses and does not necessarily indicate that they are Mississippi residents. Finally, the Defendant argues that 39 customers out of 7,580 files searched indicates less than I/2 of 1% of the Defendant’s business is related in any way to Mississippi. The Court is convinced that the volume of business, even assuming it were with Mississippi customers, would be insufficient in and of itself to assert in personam jurisdiction over this Defendant in Mississippi.

      . IPMC thus argues that this action should be dismissed or transferred to the Southern District of Florida for lack of proper venue pursuant to 28 U.S.C. § 1406(a) which states that "the district court of a district in which is filed a case laying venue in the wrong division or district, shall dismiss, or if not in the interest of justice, transfer such case to any district or division in which it could have been brought.”

      . The Plaintiff's additional contention that the venue selection clause excludes actions brought pursuant to the Commodity Exchange Act is not well taken. The last parenthetical sentence in the venue selection clause merely preserves the Plaintiff's right to pursue any federal law, including the Commodity Exchange Act, but provides that such actions must be pursued in the Southern District of Florida.


author: ARONOVITZ, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. $53,661.50 IN U.S. CURRENCY, Defendant.
    No. 84-1718-Civ-ARONOVITZ.
    United States District Court, S.D. Florida.
    July 3, 1985.

      Jack P. Attias, Key Biscayne, Fla., for claimant.
    Barry S. Seltzer, Asst. U.S. Atty., Miami, Fla., for the U.S.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

ARONOVITZ, District Judge.

THIS CAUSE was tried to the Court non-jury and having heard the testimony of the witnesses, examined all of the exhibits admitted into evidence including the deposition of Officer Randy Heller, and having heard oral argument by counsel as well as conducting a review of post-trial submissions, this Court thereupon makes its Findings of Fact and Conclusions of Law based upon the aforegoing.

FINDINGS OF FACT

1. This is a forfeiture action wherein the United States claims forfeiture of the defendant currency, $53,661.50 in U.S. Currency, pursuant to 31 U.S.C. § 5316. Yvonne Wirth claims ownership of the defendant currency and contests its forfeiture. This Court has jurisdiction herein pursuant to 28 U.S.C. §§ 1345 and 1355.

2. On February 15, 1984, Officer Randy Heller, Metro-Dade Police, stopped Edward Broff (son of Claimant) for a traffic violation on Perimeter Road adjacent to the Miami International Airport.

3. As Edward Broff exited the vehicle, Officer Heller observed a bulge protruding from Broff s right rear pants pocket. Officer Heller’s investigation revealed that the bulge was a North American Arms Corp. .22 caliber long rifle (Derringer) containing five bullets. Heller placed Broff under arrest for carrying a concealed weapon and advised him of his Miranda rights.

4. Heller requested and secured the consent of Broff to search the vehicle.

5. Officer Heller discovered $53,661.50: $25,000 in a brown paper bag underneath the driver’s seat; $27,900 in a green athletic bag in the trunk; and $761 in a men’s purse on the front seat of the vehicle. Broff carried 50c in his pants pocket.

6. Broff told Heller and Fernandez that the defendant currency had recently been brought into the United States from Jamaica and that it was to be used to purchase aircraft parts.

7. At trial, Officer Heller testified that Edward Broff had stated at the scene of arrest that it was his (Edward Broff’s) money and that he was going to use it to buy airplane parts. In his deposition taken on September 19, 1983, Officer Heller testified:

Q. What do you remember asking him and what do you remember him saying on the scene?
A. Basically I remember asking him what he was doing with that money, and he replied that he was going to purchase airplane parts with the money.

{Deposition of Officer Randy Heller, at p. 22)

Q. Did you ask him anything else, other than what he was going to do with the money? For instance, did you ask him where he got the money, whose money it was, why it was in the car in the form that it was, at the scene?
A. At the scene, no.
Q. At the scene, you didn’t ask those questions. It was just briefly: What are you doing with the money?
A. Correct.
Q. So you had no knowledge of where it comes from, who owned it, except for him having possession of it.
A. Correct.
Q. What else do you remember him saying about the money at the scene?
A. He said it was his money and that he was going to buy airplane parts with it.

{Deposition of Officer Randy Heller, at p. 23)

Officer Heller, in trial, also stated that in Station 3 to which Broff was taken from the scene of arrest, Broff stated he brought it all over from Jamaica fairly recently and all at one time.

7. Deposition of Officer Randy Heller, at p. 24:

Q. Do you remember asking him at the scene where and/or how he got the money?
A. Not at the scene.

8. In his deposition, Officer Heller further testified:

Q. Did there come a time when you did have further discussion with Edward Broff concerning the origin of the money?
A. Yes.
Q. When was that?
A. That was at the station house, Station No. 3.
Q. And who was present at the time? A. Myself, Mr. Broff and Sergeant Fernandez.
Q. What questions do you remember being asked, which either you asked or someone else asked, and what responses do you remember Edward Broff giving concerning the origin of the currency?
A. I remember the question of where did the money come from being asked, and he replied that he brought it over from Jamaica.
Q. What else do you remember being asked about the origin of the money, use of the money, anything about it?
A. I believe he also said it has something to do with his mother. I believe he said it was his mother’s and it had something to do with an estate. That’s all I can recall.
Q. What do you remember vaguely?
A. Again, just to reiterate, that I asked him where the money came from, he stated that he brought it from Jamaica, and I believe he said that it was his mother’s money and it had something to do with an estate.

{Deposition at pp. 24, 25)

9. Special Agent United States Customs Michael Mulcahy interviewed Edward Broff at Station No. 3. He testified that at one time, Broff said the money had been brought in from Jamaica and further, that it was from his father’s estate, belonged to his mother, and that his sister and he had contributed part of it as a gift to his mother; that some of it had consisted of advance hotel reservation payments to his mother, Yvonne Wirth, the claimant. Agent Mulcahy also testified that he had checked the computer which records Customs entry records into the United States to find any 4790 forms filed in the name of Edward Broff and had not found one approximating $54,000 in amount at any time. However, he had learned that Broff had filed two 4790 forms, one declaring $9,900 on arrival at Miami from Nassau through Chalks Airline on November 12, 1983 (Government’s Exhibit 3), and another form at the Canadian border going from Canada into the United States in which he declared $5,100 (Government’s Ex. 4). Mulcahy also testified that at Station No. 3, Broff told the agents that the currency was kept under a bed at a home owned by his mother in Ft. Lauderdale, Florida, which home she used from time to time and next door to which he lived when here.

10. Subsequently, on February 20, 1984, five days later, Broff was arrested by Jamaican police for failure to declare numerous items as he entered that country, and he had in his possession at that time, $54,-000 in U.S. currency for which no outbound declaration had been filed. None of the aforegoing was known to Mulcahy or any other government agent at the time the money was seized on February 15, 1984.

11. Yvonne Wirth testified that her son had been entrusted with the proceeds from her husband’s estate and collected monies from prepaid vacations. She introduced claimant’s Exhibits 3, 4, and 5, showing that her daughter had received a cash distribution of $5,962, her son (Edward Wirth Broff) a similar sum of $5,962, and she herself had received a cash distribution of $31,925 from her husband’s estate from the Probate Division, Circuit Court, Dade County, Florida. She testified, corroborated by Edward Broff, that the daughter and son had given their share of the father’s estate to their mother, and that it was stored under the bed with other monies collected as prepaid vacation deposits on a hotel she owned and operated in Jamaica. Yvonne Wirth and Edward Broff both claimed that there was more than $60,000 in a bag under the bed in the house. There is no evidence to indicate that the money which was seized from Edward Broff’s vehicle was not part of the money under the bed — (even though the under-the-bed story may stretch the imagination). The point is that they supported the existence of the money owned and claimed by Yvonne Wirth in an amount commensurate with that which was seized.

12. The testimony of Edward Broff and Yvonne Wirth did not specify exactly how much of the $60,000 had been brought in from Jamaica. Their uncontradicted testimony also was that approximately $43,000 was derived from the husband’s/father’s estate.

13. It appears from the testimony that Edward Broff had the authority of his mother to utilize the money, to replace it, and this was solely within his discretion. For all intents and purposes, he had actual possession of the money but control was vested in his mother and he acted as her agent and utilized some of the money.

14. This is not an instance wherein the Court faults the credibility or any alleged lack of credibility of Officer Heller, Agent Mulcahy, or any other government witness. The sole and only finding relevant hereto is whether or not the officers representing Customs and the United States had probable cause (within its legal definition) to seize the money and seek its forfeiture. This Court could speculate and conjecture, as may the officers who were involved herein, that it was highly suspect that the money was kept under the bed in the house and that the story told by Broff seemed to be at times at odds with the individual explanations of particular sources of origin of the money, and it may well seem that suspicion could develop that Edward Broff is a money courier or perhaps otherwise involved in some illegal activities. However, it is not for this Court to indulge in such speculation or conjecture and the Court must act on the basis of evidence and proof sufficient to constitute probable cause at the time of the seizure.

15. It is this Court’s view that, within the totality of all of the statements that Edward Broff made at Station No. 3 and at the scene of arrest, that the testimony given at trial by Officer Heller as to a single statement attributed to Broff that Broff had brought all the money over from Jamaica fairly recently and all at one time, together with the computer print-out information, were not sufficient to constitute a basis of seizure and forfeiture of the subject currency for failure to declare same. When considered within the totality of all the evidence, there was no probable cause.

Conclusions of Law

1. A forfeiture proceeding is an in rem action brought against a seized property pursuant to the fiction that the property itself is guilty of facilitating or committing a crime. See Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 680-84, 94 S.Ct. 2080, 2090-92, 40 L.Ed.2d 452 (1974).

2. In a forfeiture proceeding, as in the instant case, the plaintiff has the initial burden of demonstrating the existence of probable cause to seize the defendant currency. United States v. One 1971 Chevrolet Corvette Automobile, 496 F.2d 210, 212 (5th Cir.1974).

3. Probable cause is defined as a reasonable ground for belief or guilt supported by less than prima facie proof but more than mere suspicion. United States v. One 1978 Chevrolet Impala, 614 F.2d 983, 984 (5th Cir.1980); United States v. One 1975 Ford F-100 Pick-Up Truck, 558 F.2d 755, 756 (5th Cir.1977); United States v. One 1971 Corvette Automobile, supra.

4. Once a court determines that the plaintiff had probable cause to seize the defendant currency, the burden of proof shifts and forfeiture is proper unless a party with standing proves a defense by a preponderance of the evidence. See United States v. One 1975 Ford F-100 Pickup Truck, supra.

5. To contest a forfeiture action, “an individual must first demonstrate an interest in the seized property sufficient to satisfy the Court of his standing as a claimant.” United States v. Three Hundred Sixty Four Thousand Nine Hundred Sixty Dollars ($364,960) in United States Currency, 661 F.2d 319, 326 (5th Cir.1981). In general terms, ownership may be defined as a possessory interest in the seized property from which flows the right to exercise dominion and control. United States v. One 1945 Douglas C-5) (DC-4) Aircraft, 604 F.2d 27, 28 (8th Cir.1979).

6. It is the conclusion of this Court that in the first instance, government agents did not have probable cause but only mere suspicion and therefore, they had no appropriate grounds upon which to seize the money.

7. Yvonne Wirth, the claimant, has established standing to contest the forfeiture and has proven her right to claim the money even though it was in the actual possession of her son at the time of seizure. It was there with her permission and she had constructive possession. Although Edward Broff Wirth was in actual possession of the said currency on the date of the seizure, February 15, 1984, he was the authorized agent for claimant and had permission to have in his possession said currency for his and the family’s use. Plaintiff has established mere suspicion for the seizure of the defendant currency but has failed to establish probable cause for granting the Forfeiture in Rem Complaint.

8. This Court therefore does not have to reach a determination on the third prong of law involved here as to whether the claimant has demonstrated a defense to the seizure by a preponderance of the evidence. Admittedly, it would be difficult to give full credibility to the testimony of Edward Broff and in rendering this verdict, the Court has granted only a limited recognition of his credibility, but in doing so, the Court in no way impugns the credibility of any of the government’s witnesses. This conclusion is simply based on a lack of probable cause at the time of the seizure and further, that the claimant has established standing.

9. A Final Judgment will be entered herein directing that the United States’ request for forfeiture of the subject currency be DENIED and claimant’s claim to the subject currency in the sum of $54,661.50 in United States currency is hereby RECOGNIZED. The plaintiff is

ORDERED and DIRECTED FORTHWITH to return said sum of money to the claimant and Final Judgment shall be entered herein directing same accordingly, together with costs of the Court to be assessed against the plaintiff.


author: LEVAL, District Judge.

text:
    UNITED STATES of America, v. Deborah CARRETHERS, Defendant.
    Magistrate No. 85-373.
    United States District Court, S.D. New York.
    July 3, 1985.
    Rudolph W. Giuliani, U.S. Atty., S.D. N.Y., New York City, for U.S.; John Savarese, Asst. U.S. Atty., of counsel.
    Lorin Duckman, New York City, for defendant.
   MEMORANDUM AND ORDER

LEVAL, District Judge.

The government appeals from an order by Magistrate Raby dismissing the complaint against defendant Deborah Carrethers with prejudice.

Facts

In a complaint filed on February 28, 1985, the government charged defendant with embezzling government property in violation of 18 U.S.C. § 641. The complaint alleged that defendant used her position as a senior claims examiner for Blue-Cross Blue-Shield to create and cash fraudulent medicare checks.

After her presentment before a magistrate, defendant indicated her willingness to cooperate with the government. In order to extend the 30-day period for filing the indictment under 18 U.S.C. § 3161(b), the government applied for, with consent of defendant, an order of exclusion under 18 U.S.C. § 3161(h)(8)(A) (“ends of justice”). A 30-day exclusion was granted on March 29, 1985. Apart from the time covered by the exclusion, only one day remained for the filing of the indictment under § 3161(b).

In mid-April, the government and defendant agreed on a plea bargain. However, before the indictment was filed and the plea entered, the government received new evidence linking defendant to another prior embezzlement scheme also involving fraudulent medicare checks. Because of this new information, during the week of April 22, the government refused to enter into a cooperation agreement with defendant, but agreed to continue plea discussions with her. The 30-day exclusion order entered on March 29, 1985 expired on April 29, 1985. By a clerical error in the U.S. Attorney’s Office, the case did not appear on the magistrate’s calendar on April 29; therefore, no request for a further extension was made. The Assistant U.S. Attorney, who was handling this case, was not aware that no request had been made. When he realized this error in mid-May, he made an application with the consent of defendant for a 60-day exclusion order nunc pro tunc as of April 29, 1985. The magistrate denied the application and dismissed the complaint with prejudice for failure to file an indictment within 30 days as required by 18 U.S.C. § 3161(b).

Discussion

The government argues that the complaint should not have been dismissed with prejudice. Section 3162(a)(1) specifies the factors the court is to consider in determining whether to dismiss a case with or without prejudice where an indictment or information is not filed within the statutory time limit under § 3161:

In determining whether to dismiss the case with or without prejudice, the court shall consider, among others, each of the following factors: the seriousness of the offense; the facts and circumstances of the case which led to the dismissal; and the impact of a reprosecution on the administration of this chapter and on the administration of justice.

18 U.S.C. § 3162(a)(1). Moreover, the Court of Appeals has held that there is no presumption in the Speedy Trial Act in favor of dismissals with prejudice. United States v. Caparella, 716 F.2d 976, 979-80 (2d Cir.1983). Rather, a court must weigh various factors including those outlined in § 3162(a)(1). Id. at 980. The magistrate made no explanation of his order of dismissal with prejudice. Once the various factors are weighed in the context of this case, it is clear that this dismissal must be without prejudice.

First, the offense charged is a relatively serious one, involving around $400,000 in government money and a maximum punishment of 10 years and $10,000. Second, the failure to obtain an exclusion prospectively was the result of a mere clerical oversight. Third, at the time of the government’s failure to obtain an exclusion, there was no reason to doubt that such exclusion could later be retroactively granted. It was only later decided in United States v. Tunnessen, 763 F.2d 74 (2d Cir.1985) that ends-of-justice exclusions under § 3161(h)(8) must be granted in advance of the excluded continuance (the Court noting the inappropriateness of dismissal with prejudice where law was unsettled as to whether retroactive ends-of-justice continuances permitted). Fourth, the defendant has suffered no prejudice from the delay. See Caparella, 716 F.2d at 980 (prejudice to defendant an important consideration). She has been out on bail from the beginning of this case and she joined in all the applications for continuances, including the request of a nunc pro tunc order. In addition, she had been engaged in constant plea discussions with the government up until the dismissal of the complaint. Fifth, the public suffers no prejudice from the delays in bringing the indictment. So far as appears on the present state of the record, this was not the kind of defendant as to whom there was a public interest in putting her behind bars with the greatest possible speed to protect the public from further criminal conduct.

The delays in bringing the indictment were occasioned by appropriate good faith bilateral exploration of the question whether a cooperation agreement should be made. It is in the public interest that responsible, thoughtful consideration be given to such questions, even if they require brief delays in moving to the next stage of prosecution. Failure to accommodate the delay would have been costly to the public interest either because a potential valuable offer of cooperation would be lost, or because an offer of cooperation might be accepted inappropriately. The actions to be taken and the discretionary decisions made by prosecutors are often more complex, elaborate, subtle and sensitive than is recognized by the presumptive schedules set by the Speedy Trial Act. In passing on applications for exclusions and on questions such as this, courts should give appropriate regard to the prosecutor’s obligation to do his job carefully, thoughtfully and fairly, rather than in mindless response to presumptive time schedules that were set without reference to the needs of the particular case.

Finally, the delay in applying for the exclusion was minimal (less than one month). The government’s decision to delay filing the indictment because of ongoing plea discussions was justifiable and would have warranted an ends-of-justice continuance if it had been sought prospectively.

In dismissing the complaint with prejudice, the magistrate did not consider the factors set out in § 3162(a)(1). Consideration of these factors requires that the complaint be dismissed without prejudice. The magistrate’s order dismissing the complaint with prejudice is modified to provide that the dismissal is without prejudice.

SO ORDERED.

      . In a letter to the court dated June 27, 1985, defendant’s attorney agreed with the Government’s assessment of the facts. He noted that:
      From the date of my appointment to the present, the [Assistant] and I have engaged in discussions concerning Ms. Carrethers’ cooperation. The continuances were sought to give counsel for the Government an opportunity to assess the information provided by my client. Additionally, I hoped that during the investigation sufficient data would be obtained about her which would convince the Government to offer her a beneficial plea bargain.
      Paragraph 2 of letter dated June 27, 1985 from Lorin Duckman, Esq.

      . The government has withdrawn its request for a nunc pro tunc order of continuance in light of the recent Second Circuit case, United States v. Tunnessen, 763 F.2d 74 (2d Cir.1985) which held that ends-of-justice continuances may not be granted retroactively.

      . Although defendant's attorney in his June 27, 1985 letter to the court concurred in these facts, he noted that the defendant may have been prejudiced by the fact that the case against her appears to have been expanded. She may now be held liable for fraudulent acts committed before the dates in the original complaint. That is not prejudice. Indeed, she could be charged with these additional acts notwithstanding the magistrate's dismissal of the complaint with prejudice.


author: SUSAN H. BLACK, District Judge.

text:
    BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC., Plaintiff, v. DEPARTMENT OF BANKING AND FINANCE, an agency of the State of Florida; Gerald A. Lewis, Comptroller of the State of Florida; United States of America; Office of Personnel Management, an agency of the U.S. Government; Donald J. Devine, Director of the Office of Personnel Management, Defendants.
    No. 83-242 Civ-J-14.
    United States District Court, M.D. Florida, Jacksonville Division.
    July 5, 1985.
    J. Stephen O’Hara, Jr. and Betsy C. Cox, Mathews, Osborne, McNatt, Gobelman, & Cobb, Jacksonville, Fla., for plaintiff.
    Charles L. Stutts, Asst. Gen. Counsel and Mike Underwood, Dept, of Banking and Finance, Tallahassee, Fla., Dorothea Beane, Asst. U.S. Atty., Jacksonville, Fla., Stephen P. Smith, Washington, D.C., for defendants.
   OPINION

SUSAN H. BLACK, District Judge.

This case came on to be heard on plaintiff’s Motion for Summary Declaratory Decree as to Count II, filed herein on September 5, 1984. Defendant United States of America, Office of Personnel Management (hereinafter “OPM”) and plaintiff filed a Pretrial Stipulation on September 27, 1984. Defendant Department of Banking and Finance (hereinafter “Florida”) filed its Concurrence Of State Of Florida In Pre-Trial Stipulation As To Count II on September 28, 1984. A hearing was held before the Court on December 12, 1984. At the close of the hearing, the Court directed counsel to file further briefs. In accordance with the Court’s direction, plaintiff filed its Supplemental Memorandum, Filed Pursuant To Request Of Court on January 21, 1985. Defendant OPM, filed its Memorandum Of Points And Authorities On Behalf Of The Claim Of The United States on January 21, 1985. Florida filed its response on January 22, 1985. Furthermore, Blue Cross and Blue Shield Association (hereinafter “Blue Cross Association”) filed a brief amicus curiae on February 12, 1985.

This case of first impression is before the Court for a declaration of the rights and relations of plaintiff and defendants under the Federal Employees Health Benefits Act, 5 U.S.C. §§ 8901-8913 (hereinafter “the Act”) and the Florida Disposition of Unclaimed Property Act, Fla.Stat. § 717 (hereinafter “Unclaimed Property Act”) in regard to provision VIII(m) of Contract Number CS 1039 (hereinafter “Contract”) between OPM and the Blue Cross Association. At issue is the disposition of amounts represented by Federal Employee Program (hereinafter “FEP”) benefit checks issued by plaintiff to federal employee benefit recipients which remain uncashed for two years or more.

Plaintiff contends that the defendants have made conflicting and adverse claims to the amounts represented by the benefit checks and seeks a declaration as to how it should dispose of these amounts. Defendant OPM avers that the amounts represented by the benefit checks should be credited to the Special Reserve fund maintained by the Blue Cross Association pursuant to the Act. Defendant Florida contends that the plaintiff should hold the amounts in question until they remain unclaimed for seven (7) years and then deliver them to Florida for administration and disposition pursuant to the Unclaimed Property Act.

FINDINGS OF FACT

In the Pretrial Stipulation As To Count II, filed on September 27, 1984, the parties stipulated to the following facts.

1. Under the terms of the agreement entered into between plaintiff, Blue Cross and Blue Shield of Florida, Inc. and the Blue Cross Association, plaintiff authorized the Blue Cross Association to contract with OPM to furnish health benefits through plaintiff to federal employees and annuitants as provided by the Government-wide Service Benefit Program.

2. OPM is authorized by the Act to contract with qualified insurance carriers to provide health benefit plans such as the Government-wide Service Benefit Plan in the case sub judice. Based on this authorization, OPM and the Blue Cross Association entered into the Contract.

3. Plaintiff administers health care benefits for enrolled federal employees in Florida pursuant to the terms of the Contract and the aforementioned agreements between plaintiff and the Blue Cross Association. As one of its duties, plaintiff issues FEP checks to federal employee benefit recipients. Occasionally, these checks are not cashed.

4. Congress amended the Act effective September 17, 1978, to add the following language:

(m)(l) The provisions of any contract under this chapter which relate to the nature or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law, or any regulation issued thereunder, which relates to health insurance or plans to the extent that such law or regulation is inconsistent with such contractual provisions.

5. Subsequently, OPM amended the Contract, effective September 28, 1979, to add the following paragraph at the end of Article VIII:

(m) Payment of benefit checks issued pursuant to this contract shall be voided if the checks have been outstanding for two (2) years. The amounts represented by these checks shall be credited to the Special Reserve. The term “check” shall include any written instrument issued to pay or reimburse the payment of benefits under this contract, including by way of illustration but not limitation, drafts, money orders, and checks. This provision is adopted pursuant to P.L. 95-368, enacted September 17, 1978, to preempt State disposition of unclaimed property acts and acts of similar import.

6. The Special Reserve Fund referenced in that amendment is maintained by the Blue Cross Association pursuant to the Contract terms.

7. Plaintiff is keeping a record of all uncashed FEP benefit checks. Count II of this action is directed to the amounts represented by checks issued by the plaintiff that remained uncashed for more than two (2) years but less than seven (7) years.

8. OPM requests that, under the terms of the Contract, plaintiff credit to the Special Reserve fund the amounts represented by FEP benefit checks issued by plaintiff and uncashed for two years or more.

9. Florida disputes OPM’s claim. In its role as administrator of the Unclaimed Property Act, Florida claims that the amounts represented by the unclaimed benefit checks are to be delivered to Florida for administration and disposition pursuant to Section 717 or, alternatively, Section 716, Fla.Stat.

10. The plaintiff makes no claim to the funds in question. It asks only to have a determination as to whether these amounts should be deposited in the Special Reserve Fund maintained by the Blue Cross Association for OPM or be delivered to Florida.

CONCLUSIONS OF LAW

The Court has jurisdiction of this Count II action for declaratory decree pursuant to 5 U.S.C. § 8912; 28 U.S.C. § 1331 (together with 5 U.S.C. §§ 702 and 703); and 28 U.S.C. § 1346(a) in that this is a civil action against the United States founded on 5 U.S.C. § 8901, et seq. In order to determine the disposition of the funds, the Court will examine the history of The Act. Then, the Court will apply a two-part test to determine which defendant should be awarded the funds held by the plaintiff, Florida Blue Cross. The first part of the test will determine whether OPM’s claim preempts Florida’s. The basic precepts of federal preemption will be analyzed and then applied to the legislative intent of Congress when it passed Section 8902(m)(l). Recent court decisions that interpret The Act will be examined in light of federal preemption. Second, having made a finding regarding federal preemption, the Court will determine whether OPM had the authority to amend the Contract.

History of the Act

In 1959 Congress established the FEP to provide health benefits for federal employees and annuitants, retired employees. This was codified as The Act, 5 U.S.C. §§ 8901-8913. Under this program, the government contributes part of the premium cost and the employee pays the remainder. Id. at § 8906. Employee contributions are then paid into the Federal Employees Health Benefits Fund which is held in the United States Treasury exclusively for the payment of health benefits for the FEP subscribers. Id. at § 8909.

The FEP is administered by the OPM. In 1960, OPM contracted with the Blue Cross Association to establish the Government-Wide Service Benefit Plan authorized by The Act. Until Congress amended The Act in September of 1978, the Blue Cross Association remitted uncashed checks to each state where there was an applicable unclaimed property law. In states where there was no such law, the checks were returned to the FEP. (Audit Policies and Procedures Bulletin No. 4, FEP, October 29, 1976).

After congressional amendment of The Act, OPM and the Blue Cross Association amended their contract to provide for the federal preemption of state disposition of unclaimed property acts. The effect of this contract amendment was to ensure that all uncashed checks were returned to the special reserve of the Blue Cross Association. Employees’ rights to these checks are not extinguished by the amendment. Any employee who presents a claim for an uncashed benefit check may receive a reissued check. The Blue Cross Association immediately implemented this contract change. See Audit Policies and Procedures Bulletin No. 4, October 3, 1979. All state Blue Cross plans have acquiesced and have remitted uncashed checks to the special reserve except the Florida plan.

Federal Preemption of State Law

The Supremacy Clause of the Constitution, Article VI, Clause 2, provides that federal law preempts the operation or exercise of incompatible or conflicting state legislation. The United States Supreme Court has stated, “(t)he law of the State, though enacted in the exercise of powers not controverted, must yield when incompatible with federal legislation.” Sperry v. State of Florida, 373 U.S. 379, 384, 83 S.Ct. 1322, 1325, 10 L.Ed.2d 428 (1963) (citation omitted). In defining federal preemption, the Supreme Court stated:

The criterion for determining whether state and federal laws are so inconsistent that the state law must give way is firmly established in our decisions. Our task is to determine whether, under the circumstances of this particular case, [the State’s] law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress____ This inquiry requires us to consider the relationship between state and federal laws as they are interpreted and applied, not merely as they are written.

Jones v. Rath Packing Co., 430 U.S. 519, 526, 97 S.Ct. 1305, 1310, 51 L.Ed.2d 604 (1977) (citations omitted).

In deciding whether federal law preempts a state statute, the Court must ascertain Congressional intent in enacting the federal statute at issue. Metropolitan Life Insurance Co. v. Massachusetts, — U.S. ---, ---, 105 S.Ct. 2380, 2388, 85 L.Ed.2d 728 (1985). In keeping with the Supreme Court’s direction to “begin with the language employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose,” Park ’n Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. ---, --, 105 S.Ct. 658, 662, 83 L.Ed.2d 582 (1985) (slip op. 4), the Court will next analyze the legislative history of the recent amendment as the first part of its two-part test.

Legislative History of the Preemption Provision in the FEP Act

The original impetus for the amendment came from a report to Congress by the United States Comptroller General that identified various attempts by states to require the inclusion of special health benefits plans in the FEP. A bill to preempt state law was introduced. H.R. 2931, 95th Cong. 1st. Sess. (1977). OPM favored this bill and testified that it would give the agency the preemptive relief it needed for “administrative matters, and in terms of benefit matters.” Uniformity in Federal Employee Health Benefits and Coverage: Hearing Before the Subcomm. on Civil Service and General Services of the Senate Comm, on Governmental Affairs. 95th Cong. 1st Sess. 6 (1977) (hereinafter “Senate Hearing”).

It is clear from both the House and Senate reports that Congress not only considered preemption when it passed the legislation but also intended to preempt all state insurance laws except those regulating premium taxes and mandatory reserves. Sen.Rep. No. 903 at 4, U.S.Code Cong. & Admin.News 1978, pp. 1413, 1415; H.R.Rep. No. 282 at 4-5. Section 8902(m)(l) of The Act provides that the provisions of any FEP contract “which relate to the nature or extent of coverage or benefits (including payments with respect to benefits)” shall preempt any state law inconsistent with such contractual provisions. The uncashed checks provision in the Blue Cross Association contract relates to “payments with respect to benefits” as stated in The Act. The Court finds Congress unmistakenly ordained that the federal law preempt a state statute; thus, The Act preempts the Unclaimed Property Act of Florida.

This Court’s finding of preemption is in keeping with other recent decisions. Thus far, courts have interpreted the preemptive scope of Section 8902(m)(l) broadly. In particular, courts have found that state statutes of limitations on the time period in which subscribers may sue are preempted by time limits provided in the contract. See LaBelle v. Blue Cross & Blue Shield United of Wisconsin, 548 F.Supp. 251 (W.D.Wisc.1982). Analogous to state statute of limitations laws, state unclaimed property laws subject carriers to differing requirements and adversely affect the. uniform administration of benefit payments under the FEP. This is contrary to the congressional intent and the purpose of Section 8902(m)(l).

Thus, the first part of the Court’s test is satisfied. Federal law, Section 8902(m)(l), preempts the Unclaimed Property Act. Consistent with the basic tenants of federal preemption and the recent interpretations of this statute by federal courts that affirm this intent, Section 8902(m)(l) was intended to preempt conflicting state laws.

The Court will next examine the second part of its test and determine whether OPM had the authority to amend the contract in the case at bar.

OPM’s Power to Contract and Interpret the Statute

Pursuant to The Act, a health benefits contract was negotiated between OPM and the Blue Cross Association. The Act granted OPM broad discretionary authority to negotiate, contract for, and approve the benefits offered to federal employees by health carriers. Nat’l Federation of Federal Employees v. Devine, 679 F.2d 907, 912 (D.C.Cir.1981).

Although OPM’s decisions are reviewable, its judgments must be sustained “if consistent with the governing law and not unreasonable.” Doe v. Devine, 703 F.2d 1319, 1326 (D.C.Cir.1983). The United States Supreme Court has stated, “(w)hen faced with a problem of statutory construction, (a court should show) great deference to the interpretation given the statute by the officers or agency charged with its administration.” Udall v. Tollman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965). Such deference is particularly due when the administrative practice at issue involves the agency’s contemporaneous construction of the statute in question. See Power Reactor Develop. Co. v. International Union of Electrical, Radio and Machine Workers, 367 U.S. 396, 408, 81 S.Ct. 1529, 1535, 6 L.Ed.2d 924 (1961), citing Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 315, 53 S.Ct. 350, 358, 77 L.Ed. 796 (1933). The final determination as to coverage is made by OPM, and the contract then defines which benefits are to be provided. Garvey v. Prudential Ins. Co. of America, 596 F.Supp. 1119, 1120 (E.D.Pa.1984).

OPM construed the legislation to apply to state laws affecting the administration of benefits or coverage and benefit payments. Instanter OPM amended the Blue Cross Association’s federal contracts to accord with the passage of Section 8902(m)(l). The Court finds the second part of its test is satisfied. OPM was granted the broad discretionary authority pursuant to Sections 8901-13 to amend the Contract, and OPM’s subsequent amendment was consistent with governing law and the intent of Congress.

CONCLUSION

The Court finds it was the legislative intent for Section 8902(m)(l) to preempt any conflicting state law. Recent court decisions indicate that the federal government’s preemptive powers are being broadly interpreted in dealing with Section 8902. Furthermore, OPM is granted the authority under Sections 8901-13 to contract with carriers such as the Blue Cross Association. Section 8902(m)(l) preempts the Unclaimed Property Act. The clear language of the contract states that “amounts ... shall be credited to the Special Reserve.” Thus, the funds held by Blue Cross and Blue Shield of Florida, Inc. are to be credited to the Special Reserve of the Blue Cross Association.

The Court on this date will enter judgment in accordance with this Opinion.

      . This was the procedure prior to The Act’s amendment and the subsequent amendment of the Contract.

      . Blue Cross and Blue Shield of Florida, Inc. is not a national corporation. It is confined to the State of Florida. There are different Blue Cross and Blue Shield plans nationwide; they are all separate corporations. See Transcript of Motion for Summary Judgment, p. 14. The Blue Cross Association is a nonprofit corporation organized under the laws of the State of Illinois. It provides central coordinating and administrative services for its approximately ninety-five (95) members which are also nonprofit corporations incorporated in the various states and Puerto Rico. See Affidavit of Stanley Gertzman.

      . The amounts representing checks uncashed for seven (7) years or more were the subject of Count I. They have been deposited with the Court.

      . Prior to 1979, OPM was called the Civil Service Commission.

      . In general, state unclaimed property laws specify the time when unclaimed property is considered abandoned. These laws delineate reporting requirements for holders of unclaimed property and procedures for turning over property to the state when it is deemed abandoned. At present, statutory requirements vary considerably from state-to-state. (Brief Amicus Curiae of the Blue Cross and Blue Shield Association in Support of Defendant, United States Office of Personnel Management [hereinafter "Amicus Brief’]. For example, states differ as to what the value of the unclaimed property must be before a holder is subject to the state’s reporting requirements. Arizona has a minimum value of $5.00; Florida, $25.00; Kansas, $3.00; Vermont, $10.00; and West Virginia, $50.00. Ariz.Rev.Stat.Ann. § 44-361 (West 1967); Fla.Stat.Ann. § 717.12 (West 1969); Kan.Stat.Ann. § 58-3912 (1983); Vt.Stat. Ann. tit. 27, § 1220 (1975); W.Va.Code § 36-8-11 (1984). States’ laws also differ as to the time at which property is presumed abandoned. For example, Arizona deems unclaimed property abandoned after seven (7) years; Iowa, ten (10) years; and Washington, five (5) years. Ariz. Rev.Stat.Ann. § 44-359 (West 1967); Iowa Code § 556.9 (1984); Wash.Rev.Code § 63.29.020 (1983). See Amicus Brief at 12, 13.

      . This special reserve is used for benefit payments in future years. The level of this reserve can be a factor in determining future rates and benefits. Blue Cross and Blue Shield Association Federal Health Benefits Program, Contract No. CS 1039, January 1, 1984, Art. VII(a), VIII(b)(2)(3).

      . See Administrative Manual, FEP, 2.46. This uncashed checks provision does not work an escheat of funds to the federal government since there is not a permanent turnover. Florida, in a letter from Michael J. Coniglio to Wm. Solo-man, October 5, 1981, and in the Supplemental Brief in Response to Briefs of Blue Cross and Blue Shield Association and the United States of America, filed February 6, 1985, at 10, stated that it could also provide this service under its Unclaimed Property Act.

      . See Affidavit of Stanley H. Gertzman at 3.

      . The Supreme Court has considered several criteria to apply when determining whether federal law preempts a state statute. Other than Congressional ordination, these criteria include: (1) if the nature of the regulated subject matter permits no other conclusion but preemption, Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963); De Canas v. Bica, 424 U.S. 351, 356, 96 S.Ct. 933, 936, 47 L.Ed.2d 43 (1976); and (2) if the state law violates the supremacy clause by standing as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress, Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941); Florida Lime & Avocado Growers, Inc., 373 U.S. at 141, 83 S.Ct. at 1216. In the case at bar, this criteria is satisfied. Since uniformity was clearly one of the accomplishments Congress desired, and Florida is the only state not in compliance, the federal Act should preempt Florida’s state statute.

      . For example, some statements mandated recognition of the services of chiropractors while others required benefits for treatment of drug abuse. Report of the Comptroller General of the United States, Conflicts Between State Health Insurance Requirements and Contracts of the Federal Employees Health Benefits Carriers (No. MWD-76-49 Oct. 17, 1975).

      . The first bill, H.R. 12114, 94th Cong., 2d Sess. (1976) was introduced during the 94th Congress and passed the House on the Consent Calendar; however, it was not enacted into law during that session. H.R.Rep. No. 282, 95th Cong., 1st Sess. 1 (1977), Ex. 5. The bill, H.R. 2931, introduced during the 95th Congress, was identical to H.R. 12114.

      . In his testimony on behalf of OPM, Thomas Tinsley, Director of the Bureau of Retirement, Insurance and Occupational Health, stated that OPM was concerned with several state laws that were causing administrative problems and lack of uniformity of benefits. Senate Hearing, at 2-3, 10. He cites as examples some state procedural and administrative requirements concerning the age of dependents, the conversion of contracts after termination of employment, and the types of information furnished to an employee.

      . Testifying on behalf of OPM, Thomas A. Tinsley, Director of the Bureau of Retirement, Insurance and Occupational Health declared that when states enforced unique requirements created exclusively by one state for its own benefit, this created great administrative difficulty since OPM administers over seventy different carriers and has worldwide coverage. Id. at 3. Furthermore, in letters to both the House and Senate committees, OPM stated that state laws which interfered with administration of the insurance plans caused an impossible situation when FEP carriers were exposed to varying requirements from state to state and caught by conflicts between the states and the program’s requirements. This lack of uniformity was intolerable. OPM further stated that although The Act superseded state laws that interfered with it, without the new bill, the only remedy for OPM was costly litigation with each state under the supremacy clause of the Constitution. Sen.Rep. No. 903, 95th Cong., 2d Sess. 7-8 (1978); H.R. Rep. No. 282, 95th Cong. 1st Sess. 6-7 (1977).

      . Florida argues for a narrow interpretation of The Act’s preemption provision. However, The Act provides for preemption of laws affecting benefits, coverage, and payments with respect to benefits. If Congress had intended a narrow interpretation of preemption, it would have drafted the provision to clearly state that it applied only to mandated benefit statutes.

      . See also Richards v. Blue Cross/Blue Shield of Florida, Inc., No. 83-21719, slip. op. at 1 (Fla. Cir.Ct. Nov. 30, 1984) (contractual statute of limitations preempts state statute of limitations), Ex. 15; White v. Associated Hospital Services, Inc., No. 507-291, slip. op. at 2 (Wis.Cir.Ct. Sept. 23, 1980) (same), Ex. 16; Rogers Memorial Hospital v. Keast, No. 78-CV-356, slip. op. at 4 (Wis.Cir.Ct. Apr. 18, 1980) (same), Ex. 17; cf. Arnold v. Blue Cross and Blue Shield of Florida, No. 83-00429, slip op. at 1 (Fla.Cir.Ct. Apr. 21, 1983) (section 8902(m)(l) preempts Florida’s attorneys’ fee statutes), Ex. 18; Oleniacz v. Blue Cross and Blue Shield of Florida, Inc., No. 82-8163-15, slip op. at 2 (Fla.Cir.Ct. Mar. 8, 1983) (same), Ex. 19.

      . See supra note 5 and accompanying text.

      . See Tackitt v. Prudential Insurance Co. of America, 595 F.Supp. 887, 890 (N.D.Ga.1984) where the court found that a question of insurance law was to be decided under federal principles rather than state insurance law since inconsistent state law was preempted and superseded by the contract provisions under 5 U.S.C. § 8902(m)(l).


text:
    Christoper A. DAY, Plaintiff, v. TEMPLE DRILLING COMPANY, Defendant, Chevron U.S.A., Inc., Gulf Oil Corporation, and Shell Oil Company, Garnishee/Defendants.
    Civ. A. No. J85-0398(B).
    United States District Court, S.D. Mississippi, Jackson Division.
    July 9, 1985.

      Samuel H. Wilkins, Jackson, Miss., for plaintiff.
    James A. Boone, Rexford T. Brown, Jackson, Miss., James 0. Dukes, Gulfport, Miss., Howard 0. Leach, Jr. and Arthur A. Crais, Jr., New Orleans, La., for defendant.
   MEMORANDUM OPINION AND ORDER

BARBOUR, District Judge.

This matter is before the Court upon the Motion of Defendant, Temple Drilling Company (“Temple”), to Dismiss and to Quash the Writs of Attachment and Garnishment against Garnishee/Defendants, Chevron U.S.A., Inc., Gulf Oil Corporation and Shell Oil Company.

FACTS

On April 26, 1985, Plaintiff, Christoper A. Day (“Day”), sued Temple, his employer, and requested that writs of garnishment be issued against Chevron, Gulf and Shell pursuant to Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure. According to the Complaint, Day, a Mississippi resident, was employed by Temple as a “maintenance roustabout” on an offshore drilling rig known as the “Cheyenne.” Day alleges that in January 1984, while engaged in the scope of his employment, he slipped and fell down a greasy and rain-covered stairway leading to the motor room of the rig. As a result of this fall, Day claims he sustained severe and permanent injuries attributable to the negligence of Temple for which he is entitled to recover.

Since Temple is not subject to the personal jurisdiction of this Court, Day requested that Chevron, Gulf and Shell be personally served with writs of garnishment pursuant to Rule B(l) of the Supplemental Rules of Certain Admiralty and Maritime Claims. Rule B(l) provides in pertinent part:

With respect to any admiralty or maritime claim in personam a verified complaint may contain a prayer for process to attach the defendant’s goods and chattels, or credits and effects in the hands of garnishees ..., if the defendant shall not be found within the district.

Gulf answered the writ of garnishment, admitting a debt owed to Temple in the amount of $1,010,000.00. Gulf also answered interrogatories sérved with the writ of garnishment, stating that the debt owed Temple arose out of billings from Temple for services performed by Temple pursuant to a contract between it and Gulf. Gulf further states that the contract was not executed in Mississippi nor were the services performed by Temple in Mississippi or its territorial waters.

Shell has also responded to garnishment interrogatories, stating that one of its subsidiaries has entered into a contract with Temple for services to be performed by Temple in Louisiana with payment for the services to be made by the Shell subsidiary from Texas. Chevron has not answered at this time.

Temple moves to dismiss and to quash the writs of garnishment for the following reasons:

(1) No property or res belonging to Temple is present within the district to support personal jurisdiction over Temple;
(2) No “minimum contacts” exist in Mississippi to support jurisdiction over Temple;
(3) Rule B is unconstitutional under the Fifth Amendment.

THE EXISTENCE OF A RES IN MISSISSIPPI

Temple argues that this Court does not have jurisdiction over it pursuant to Rule B because Day has not attached or garnished property of Temple located within the district. In essence, Temple argues that the situs of a debt does not follow the debtor so that jurisdiction over the garnishee/defendants does not grant jurisdiction over the debts. In support, Temple primarily relies on an unpublished decision of this Court in Beall v. Ocean Drilling and Exploration Company, et al., Civil Action No. J78-0536(C) (S.D.Miss. Feb. 5, 1979), wherein Judge Harold Cox dismissed an action similar to the one sub judice upon finding that:

... This Court does not have jurisdiction over the ... defendant ...; no indebtedness was owed by any of the garnished defendants to the principal defendant, ... and none of the garnishee defendants had any property or effects of said defendant in their possession or under their control, which would be subject to or affected by the writ of attachment and garnishment ..., and there is no res within this district which could support the jurisdiction of this Court in this case____ [Emphasis added].

This Court is not bound by the unpublished decision in Beall nor does it consider Beall dispositive of the Motion of Temple. In Beall, the Court found that the garnishee/defendants owed nothing to the principal defendant. Consequently, as the Court found, there was no debt to attach and, certainly no “res” within Mississippi to support jurisdiction over the principal defendant. That is not the case here. In this case, the garnishee/defendants have been personally served with the writs of garnishment. Gulf has answered, admitting owing Temple a sizeable indebtedness. Shell has admitted a debt may be owed by its subsidiary to Temple. Chevron has not answered. As such, a “res” exists in Mississippi such that jurisdiction over Temple is proper.

Although no cases have been found considering the situs of the debt in quasi in rem admiralty actions, this Court is persuaded by the decision of the Fifth Circuit in Belcher Company of Alabama, Inc. v. M/V Maratha Mariner, 724 F.2d 1161 (5th Cir.1984) such that if the court has jurisdiction over the garnishee/defendant, it has jurisdiction over the “res”.

Belcher involved an in rem libel action against a vessel to recover for fuel bunkers furnished the vessel. Jurisdiction was obtained by attachment of the vessel. The Court noted that under the admiralty law of the United States there are three categories of claims: (1) an in personam action filed against the owner of the vessel personally; (2) an in rem action filed against the vessel; and (3) a quasi in rem action based on a claim for money begun by attachment or other seizure of property

... when the court has no jurisdiction over the person of the defendant, but has jurisdiction over a thing belonging to him or over a person who is indebted to, or owes a duty to the defendant. 724 F.2d at 1164. [Emphasis added].

The Court further noted that attachment issues

‘with respect to any admiralty or maritime claim in personam’ and its purpose is to ‘attach the defendant’s goods or chattels’ or other assets if the defendant shall not be found in the jurisdiction. Rule B. Attachment may be used for any debt.

Id. [Emphasis added]. Consequently, it appears that the Fifth Circuit would hold that in quasi in rem actions, if the court has jurisdiction over the garnishee-defendant, it has jurisdiction over the debt.

Likewise, in Engineering Equipment Company v. S/F Selene, 446 F.Supp. 706 (S.D.N.Y.1978), the plaintiff sought leave to file a Rule B(l) complaint attaching the property of certain foreign defendants to obtain quasi in rem jurisdiction. The defendants suggested that the debts the plaintiff sought to garnish had no local situs and, therefore, the court had no jurisdiction. The court found:

... this contention is without merit. Since the Holt defendants (the garnishees) are subject to our in personam jurisdiction, the debts are deemed to have their situs within the district. Thus, there is no doubt that the requirements of Rule B(l) have been satisfied in this case.

446 F.Supp. at 708-09.

In so ruling, the court deferred to state law to ascertain whether jurisdiction over the garnishee-defendant was synonymous with jurisdiction over the debt. 446 F.Supp. at 709 n. 5. Mississippi law also holds that jurisdiction over the garnishee-defendant is synonymous with jurisdiction over the debt. See, e.g., Keathley v. Hancock, 53 So.2d 29 (Miss.1951).

This Court concludes that since it has personal jurisdiction over the garnishee/defendants, Gulf, Shell and Chevron, it also has jurisdiction over any indebtedness owed by the garnishee/defendants to Temple. This issue appears to be a matter of first impression. The Court recognizes that its decision has a considerable effect on parties like Temple. However, the ruling of this Court is not inconsistent with the purpose of Rule B.

[B]y preserving maritime attachment and garnishment, a claimant is enabled to obtain jurisdiction over credits and effects of the defendant in any number of places where these may be attacked or garnished, although the defendant’s residence or place of business may be halfway around the world and the occurrence underlying the suit took place in some other district, or the high seas, or in a foreign country. The practical importance to plaintiffs in preserving this remedy, which antedates the formulation of a comparable common law remedy, is readily apparent.

7A Moore’s Federal Practice ¶ 90 at 493.

NECESSITY OF MINIMUM CONTACTS

Temple next argues that Rule B(l) violates the substantive due process clause of the Fifth Amendment because it permits the Court to exercise jurisdiction despite the absence of minimum contacts as required by Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977).

This contention is without merit. In Grand Bahama Petroleum Company, Ltd. v. Canadian Transportation Agencies, Ltd., 450 F.Supp. 447, 453 (W.D.Wash.1978), the court considered at length the applicability of Shaffer v. Heitner to Rule B, and concluded that:

... maritime attachment is part and parcel of admiralty jurisprudence and has its justification in the maritime context. The history of maritime attachment itself indicates as well that the common law principles enunciated in Shaffer do not necessarily apply to it.

Since admiralty deals with circumstances generally different from those of the common law, this Court is of the opinion that dismissal of this action based upon Shaffer v. Heitner would be improper. See also, Trans-Asiatic Oil Limited S.A. v. Apex Oil Company, 743 F.2d 956, 959 (1st Cir.1984).

CONSTITUTIONALITY OF RULE B

Temple finally argues that Rule B violates Fifth Amendment procedural due process rights since it fails to provide for a constitutional procedure for seizure of property. Specifically, Temple argues that Rule B does not provide for: (1) effective notice to persons having interests in the property; (2) judicial review prior to attachment of the property; (3) avoidance of eonclusory allegations in the complaint; (4) security posted by the plaintiff to protect the owner of the property under attachment; and (5) a meaningful and prompt post-attachment hearing.

The question Temple presents thus becomes whether the same procedural due process that is required before deprivation of property occurs in a non-maritime action should be required before attachment occurs in a maritime action under Rule B. After careful consideration of the plethora of cases which have confronted this issue, the Court thinks not. Although no court to which this Court is accountable has considered the constitutionality of Rule B, this Court is of the opinion that Rule B is constitutional based upon the exhaustive analysis of procedural due process requirements in the maritime context in Trans-Asiatic Oil Limited, S.A. v. Apex Oil Company, supra; Schiffahrtsgesellschaft v. A. Bottacchi, 732 F.2d 1543 (11th Cir. 1984); Merchants National Bank of Mobile v. The Dredge General G.L. Gillespie, 663 F.2d 1338 (5th Cir.1981), cert. denied, 456 U.S. 966, 102 S.Ct. 2263, 72 L.Ed.2d 865 (1982) (Rule C is constitutional); Parcel Tankers, Inc. v. Formosa Plastics Corporation, 569 F.Supp. 1459 (S.D.Tex.1983). The courts in these cases considered whether the due process requirements applicable in common law should also apply in an admiralty setting and determined that maritime attachment warrants consideration of a more flexible application of the doctrines of due process consistent with its historical function as a security device in maritime commerce. As stated in Schiffahrtsgesellschaft, 732 F.2d at 1546,

... constitutional review of Rule B attachments is not governed by the unyielding guidelines promulgated in Sniadach and cases which followed. That approach simply does not hold water in the context of maritime commerce.

Accordingly, this Court also agrees that the transient nature of maritime property precludes the application of common law due process requirements.

For the reasons stated above, the Motion of Defendant, Temple Drilling Company, to Dismiss and to Quash the Writs of Attachment and Garnishment is hereby denied.