author: BAKER, Chief Judge.

text:
    CITY OF WATSEKA, COUNTY OF IROQUOIS, and State of Illinois, a home rule municipality, Plaintiff, v. ILLINOIS PUBLIC ACTION COUNCIL, and American Liberties Union, Defendants. ILLINOIS PUBLIC ACTION COUNCIL, Plaintiff, v. CITY OF WATSEKA, COUNTY OF IROQUOIS and State of Illinois, a home rule municipality, and Ernest A. Grove, Mayor of Watseka individually and in his official capacity, Defendants.
    No. 82-2347.
    United States District Court, C.D. Illinois.
    Jan. 16, 1984.
    Order Assessing Damages For IPAC Aug. 22, 1984.

      Milo J. Fleming, Watseka, Ill., Ralph Swanson, Danville, Ill., for plaintiff.
    Harvey Grossman, Barbara O’Toole, Chicago, Ill., for defendants.
   ORDER

BAKER, Chief Judge.

This matter is currently before the court on the parties’ cross motions for summary judgment.

On October 8, 1982, the plaintiff, City of Watseka, Illinois (hereinafter “Watseka”), filed a complaint in the Circuit Court of the Twelfth Judicial Circuit of Iroquois County, Illinois. The complaint sought a declaratory judgment that § 19-9 of the Revised Ordinances of the City of Watseka (regulating the hours of door-to-door solicitation) is a valid and constitutional exercise of Watseka’s police powers. Watseka also sought an injunction, prohibiting the defendant Illinois Public Action Council (hereinafter “IPAC”) from violating the ordinance.

On November 29, 1982, IPAC and co-defendant, American Civil Liberties Union of Illinois (ACLU) filed a Petition for Removal in this court. The petition was granted and on December 6, 1982, IPAC and ACLU filed their Answer and Counterclaim. In its counterclaim, IPAC sought a declaratory judgment that Watseka’s ordinance is unconstitutional, both on its face and as applied to IPAC, an injunction, prohibiting enforcement of the ordinance, and compensatory and punitive damages.

On June 29,1983, Watseka filed a Motion for Summary Judgment, together with exhibits, affidavits, and a memorandum in support of the motion. By its motion, Watseka seeks summary judgment in its favor on the declaratory judgment action and dismissal of IP AC’s counterclaim. On July 19, 1983, IPAC and ACLU filed a Motion in Opposition to Plaintiff’s Motion for Summary Judgment and Cross Motion for Summary Judgment, and a memorandum in support of the defendants’ motion. By their motion, the defendants seek summary judgment in their favor on the declaratory judgment action.

The relevant facts are simple and undisputed. On October 15, 1979, Watseka passed an ordinance regulating solicitation within the city limits. That part of the ordinance which is at issue limits solicitation in private residences in Watseka to the hours of 9:00 a.m. to 5:00 p.m., Monday through Saturday, and prohibits solicitation on holidays.

Summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). In determining whether summary judgment is proper, a court ordinarily must view the record in the light most favorable to the party opposing the motion, drawing all inferences most favorable to that party. Rose v. Bridgeport Brass Co., 487 F.2d 804, 808 (7th Cir.1973).

IPAC’s canvassing and solicitation activities are clearly protected by the First Amendment to the United States Constitution. See Village of Schaumburg v. Citizens for a Better Environment, 444 U.S. 620, 100 S.Ct. 826, 63 L.Ed.2d 73 reh’g denied, 445 U.S. 972, 100 S.Ct. 1668, 64 L.Ed.2d 250 (1980). It is also well established that Watseka has the power to regulate the activities of canvasers and solicitors if the regulation is in furtherance of a legitimate governmental objective. See ACORN v. City of Frontenac, 714 F.2d 813 (8th Cir.1983). See e.g., Hynes v. Mayor of Oradell, 425 U.S. 610, 616-17, 96 S.Ct. 1755, 1758-59, 48 L.Ed.2d 243 (1976). However, the regulation of canvassing and soliciting must be undertaken:

[W]ith due regard for the reality that solicitation is characteristically intertwined with informative and perhaps persuasive speech-seeking support for particular eauses or for particular views on economic, political, or social issues, and for the reality that without solicitation the flow of such information and advocacy would likely cease. Canvassers in such contacts are necessarily more than solicitors for money.

Village of Schaumburg, 444 U.S. at 632, 100 S.Ct. at 833.

It is the duty of the court to determine the constitutional validity of a municipality’s regulation. Thomas v. Collins, 323 U.S. 516, 65 S.Ct. 315, 89 L.Ed. 430 (1945). Additionally, “although a duly enacted statute normally carries with it a presumption of constitutionality, when a regulation allegedly infringes on the exercise of First Amendment rights, the statutes proponents bears the burden of establishing the statute’s constitutionality.” (Emphasis added.) ACORN, 714 F.2d at 817 citing Organization for a Better Austin v. Keefe, 402 U.S. 415, 419, 91 S.Ct. 1575, 1577, 29 L.Ed.2d 1 (1971). See also Village of Schaumburg, 590 F.2d 220, 224 (7th Cir.1978), aff'd, 444 U.S. 620, 100 S.Ct. 826, 63 L.Ed.2d 73 (1980).

In Heffron v. International Society for Krishna Conscienceness, Inc., 452 U.S. 640, 101 S.Ct. 2559, 69 L.Ed.2d 298 (1981), the United States Supreme Court stated that the validity of a regulation which infringes upon the exercise of First Amendment Freedoms will be sustained, “only if the regulation is narrowly drawn to further a legitimate governmental objective unrelated to the restriction of communication, and if it does not unduly intrude upon the exercise of First Amendment rights. See also Schad v. Borough of Mt. Ephriam, 452 U.S. 61, 68, 101 S.Ct. 2176, 2182, 68 L.Ed.2d 671 (1981); Village of Schaumburg, 444 U.S. at 637, 100 S.Ct. at 836; L. Tribe, American Constitutional Law, § 12-2 at 581-82 (1978).

In applying the Heffron test to this ease, the court recognizes that Watseka’s interest in protecting the privacy of its residents is a legitimate governmental objective. However, the regulation enacted by the city unduly intrudes upon the plaintiffs’ exercise of their First Amendment rights. Cf. Heffron, 452 U.S. at 658, 101 S.Ct. at 2569.

In ACORN v. City of Frontenac, the United States Court of Appeals for the Eighth Circuit found that Frontenac’s solicitation ordinance (which was similar to Watseka’s) unduly burdened the plaintiffs’ First Amendment rights because the City of Frontenac could have achieved its goal of preventing undue annoyance of its residents through means less restrictive to the constitutional freedoms than the means embodied in its regulation. See 714 F.2d at 819. The court found that the city’s trespassing laws could be enforced against those who enter or remain on private property after its owner had indicated to the intruder that (s)he was not welcome. The court continued, explaining:

Furthermore, unlike the public transit patron in Lehman v. City of Shaker Heights, 418 U.S. 298, 304, 94 S.Ct. 2714, 2717-18, 41 L.Ed.2d 770 (1974) (plurality opinion); id. at 307-308, and the unwilling target of the sound truck in Kovacs v. Cooper, 336 U.S. 77, 86-87, 69 S.Ct. 448, 453, 93 L.Ed. 513 (1949), the resident in this case is not a member of a captive audience. The solicitor or canvaser has no right to make an uninvited entry into a resident’s home. Cf. Owen v. United States Post Office Department, 397 U.S. 728, 90 S.Ct. 1484, 25 L.Ed.2d 786 (1970) (householder has no right to bar entry of unwanted mail into home). If the resident is not interested in receiving the particular solicitor’s message, he may indicate as much and close the door. If the resident cares not to receive messages from any solicitors or canvassers, he may post a sign to that effect at his door or at the entrance to his proprety. But Frontenac may not, in the interest of achieving its legitimate objectives, broadly prohibit the plaintiffs’ activities when less restrictive alternatives will satisfactorily accomplish the same objectives.
We are not persuaded by Frontenac’s argument that the ordinance is valid since it allows ACORN and others to solicit at alternative times, namely, from 9:00 a.m. to 6:00 p.m., Monday through Saturday. Regardless of ACORN’s argument that to canvass during those hours would be fruitless, we note, as the Supreme Court has noted, that “one is not to have the exercise of his liberty of expression in appropriate places abridged on the plea that it may be exercised in some other place.” (Emphasis added.)

ACORN, 714 F.2d at 819 citing Schneider v. State, 308 U.S. 146, 163, 60 S.Ct. 146, 151, 84 L.Ed. 155 (1939).

Just as the residents of Frontenac could rely on the city’s trespassing laws to ensure their privacy from unwanted solicitors, the residents of Watseka may rely upon their city’s trespassing laws for protection. Additionally, the Watseka residents wishing to avoid door-to-door solicitation all together may do so by posting a “no solicitation” or “no trespassing” sign at their door or at the entrance to their property. See Ordinances of the City of Watseka §§ 19-6 to 19-8. Cf. Citizens for a Better Environment v. Village of Olympia Fields, 511 F.Supp. 104, 107 (N.D.Ill. 1980).

Given that Watseka’s ordinance already provides a comprehensive registration and certification scheme for solicitors, it appears that Watseka already has, in force, several less restrictive alternatives to protect its citizens from unwanted canvassers or solicitors. See Revised Ordinances of the City of Watseka, §§ 19-2 — 19-4. Consequently, this court must conclude that the City of Watseka’s ordinance regulating canvassing and solicitation is unconstitutional under the First Amendment because it unduly burdens the defendants’ right to freedom of speech and because there exist several less restrictive means through which the city may protect its residents from unwanted canvassers and solicitors.

In Watseka’s motion for summary judgment, the city advances the issue of whether the ordinance in question, by its language, applies to IPAC. The court concludes that it is unnecessary to reach this issue because the city’s ordinance is an unconstitutional deprivation of free speech.

IT IS THEREFORE ORDERED that the plaintiff City of Watseka’s motion for summary judgment be, and hereby is, denied.

IT IS FURTHER ORDERED that the defendants’ cross motions for summary judgment be, and hereby is, granted.

IT IS FURTHER ORDERED that the plaintiffs are enjoined and restrained from enforcing those provisions of the ordinance which limit solicitation in private residences in Watseka to the hours of 9:00 a.m. to 5:00 p.m. Monday through Saturday, and prohibiting solicitation on holidays.

IT IS FURTHER ORDERED that the matter is set for hearing on the issue of damages and all other pending matters on April 20, 1984 at 1:30 p.m.

ORDER ASSESSING DAMAGES FOR IPAC

This matter is before the court for the assessment of damages. An evidentiary hearing was held on May 23, 1984, and the briefs and arguments of counsel were finally submitted on August 13, 1984.

The court makes the further findings of fact that:

1. Illinois Public Action Council (IPAC) suffered a loss in revenue by its inability to canvass in the City of Watseka in the year 1981 of $1200.00.

2. IPAC suffered a loss in revenue by its inability to canvass in the City of Watse-ka in the year 1982 of $1400.00.

3. IPAC suffered a loss in revenue by its inability to canvass in the City of Watse-ka in the year 1983 of $2900.00.

4. The total gross revenue lost by IPAC in the years 1981 through 1983 was $5500.00.

5. IPAC had an overhead cost of forty percent which would reduce its revenue lost to a net of $3300.00.

Preventing a person from exercising a First Amendment right is a compensable element of damage in and of itself. “The court should consider compensation for harm, if any, resulting from the constitutional violation, and appropriate compensation for the constitutional violation itself.” Walsh v. Brewer, 733 F.2d 473, 477 (7th Cir., May 3, 1984); Owen v. Lash, 682 F.2d 648, 652-53 (6th Cir.1982); see generally Lenard v. Argento, 699 F.2d 874, 891 (7th Cir.1983); Kincaid v. Rusk, 670 F.2d 737, 746 (7th Cir.1982). IPAC was prevented from exercising its First Amendment rights in this case and the court finds that a sum of money which will reasonably and fairly compensate IPAC for that loss is $5,000.00.

Accordingly, IT IS ORDERED that the Clerk enter judgment in favor of Illinois Public Action Council against the City of Watseka in the sum of $8,300.00 and costs of suit.


source: Caselaw Access Project

author: PLATT, District Judge.

license: Public Domain

text:
    Michael ZACHARIAS, Plaintiff, v. SHELL OIL COMPANY, Defendant.
    No. CV 83-3013.
    United States District Court, E.D. New York.
    March 1, 1984.

      Agulnick & Gogel, New York City, by William A. Gogel, for plaintiff.
    Solin & Breindel, New York City, by Howard Breindel, Mark L. Weyman, for defendant.
   MEMORANDUM & ORDER

PLATT, District Judge.

By an opinion dated September 21, 1983, this Court concluded that, under § 105(d)(3) of the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. § 2805(d)(3), defendant Shell Oil Company (Shell) was entitled to recover reasonable attorneys’ fees and the costs and expenses incurred by it in connection with this action. At an evidentiary hearing on December 2, 1983, defendant claimed $38,400.00 in attorneys’ fees for Solin & Breindel, P.C., a New York law firm (Exhibit Q) and $8,287.50 for James L. Michalak, an attorney employed as defendant’s in-house counsel (Exhibit T). Defendant also claimed $7,701.62 in disbursements incurred by Solin & Breindel, P.C. during the months July 1983 — November 1983 (Exhibit S) and $2,712.77 in expenses incurred by Mr. Michalak (Exhibit U). For breach of contract, defendant claimed damages in the sum of $11,217.61 (Exhibit P). In addition to the testimony given at the hearing, defendant Shell submitted records and affidavits detailing the services rendered by its attorneys and the number of hours spent providing those services. These materials comply with the stringent record keeping requirement mandated in City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir.1974).

In opposition to defendant’s request for attorneys’ fees, plaintiff Michael Zacharias contends, inter alia, that defendant cannot recover fees for both in-house and outside counsel, that defendant improperly includes fees for paralegals and law clerks, and that defendant’s claimed legal fees are not reasonable. Mr. Zacharias also argues that Solin & Breindel, P.C.’s claimed expenses are not reasonable, and that Mr. Michalak’s claimed expenses should be disallowed in their entirety. In addition, plaintiff seeks to exclude much of defendant’s breach of contract damage claims and to offset the recoverable damages against plaintiff’s equipment that remains affixed to the gas station premises.

For the reasons stated below, this Court awards defendant $46,687.50 in attorneys’ fees and $10,414.39 in disbursements. The defendant is also awarded damages for breach of contract.

ATTORNEYS’ FEES

In this Circuit, courts have consistently used the two step analysis formulated by the Third Circuit in its two decisions in Lindy Bros. Builders v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir.1973) and 540 F.2d 102 (3d Cir.1976), to determine an award of reasonable attorneys’ fees. Under this approach, a “lodestar” figure is obtained by multiplying the number of compensable hours spent by the successful attorney on the litigation by the reasonable hourly billing rate for the attorney’s services. 487 F.2d at 167-68. If necessary, a court may adjust this figure by considering two additional factors — the contingent nature of success and the quality of the services provided. 540 F.2d at 117-18. This is the method that this Court will use in evaluating the defendant’s claim for attorneys’ fees. But first, we must address the plaintiff’s arguments in opposition to the defendant’s claim.

The plaintiff seeks to reduce the amount of the requested attorneys’ fees on many grounds. First, Mr. Zacharias contends that fees may not be assessed for both outside and in-house counsel'. The plaintiff argues that not only was the use of multiple attorneys duplicative and unnecessary in this action, but as a salaried employee, Mr. Michalak’s time should not be billed at an hourly rate.

It is clear that in constructing a fee award, courts may reduce the number of compensable hours to compensate for overstaffing or the unnecessary duplication of attorneys’ efforts. See, e.g., Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717 (5th Cir.1974); Steinberg v. Carey, 470 F.Supp. 471, 478-79 & n. 35 (S.D.N.Y.1979). However, where the alleged duplication of attorney time is the result of the division of responsibility for substantive tasks, it is inappropriate to reduce the fee in the absence of clear and unnecessary duplicative efforts. Ross v. Saltmarsh, 521 F.Supp. 753, 762 (S.D.N.Y.1981). Mr. Michalak, as a member of Shell’s in-house counsel located in Texas, has expertise and familiarity with the PMPA and functioned as lead counsel' in this litigation based in New York. Mr. Michalak and Solin & Breindel divided their responsibilities in this case. There has been no showing of unnecessary overstaffing or duplication of efforts.

The plaintiff also suggests that Mr. Michalak’s efforts should not be billed at an hourly rate because he is in-house counsel to defendant and a salaried employee. Compensating in-house or salaried employees by using an hourly rate is commonly used by courts in awarding attorneys’ fees. See, e.g., Pittsburgh Plate Glass Co. v. Fidelity & Casualty Co., 281 F.2d 538, 542 (3d Cir.1960); Brisbane v. The Port Authority of New York & New Jersey, 550 F.Supp. 222, 224 (S.D.N.Y.1982). As the United States Court of Appeals for the Third Circuit recognized in Pittsburgh Plate Glass Co. v. Fidelity & Casualty Co., 281 F.2d 538 (3d Cir.1960), work performed by in-house counsel reduces the workload and, consequently, the fee of the retained counsel and “[tjhere is no reason in law or in equity why the [plaintiff] should benefit from [defendant Shell’s] choice to proceed with some of the work through its own legal department.” Id. at 542. We agree and conclude that the use of an hourly rate is a reasonable method to compensate the defendant for the efforts expended by its in-house counsel.

Mr. Zacharias further argues that defendant improperly and without legal justification included fees for paralegals and law clerks in its request for attorneys’ fees. This Court has previously recognized the propriety of including the time spent by such non-lawyers in a fee award. Selzer v. Berkowitz, 477 F.Supp. 686, 690 n. 3 (E.D.N.Y.1979). As we noted in the Selzer case, “[t]o the extent that such work is done by non-lawyers at lower time rates than would have been the case had the work been done by lawyers, the losing party benefits and has little cause to complain.” Id. See also City of New York v. Darling-Delaware, 440 F.Supp. 1132, 1136 (S.D.N.Y.1977) (awarding compensation for paralegal’s time). For the same reason, we include the time spent by paralegals and law clerks in the fee award.

Mr. Zacharias maintains that the legal fees sought by the defendant are not reasonable. We assume that the plaintiff is challenging both the total number of hours spent by Shell in defending the action and the various hourly billing rates submitted by the defendant. Since these issues raise the same questions as those involved in the “lodestar” determination, we will proceed with that analysis which requires us to determine and multiply the number of hours reasonably expended by a reasonable hourly rate.

Mr. Michalak has submitted an affidavit stating that 110.50 hours were expended on this matter and the Solin & Breindel, P.C. firm claims 412.25 hours of time expended by various attorneys and paralegals. These amounts appear to be wholly reasonable. As indicated above, the efforts of Mr. Michalak and Solin & Breindel, P.C. were not unnecessary or duplicative and the hours expended were adequately substantiated. The plaintiff suggests that the number of compensable hours submitted by the defendant should be reduced because litigation was not protracted and little effort was necessary to fend off the plaintiff’s claim. The plaintiffs concession, at the completion of this lawsuit, that his claim was easily defeatable, does not present new information to this Court. The defendant repeatedly argued that plaintiff’s claim was frivolous and without merit and this Court agreed. However, a decision made at the conclusion of litigation that questions the merits of an action does not affect a defendant’s right to zealously defend an action against it. In this case, Shell properly sought to protect its interests and to defend itself from the serious charges levied against it by the plaintiff in this Court. The fact that the defendant successfully demonstrated that the plaintiff’s claims were without merit may not be used by the plaintiff at this point in the proceeding to support an argument that little effort was necessary to defeat the plaintiff’s claim. Therefore, we will not adjust the number of hours submitted by the defendant.

Having concluded that the number of hours claimed by the defendant is reasonable, the next step in the “lodestar” analysis is a determination of whether the various hourly rates submitted by Shell are reasonable. The Lindy court suggested using an attorney’s normal hourly rate because it is indicative of his or her legal reputation and status. 487 F.2d at 167-68. See also Grinnell, 495 F.2d at 473. With the exception of billing rates lowered by the Solin & Breindel, P.C. firm for the purposes of litigation involving Shell, the submitted rates are the ones normally billed by the firm. As explained at the hearing, Mr. Michalak’s hourly billing rate was carefully calculated by determining the value of his service in Shell’s in-house legal department. This Court finds the varying rates reasonable and appropriate, reflecting customary charges of law firms and well within the range of hourly rates awarded in other attorneys’ fees cases. See New York State Teamsters Conference Pension v. Hoh, 561 F.Supp. 687, 690 (N.D.N.Y.1983) (citing Miles v. New York State Teamsters Conference Pension & Retirement Fund, Civ. 77-432, 3 BNA Employee Benefit Cases 1513 (W.D.N.Y.1982) (hourly rates for attorneys of unspecified years of experience ranging from $70 to $125 found to be generally reasonable); Vulcan Society of Westchester Co., Inc. v. Fire Dep’t of the City of White Plains, 533 F.Supp. 1054 (S.D.N.Y.1982) (pre-1980 rates ranging from $80 to $125 held reasonable); Ross v. Saltmarsh, 521 F.Supp. 753 (S.D.N.Y.1981) (pre-admission rate of $40 per hour through rate of $90 per hour for more than two years of experience held reasonable); Van Gemert v. Boeing Co., 516 F.Supp. 412 (S.D.N.Y.1981) (hourly rates ranging from $30 for paralegals to $160 for attorneys held reasonable)).

Applying the “lodestar” analysis and multiplying the expended hours by the various billing rates, we award a total of $46,-687.50 in attorneys’ fees to the defendant ($38,400.00 for Solin & Breindel, P.C. and $8,287.50 for Mr. Michalak). While this figure could be adjusted upward or downward to reflect either the contingent nature of success or the quality of the services provided, such an adjustment is unnecessary in this case. As explained above, the risk involved in defending this case should not be used to decrease the fee award. The defendant’s award should not be decreased because it zealously, professionally and successfully defended the claim. Although defendant’s counsel professionally handled this matter and should be commended for their high quality of representation, the Court believes they are adequately compensated by the fee award and does not adjust the award.

COSTS AND EXPENSES

Section 105(d)(3) of the PMPA provides that “the court may, in its discretion, direct that reasonable attorney and expert witness fees be paid by the franchisee if the court finds that such action is frivolous.” The defendant asserts that “reasonable attorneys’ fees” include the costs and out-of-pocket expenses incurred by Solin & Brein-del, P.C. and billed to it as disbursements in this action and seeks to recover, inter alia, fees expended for court reporters, witnesses, lexis time, xeroxing, messengers, transportation and postage. Shell also seeks to recover the expense of Mr. Michalak’s transportation to New York from Texas for court hearings and for meals and hotels in New York during these trips.

Although the plaintiff recognizes that an attorneys’ fees award can include out-of-pocket expenses incurred by the attorney (Plaintiffs’ Brief, page 5 (citing Hoh, 561 F.Supp. at 687)), he maintains that the expenses claimed by Solin & Breindel, P.C., should be limited and all expenses claimed for Mr. Michalak should be disallowed in their entirety. The plaintiff fails to cite or rely on any authority for this proposition. As a general rule, a district court must find authority to award costs or out-of-pocket expenses in a federal statute, rule of court or in the practice, custom and usage of a particular court. 6 J. Moore, Moore’s Federal Practice ¶ 54.77[1] (1982). We must determine, therefore, whether there is authority for the expenses claimed here.

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.” 28 U.S.C. § 1920 outlines what, in the Court’s discretion, is taxable as costs. Pursuant to section 1920, which is very limited in its terms, we award those costs that are recoverable under the statute. Northcross v. Board of Ed. of Memphis City Schools, 611 F.2d 624, 639 (6th Cir.1979).

There remains the question of whether the items of expense not covered by the narrow terms of section 1920 may be recovered by Shell. We first examine the expenses incurred by Solin & Breindel, P.C. and then address the claim of Mr. Michalak’s transportation costs. The provision of the PMPA permitting recovery provides for “reasonable attorneys’ fees” and it must be determined if out-of-pocket expenses may be included in the concept of attorneys’ fees contained in the statute. Unfortunately, the legislative history accompanying the PMPA is silent on the issue of what items should be considered elements of an attorney’s fee. See Sen. Rep. No. 95-731, 95th Cong., 2d Sess., reprinted in 1978 U.S.Code Cong. & Ad. News 873. Other federal statutes and rules awarding “reasonable attorney’s fees,” however, have been interpreted as including all incidental and necessary costs and expenses incurred by an attorney that are normally charged to a fee-paying client in the course of providing legal services. See, e.g., Northcross, 611 F.2d at 639 (Civil Rights Attorney’ Fees Awards Act) (citing Remarks of Congressman Drinan, 122 Cong.Rec. H12160 (daily ed. 1 Oct. 1976), Beazer v. New York Transit Authority, 558 F.2d 97 (2d Cir.1977), rev’d on other grounds, 440 U.S. 568, 99 S.Ct. 1355, 59 L.Ed.2d 587 (1979)); Hoh, 561 F.Supp. at 691 (common law “bad faith” exception to “American Rule” prohibiting attorneys’ fees). But see Beech Cinema, Inc. v. Twentieth Century Fox Film Corp., 480 F.Supp. 1195, 1198 (S.D.N.Y.1979) (expert witness fees, travel expenses, transportation, messenger service, secretarial overtime, long distance phone calls, meals and extraordinary postage not recoverable in allowance for reasonable attorneys’ fees and costs under 15 U.S.C. § 15). All of the expenses that Shell seeks to recover here are items actually billed to it by Solin & Breindel, P.C. We adopt the view that reasonable attorneys’ fees should include out-of-pocket expenses billed to a client. As a practical matter, these items, billed and paid by a client, are an element of an attorney’s fee. Furthermore, since the purpose of the fee shifting provision of the PMPA is to protect one from the expense of defending a frivolous and unnecessary lawsuit, it is in keeping with this policy to include out-of-pocket costs that are billed to a client in the fee award. Accordingly, we find that the expenses incurred by Solin & Breindel, P.C., that were billed to and paid by defendant Shell, should be included in the attorneys’ fee award.

While Mr. Michalak’s transportation, meals and hotel expenses are plainly not recoverable as costs, e.g., Wahl v. Carrier Manufacturing Co., Inc., 511 F.2d 209, 217 (7th Cir.1975); 6 J. Moore, supra, ¶ 54.77[4], at 1725, & ¶ 54.77[8], at 1751, these expenses may be items included in the attorneys’ fee award since they were fees expended by Shell in defending this lawsuit. On this basis, we include them in the fee award.

BREACH OF CONTRACT

The defendant has claimed damages for breach of contract in the sum of $11,217,61. Of the items claimed as damages, we permit only the following: unpaid rent ($2,343.60); open statement items ($327.08); lock change ($300.00); and the expenses of Shell employees (Cummings-$250.00), (Kennedy — $150.00), (Souza— $200.00).

The plaintiff suggests that the damage award should be offset by equipment affixed to the gas station premises which, according to the plaintiff, is worth approximately $4,100.00. At the December 2,1983 hearing, there was some discussion between the plaintiff and the defendant regarding the return of equipment remaining on the premises. If there is any equipment remaining on the premises that the defendant is using, the plaintiff should submit proof of its existence and value and he will be permitted to offset that amount from the damages due.

Subject only to the possible offset discussed above, defendant’s motion for attorneys’ fees and damages for breach of contract is hereby granted.

      . We recognize that courts differ in their treatment of the time spent by non-lawyers in structuring fee awards. Some courts have refused to include paralegal and law clerk time in the fee award, but have reimbursed this time as a cost. See, e.g., City of Detroit v. Grinnell Corp., 495 F.2d 448, 473 (2d Cir.1974). One reason for segregating non-lawyer time in this manner is to ensure that it will not be subject to a risk factor bonus in the Lindy "lodestar” determination.
        Id.; Desimone v. Industrial Bio-Test Labs., Inc., 83 F.R.D. 615, 621 (S.D.N.Y.1979). Although we think that such time should properly be included in an attorney’s fee award, it should be noted that since a risk bonus is not awarded in this case, it makes no difference, as a practical matter, whether this time is classified as part of the fee award or as part of the costs.

      . Mr. Zacharias also argues that the defendant should not be permitted to recover for time spent in the preparation and litigation of the fee application. The attorneys’ fees in this case are statutorily authorized by the PMPA and are awarded because the defendant had to defend a frivolous lawsuit and unnecessarily expend attorneys’ fees. To refuse to permit fees associated with this fee application would not comport with the purpose behind the PMPA’s fee shifting provision — i.e., to make whole one who has had to defend a frivolous lawsuit and, therefore, discourage the institution of lawsuits without merit. Accordingly,, while this type of allowance might not be proper in some other cases, we permit recovery for the time expended by the defendant’s lawyers on this fee application. See, e.g., Balark v. Curtin, 655 F.2d 798, 802-03 (7th Cir.1981); Bagby v. Beal, 606 F.2d 411, 416 (3d Cir.1979); Lund v. Affleck, 587 F.2d 75, 77 (1st Cir.1978); Bradford v. Blum, 507 F.Supp. 526, 534 (S.D.N.Y.1981).

      . The hourly rates submitted by Solin & Brein-del, P.C. ranged from $40.00 for a paralegal, $68.00 for a law clerk, to $110.00 for a named partner. Mr. Michalak submitted an hourly rate of $75.00.

      . As evidence of these costs, Shell submitted the bills from Solin & Breindel, P.C., which, to a large extent, itemized disbursements. It is important to note that all of these costs are out-of-pocket expenses incurred by Solin & Breindel and billed to defendant Shell. As we explain below, they are awarded as an element of defendant’s attorneys’ fee. If they were being evaluated simply as costs, we would require greater documentation and a more detailed explanation of individual expenditures.

      . § 1920. Taxation of costs.
      A judge or clerk of any court of the United States may tax as costs the following:
      (1) Fees of the clerk and marshal;
      (2) Fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in the case;
      (3) Fees and disbursements for printing and witnesses;
      (4) Fees for exemplification and copies of papers necessarily obtained for use in the case;
      (5) Docket fees under section 1923 of this title.
      (6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.
      A bill of costs shall be filed in the case and, upon allowance, included in the judgment or decree.

      . Defendant’s Exhibit P sets forth the damages for breach of contract as follows:


author: LIMBAUGH, District Judge.

text:
    Stanley M. PARISER, M.D., Plaintiff, v. CHRISTIAN HEALTH CARE SYSTEMS, INC., Defendant.
    No. 84-293C(5).
    United States District Court, E.D. Missouri, E.D.
    July 23, 1984.
    On the Merits Jan. 17, 1986.

      Anthony J. Sestric, Anne 0. McCarthy, St. Louis, Mo., for plaintiff.
    Coffelt & Coffelt, Kemper R. Coffelt, Clayton, Mo., Armstrong, Teasdale, Kramer & Vaughn, Richard A. Oertli, St. Louis, Mo., for defendant.
   MEMORANDUM AND ORDER

LIMBAUGH, District Judge.

The matter before the Court is the defendant’s motion to dismiss Count II of the complaint. The plaintiff has filed a memorandum in response.

The plaintiff, a physician, had certain staff privileges at the defendant corporation’s Illinois hospital. The privileges were terminated. Count II alleges that the termination was done without procedural due process guaranteed by the Fourteenth Amendment. Although the hospital is privately owned, the complaint alleges that the termination constituted state action because the defendant receives public funds, enjoys tax benefits, has a virtual monopoly on health care within a two-county area, and is subject to pervasive regulation. The plaintiff’s memorandum adds that the hospital performs a public function. In its motion, the defendant argues that the termination was not state action.

State action is not established merely because the hospital receives public funds, enjoys tax benefits, is subject to pervasive state regulation and performs a public function. These factors must be related in some way to the hospital’s decision to terminate without procedural due process. There is state action “only when it can be said that the State is responsible for the specific conduct of which the plaintiff complains.” Lubin v. Crittenden Hospital Association, 713 F.2d 414, 415 (8th Cir.1983), cert. denied, 465 U.S. 1025, 104 S.Ct. 1282, 79 L.Ed.2d 685 (1984). See also Briscoe v. Bock, 540 F.2d 392 (8th Cir.1976).

The doctor plaintiffs in Lubin and Bris-coe did not allege that their hospitals possessed monopoly status, but Briscoe did note that monopoly status is not by itself determinative. 540 F.2d at 395. When monopoly status is aggregated with the other factors, there is still not a sufficient connection between the State and the termination. Although monopoly status makes the termination more burdensome, that does not mean that the State is more responsible for the hospital’s choice of termination procedures. “[A] State normally can be held responsible for a private decision only when it has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the State.” Blum v. Yaretsky, 457 U.S. 991, 1004, 102 S.Ct. 2777, 2786, 73 L.Ed.2d 534 (1982).

The allegations of the complaint are insufficient to establish state action. Accordingly,

IT IS HEREBY ORDERED that the defendant’s motion to dismiss Count II be and is GRANTED.

IT IS FURTHER ORDERED that Count II be and is dismissed with leave to amend within ten (10) days of the date of this order.

ON THE MERITS

Plaintiff, Stanley M. Pariser, M.D., brought this action in a three-count complaint against Christian Health Care Systems, Inc. Count One is for damages arising from a contract breach. Count Two requests damages for violation of the Sherman Act. Count Three requests damages for the tort of intentional infliction of emotional distress. After trial, plaintiff requested the Court to allow plaintiff to amend his complaint to add a fourth count for tortious interference with contract.

This matter is before the Court for a decision on the merits following a three-day bench trial. After consideration of the testimony adduced at trial, the exhibits introduced into evidence, the briefs of the parties and the applicable law, the Court hereby makes the following findings of fact and conclusions of law, as required by Rule 52 of the Federal Rules of Civil Procedure.

Findings of Fact

Plaintiff has been an Illinois resident since 1965 and was an Illinois resident at the time this case was filed. Plaintiff received his medical degree in 1949 and interned at the Jersey City Medical Center. After completing his residency, plaintiff spent the next twenty-eight years, from 1952 to 1980, at three Veteran’s Administration Hospitals. Plaintiff is a board certified internist. Plaintiff is licensed to practice medicine in Missouri, Illinois and Ohio but has practiced medicine only in the State of Illinois since 1965.

The Southern Medical Center, Inc., is a hospital located in Cairo, Illinois. Defendant, Christian Health Care Systems, Inc., provides management and administrative services to the Southern Medical Center. Christian Health Care Systems is a Missouri corporation.

In 1980, plaintiff applied for admission to practice at the Anna Mental Health Center in Anna, Illinois. After plaintiff applied he was granted temporary privileges and placed on a six-month probationary period. At the end of the probationary period, plaintiff was not granted permanent privileges at the hospital. Basically, plaintiff was fired.

Sometime around March, 1981, plaintiff moved to Cairo, Illinois where he was employed by Community Health Services, Inc., a not-for-profit, federally funded health care provider in the Alexander/Pulaski Counties of Southern Illinois. As a condition of his employment, plaintiff applied for medical hospital privileges at the Southern Medical Center on March 1, 1981. Shortly thereafter, Southern Medical Center granted plaintiff hospital admitting privileges.

Community Health Services, Inc. employed plaintiff until March, 1982. During the spring of 1982, plaintiff established a private practice of medicine in Cairo. Southern Medical Center renewed plaintiffs hospital admitting privileges in March, 1982. Although plaintiff is a board certified internist, a substantial portion of his medical practice was devoted to general, family and pediatric medicine. In June, 1982, plaintiff applied to the Missouri Delta Community Hospital in Sikeston, Missouri for privileges. Plaintiff omitted his affiliation with the Southern Medical Center and his prior affiliation with the Anna Mental Health Center. The Sikeston Hospital took no definitive action regarding plaintiff’s application.

In September, 1982, Ben Felton was hired as the hospital administrator of the Southern Medical Center. After assuming the job as hospital administrator, Felton reviewed the hospital’s bylaws, staff records and evaluated the quality of the hospital personnel. During his review, Fel-ton found that one of the physicians on the hospital staff was not admitted to practice medicine in Illinois. Pursuant to the summary dismissal rules in the hospital’s bylaws, the physician was dismissed from the staff. Following this discovery, Felton became concerned with the qualifications of other staff personnel and decided to evaluate the seven members of the medical staff of the 44-bed hospital.

On the application for admitting privileges to the Southern Medical Center, one section of the application addresses the issue of any disciplinary action which may have been taken against the applicant relating to the practice of medicine. Three questions in the disciplinary section of the application are important to this case. The questions ask if the applicant had: (1) ever been denied membership on a hospital medical staff, (2) ever had his privileges at any hospital suspended, revoked or not renewed and (3) ever been denied membership or renewal of membership or had been subject to disciplinary action in any medical organization. Plaintiff answered “no” to each of the three questions. One of the paragraphs at the end of the application for admitting privileges states that: “I fully understand that any significant mis-state-ments or omissions from this application constitute cause for denial of appointment or cause for summary dismissal from the medical staff. All information submitted by me in this application is true to my best knowledge and belief.”

During his investigation and evaluation of plaintiff’s credentials, Felton contacted Dr. Wayne Isaacs, the administrator of the Anna Mental Health Center during plaintiffs employment there. In a phone conversation, Felton and Isaacs reviewed plaintiffs application for privileges at the Southern Medical Center. Isaacs told Fel-ton that during his probationary period at Anna, plaintiff had his privileges suspended and had been refused membership to the staff.

On October 22, 1982, the executive committee of the medical staff held a meeting. The members of the executive committee present during the meeting were Dr. Charles Yarbrough, Dr. Victor Surpris, Dr. Crisostomo Lozada, Ben Felton and Pat Burt. Prior to the time Felton became administrator of the Southern Medical Center, Dr. Surpris had initiated an investigation into plaintiffs competency and willingness to cooperate and work with the other doctors and the nursing staff at the hospital. However, the meeting of October 22nd was called to review plaintiffs privileges since he had given false answers on his application for privileges at the hospital. Felton requested the executive committee to decide whether a review of the charges should be made or whether plaintiff’s privileges should be curtailed. The executive committee decided to curtail plaintiff’s privileges due to the false answers given on his application. The executive committee made the decision effective immediately, pending a complete new application by plaintiff.

The executive committee's action was taken pursuant to Article VII, Section Two of the hospital’s bylaws dealing with summary suspension. Section Two states:

Section 2. Summary Suspension
a. Any one of the following — the chairman of the executive committee, the president of the medical staff, a chief of service, the chief executive officer and the executive committee of either the medical staff or the governing body— shall each have the authority whenever action must be taken immediately in the best interest of patient care in the hospital, to summarily suspend all or any portion of the clinical privileges of a practitioner, and such summary suspension shall become effective immediately upon imposition.
b. A practitioner whose clinical privileges have been summarily suspended shall be entitled to request that the executive committee of the medical staff hold a hearing on the matter within such reasonable time period thereafter as the executive committee may be convened in accordance with Article VIII of these bylaws.
c. The executive committee may recommend modification, continuance or termination of the terms of the summary suspension. If, as a result of such hearing, the executive committee does not recommend immediate termination of the summary suspension, the affected practitioner shall, also in accordance with Article VIII, be entitled to request an appellate review by the governing body, but the terms of the summary suspension as sustained or as modified by the executive committee shall remain in effect pending a final decision thereon by the governing body.
d. Immediately upon the imposition of a summary suspension, the chairman of the executive committee or responsible chief of service shall have authority to provide for alternative medical coverage for the patients of the suspended practitioner still in the hospital at the time of such suspension. The wishes of the patients shall be considered in the selection of such alternative practitioner.

Plaintiff’s response to the executive committee’s action was a letter in which he demanded reinstatement of his privileges. However, plaintiff did not request a hearing.

The Southern Medical Center does not provide any services outside the State of Illinois. There are eight hospitals within approximately a thirty-five mile radius of Cario, Ilinois. Plaintiff never practiced at any of the eight hospitals, nor did he apply for admitting privileges at any of the area hospitals, except the one in Sikeston, Missouri. Approximately ninety-five percent of plaintiff’s patients were residents of Alexander or Pulaski Counties. Plaintiff rearely transferred other patients to other hospitals. Approximately ninety-eight percent of the Sourthern Medical Center’s patients are from the State of Illinois.

Conclusions of Law

Count I — Breach of Contract

This Court has jurisdiction over this cause pursuant to 28 U.S.C. § 1332. The parties agree that the law of the State of Illinois applies to Count I.

Plaintiff seeks damages for the alleged breach of contract due to the executive committee’s decision curtailing plaintiff’s privileges at the Southern Medical Center. Once a physician is allowed admitting privileges to a hospital, the existence of the governing bylaws of the hospital constitutes a valid contract between the physician and the hospital. Nagib v. St. Therese Hospital, Inc., 41 Ill.App.3d 970, 355 N.E.2d 211, 213 (1976). Indeed, the hospital’s bylaws provide an “integral relationship between the hospital and members of its staff.” Fahey v. Holy Family Hospital, 32 Ill.App.3d 537, 336 N.E.2d 309, 314 (1975). The Court is hesitant to overturn a hospital’s decision to dismiss or curtail a physician’s privileges unless plaintiff can show that the procedures followed violated the constitution or bylaws of the hospital. Maimón v. Sisters of the Third Order, 120 Ill.App.3d 1090, 76 Ill.Dec. 517, 519, 458 N.E.2d 1317, 1319 (Dist. 4 1983) citing Jain v. Northwest Community Hospital, 67 Ill.App.3d 420, 24 Ill.Dec. 341, 385 N.E.2d 108 (1978). In addition, the Court will also overturn a hospital’s decision if the record of the proceedings of a physician’s dismissal clearly showed partiality or bias of the committee that expelled him. Maimon, 76 Ill.Dec. 519, 458 N.E.2d 1319 citing Van Daele v. Vinci, 51 Ill.2d 389, 282 N.E.2d 728 (1972).

The evidence at trial showed that the executive committee properly followed the hospital bylaws for summary dismissal. Any right to a hearing plaintiff may have had due to his dismissal was waived since plaintiff did not request a hearing. Accordingly, the Court finds that the executive committee acted properly pursuant to the hospital’s bylaws and plaintiff has no right to recover under a breach of contract theory. Judgment will be entered for defendant on Count I of plaintiff’s complaint.

Count II — Antitrust Claim

Plaintiff claims that defendant’s actions in curtailing his staff privileges are violations of § 1 and § 2 of the Sherman Act. The Sherman Act covers two types of activities, activities that are in interstate commerce and activities that substantially affect interstate commerce. McLain v. Real Estate Board of New Orleans, 444 U.S. 232, 241, 100 S.Ct. 502, 508, 62 L.Ed.2d 441 (1980); Hospital Building Company v. Trustees of the Rex Hospital, 425 U.S. 738, 743 96 S.Ct. 1848, 1851, 48 L.Ed.2d 338 (1976).

In McLain, the Supreme Court held that a plaintiff must show that the local activity has a substantial effect on interstate commerce. Lease Lights, Inc. v. Public Service Company of Oklahoma, 701 F.2d 794, 798-99 (10th Cir.1983); Turf Paradise, Inc. v. Arizona Downs, 670 F.2d 813, 818-19 (9th Cir.1982).

The Eighth Circuit Court of Appeals has held that to establish jurisdiction under the Sherman Act, a plaintiff must show that the challenged conduct occurs in or affects interstate commerce. Hayden v. Bracy, 744 F.2d 1338 (1984). In view of the relevant facts regarding plaintiffs medical practice while in Cairo, Illinois and the executive committee’s actions suspending plaintiff, the Court finds that the action taken does not substantially affect interstate commerce. Hayden, 744 F.2d at 1343. Accordingly, judgment will be entered for defendant on Count II of plaintiff’s complaint.

Count III — Intentional Infliction of Emotional Distress claim

To recover under Count III, plaintiff must show that defendant’s conduct was “extreme, outrageous, atrocious, utterly intolerable and beyond all possible bounds of decency.” Watson v. Franklin Finance, 540 S.W.2d 186, 189 (Mo.App.1976) (citation omitted). According to the facts presented at trial and stated above, plaintiff did not make any showing that defendant’s conduct approached the standard stated in Watson. Accordingly, judgment will be entered for defendant on Count III of plaintiff’s complaint.


author: CAMPOS, District Judge.

text:
    TEXAS UTILITIES COMPANY and Chaco Energy Company, Plaintiffs, v. SANTA FE INDUSTRIES, INC., et al., Defendants.
    No. CIV-82-1419 C.
    United States District Court, D. New. Mexico.
    March 11, 1985.
    On Motion to Dismiss Dec. 16, 1985.

      M.D. Sampels, Nancye L. Bethurem, Worsham, Forsythe, Sampels & Wool-dridge, Dallas, Tex., Gordon B. Spivack, Jonathan M. Jacobson, Elinor R. Hoff-mann, Lord, Day & Lord, New York City, Charles D. Olmsted, Lindsay A. Lovejoy, Stephenson, Carpenter, Crout & Olmsted, Santa Fe, N.M., for plaintiffs.
    John R. Cooney, Allen C. Dewey, Jr., Peter J. Adang, Zachary L. McCormick, Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, N.M., Gus Svolos, Chicago, Ill., Edgar Keltner, Jr., Hudson, Kelt-ner, Smith, Brants & Sparks, Fort Worth, Tex., for defendants.
   MEMORANDUM OPINION

CAMPOS, District Judge.

This case is before the Court on a Motion to Dismiss Price Fixing Claims, pursuant to Fed.R.Civ.P. 12(b)(6), filed by Defendants Santa Fe Industries, Inc. (“SFI”), The At-chison, Topeka and Santa Fe Railway Company (“ATSF”), Santa Fe Mining, Inc. (“SFM”), and Hospah Coal Company (“Hos-pah”). Having carefully considered the parties’ briefs, the Complaint, and the relevant law, the Court finds and concludes that the Motion is not well-taken and should be denied.

This case has a complex procedural background; it is the consolidation of three federal district court cases in New Mexico and the Northern District of Texas. A state lawsuit was also filed in New Mexico. The record of this litigation, which is only in its “first wave” of discovery, is voluminous. The Court will only discuss aspects of the case which are relevant to the current motion to dismiss.

On December 18, 1981, Plaintiffs Texas Utilities Company (“TU”) and its subsidiary, Chaco Energy Company (“Chaco”) filed suit against SFI, its two subsidiaries, SFM and AT & SF, Thercol Energy Company (“Thercol”) and Peabody Coal Company (“Peabody”). The Court dismissed Thercol and Peabody January 18, 1983 pursuant to a settlement. Hospah, another SFI subsidiary and an alleged co-conspirator in the Complaint, was added as a Defendant after the lawsuit was transferred to this District from the Northern District of Texas.

It is undisputed that for purposes of a motion to dismiss for failure to state a claim the material allegations of the complaint must be viewed as if they were true. Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S.Ct. 1843, 1848, 23 L.Ed.2d 404 (1969); Dewell v. Lawson, 489 F.2d 877, 879 (10th Cir.1974); Franklin v. Meredith, 386 F.2d 958, 959 (10th Cir.1967). “It is axiomatic that a complaint should not be dismissed unless ‘it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief.’ ” McLain v. Real Estate Board of New Orleans, Inc., 444 U.S. 232, 246, 100 S.Ct. 502, 511, 62 L.Ed.2d 441 (1980) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957)).

The pertinent “facts” of the Complaint disclose that from 1974 until the date the lawsuit was filed, “Defendants and Co-conspirators entered into contracts and engaged in a continuing combination and conspiracy in unreasonable restraint of interstate trade and commerce in violation of Section 1 of the Sherman Act (15 U.S.C. § 1).” Complaint, 11 24. In Counts I and IV of the Complaint, which charge violations of 15 U.S.C. § 1 and N.M.Stat.Ann. § 57-1-1 (1978), Plaintiffs allege a continuing conspiracy to fix, maintain, and stabilize the price and other terms of coal rights in the San Juan Basin Area of New Mexico and to restrict competition in the production and sale of coal from that area.

The Section 1 violations consisted of continuing contract negotiations and contractual arrangements imposed by Defendants and Co-conspirators on Plaintiffs and a continuing understanding and concert of action among the Defendants and Co-conspirators, the substantial terms of which have been and are:
(a) to fix, maintain and stabilize the price of coal rights in the San Juan Basin Area;
(b) to restrict competition in the production and sale of coal from the San Juan Basin Area; and
(c) to refuse to negotiate with Plaintiffs on any terms other than those agreed to among the Defendants and Co-conspirators.

Complaint, 111125, 37.

Plaintiffs charge that:
[djuring the period of time covered by this Complaint, the Defendants and Co-conspirators, in the course of forming and for the purpose of effectuating the aforesaid contracts, combination and conspiracy, have done, among other things, the following:
(a) fixed the royalty and other payments to be made by Plaintiffs at artificially and unreasonably high levels;
(b) the Santa Fe Defendants prevented Plaintiffs from obtaining or providing rail transportation to and from the San Juan Basin Area on reasonable terms;
(c) imposed a limitation on the quantity of coal that Plaintiffs could sell to third parties;
(d) agreed to penalize Plaintiffs for selling coal to third parties by requiring additional royalties on such sales;
(e) agreed to discourage Plaintiffs from cutting prices on sales to third parties by calculating the additional royalty payments for such sales at the “prevailing market price” rather than the actual sales price; and
(f) refused to negotiate with Plaintiffs on terms other than those agreed to among the Defendants and Co-conspirators.

Complaint, 111126, 38 (emphasis added).

Plaintiffs attached to the Complaint copies of four agreements between Chaco and Thercol signed January 26, 1977. Complaint, Exhibits B, C, D, E. Plaintiffs also appended a copy of a coal lease between Hospah and Chaco dated April 15, 1977. Complaint, Exhibit F. The base royalties provided for in the price terms were to be escalated by a formula which was dependent on annual revisions of the Implicit Price Deflator for the gross national product by a government agency. Complaint, Exhibit F, § 5; Complaint, Exhibits C & E, § 24. The Hospah-Chaco Coal Lease provided for revisions of the quantity schedule (Schedule A); the revision calculations were to be made by December 31, 1977. Complaint, Exhibit F, § 8. Apparently, these revisions were completed in Modification No. 1 of the lease dated February 12, 1981, but “effective April 15,1977.” Complaint, Exhibit H, ¶ 1.20. The Hospah-Chaco Coal Lease provides for subsequent revisions of the quantities of coal mined. Plaintiffs have not alleged that there have been other revisions besides Modification No. 1.

For Defendants’ past antitrust violations, Plaintiffs ask for treble damages. The future relief requested is injunctive because of the impracticability of “reasonably” estimating “the full amount of damages that will be incurred by Plaintiffs over the entire terms of their contracts with Hospah and Thercol.” Complaint, II70.

Defendants have denied any wrongdoing, but have also moved to dismiss “all price-fixing claims because they are barred by the applicable statute of limitations.” Defendants assert that Plaintiffs’ demands for equitable relief are likewise barred by laches.

Section 4B of the Clayton Act, 15 U.S.C. § 15b, sets a four-year limitation on private federal treble damage actions: “[a]ny action to enforce any cause of action under sections 15, 15(a) or 16(c) of this title shall be forever barred unless commenced within four years after the cause of action accrued.” Since the contracts which contained the asserted illegally-fixed coal prices were all executed more than four years before the lawsuit was filed, Defendants move for dismissal of the price-fixing claims.

Unlike practice under Code pleading, under the modern rules of procedure parties may raise the defense of limitations “by motion to dismiss when the time alleged in the complaint shows that the action was not brought within the statutory period.” J. Moore, Moore’s Federal Practice, ¶ 12.10 at 2314 (2d ed. 1984); Rohner v. Union Pacific Railroad, 225 F.2d 272 (10th Cir.1955). See also Kaiser Aluminum and Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045 (5th Cir.1982), cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 953 (1983) (dismissal of antitrust case on statute of limitations grounds affirmed). Plaintiffs allege a course of conduct which illegally restrained trade “[bjeginning at least as early as 1974 ... and continuing thereafter up to and including the date of the filing of this Complaint. ” Complaint, 1124 (emphasis added). It is not clear from the Complaint that all price-fixing activities occurred beyond the permissible four-year period. Moreover, Plaintiffs rely on two theories to defeat the statute of limitations defense concerning the 1977 contracts: continuing conspiracy and the speculative nature of the damages in this lawsuit. This is not a case, therefore, in which the Court can decide the limitations question on a motion to dismiss.

Both the continuing violation exception to Section 4B of the Clayton Act, which originated in Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968) and Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971), and the speculative damage exception, which Zenith also established, overcome statute of limitations defenses in antitrust cases. Some courts have intertwined the two exceptions. In City of El Paso v. Darbyshire Steel Co., 575 F.2d 521 (5th Cir.1978), cert. denied, 439 U.S. 1121, 99 S.Ct. 1033, 59 L.Ed.2d 82 (1979), the Fifth Circuit Court of Appeals held that application of one version of the continuing violation exception, the continuing benefits exception (receipt of contract benefits is a continuing violation under antitrust law), was contingent on whether damages were speculative or unprovable. If the damages were “provable with certainty” at the time the contract was executed, the continuing benefits exception did not apply. See discussion in Kaiser Aluminum and Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1052-1054 (5th Cir.1982), cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 953 (1983). In contrast with this definition of the continuing conspiracy exception, other courts have viewed the exception broadly. E.g., United States v. Inryco, 642 F.2d 290 (9th Cir.1981), cert. dismissed, 454 U.S. 1167, 102 S.Ct. 1045, 71 L.Ed.2d 324 (1982); see discussion in In re New Mexico Natural Gas Antitrust Litigation, 1982-1 Trade Cas. 1164,685 at 73,-724 notes 17 and 18 (D.N.M.1982).

The Tenth Circuit has not squarely addressed the question of what constitutes a continuing conspiracy that will toll Section 4B of the Clayton Act. Plaintiffs’ Complaint and Memorandum in Opposition to Defendants’ . Motion to Dismiss allege “facts” which would establish a continuing conspiracy under either view of this exception.

Since the 1977 contracts were all attached to the Complaint, and referred to by both parties in their memoranda concerning the speculative damages exception, the Court is seriously considering treating this part of Defendants’ Motion to Dismiss as a motion for summary judgment pursuant to Fed.R.Civ.P. 12(b)(6). The Court hereby formally notifies all parties that they will have twenty (20) days from the date of filing of this Memorandum Opinion and Order to present any additional material which relates to the speculative damages exception and which is “made pertinent to such a motion by Rule 56.” Fed.R.Civ.P. 12(b)(6); see Prospero Associates v. Burroughs Corp., 714 F.2d 1022 (10th Cir.1983).

An order will be entered in conformity with this Memorandum Opinion.

ON MOTION TO DISMISS

This case is currently before the Court on Defendants’ motion to dismiss, which the Court has treated as a motion for partial summary judgment. Having carefully considered the parties’ memoranda, the exhibits submitted therewith, the record of this case, and the pertinent law, the Court finds and concludes that Defendants’ motion should be denied.

This is an antitrust case filed December 18, 1981. Plaintiffs Texas Utilities Company (“TUC”) and its subsidiary, Chaco Energy Company (“Chaco”) sue Santa Fe Industries, Inc. (“SFI”) and its three subsidiaries, The Atchison, Topeka and Santa Fe Railway Company (“ATSF”), Santa Fe Mining, Inc. (“SFM”) and Hospah Coal Company (“Hospah”) for various violations of 15 U.S.C. §§ 1 and 2. There are also some state and common law claims irrelevant to this motion. In Count I of the Amended Complaint, Plaintiffs allege that Defendants participated in a continuing conspiracy to fix, maintain, and stabilize the price and other terms of coal rights in the San Juan Basin area of New Mexico and to restrict competition in the production and sale of coal from that area, all in violation of 15 U.S.C. § 1. At issue are a coal lease between Chaco and Hospah dated April 15, 1977 and four January 26, 1977 agreements between Chaco and Thercol Energy Company, a defendant who has been dismissed pursuant to a settlement.

Defendants filed a motion to dismiss Plaintiffs’ price-fixing claims because they were time barred. They argued that since the contracts which contained the allegedly illegally fixed coal prices were executed more than four years before Plaintiffs filed suit, 15 U.S.C. § 15b dictated that these claims should be dismissed. The Court ruled that Plaintiffs’ Complaint contained “facts” which would establish a continuing conspiracy exception to the statute of limitations. This portion of Defendants Fed.R. Civ.P. 12(b)(6) motion was therefore denied.

In the memoranda submitted in support of or in opposition to Defendants’ dismissal motion, both parties presented matters outside the pleading concerning the “speculative damages exception" to 15 U.S.C. § 15b. The Court notified the parties that it was giving some thought to treating this part of Defendants’ motion as a motion for summary judgment pursuant to Fed.R. Civ.P. 12(b). It gave the parties an opportunity to present additional material pertinent to summary judgment on this issue.

In Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971), the Supreme Court ruled that the Plaintiff in an antitrust case may recover damages occurring within the statutory limitations period that are the result of conduct occurring prior to that period, if at the time of the conduct, those damages were speculative, uncertain, or incapable of proof.

In antitrust and treble-damage actions, refusal to award future profits as too speculative is equivalent to holding that no cause of action has accrued for any but those damages already suffered. In these instances, the cause of action for future damages, if they ever occur, will accrue only on the date they are suffered; thereafter the plaintiff may sue to recover them at any time within four years from the date they were inflicted.

Id. at 339, 91 S.Ct. at 806 (citations omitted). See also In re New Mexico Natural Gas Antitrust Litigation, 1982-1 Trade Cas. 1164,686 at 73,723-73,724 (D.N.M. 1982). Assuming Defendants’ liability, the issue before the Court will be whether Plaintiffs’ damages within the statutory limitations period were speculative, uncertain, or unprovable before that period. The question now is whether there is a genuine issue of material fact concerning the speculative nature of Plaintiffs’ damages due to the alleged price-fixing so that Defendants’ motion should be denied.

Plaintiffs assert that they were injured by the price-fixing conspiracy both as a customer and a competitor, because Plaintiffs intended to consume coal in their utility operations and to resell any excess coal they mined to non-parties. As a customer, their damages would be the amount of overcharge resulting from the unlawful combination. Hawaii v. Standard Oil Co., 405 U.S. 251, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972). As a competitor, they claim lost profits from the resale of coal had there been no conspiracy. King & King Enterprises v. Champlin Petroleum Co., 657 F.2d 1147 (10th Cir.1981), cert. denied 454 U.S. 1164, 102 S.Ct. 1038, 71 L.Ed.2d 320 (1982). The Court makes no comment on the possibly conjectural or duplicative nature of this latter damage claim. It nevertheless does not accept Defendants vehement argument that this second formula is an improper measure of damages in a price-fixing case. Under the Clayton Act, a Plaintiff may recover for any injury to his business or property caused by a defendant’s antitrust violation. 15 U.S.C. § 15. Even so, for purposes of this decision, the Court has focused on the first method of computing Plaintiffs’ damages due to the asserted combination to set prices and other terms to coal rights in the San Juan Basin, without estimating the viability of Plaintiffs’ claims for lost profits.

Plaintiffs have submitted evidence to support their position that the prices they had to pay for coal under the contracts were indeterminable at the time these contracts were made, and that the prices only became certain during the statutory limitation period. Section 5(c)(ii) of the Hospah-Chaco coal lease sets out this formula for calculating the royalty payments Chaco is to pay Hospah twice annually for at least a thirty-five-year period:

Prior to each Calendar Year, Hospah with the concurrence of Chaco shall determine the Royalty Rate for such Calendar Year by estimating the Deflator for such Calendar Year. When the Department of Commerce, or any successor agency, determines the actual Deflator for such Calendar Year, Hospah with the concurrence of Chaco shall redetermine the Royalty Rate for such Calendar Year. If the estimated Deflator was less than the actual Deflator, Chaco shall make an adjustment payment to correct for the difference in accordance with Section 6; if the estimated Deflator was more than the actual Deflator, Hospah shall either credit Chaco or make an adjustment payment to correct for the difference in accordance with Section 6.

Coal Lease, Amended Complaint, Ex. F. The Chaco-Thercol agreements contained similar provisions. See Joint Development and Operating Agreement §§ 24, Complaint, Exs. C, E. The royalty payments fluctuated because they were based on the implicit price deflator (“IPD”) of the gross national product for each calendar year. According to the affidavit of Chaco’s president, “the current royalty level is $.37206 per million Btu’s in contrast to the rate of $.22262 per million Btu’s for the first payment under the lease in July 1977, reflecting an increase of 67.1% in the royalty level.” Paragraph 10, Affidavit of Michael D. Spence, attached to Plaintiffs’ Supplemental Memorandum. Plaintiffs argue that until the Department of Commerce calculates the IPD, which is based on the performance of the economy, the royalty rate cannot be calculated.

Additionally, Plaintiffs maintain that Defendants were aware of the indeterminate nature of the royalty payments. In an opinion letter discussing the lease, Defendants’ auditors wrote to SFI’s president: “[W]e do not believe that the fair value of the assets exchanged can reasonably be measured for financial reporting purposes ... [because] [t]he ultimate quantities and Btu content of the coal are unknown ... [and because] [t]he ultimate royalty rate is unknown because it is dependent upon the implicit price deflator of the gross national product.” May 6, 1977 Price Waterhouse letter, Sampels Affidavit, Ex. 3-C.

Plaintiffs also argue that because Modification No. 1 to the lease, executed February 12, 1981, revised the scheduled quantities of coal against which Chaco’s royalty payments would be measured, the minimum amount of coal Plaintiffs were required to pay for within the statutory period was unknown in 1977.

Without describing the rest of Plaintiffs’ evidence and arguments, and without discussing Defendants’ rebuttals, additional contentions, and the materials they have filed, the Court finds and concludes on the basis of the matters already treated in this Opinion, that there are genuine issues of material fact concerning the speculative nature of Plaintiffs’ damages at the time the contracts were entered into so that Defendants’ motion should be denied.

This case is still in the “first wave” of discovery. It is a consolidation of three federal district court cases; at the request of the parties, the Court has appointed a special master to supervise discovery matters. Discovery will be lengthy and voluminous. Plaintiffs have reserved their right to move for partial summary judgment on the speculative damages issue when discovery is closed. This decision does not prevent them from filing such a motion. An order will be entered denying Defendants’ motion.

      . Throughout this Opinion, the Court will refer to the Amended Complaint as "the Complaint.” The remaining Defendants after Thercol and Peabody’s dismissal, SFI and all its subsidiaries and divisions, will be referred to collectively as “the Santa Fe Defendants.”

      . This statute states:
      A. Every contract, agreement, combination or conspiracy in restraint of trade or commerce, any part of which trade or commerce is within this state, is hereby declared to be unlawful.
      B. Every contract, agreement, combination or conspiracy which controls the quantity, price or exchange of any article of manufacture, product of the soil or mine or any goods or services in restraint of trade is hereby declared to be unlawful.
      N.M.Stat.Ann. § 57-1-1 (1978). N.M.Stat.Ann. § 57-1-3 (1978) provides for civil liability for restraint of trade. Counts I and IV will be referred to hereinafter as "Section I claims.”

      . In addition to Count I, Counts II and III are monopolization claims brought under 15 U.S.C. § 2.


author: RALPH B. GUY, Jr., District Judge.

text:
    Joyce Ann DIXSON, Plaintiff, v. Denise QUARLES and Frank J. Kelley, Defendants.
    Civ. A. No. 84-CV-4957-DT.
    United States District Court, E.D. Michigan, S.D.
    March 12, 1985.

      Kenneth M. Mogill and Edward J. Little-john, Detroit, Mich., for plaintiff.
    Edgar L. Church, Jr., Asst. Atty. Gen., Corrections Div., Lansing, Mich., for defendants.
   OPINION

RALPH B. GUY, Jr., District Judge.

Petitioner, presently confined at the Huron Valley Women’s Facility at Ypsilanti, Michigan, has filed this petition for writ of habeas corpus pursuant to 28 U.S.C. § 2254. On July 2, 1976, after a bench trial, she was convicted of first-degree murder. Mich.Comp.Laws § 750.316. She was sentenced by Saginaw Circuit Court Judge Fred Borchard to a term of life imprisonment. On December 1, 1977, the Michigan Court of Appeals reversed her conviction (Docket No. 31120). The Michigan Supreme Court reversed the Michigan Court of Appeals’ decision and, on July 17, 1978, remanded for further consideration. 403 Mich. 106, 267 N.W.2d 423 (1978). On October 5, 1978, the Michigan Court of Appeals once again reversed Petitioner’s conviction (Docket No. 78-3439). Subsequently, on February 26, 1979, the Michigan Supreme Court vacated the Michigan Court of Appeals’ decision. 406 Mich. 864, 275 N.W.2d 551 (1979).

On July 19, 1982, the trial court denied Petitioner’s delayed motion for a new trial and, on November 1, 1983, the Michigan Court of Appeals affirmed (Docket No. 66028). The Michigan Supreme Court denied leave to appeal on April 30, 1984. 419 Mich. 866 (1984).

On December 22, 1975, Petitioner shot and killed a man named John L. Bond in his home. The only other witness to the shooting, Claudette Hence, testified that Petitioner had murdered Bond. Petitioner, on the other hand, testified that Bond was a pimp and a narcotics dealer, and was paranoid that someone was trying to kill him. Bond believed that he was to be indicted for tax evasion and would soon go to prison. Consequently, he was going to kill two people. Believing her own life to be in jeopardy, Petitioner contended that she killed him in self defense.

Petitioner claims, and Respondent does not controvert, that in 1982, she first learned that her trial attorney had, until Bond’s death, been Bond’s attorney. In an affidavit attached to Petitioner’s petition, this attorney states:

Further, affiant states that prior to being retained to represent Ms. Dixson he had represented the deceased, Mr. Bond, many times on a number of matters over a period of years; that Mr. Bond had also referred other clients to him; that immediately prior to Mr. Bond’s death and until the time of Mr. Bond’s death, affiant had discussed with Mr. Bond an Internal Revenue Service criminal tax fraud investigation;
Further, affiant states that he is without personal knowledge as to whether Ms. Dixson knew of affiant’s representation of Mr. Bond, and that at no time prior to or after being retained by Ms. Dixson can he recall advising her of his representation of the deceased, nor can he recall advising the Court of this matter on the record....

In its July 9, 1982 opinion, the trial court rejected Petitioner’s claim that the conviction should be reversed due to a conflict of interest:

The record in this ease shows that Defendant was accorded full and effective representation at trial. The defense presented was self defense. [The defense attorney] throughout the trial sought to portray the victim, John L. Bond, as a pimp, a narcotics dealer, and “a person of the lowest moral turpitude”. He sought to show that Bond was a dangerous and paranoid individual who was planning to kill the Defendant and two (2) other persons. There is no evidence in this record that [the defense attorney’s] representation of the Defendant was hampered by conflicting loyalties. To the contrary, [his] representation of Defendant was vigorous and uncompromising. The interests of the Defendant were not sacrificed in any manner. Counsel performed at least as well as a lawyer with ordinary training and skill in the criminal law.

In affirming, the Michigan Court of Appeals stated:

[T]he trial court ... concluded that Defendant had not shown an actual conflict of interest adversely affecting her counsel’s performance. The Court noted that the defense strategy followed at trial had included a vigorous attack on the victim’s character, an attempt to show that the victim had been involved in a plot to murder Defendant and several others, and a claim of self-defense. While Defendant speculated that counsel may have known of the relevant evidence protected by the attorney-client privilege or may have had personal knowledge of relevant facts, there was not a shred of evidence to support such speculations.

Petitioner claims that the Michigan courts applied an incorrect standard in analyzing her conflict of interest claim:

[W]here as here, the conflict was unknown to the defendant and not revealed to the Court, a per se rule applies, vitiating a resulting conviction as a matter of law.
* * He He * *
The rule that emerges ... a clear rule and the only one consistent with importance of the constitutional right to conflict-free representation is that whenever defense counsel is tied, through a present or former attorney-client relationship, to an interest for the prosecution in a criminal case, an actual conflict of interest exists. This follows whether the link to the prosecution is present representation of the alleged victim in an unrelated matter, former representation of the prosecutor in an unrelated matter, concurrent representation of a main prosecution witness or former representation of a prosecution witness. Where a link exists, a conflict does, too; and where a conflict exists a resulting conviction is fundamentally tainted as a matter of law.

In the present case, the question before this court does not concern the trial attorney’s ethical obligations to the Bar, the court, or to his client. Instead, the issue is whether or not, under the facts of this case, a new trial should be ordered. Strickland v. Washington, 466 U.S. 668, 692, 104 S.Ct. 2052, 2067, 80 L.Ed.2d 674 (1984), summarizes the applicable legal standard:

In Cuyler v. Sullivan, 446 U.S. [335], at 345-350, 100 S.Ct. [1708] at 1716-1719 [64 L.Ed.2d 333] [1980], the Court held that prejudice is presumed when counsel is burdened by an actual conflict of interest. In those circumstances, counsel breaches the duty of loyalty, perhaps the most basic of counsel’s duties. Moreover, it is difficult to measure the precise effect on the defense of representation corrupted by conflicting interests. Given the obligation of counsel to avoid conflicts of interest and the ability of trial courts to make early inquiry in certain situations likely to give rise to conflicts, see e.g. Fed.Rule Crim.Proc. 44(c), it is reasonable for the criminal justice system to maintain a fairly rigid rule of presumed prejudice for conflicts of interest. Even so, the rule is not quite the per se rule of prejudice that exists for the Sixth Amendment claims mentioned above [actual or constructive denial of the assistance of counsel altogether]. Prejudice is presumed only if the defendant demonstrates that counsel “actively represented conflicting interests” and “that an actual conflict of interest adversely affected his lawyer’s performance”. Cuyler v. Sullivan, supra, 446 U.S., at 350, 348, 100 S.Ct., at 1719, 1718 (footnote omitted).

In other words, “the Cuyler test directs us to determine, on the facts of each case, whether there is an actual conflict of interest and whether that conflict has caused ineffective performance in violation of the provisions of the Sixth Amendment....” Smith v. Bordenkircher, 671 F.2d 986, 987 (6th Cir.1982), cert. denied, 459 U.S. 848, 103 S.Ct. 107, 74 L.Ed.2d 96 (1982).

To support her position, Petitioner cites Castillo v. Estelle, 504 F.2d 1243 (5th Cir.1974), and Zuck v. Alabama, 588 F.2d 436 (5th Cir.1979), cert. denied, 444 U.S. 833, 100 S.Ct. 63, 62 L.Ed.2d 42 (1979). In Castillo, the Fifth Circuit found an actual conflict of interest and reversed the conviction where, unknown to the Petitioner, his trial attorney was representing the victim of the offense in an unrelated civil case. It reversed because this situation was found so inherently conducive to divided loyalties: “[The attorney’s] zeal in defense of his client the accused is thus counterpoised against solicitude for his client the witness.” 504 F.2d at 1245.

In Zuck, the defense attorney, unknown to his client, was representing the prosecution in an unrelated civil matter. Finding that the prosecution might take umbrage at a vigorous defense, the Fifth Circuit found the situation so inherently conducive to divided loyalties that it found that an actual conflict existed and, therefore, ordered a new trial. It did, however, also note: “A conflict of interest must be actual rather than speculative because the constitutional guarantees of effective assistance of counsel are implicated....” 588 F.2d at 439. This is the same rule in the Sixth Circuit. The mere possibility of conflict is insufficient. Thacker v. Bordenkircher, 590 F.2d 640 (6th Cir.1979), cert. denied, 442 U.S. 912, 99 S.Ct. 2827, 61 L.Ed.2d 278 (1979); United States v. La-Riche, 549 F.2d 1088, 1095 (6th Cir.1977), cert. denied, 430 U.S. 987, 97 S.Ct. 1687, 52 L.Ed.2d 383 (1977).

The test for determining whether a conflict of interest is actual or merely possible is found in United States v. Mers, 701 F.2d 1321, 1328 (11th Cir.1983), cert. denied, 464 U.S. 991, 104 S.Ct. 481, 78 L.Ed.2d 679 (1983):

We will not find an actual conflict unless appellants can point to “specific instances in the record to suggest an actual conflict or impairment of their interests.” United States v. Fox, 613 F.2d [99, 102 (5th Cir.1980) ]. Appellants must make a factual showing of inconsistent interests and must demonstrate that the attorney “made a choice between possible alternative courses of action, such as eliciting (or failing to elicit) evidence helpful to one client but harmful to the other. If he did not make such a choice, the conflict remained hypothetical.” Comment, 68 J.Crim.L. & Criminology, supra, at 232 (parentheses in original). There is no violation where the conflict is “irrelevant or merely hypothetical”; there must be an “actual significant conflict”. Foxworth [v. Wainwright, 516 F.2d 1072, 1077 n. 7 (5th Cir.1975) ].

Petitioner claims that an actual conflict existed in the present situation. Even though Bond was dead, the attorney-client privilege still existed. Eicholtz v. Grunewald, 313 Mich. 666, 671, 21 N.W.2d 914 (1946) She argues that:

This continuing obligation created an actual conflict of interest here, a conflict that was magnified by the scope, duration and recency of [defense counsel’s] representation of Bond and by the nature of the defense to be presented. In preparing and presenting the defense in this case [defense counsel] had to elicit facts and circumstances inextricably interwoven with the facts and circumstances of Bond’s history and personality. He also had to explore Bond’s feelings and emotional state about the tax fraud investigation on which Bond had been consulting with him immediately prior to his death — facts which were likely to bear heavily on Bond’s temper and facts known to [defense counsel] only through his representation of him. It would be facile and disingenuous to suggest that under these circumstances a concern for his continuing obligation to preserve confidentiality in no way influenced [his] conduct.

Petitioner’s position, however, is not supported by the cases. In Smith, supra, the defense counsel, before trial, represented the two co-defendants. He ceased to represent both of them when one client pled guilty pursuant to a plea bargain. He continued to represent the petitioner, however, even though the co-defendant testified at the trial for the prosecution. The petitioner argued to the Sixth Circuit that such a conflict restricted cross-examination of this witness. The Sixth Circuit rejected this claim by stating that the petitioner had not shown how it was restricted and that the record showed that the attorney in fact brought out prior inconsistent statements: “The trial transcript reveals that [the attorney] conducted a professionally acceptable cross examination. Although it is true as the petitioners allege that the cross could have been stronger,” the record supported the attorney’s assertion that that was really a part of the trial strategy. 671 F.2d at 987. As such, no actual conflict was found.

In United States v. Gullett, 713 F.2d 1203 (6th Cir.1983), cert. denied, 464 U.S. 1069, 104 S.Ct. 973, 79 L.Ed.2d 211 (1984), the Sixth Circuit once again found no actual conflict. There, the trial attorney jointly represented both defendants. One of them argued that the attorney had failed to distinguish between the co-defendant’s dominant and his own minimal role. The Sixth Circuit rejected this argument, however, by stating that the record showed that the attorney had diligently represented his client’s interests at trial. Id. at 1214.

A third case controlling the present case is Barham v. United States, 724 F.2d 1529 (11th Cir.1984), which distinguished both Castillo and Zuck. There, the Eleventh Circuit refused to grant relief even though the trial attorney had represented a prosecution witness in a civil matter. Because the witness’ testimony was too insignificant at trial, it ruled that the petitioner had not shown an actual conflict. His trial counsel’s advocacy had not been dulled due to the simultaneous representation. Id. at 1531.

Petitioner argues that her trial counsel’s relationship with the deceased prevented him from calling witnesses to verify his poor reputation and that he failed to thoroughly investigate the matter. Bond’s reputation was very crucial to the defense. Petitioner has, however, made no offer of proof for these allegations. Furthermore, the record controverts Petitioner’s statement that she was the only one to testify about Petitioner’s reputation. Defense counsel began this line of inquiry with the second witness and established it through a number of the prosecution witnesses. Petitioner has not suggested which other witnesses could have been called. Furthermore, Petitioner has not shown how defense counsel’s solicitation for Bond prevented him from doing that. As it was, defense counsel stated in opening argument:

Our position is that the defendant in this matter did shoot John Bond, but she did in self-defense and fear for her life. Our proof further will show that John L. Bond is a panderer, a narcotics purveyor, a person of the lowest moral turpitude. It will further show that he was a paranoid, feeling that everyone was going to kill him and get him.

Petitioner has not shown what else defense counsel would have done but for his earlier representation of Bond.

Petitioner also argues that defense counsel was deficient in letting the trial judge read the preliminary examination transcript in ruling on a motion even though the jury had already been waived. This reason formed the basis for the Michigan Court of Appeals’ first reversal. The Michigan Supreme Court, however, relied on defense counsel’s acquiescence in reinstating the conviction. But whether this course of action constitutes ineffective assistance of counsel, however, is irrelevant to Petitioner’s conflict claim. Petitioner has not shown that her trial counsel did this because of his former representation of Bond. In short, Petitioner has failed to “establish a concrete conflict, as envisioned in Cuyler, which adversely affected [her] lawyer’s performance.” O’Guin v. Foltz, 715 F.2d 397, 400 (6th Cir.1983).

For the foregoing reasons, the petition for writ of habeas corpus must be DENIED. An appropriate order and judgment shall issue.