author: WHITMAN KNAPP, District Judge.

text:
    WELLS FARGO ASIA LIMITED, Plaintiff, v. CITIBANK, N.A., Defendant.
    No. 84 Civ. 0996 (WK).
    United States District Court, S.D. New York.
    July 2, 1985.

      Skadden Arps Slate Meagher & Flom by Edwin E. McAmis, New York City, for plaintiff.
    Shearman & Sterling by John E. Hoffman, Jr., New York City, for defendant.
   MEMORANDUM & ORDER

WHITMAN KNAPP, District Judge.

Plaintiff, Wells Fargo Asia Limited, moves for summary judgment for non-payment of certain overdue non-negotiable time deposits placed with the Philippine branch of defendant Citibank.

Plaintiff at all times relevant to this law suit was a bank chartered to do business by the government of Singapore and a wholly-owned subsidiary of Wells Fargo Bank, National Association, a federally chartered bank based in San Francisco, California. Citibank is a national bank chartered under the National Bank Act, 12 U.S.C. § 21 et seq., with its corporate headquarters in New York. Citibank has a branch office (“Citibank/Manila”) in Manila, the Philippines.

On June 10, 1983 plaintiff placed two six-month non-negotiable U.S. $1,000,000 deposits with Citibank/Manila. The deposits were to earn interest at the rate of 10% and mature on December 9 and 10, 1983. In October 1983, however, the Philippine government forbade repayment of the principal of certain foreign currency obligations without the prior approval of the Central Bank of the Philippines (the “Central Bank”). Citibank did not receive such approval, and did not repay the deposits on maturity.

Citibank asserts that issues of fact exist pertaining to the parties’ understanding of the deposit contract, and whether or not plaintiff assumed the risk that repayment might be affected by Philippine law. Plaintiff has denied having had any understanding that it was assuming this risk and asserts in support of its motion that the deposits bore an unconditional repayment date, that repayment is overdue, and that, as a matter of law, the main office of Citibank is liable for the obligations of its Manila branch.

BACKGROUND

Eurodollar Transactions

At the nub of this case is the treatment to be accorded to a particular kind of time deposit denominated in U.S. dollars which is maintained in a banking institution outside of the United States (the “receiving bank”), commonly called a “Eurodollar” deposit. The case before us presents a deposit of “Asiadollars,” or a dollar-denominated deposit made in an Asian country. These transactions in general bear a higher rate of interest than similar transactions within the United States. Thus, at the time plaintiff made the deposits here at issue, domestic banks were granting an interest rate of approximately 8.85%, while Eurodollar (or “Asiadollar”) deposits bore an interest rate of about 10%.

The reason for this difference in interest rates is disputed. The parties agree that one of the reasons is that banks operating abroad are free from the reserve requirements imposed by the Federal Reserve Board and Federal Deposit Insurance Corporation upon banks operating within the United States. In addition, they are in accord that in the event a third person (e.g., a bank robber) or an act of nature (e.g., flood or fire) disabled the branch bank from timely repaying deposits made with it, the main office would assume liability. The parties’ view of the Eurodollar market diverges after these two areas of accord, and their differences go to the heart of the propriety of a disposition by summary judgment.

Citibank posits that aside from the category of disabling events mentioned above for which the main office would assume liability, which it terms “credit risk,” there also exists a “sovereign risk” for which its main office denies liability. Such sovereign risk results from the acts of the foreign government (e.g., confiscation) in whose jurisdiction the deposits are held which prevent repayment by the foreign-based branch. It suggests that the main office would not bear liability for such acts because the depositor assumes the risk that the foreign government might so act and, in effect, bargains for a higher interest rate in exchange for the risk.

The positions of the respective parties are set forth, on the one hand, in plaintiff’s denial of two of Citibank’s Requests for Admissions and, on the other hand, in an affidavit submitted by Citibank. The two Citibank requests for admissions (denied by plaintiff) are:

[Request 2] WF Asia [plaintiff] understood that Citibank’s obligation to repay the WF Asia deposits was subject to Philippine law.
[Request 62] In deciding to place the deposits in Manila, WF Asia considered the risk of placing funds in the Philippines and the interest rate Citibank Manila offered to pay on the deposits.

The affidavit submitted by Citibank is that of Ian H. Giddy, a professor of international finance at the New York University Graduate School of Business. Professor Giddy states at 1132 of his affidavit:

During the course of seminars and conventions with hundreds of international bankers during the past ten years, I have never had occasion to hear a banker deny that Eurodollar deposits are subject to the sovereign risk of the country in which the deposits are placed. Accordingly it is inconceivable to me that the staff at [Wells Fargo] Asia responsible for placing the deposits at issue did not understand that these deposits were subject to Philippine sovereign risk.

Professor Giddy explains that the existence of such a “sovereign risk” causes many depositors to place limits on the amount of Eurodollar transactions permitted in a particular bank or country.

He identifies two forms of Eurodollar deposits: negotiable deposits and non-negotiable deposits, sometimes called off-shore deposits. It is the second type of transaction which is here at issue. Because in the case of negotiable deposits (the first type) it is necessary to put potential transferees on notice of the terms of payment, it is apparently standard practice to include a legend on the certificate of deposit to the effect that the instrument is governed by and construed in accordance with the laws of the particular foreign country in which the deposit is held. In the case of non-negotiable deposits, such as those before us, this legend is, the Professor asserts, unnecessary since there are no possible transferees. He asserts, however, that all non-negotiable certificate depositers understand that the same rules apply.

Professor Giddy further teaches that Eurodollar deposits between banks are often arranged through independent brokers which collect information from banks, such as the amount of dollars they are willing to lend or borrow and the interest rate they seek or are willing to provide. Such information is shared among other potential borrowers or lenders, and the broker matches willing participants.

Payments into and from Eurodollar accounts, which are conducted through an interbank clearing system, are apparently made through telexed instructions to credit and debit demand accounts located in banks in the United States. The bank within the United States at which such demand account is kept is called the “clearing” or “correspondent” bank. This bank does not generate the payment or repayment instructions, which originate instead with the foreign bank on whose behalf the demand account is kept. Professor Giddy maintains that no significance is attached to the identity of the clearing or correspondent bank. Through the affidavit of Donald S. Howard, Executive Vice President and Chief Financial Officer of Citicorp and Citibank, N.A., Citibank asserts that Eurodollar payments are cleared through the main office of Citibank in New York because dollar transactions are cleared through the United States, just as sterling transactions are cleared through London, and franc transactions through Paris.

Mr. Howard’s affidavit in addition asserts by reference to a 1973 letter from its former president that it is “Citibank [sic] position that, as an institution, it is responsible for any breach of agreement by an overseas branch but, if the failure to perform is due to such branch’s compliance with the law to which it is subject, then the failure does not constitute a breach for which either the branch or the institution as a whole is responsible.” Such policy, according to Mr. Howard, was in August 1983 disseminated by the bank’s policy manual to Citibank officers around the world.

The Written Deposit Contract

The written contract between plaintiff and Citibank/Manila is made up of several confirmations and computer-generated telexes among the parties and the independent broker which arranged the deposits, and a statement of “Terms and Conditions” apparently sent to plaintiff after the deposits were placed.

On June 10, 1983, Citibank/Manila indicated to the independent broker that it wished to borrow U.S. dollars that day. The independent broker’s confirmation that day designated Citibank/Manila as “Borrower” and plaintiff as “Lender.” Payment was to be made to “Citibank, N.A., New York Account Manila.” Repayment was directed to “Wells Fargo International, New York Account, Wells Fargo ABIA Asia, Ltd., Singapore Account # 003-023645.” On June 14th plaintiff confirmed each deposit and instructed Wells Fargo New York (“our correspondent”) to pay to Citibank, New York (“customer’s correspondent”) the required sums. These confirmations were accompanied by computer-generated telexes. Citibank/Manila’s telex states:

Please remit U.S. DLR 1,000,000.00 to our account with Citibank New York. At maturity we remit U.S. DLR 1,050,-277.78 to your account with Wells Fargo Bank Inti. Corp. N.Y. through Citibank New York.

Plaintiff’s confirmation states:

We shall instruct Wells Fargo Bk Inti New York to pay to Citibank, N.A. 399 Park Avenue, New York, N.Y. 10022 U.S.A. Please pay to our A/C with Wells Fargo Bk Inti New York.

The independent broker’s confirmation reads:

Settlement—Citibank N.A. NYK AC Manila Repayment-Wells-Fargo Bk Inti, NYK AC Wells Fargo Asia Ltd SGP No. 003-023645.

Paragraph 6 of the statement of Citibank’s Terms and Conditions provides:

The bank shall have no responsibility for or liability to the undersigned for ... the unavailability of such funds due to restrictions on convertibility, requisitions, involuntary transfers, distraints of any character ... or other similar causes beyond the bank’s control.

The Philippine Decree

As indicated above, on October 15, 1983, the Philippine government issued a “Memorandum to Authorized Agent Banks” (“MAAB 47”) which provided in full:

Any remittance of foreign exchange for repayment of principal on all foreign obligations due to foreign banks and/or financial institutions, irrespective of maturity, shall be submitted to the Central Bank thru the Management of External Debt and Investment Accounts Department (MEDIAD) for prior approval.
Accordingly, total obligations to foreign banks/financial institutions as of the end of business hours in New York City on October 14, 1983, shall not be reduced without prior Central Bank approval.
These measures shall apply to payments value dated during the period October 17, 1983 to January 16, 1984.
Appropriate sanctions shall be imposed on banks which fail to strictly comply with this directive. (Emphasis supplied.)

Raphael Buenventera, a senior vice-president of Citibank and the Country Corporate Officer for Citibank in the Philippines, has submitted an affidavit dated February 28, 1985 which attests in substance that following receipt of MAAB 47, he engaged in daily discussions with officials of the Central Bank, including three meetings with the governor of that institution who, in response to Mr. Buenventera’s questions, “repeatedly and consistently stated that, in accordance with the requirements of [MAAB 47], foreign currency deposits placed by foreign financial institutions with Citibank Manila were frozen and that no payment would be allowed.” Affidavit of Raphael Buenventera, ¶ 16. No written demand to permit payment was made prior to the maturity date of the Wells Fargo deposits.

Citibank did not pay plaintiffs deposits when they matured on December 9 and 10, 1983, and on February 10, 1984, plaintiff commenced the instant action. On February 20, 1984 Citibank/Manila applied to the Central Bank for permission to repay certain deposits, which request was granted on March 23, 1984 to the extent of repayment with Citibank/Manila’s non-Philippine assets. This amounted to 46% of the sum due plaintiff. Citibank/Manila has continued to pay to the plaintiff the interest due on the remaining sum.

DISCUSSION

The support for plaintiffs position that Citibank, N.A. is liable as a matter of law for the obligations of its branch, regardless of the ability of that branch itself to effect payment, is summed up by our Court of Appeals in Vishipco Line v. Chase Manhattan Bank, N.A. (2d Cir.1981) 660 F.2d 854, 863, cert. denied (1982) 459 U.S. 976, 103 S.Ct. 313, 74 L.Ed.2d 291, as follows:

... [impossibility of performance in Vietnam did not relieve Chase of its obligation to perform elsewhere. By operating in Saigon through a branch rather than through a separate corporate entity, Chase accepted the risk that it would be liable elsewhere for obligations incurred by its branch.
* * # :¡¡ * *
U.S. banks, by operating abroad through branches rather than through subsidiaries, reassure foreign depositors that their deposits will be safer with them than they would be in a locally incorporated bank.

See Garcia v. Chase Manhattan Bank, N.A. (2d Cir.1984) 735 F.2d 645; Sokoloff v. National City Bank (S.Ct.N.Y.Cty.1927) 130 Misc. 66, 73, 224 N.Y.S. 102, 114.

While the parties disagree as to the reasons a Eurodollar deposit differs from one made within the United States, there is no dispute that it does. If plaintiff is correct that the holdings in the above-cited cases here apply, then Citibank, N.A. would appear to bear liability for the failure of Citibank/Manila. However, we think it clear that had plaintiffs deposits borne the legend we are informed is routinely inscribed on negotiable Eurodollar deposits, to the effect that the instrument was governed by and was to be construed in accordance with the law of the Philippines, the above-cited cases would not make the home office liable when the branch was disabled from performance because of Philippine law. We therefore find the question before us to be whether the contract should be subjected to proof of an agreed-upon, though unstated, condition to the same effect, based on usage in the Eurodollar trade and the parties’ understanding of the deposit terms which derived from such custom.

There are at least two areas in which the parties’ interpretations of the terms of their contract vary, and which have material bearing on Citibank’s liability. The first is whether the deposits at issue were subject to a “sovereign” risk as it is defined by Citibank. Professor Giddy finds it “inconceivable” that a sophisticated international bank depositer would claim ignorance of what he contends are the known rules of the Eurodollar deposit game, the most pertinent of which is that a consideration for the higher interest rate earned by a Eurodollar deposit is the depositer's agreement to assume a “sovereign risk.” Plaintiff denies Citibank’s Requests for Admissions that it had an understanding that its deposits were subject to Philippine law. It contends that the higher interest rate is a function solely of the foreign branch bank’s freedom from reserve requirements. Related to this dispute is the question whether, assuming Citibank’s statement of Terms and Conditions was part of the contract, its disclaimer of liability for the “unavailability of funds due to restrictions on convertibility, requisitions, involuntary transfers, distraints of any character ... or other similar causes beyond the bank’s control” encompassed the Philippine decree.

The second area of disagreement is over Citibank’s ability to assert the affirmative defense of the Act of State doctrine. As a threshhold matter, the validity of that defense turns on whether the debt was located in the Philippines with the result that the purported “taking” effected by MAAB 47 came “to complete fruition within the dominion of the [Philippine] government.” Allied Bank International v. Banco Credito Agricola de Cartago (2d Cir.1985) 757 F.2d 516, 521, quoting Tabacalera Severiano Jorge, S.A. v. Standard Cigar Co. (5th Cir.) 392 F.2d 706, 715-16, cert. denied (1968) 393 U.S. 924, 89 S.Ct. 255, 21 L.Ed.2d 260. If the deposit was not located in the Philippines, Citibank’s defense would be unavailable. See Allied Bank International, supra (defense unavailable to Costa Rican bank which conceded jurisdiction in New York and agreed to pay debt in New York City); Garcia v. Chase Manhattan Bank (2d Cir.1984) 735 F.2d 645 (doctrine inapplicable where bank employee made explicit assurance that debt was repayable in any branch around the world); Vishipco Line v. Chase Manhattan Bank, N.A. (2d Cir.1981) 660 F.2d 854 (Act of State doctrine inapplicable where situs of debt was no longer Vietnam); but see Perez v. Chase Manhattan Bank, N.A. (1984) 61 N.Y.2d 460, 471, 474 N.Y.S.2d 689, 463 N.E.2d 5 (even where debt was payable in both United States and Cuba, Cuban government’s confiscation gave rise to valid Act of State defense). If it were payable in the Philippines, however, the doctrine might prove successful. See Braka v. Bancomer (2d Cir.1985) 762 F.2d 222 (doctrine applies to non-payment of deposits which on their face indicated that Mexico was the place of deposit and payment). Plaintiff maintains that the computer-generated telexes indicate the deposits were payable (and therefore sited) in New York. Citibank counters that these telexes indicate merely that the New York office was the clearing, or correspondent bank, and that such a bank cannot be deemed the repository of the debt. It asserts that it had no control over whether and when deposits were to be repaid, such instructions necessarily originating from Citibank/Manila.

We have recently been reminded that summary judgment is improper unless the terms of a contractual agreement are wholly unambiguous. Wards Co., Inc. v. Stamford Ridgway Associates and Trim Fashions, Inc. (2d Cir.1985) 761 F.2d 117. Thus, unless plaintiff has demonstrated that the contractual language involved is not “susceptible of at least two fairly reasonable meanings,” id. at 120, quoting Sobering Corp. v. Home Insurance Co. (2d Cir.1983) 712 F.2d 4, 10, “a material issue exists concerning the parties’ intent, and the non-moving party has a right to present extrinsic evidence negating the meaning of the contested term.” Wards, supra at 120; accord Heyman v. Commerce and Industry Insurance Co. (2d Cir.1975) 524 F.2d 1317, 1320. In the instant case, such extrinsic evidence would permissibly encompass evidence of the parties’ intent, especially as it derives from custom and usage in the Eurodollar trade.

The authorities cited by plaintiff are not to the contrary. All of them concerned contracts whose terms a reasonable person could not help but understand, in contrast to the enigmatic and sparse phrases which comprise the contract before us. In addition, those cases turned on the fact that the suggested custom or usage did not support the non-moving party’s interpretation, Croce v. Kurnit (2d Cir.1984) 737 F.2d 229, 238; Cable Wiedemer, Inc. v. A. Friederich & Sons, Inc. (Monroe Cty. 1972) 71 Misc.2d 443, 336 N.Y.S.2d 139, or contradicted what was otherwise a clear and unambiguous term of the contract, Croce,

supra; Kologel Co. v. Down in the Village, Inc. (S.D.N.Y.1972) 539 F.Supp. 727 (where person entitled to delivery of goods was explicitly named as “consignee,” evidence of trade usage could not modify such designation); Salzman v. Boyer Products, Inc. (1st Dept.1973) 42 A.D.2d 531, 344 N.Y.S.2d 755 (agreement confirming unconditional nature of two loans may not be modified by evidence of oral condition), or was inconsistent with clearly established law. Avedon v. Exstein (S.D.N.Y.1956) 141 F.Supp. 278 (in light of long line of cases to effect that rights to delivered photograph are in customer who hired photographer and not in photographer, evidence of custom incompetent to show rights were in photographer); Colten v. Jaches Marchais, Inc. (Mun.Ct.1946) 61 N.Y.S.2d 269 (custom and usage cannot alter law that customer obtains proprietary rights in photo negatives).

We find the words and phrases of the various documents before us far from clear enough to eliminate the possibility that the parties intended to subject these deposits to the same conditions as those of negotiable deposits which, because of their transferability, explicitly bear the proviso that the deposit is subject to the law of the country in which it is placed. Similarly, we are unable conclusively to state that the deposits were not sited in the Philippines. The confirmations and telexes superficially support Citibank’s theory that its New York office was the “correspondent” bank for Citibank/Manila, just as Wells Fargo Bank, National Association was the “correspondent” for plaintiff. The ultimate significance or lack thereof to be given these terms will depend on what the trier of fact determines to have been the parties’ understanding of them as they were used in the Eurodollar trade. Recognizing that our task on a motion for summary judgment is “issue-finding, not issue-resolution,” United States v. One Tintoretto painting entitled “the Holy Family with Saint Catherine and the Honored Doctor” (2d Cir.1982) 691 F.2d 603, 606; see also Sillman v. Twentieth Century Fox (1957) 3 N.Y.2d 395, 398, 404, 165 N.Y.S.2d 498, 499, 505 (“issue-finding rather than issue-determination is the key to the procedure”), and finding that Citibank has substantiated the existence of a genuine dispute as to material issues, see Schering Corp., supra, 712 F.2d at 9, we deny plaintiffs motion.

Related to Citibank’s possible defenses of impossibility of performance and preclusion by the Act of State doctrine is whether Citibank may assert them in the first instance. MAAB 47 did not by its terms prohibit repayment of foreign deposits, but simply required that Central Bank approval be obtained prior to the making thereof. Plaintiff contends that Citibank has not shown that it ever attempted to gain such approval, and therefore cannot raise the decree to shield it from liability. After we expressed our sympathy with this position at oral argument, Citibank submitted the affidavit of Raphael Buenventera, its chief officer in the Philippines, the most persuasive portion of which we find to be his statement that, prior to the maturity date of Wells Fargo’s deposits, he inquired into the effect of the decree and was unequivocally told by the Governor of the Central Bank that all foreign payments were “frozen.” When the “government or other restraint does not render performance absolutely impossible, it is the duty of the promisor to make a bona fide effort to dissolve and be relieved of the restraint which operates to prevent his performance.” Brown v. J.P. Morgan (N.Y.Cty.1941) 177 Misc. 626, 31 N.Y.S.2d 323, 334, rev’d on other grounds (1st Dep’t 1943) 265 A.D. 631, 40 N.Y.S.2d 229, aff'd (1946) 295 N.Y. 867, 67 N.E.2d 263. We believe that a trier of fact could construe Mr. Buenventera’s efforts as a “bona fide effort” to obtain approval, and that the response he received demonstrated that his effort had failed. See Dezsofi v. Jacoby (N.Y.Cty.1942) 178 Misc. 851, 36 N.Y.S.2d 672, 674. We thus find a question of fact to exist with regard to the sufficiency of Citibank’s efforts to comply with MAAB 47 and its consequent standing to raise any of its affirmative defenses.

It appearing that—at least in the several areas here enumerated—there are factual disputes which may have a material bearing on Citibank’s liability, we deny plaintiff’s motion for summary judgment. A status conference shall be held in Chambers on September 30, 1985, at 9:30 a.m., to discuss further proceedings in this action.

SO ORDERED.

      . For the purposes of this motion only, in which we construe the submissions in a light most favorable to the party opposing summary judgment, see United States v. Diebold, Inc. (1962) 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176, we treat this statement as though it were part of the contract of deposit.

      . Plaintiff makes a cogent argument that the theory propounded by Citibank to explain the higher rate of interest borne by a Eurodollar deposit—that the depositer assumes a sovereign risk—is considerably undercut by the fact that the higher rate of interest is uniform among countries whose governments might be regarded as more or less "risky" than others. Thus, the Manila deposits here at issue bore the same rate of interest as those placed in London, Frankfurt and Singapore on the same day. Suggestive as this circumstance might be, we believe whether the validity of Citibank’s position is thereby undermined is a question for the trier of fact.

      . Plaintiff maintains that because it does not challenge the validity of the Philippine government’s actions pursuant to MAAB 47, but simply relies upon Citibank's liability for the debts of its branch banks under the ruling in Vishipco Line, supra, the Act of State doctrine is irrelevant. We do not believe, however, that this holding extends so far. In Vishipco Line the doctrine was not applied because it was determined that Vietnam was not the situs of the debt at the time of confiscation. 660 F.2d at 862-63. The court thus did not reach the question whether, assuming that the situs of the debt had been Vietnam, the home office would nonetheless be liable.


source: Caselaw Access Project

author: REYNOLDS, Chief Judge.

license: Public Domain

text:
    Frank SCHWEITZER, Plaintiff, v. Margaret HECKLER, Secretary of Health and Human Services, Defendant.
    Civ. A. No. 83-C-1684.
    United States District Court, E.D. Wisconsin.
    July 2, 1985.

      Luanne M. Henk, Clintonville, Wis., for plaintiff.

      Joseph P. Stadtmueller, U.S. Atty. by Melvin K. Washington, Asst. U.S. Atty., Milwaukee, Wis., and Donna Morros Weinstein, Dept, of Health & Social Services, Chicago, 111., for defendant.
   DECISION AND ORDER

REYNOLDS, Chief Judge.

This matter is before the Court on plaintiffs request for review of a final decision of the defendant Secretary of Health and Human Services (“the Secretary”) denying his application for a period of disability and disability insurance benefits. Federal jurisdiction is based on 28 U.S.C. § 1331 and 42 U.S.C. § 405(g). The action was referred to a United States Magistrate, who recommended that the Secretary’s decision be affirmed. Plaintiff has filed timely objections to the recommendation. I conclude that the case must be remanded to the Secretary for further proceedings.

Plaintiff filed his application for disability insurance benefits on December 8, 1981, stating that he became disabled after suffering a heart attack. The Secretary denied the application initially and on reconsideration. A hearing was held before an administrative law judge (“AU”) on October 21, 1982, at which plaintiff was represented by counsel. Plaintiff and a vocational expert gave testimony. The AU issued his decision denying plaintiff’s application on April 26, 1983.

The record discloses that plaintiff was forty-six years old at the time of the hearing. He has a seventh-grade education and has received no vocational or specialized training. His past work was as a farmer and a truck driver, and his last place of employment was with a construction company, where he drove a gravel truck and lifted sacks of cement. He presently lives on a farm with his wife and six of his seven children. He supervises the operation of his farm, although his children do the physical labor and his wife performs the bookkeeping.

On May 19, 1981, plaintiff suffered a heart attack while driving a truck, and was taken to a local hospital and then to a hospital in Appleton, Wisconsin. He was diagnosed as having arteriosclerotic heart disease with an acute inferior and lateral wall myocardial infarction, complicated by second and third degree arterial ventricular block. There was substantial arterial blockage, including complete obstruction of the coronary artery. On May 21, 1981, a temporary pacemaker was inserted in plaintiff’s chest. On August 4, 1981, he underwent a treadmill test, the results of which were consistent with the earlier diagnosis.

Plaintiff was examined by his primary physician, a Dr. George Nichols, and two other doctors, Drs. Lowell Peterson and Robert Koberstein. All three physicians opine that plaintiff is incapable of returning to his former job. Reports of examinations by Dr. Nichols in the months following the heart attack indicate that plaintiff complained of difficulty coping with heat and direct sunlight, insomnia, occasional dizzy spells, and the sensation of a “bobber” in his throat that impeded his respiration. Dr. Nichols’s notes of a 1982 examination show that plaintiff complained of dizzy spells when he tried to lift things and an occasional little “pin-sticking” sensation. Notes of a September, 1982 examination reflect that plaintiff complained of a dizzy spell while gardening, numbness in his legs at night and insomnia, a sensation of having a “bobber” in his throat and intermittent sore spots in his chest. Notes of an October 12, 1982 examination show that plaintiff was aware of Dr. Nichols’ opinion that his symptoms were mental but still felt occasional tiredness and needle-jabs, and restlessness in his legs. Dr. Nichols also noted that on October 14, 1982, plaintiff’s wife telephoned him to say that plaintiff had jumped out of bed in the night with a cramp in his leg and became dizzy and fell. Notes of an October 28, 1982 examination show that plaintiff complained of numbness in his left arm.

Following right and left heart catheterization and coronary arteriography in July, 1981, Dr. Peterson conducted electrocardiogram treadmill tests on plaintiff. A report dated July 23, 1981 showed that plaintiff experienced no chest pain during the treadmill exercise, and maintained a normal heart rate during the exercise with a normal slowing rate thereafter, but showed some residual effects of the infarction. The report of a treadmill test conducted August 4, 1981 contains similar results. In a letter to Dr. Nichols dated November 30, 1981, Dr. Peterson described a reevaluation examination of plaintiff. Plaintiff had told Dr. Peterson that when he did farm work, which required some heavy lifting, he experienced palpitations in his throat that made him somewhat short of breath. Plaintiff also noted to Dr. Peterson some problems with heat intolerance and nervousness, but mentioned no chest pain, palpitations or shortness of breath in this respect. Plaintiffs pulse was regular and no murmurs were detected. Dr. Peterson recommended that plaintiff not return to heavy work, such as his truck driving job, that he apply for social security benefits and that he be given treadmill electrocardiogram exercise once every six to twelve months.

The April 29, 1982 report of Dr. Koberstein reflects the result of an electrocardiogram exercise undertaken on that date. The report notes that the test was stopped because of some premature ventricular contraction and plaintiff’s complaints of lightheadedness. He did not complain of chest pain or shortness of breath. Dr. Koberstein concluded that plaintiff displayed a low exercise tolerance for a man his age. In an April 23, 1982 letter to the Bureau of Social Security Disability Insurance, pursuant to whose direction Dr. Koberstein had examined plaintiff, Dr. Koberstein wrote that plaintiff had complained of chest pains associated with severe exertion, such as walking more than one mile, or with exposure to extreme cold, heat or humidity. The chest pains could be relieved by rest or nitroglycerine. Dr. Koberstein opined that plaintiff was capable of light work and walking distances under one mile. He recommended that plaintiff not return to his past work as a truck driver.

At the hearing, plaintiff testified that he no longer did physical work on his farm, but had turned that responsibility over to his sons. He testified that the farm operations were not profitable, and that his family had to continue borrowing to pay bills. He also stated that some of the family’s income was in the form of social security benefits to his daughter, who is mentally retarded.

He further testified that he presently has high blood pressure and has been advised by his doctor to get a check-up on a weekly basis, although he is not taking any medication for this. He testified that he had recurrent chest pain, which he described as a “spearing with a pin” sensation followed by general discomfort. He stated that the pain was controllable by nitroglycerin, although the nitroglycerin gave him severe headaches. He testified that he suffered from insomnia up to three nights per week, and had experienced four or five dizzy spells in the past month. He testified to having numbness in his legs while he was inactive, and could sit for approximately ten minutes before his legs began to bother him. Further, he testified that he had difficulty climbing stairs, and expressed doubt about being able to work in conditions where there would be dust, heat, and fumes from gasoline. He described his activities as watching television, going for walks, and driving around the block or to the grocery store with his wife. He stated that he tried gardening, but began to feel faint when trying to operate a tiller. He said that he socialized very seldom.

The vocational expert who testified at the hearing, Dr. Laurine Fitzgerald, noted plaintiff’s functional illiteracy, and also a recalcitrant verbal pattern and problems with memory. She said that these factors, considered in conjunction with plaintiff’s attested dizzy spells and leg discomfort, and the possibility that surgery might be necessary in the future, made “the employment return bleak.” Tr. at 72. She stated that there were jobs available within a tristate area that plaintiff could perform, but only a very few. She mentioned visual scanning work in packing and food processing plants, and capping or bottling work as possibilities. She opined that the work environment would have to be free of dust and fumes and not be subject to changes in temperature.

The AU concluded that plaintiff had retained a capacity for light work. The AU assumed that plaintiff was functionally illiterate, and applied the grid in the vocational guidelines at 20 C.F.R. Part 404, Subpart P, Appendix 2, which directs a finding of nondisability for persons of plaintiffs characteristics. The AU stated his view that some of plaintiffs symptoms were caused by anxiety, and that there were no indications of impaired thought process or inability to follow instructions or cooperate with coworkers that would render plaintiff unable to perform unskilled entry-level work activity. He also found that the documentary evidence, testimony and his observation did not indicate the presence of disabling pain. Therefore, he concluded that plaintiff was not entitled to a period of disability or disability benefits.

The Magistrate determined that this conclusion was supported by substantial evidence. He observed that none of the doctors nor the vocational expert had ruled out plaintiffs capacity for light work, and that the expert and one of the doctors had recognized that plaintiff could perform some light work. The Magistrate also observed that for the AU to discredit plaintiffs testimony on his spear-like pains in his chest was within the AU’s authority, in view of conflicting documentary medical evidence from examining physicians.

Plaintiff has objected to the Magistrate’s recommendation. He argues that the Secretary’s decision is not supported by substantial evidence, and cites certain evidence favoring his claim. Specifically, he cites the July 23, 1981 tread mill test results, in which it was noted that the test had to be stopped due to shortness of breath and leg fatigue; the report of Dr. Peterson on his November 22, 1981 examination of plaintiff wherein plaintiff’s complaints of throat palpitations and inability to tolerate heat were noted; Dr. Koberstein’s conclusion in his April 23,1982 letter to the Bureau of Social Security Disability Insurance that plaintiff experienced chest soreness and that exposure to cold, heat or humidity would cause chest discomfort; the examination notes of Dr. Nichols from 1982; and the statements of Drs. Peterson and Nichols that plaintiff is disabled.

Under 28 U.S.C. § 636(b)(1)(B), the Court is required to undertake a de novo determination of the portions of the Magistrate’s recommendation to which objections have been made. The plaintiff argues that the decision of the Secretary and the AU’s finding that plaintiff’s pain is not disabling are not supported by substantial evidence. The Court construes this as an objection to the Magistrate’s overall conclusion that the findings and decision of the AU were supported by substantial evidence. Therefore the AU’s decision will be reviewed de novo under the “substantial evidence” standard.

Claims for disability benefits are administratively reviewed pursuant to a five-part sequential inquiry established in the Social Security regulations. See 20 C.F.R. § 404.1520 (1984). Specifically, the AU must inquire: 1) whether the claimant is presently unemployed; 2) whether the claimant’s impairment is “severe;” 3) whether the impairment meets or exceeds one of a list of specific impairments; 4) whether the claimant is unable to perform his or her former occupation; and 5) whether the claimant is unable to perform any other work within the economy. An affirmative answer leads either to the next step or, on steps 3 and 5, to a finding that the claimant is disabled. A negative answer at any point, other than step three, stops the inquiry and leads to a determination that the claimant is not disabled. Zalewski v. Heckler, 760 F.2d 160, 162 n. 2 (7th Cir.1985). Judicial review of the decision is limited to a determination of whether the findings are supported by substantial evidence and whether the correct legal standards have been applied. Halvorsen v. Heckler, 743 F.2d 1221, 1225 (7th Cir.1984). “Substantial evidence” is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Rich ardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971). There must be more than a mere scintilla of evidence to support the decision, but if there is, the court may not substitute its judgment for that of the AU, even though the court might have reached a contrary result if it had taken the evidence in the first instance.

There is no dispute that plaintiff is presently unemployed, and that he is unable to return to his former work as a farmer and a gravel truck driver for a construction company. The decisive step in the AU’s inquiry was the fifth, that is, the determination of whether the plaintiff was unable to perform any other work within the economy. In this context, the AU found that plaintiff retained the residual functional capacity to perform light work, and applied the grid appearing at 20 C.F.R. Part 404, Subpart P, Appendix 2 to conclude that plaintiff was not disabled.

There is substantial evidence supporting the conclusion that plaintiff can perform light work as defined in 20 C.F.R. § 404.1567(d). None of the examining physicians has ruled out this possibility, and Dr. Koberstein explicitly suggested that plaintiff was capable of light work. The vocational expert testified that the examining physicians did not particularize their assessment of plaintiffs ability in terms of poundage he could lift, length of time he could stand or sit, or ability to stoop, reach, bend or twist. Yet she did concede that plaintiff could cope with a sedentary or a light job where he could focus his attention on something finite.

The AU considered the plaintiffs residual capacity to perform light work, his age and his lack of vocational training, and assumed that he was functionally illiterate in applying the medical vocational grid. He found that plaintiff came within Rule 202.16 of Table 2, which directs a finding of not disabled.

However, the grid is not to be used for directing a finding if a claimant’s nonexertional limitations prevent him from performing the full range of jobs within his exertional level. Smith v. Schweiker, 735 F.2d 267, 271 (7th Cir.1984). The plaintiff testified to dizzy spells, numbness in his legs, insomnia, reduced tolerance to heat, humidity and cold, inability to walk more than several blocks, palpitations in his throat, and a pin-pricking sensation in his chest followed by general soreness. Additionally, the vocational expert testified that the plaintiff’s work environment would have to be free of gasoline or diesel fumes. The AU discredited the foregoing, reasoning that the plaintiff’s testimony concerning his inability to walk a certain distance contradicted remarks he had made to his physicians, that his complaints of chest pain contradicted the treadmill test results showing no pain during exercise, and that his symptoms seemed to be the product of anxiety.

While the question is a close one, I conclude the AU erred in applying the grid in this case, because there is not substantial evidence to support a conclusion that plaintiff’s alleged nonexertional limitations do not prevent him from performing the full range of jobs within his exertional level. The AU properly exercised his prerogative in determining that plaintiff seemed “perfectly capable of extended standing and walking.” However, there is nothing to contradict plaintiff’s alleged inability to tolerate cold, heat, humidity and fumes except for Dr. Nichols’s notes of October 12, 1982, wherein he states plaintiff told him he was aware that Dr. Nichols thought his symptoms were “mental.” Given the fact that the “symptoms” referred to are not specified, and judging from the context, I do not think the doctor’s notes provide substantial support for the proposition that plaintiff could withstand exposure to cold, heat, humidity or fumes without chest pain.

It does not follow that the Court must grant plaintiff’s motion for summary reversal. A finding that the vocational guidelines are inapplicable to a claimant’s case is not determinative of the merits of the case. 20 C.F.R. Part 404, Subpart P, Appendix 2, Rule 200.00(d), Smith v. Schweiker, 735 F.2d at 272 n. 4. Rather, the matter must be remanded to the Secretary for further development of the record on the issue of the nature and severity of plaintiff’s nonexertional impairments, and on the issue of the existence of work in the national economy for an individual with plaintiff’s limitations.

THEREFORE, IT IS ORDERED that the plaintiff’s and the defendant’s motions for summary judgment are denied.

IT IS FURTHER ORDERED that this action is remanded to the defendant Secretary of Health and Human Services for further proceedings in accordance with this decision.


author: SHADUR, District Judge.

text:
    Cynthia SMITH, Plaintiff, v. McDONNELL DOUGLAS CORPORATION, et al., Defendants.
    No. 85C5970.
    United States District Court, N.D. Illinois, E.D.
    July 2, 1985.
    Norman J. Barry, Daniel Cummings, Rothschild, Barry & Myers, Chicago, 111., for defendants.
    James W. Vititoe, Law Offices of Edward L. Masry, Sherman Oaks, Cal., for plaintiff.
   MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

McDonnell Douglas Corporation (“MDC”) has removed this personal injury action from the Circuit Court of Cook County, where it was brought by Cynthia Smith (“Smith”). For the reasons briefly stated in this memorandum opinion and order, the action is remanded to the court from which it emanated.

Removal to the federal courts is a subject fraught with arcane mysteries, in substantial part because federal courts are courts of limited jurisdiction and jurisdictional questions are filled with technical pitfalls for the unwary. In this case the problems are created by Smith’s lawyer’s inclusion of “DOES 1 through 50” as defendants.

MDC has filed its petition for removal as though it were the sole defendant. But if Smith’s allegations are taken at face value (as they must be), the Doe defendants are real people whose identity is simply not yet known to Smith—not hypothetical people who may or may not exist. See Fifty Associates v. Prudential Insurance Co. of America, 446 F.2d 1187, 1191 (9th Cir.1970).

Ordinarily removal must be joined in by all defendants. 14A Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 2d § 3723, at 308 & n. 6 and cases cited (1985 ed.). But where as here the state court had acquired jurisdiction only over MDC at the time of removal, MDC alone could petition for that purpose. Id. at § 3731, 504-07 & nn. 7-8 and cases cited. Therefore MDC’s having acted alone poses no problem of itself.

But another and fatal flaw infects the removal petition. Had Smith sought to file the identical complaint in federal court, she would have been obliged to allege the citizenship of every defendant. 13B Wright, Miller & Cooper § 3611, at 516 & n. 26 and cases cited (1984 ed.). And given the nature of her allegations about the unknown identity of the Doe defendants, she could not in fact have made the necessary diversity of citizenship allegations to confer federal jurisdiction. Fifty Associates, 446 F.2d at 1189-91.

MDC’s removal petition can stand in no better stead. It did not make the necessary citizenship allegations as to the Doe defendants—and it really could not have. Cf. John Hancock Mutual Life Insurance Co. v. Central National Bank in Chicago, 555 F.Supp. 1026 (N.D.Ill.1983). Nor is this a case of a plaintiff’s obviously spurious joinder of defendants (albeit of unknown specific identity in this case) to defeat federal jurisdiction. Smith’s Doe defendants are the persons who designed, made and assembled the MDC product whose defective nature assertedly caused Smith’s injury (Complaint 114). Thus the Complaint is conceptually comparable (though not identical in form) to that found to require remand in Baggett v. Alto Corp., 459 F.Supp. 989 (N.D.Ala.1978).

Case law in this area is not all of a piece. See Comment, John Doe, Where Are You? The Effects of Fictitious Defendants on Removal Jurisdiction in Diversity Cases, 34 Ala.L.Rev. 99 (1983). However the cases that strike this Court as better-reasoned, consistent with the limited jurisdiction of the federal courts and the strict reading ordinarily given removability as a result, compel remand here. See, e.g., Pecherski v. General Motors Corp., 636 F.2d 1156 (8th Cir.1981) generally, and cases cited id. at 1160; Weber v. Metropolitan Life Insurance Co., 554 F.Supp. 553 (D.Nev.1982). Indeed the extended and thoughtful analysis by Judge Schwarzer in Goldberg v. CPC International, Inc., 495 F.Supp. 233 (N.D.Cal.1980), dealing with a complaint much like the present one, concluded, id. at 238:

It follows from the [Southern Pacific Co. v. ] Haight, [126 F.2d 900 (9th Cir.), cert. denied, 317 U.S. 676 [63 S.Ct. 154, 87 L.Ed. 542] (1942) ], Grigg [v. Southern Pacific Co., 246 F.2d 613 (9th Cir.1957) ] and Preaseau [v. Prudential Insurance Co. of America, 591 F.2d 74 (9th Cir.1979)] line of cases that a complaint containing Doe allegations is on its face a pleading which is not removable, regardless of the specificity of the description of or of the charges against the Does. It may of course become removable either by proof that the Doe allegations are sham or by subsequent dismissal or abandonment of the claim against the Does.

All the cases cited in this paragraph draw sustenance from Pullman Co. v. Jenkins, 305 U.S. 534, 540-41, 59 S.Ct. 347, 350-351, 83 L.Ed. 334 (1939), the inferences from which also support remand here.

Accordingly diversity of citizenship—and therefore subject matter jurisdiction—is lacking, and the action must be deemed to have been “removed improvidently and without jurisdiction” (28 U.S.C. § 1447(c)). This action is remanded to the Circuit Court of Cook County by reason of such improvident removal.

      . As the discussion will reflect, there is a lack of proved diversity of citizenship, and thus a lack of subject matter jurisdiction, in this case. That defect is properly raised by this Court sua sponte. 14A Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 2d § 3739, at 572-73 & nn. 3-4 and cases cited (1985 ed.).

      . Though both the caption and Complaint ¶ 2 refer to 50 Doe defendants, the prayer for relief adverts to just 10. That makes no difference to the analysis in this opinion.

      . Not surprisingly, Smith's lawyer is a California practitioner (as Smith appears to be a California citizen). Doe practice, virtually unknown here, is de rigeur in California. Cal.Civ. Proc.Code § 474; see Hogan, California’s Unique Doe Defendant Practice: A Fiction Stranger Than Truth, 30 Stan.L.Rev. 51 (1977).


author: GERRY, District Judge.

text:
    Florence LINDSAY, Plaintiff, v. SECRETARY OF HEALTH AND HUMAN SERVICES OF the UNITED STATES, Defendant.
    Civ. A. No. 78-2887 (JFG).
    United States District Court, D. New Jersey.
    July 3, 1985.
    Kirk B. Roose, Elyria, Ohio, pro hac vice, Howard N. Sobel, Cherry Hill, N.J., for plaintiff.
    W. Hunt Dumont, U.S. Atty. by Laurie J. Gentile, Sp. Asst. U.S. Atty., Newark, N.J., for defendant.
   OPINION

GERRY, District Judge.

This motion presents an interesting question of statutory construction involving the Social Security Act.

Following several years of administrative hearings, appeals to this court, remands, and renewed appeals, the plaintiff was finally awarded disability insurance and SSI benefits by this court (by Order dated March 19, 1984). During the period that plaintiff was languishing without these benefits she received welfare payments from the State of New Jersey in the amount of approximately $14,000.

Ordinarily, an individual who believes she is disabled applies for both Disability Insurance Benefits (Title II) and Supplemental Security Income (Title XVI). The disability standards are identical under these two subchapters. However, there are differences in the two programs. Title II benefits are based on contributions the claimant has made into a Social Security trust fund (via a withholding tax), and these benefits are not based on financial need. Title XVI benefits are needs based, and are not dependent on one’s having ever worked. The larger one’s Title II benefits, the smaller will be one’s Title XVI benefit, as Title II benefits are figured into the Title XVI "needs” equation. Eligibility for Title II and Title XVI benefits is ordinarily determined concurrently, as it was here.

Under 42 U.S.C. § 407, Title II benefits cannot be assigned to creditors, such as state welfare agencies that provide interim benefits to a claimant. However, under 42 U.S.C. § 1383(g)(1), Health and Human Services may withhold past-due Title XVI benefits from a claimant, and pay them to a state in reimbursement of the state’s interim outlay of welfare benefits.

Under another provision, 42 U.S.C. § 1320a-6, where an individual has been paid benefits under Title XVI, and then is deemed eligible for Title II benefits, the amount payable to the claimant under Title II is reduced by the amount of Title XVI benefits that the claimant would not have received had Title II benefits been paid in the first place. But even before the claimant gets anything from Title II, the state is reimbursed for its interim welfare payments. Section 1320a-6 is an antiwindfall provision, designed to ensure that a claimant is not paid twice.

The problem is this:

Section 1320a-6, by its language, seems to contemplate that the above-described offset scheme only applies where payment of Title XVI benefits has preceded the payment of Title II benefits. So what happens if eligibility for Title II and Title XVI is determined concurrently (i.e. with a single decision that an individual is disabled)?

Suppose the Title II benefits are computed first. Let’s say the past-due amount under Title II is $30,000. The claimant gets all of this, since under § 407, these benefits are nonassignable. Then, the Title XVI benefits are calculated, and are found to total $5,000. In the meantime, state welfare has paid out $15,000. The entire $5,000 is paid to the welfare department. But if Title II benefits are paid first, as in this hypothetical, the welfare department is out of pocket $10,000, and the claimant, who was only entitled to $35,000, is “in pocket” $45,000 (15 + 30).

Now let’s suppose the Title XVI benefits are computed first. Now, because Title II “income” is not figured into the needs equation, Title XVI benefits will be much higher—let’s say $25,000. The Social Security Administration will pay the welfare department $15,000, pursuant to § 1383(g), and remit the rest to the claimant: $10,000. Now, in calculating Title II benefits, the Social Security Administration will offset the amounts paid under Title XVI that would not have been paid had Title II been computed first. So, having already received $25,000 in payments (15 + 10), and being entitled to $35,000, the Social Security Administration will only remit to the claimant an additional $10,000. In this example, then, the Social Security Administration pays out the same $35,000. But the welfare department is totally reimbursed for an amount it would not have had to pay had claimant originally been deemed disabled, and the claimant gets $10,000 less.

The question presented by this motion is which method of computation the Social Security Administration should use when eligibility for both types of benefits is determined concurrently. Predictably, the claimant says that Title II benefits should be computed first. The Social Security Administration takes the contrary position.

In fact, the Social Security Administration did compute Title XVI benefits first, with the resulting loss to the claimant (of some $14,000) and the making whole of the welfare department. The purpose of the “motion to enforce” is to make the Social Security Administration reverse the order of computations and thereby remit to claimant the additional $14,000.

There are cases which go both ways on this problem. Burnett v. Heckler, 563 F.Supp. 789 (W.D.Ark.1983), reversed on other grounds, 756 F.2d 621 (8th Cir.1985); and Carlisi v. Heckler, 583 F.Supp. 135 (E.D.Mich.1984), both hold that Title II benefits should be computed first, with the consequent windfall to the claimant. But neither of these cases really squarely address the issue. Both are concerned with attorneys fees payable under the Act. Under § 406, attorneys fees may only be withheld from Title II past due benefits, see 20 C.F.R. § 404.1703, so that if these are computed second, and are therefore in a reduced amount, the attorneys fees will also be in a reduced amount. An unreported case from Minnesota, McKenzie v. Heckler, addresses the issue more squarely and reaches the same result. In that decision, the court concluded that to permit Title XVI to be computed first involved an end-run around § 407, which protects Title II benefits from creditor's such as the state.

This argument is not thoroughly persuasive. Section 407 does not set an order for the computation of benefits; it merely provides that Title II benefits, whenever computed, may not be assigned.

A second argument involves the language of the windfall provision, § 1320a-6. The provision (since amended) governing this case reads in pertinent part:

In any case where an individual—(1) makes application for [Title II] benefits ... and is subsequently determined to be entitled to those benefits, and (2) was an individual with respect to whom [Title XVI] benefits were paid ... [Title II benefits will be reduced].

The McKenzie court, relying on the “were paid” language, reasoned that the offset only applies where a determination of Title II eligibility comes after determination of Title XVI eligibility, not where there is a concurrent determination of eligibility.

Again, this argument is not thoroughly persuasive. Section 1320a-6, like § 407, is silent on the question of which of two benefits, for which eligibility has been determined simultaneously, should be computed first. If Title XVI benefits are computed and paid first, then these amounts quite literally “were paid” before the receipt of Title II benefits, and nothing in § 1320a-6 bars recoupment of the latter benefits.

I am more persuaded by the reasoning of Gallo v. Heckler, 600 F.Supp. 1513 (E.D.N. Y.1985), which endorses the Secretary’s approach here. That case correctly, I believe, states that no statute provides clear guidance on which benefits are to be calculated first. Gallo does point out, however, that § 1320a-6 expresses a clear intent to avoid windfalls and insure that a claimant not receive a greater amount in past due benefits (including interim welfare payments) than she would have received had benefits been actually paid when due (i.e. had claimant been originally judged disabled by the Social Security Administration). Gallo further recognizes the unfairness to local welfare departments in being unable to recoup interim payments that would not have been made but for the original erroneous determinations of nondisability, and attaches greater importance to the § 1383(g) reimbursement scheme.

The Eighth Circuit, in reversing Burnett, supra, seems to endorse Gallo, although that endorsement is dicta, and in a footnote. No other appellate court seems to have reached the issue yet.

The motion to reopen will be granted, but the substantive motion will be denied. Defendant shall submit an order within five days.


author: EDWARD WEINFELD, District Judge.

text:
    EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, v. KDM SCHOOL BUS COMPANY, City School District of the City of New Rochelle, City of New Rochelle, New York State Education Department, Commissioner of Education of the State of New York, Defendants.
    No. 84 Civ. 3861 (EW).
    United States District Court, S.D. New York.
    July 5, 1985.

      E.E.O.C., New York District Office, New York City (Robert L. Williams, Regional Atty., Bert A. Bunyan, Supervisory Trial Atty., Brunhilda Sanders, Senior Trial Atty., New York City, of counsel), for plaintiff.
    Robert Abrams, Atty. Gen., State of New York., New York City (Douglas D. Aronin, Asst. Atty Gen., New York City, of counsel), for defendants New York State Educ. Dept, and Commissioner of Educ. of State of N.Y.
    Kaye, Scholer, Fierman, Hays & Handler, New York City (Peter A. Walker, Steven M. Martin, New York City, of counsel), for defendant City School Dist. of City of New Rochelle.
   OPINION

EDWARD WEINFELD, District Judge.

Plaintiff, the Equal Employment Opportunity Commission (“EEOC”), brings this action claiming that a regulation promulgated by the Commissioner of Education of the State of New York which requires school bus drivers to retire at the age of sixty-five violates the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. (1982) (“ADEA”). The EEOC, on behalf of Henry J. Stevens, a discharged bus driver, and others similarly situated, seeks a permanent injunction enjoining the enforcement of the regulation, reinstatement, back pay, and other monetary damages against all defendants, including the New York State Education Department and the Commissioner of Education of the State of New York (hereinafter the “State defendants”).

The individuals on whose behalf plaintiff seeks relief are school bus drivers formerly employed by defendant KDM School Bus Company (“RDM”). KDM contracts with the defendant City School District of the City of New Rochelle (“School District”) to provide bus service to and from educational and extracurricular activities for New Rochelle students ranging in age from five to twenty-one. The School District includes in its contract with KDM a requirement that KDM comply with the regulations of the Commissioner of Education, one of which— mandatory retirement at age sixty-five— the EEOC challenges here.

The State defendants move, pursuant to Rule 12(b), Fed.R.Civ.P., to dismiss the complaint. In support of the motion, they place principal reliance upon a decision of the Northern District of New York, Maki v. Commissioner of Education of the State of New York, which was affirmed by our Court of Appeals in an unpublished opinion. Maki held, after a trial upon the merits, that the age restriction contained in the same regulation challenged here is a “bona fide occupational qualification” for school bus drivers and therefore permissible under the ADEA. In addition, the State defendants seek dismissal on grounds that plaintiff’s claims for back pay and money damages are barred by the doctrine of sovereign immunity.

Defendant School District also moves to dismiss the complaint, joining the State defendants in arguing that the issue before this Court has already been decided by Maki and, in addition, contending that the School District is not an employer within the meaning of the ADEA, and that the EEOC has failed to satisfy its statutory obligation to conciliate its claim against the School District prior to the institution of litigation.

DISCUSSION

The State defendants’ Motion

The State defendants urge the Court to accept the same arguments which they unsuccessfully advanced in Barrett v. Suffolk Transportation Services, Inc. (decided after argument of this motion), where, as here, the EEOC is challenging the termination of school bus drivers at age sixty-five. In view of Barrett, it is sufficient simply to state this Court’s conclusions, which are in accord with those of Judge Mishler, that dismissal of plaintiff’s complaint is neither warranted by the Maki decision nor by the doctrine of sovereign immunity. The unpublished affirmance by our Court of Appeals in Maki, having no precedential effect, does not bind this Court; and, in the absence of any evidence as to the effect upon safety, this Court may not assume that an age limitátion of sixty-five for school bus drivers is per se a bona fide occupational qualification. Further, the Court is of the view that Congress, in extending the ADEA to the States, acted pursuant to Section Five of the Fourteenth Amendment and intended to abrogate the immunity conferred upon them under the Eleventh Amendment.

A final disposition of the State defendants’ motion requires only brief discussion of an argument relied upon here, but apparently not raised in Barrett. The State defendants contend that the EEOC had the right to intervene and join with the Maki plaintiff and therefore it should be collaterally estopped from litigating the question whether the Commissioner’s regulation constitutes a bona fide occupational qualification. The EEOC was not a party to the Maki action. To accept the State defendants’ argument would, in effect, require the EEOC to intervene and become a party in every individual action or risk potentially preclusive factual determinations, placing an enormous burden upon a federal agency which has limited resources and is charged with the protection of the public interest. As the Supreme Court has recently cautioned, “courts should be careful when they seek to apply expanding rules of collateral estoppel to government litigation.” The Court declines to extend to the EEOC the State defendants’ novel theory of estoppel by failure to intervene.

Accordingly, the State defendants’ motion to dismiss is denied.

The School District’s Motion

The School District contends that the complaint should be dismissed against it because it does not directly employ the bus drivers on whose behalf the EEOC brings this action and, therefore, is not an “employer” within the meaning of the ADEA. The School District further relies upon the fact that it does not own or operate any of the buses used to transport students to or from its various schools; that all bus service is subcontracted to independent contractors such as defendant KDM School Bus Company; and that the School District has no direct involvement with the employer/ employee relationship between the independent contractor bus companies and their bus drivers. In response, the EEOC emphasizes that the School District requires KDM under its contract for bus services to comply with the very regulation the EEOC is challenging as violative of the ADEA; in other words, that pursuant to its contract, KDM must terminate bus drivers at age sixty-five.

There can be no doubt that the School District could be an employer within the meaning of the statute: the ADEA expressly defines the term “employer” to include “a State or political subdivision of a State and any agency or instrumentality of a State or a political subdivision of a State ...” However, the School District argues that it may not be held responsible for the termination of school bus drivers when there is no direct employment relationship between it and the employees of its independent contractors. The lack of a direct relationship does not insulate the School District from liability. Statutory employers “who are neither actual nor potential direct employers of particular complainants, but who control access to such employment and who deny such access by reference to invidious criteria,” may be held liable for violations of the ADEA. There is no dispute that the bus drivers are directly employed by the companies with which the School District contracts for bus services. The initial responsibility for the bus transportation of children between the ages five to twenty-one is that of the School District. However, it has delegated this responsibility to the defendant KDM School Bus Company, under a contract which requires the bus company to comply with the State regulation which plaintiff contends is in violation of ADEA. Assuming that the regulation in fact violates the ADEA, the School District may be held liable for interfering with the bus drivers’ employment opportunities based upon impermissible age-related criteria. To hold otherwise would be to condone indirect exploitation of age-based factors which would be impermissible if applied to persons directly employed by the School District.

Finally, the School District urges dismissal of the complaint on grounds that the EEOC has failed to satisfy its obligation pursuant to Section 7(b) of the ADEA to “attempt to ... effect voluntary compliance ... through informal methods of conciliation, conference, and persuasion.” Defendant contends that the EEOC’s prelitigation efforts to resolve the claimed violation of the Act by negotiation and conciliation were “cavalier” at best.

Plaintiff’s complaint alleges that “[p]rior to instituting this action, representatives of the Commission attempted to eliminate the unlawful employment practices alleged ... and to effect voluntary compliance with the requirements of the ADEA through informal methods of conciliation, conference and persuasion.” Upon a motion to dismiss, the Court must assume the truth of the matters so alleged and accordingly, based upon the complaint, it cannot be said that under no set of facts could plaintiff establish that it had met its obligations to conciliate under the ADEA.

Even if the Court were to consider the affidavits of counsel submitted by the defendant and treat its motion as one for summary judgment, the result would be the same. While counsel characterizes the EEOC’s efforts as “cavalier,” he concedes that the EEOC informed the School District, by letter, of its decision and the basis for finding a violation; and that, after a telephone conversation with counsel for the School District, the EEOC sent a further letter detailing the claimed violation, suggesting means by which the School District could administratively resolve the matter, and requesting that the School District formulate a response. That response emphatically denied any liability on the part of the School District, and the School District’s only offer of “conciliation” was a request that plaintiff reverse its decision.

To evaluate whether the EEOC has adequately fulfilled the conciliation requirement, “the fundamental question is the reasonableness and responsiveness of the EEOC’s conduct under all the circumstances.” The circumstances of this case do not warrant a finding that plaintiff’s efforts were insufficient as a matter of law to satisfy its obligations to conciliate. It may be conceded that the EEOC’s letter was not a model of a conciliatory approach and was somewhat peremptory. However, this is not a case where a private employer's conduct toward individual employees is at issue; rather, it is a case where a State regulation which requires the defendants’ compliance is being challenged. The regulation was imposed by higher authority upon the School District. The mandatory aspect of the challenged employment practice does not admit to the type of conciliation possible in other cases. This is reflected in the School District’s response to the EEOC’s suggested means of compliance: a request for reversal. Such a response, in view of the nature of the claimed employment practice, serves to justify what in other situations might be found inadequate efforts to conciliate. Upon the record before the Court, the EEOC’s letters outlining the basis for its allegations of a violation of the ADEA and suggesting means of compliance, in view of the nature of the claim and the School District’s response, are sufficient to withstand a motion for summary judgment.

Accordingly, the School District’s motion is denied.

So ordered.

      . 8 N.Y.C.R.R. § 156.3(b) (1982) provides:
      (b) Age. All drivers of school transportation conveyances shall be at least 21 years of age, but not in excess of 65 years of age.

      . 568 F.Supp. 252 (N.D.N.Y.1983), aff’d without opinion, 742 F.2d 1437 (2d Cir.1984).

      . Under the ADEA, it is unlawful for an employer to discriminate against any employee or potential employee on the basis of age, except "where age is a bona fide occupational qualification reasonably necessary to the normal operation of the particular business.” 29 U.S.C. § 623(f)(1) (1982).

      . The State defendants’ claim that the EEOC lacks authority to enforce the ADEA, see E.E. O.C. v. CBS, Inc., 743 F.2d 969 (2d Cir.1984), has been rendered moot by the subsequent ratification by Congress of legislation authorizing the EEOC's jurisdiction. Pub.L. No. 98-532 (1984). So, too, their claim of improper service is unavailing, any alleged defect having been subsequently cured.

      . 600 F.Supp. 81 (E.D.N.Y.1984).

      . See Rules of the United States Court of Appeals for the Second Circuit § 0.23; U.S. v. Joly, 493 F.2d 672, 676 (2d Cir.1974) (The “clear intent” of Rule 0.23 is that the decisions shall "have no effect as stare decisis;” their use "as a precedent is inconsistent with the assumption upon which the affirmance was rendered”); AAACON Auto Transport, Inc. v. State Farm Mutual Auto Ins. Co., 537 F.2d 648, 658 (2d Cir.1976), cert. denied, 429 U.S. 1042, 97 S.Ct. 742, 50 L.Ed.2d 754 (1977); U.S. v. Diggs, 497 F.2d 391, 393 n. 3 (2d Cir.), cert. denied, 419 U.S. 861, 95 S.Ct. 112, 42 L.Ed.2d 96 (1974).

      . See Johnson v. Mayor & City Council of Baltimore, - U.S.-, 105 S.Ct. 2717, 86 L.Ed.2d 286 (1985); Ramirez v. Puerto Rico Fire Services, 757 F.2d 1357, 1358 (1st Cir.1985).

      . Ramirez v. Puerto Rico Fire Service, 715 F.2d 694, 697-701 (1st Cir.1983); see id. at 699 (citing cases); U.S.E.E.O.C. v. County of Calumet, 686 F.2d 1249, 1251-53 (7th Cir.1982); E.E.O.C. v. Elrod, 674 F.2d 601, 608 (7th Cir.1982); Arritt v. Grisell, 567 F.2d 1267, 1271 (4th Cir.1977); see also E.E.O.C. v. Wyoming, 460 U.S. 226, 243 n. 18, 103 S.Ct. 1054, 1064 n. 18, 75 L.Ed.2d 18 (1983); Fitzpatrick v. Bitzer, 427 U.S. 445, 96 S.Ct. 2666, 49 L.Ed.2d 614 (1976).

      . United States v. Mendoza, 464 U.S. 154, 104 S.Ct. 568, 573, 78 L.Ed.2d 379 (1984).

      . 29 U.S.C. § 630(b) (1982).

      . Sibley Memorial Hosp. v. Wilson, 488 F.2d 1338, 1342 (D.C.Cir.1973) (footnote omitted); see Gomez v. Alexian Bros. Hosp., 698 F.2d 1019 (9th Cir.1983); Amarnare v. Merrill Lynch, Pierce, Fenner & Smith, 611 F.Supp. 344 (S.D.N.Y.1984); Pao v. Holy Redeemer Hosp., 547 F.Supp. 484 (E.D.Pa.1982); Vanguard Justice Soc’y, Jnc. v. Hughes, 471 F.Supp. 670 (D.Md.1979); Gill v. Monroe County Dep't of Social Services, 79 F.R.D. 316 (W.D.N.Y.1978); Curran v. Portland Superintending School Committee, 435 F.Supp. 1063 (D.Me.1977); Puntolillo v. New Hampshire Racing Commission, 375 F.Supp. 1089 (D.N.H.1974); see also Beverley v. Douglas, 591 F.Supp. 1321, 1327-28 (S.D.N.Y.1984).
      The Court notes that, while the cases cited above all arise under Title VII, 42 U.S.C. Sec. 2000e et seq. (1982), the relevant statutory language is nearly identical, reflecting the origin of the ADEA's substantive provisions in Title VII. Lorillard v. Pons, 434 U.S. 575, 584 (1978). Courts have repeatedly relied upon Title VII precedent in interpreting the scope of the ADEA. See, e.g., EEOC v. Zippo Manuf. Co., 713 F.2d 32, 38 (3d Cir.1983).

      . The Commissioner’s regulations expressly provide that ”[a]pproval for employment of a school bus driver shall be in writing on a form prescribed by the Commissioner of Education. A school bus driver shall mean any person who drives a school bus which is owned, leased or contracted for by a public school district for the purpose of transporting pupils.” 8 N.Y.C.R.R. § 156.3(a) (1982) (emphasis added).

      . Sibley, 488 F.2d at 1342.

      . 29 U.S.C. § 626(b) (1982).

      . Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957); Goldman v. Belden, 754 F.2d 1059, 1065-66 (2d Cir.1985).

      . EEOC v. Klinger Elec. Corp., 636 F.2d 104, 107 (5th Cir.1981); see Marshall v. Sun Oil Co. (Delaware), 605 F.2d 1331, 1335-36 (5th Cir. 979); EEOC v. Colgate-Palmolive, 34 FEP Cas. 1551, 1555 (S.D.N.Y.1983).

      . The E.E.O.C.’s duty to attempt conciliation is fulfilled if it 1) outlines to the employer the reasonable cause for its belief that the employer is in violation of the Act, 2) offers an opportunity for voluntary compliance, and 3) responds in a reasonable and flexible manner to the reasonable attitude of the employer.

        EEOC v. Colgate-Palmolive Co., 34 FEP Cas. 1551, 1555 (S.D.N.Y.1983); see EEOC v. Klinger Elec. Corp., 636 F.2d 104, 107 (5th Cir.1981); Marshall v. Sun Oil Co. (Delaware), 605 F.2d 1331, 1335-36 (5th Cir.1979).


author: NANGLE, Chief Judge.

text:
    Ronald SLAUGHTER, Plaintiff, v. CITY OF MAPLEWOOD, Defendant.
    No. 83-465C(1).
    United States District Court, E.D. Missouri, E.D.
    July 5, 1985.
    See also, 8th Cir., 731 F.2d 587.

      Hugh R. Law, Bernard Mellitz, St. Louis, Mo., for plaintiff.
    R. Jon Bopp, Ballwin, Mo., Lawrence B. Grebel, St. Louis, Mo., for defendant.
   MEMORANDUM

NANGLE, Chief Judge.

Plaintiff, Ronald Slaughter, brought this action pursuant to Title VII, 42 U.S.C. § 2000e et seq., 42 U.S.C. § 1981, and 42 U.S.C. § 1983. He is a former employee of defendant, the City of Maplewood, and alleges that defendant engaged in race discrimination by terminating him from his employment, by affording him less favorable job assignments than white employees, by denying him the privilege of working overtime, and by tolerating insulting racial slurs on behalf of other employees.

The § 1981 and § 1983 claims were tried to a jury which found that the City had not discriminated against plaintiff. Only the Title VII claim remains for this Court’s consideration herein. The Court, having considered the pleadings, the testimony of witnesses, the documents in evidence, and the stipulations of the parties, and being fully advised in the premises, hereby makes the following findings of fact and conclusions of law, as required by Rule 52 of the Federal Rules of Civil Procedure.

A. FINDINGS OF FACT

1. Plaintiff Ronald Slaughter is a black, male resident of the State of Missouri, and a citizen of the United States.

2. Defendant City of Maplewood is a municipal corporation within the State of Missouri.

3. Ronald Slaughter was employed by defendant from September 10, 1979, to December 23, 1981, as a truck driver/laborer for the City’s Street Department.

4. As a Street Department employee, plaintiff was responsible for maintaining the streets and operating various motor vehicles. He was physically capable of performing all of the tasks assigned to him.

5. Ronald Slaughter had an atrocious employment record with the City of Maple-wood, replete with counselings and suspensions. His lack of cooperation with his supervisors was the primary target of these disciplinary actions. On February 12, 1980, plaintiff received a performance evaluation from his supervisor, Mr. Ray Heinsohn which reflected an unsatisfactory performance in the areas of dependability and cooperation. On August 14, 1980, when assigned to assist in blaektopping an area, plaintiff refused to work and walked away from his job. On December 4, 1980, he was suspended because he refused to work upon receiving an assignment which he did not like. Furthermore, he directed some profane language towards two of his supervisors in connection with that incident.

6. Plaintiff had a poor attendance record, as well. He was late to work on numerous occasions. On April 13 and April 20, 1981, he failed to either call in or report to work, and was consequently suspended without pay.

7. Also, in April of 1981, Mr. Slaughter received a directive from the City Manager to prepare a written job description. When he failed to comply with this request, he was suspended for two additional days without pay.

8. Plaintiff contends that he received fewer overtime assignments than other employees, including employees with less seniority than himself. On several occasions, however, plaintiff’s supervisor, William Rushing, attempted to contact plaintiff about overtime work, without avail. On one occasion a woman answered the telephone and indicated that plaintiff was not at home. The woman’s reply came only after a pause and after she had consulted someone else in the home. Mr. Rushing felt that plaintiff was in fact at home, but had instructed the woman to suggest otherwise. In addition, plaintiff refused an overtime assignment on December 20, 1981. Plaintiff acknowledged that the bulk of overtime assignments were distributed in December of 1981, during a large snowstorm, yet asserts that another white employee with less seniority than himself received an overtime assignment while he did not. This particular individual was not employed by the Department at that time, however. This Court thus concludes that plaintiff’s allegations that he was passed over with respect to overtime assignments are not credible.

9. On December 22, 1981, plaintiff’s supervisor requested plaintiff to work overtime. Plaintiff refused, directed some foul language towards the supervisor, and turned away. The following day plaintiff was terminated for insubordination by the City Manager, a black female.

10. On December 5, 1980, plaintiff filed a complaint with the Equal Employment Opportunity Commission for race discrimination. The EEOC found that reasonable cause to believe that plaintiff’s allegations were true did not exist. Plaintiff elected not to pursue any further action on his complaint.

11. While some racial slurs may have been directed toward plaintiff, during his employment with the City of Maplewood, plaintiff never complained to his supervisor William Rushing.

12. No other white employees have an attendance record similar to plaintiff’s. In fact, mention was made of two other employees who were terminated during plaintiff’s term of employment, both of whom are white. One was terminated for failing to report to work or to call in. The other was terminated for displaying a dangerous weapon.

13. Plaintiff filed a timely complaint with the EEOC against defendant in accordance with 42 U.S.C. § 2000e-5. He received an unfavorable result and subsequently filed a complaint with this Court.

B. CONCLUSIONS OF LAW

This Court has jurisdiction of this case pursuant to 28 U.S.C. § 1331 and 42 U.S.C. § 2000e—5(f)(3). In addition, defendant is an employer as defined by 42 U.S.C. § 2000e(b).

From the outset, the theory of collateral estoppel applies to this case because a jury denied plaintiffs claims of discrimination under § 1981 and § 1983. As noted by the Eighth Circuit in Goodwin v. Circuit Court of St. Louis County, Missouri, 729 F.2d 541, 549 n. 11 (8th Cir.1984), “when § 1983 and Title VII claims are tried jointly, the § 1983 theory to the jury and the Title VII theory to the court, a jury verdict on the issue of discrimination would collaterally estop the parties with respect to that issue on the Title VII claim.” See also Sisco v. J.S. Alberici Construction Co., Inc., 655 F.2d 146, 151 (8th Cir.1981), cert. denied, 455 U.S. 976, 102 S.Ct. 1485, 71 L.Ed.2d 688 (1982). As discrimination claims brought under § 1981, § 1983 and Title VII require the same elements of proof, Lewis v. University of Pittsburgh, 725 F.2d 910, 915 n. 5 (3rd Cir.1983); Wilson v. Legal Assistance of North Dakota, 669 F.2d 562, 564 (8th Cir.1982), this Court concludes that it is bound by the jury’s finding that defendant did not discriminate against plaintiff.

This Court independently concludes, however, that plaintiff’s Title VII claim is meritless. In a Title VII claim, the plaintiff has the initial burden of establishing a prima facie case of discrimination. If the plaintiff is successful, the defendant must articulate a legitimate non-discriminatory reason for its actions. The defendant’s evidence need only raise a genuine issue of fact regarding discrimination. The burden of coming forth with additional evidence then returns to the plaintiff. The plaintiff must show by a perponderance of the evidence that the defendant’s explanation was merely a pretext for discrimination within the meaning of the statute. Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981); McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973); Coleman v. Missouri Pacific Railroad Co., 622 F.2d 408 (8th Cir.1980). The plaintiff bears the ultimate burden of establishing discrimination. United States Postal Service, Board of Governors v. Aikens, 460 U.S. 711, 103 S.Ct. 1478, 75 L.Ed.2d 403 (1983); Jones v. I.T.T. Educational Services, Inc., 587 F.Supp. 1533, 1538 (E.D.Mo.1984).

This Court concludes that plaintiff has established a prima facie case of discriminatory discharge in that he established (1) he was a member of a protected class, (2) he was capable of performing the job, and (3) he was discharged from the job. Johnson v. Bunny Bread Co., 646 F.2d 1250, 1253 (8th Cir.1981); Osborne v. Cleland, 620 F.2d 195, 198 (8th Cir.1980).

The next step in the analysis is to determine whether defendant City has articulated a legitimate non-discriminatory reason for the discharge of plaintiff, sufficient to raise a genuine factual issue regarding plaintiff’s claims of discrimination. Texas Department of Community Affairs v. Burdine, 450 U.S. at 254-55, 101 S.Ct. at 1094-1095. This Court concludes that defendant has met this burden. Defendant presented testimony and exhibits regarding plaintiff’s attendance record with the City. Plaintiff indeed held a long history of unexeused absences and tardiness, and he was suspended on two occasions for such absences. In addition, he was suspended for failing to comply with a directive of the City Manager, and an employee performance evaluation reflected that he had a habit of talking back to his supervisors. He also walked away from his assigned tasks on two occasions. Finally, when asked to work overtime, he directed foul and profane language towards his supervisor. This Court concludes that these incidents constituted sufficient and non-discriminatory reasons for the City to terminate plaintiff from his employment.

Finally, plaintiff cannot establish that defendant’s explanation is a pretext for its actual intent to discriminate. Plaintiff did not introduce any evidence that the treatment he received was different from that of white employees. Nor did any other employee have a record similar to plaintiff's. Two other white employees were terminated while no black employees were terminated during plaintiffs term of employment. In addition, this Court notes that the City Manager was a black female. See Johnson v. Bunny Bread Co., 646 F.2d at 1255.

Plaintiff suggests that the racial slurs on the part of other employees constitutes evidence of a discriminatory intent. This evidence is not sufficient to establish pretext, however! The termination was in response to plaintiffs insubordination and refusal to cooperate with his supervisor. Furthermore, plaintiff never complained of discrimination to Mr. William Rushing, his supervisor. Mr. Rushing was the individual who recommended termination to the City Manager, yet plaintiff did not submit anything to imply that Mr. Rushing personally used derogatory language or harbored a racial bias against plaintiff.

Plaintiff further asserts that he was assigned to equipment which was in worse condition than the equipment used by white employees. Most of the equipment owned by the City was in a state of disrepair, however, and this Court is not convinced that plaintiffs equipment was more broken or unsafe than that of other employees.

Finally, plaintiff claims he was retaliated against for filing his first complaint with the EEOC. This Court concludes, however, that defendant did not retaliate. Mr. Slaughter presented no evidence that he received less favorable and unjustified treatment after filing his EEOC complaint. He thus has failed to establish a prima facie case of retaliation as there is no evidence of a Causal link between his EEOC complaint and his termination or conditions of employment. McMillan v. Rust College, Inc., 710 F.2d 1112, 1116 (5th Cir.1983); Lewis v. St. Louis University, 573 F.Supp. 300, 305 (E.D.Mo.1983), aff'd., 744 F.2d 1368 (8th Cir.1984).

Therefore, plaintiffs claims of discrimination fall because he has failed to meet his ultimate burden of establishing that defendant’s explanation for the termination is a pretext for its discriminatory intent. Additionally, the record does not contain any evidence of retaliation on defendant’s behalf.

Defendant seeks an award of attorney’s fees under 42 U.S.C. § 1988. An award of attorney’s fees for the prevailing party in a Title VII action is available only when the trial court in exercising its discretion finds that the plaintiff’s action was frivolous, unreasonable or without foundation. Christiansburg Garment Co. v. E.E.O.C., 434 U.S. 412, 420, 98 S.Ct. 694, 699, 54 L.Ed.2d 648 (1978); Patzkowski v. United States, 576 F.2d 134, 138 (8th Cir.1978). This Court concludes that this case is so frivolous, unreasonable and without foundation as to justify an award of attorney’s fees to defendant. Plaintiff’s employment record was abominable and the facts presented by him in support of his discrimination claim were indeed weak and not credible. Furthermore, when presented with the facts which this Court found to have occurred regarding his employment record, plaintiff conceded that he deserved termination. Under these circumstances, plaintiff deserves to compensate defendant for its expenses in litigating the matter. In addition, such an award may serve as a deterrent to continued baseless claims. Christiansburg Garment Co. v. EEOC, 434 U.S. at 421, 98 S.Ct. at 700.

Defendant requests $7,637.00 in attorney’s fees, which constitutes 109.1 hours of work at $70.00 an hour. Plaintiff on the other hand is presently unemployed and incapable of satisfying such a judgment. Accordingly, this Court' reduces defendant’s request for attorney’s fees and orders plaintiff to pay $750.00 in attorney’s fees to defendant. Rogers v. Kroger Co., 586 F.Supp. 597, 602 (S.D.Tex.1984); Warren v. Applebaum, 526 F.Supp. 586, 589 (E.D.N.Y.1981).