author: FITZGERALD, Chief Judge.

text:
    Dennis DeLONG and Ronald Cole, Plaintiffs, v. UNITED STATES of America, Defendant.
    No. A 82-487 Civ.
    United States District Court, D. Alaska.
    Oct. 31, 1984.
    Donald D. Hopwood of Kay, Christie, Fuld, Saville & Coffey, Anchorage, Alaska, for plaintiffs.
    Michael R. Spaan, U.S. Atty., Anchorage, Alaska, for defendant.
   MEMORANDUM AND ORDER

FITZGERALD, Chief Judge.

Plaintiffs DeLong and Cole have brought claims against the government for injuries sustained when they were working as civilian employees at the Adak Naval Station. Marine guards had not been informed that the plaintiffs had permission to be at their job site within a restricted area. The guards apprehended and held the plaintiffs, and allegedly struck and kicked them inflicting the injuries for which plaintiffs now claim compensation.

The plaintiffs allege liability under the Federal Tort Claims Act, 28 U.S.C. §§ 1346, 2671-2680 (1982), in two different counts in their complaint. First, they claim the marine guards were “investigative or law enforcement officers”, thus allowing recovery for intentional torts under 28 U.S.C. § 2680(h). Second, they claim that military personnel other than the marine guards themselves were negligent in failing to inform the guards that the plaintiffs were legitimately within the restricted area.

The government moved to dismiss for lack of subject matter jurisdiction, arguing, first, that the marine guards were not “investigative or law enforcement officers” within the statutory definition, and second, that even a claim sounding in negligence would be barred because it “arises out of” an alleged intentional tort.

The Federal Tort Claims Act (FTCA) confers on district courts

exclusive jurisdiction of civil actions on claims against the United States, for money damages ... for ... personal injury ... caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.

28 U.S.C. § 1346(b). The FTCA provides that “[t]he United States shall be liable ... in the same manner and to the same extent as a private individual under like circumstances.” Id. § 2674. There are, however, a number of exceptions to this waiver of immunity. There is no liability for “[a]ny claim arising out of assault, battery, false imprisonment, [or] false arrest” unless such claim is the result of “acts or omissions of investigative or law enforcement officers of the United States Government.” Id. § 2680(h).

In their first claim, plaintiffs DeLong and Cole allege assault, battery, false imprisonment, and false arrest. The government maintains that these particular torts are included within a specific exception to the general waiver of sovereign immunity embodied in the FTCA. Title 28 U.S.C. § 2680(h) provides in relevant part that the FTCA waiver does not apply to:

Any claim arising out of assault, battery, false imprisonment, false arrest ...: Provided, That, with regard to acts or omissions of investigative or law enforcement officers of the United States Government, the provisions of [the FTCA] shall apply to any claim arising ... out of assault, battery, false imprisonment, false arrest____ For the purpose of this subsection, “investigative or law enforcement officer” means any officer of the United States who is empowered by law to execute searches, to seize evidence, or to make arrests for violations of Federal law.

Plaintiffs respond that the marine guards who detained them are “investigative or law enforcement officers” within the meaning of the proviso; the government takes the opposite position that the guards are not investigative or law enforcement officers. Resolution of this conflict depends therefore upon whether the marine guards are empowered by law “to execute searches, to seize evidence, or to make arrests for violations of Federal law.” See Solomon v. United States, 559 F.2d 309, 310 (5th Cir.1977).

Ordinarily, this issue can be readily determined. In the typical case when an individual complains under the FTCA that he has been victimized by an overzealous exercise of government police power, the citizen will likely have been confronted by an officer who has been statutorily granted the powers necessary to qualify him as a law enforcement officer. See, e.g., 18 U.S.C. § 3050 (powers of Bureau of Prisons officers); Id. § 3052 (powers of Federal Bureau of Investigation officers); Id. § 3053 (powers of federal marshals and deputies); Id. § 3061 (powers of postal inspectors); 26 U.S.C. § 7608 (powers of Internal Revenue officers). In such a case, once the relevant statutory provision has been identified, the court need not make further inquiry. See Hernandez v. Lattimore, 612 F.2d 61, 64 n. 7 (2d Cir.1979) (18 U.S.C. § 3050). Conversely, several courts have looked to the statutory delegation of powers and have concluded that the relevant officers were not law enforcement officers within the meaning of § 2680(h). See, e.g., Ames v. United States, 600 F.2d 183, 185 n. 3 (8th Cir.1979) (28 U.S.C. § 547 does not empower U.S. Attorneys to search, seize, or arrest); Art Metal-U.S.A., Inc. v. United States, 577 F.Supp. 182, 185-86 (D.D.C.1983) (5 U.S.C. Appendix I, § 6(a)(4) authorizing Inspector General of GSA to issue subpoenas does not qualify him as law enforcement officer).

In this case there is no specific statutory provision delineating the powers and duties of marine guards from which it can be readily determined whether they are law enforcement officers. Plaintiffs argue that in carrying out their assigned duties, marine guards may on occasion detain individuals, search them for weapons, intelligence gathering equipment, and contraband, and seize such items that are found. Plaintiffs also contend that marine guards receive additional training in the use of deadly force, the rules of engagement, and procedures for the apprehension of individuals. Since guards are authorized to perform such duties, plaintiffs conclude they properly fall within the statutory definition of law enforcement officer provided in § 2680(h).

The government acknowledges that marine guards do, on occasion, perform the above-described duties, but it maintains that such duties are merely “incidental” to their primary function as sentries. According to the affidavit of a marine guard officer, the guards’ main task is to prevent unauthorized access to restricted areas. Once an unauthorized individual is identified, the guards apprehend and detain him and then immediately notify the Naval Station, Adak Security Department. The individual is then turned over to naval security personnel who are independent of the marine barracks and are responsible for law enforcement at Adak. The authority of the guards is thus limited to the initial apprehension and detention of suspected intruders until naval personnel are notified. Since it is the responsibility of naval personnel to maintain law enforcement at Adak, the government concludes that the incidental duties performed by guards should not qualify them as law enforcement officers within the meaning of § 2680(h). I agree.

In order to determine precisely what duties and powers are entrusted to marine guards, I required the government to submit the pertinent regulations that detail their duties. The government submitted an excerpt from the MOS Manual that pertains to guards rated at MOS 8151; for purposes of comparison, the government also submitted an excerpt from the MOS Manual setting forth the duties of military police rated MOS 5811 through 5814, and an excerpt from the local instructions for Adak detailing the duties of naval security personnel.

The regulations submitted by the government confirm the government’s position that a marine guard is not a law enforcement officer. A guard’s duties in relevant part include:

1. Enforces military regulations and orders.
2. Controls entrances to military posts, station or other establishments.
3. Verifies authenticity of passes and identification cards of military personnel, civilian employees, and visitors afoot or in motor vehicles, entering or leaving installation.
4. Prevents unauthorized removal of government property.

From these listed duties it is evident that, on occasion, a guard will be required to apprehend and detain an individual. It is also consistent with these duties that a guard may have to disarm an individual or temporarily seize an item that the individual is carrying. It is also equally evident that the regulations do not authorize guards to conduct searches, seize evidence, or arrest individuals for violations of federal law.

The distinction propounded by the government between the incidental duties performed by guards and the duties of recognized law enforcement officers can best be demonstrated by comparing the guard’s duties as listed above with those of military police and naval security personnel. According to the MOS Manual, the duties that a military police officer is charged with include (depending upon rank):

8. Understands laws and regulations governing military personnel.
9. Completes and issues citations to violators.
10. Understands law and regulations concerning apprehension, search and seizure, rules of evidence and use of deadly force.
* * * * * *
13. Collects, marks, and preserves evidence.
* * * * * *
15. Investigates minor offenses at level appropriate to grade.
16. Applies crime prevention techniques.
* * * * * *
18. Apprehends violators.
* * * * * *
35. Coordinates military police activities and functions with local civil law enforcement agencies.

The Manual demonstrates that unlike marine guards, military police are expressly authorized to investigate offenses, to issue citations, to apprehend violators, and to collect evidence. The military police, in effect, are authorized to perform traditional police functions. But more important, military police are required to understand the laws and regulations concerning arrest, search, and seizure since in the execution of their duties it is expected that incidents will ordinarily arise when they will be required to perform such traditional law enforcement functions. Marine guards are not required to learn about these areas of law enforcement since they are not called upon to perform traditional law enforcement duties.

Naval security personnel, like military police and unlike marine guards, are also authorized to perform traditional law enforcement duties. The summary of duties of the security department, submitted by the government, provides:

Security Department (50). Protects the Naval Station against unlawful entry, sabotage, espionage, theft, rioting or other covert and overt acts, administers area clearance for official visits, maintains law and order in accordance with current Alaska state and federal laws and naval directives, investigates crimes, maintains liason and coordinates with federal and state law enforcement agencies.

(Emphasis added). Security personnel duties overlap with the duties of guards to the extent that they both are charged with assuring the security of the naval facility. But security department duties go beyond those of guards and encompass investigation of crimes and maintenance of law and order in accordance with federal law and naval directives.

From the excerpted summaries submitted, it is apparent that military police and naval security personnel perform traditional law enforcement duties including the investigation of crimes, the apprehension of suspects, and the search for and seizure of evidence. These agents would therefore fall within the definition of law enforcement officer set forth in 28 U.S.C. § 2680(h). I find that marine guards, however, are not empowered by law to investigate crimes, to arrest suspects, and to search for and seize evidence of crimes. In order to perform his duties effectively, a guard must be able to exercise the necessary degree of force to detain a suspected intruder and prevent harm to himself as well as the concealment of items forbidden in the Naval Station. To the extent that in performing his duties a guard must detain an individual and temporarily seize from his custody weapons, intelligence gathering equipment, and contraband, I find that these actions are incidental to his performance of his authorized duties ás a sentry which do not include law enforcement functions. The performance of these incidental activities cannot elevate the duties of guards to those of law enforcement officers who are “empowered by law” to perform traditional law enforcement functions.

The conclusion that marine guards are not law enforcement officers within the meaning of § 2680(h) is supported both by the limited number of reported decisions addressing this issue, and by the brief legislative history behind the enactment of the waiver amendment. Very few cases have examined whether military security officers qualify as law enforcement officers for purposes of § 2680(h). In Solomon v. United States, 559 F.2d 309 (5th Cir.1977) (per curiam), the plaintiff was stopped outside an air force base exchange by two security employees who suspected her of shoplifting. Without specifically addressing what duties the employees were authorized to perform, the court found that they were not empowered by law to execute searches, seize evidence, or arrest individuals for violations of federal law. Id. at 310.

In Bates v. United States, 517 F.Supp. 1350 (W.D.Mo.1981), on the other hand, the court treated an army military police officer assigned to the Game Warden Section as a law enforcement officer. While it was stipulated by the parties that the officer in question was a law enforcement officer since he possessed the power to make arrests for violations of federal law, id. at 1354, this conclusion is otherwise unavoidable given the duties assigned to the officer.

According to the stipulated facts adopted by the court:

Thornton’s duties consisted of the random and selected patrolling of Fort Leonard Wood. Thornton cheeked permits, assisted sportsmen, and patrolled for fish and game violators, poachers, and trespassers. He was also to search for illegal trash dumping; the destruction, dumping or cutting of trees; and the destruction of wildlife food plots.
... In addition to his game and wildlife duties set out above, Thornton also had authority to arrest military personnel and to detain civilians for any suspected crimes and could make such arrests or detentions on any and all parts of the Army base.

Id. at 1352.

The court in Daniels v. United States, 470 F.Supp. 64 (E.D.N.C.1979) similarly treated an air force security policemen as a law enforcement officer. The officer’s job description stated that he was “to exercise broad discretion in investigating, detaining, searching and arresting any person suspected of violating federal law or Air Force regulations.” Id. at 70. The duties of the marine guards in the case at bar more closely resemble the limited duties of the base exchange security employees in Solomon rather than the broad law enforcement duties exercised by the officers in Bates and Daniels.

Furthermore, 28 U.S.C. § 2680(h), waiving sovereign immunity for intentional torts committed by law enforcement officers, was enacted in 1974 in response to a series of unlawful and outrageous “noknoek” raids by federal law enforcement personnel. See generally, Boger, Gitenstein, and Verkuil, The Federal Tort Claims Act Intentional Torts Amendment: An Interpretative Analysis, 54 N.C.L.Rev. 497 (1976). Congress could have waived sovereign immunity for the actions of all federal employees, including marine guards, who have the capacity to bring the power and the authority of the federal government to bear against an individual in a manner that would constitute an intentional tort under state law. Congress did not, however, paint with such a broad brush; instead it chose to waive sovereign immunity for certain intentional torts only in limited circumstances. See Solomon, 559 F.2d at 310. Sovereign immunity continues to apply unless one of the specific intentional torts is committed by an officer “empowered by law” to execute searches, seize evidence, or arrest an individual for violations of federal law. Since marine guards are without such authority, I conclude that they do not fall within the statutory definition of law enforcement officer.

As to the plaintiffs’ negligence claims, the first question is whether such a claim “aris[es] out of” the alleged assault, battery, and/or false imprisonment by the marine guards. Even though the claim is worded in terms of negligence, 28 U.S.C. § 2680(h) bars any claim “arising out of” these intentional torts. Several courts have emphasized the significance of the language used. Congress could have barred only claims for assault, but instead barred all claims arising out of assault. See, e.g., Collins v. United States, 259 F.Supp. 363, 364 (E.D.Pa.1966).

Generally state law must be looked to in order to determine whether a plaintiff’s claim constitutes a cause of action for negligent conduct. This' is so since the FTCA applies “the law of the place where the act or omission occurred.” 28 U.S.C. § 1346(b). However, to the extent that the issue goes to the applicability of the FTCA, federal law applies. In Ramirez v. United States, 567 F.2d 854 (9th Cir.1977) (en bane), the court was called upon to decide whether a government physician’s failure to warn constituted a “misrepresentation,” because claims arising out of misrepresentation are barred under the FTCA as are claims arising out of assault. 28 U.S.C. § 2680(h). The court stated: “Questions of interpretation under the exclusion provisions [of the FTCA] are controlled by federal law.” 567 F.2d at 856.

In interpreting the “discretionary function” exception to the FTCA found in 28 U.S.C. § 2680(a), the United States Supreme Court has held: “[W]e think it improper to limit suits by federal prisoners because of the restrictive state rules of immunity. Whether a discretionary function is involved is a matter to be decided under 28 U.S.C. § 2680(a), rather than under state rules relating to political, judicial, quasi-judicial, and ministerial functions.” United States v. Muniz, 374 U.S. 150, 164, 83 S.Ct. 1850, 1858, 10 L.Ed.2d 805 (1963).

Therefore, in interpreting the “arising out of” language in 28 U.S.C. § 2680(h), I must look to federal law for guidance rather than to the law of Alaska. A number of federal courts, both at the district court level and at the court of appeals level, have addressed this issue. However, so far as I am aware, there are no reported decisions directly on point out of either the Ninth Circuit or out of district courts within the Ninth Circuit. For guidance then I must look to other circuits.

The majority rule appears to be that where a claim alleges negligence by a government official in failing to properly control or supervise another government employee, who in turn commits an intentional tort, even the negligence claim is barred because it “arises out of” the intentional tort for which suit is prohibited by 28 U.S.C. § 2680(h). E.g., Naisbitt v. United States, 611 F.2d 1350 (10th Cir.1980) (suit barred where allegation was that government negligently failed to supervise and curtail two airmen who committed a series of rapes and murders); Hughes v. Sullivan, 514 F.Supp. 667 (E.D.Va.1980) (suit barred where allegation was that government, with knowledge of indecent conduct on part of postman, negligently retained postman on his route where he took indecent liberties with infant plaintiffs), aff'd, 662 F.2d 219 (4th Cir.1981); see also Panella v. United States, 216 F.2d 622 (2d Cir.1954) (dictum) (suit against government on negligence theory would be barred where subsequent assault was committed by government employee). These courts make a distinction based on whether the tortfeasor is a government employee or not. Suit is barred only in the former case. When the tortfeasor is a nonemployee, suit against the government for negligence is allowed. See, e.g., Naisbitt, 611 F.2d at 1356.

The Third Circuit has adopted the opposite view, permitting negligence suits against the government even where the tortfeasor was a government employee. Quinones v. United States, 492 F.2d 1269 (3d Cir.1974) (suit for negligent maintenance of personnel records permitted where government subsequently disseminated inaccurate information to prospective employers causing injury to reputation; court held claim was not one “arising out of” defamation which would be prohibited); Gibson v. United States, 457 F.2d 1391 (3d Cir.1972) (suit for failure to exercise due care for safety of instructors in job training program permitted where trainee subsequently attacked the instructor).

The rule in the Fifth Circuit is not entirely clear and the few related opinions do not satisfactorily establish that court’s position. See Underwood v. United States, 356 F.2d 92 (5th Cir.1966) (court cited Panella for proposition that § 2680(h) bars claims for assaults by government agents which the government negligently fails to prevent, but permitted suit where airman had killed his former wife; no discussion of why airman was not “government agent”); United States v. Shively, 345 F.2d 294 (5th Cir.) (court disallowed suit because, under state law, government negligence in issuing weapon did not proximately cause shooting injury by sergeant; court then “also conclude[d]” that the claim did “arise out of” the assault and was therefore barred), cert. denied, 382 U.S. 883, 86 S.Ct. 177, 15 L.Ed.2d 124 (1965); Fair v. United States, 234 F.2d 288 (5th Cir.1956) (suit in negligence permitted where plaintiff claimed that government had promised to notify plaintiff’s decedent when air force officer was to be released from hospital, but did not so notify, and officer subsequently shot plaintiff’s decedent; § 2680(h) not discussed).

Other circuit courts, including the Ninth Circuit, appear not to have specifically addressed the question. The Ninth Circuit has permitted suit for negligence against the government where the subsequent assault was by a non-employee, Jablonski v. United States, 712 F.2d 391, 395 (9th Cir.1983), but the court has not faced the government employee situation.

Although the Ninth Circuit has not interpreted the “arising out of” language in 28 U.S.C. § 2680(h) in the context of a subsequent assault, battery, or false imprisonment by a government employee, it has interpreted the phrase in the context of the exceptions for misrepresentation and defamation. The court has sometimes allowed suit and sometimes precluded suit, depending upon the particular facts. See, e.g., S.A. Empresa de Viacao Aerea Rio Grandense (Varig Airlines) v. United States, 692 F.2d 1205 (9th Cir.1982) (court permitted suit for negligent inspection of airplane plans, holding that claim arose from negligent inspection rather than from any ensuing misrepresentation in resultant certificate), rev’d on other grounds, — U.S. -, 104 S.Ct. 2755, 81 L.Ed.2d 660 (1984); Hoesl v. United States, 629 F.2d 586 (9th Cir.1980) (per curiam) (where plaintiff was suspended from his job based on psychiatric report, suit barred under libel and slander exception despite argument that cause of harm was negligently conducted psychiatric exam).

Some of the cases following the majority rule which would bar the plaintiffs negligence claim in the present case may be distinguished. In several of the cases, the only allegation of negligence was a general “failure to supervise” which, it was argued, resulted in the subordinate employee committing an assault. In these cases, the courts frequently noted that the separate and independent acts of the intentional tortfeasor were intervening forces of such magnitude as to minimize or sever the connection between the government’s alleged negligence and the resulting injury. See, e.g., Naisbitt, 611 F.2d at 1356, Hughes, 514 F.Supp. at 670. In a Third Circuit ease permitting suit, the court based its decision in part on its observation that

The attack upon [the plaintiff] was a foreseeable consequence of the Government’s failure to exercise due care under the circumstances and, therefore, it is not such an intervening act as will sever the necessary causal relation between the negligence and [the plain tiffs] injuries____ Under such circumstances, the attack was not an intervening act and the tort did not arise out of the assault and battery. It had its roots in the Government’s negligence.

Gibson, 457 F.2d at 1395 (emphasis in original).

In the case at bar, the plaintiffs do not merely allege a general failure on the part of government officials to supervise the marine guards. Instead, the claim is that higher government officials failed in their specific responsibility to notify the guards that civilian workers would be in the restricted area. This allegation of specific acts or omissions by higher officials is quite separate from allegations of assault committed by the marine guards. This fact situation distinguishes the case before me from many of the cases in which suit was barred.

The Alaska Supreme Court, when faced with a similar provision in Alaska’s government claims statute, Alaska Stat. § 09.50.-250, turned to federal decisional law interpreting 28 U.S.C. § 2680(h) for guidance. The Alaska court discussed and evaluated the cases on both sides of the question, and adopted the Third Circuit’s position permitting suit as representing the “better reasoned” line of cases. Zerbe v. State, 578 P.2d 597, 600 (Alaska 1978). In Zerbe, a state court judge had not been informed that a complaint against Zerbe had been dismissed, so the judge issued a warrant for Zerbe’s arrest. Zerbe was arrested, taken to jail, and detained. His complaint alleged negligence by state employees in failing to inform the judge of the dismissal.

The court permitted his suit, holding that “it was negligent record keeping, rather than false imprisonment, which caused Zerbe’s injuries.” Id. at 601. Although the Ninth Circuit looks to federal rather than state law in interpreting the FTCA exclusion provisions, and thus Zerbe is not binding, it does represent a reasoned evaluation of the arguments and prior case law on both sides of the issue. See also Note, Section 2680(h) of the Federal Tort Claims Act: Government Liability for the Negligent Failure to Prevent an Assault and Battery by a Federal Employee, 69 Geo.L.J. 803 (1981) (advocating abandonment of the employee/nonemployee distinction and arguing in favor of permitting suit).

In summary, I conclude the plaintiffs’ suit should be allowed. Given no Ninth Circuit case on point, and a conflict among the other circuits, I should follow the reasoning which best serves the policy of the statute. Given the specific facts in this case, in which the plaintiffs allege a specific failure to notify by higher government officials, I believe the majority rule discussed earlier may not necessarily be applicable. Moreover, other cases in which the majority rule was applied to bar suit can be distinguished on their facts.

If suit is permitted, the plaintiffs will still have to establish a case in negligence under Alaska state law. See 28 U.S.C. § 1346(b). The government, in its Supplemental Brief on Negligence Standards Under State Law, argues in part that it had no duty of care towards the plaintiffs, and therefore that the suit should be dismissed. I conclude the existence or nonexistence of a duty of care is irrelevant to the initial decision as to whether suit is barred by 28 U.S.C. § 2680(h). Rather, I think the duty of care issue is one to be resolved at trial, along with other questions of breach of duty, proximate cause, and injury to plaintiffs.

For the reasons stated I conclude that plaintiffs’ first claim for relief, based on the “investigative or law enforcement officers” provision, must be dismissed on the government’s motion. I conclude that the government’s motion to dismiss the plaintiffs’ second claim, grounded in negligence, must be denied.

IT IS SO ORDERED.


source: Caselaw Access Project

author: ENRIGHT, District Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff, v. Eddie L. MAY, et al., Defendants.
    Civ. No. 83-0214-E.
    United States District Court, S.D. California.
    Oct. 31, 1984.
    Nancy Morgan, Trial Atty., Tax Div., Dept, of Justice, Washington, D.C., for plaintiff.
    A. Lee Estep, San Diego, Cal., for defendants.
   MEMORANDUM DECISION

ENRIGHT, District Judge.

BACKGROUND

This is an action by the United States to recover tax deficiencies owed for the years 1969 and 1970 by defendants Eddie L. May and his former wife, Margarita Woolf.

In a Memorandum Decision dated June 20, 1984, this court granted summary judgment in the government’s favor on several claims. The court held that the United States is entitled to judgment against Eddie May in the amount of $105,289.01 as a result of tax deficiencies. Margarita Woolf was held to owe $52,257.98, plus interest, on her tax deficiencies. In light of these deficiencies, the United States was held to possess tax liens on all property owned by May and Woolf. Finally, as to the property known as “Hidden Glen Ranch,” conveyed by Eddie May to his second wife, Efigenia May, the court held that the conveyance was fraudulent and should be set aside. The court permitted the foreclosure of the tax lien on the ranch property and ordered that if the proceeds of the sale of the ranch were insufficient to satisfy May’s liability, the United States was entitled to a deficiency judgment against him.

At present, the court has before it an attempt by the United States to satisfy Margarita Woolf’s tax liability out of property formerly owned by Woolf, located at 3705 Fairmount Avenue, San Diego, California, and conveyed to Woolf’s half brother, J. deJesus Munoz. The government moves for summary judgment in its favor setting aside the transfer of that property as fraudulent, foreclosing Woolf’s interest in that property by judicial sale, and granting the United States a deficiency judgment in the event the proceeds from the sale of the property are insufficient to satisfy Woolfs obligation to the government.

FACTS

The facts relating to the transfer of the Fairmount property from Woolf to Munoz are as follows. The property was originally purchased in 1977 by Margarita Woolf and J. deJesus Munoz as tenants in common. After an assessment in 1977 by the Secretary of the Treasury for the deficiency on her 1969 federal income tax return, Margarita Woolf stipulated through counsel to a determination of tax deficiency in the amount of $38,083.18 in the United States Tax Court. This amount was never paid, however, and, as noted, this court has recently held that Woolf owes $52,257.98 to the United States.

Margarita Woolf transferred her interest in the property to her half brother and co-owner on February 8, 1979, seven days after she stipulated to the deficiency in the tax court. The transfer was accomplished by quitclaim deed and the deed recited that the transfer was for no consideration.

Despite the language of the deed, however, there is some confusion as to the consideration for the transfer. Neither Woolf nor her half brother appear certain as to what the consideration was, if anything. Early in her deposition, Woolf states that there was no consideration for the transfer. Later, she indicates that the property may have been transferred in exchange for forgiveness of all her prior debts to her brother, unspecified in amount. Still later, Woolf states that she had received a $5,000 loan from Munoz which he forgave as consideration, but that that was the only debt forgiven. Finally, on her 1979 tax return Woolf states that she received $23,800 for the sale of her share of the property to Munoz.

The following exchange is indicative of the ambiguity surrounding the transaction:

Q. So you just received that $5,000. Was there any other cancellation of indebtedness? I mean, the other money that you owed your brother, did he cancel that indebtedness?
A. We have adjusted as we go along, because he did help me and he has sent me money. Whenever I need it, he sent me money.
Q. But you don’t have any more cash. You never received any more money on the sale of the Fairmount Street?
A. Not on that property, no.

(Questioning of Ms. Woolf by Ms. Nancy Morgan, Tax Division, United States Department of Justice).

In his deposition, Woolf’s half brother Munoz testified that he paid Woolf for the Fairmount property. He testified that the payment he made to her was in the form of bank drafts and cash. He stated in his deposition that he could not remember the exact amount, however:

Q. And not to repeat, how much did you pay her?
A. Exactly, I would not be able to say.
Q. $10,000?
A. No. She can give you more exact amount than I can.
Q. I’m just asking for your recollection. Is it $20,000, can you approximate?
A. No. No, I can’t give you an exact amount.

(Deposition questioning of Mr. Munoz by Ms. Karen Stifter, Tax Division, United States Department of Justice).

At the time of the transfer from Woolf to May, both deponents indicate that the fair market value of the property was $40,-000. Munoz added roughly $20,000 in improvements to the property during this period.

DISCUSSION

It is this court’s conclusion that the government’s motion for summary judgment should be granted.

California has adopted the Uniform Fraudulent Conveyances Act, Cal.Civ.Code §§ 3439 to 3439.12 (West 1970). Under Section 3439.04 of the California Civil Code, a conveyance made by

a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made ... without a fair consideration.

As is evident from the statutory language itself, no intent to defraud creditors by way of the transfer need be shown under this section. Headen v. Miller, 141 Cal.App.3d 169, 172, 190 Cal.Rptr. 198 (1983).

Under this section, the conveyance of the Fairmount Avenue property from Woolf to Munoz must be set aside as fraudulent. After the conveyance of her interest in the property, Woolf had no assets and an indebtedness of $35,000, according to her deposition testimony. The conveyance thus rendered Woolf insolvent. Cal.Civ.Code § 3439.02(a) (West 1970); TriContinental Leasing Corp., Inc. v. Zimmerman, 485 F.Supp. 495, 498 (N.D.Cal.1980).

Further, while there is some uncertainty as to the consideration Woolf received for the property, it is this court’s view that there was no fair consideration as it is defined in the Act, Cal.Civ.Code § 3439.03 (West 1970), as a matter of law.

Fairness of the consideration received is to be viewed from the creditor’s perspective. Patterson v. Missler, 238 Cal.App.2d 759, 766, 48 Cal.Rptr. 215 (1965). Woolf has testified, and the deed supports this testimony, that she received no consideration for the transfer. Alternatively, she has testified that she received $5,000 in the form of debt forgiveness from her half brother. Her tax return for the year in question would suggest that she received $23,800, but there is no supporting evidence in her testimony that she received that amount, nor can her brother remember paying that sum to her for the property. There is some suggestion that the transfer was in exchange for a cancellation of past indebtedness to Munoz accumulated over the years 1970 to 1979 and amounting to in excess of $56,000.

This “consideration” is discovered for the first time in Woolf’s response to the present motion, however: She never referred to the cancellation of indebtedness in this amount as consideration in her deposition testimony and even asserted that $5,000 debt to Munoz that was also allegedly cancelled in exchange for the property was the only debt forgiven in exchange for the transfer.

Summary judgment is properly granted only when there is no genuine issue of material fact and the moving party is entitled to judgment in its favor as a matter of law. Retail Clerks Union Local 648, AFL-CIO v. Hub Pharmacy, Inc., 707 F.2d 1030, 1033 (9th Cir.1983). But the fact that there is confusion in defendants’ own minds about the consideration for the transfer does not preclude summary judgment in the present case; a party cannot create a genuine issue of fact by contradicting his own testimony. Mesirow v. Pepperidge Farm, Inc., 703 F.2d 339, 344 (9th Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 83, 78 L.Ed.2d 93 (1983); Lopez v. General Motors Corp., 697 F.2d 1328, 1333 (9th Cir.1983).

Thus, the evidence before the court establishes that the conveyance from Woolf to Munoz was fraudulent under Section 3439.03 and should be set aside. In addition, this conveyance is also fraudulent under Section 3439.04 of the California Civil Code which provides that conveyances made with actual intent to defraud present and future creditors are void as to such creditors.

As discussed in the earlier Memorandum Decision in this case, proof of actual intent to defraud is difficult to obtain, therefore proof of such intent is generally made through circumstantial evidence. United States v. Bertie, 529 F.2d 506, 508 (9th Cir.1976).

Certain “badges of fraud” are viewed as particularly indicative of fraudulent intent. The numerous badges of fraud in the instant transaction lead this court to conclude that the transfer was made with fraudulent intent. In so holding, the court looks to

1) the close personal relationship between the transferor Woolf and the transferee Munoz,
2) the fact that Woolf was rendered insolvent by the transaction,
3) the inadequacy of the consideration, if any,
4) the lack of documentation of the alleged loans, and
5) the fact that the lawsuit was imminent at the time of transfer.

Bertie, 529 F.2d at 509, n. 5. In addition, it is worth noting that Woolf continued to reside on the property with her daughter after the alleged transfer, paying only nominal rent and receiving full support from Munoz. This, too, is a badge of fraud. Id. at 509.

CONCLUSION

Upon due consideration of the parties’ memoranda and exhibits, the arguments advanced at the hearing, and for the reasons set forth herein, the court grants plaintiff’s motion for summary judgment.


author: WILLIAM T. HART, District Judge.

text:
    Emanuel M. GLAROS, Plaintiff, v. H.H. ROBERTSON COMPANY, a Pennsylvania corporation, and Inryco, Inc., a Delaware corporation, Defendants.
    No. 79 C 1803.
    United States District Court, N.D. Illinois, E.D.
    Nov. 14, 1984.

      William J. Harte, Lawrence Stanner, Chicago, Ill., for plaintiff.
    William Marshall, Nate Scarpelli, Merriam, Marshall & Bicknell, William Marshall Lee, William Marshall Lee, Jr., Lee & Smith, Chicago, Ill., for defendants.
   memorandum: opinion AND ORDER

WILLIAM T. HART, District Judge.

Plaintiff Emanuel M. Glaros filed this action against defendants H.H. Robertson Company (“Robertson”) and Inryco, Inc. (“Inryco”), alleging that they had willfully infringed U.S. patent No. 3,535,844 issued to him on October 27, 1970 (the “Glaros patent”) covering a type of structural panel (the “Glaros panel”) used in the construction of steel frame buildings. The defendants have responded by denying the charge of infringement and asserting that the Glaros patent is invalid. During the pendency of this action before Judge Roszkowski, the defendants moved for summary judgment, arguing that the prior art anticipated the Glaros patent, 35 U.S.C. § 102, and, alternatively, rendered it obvious. 35 U.S.C. § 103. Judge Roszkowski denied the motion, as questions of fact existed regarding the scope and content of the prior art, which could only be resolved with the aid of expert testimony. Glaros v. H.H. Robertson Co., 79 C 1803, Slip at p. 5 (N.D.Ill. Sept. 17, 1981). After further discovery and the entry of a final pretrial order on April 22, 1982, the case was set for trial before Judge Roszkowski.

After transfer to this Court’s trial calender, the parties requested further discovery. Discovery reopened for a short period on September 14, 1983, pursuant to an agreed schedule. The parties supplemented the pretrial order and the case was returned to the trial calendar on December 23, 1982. On February 22, 1984, the defendants filed a renewed motion for summary judgment on the issue of obviousness, based on the deposition testimony of plaintiff’s expert, Dr. Larry D. Luttrell. That motion is the matter currently before the Court.

In light of the parties’ varying views on the application of the standards for summary judgment contained in Fed.R. Civ.P. 56 to the issue of obviousness, some preliminary discussion is in order. The United States Court of Appeals for the Federal Circuit has repeatedly accepted the propriety of granting summary judgment on the issue of obviousness. E.g., Peterson Mfg. Co. v. Central Purchasing, Inc., 740 F.2d 1541, 1546 (Fed.Cir.1984); Union Carbide Corp. v. American Can Co., 724 F.2d 1567, 1571 (Fed.Cir.1984). Whether an invention is or is not obvious in light of the prior art is a legal question to be determined by the Court. Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1535 (Fed.Cir.1983).

This legal determination is based upon the subsidiary factual inquiries identified in Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966).

Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented. As indicia of obviousness or nonobviousness, these inquiries may have relevancy.

383 U.S. at 17, 18, 86 S.Ct. at 693, 694. The Federal Circuit has repeatedly reaffirmed the necessity of pursuing these factual inquiries to provide a basis for determining obviousness. See, e.g., Jones v. Hardy, 727 F.2d 1524, 1528 (Fed.Cir.1984). The Federal Circuit has also repeatedly emphasized the importance of the inquiry into secondary considerations, such as the commercial success of the invention and the prior failure of others, as the strongest precaution against judging an invention from the perspective of 20/20 hindsight. See, e.g., Connell v. Sears, Roebuck & Co., 722 F.2d 1542, 1549 (Fed.Cir.1983); W.L. Gore & Associates, Ltd. v. Garlock, Inc., 721 F.2d 1540, 1553 and 1555 (Fed.Cir.1983).

Glaros has chosen to rely almost exclusively upon such secondary considerations in his opposition to the defendants’ motion. Since Glaros does not take issue with the defendant’s presentation of the remaining three predicate inquiries (with one important exception discussed below), the defendants’ evidence on these issues is uncontroverted. Glaros does present the opinion of Dr. Luttrell that the Glaros patent was not obvious in light of the then available prior art. But this conclusory opinion as to the legal issue to be decided sheds no light on the underlying factual issues, and so cannot create a material issue of fact precluding summary judgment. Peterson Mfg., 740 F.2d at 1547-48. See also Union Carbide, 724 F.2d at 1573. Therefore, the Court turns to these factual inquiries, allowing the plaintiff the benefit of all favorable inferences, as must be done on a motion for summary judgment. The uncontroverted evidence presented by the parties on these issues reveals the following.

THE GLAROS PATENT

The Glaros patent contains three claims relevant to this action. First, the Glaros patent claims a unitized structural panel composed of two sheets of some rigid material (normally sheet metal) or “skins,” forming “a box-like configuration” and filled with an insulating material, or “insulant,” which adheres to these exterior skins (see Figure 1). Both side edges of each panel must form a weathertight interlocking joint when combined with adjoining panels. To provide such an interlock, the Glaros panel utilizes a “double tongue and groove” joint in which each side edge contains both a “tongue” and a “groove” that engage the corresponding tongue and groove of the adjoining panel. The Glaros tongue is a “boxed tongue.” Rather than a tongue made solely of a single thickness of the sheet metal by making a single bend in the skin, this boxed tongue is made with a double bend, so that it consists of two thicknesses of the sheet metal skin reenforced by the insulant enclosed within the “box.” This claim, Claim No. 1, comprises the basic invention. By virtue of its unitized construction this panel allows for one step installation onto the supporting framework of a building. Its double tongue and groove interlocking joint forms a weather-tight joint between panels.

The Glaros patent lists as its second claim a panel with a particular version of this double tongue and groove interlock. In this version, the front and back skins are “offset” so that the tongue on each side edge protrudes beyond the sides of the groove on that same side (see Figures 2 and 3). The purpose of this modification is twofold. First, a fastener, such as a bolt or screw, may be inserted through the back skin and the elongated tongue that results from the offset. When interlocked with the corresponding groove of the panel that has been fastened to the building’s frame, the protruding tongue of the adjoining panel hides the fastener, providing a smooth front. Second, and perhaps more important, the offset eliminates any direct contact between the front and back sheets of the structural panel, improving the insulating properties of the panel. Since the front and back sheets of the panel are ordinarily made from some type of sheet metal, which freely conducts heat or cold, any direct contact allows heat or cold to pass more easily through a wall of panels.

The third relevant claim of the Glaros patent is a panel, as described in Claim No. 1 and filled with rigid foam insulant. Use of rigid foam insulant allows one step fabrication of the Glaros panel by applying liquid insulant to the metal skins. The liquid then expands to fill the interior of the panel.

THE PRIOR ART

The defendants rest their obviousness argument on two alternative panel designs, which became part of the prior art in 1936 and 1947, respectively. They suggest that either of these panels, when modified to account for subsequent advances in metal-forming technology and the invention of rigid foam insulants, rendered the Glaros patent obvious. The later of these enhancements in the art occurred in 1963; roughly five years prior to the date Glaros “invented” his panels.

The first panel design is disclosed in U.S. Patent 2,047,154 issued during 1936 to Carl J. Pimsner (alternatively the “Pimsner patent” or the “Pimsner panel”). Pimsner’s panel was designed to insulate devices such as industrial ovens, driers or refrigerators which maintain a high temperature differential between their interior and exterior. The Pimsner patent discloses a panel composed of two sheet metal skins joined by narrow metal cross members to form a box-like configuration filled with a loose insulant such as rock wool or fiberglass. The Pimsner panel side edges are formed in an offset double tongue and grove interlock configuration (see Figure 4). The tongue portions of the Pimsner panel interlock are not “boxed tongues” as are Glaros’, but rather tongues composed of a single thickness of sheet metals. The front and back skins of the Pimsner panel are also offset to provide both a space through which a fastener may be inserted and a gap to prevent direct heat exchange between the front and back skins. However, the offset is created by recessing rather than protruding the tongue of each side edge.

The second panel noted by the defendants is the Fenestra Type C Building Panel (the “Fenestra panel”). This unpatented design became part of the prior art when produced and marketed by the Detroit Steel Products Company in 1947. The Fenestra panel consists of two sheet metal skins formed into a box-like configuration by pressing the sheets together at the panel’s side edges (see Figures 7(A)-(C)). Although the panel is filled with loose insulant, as is the Pimsner panel, it does not require cross members to hold together the front and back skins because the skins themselves are joined at the side edges. The side edges each possess a tongue and groove, again forming a double tongue and groove interlock with the adjoining panels. Since the front and back skins of the Fenestra panel are pressed together to form a single side edge, the tongue is a boxed tongue. The front and back sheet metal skins are not offset, so that the tongue and groove are even. However, one method illustrated for installing Fenestra panels is by inserting a fastener through the back side of the groove (see Figure 7(D)). Apparently then, there is sufficient clearance without any offset to allow attachment of a fastener, although the fastener must pass through two thicknesses of sheet metal. Despite the lack of any offset, the Fenestra panel design addresses the problem of heat transfer between the front and back skins, by inserting a strip of asbestos felt between the two pieces of sheet metal before they are pressed together.

The Fenestra panel also embodies an advance in metalworking design that took place in approximately 1940. In that year the American Iron & Steel Institute published its light gauge cold-formed design manual (the “Steel Institute manual”). This manual allowed design engineers to ascertain for a given metal form, such as a boxed tongue, a numerical measure of its strength. Hence, without performing tests, a design engineer could compare the relative strengths of a single thickness sheet metal tongue of the sort embodied in Pimsner’s panel to the type of boxed tongue utilized in the Glaros panel. Further, the sheet metalforming art developed considerably between the time Pimsner’s patent issued and the time of Glaros’ invention. Dr. Luttrell questioned Pimsner’s ability to form a boxed tongue, but admitted that by the 1960’s, such configurations could easily 'be formed from sheet steel. The Fenestra panel is formed into such a boxed tongue configuration.

The last prior art reference advanced by the defendants is U.S. Patent No. 3,290,845 issued to Marvin K. Snyder on December 13, 1966 (the “Snyder patent” or “Snyder panel”). The Snyder patent also discloses a panel comprised of two sheet metal skins placed in a box-like configuration and filled with insulant. Snyder utilizes the same rigid foam insulant claimed by Glaros to form a unitized panel. The side edges of the Snyder panel do not resemble those of Glaros and Pimsner, and will not be discussed except to note that they further evince advances in the metalforming art (see Figure 6).

THE DIFFERENCES

(a) Pimsner

The Glaros panel differs from the Pimsner panel in several respects. First, the outer skins of the Glaros panel form a unitized panel with the rigid foam insulant rather than a hollow shell filled with loose insulating material. However, rigid foam had not been invented in 1936. Although Dr. Luttrell had reservations as to the ease of fabrication, he agreed that the loose insulant utilized by Pimsner could be replaced with a rigid foam insulant on any date after rigid foam filler had been disclosed by Snyder in 1963.

Second, the side edges of the Pimsner panel utilize a single thickness tongue rather than a boxed tongue. Again, in 1936 it is doubtful that Pimsner could have fabricated boxed tongues had he desired to or been aware of their increased strength. However, by 1963 the ability to fabricate such boxed tongues had been developed and the Steel Institute’s manual described the increased strength of a boxed tongue in relation to a single thickness tongue.

Third, although the Pimsner panel utilized an “offset” as did the Glaros panel, the offsets are not the same. Pimsner’s offset provides a space for installing a hidden fastener and also reduces heat transfer between the panels’ skins, as does the Glaros offset. Yet filling the Pimsner panel with rigid foam rather than loose insulant poses difficulties for engaging the tongues and grooves in the Pimsner offset configuration. Dr. Luttrell explained that the Pimsner panel could be interlocked to an adjoining panel only when the nonboxed side of a groove could push past or through the loose insulant along its corresponding tongue to engage its corresponding tongue. Rigid foam insulant cannot be displaced as can loose insulant, so that it impedes any interlock.

In contrast to the Pimsner offset, the Glaros offset poses no such difficulty when filled with a rigid insulant. By protruding the tongue rather than the groove of the side edge, Glaros alleviates this problem. In the Pimsner design, that portion of the tongue over which the side of the groove must pass to engage the interlock is an interior surface edge of the panel. In the Glaros design, this edge has become an exterior surface, so that it does not contact the insulant filling the interior of the panel,

(b) Fenestra

The Fenestra panel utilizes loose insulant as does Pimsner, since rigid foam insulant was not yet available when it was designed. Due to the absence of any offset, filling the Fenestra panel with rigid foam poses no new difficulties as to the side edge interlock. The Fenestra tongues are boxed, as are Glaros’. The Fenestra panel also utilizes a hidden fastener. The Fenestra panel differs chiefly from the Glaros panel by virtue of the lack of any offset. As noted above, the Fenestra design deals with the heat transfer problem in a different manner.

THE LEVEL OF ORDINARY SKILL

Dr. Luttrell testified that during the early 1960’s the “vast majority of people in the industry, the light gauge cold-formed industry, ... probably were sort of half artists and half engineers.” See deposition transcript pp. 172-177. He described artists as those “with some understanding of sheet metal work, though not a great deal of engineering abilities to deal with it.” However, by 1963 structural panels had become “a fairly widely engineered product,” so that the ordinary “structural type engineers working on this problem” were graduate engineers with bachelor’s degrees and three or four years of experience. Although “relatively few engineers really understood the business of calculating these strengths [of various tongues and grooves],” and so might not know the full extent of various changes, one with ordinary skill would have appreciated the increase in strength achieved by “boxing” a tongue and groove interlock.

SECONDARY CONSIDERATIONS

To avoid creation of a material issue of fact precluding summary judgment, the defendants have not contested Glaros’ evidence regarding their failure to design a successful structural panel and the subsequent commercial success of their allegedly infringing panel. That evidence demonstrates the following. While defendant Inryeo began “exploring” foam insulated structural panels as early as 1962, Inryco seriously pursued development only after 1974. Since Glaros filed his patent application during 1968, evidence of any developmental failures or success by Inryco is irrelevant.

Beginning in 1961, defendant Robertson undertook a significant program to develop a unitized structural panel. Robertson engineers unsuccessfully pursued a number of alternative panel designs, until November of 1967, when they selected one for a pilot manufacturing program. Robertson engineers ultimately choose a panel whose side edge possessed a double tongue and groove interlock. This double tongue and groove consisted of two single thickness tongues with no offset to reduce heat transfer.

In February of 1968, Robertson personnel visited a trade show in Chicago where Glaros was exhibiting his panel design. Soon after, a copy of Glaros’ brochure found its way to Robertson’s development team. Robertson then scrapped its plans for pilot production of the previously selected panel. Instead, Robertson began to produce a panel whose side edge contained an offset boxed tongue and groove design (it is unclear whether this interlock is a single or double tongue and groove). In 1970 and again later during the 1970’s, Robertson modified the side edge configuration of its panels, moving closer to Glaros’ design. Each of these designs has enjoyed commercial success.

The Glaros panel enjoyed a lesser degree of commercial success than did Robertson’s panel. In 1970, annual sales of the Glaros panel exceeded one million dollars and were increasing. Wheeling-Pittsburgh Steel Company (W-P) marketed the panel jointly with Glaros Products, Inc. until 1972, when W-P acquired exclusive rights to the Glaros panel. W-P sold roughly four to five million dollars worth of Glaros’ panels from 1972 through 1974, when it stopped selling panels with Glaros’ design due to unspecified problems. Glaros reacquired the rights to his patent in August of 1976. Since then he has sold no panel embodying his design and had granted no licenses to others.

OBVIOUSNESS

Under the patent statute, ‘ideas’ are not patentable; claimed structures and methods are. Analysis properly begins with the claims, for they measure and define the invention. Further, each claim must be considered as defining a separate invention (citations omitted).

Jones v. Hardy, 727 F.2d 1524, 1528 (Fed.Cir.1984).

The defendants maintain that Glaros’ design is no more than an update of the Pimsner panel. The defendants note that the invention claimed by Glaros consists of: (i) two sheet metal skins unitized with rigid insulant filler; (ii) double tongue and groove side edge interlocks; (iii) with boxed tongues; (iv) an offset between the tongue and the groove to reduce heat transfer; and (v) allow installation of a hidden fastener. They contend that the Pimsner patent disclosed a panel with (i) double tongue and groove side edge interlocks with (ii) an offset to reduce heat transfer, (iii) which would allow installation of a hidden fastener. Take Pimsner’s design, box the tongues and substitute rigid foam for loose insulant, they argue, and you have the Glaros design.

Glaros all but concedes that in 1963, substituting foam for loose insulation involved no inventiveness. After the Snyder patent issued in 1963, it was obvious to apply rigid foam to two sheet metal skins to form a unitized structural panel. Hence Claim No. 3 is invalid as obvious.

Boxing Pimsner’s single thickness tongues to increase the strength of the side edge interlock would also have been obvious during this period. Thus, Claim No. 1 of the Glaros patent is also invalid, for it discloses only the boxed double tongue and groove interlock on a unitized structural panel. As the Fenestra panel illustrated, boxed double tongue and groove interlocks were well known in the structural panel art long before the 1960’s. The Steel Institute manual disclosed widely both the existence of such a configuration and its relative utility, as opposed to that of a single thickness tongue and groove.

The result differs as to Claim No. 2 of the Glaros patent. That claim discloses all five of the elements set forth by the defendants, including the offset created by Glaros’ protruding tongue configuration. The defendants are mistaken when they assert that the panel described in Claim No. 2 of Glaros is simply Pimsner with boxed tongues and rigid foam insulant. It is more.

To establish obviousness, the prior art must contain more than merely the individual features of the claimed invention. Rather, the prior art must “suggest the desirability and thus the obviousness, of making the combination.” Lindemann Maschinenfabrik GmBH v. American Hoist & Derrick Co., 730 F.2d 1452, 1462 (Fed.Cir.1984). Dr. Luttrell stressed the problem created by filling the Pimsner panel with solid rather than loose insulant. Since rigid foam insulant impedes the Pimsner tongues and grooves from engaging, it is not clear that one with ordinary skill in the panel art would have attempted to enhance Pimsner’s design in this manner. Where a design “was contrary to the expectations and expectations of the art, the structure effectuating it would not have been obvious to those skilled in the art.” Schenck v. Nortron Corp., 713 F.2d 782, 785 (Fed.Cir.1983). In light of the difficulties in engaging Pimsner’s. offset if filled with rigid foam, combining an offset tongue and groove interlock with rigid foam insulant may have been counter-intuitive and thus nonobvious to those in the structural panel art.

Robertson’s own failure to develop the design they now suggest was obvious suggests that these enhancements to Pimsner’s design were nonobvious. Robertson’s failure cannot be given undue weight, for Robertson’s engineers may not have run across the Pimsner design. However, the standard for determining obviousness is objective, focusing upon the inventor, possessing ordinary skill in the art, “working in his shop with the prior art references — which he is presumed to know — hanging on the walls around him.” Union Carbide, 724 F.2d at 1576, quoting In re Winslow, 365 F.2d 1017, 1020 (CCPA 1966). Although Robertson’s failure is thus at best equivocal evidence of nonobviousness, on the defendants’ motion for summary judgment Glaros is entitled to the most favorable inference from Robertson’s failure.

The defendants argue that the problem of engaging Pimsner’s tongue and groove joints that arises when rigid foam insulant is substituted for Pimsner’s loose insulant is easily solved by either of two methods. Foam insulant that impeded engagement could be routed out during installation, or could be blocked out from the critical area during the initial “foaming” of the panel (see Figure 8). Either solution is obvious, they contend. Even if it would be obvious to modify a Pimsner panel as suggested and the block or route out excess foam insulant, the result would not be the invention claimed by Glaros. A claimed invention is nonobvious if it “achieved more than a combination which any of the prior art references suggested, expressly or by implication.” In re Sernaker, 702 F.2d 989, 994 (Fed.Cir.1983). By protruding the tongue rather than the groove of the panel’s side edge to form his offset, Glaros eliminated the need to block or route out unwanted foam insulant. The metal skin that forms one side of the Glaros tongue blocks any foam insulant from impeding the tongue and groove interlock. Accordingly, the Glaros panel is not the functional equivalent of a Pimsner panel with boxed tongues and foam insulant. Glaros’ decision to protrude the tongue rather than recess it, has another function in addition to those achieved by Pimsner’s offset. There is no evidence in this record that this change in the offset was obvious in light of the prior art. To the contrary, Dr. Luttrell testified that the problem of rigid foam impeding Pimsner’s interlock would require “cleverness,” “ingenuity,” “another tack,” all of which denote a level of inventiveness or nonobviousness. See deposition transcript pp. 145, 233, 242-43, and 249-50.

IT IS THEREFORE ORDERED that the defendants’ motion for summary judgment is granted in part and denied in part. Claims 1 and 3 of United States patent number 3,535,844 issued on October 27, 1970 to plaintiff Emanuel M. Glaros are declared to be invalid as obvious in light of the prior art. The validity of Claim No. 2 is reserved for trial.

      . The defendants are to be complimented on a very thorough and lucid presentation of a complex and technical set of facts. Although lengthy briefs, as were submitted here, often become repetitive and unhelpful, the defendants have avoided these pitfalls with their clear and straightforward presentation.

      . In his surreply, Glaros belatedly raises the issue of whether the Pimsner patent is a part of the relevant prior art. See Lindemann Maschinenfabrik GmBH v. American Hoist & Derrick Co., 730 F.2d 1452, 1460 (Fed.Cir.1984). However, Glaros has failed to direct the Court to any evidence that the Pimsner patent is not relevant to "the particular problem with which the inventor was involved.” Union Carbide, 724 F.2d at 1572. To the contrary, Dr. Luttrell discussed at length the application of Pimsner’s teaching to the problem faced by Glaros.

      . Glaros argues that the analysis advanced by the defendants improperly focuses upon various elements of the claimed invention rather than the obviousness or nonobviousness of the invention as a whole. Glaros correctly defines the focus of the ultimate determination. Nonetheless, that determination cannot be made without some examination of individual differences between the prior art and the claimed invention. Such an inquiry is a proper aid for determining obviousness and is mandated by Graham v. John Deere, supra. Jones v. Hardy, 727 F.2d 1524, 1528 (Fed.Cir.1984); Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1537 (Fed.Cir. 1983).
      In his surreply, Glaros also incorrectly attempts to characterize the defendants’ argument as an impermissible “obvious to try" theory. See, e.g., Jones v. Hardy, 727 F.2d at 1530. The prior art cited by defendants clearly provides a motivation for making these enhancements to Pimsner as well as identifying the possible modifications. For example, the Steel Institute's manual does not simply identify boxed tongues in the abstract, but also teaches that this configuration adds strength to a tongue and groove interlock. The Snyder Patent does not simply disclose the existence of rigid foam as an insulant, but also teaches the utility of rigid foam in forming such a unitized panel.

      . This is not to say that some synergy is required. Although synergy is evidence of nonobviousness, the absence of some synergy is not dispositive. Kansas Jack, Inc. v. Kuhn, 719 F.2d 1144, 1150 (Fed.Cir.1983).

      . The Fenestra panel provides no support for the defendants’ argument on this point. Although its side edge does allow sufficient space to insert a hidden fastener, there is no real offset as in the Pimsner and Glaros panels, as evidenced by the different approach to the heat transfer problem taken in the Fenestra panel. Nonetheless, the Fenestra panel does indicate that the sheet metal forming a boxed tongue can be utilized to confine insulant away from the interlock.


author: THELTON E. HENDERSON, District Judge.

text:
    Don L. ANTHONY, Jr., Plaintiff, v. BASIC AMERICAN FOODS, INC., Defendant.
    No. C 84-1228 TEH.
    United States District Court, N.D. California.
    Nov. 15, 1984.

      Michael J. Tonsing, Asst. U.S. Atty., Marshall Salzman, Staff Atty., Dept, of Labor, San Francisco, Cal., William H. Berger, Dept, of Labor, Atlanta, Ga., for plaintiff.
    F. Bruce Dodge, Karl Olson, Morrison & Foerster, San Francisco, Cal., for defendant.
   ORDER

THELTON E. HENDERSON, District Judge.

In this action both parties have moved for summary judgment on the question of whether the defendant violated the Veterans Reemployment Rights Act. The motion was taken under submission by the Court without oral argument on November 5, 1984. For reasons discussed below, the Court holds that plaintiff is entitled, as a matter of law, to prevail on this question. The Court also denies defendant’s summary judgment motion on the question of whether its liability to plaintiff terminated with the sale of its Redwood City distributorship.

Discussion

The case turns on the interpretation of the Veterans Reemployment Rights Act (“The Act”), specifically 1) whether its protections extend to leaves for reservists as long as 4V2 months or whether it is limited to leaves of 3 months duration and 2) if there is no strict 3 month limit, was the plaintiff’s leave here nonetheless “unreasonable?”

1) Is there a three month limit on leaves of absence?

The relevant portions of the Act, 38 U.S.C. § 2021 et seq., are as follows: Section 2024(d), which refers to the rights of reservists and National Guardsmen, provides that

Any employee ... shall upon request be granted a leave of absence for the period required to perform active duty for training or inactive duty training in the Armed Forces of the United States. Upon such employee’s release from a period of such active duty for training or inactive duty training or upon such employee’s discharge from hospitalization incidental to that training, such employee shall be permitted to return to such employee’s position with such seniority status, pay and vacation as such employee would have had if such employee had not been absent for such purpose.

Section 2021(b)(3), also applicable to reservists and Guardsmen states that

Any person ... shall not be denied retention in employment or any promotion or other incident or advantage of employment because of any obligation as a member of a reserve component of the Armed Forces.

Defendant’s central argument is one of statutory construction. Admittedly, there is no express language in § 2024(d) which says that only a leave of absence for 3 months or less shall be granted. However, 2024(d) applies to employees not covered by 2024(c). Subsection (c) in turn provides that a reservist who is ordered to an initial training period of not less than 3 months shall be entitled to reemployment rights and benefits. Thus, defendant says, 2024(d) applies to short-term training periods; 2024(c) applies to periods over 3 months; and plaintiff’s 41/2 month leave was therefore outside the coverage of section (d).

Plaintiff says that by its express terms, the statute places no limit on the time, nature or frequency of training which will entitle reservists and . National Guardsmen to reemployment rights. The distinction between (c) and (d), plaintiff continues, is not based on length of training but rather the type of training. Section (c) refers to initial active duty for training; section (d) deals with active duty for training or inactive duty training.

The case law on this precise issue, despite the protestations of the parties, is not dispositive. Both sides find unwarranted significance from the fact that no court has either 1) upheld a leave over 3 months or 2) denied a leave over 3 months on the grounds that it was unauthorized by the statute. Basically, the issue has not been squarely confronted.

The strongest argument raised by the defendant is based on language from the Supreme Court’s opinion in Monroe v. Standard Oil Co., 452 U.S. 549, 101 S.Ct. 2510, 69 L.Ed.2d 226 (1981). There the Court was considering a discrete issue: whether, for an employee who went on weekend and summer (2 weeks) training sessions, an employer was required by § 2021(b)(3) to provide a preferential work schedule. The Court answered that question in the negative, and in the course of its opinion, set forth its view of the structure of the Act. The Court noted that in 1960 a new section had been enacted to deal with “employees who had military obligations less than three months,” and that this section was now codified at 38 U.S.C. § 2024(d). The same remark appears in the dissent. From this statement, defendant argues that a 3 month limitation is the proper interpretation of the statute.

In response, plaintiff makes two arguments. First, he quite accurately notes that the Supreme Court’s discussion of § 2024(d) in Monroe was dicta. Second, he points to recent action by Congress dealing with this issue. The background of that Congressional action is as follows: The Department of Labor, which has the responsibility for administering the Act, traditionally adhered to the view that the statute imposes no restrictions on the length of training periods for which the employee is protected. In 1982, the Department reversed its position and issued a policy memorandum limiting that protection to reservists who had no more than 90 days of training duty every three years. In response, the House passed legislation which would have clarified the period for which an employer must grant a leave of absence under 2024(d), but the Senate never acted on the measure. Subsequently, in the report accompanying separate legislation (the Veterans’ Compensation, Education, and Employment Amendments of 1982), Congress addressed the issue of a 90-day limit by stating that the:

committees do not believe that the 90-day limit that the Labor Department has imposed on that period, based on the Solicitor of Labor’s October 8, 1981, interpretation of § 2024 of title 38, is well-founded either as legislative interpretation or application of the pertinent case law. Accordingly, the Committees urge the ASVE, upon assuming the responsibility for the reemployment rights program provided in the compromise agreement, to review the situation and take appropriate action to eliminate this arbitrary limitation.

1982 U.S. Code Cong. & Admin.News 2877, 3012, 3020.

The Court finds this Congressional statement persuasive, and concludes that Congress did not intend there to be a strict three month limitation in § 2024(d). Defendant’s attempts to minimize the significance of Congress’s response are not convincing. Essentially, defendant argues that because the 1982 Congress did not change existing law, its comments are precatory and entitled to no weight. Defendant cites Supreme Court doctrine to the effect that the longstanding judicial interpretation of a law, coupled with Congress’s failure to reject the interpretation, “argues significantly in favor of that interpretation”; and, moreover, that the “views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one.”

Defendant's contentions are misleading in all respects. First, this is not a case where existing law had to be rewritten in order for a Congressional statement to have significance. What Congress did was to amplify the meaning of a statutory phrase that remained unchanged. Similarly, this is not nearly a case where there was any “longstanding judicial interpretation” of the law. The Monroe opinion, on which defendant primarily relies, was handed down in 1981. More important, Monroe, as well as the other eases defendant cites, never “interpreted” section (d); they merely referred to that section’s provisions in dicta. In addition, as plaintiff notes, the Ninth Circuit has held that subsequent Congressional interpretation of a statute which remains unchanged is entitled to “special weight, because the inferences flow not from Congressional action or inaction or amendatory legislation, but from explicit Congressional statements of the meaning of a phrase which has remained unchanged during the period in question.” Walt Disney Productions v. United States, 480 F.2d 66, 69 (1973), cert. denied sub nom., United States v. Walt Disney Productions, 415 U.S. 934, 94 S.Ct. 1415, 39 L.Ed.2d 493 (1974) (emphasis added). In the Walt Disney case, the Ninth Circuit was well aware of the hazards of relying on subsequent legislative statements for inferring the intent of an earlier Congress, but said it would not ignore such statements where they were clearly relevant. Id. at 68.

2) Was plaintiffs leave request reasonable?

Having decided that the 4V2 month leave request is not outside the scope of the Act, we next address whether it should be judged by a standard of reasonableness. The case most closely analagous to this one, Lee v. City of Pensacola, 634 F.2d 886 (5th Cir.1981), adopted such a test, holding that both the length of time and circumstances surrounding the request and the circumstances existing when the reemployment is sought must be reasonable. Both parties accept the approach used by the Lee court, although the plaintiff says that the Lee test needs to be modified in light of the Supreme Court’s statement in Monroe that employers may not rid themselves of the “inconveniences and productivity losses” caused by reservists by discharging them. Monroe v. Standard Oil Co., supra, 452 U.S. at 565, 101 S.Ct. at 2519.

The Court agrees that the plaintiff’s leave request should be evaluated according to whether it was reasonable both in light of 1) the circumstances giving rise to the request and 2) the requirements of the employer. However, we are persuaded by plaintiff that in making this analysis, there should be a presumption that the leave is protected under the Act. As plaintiff notes, “It has repeatedly been said that the acts of Congress providing for reemployment of military persons are to be construed liberally in favor of the veteran.” Lee v. City of Pensacola, supra, 634 F.2d at 889, and cases cited therein. Moreover, Congress has very recently given strong expression to its view of the importance of the National Guard and Reserve forces. In the 1983 Department of Defense Authorization Act, Congress noted, inter alia, that in the current period “attracting and retaining sufficient numbers of qualified persons to serve in the Guard and Reserve is a difficult challenge”; “that the support of employers and supervisors in granting employees a leave of absence from their jobs to participate in a military training program without detriment ... is essential to the maintenance of a strong (force),” and urged and requested employers to abide by the Act and grant leaves for military training. See 1982 U.S. Code Cong. & Admin.News at 1587 (emphasis added).

In making an evaluation of “reasonableness,” defendant first attempts to find fault with plaintiff for the circumstances surrounding his leave request. Thus, defendant says, plaintiffs need for Ordnance Training in early 1983 was pressing only because he had delayed for two years applying for this training; plaintiff ignored alternatives involving shorter training periods; plaintiff failed to thoroughly explore the possibility of taking the course, at least in part, by correspondence; and plaintiff chose the earliest of three possible courses. Defendant notes that the plaintiff never actually sought permission from his employer, and never discussed how his responsibilities would be met in his absence.

The Court does not believe that these facts surrounding plaintiffs leave request make it unreasonable. Given Congress’s clear desire for the maintenance of a strong National Guard force, the Court feels it is inappropriate for us to closely scrutinize plaintiff’s actions, and require perfect justification for them. Plaintiff’s brief, supported by the Declaration of Major Carlos Ramirez, Chief of Officer Personnel for the California Army National Guard, satisfactorily explains the requested leave:

1) there was an “immediate and critical need” for plaintiff to qualify as an Ordnance officer in his unit 2) correspondence training courses were rarely granted and 3) plaintiff realistically “had no choice” but undergoing training if he wanted to remain as a commissioned officer. Defendants rely heavily on Lee v. City of Pensacola, supra, but that case is distinguishable. In Lee, after the plaintiff had been granted a leave request of approximately 11/2 months, he sought permission to extend the leave by an additional 4 months just a week before he was due back at work. The court there was troubled by the fact that the plaintiff had been negotiating with his military superiors for an extension of his training period without communicating this to his employer, and also noted that it was not a case where his original leave request was denied. Moreover, the court emphasized that it was not necessary for the plaintiff to complete the entire training in that particular year, but that he could seek additional training in later years or qualify for promotion by correspondence courses. While admittedly the plaintiff here might have proceeded differently, this does not render his actions unreasonable.

Regarding the impact on the defendant’s operations, defendant argues that its Redwood City distributorship was small and could not withstand the loss of one of its workers, especially during the busy summer season. While it could compensate in the short run by paying its other workers overtime and hiring an independent contractor, defendant says its only realistic alternative was to hire a permanent replacement for the plaintiff. The defendant says that once plaintiff returned from training and requested reemployment, rehiring him would have meant either firing its new employee or creating a superfluous position, neither a viable option.

While plaintiffs leave undoubtedly placed strains on the defendant’s operation, we are not persuaded that this entitled the defendant to refuse his application for reemployment. Lee v. City of Pensacola, supra, the primary case cited by defendant for the “rule of reasonableness,” does not support this proposition. It is true, as defendant notes, that an employer cannot be forced to create a useless job in order to rehire a veteran or reservist. However, there is a clear line of authority holding that an employee cannot be refused reinstatement because another person has been hired to fill the position temporarily, Kay v. General Cable Corporation, 144 F.2d 653, 656 (3rd Cir.1944), or because no opening exists at the time of application for reemployment. See e.g., Davis v. Halifax Cty. Sch. System, 508 F.Supp. 966, 968-69 (E.D.N.C.1981); Jennings v. Illinois Office of Education, 83 CCH Labor Cases ¶ 10,408, 17,628 (S.D.Ill.1978), aff'd, 589 F.2d 935 (7th Cir.1979), cert. denied, 441 U.S. 967, 99 S.Ct. 2417, 60 L.Ed.2d 1073 (1979). The cases have not disapproved of the bumping of another employee in favor of the returning veteran. Id.

The only limited exception to reinstatement which the courts have countenanced is where the prior job no longer exists: i.e., where the position has been abolished, or a reduction in the work force taken place which would have clearly included the reservist, or the business itself has been discontinued. When plaintiff applied for reinstatement, none of these exceptions were relevant to the defendant (the last one became relevant after defendant sold its distributorship to ICF, which is discussed below). Thus, the Court’s conclusion is that even though Basic was inconvenienced by plaintiff’s departure, it had an obligation to rehire him once his training obligations were concluded.

3) Defendant’s Liability

Having concluded that plaintiff’s leave request was protected under the Act, and that defendant had an obligation to rehire him, we now turn to the question of defendant’s liability. In February, 1984, the Redwood City distributorship in which plaintiff was employed was sold to Interstate Convenience Foods (ICF), a corporation with no ownership or management ties to the defendant. Defendant argues that this sale terminated whatever liability it may have had to the plaintiff.

Defendant is correct in arguing that the sale of a business in which a veteran had been employed constitutes such a change in the employer’s circumstances as to make reemployment “impossible or unreasonable.” See 38 U.S.C. § 2021(a)(B)(i). Had defendant sold its distributorship in August, 1983, it would have been relieved of its obligation to rehire the plaintiff. That is not the case here, however, and plaintiff contends that but for defendant’s action, he would have been employed by the defendant and had at least an opportunity to continue in that position with ICF. ICF did tell defendant during their negotiations that all of defendant’s employees would be given a chance to continue employment, and one of defendant’s workers was hired by ICF.

Defendant responds that this argument raises the wrong issue — the possibility of work with ICF rather than the right to continued employment with defendant. Defendant’s position has substantial merit to it. Given that ICF was not a successor in interest to the defendant, and that there was no contractual agreement between them regarding the retention of defendant’s employees, the Court believes that the defendant should be relieved of its liability following the February, 1984 transfer of ownership unless plaintiff can demonstrate that he would have been retained by ICF. However, the burden must be on plaintiff to prove this: not just that he had the chance to be hired by ICF, but that it was more likely than not that this would have occurred. The Court will grant plaintiffs request that he be allowed to conduct further discovery on this issue in order to determine when defendant’s liability terminated.

However, before any such discovery is commenced, the Court ORDERS that this case be referred to Magistrate Claudia Wilken for a mandatory settlement conference. All discovery on the issue of defendant’s liability shall be stayed until this settlement conference is held.

IT IS SO ORDERED.

        . Defendant cites other cases which contain similar statements about the coverage of § 2024(d). These are not very persuasive, though, because 1) the language in all except one is drawn directly from the Monroe case and 2) the language is all dicta, since none of the courts had before them the question of the meaning of section (d).

        . Quoting from Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 733, 95 S.Ct. 1917, 1924, 44 L.Ed.2d 539 (1975).

      . United States v. Price, 361 U.S. 304, 313, 80 S.Ct. 326, 331, 4 L.Ed.2d 334 (1960).

      . The court in Lee v. City of Pensacola, 634 F.2d 886 (5th Cir.1981), while holding that a 51/2 month leave request was not protected by § 2024(d), did not interpret section (d) in the manner suggested by defendant, i.e., limited by its terms to 3 months.

      . The Lee court specifically held that Congress "did not intend to endow a reservist with 'unreasonable powers’ over his employer or cause his employer unreasonable hardship. The training period for which leave of absence is given must be reasonable both in the context of the reservist’s military obligation and the requirements of the employer." 634 F.2d at 888 (quoting from the District Court opinion.)

      . Even defendant acknowledges that a correspondence course might not have been approved, is used by only a small portion (20%) of trainees, and can take a long time (often up to two years) to complete.

      . Other factors argue in favor of plaintiff as well: 1) his position had been vacant for one year prior to his hiring, 2) defendant did manage to get by for over three months from April 29 to August 8, 1983, before a replacement for him was hired; and 3) plaintiff did give his employers two months notice of his intention to leave, giving them time to find alternative arrangements.


author: MILES W. LORD, Chief Judge.

text:
    GOTHIC EVANGELICAL CHURCH, and Homer and Louise Johnson, Petitioners, v. UNITED STATES of America, Respondent.
    Civ. No. 4-84-694.
    United States District Court, D. Minnesota, Fourth Division.
    Nov. 15, 1984.

      Thomas L. Iliff, Bloomington, Minn., for petitioners.
    Beth A. Sabbath, Tax Div., Dept, of Justice, Washington, D.C., for respondent.
   MEMORANDUM AND ORDER

MILES W. LORD, Chief Judge.

This matter arises upon the motion of petitioners Gothic Evangelical Church and Homer and Louise Johnson to quash an Internal Revenue Service summons of records related to the Johnsons’ potential tax liability for the years 1979-1983. Based upon the parties’ pleadings, memoranda, affidavits and declarations, and upon the record developed at the evidentiary hearing held in open court on September 25, 1984, the petitioners’ motion to quash the summons is denied.

Homer and Louise Johnson are husband and wife, and officers and directors of the Gothic Evangelical Church, a nonprofit corporation organized under the laws of Minnesota. The Johnsons’ failure to file federal income tax returns after 1978 attracted the interest of the District Director of Internal Revenue at St. Paul, who assigned Revenue Agent Robin Olson to investigate the Johnsons’ tax liability. Agent Olson determined that the Gothic Evangelical Church might be paying the Johnsons’ personal living expenses. Agent Olson further determined that checks were issued to Homer Johnson on the Gothic Evangelical account at the Metro Bank in Bloomington, signed by the Johnsons and their sons Rhody and Ayrlahn, and deposited into the Johnsons’ personal checking account at the Marquette National Bank in Minneapolis.

Thus convinced that the Johnsons were using the Church as a screen for obscuring the extent of their personal assets and income, Agent Olson issued two Internal Revenue Service summons to the Metro Bank and Kandiah Ramalngam, a bank vice-president and cashier, on July 23, 1984. These summons directed the production of records relating to transactions between the Johnsons and Gothic Evangelical Church, as well as the appearance of Mr. Ramalngam to provide testimony. Copies of the summons were also sent to the John-sons’ home address, which also happens to be the address of the Gothic evangelical church. The bank and Mr. Ramalngam declined to answer the summons, but have not been joined as parties to this petition.

The Johnsons filed their petition to quash the summons on behalf of the Gothic Evangelical Church on July 12,1984. They argue that disclosure of records pertaining to transactions between them would have a chilling effect on the Church’s First Amendment right of association, to the extent that disclosure of the names of the Church’s contributors and beneficiaries would inhibit the solicitation of new members or the development and maintenance of new ministries. It must be borne in mind that the Johnsons themselves, not the Church, are the subjects of the IRS investigation. The summons directed to the Metro Bank, by its terms, only seeks records concerning “transactions or dealings with, for, or on behalf of Louise Johnson, Homer Johnson, and Gothic Evangelical Church.” The summons is therefore substantially narrower and distinguishable from that condemned for overbreadth in United States v. Life Science Church of America, 636 F.2d 221 (8th Cir.1980).

Homer Johnson’s testimony before this court shows that Gothic Evangelical Church neither actively seeks new members nor regularly solicits contributions. Indeed, the Church occasionally has even declined to accept outside contributions. Only five to ten individuals make contributions to the Church as frequently as every three months. In any event, because the tax-exempt status of the Church, its size, and its inclination or ability to attract converts are not at issue in the IRS investigation into the Johnsons’ finances, this court finds that the Church’s First Amendment right to freedom of association is not implicated by the IRS summons.

Even if the Johnsons and Church could have succeeded in establishing that the IRS summons might infringe upon their First Amendment rights, the government has made ample showing that it is nonetheless entitled to the financial data it seeks, under the test announced in United States v. Citizens State Bank, 612 F.2d 1091 (8th Cir.1980). In that ease, when the trial court declined to hear evidence as to the taxpayers’ motive in refusing compliance with an IRS subpoena, the Court of Appeals for this Circuit held that when taxpayers make an initial showing of arguable First Amendment infringement, the burden shifts to the government to demonstrate its need for the material sought. There must be a rational connection between disclosure and a legitimate government objective, and the government’s interest in the disclosure must be cogent and compelling. Id. at 1094.

The government has met that burden in this case. Its objective is legitimate — the determination and collection of personal income tax overdue and owing from 1979 on. Disclosure of the records is necessary to determine the extent of the Johnsons’ tax liability. The integrity of the government’s fiscal policies fundamentally depends upon its ability to collect taxes. The IRS had reason to believe that the Johnsons were using the Church as a means of concealing their taxable income. According to his own testimony, Homer Johnson is responsible as Church administrator for protecting the Church’s assets. These assets primarily consist of a brokerage account and a private residence, title to each of which was transferred to the Church by Johnson himself. The Johnsons themselves make all decisions pertaining to the expenditure of those assets. In the similar circumstances encountered in Loving Saviour Church v. United States, 556 F.Supp. 688 (D.S.D.1983), the court found that the church was the alter ego of the taxpayers, based upon facts such as the following: 1) the unity of interest between the taxpayers and the church, 2) the taxpayers’ complete control over the church’s assets, 3) the close family relationship between-the directors, organizers, and officers of the church, and 4) the fact that the church was the taxpayers’ sole support. Without questioning the sincerity of the taxpayers’ Christian beliefs, the Loving Saviour court found that the transfers of property from the taxpayers to the church amounted to fraudulent conveyances, that the church was the taxpayers’ alter ego, and concluded that property held in the church’s name could be levied upon to satisfy the taxpayers’ personal income tax liabilities. Id. at 694.

Neither does this court feel obliged to pass upon the sincerity of the Johnsons’ religious beliefs. Without intending to suggest that the Gothic Evangelical Church was founded as a cynical expedient to the end of tax avoidance, this court simply holds that the IRS summons to the Metro Bank is to be enforced. The John-sons have not shown that they as individuals are entitled to exemption from personal income taxes, while the government has demonstrated amply that access to the Church’s financial records is essential to a determination of the Johnsons’ tax liability. This court is satisfied that full compliance with the summons will not interfere with any constitutional rights of either the John-sons or the Gothic Evangelical Church. The government’s motion for attorney’s fees is denied. IT IS SO ORDERED.