author: DAVID V. O’BRIEN, District Judge.

text:
    Gary BERNE and Cynthia Berne, Plaintiffs/Appellees, v. AETNA INSURANCE COMPANY, Defendant/Appellant.
    Civ. No. 83/360.
    District Court, Virgin Islands, D. St. Thomas and St. John.
    Feb. 20, 1985.

      Aurelia Rashid, Birch, deJongh & Farrelly, St. Thomas, V.I., for plaintiffs/appellees.
    John E. Lenahan, Bryant, Lenahan & Eltman, St. Croix, V.I., for defendant/appellant.
   MEMORANDUM OPINION

DAVID V. O’BRIEN, District Judge.

This case, on appeal from Territorial Court, requires us to decide whether a provision in a homeowners policy which limits the recovery for loss by theft of jewelry to $500 is enforceable in the face of a total $20,000 coverage for unscheduled personal property provided in the same policy. We find such a special limitation is enforceable. We will reverse the judgment of Territorial Court awarding $20,000 plus costs and fees to the insureds. The refusal of the Territorial Court to award punitive damages against the insurance company will be affirmed.

I. FACTS

The plaintiffs/appellees, (“the Bernes”), purchased a standard homeowners policy from the defendant/appellant, (“Aetna”). Coverage was provided for damage to real property, for personal liability protection against claims of others and for unscheduled personal property losses up to $20,-000. (App. 8). The body of the policy was the HO-2 Homeowners Policy Broad Form, as revised in September, 1970. (App. 10-13). The first page of HO-2 contained a description of the property and interests insured.

Schedule C on that page listed the Unscheduled Personal Property description, which was followed by an enumeration of the perils insured against; The second page, (App. 11), included theft as one of the covered perils.

After describing additional exclusions to the policy, page three of HO-2, (App. 12), spelled out additional conditions attached to the policy. The second of these additional conditions listed “Special Limits of Liability on Certain Property” and included the following language:

(4) $500 in the aggregate for loss by theft of jewelry, watches, necklaces, bracelets, gems, precious stones, gold, platinum and furs including articles containing fur which represents its principle (sic) value.

Except for the headings of sections and subsections, the policy coverage, exclusions and additional conditions are in the identical typeface.

On November 14, 1980, while the policy was in force, the Bernes’ home was burglarized and $20,000 in jewelry was taken and never recovered. They filed a proof of loss with Aetna, which declined to pay more than $500, citing the special limitation to that amount for theft of unscheduled jewelry.

The Bernes filed this action against Aetna in Territorial Court. A non-jury trial was held, after which the court entered its findings of fact and conclusions of law from the bench. In its findings and conclusions, the court found that the policy in question was “unambiguous” but that notwithstanding, Aetna was under an obligation to disclose “material information” concerning the $500 limit on unscheduled jewelry. Having found the policy “unambiguous” the court then invoked the doctrine of reasonable expectations, citing as authority Kievit v. Loyal Protective Life Ins. Co., 170 A.2d 22, 30 (N.J.1961). Also cited was Hallowell v. State Farm Mutual Auto Ins. Co., 443 A.2d 925, 927 (Del.1982), for the proposition that a court will look to the reasonable expectations of an insured at the time he entered into a contract if the terms are ambiguous or conflicting, of if the policy contains a hidden trap or pitfall, or if the fine print takes away that which has been given by the large print. (App. 22-33).

The court then proceeded to find that the Bernes had the reasonable expectation that their jewelry was fully insured to the extent of $20,000 without scheduling. It faulted the placement of the various sections containing special limitations and conditions and stated that the practice of “using lengthy, complex and cumbersomely written insurance policies to deprive the consuming public of its reasonable expectations when it purchases insurance cannot be sanctioned.” (App. 31).

The court also concluded that the public “should not be subjected to technical encumbrances or to hidden pitfalls and their policies should be construed liberally in their favor to the end that coverage is afforded to the full extent that any fair interpretation will allow.” (App. 32).

Upon such findings of fact and conclusions of law, the court entered judgment for the Bernes in the amount of $20,000, together with attorney’s fees and costs of $2,115.00, for a total judgment of $22,-115.00. At the same time, the court dismissed a punitive damage claim by the Bernes against Aetna.

Aetna appealed the money judgment and the Bernes cross appealed the dismissal of the punitive damage claim.

II. DISCUSSION

A. The Homeowners Policy

The insurance policy issued to the Bernes by Aetna was a standard form homeowners policy in use across the width and breadth of the United States and its territories. The last revision of the particular language involved in this case, the special limitation on unscheduled jewelry to $500, appears to have taken place in the late 1960s and early 1970s. Orren v. Phoenix Ins. Co., 179 N.W.2d 166, 168 (Minn.1970). The policy in the case herein contains a September, 1970 revision of the HO-2 form, quoted earlier.

This homeowners policy appears to have been given uniform acceptance by courts across the country. The special limitation on unscheduled jewelry loss to a maximum of $500 has been upheld in the few cases we have been able to locate. U.S. Liability Ins. Co. v. Bove, 347 So.2d 678 (Fla.Dist.Ct.App.1977), held that the policy language was “plain and unambiguous” and “no special construction or interpretation is required.” It will be given “that meaning which it clearly expresses”. Id. at 680. See also Halford v. Republic Underwriters Ins. Co., 348 So.2d 87, 89 (La.Ct.App.1977).

The Territorial Court found that the policy itself was unambiguous. In so stating, we can only assume that the court considered the insurance policy “susceptible of but one meaning”. Black’s Law Dictionary 1366 (rev. 5th ed. 1979).

B. Applicable Law

We are guided in this case by general principles of insurance law as developed by courts throughout the nation. Buntin v. Continental Ins. Co., 583 F.2d 1201, 1204 (3d Cir.1978). This is because there are no rules of the common law as expressed in the restatements of law as approved by the American Law Institute, and in such an absence, we look to the law “generally understood and applied in the United States ...” 1 V.I.C. § 4.

Since the policy in question is unambiguous, i.e. susceptible of only one meaning, the interpretation of that insurance contract is a matter of law for the court. Eastern Associated Coal Corp. v. Aetna Casualty & Surety Co., 632 F.2d 1068, 1075 (3d Cir.), cert. den., 451 U.S. 986, 101 S.Ct. 2320, 68 L.Ed.2d 843 (1980). In such an analysis, the same case at the same page tells us that “since the policy is a contract, the court’s duty is to ascertain the intent of the parties as manifested in the language of the agreement.”

Because the contract is unambiguous, the rule that contracts are construed strictly against the insurer cannot apply. Eastern Associated Coal Corp., supra, at 1077, and cases cited. And, where a policy is unambiguous, “the loss must be determined strictly in accordance with the terms of the insurance policies.” American Alliance Ins. Co. v. Keleket X-Ray Corp., 248 F.2d 920, 928 (6th Cir.1957).

C. The Decision Below

Notwithstanding the provisions just discussed, the court below made its ruling by strictly construing the terms of the policy against Aetna, finding that “the insurance policy in question contains a hidden trap or pitfall in that the fine print takes away what is given in the large print.” (App. 27). Thus, the court reasoned, under the doctrine of reasonable expectations, the rule of strict construction against Aetna applied. Such a statement is incorrect. Simple reference to the policy, (App. 10-13), shows that all provisions, coverage as well as exclusions and special limitations, are printed in the same type face.

The court also applied the rule of strict construction because it found the format of the policy inadequate. (App. 30-31). In that, the court fell into the error discussed in Viger v. Commercial Ins. Co. of Newark, N.J., 707 F.2d 769 (3d Cir.1983). There, the Third Circuit noted:

We have examined this policy and do not find the “bewildering array of exclusions, definitions and conditions” which apparently characterized the policy ...

Id., at 774.

The Territorial Court also applied the rule of strict construction against Aetna because it found that the format of the policy was not adequate to demonstrate to the Bernes the coverage and limits thereon. (App. 30-31). We disagree. To paraphrase Viger, supra, at 774, we have examined the policy and do not find the confusion or hidden traps wherein the fine print takes away what is given in the large print. Nor do we find the format unusual. The policy defines the coverage generally in the first section, then defines specific exclusions and the special limitations of coverage. Each is delineated and no section is made to stand out on the page more than any other section.

As Viger cautions, simply because one must refer to several different places in the policy to find the applicable exclusions and definitions does not warrant a failure to enforce its provisions. As Judge Sloviter wrote:

Unless insurance policies are to be drafted individually to cover each contract, which would increase the premiums considerably, the necessity to integrate provisions from different parts of the policy seems inevitable.

Id. at 774.

In discharging its duty, the court should attempt to view the policy in its entirety, and give effect, if possible, to all portions of the contract. Treasure Craft Jewelers, Inc. v. Jefferson Ins. Co. of N. Y., 583 F.2d 650, 652 (3d Cir.1978).

The Third Circuit recently stressed that “a court should read policy provisions to avoid ambiguities, if possible, and not torture the language to create them.” Northbrook Ins. Co. v. Kuljian Corp., 690 F.2d 368, 372 (3d Cir.1982), (quoting St. Paul Fire & Marine Ins. Co. v. United States Fire Ins. Co., 655 F.2d 521, 524 (3d Cir.1980)). By analogy, that same reasoning applies in the case herein. A court should read a policy, if possible, in its entirety and should avoid seeking hidden traps and pitfalls where none exist. If the policy herein is read on such a basis, there can be no doubt that the court below erred in awarding the Bernes $20,000 in a jewelry theft loss in the face of the $500 limitation clearly stated therein.

In so finding, we need not reach the question of the reasonable expectations of the insureds. Since the policy is not ambiguous, is not conflicting and does not contain any hidden traps or pitfalls, or take away with fine print that which is granted by the large print, such a doctrine does not apply. Indeed, the reasonable expectations doctrine “is not a rule granting substantive rights to an insured when there is no doubt as to the meaning of policy language.” Hallowell v. State Farm Mutual Ins. Co., supra at 927.

CONCLUSION

The judgment of the Territorial Court is reversed and the matter remanded for the purpose of dismissal of the complaint and the award of attorney’s fees and other costs, if warranted, and as provided by law. While this also disposes of the cross appeal of the refusal to grant punitive damages, we will affirm such refusal in order for the record to be complete in the event there are further proceedings on appeal. Even if the compensatory award were upheld, the Territorial Court correctly refused to make a further award of exemplary damages.


source: Caselaw Access Project

author: SHAPIRO, District Judge.

license: Public Domain

text:
    Carl F. BERNDT v. KAISER ALUMINUM & CHEMICAL SALES, INC.
    Civ. A. No. 82-3931.
    United States District Court, E.D. Pennsylvania.
    Feb. 21, 1985.

      Thomas Preston, Philadelphia, Pa., for plaintiff.
    Andrea P. Wapner by Ronald H. Surkin, Philadelphia, Pa., for defendant.
   MEMORANDUM and ORDER

SHAPIRO, District Judge.

Plaintiff Carl F. Berndt brought this action against defendant Kaiser Aluminum & Chemical Sales, Inc. for discharge in violation of the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. §§ 621 et seq. Immediately prior to trial, the parties stipulated to the dollar values of certain items of damages claimed by plaintiff and agreed that if the jury verdict on liability were in favor of plaintiff, damages would be awarded by the court upon determination of certain disputed issues of law. On December 17, 1984, the jury found that age was a determining factor in plaintiff’s discharge and that the discharge was “willful.” This Memorandum articulates the court’s conclusions with regard to damages.

The goal of the ADEA o restore a victim of discrimination to the economic position he or she would have occupied but for the employer’s unlawful conduct. Rodriguez v. Taylor, 569 F.2d 1231, 1238 (3d Cir.1977). Therefore, the touchstone in calculating damages is the “make whole” standard of relief.

BACK PAY

The parties have agreed that damages properly include an award of “back pay.” Back pay is measured by the difference between the salary an employee would have received but for a violation of the ADEA, less severance pay, and the salary actually received from other employment. The relevant period for measuring back pay begins at the time of loss of employment resulting from the violation and ends at the time of trial. Plaintiff was discharged as of August 31, 1981 but received two and one-half months’ severance pay. Therefore, plaintiff is entitled to back pay as of November 15, 1981. The parties have agreed that plaintiff would have earned the following amounts:

November 15,1981 — December 31,1981 $2,526 per month
January 1, 1982 — July 31, 1982 $2,695 per month
August 1,1982 — May 31,1983 $2,762 per month
June 1,1983 — November 31,1984 $2,859 per month

Defendant had not determined what salary increases would have been awarded in 1985; the parties agreed that for the period from December 1, 1984, damages for back salary would be calculated at the rate of $2,859 per month. The parties also agreed that earnings received from employment with Kennedy Culvert Co. and Ruth’s Whatnot Shop were in the amount of $12,-814.50 and should be deducted from any backpay award. Plaintiff is, therefore, entitled to back pay through December 31, 1984 in the amount of $101,619 less $12,-814.50, a total of $88,864.50.

PENSION

The parties have agreed to the amount that plaintiff should receive as lost pension benefits. Plaintiff’s present monthly pension, payable for life beginning at age 62 (June 30, 1985), is $207.94 per month. If plaintiff had continued in the employ of defendant to age 62 his pension payable for life would have been $410.12 per month. The parties have agreed that the lump sum present value of the difference between what plaintiff is now entitled to receive and what he would have received had he remained with Kaiser until age 62 is $16,-543.00.

PROFIT SHARING

The parties have agreed that company contributions to plaintiffs profit sharing account for the period from the date of plaintiffs discharge, August 31, 1981, until December, 1984 would have been $3,637.54 and that no calculation can be made beyond December, 1984.

INSURANCE BENEFITS

Kaiser provided its employees with Blue Cross/Blue Shield and Major Medical insurance. Additionally, Kaiser had a Dental Plan and, until December 31, 1983, the Company also had a Vision Plan for its employees. The Company’s health policies are all self-insured so that the Company pays the actual cost of a covered medical expense incurred by the employee. Plaintiff claims that since his discharge he has spent $1,752 for Blue Cross/Blue Shield coverage and incurred unreimbursed medical expenses, which would have been reimbursable under the Kaiser plan, in the amount of $416. The court finds plaintiff entitled to recover these amounts.

However, plaintiff also seeks to recover the average amount Kaiser spent per employee in providing dental, vision and life insurance coverage even though plaintiff neither obtained such insurance, nor died, nor incurred any out-of-pocket expenses which would have been compensable under Kaiser’s dental or vision plan. Requiring Kaiser to reimburse plaintiff for the amounts it would have incurred in providing insurance coverage when no loss has been suffered by the plaintiff is not consistent with the “make whole” policy of the ADEA. Such an award of damages would be punitive rather than remedial. Awarding plaintiff amounts not expended for dental repairs or eye glasses would not place him in the economic position he would have been in but for his illegal discharge. Neither would it take from Kaiser the amount it saved by terminating plaintiff since no amount would have been expended even if he were not discharged. The court finds that plaintiff is entitled only to out-of-pocket expenses incurred for other insurance and/or actual medical expenses; this amount totals $2,168, See Duffy v. Wheeling Pittsburgh Steel Corp., 738 F.2d 1393 (3d Cir.1984); Syvock v. Milwaukee Boiler Mfg. Co., 665 F.2d 149 (7th Cir.1981).

EXPENSE ACCOUNT BENEFIT

Kaiser reimbursed all its employees for reasonable costs actually incurred for meals, hotel and customer entertainment while making customer calls. Plaintiff claims that he is entitled to $850 (calculated at a rate of $5 per week) for such expenses. Because plaintiff was terminated as a salesman, he did not incur any out-of-pocket sales-related expenses and is not entitled to reimbursement for them as a lost fringe benefit.

AUTOMOBILE

Plaintiff was provided with a Company car for use in connection with his job and was permitted its personal use during non-working hours. Plaintiff claims reimbursement of the $500 per month Kaiser would have expended to provide this automobile, a total of $20,000. This measure of damages is also inappropriate since it does not reimburse plaintiff for an economic loss caused by his termination but seeks to claim an alleged benefit to Kaiser. Plaintiff contends in the alternative that he is entitled to receive the full replacement value of a new automobile, including cost of insurance and maintenance. Because plaintiff’s automobile was to be used primarily for sales-related work but its availability for personal use was a fringe benefit, plaintiff may recover a sum for the loss of personal use on weekends. A pro rata formula allowing reimbursement for personal use two of seven days per week is an imprecise but reasonable basis for awarding damages for this item. For loss of automobile use, the plaintiff is awarded $3,036.57.

FRONT PAY

In addition to seeking back pay from the date of termination to the date of trial, plaintiff seeks either reinstatement to his former position or an award of “front pay” —the present equivalent of pay and fringe benefits from the time of trial until June, 1985, when plaintiff will reach the retirement age of 62.

Plaintiff has expressed a willingness to return to work at Kaiser. Determination of whether to order reinstatement is committed to the sound discretion of the court. Duffy v. Wheeling Pittsburgh Steel Corp., 738 F.2d 1393 (3d Cir.1984). In the circumstances, this remedy is undesirable if not impossible. The relationship between plaintiff and Kaiser has been so damaged by the litigation that a continued working relationship for the four months remaining until plaintiff will retire is not feasible.

The Third Circuit has not yet determined whether a successful ADEA plaintiff is entitled to an award of so-called “front pay” in lieu of reinstatement. However, several district court cases in this Circuit have held “front pay” appropriate in situations where a court determines that reinstatement is an inadequate remedy. See, e.g., Chern v. Ogden Service Corp., 33 FEP Cases (E.D.Pa.1984).

The court is of the view that “front pay” is appropriate when the plaintiff is clearly willing and able to work, the earnings from other employment are clearly defined, and the time interval for which “front pay” is awarded is relatively short. Plaintiff would have earned $17,154 in salary from January until June, 1985 had he remained at Kaiser; this amount must be reduced by the amount plaintiff is likely to have earned in other employment during this time period. On the assumption that plaintiff will retain his current employment at Ruth’s Whatnot Shop, the award of damages has been reduced by $3,510 to $13,-644. In making the determination of “front pay,” the court in the exercise of its discretion has not included the monetary equivalent of future fringe benefits, because it finds them too uncertain and speculative. Their award is unnecessary to place plaintiff in the position he would have been were it not for the discriminatory discharge. The award of damages for future earnings has been reduced to present value. At an interest rate of ten percent, the present value of plaintiff’s future earnings until June, 1985 is $13,374.

LIQUIDATED DAMAGES

Under the ADEA, 29 U.S.C. § 626(b), “liquidated damages shall be payable only in cases of willful violations” of the Act. If allowed, liquidated damages are in the amount equivalent to the plaintiff’s award for back pay and fringe benefits; that is, a finding of willfulness results in doubling the damages. The jury found, in response to a specific interrogatory, that Kaiser’s violation of the ADEA was “willful.”

Subsequent to the jury verdict, the Supreme Court, in Trans World Airlines, Inc. v. Thurston, — U.S.-, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985), adopted a stringent standard of “willfulness.” The Court rejected a standard that a violation of the ADEA was willful if the employer simply knew of the applicability of the ADEA; the Court found that such a standard “would result in an award of double damages in almost every case.” A violation of the ADEA may be deemed “willful” only if “the employer ... knew or showed reckless disregard for the matter of whether its conduct was prohibited by the ADEA.”

But in this case the issue of willfulness was submitted to the jury under an instruction that willfulness is proved if the decision to terminate plaintiff was voluntary and not accidental, mistaken or inadvertent or made with a reckless disregard for its consequences. This instruction was given in accordance with the decision of the Court of Appeals in Wehr v. Burroughs Corp., 619 F.2d 276, 283 (3d Cir.1980).

This charge on willfulness was not only incorrect but prejudicial to defendant. Moreover, the evidence presented at trial was insufficient to submit the issue of “willfulness” to the jury as willfulness has now been defined by the Supreme Court. Even if we view the evidence and all inferences from the evidence in favor of plaintiff as we are required to do because of the verdict in his favor, there is insufficient evidence to support a verdict that Kaiser intended to violate the ADEA, knew it was doing so, or recklessly disregarded its obligation under the discrimination laws.

Plaintiff has conceded that economic necessity required Kaiser to retain only four of its six Division salesmen; the two discharged were the oldest. Plaintiff has convinced a jury that his immediate supervisor selected him because of his age. But the issue was an extremely close one; the evidence was all circumstantial. It is undisputed that Kaiser had a member of management designated to review discharges where violation of the Act might be implicated and at the level of highest corporate management it was determined, now as it turns out erroneously, that there would be no violation of ADEA in dismissing the plaintiff. No liquidated damages can be awarded in this case.

PREJUDGMENT INTEREST

Under § 626(b) of the ADEA, the court is empowered to grant “such legal or equitable relief as may be appropriate,” Such relief may include an award of prejudgment interest at the court’s discretion. See Kelly v. American Standard, Inc., 640 F.2d 974, 982-983 (9th Cir.1981); Syvock v. Milwaukee Boiler Manufacturing Co., 665 F.2d at 162. However, it is generally accepted that the ADEA does not permit a successful plaintiff to obtain prejudgment interest in addition to liquidated damages. See Brooklyn Savings Bank v. O’Neil, 324 U.S. 697, 715, 65 S.Ct. 895, 906, 89 L.Ed. 1296 (1945).

[Liquidated damages under the ADEA, like prejudgment interest, are intended to provide compensation for losses that cannot be calculated with certainty, such as the value attributable to the loss of use of unpaid wages after an employee has been unlawfully discharged. Accordingly, in order to prevent double recovery, successful plaintiffs are not entitled under the ADEA, as well as under the FLSA, to obtain both liquidated damages and prejudgment interest.

Gibson v. Mohawk Rubber Co., 695 F.2d 1093 (8th Cir.1982).

Because the court has determined that an award of liquidated damages is not appropriate in this case, prejudgment interest will be awarded on back pay, medical expenses and automobile cost reimbursement. Prejudgment interest is not awarded on the amounts for profit sharing or pension benefits; these amounts would not have been payable until retirement.

The parties agreed that if prejudgment interest were awarded, the appropriate rate was in the discretion of the court. Plaintiff suggested that interest be calculated at 11% but introduced no evidence at trial showing that he could have invested money at that rate. The court in its discretion determines that an eight percent interest rate is adequate. Therefore, plaintiff is awarded interest on back pay, medical expenses and automobile costs, totalling $94,-069.07 from November, 1981 to December, 1984. At eight percent simple interest, the interest on this amount is $12,258.34.

FINAL JUDGMENT

AND NOW, this 21st day of February, 1984, for the reasons set forth in the foregoing Memorandum, it is ORDERED that

JUDGMENT on damages is entered in favor of plaintiff Carl F. Berndt and against defendant Kaiser Aluminum & Chemical Sales, Inc. in the following amounts:

Back Pay (Lost earnings less earnings from other emiiloyment) $ 88,8(54.50
Pension Benefits Mi, 543.00
Profit Sharing 3,(537.54
Blue Cross/Blue Shield 1,752.00
Medical Expenses 41(5.00
Automobile 3,036.57
Future Lost Wages 13,374.00
Prejudgment Interest 12,258.34
TOTAL $ 139,881.95

This amount is entered as a FINAL JUDGMENT.

      . The parties have disagreed on whether as a result of the incorrect jury charge there should be a new trial on the issue of willfulness only. If the determination that there was insufficient evidence to go to the jury is incorrect, then a new trial on both liability and willfulness would be granted because the issues are so inextricably intertwined that severance would be inappropriate. The issue of whether violation of the statute occurred at all was a close one. Without complete development of the facts and circumstances, a jury, having been informed as a matter of law that there had been a violation of the ADEA, could not fairly determine the issue of "willfulness.”


author: CACHERIS, District Judge.

text:
    Christopher F. WEIGHT, et al., Plaintiffs, v. KAWASAKI MOTORS CORP., U.S.A., et al., Defendants.
    Civ. A. No. 84-0925-A.
    United States District Court, E.D. Virginia, Alexandria Division.
    March 4, 1985.
    See also 597 F.Supp. 1082.
    Yvonne F. Weight, Bernard S. Cohen, Alexandria, Va., for plaintiffs.
    George F. Cronin, Jr., Fairfax, Va., Carl F. Ameringer, Michael Esher Yaggy, Niles, Barton & Wilmer, for defendant Kawasaki Motors Corp., U.S.A.

      Joe A. Shull, Arlington, Va., James K. Archibald, Lawrence H. Norton, Venable, Baetjer & Howard, Baltimore, Md., for defendant Kawasaki Heavy Industries, Ltd.
   MEMORANDUM OPINION

CACHERIS, District Judge.

This matter is before the court on defendant Kawasaki Heavy Industries, Ltd.’s (“KHI”) Motion to Dismiss for Lack of Personal Jurisdiction. For reasons set forth below, KHI’s Motion is denied.

I

Background

Plaintiff Christopher Weight, a Virginia resident, brings this products liability claim alleging personal injuries caused by a defective motorcycle manufactured by defendant KHI, a Japanese corporation. KHI is a corporation engaged in the manufacture of motorcycles and other products. The accident occurred in Virginia. Plaintiff alleges that the motorcycle was sold by KHI to co-defendant Kawasaki Motor Corporation, U.S.A. (“Kawasaki U.S.A.”), which is the distributor in the United States for Kawasaki motorcycles.

KHI sells all of its motorcycles for the American market to Kawasaki U.S.A. f.o.b., Japan. KHI is neither registered nor licensed to do business in Virginia. KHI indicates that it makes no sales to local U.S. distributors, it does not maintain an office in Virginia, and that all motorcycles shipped by Kawasaki U.S.A. to the United States are shipped through ports in states other than Virginia. KHI contends that it is not doing business in Virginia and that it has insufficient minimum contacts with Virginia to satisfy due process, and therefore, this court lacks personal jurisdiction over it.

II

In cases in which jurisdiction is based on diversity of citizenship, the plaintiff has the burden to show, first, that an applicable statute asserts jurisdiction, and, second, that the assertion of jurisdiction is consonant with the constitutional limitations of due process. Peanut Corp. of America v. Hollywood Brands, Inc., 696 F.2d 311, 313 (4th Cir.1982).

The Virginia Long-Arm Statute, § 8.01-328.1, Va.Code (Repl.Vol.1984), provides in pertinent part:

When personal jurisdiction over person may be exercised. — A. A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action arising from the person’s:
1. Transacting any business in this Commonwealth;
2. Contracting to supply services or things in this Commonwealth;
3. Causing tortious injury by an act or omission in this Commonwealth;
4. Causing tortious injury in this Commonwealth by an act or omission outside this Commonwealth if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this Commonwealth;
5. Causing injury in this Commonwealth to any person by breach of warranty expressly or impliedly made in the sale of goods outside this Commonwealth when he might reasonably have expected such person to use, consume, or be affected by the goods in this Commonwealth, provided that he also regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this Commonwealth.

To satisfy constitutional due process a defendant must have certain minimum contacts with the forum State such that maintenance of a suit does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Virginia’s Long-Arm Statute has been construed to be as broad as the standard of constitutional due process. Kolbe, Inc. v. Chromodern, 211 Va. 736, 740, 180 S.E.2d 664, 667 (1971). Accordingly, if the exercise of personal jurisdiction over KHI satisfies the due process requirements of the U.S. Constitution, KHI’s motion must be denied.

Both plaintiff and defendant argue that World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), supports their respective arguments. In World-Wide Volkswagen, plaintiff brought suit in Oklahoma for personal injuries arising out of an accident in Oklahoma in which plaintiffs Audi automobile caught on fire when rear-ended by another automobile. The regional distributor and retailer dealer who sold plaintiff the car in New York successfully challenged the power of the Oklahoma court to exercise jurisdiction. In applying the World-Wide Volkswagen decision to the facts of the case at bar, this court notes that the foreign manufacturer in World-Wide Volkswagen did not challenge jurisdiction. The Supreme Court did, however, provide dictum which is applicable to the case at bar:

[I]f the sale of a product of a manufacturer or distributor ... is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve, directly or indirectly, the market for its products in other states, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owners or to others. The forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State.

444 U.S. at 297, 298, 100 S.Ct. at 567, 568.

KHI argues that plaintiff has not met his burden of showing that defendant has purposefully availed itself of the privilege of conducting business in Virginia. KHI also argues that there has been no showing that KHI’s sales to Kawasaki U.S.A. in Japan were part of any effort by KHI to serve any market for its products in Virginia.

This court believes that plaintiff has met his burden of proof. Plaintiff points out that KHI owns over 96% of the shares of stock of Kawasaki U.S.A. and at least one person serves on the board of directors of both corporations. There are nineteen retail dealers in Virginia who sell new Kawasaki motorcycles purchased by them from Kawasaki U.S.A. KHI has also entered into trademark agreements to allow these American retail dealers to use the name “Kawasaki.” Kawasaki U.S.A. has an indemnity agreement with KHI. Furthermore, the owner's manuals and brochures written by KHI which describe the Kawasaki motorcycles sold by KHI to Kawasaki U.S.A. are written in English and state that the motorcycles meet U.S. safety regulations. It is clear that KHI knew and intended that many of the motorcycles manufactured by them would be purchased by consumers in Virginia and that this activity would have consequences in Virginia.

KHI derives substantial economic benefits from the sales of its vehicles by Kawasaki U.S.A. Kawasaki U.S.A.’s operations produce profits for KHI, both from the dividends paid to it by Kawasaki U.S.A. and from Kawasaki U.S.A.’s purchases of motorcycles from the parent corporation. This court believes that the sale of motorcycles in Virginia bought from KHI constitutes a substantial source of revenue in actual dollar amounts. KHI has not only derived benefit from the Virginia marketplace but also received protection from Virginia law. This is true even though the product was not placed directly in Virginia by KHI, but instead was marketed by one whom KHI could foresee would cause the product to enter Virginia. See Hicks v. Kawasaki Heavy Industries, 452 F.Supp. 130 (M.D.Pa.1978).

Recent decisions in which foreign motor vehicle manufacturers had a sales arrangement quite similar to the one in the present case have held that the fact that a foreign parent conducts its marketing and distribution in the United States though an independent distribution system does not shield it from in personam jurisdiction. See, e.g., Lasky v. Continental Products Corp., 569 F.Supp. 1225, 1227 (E.D.Pa.1983); United States v. Toyota Motor Corp., 561 F.Supp. 354, 359 (C.D.Cal.1983). Due process is satisfied as long as the foreign manufacturer knew and intended that its vehicles would be sold in Virginia. Id.

The assertion of jurisdiction in this case is also sound from a public policy standpoint. Virginia has an interest in providing a forum for an injured resident to bring an action against a non-resident manufacturer in a products liability action. In a case in which a Japanese manufacturer had a sales arrangement quite similar to the one in the present case, Hetrick v. American Honda Motor Co., 429 F.Supp. 116 (D.Neb.1976), the court stated:

“The court must look to the economic and commercial realities of this case and it would be fundamentally unfair to allow a foreign manufacturer to insulate himself from the jurisdiction of the courts by use of an exclusive distributor. Any inconvenience to defendant in defending this lawsuit is outweighed by other considerations.”

429 F.Supp. at 118-119. See also Hicks v. Kawasaki Heavy Industries, 452 F.Supp. 130 (M.D.Pa.1978); Dotterweich v. Yamaha International Corporation, 416 F.Supp. 542 (D.Minn.1976).

KHI relies heavily on an unpublished opinion of the United States District Court for Maryland which held that personal jurisdiction could not be asserted over KHI. Batzer v. Kawasaki Motor Corporation, U.S.A., et al., Civil Action No. R-80-1591 (D.Md. December 15, 1981). However, this court, along with the weight of authority in other jurisdictions finds the Batzer court’s interpretation of World-Wide Volkswagen to be strained, unpersuasive and inconsistent with the dictum in World-Wide Volkswagen which logically applies to the foreign parent — American subsidiary situation.

In World-Wide Volkswagen, the Supreme Court held that:

[T]he foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.

444 U.S. at 297, 100 S.Ct. at 567.

For reasons given above, this court finds that KHI should reasonably be expected to be haled into court in Virginia. KHI’s Motion to Dismiss for Lack of In Personam jurisdiction is, therefore, dismissed.

An appropriate Order shall issue.

      . Between 1982 and 1984, Kawasaki U.S.A. sold 7.250 motorcycles to the 19 retail dealers in Virginia. The exact number of motorcycles manufactured by KHI that were sold to Virginia dealers is unknown for two reasons. First, the 7.250 total does not include sales to Virginia dealers who are no longer Kawasaki U.S.A.’s franchised dealers. Second, the total includes some motorcycles manufactured by an affiliate of Kawasaki U.S.A. in Nebraska, sold to Kawasaki U.S.A. and then sold by Kawasaki U.S.A. to dealers in Virginia.


author: LOUIS H. POLLAK, District Judge.

text:
    UNITED STATES of America v. Joseph MALENO.
    Crim. No. 83-0041-2.
    United States District Court, E.D. Pennsylvania.
    March 4, 1985.

      Robert E. Welsh, Jr., Asst. U.S. Atty., Philadelphia, Pa., for United States.
    Mark D. Schaffer, Philadelphia, Pa., for petitioner Maleno.
   OPINION

LOUIS H. POLLAK, District Judge.

Joseph Maleno has petitioned, pursuant to 28 U.S.C. § 2255, for a new trial. Mr. Maleno contends that his conviction was based in part on the out-of-court statements of co-conspirators who were not present at trial and who consequently could not be cross-examined. The government did not show at trial and has not shown since that all the authors of these statements were unavailable at the time of trial. Mr. Maleno contends that under the Third Circuit’s recent decision in United States v. Inadi, 748 F.2d 812 (3d Cir.1984), he must therefore receive a new trial. The government has responded to Mr. Maleno’s petition.

On February 8, 1983, Joseph Maleno and twelve other individuals were indicted for conspiracy to distribute methamphetamine and related crimes. Five months later, Maleno and four codefendants were tried before this court without a jury. In the course of a five-day trial, a large number of taped telephone conversations (and transcripts thereof) were introduced into evidence. Mr. Maleno took part in a number of these conversations; others involved either Mr. Maleno’s codefendants, other individuals who were indicted but not on trial, or unindicted co-conspirators. At the conclusion of the trial, Joseph Maleno was convicted of one count of conspiracy to distribute methamphetamine in violation of 21 U.S.C. § 846, twenty-one counts of unlawful use of a communication facility in violation of 21 U.S.C. § 843(b), and one count of possession of methamphetamine with intent to deliver in violation of 21 U.S.C. § 841(a)(1). On September 1, 1983, Mr. Maleno was sentenced to (1) five years ■of incarceration for conspiracy, (2) four yers of incarceration (consecutive to the incarceration imposed for the conspiracy conviction), two years of special parole, and a $10,000 fine for possession with intent to distribute, and (3) two years of probation (concurrent to the special parole) for unlawful use of a communication facility. Mr. Maleno appealed his conviction to the Court of Appeals for the Third Circuit, which affirmed the conviction. 738 F.2d 426. The Supreme Court denied certiorari on October 15, 1984. — U.S.-, 105 S.Ct. 298, 83 L.Ed.2d 232.

On November 13, 1984, the Court of Appeals for the Third Circuit issued its opinion in United States v. Inadi, 748 F.2d 812 (3d Cir.1984). In Inadi, the Court of Appeals held, inter alia, that out-of-court statements of co-conspirators may not, consistent with the Sixth Amendment’s Confrontation Clause, be offered for their truth unless (1) the declarant is available for cross-examination at trial, or (2) the government has made a good-faith effort to obtain the declarant’s presence at trial. 748 F.2d at 818-19.

Mr. Maleno argues that Inadi compels the grant of a new trial in this case. In support of this argument, Mr. Maleno contends that tapes of a number of conversations to which he was not a party were admitted into evidence at-trial, that some of these conversations involved persons who were not present at trial and whom the government made no effort to produce, and that the out-of-court statements of these absent individuals were inculpatory as to Mr. Maleno.

The government responds with several arguments, only one of which I need reach here. The government argues, correctly in my view, that because the out-of-court statements in question were not used for their truth, Inadi is inapplicable.

I.

The Sixth Amendment guarantees a criminal defendant “the right ... to be confronted with the witnesses against him.” U.S. Const, amend. VI. The guarantee is an important one, going directly to the “integrity of the fact-finding process.” Berger v. California, 393 U.S. 314, 315, 89 S.Ct. 540, 541, 21 L.Ed.2d 508 (1969); Ohio v. Roberts, 448 U.S. 56, 64, 100 S.Ct. 2531, 2538, 65 L.Ed.2d 597 (1980). It ensures that one charged with a crime cannot be convicted by the accusatory words of those unwilling to testify in open court; at the same time, it serves to protect the public interest in open trials by forcing the government to put on its case where all may see it.

Despite these noble purposes, the Confrontation Clause has never been thought to prohibit the use of every statement by a declarant not present at trial. Ohio v. Roberts, supra, 448 U.S. at 64-65, 100 S.Ct. at 2538-2539; United States v. Ammar, 714 F.2d 238, 255 (3d Cir.), cert. denied, Stillman v. United States, — U.S. -, 104 S.Ct. 344, 78 L.Ed.2d 311 (1983). Instead, the policies in favor of requiring the opportunity for effective cross-examination have yielded on occasion to the “strong interest in effective law enforcement” which all jurisdictions share. Id. 448 U.S. at 64, 100 S.Ct. at 2538. The Supreme Court expressed the essence of the resulting compromise in Ohio v. Roberts:

The Confrontation Clause operates in two separate ways to restrict the range of admissible hearsay. First, in conformance with the Framers’ preference for face-to-face accusation, the Sixth Amendment establishes a rule of necessity. In the usual case (including cases where prior cross-examination has occurred), the prosecution must either produce, or demonstrate the unavailability of, the declarant whose statement it wishes to use against the defendant____
The second aspect operates once a witness is shown to be unavailable. Reflecting its underlying purpose to augment accuracy in the factfinding process by ensuring the defendant an effective means to test adverse evidence, the Clause countenances only hearsay marked with such trustworthiness that ‘there is no material departure from the reason for the general rule.’

448 U.S. at 65, 100 S.Ct. at 2588 (citations omitted).

This passage appears to require that, in order to introduce the out-of-court statements of a declarant absent from trial, the government must show both that the declarant is unavailable and that the declaration is trustworthy. If applicable, such a requirement could potentially lead to a new trial for petitioner, since the government did not claim at trial and does not claim now that all the speakers in the taped conversations introduced against Mr. Male-no were either present in court or unavailable.

There are, however, at least two exceptions to the unavailability requirement which Roberts articulated in the passage just quoted and which Inadi applied to co-conspirator statements. The first of these derives from Dutton v. Evans, 400 U.S. 74, 91 S.Ct. 210, 27 L.Ed.2d 213 (1970), in which the Supreme Court permitted the admission of a co-conspirator hearsay statement even though (1) the declarant did not testify at trial and (2) the government made no showing of unavailability. Alex Evans, the defendant in Dutton, was convicted of the murder of three police officers who had discovered Evans and an accomplice, Venson Williams, switching the license plates on a stolen car. At trial, a Mr. Shaw testified that he heard Williams say in reference to the case, “If it hadn’t been for that dirty son-of-a-bitch Alex Evans, we wouldn’t be in this now.” Dutton v. Evans, supra, 400 U.S. at 77, 91 S.Ct. at 214 (quoting Shaw’s testimony). Williams was not called to testify. A plurality of the Supreme Court found no violation of Evans’ Sixth Amendment right to confront the witnesses against him, reasoning that there was no real possibility that cross-examination of Williams would have shown the statement to be unreliable. Id. at 89, 91 S.Ct. at 220. In Roberts, the Court described Dutton as a case in which “the utility of trial confrontation [was] so remote that [the Court] did not require the prosecution to produce a seemingly available witness.” Roberts, supra, 448 U.S. at 65 n. 7, 100 S.Ct. at 2538 n. 7. See also United States v. Yakobov, 712 F.2d 20, 24 n. 4 (2d Cir.1983).

The second exception to the unavailability requirement derives from the same principle as the first. Those out-of-court statements which are not offered for the truth of the assertions made therein, and are therefore not technically “hearsay,” are admissible without regard to the declarant’s presence or availability at trial. Collins v. Francis, 728 F.2d 1322, 1336 (11th Cir.), cert. denied, — U.S. -, 105 S.Ct. 361, 83 L.Ed.2d 297 (1984); United States v. Peaden, 727 F.2d 1493, 1500 & n. 11 (11th Cir.) cert. denied, — U.S. -, 105 S.Ct. 185, 83 L.Ed.2d 118 (1984); United States v. Bruner, 657 F.2d 1278, 1285 (D.C.Cir.1981). No Confrontation Clause issue arises as to such statements, because cross-examination of the witness who recounts the out-of-court statement is sufficient to test the accuracy of the witness’ account of how, when and by whom the statement was made. As Justice Stewart stated in his plurality opinion in Dutton v. Evans, supra: 400 U.S. at 88, 91 S.Ct. at 219 (plurality opinion).

Evans was not deprived of any right of confrontation on the issue of whether Williams actually made the statement related by Shaw. Neither a hearsay nor a confrontation question would arise had Shaw’s testimony been used to prove merely that the statement had been made. The hearsay rule does not prevent a witness from testifying as to what he has heard; it is rather a restriction on the proof of fact through out-of-court statements. From the viewpoint of the Confrontation Clause, a witness under oath, subject to cross-examination, and whose demeanor can be observed by the trier of fact, is a reliable informant not only as to what he has seen but also as to what he has heard.

The common thread that runs through these exceptions is the disutility of cross-examination as a vehicle for challenging the out-of-court statement. As the principal purpose of the Confrontation Clause is to ensure “an effective means to test adverse evidence,” Ohio v. Roberts, supra, 448 U.S. at 65, 100 S.Ct. at 2539, so its exceptions occur when the evidence sought to be introduced is so plainly trustworthy that “testing” by cross-examination is unnecessary. In the case of out-of-court statements offered for the fact that they were made and not for the truth of the assertions they contain, such testing will almost never be necessary; as a result, the introduction of nonhearsay does not trigger a defendant’s right to confront witnesses against him. E.g., Collins v. Francis, supra, 728 F.2d at 1336. In addition, some very few hearsay statements will be self-evidently truthful, so that requiring the opportunity to cross-examine an absent declarant would elevate the form of evidence over its substance. Dutton v. Evans, supra; Ohio v. Roberts, supra, 448 U.S. at 65 n. 7, 100 S.Ct. at 2538 n. 7. In either instance, unavailability is not a prerequisite to the introduction of the out-of-court statement, because cross-examination of the declarant would not advance the defendant’s legitimate interest in testing the evidence offered against him.

Inadi, on which defendant relies so heavily, does nothing to undermine these principles. The co-conspirator statements at issue in that case were “[a]ll ... received as substantive evidence” against the defendant. United States v. Inadi, supra, 748 F.2d at 815. Accordingly, the Third Circuit applied the test enunciated in Ohio v. Roberts for restricting “the range of admissible hearsay,” and found that the failure to show that the absent declarants were unavailable violated the defendant’s right to confront the witnesses against him. Id. at 818-19. The cases cited to support this result all involved absent declarants’ out-of-court statements offered for their truth. See Ohio v. Roberts, supra; United States v. Lisotto, 722 F.2d 85 (4th Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 1682, 80 L.Ed.2d 157 (1984); United States v. Ordonez, 722 F.2d 530 (9th Cir.1983), as amended, 737 F.2d 793 (9th Cir.1984). Inadi thus fails to speak to the question whether a showing of unavailability is essential to the introduction of out-of-court statements offered for a nonhearsay purpose.

II.

Applying the foregoing principles to the out-of-court statements at issue in this case, I conclude that no Confrontation Clause violation has been shown. In an opinion delivered from the bench' after the close of trial, I explained my reasons for finding that Mr. Maleno was guilty, and also explained the evidence on which I relied in reaching that finding. See Tr. 758-61 (July 15, 1983). The discussion in the bench opinion makes clear that the substantive evidence on which, as fact-finder, I relied chiefly consisted of the tapes of forty-four conversations in which Mr. Maleno was a participant. The bench opinion refers to the many conversations in which Mr. Maleno participated, id. at 758, and in which “the matter under discussion is the distribution of methamphetamine.” Id. at 760.

The terms used in those conversations were not always self-defining. Phrases meaning one thing to a lay auditor may mean something very different when used among persons trafficking in metamphetamine. See id. at 769-777 (discussing, inter alia, specialized meaning given the terms “guys” — used to refer to pieces of methamphetamine — and “wetness” — used to describe the condition of the drug). As a result, I relied in part on certain evidence extrinsic to the conversations themselves to interpret the terms used therein. In Mr. Maleno’s case, the bench opinion expressly notes that the testimony of Agent Hershowitz was important in “giving content to conversations, a great many of which were ... ambiguous to the lay auditor.” Id. at 760. Agent Hershowitz was of course available. for cross-examination at trial; the use of his testimony therefore raises no Confrontation Clause problems.

In addition to the testimony of Agent Hershowitz, I mentioned one other source of evidence for the meaning of ambiguous conversations: others of the taped conversations in which the ambiguous terms are more clearly used to refer to the business of methamphetamine distribution. Id. at 763-778. Often, these other conversations were used to clarify discussions involving different parties, so that roughly contemporaneous conversations involving A and B might be used to help clarify conversations between A and C. Moreover, it is undisputed that participants in some of the conversations were not subject to cross-examination at trial, since they were not called to testify. This is the basis for Mr. Maleno’s claim under the Confrontation Clause.

At the outset, it is unclear whether any use was made as to Mr. Maleno of conversations in which Mr. Maleno did not participate. Mr. Maleno was tried together with four codefendants; the portions of my July 1983 bench opinion in which I expressly discuss my use of certain conversations against nonparticipants involve other defendants, not Mr. Maleno. Id. (explaining reasons for convictions of defendants Dominic Florio, Ralph Pultrone, and John Di-Salvo). Mr. Maleno’s Confrontation Clause claim is therefore necessarily difficult to pin down, because it rests not on a particular statement or set of statements but on the whole range of conversations in which he did not participate. The bench opinion strongly suggests that none of the statements of which Mr. Maleno complains were used against him — that, instead, the “great many” conversations in which he participated decisively proved his guilt. See id. at 758-61. I am not willing, however, to reject Mr. Maleno’s claim on the ground that out-of-court conversations of unavailable individuals were not used against him. My bench opinion does not purport to discuss my use of every item of evidence introduced during the course of a long trial. Nor am I prepared, on the basis of memory, to assert with confidence what I did or did not consider in reaching a criminal verdict some nineteen months ago. Accordingly, it seems only prudent to assume for purposes of deciding Mr. Maleno’s petition for a new trial that conversations of absent co-conspirators were indeed used against Mr. Maleno, for the same purposes as against the other defendants.

As I have already indicated, those purposes were limited. The bench opinion contains an extended discussion of the proper evidentiary use of conversations in which a given defendant did not participate against that defendant. Id. at 763-78. I summarized my use of such conversations as follows:

The evidentiary use I have made of the conversations in which the charged person was not a participant was a use which did not involve relying on the recitals in those other conversations for the truth of what was recited, and thus the hearsay objection which otherwise would be proper is in my judgment obviate[d]; that is to say, those conversations to which persons other than the defendant who was charged by the Government to be a conspirator, were looked to not for the truth of what was asserted to locate the defendant in the conspiracy, but to place in context and give clarification to the meaning to be assigned to otherwise ambiguous conversations that the charged defendant ... was clearly a participant in.

Id. at 778. Statements of absent co-conspirators were, in short, used not for the truth of the assertions they contained but for the words and phrases they employed. Such nonhearsay use of out-of-court statements does not violate the Confrontation Clause, regardless of the presence or absence of the out-of-court declarant. See Collins v. Francis, supra, 728 F.2d at 1336; United States v. Peaden, supra, 727 F.2d at 1500 & n. 11. The statements’ limited use necessarily renders cross-examination of the absent declarants unhelpful, since the tapes establish the choice of words, and since the truth of the words was not at issue.

The unavailability requirement which Inadi reaffirmed and applied to the co-conspirator context does not apply to situations such as this one. The Third Circuit’s analysis depends upon the proposition that the “broad co-conspirator exception to the hearsay rule” creates a “tremendous evidentiary advantage” for the government, because it permits the introduction of vast quantities of hearsay without a clear demonstration that such evidence is reliable. See Inadi, supra, 748 F.2d at 818-19. The statements at issue in this case were used for the fact of their utterance and not for their truth, so that there was no prosecutorial “advantage” to be counterbalanced.

For these reasons, I find that Mr. Maleno has not shown a violation of the Confrontation Clause. The petition for a new trial will therefore be denied. An Order to that effect accompanies this Opinion.

      . The government's brief raises four arguments. First, the government contends that Inadi is inapplicable because no co-conspirator statements were offered against Mr. Maleno. Government’s Response at 2-3. Second, the government maintains that Inadi does not apply because the co-conspirator statements introduced at trial were used by the court (as finder of fact) not for their truth but for the fact of their utterance. Id. at 3-4. The government devotes one paragraph apiece, with no citations, to each of these first two arguments. The largest portion of the government’s brief is devoted to its third argument — that Inadi should be applied only prospectively. Id. at 4-7. Finally, the government contends that, if petitioner’s view of Inadi is accepted, the record in this case should simply be reopened in order to permit the government to introduce evidence of the unavailability of the relevant out-of-court declarants. Id. at 7-8.
      Because I resolve Mr. Maleno’s petition on what the government apparently viewed as a secondary issue — the application of Inadi to non-hearsay out-of-court statements — I do not reach other arguments advanced by the government. In particular, I express no view with regard to the question whether Inadi is to be applied prospectively only.

      . The Third Circuit referred to this exception only in passing in Inadi, see 748 F.2d at 818 n. 4, finding that the government had not raised the issue and that in any event the exception was inapplicable. Id.

      . Justice Marshall's dissenting opinion in Dutton v. Evans, in which Justices Black, Douglas, and Brennan joined, appeared to argue that the Confrontation Clause applied to nonhearsay as well as hearsay: “Much of the complexity afflicting hearsay rules comes from the definition of hearsay as an out-of-court statement presented for the truth of the matter stated — a definition nowhere adopted by this Court for confrontation purposes.” Dutton v. Evans, supra, 400 U.S. at 105 n. 7, 91 S.Ct. at 228 n. 7 (Marshall, J., dissenting). Justice Harlan, who concurred in the result but did not join the plurality opinion, did not address the question whether the clause applies only to hearsay as that word is traditionally defined. Rather, Justice Harlan argued that the confrontation clause was simply a rule of trial procedure, and thus required only that the defendant be permitted to cross-examine whatever witnesses the government chooses to call. Id. at 94-97, 91 S.Ct. at 222-224 (Harlan, J., concurring in the result). Thus, the Court in Dutton v. Evans divided 4-4 on the question whether the Confrontation Clause applied to out-of-court statements not offered for their truth.
      Nevertheless, cases decided since Dutton (and since Ohio v. Roberts, supra) have uniformly concluded that the introduction of out-of-court statements which are nonhearsay does not implicate the Confrontation Clause. See, e.g., United States v. Peaden, supra, 727 F.2d at 1500 & n. 11 (“We find no cases indicating that the confrontation clause protection extends to evidence that is not hearsay"). The Supreme Court appeared to assume such a rule in Roberts, stating that “[t]he Confrontation Clause operates in two separate ways to restrict the range of admissible hearsay." Ohio v. Roberts, supra, 448 U.S. at 65, 100 S.Ct. at 2538 (emphasis added).

      . Under the Federal Rules of Evidence, certain classes of co-conspirator statements are treated as "statements which are not hearsay.” See Fed.R.Evid. 801(d)(2)(E). Such statements nevertheless fall within the traditional common-law definition of hearsay, since they are out-of-court statements offered for the truth of the assertions they contain. There is thus no contradiction in the fact that co-conspirator statements offered for their truth under Rule 801(d)(2)(E) trigger the Confrontation Clause under Inadi, supra, while similar statements, when offered for the fact of their utterance, have been found outside the clause’s scope.

      . Mr. Maleno’s brief in support of his petition for a new trial does not refer me to any particular conversation whose use against him violated the Confrontation Clause, but rather complains that ”[m]ost of the evidence in this case consisted of tape recorded conversations between several co-conspirators,” and that such conversations were "used as substantive evidence against [Mr. Maleno] resulting in his conviction.” Petitioner's Brief at 1.

      . Petitioner argues that this characterization is incorrect, relying on the fact that "the Court and Agent Hershowitz went to great lengths to ‘interpret’ many of the co-conspirator conversations.” Petitioner's Brief at 2. Availability of the declarants for cross-examination was necessary, the argument goes, to permit the speakers to "explain their own ambiguous utterances rather than permit a government agent to speculate as to what was really meant.” Id.

      This argument confuses the evidentiary uses of (1) conversations in which Mr. Maleno participated and (2) conversations in which Mr. Maleno did not participate. It is clear that Mr. Maleno’s words were indeed used as "substantive evidence” against him, and that I carefully considered Agent Hershowitz’ extensive testimony in interpreting the sometimes ambiguous words which Mr. Maleno used. See Tr. 758-61 (July 15, 1983). It is equally clear that some conversations were used as evidence against parties who did not participate in those conversations. Id. at 763-78. The evidentiary value of these latter conversations was precisely their clarity — terms which elsewhere appeared vague were used in a context that left no doubt as to their meaning. E.g., id. at 772-74 (conversation between Anthony Orlando and Joseph Maleno used to clarify meaning of "wetness” as used in conversation between Joseph Maleno and John DiSalvo). Thus, it was unnecessary for me to "interpret” these conversations in order to use them against defendants who did not participate in them. To the contrary, they were used as interpretive tools with which to construe the critical "substantive evidence" against the various defendants — the defendants’ own words in conversations with each other and with the other members of the conspiracy.


author: LEISURE, District Judge:

text:
    STINNES INTEROIL, INC., Plaintiff, v. APEX OIL CO., Goldstein Oil Co. and Novelly Oil Co., Defendants.
    No. 84 Civ. 6622(PKL).
    United States District Court, S.D. New York.
    March 8, 1985.

      Cahill, Gordon & Reindel, New York City (Thomas R. Jones, Paula A. Franzese, New York City, of counsel), for plaintiff.
    Cadwalader, Wickersham & Taft, New York City (Pamela R. Chepiga, Edward P. O’Keefe, New York City, of counsel), for defendants.
   MEMORANDUM AND ORDER

LEISURE, District Judge:

In this suit for breach of contract defendants Apex Oil Co., Goldstein Oil Co. and Novelly Oil Co. (collectively “Apex”) have moved pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss the complaint for failure to state a claim upon which relief may be granted, or in the alternative, to transfer this action to the Eastern District of Missouri under 28 U.S.C. § 1404(a). I con-elude that neither prong of defendants’ motion should be granted.

I. SUFFICIENCY OF THE COMPLAINT — RULE 12(b)(6).

It is elementary that for purposes of a motion under Rule 12(b)(6), the allegations of the complaint are taken “at face value.” California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 515, 92 S.Ct. 609, 614, 30 L.Ed.2d 642 (1972); Merchants Bank of N.Y. v. Credit Suisse Bank, 585 F.Supp. 304, 311 (S.D.N.Y.1984). The function of a motion to dismiss “is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.” Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir.1980). The complaint may be dismissed only if it appears to a certainty that plaintiff could prove no set of facts entitling him to relief. See McLain v. Real Estate Board, 444 U.S. 232, 246, 100 S.Ct. 502, 511, 62 L.Ed.2d 441 (1980); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). In evaluating the sufficiency of the allegations, the court must bear in mind Rule 8(a)’s instruction that the complaint be a “short and plain statement of the claim.” See 5 C.A. Wright & A.R. Miller, Federal Practice and Procedure: Civil §§ 1356 at 590, 1357 at 598 (1969).

A. Facts.

Stinnes and Apex both engage in the business of petroleum trading. On January 25, 1982, Stinnes and Apex entered into an agreement for Apex to purchase blended gasoline from Stinnes. The written contract provided for February delivery of 500.000 barrels at 91V4$ per gallon. The parties agreed that Missouri law would control. The contract did not expressly indicate that time was of the essence.

By February 22, 1982, Stinnes had delivered about 360,000 barrels to Apex in a number of separate deliveries, all of which were accepted. Each delivery was separately invoiced and paid for. With delivery of 140,000 barrels still outstanding, Stinnes, at Apex’s request, agreed to a “book transfer” of about 150,000 barrels. A book transfer is an accepted industry method of settling obligations between oil traders. In essence, it transfers ownership of petroleum by means of book entries. In this case, Stinnes book-transferred some 150.000 barrels owed to it by Irving Petroleum Co. to United Oil Co. at Apex’s request. According to the complaint, Apex was told that if Stinnes were to comply with Apex’s request to book-transfer 150,-000 barrels to United, then Stinnes could fulfill its obligation to deliver the 140,000 barrels due Apex under the January 25 agreement only when a certain tanker arrived in port. Since the tanker was due to arrive on February 27 or 28, any delay in arrival would result in a late delivery. Stinnes claims that Apex knew of and accepted this possibility, and decided to proceed with the book transfer anyway.

As matters turned out, the ship was delayed at sea because of adverse weather conditions. It did not arrive until March 2. Stinnes repeatedly attempted to notify Apex once it became clear that the ship would be delayed. On March 1, Apex informed Stinnes that it would refuse delivery as untimely. Nevertheless, on March 2 Stinnes tendered the gasoline to Apex, which repeated its refusal to accept. Stinnes then disposed of the gasoline in what was then a falling market, incurring thereby losses of over $716,000. This suit followed in September 1984.

B. Discussion.

The Rule 12(b)(6) prong of Apex’s motion is premised on the theory that the complaint alleges no more than a breach of the contract by Stinnes and thus is deficient on its face. Its argument runs essentially as follows. Apex was entitled to a perfect tender under § 2-601 of the Uniform Commercial Code (“UCC”), V.M.A.S. § 400.2-601, so it was justified in rejecting late delivery. The January 25, 1982 contract was not and could not have been modified by the subsequent book transfer because, first, each contract was independent, and second, the January 25 agreement by its terms precluded parol modification. Finally, Apex argues that the force majeure clause of the contract has no application in this instance.

1. Perfect tender. Relying on § 2-601, Apex argues that Stinnes breached the January 25 contract by delivering the outstanding barrels of gasoline on March 2 rather than during February. Often referred to as the “perfect tender rule,” § 2-601 permits a buyer to reject an entire shipment of goods for “fail[ure] in any respect to conform to the contract____” Apex’s argument is simple. The contract called for February delivery. The complaint itself says that goods were delivered not in February, but in March. Apex had the right to insist on literal, punctilious performance under § 2-601. Therefore, its rejection of Stinnes’s tender of delivery was entirely proper. The bottom line is that the complaint itself states that it was Stinnes and not Apex which breached the agreement; therefore the Rule 12(b)(6) motion should be granted.

Stinnes, on the other hand, argues that the January 25 contract was actually an installment contract, which is exempt from the perfect tender rule of § 2-601. Stinnes points to the fact that the gasoline had been delivered during February in several lots, each separately invoiced and paid for, as evidence that this was in fact an installment contract. Installment contracts are governed by § 2-612, which, unlike § 2-601, permits the buyer to reject a delivered installment only “if the non-conformity substantially impairs the value of that installment.” It is Stinnes’s contention that a two-day delay in delivery does not constitute a “substantial impairment.”

Whether the delay substantially impaired the value of the last 140,000 barrels of gasoline is a question of fact. See Cherwell-Ralli, Inc. v. Rytman Grain Co., 180 Conn. 714, 433 A.2d 984, 986 (1980); Graulich Caterer Inc. v. Hans Holterbosch, Inc., 101 N.J.Super. 61, 243 A.2d 253, 262 (N.J.App.1968). So if this was in fact an installment contract, Apex’s motion would be immediately denied. It is, however, at least open to question whether the instant agreement may be read as an installment contract.

Section 2-612(1) defines an installment contract as “one which requires or authorizes the delivery of goods in separate lots to be separately accepted____” Comment 1 to that section explains that “installment contract” is defined broadly “so as to cover installment deliveries tacitly authorized by the circumstances.” Thus, Stinnes contends that the contract contemplated or authorized installment deliveries, and hence is an installment contract within § 2-612(1). On the other hand, § 2-307 provides that even in non-installment contracts, delivery may be in lots if the circumstances warrant it, and payment in such cases may be demanded lot by lot. So the import of the earlier delivery of 360,000 barrels in separate lots which were separately invoiced and paid for is not at all clear. The delivery of lots could signify an installment contract equally as well as it could signify a unitary contract with delivery in lots. Which characterization is correct is a question of fact. Since the complaint alleges that delivery of the first 360,-000 barrels was “pursuant to the terms of the Agreement” (H10), it may fairly be read to allege that the contract authorized delivery in separate lots separately accepted. It should therefore be open to Stinnes to prove that such was the case.

2. Modification — the February 22 book transfer. Stinnes argues that the January 25 contract was modified when Stinnes agreed to participate in the February 22 book transfer of 150,000 barrels of gasoline. It reasons as follows. The 150,-000 barrels Stinnes used in the book transfer could have been used to satisfy its obligations to Apex under the January 25 contract. When Apex asked it to use that gasoline in the book transfer, Stinnes told Apex that it would do so, but that doing so would mean Stinnes could deliver the 140,-000 barrels outstanding under the January 25 contract only upon the arrival of a certain tanker, which was due on February 27-28 and could be delayed. Apex nevertheless desired to consummate the book transfer. By doing so, therefore, Apex agreed to a short delay in delivery of the 140,000 barrels due it under the January 25 agreement.

Apex raises as a bar to this argument the final clause of the agreement, which provides that it can not be amended except by “express written agreement of both parties.” Under § 2-209(2), such clauses are binding. Moreover, § 2-209(3) requires that a modified contract comply with the Statute of Frauds if it is applicable, which is the case here. See UCC § 2-201. Finally, it asserts that the January 25 and February 22 transactions were entirely separate and unrelated. Stinnes in response indicates that under § 2-209(4) an attempted modification may be viewed as a waiver of the no-oral-modification clause and the Statute of Frauds. Since under Stinnes’s view of the facts there was an attempt to orally modify the January 25 contract, § 2-209(4) prevents Apex from raising the antimodification clause of the contract as a defense.

Whether the January 25 and February 22 transactions were separate and independent or related is a question of fact, open to proof at trial. Whether the alleged attempt at modification would be viewed as a waiver depends on the facts and circumstances, which also are to be adduced at trial. See, e.g., Federal Express, supra, at 1302 (waiver inferred from conduct); Dangerfield v. Markel, 252 N.W.2d 184 (N.D.1977); Linear Corp. v. Standard Hardware Co., 423 So.2d 966, 968 (Fla.App.1983) (“evidence as to the parties’ conduct supports finding ... a waiver”). Usage of trade, the parties’ course of dealing and the course of performance under this contract are all relevant evidence on questions of contract interpretation. See §§ 1-205(3), 2-208(3). Accordingly, plaintiff can not be foreclosed by this motion from proceeding with this action.

3. Force majeure. The January 25 contract provided that in the event a cause beyond a party’s control prevents it from performing, its performance will be suspended without penalty for as long as the disability continues. Stinnes claims that this provision excused it from timely performance. Apex responds that the clause was not meant to apply to this situation.

Apex looks for support to § 2-615, which deals with excuse or suspense of performance for commercial impracticability. That section spells out the conditions under which a party’s expected performance will be excused because of events beyond its control. Apex argues that the facts of this case do not fall within § 2-615’s excusing provisions. This argument assumes, however, that § 2-615 is exclusive, and that the parties may not agree to provide for excusal or suspense of performance in circumstances where § 2-615 does not excuse or suspend performance. That is manifestly not the case. In the first place, § 1-102(3) permits parties to a contract to vary the Code’s provisions by agreement. And in any event, it is clear from the case law that the parties were permitted to agree upon an excuse/suspense provision with terms broader than those of § 2-615, if that is what they chose to do. Interpetrol Ber muda Ltd. v. Kaiser Aluminum Int’l Corp., 719 F.2d 992, 997-1000 (9th Cir.1983). Whether the clause actually covers this type situation is a different question, one that should be answered by looking at the understanding of the parties in light of the circumstances at the time of contracting, taking account of “mercantile sense and reason.” See UCC § 2-615 comment 8; Eastern Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957, 990-92 (5th Cir.1976). Thus, what transpired here could legally have been covered by the force majeure clause of the contract. Whether it was in fact so covered, so that Stinnes would be released from timely delivery, presents yet another factual question which can not be decided on a motion to dismiss.

4. Summary. From the foregoing discussion it should be apparent that there are sets of facts which, if proved at trial, would support Stinnes’s claim for relief. Accordingly, Apex’s motion to dismiss the complaint must be denied.

II. TRANSFER OF VENUE — 28 U.S.C. § 1404(a).

Apex has requested that in the event I deny its Rule 12(b)(6) motion, I transfer this case to the District for the Eastern District of Missouri (E.D.Mo.) under 28 U.S.C. § 1404(a) (1982). Section 1404(a) permits a district court to transfer a case to another district court “[f]or the convenience of parties and witnesses, in the interest of justice____”

It is well-settled that on such a motion, the burden is on the movant “to establish that there should be a change of forum.” Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 218 (2d Cir.1978), cert. denied, 440 U.S. 908, 99 S.Ct. 1215, 59 L.Ed.2d 455 (1979). To meet its burden, Apex has raised a number of proposed bases for transfer.

First, Apex contends that considerations of witnesses' convenience mandate transfer to E.D.Mo. Three of Apex’s Missouri-based employees would need to be witnesses. Each is a key employee in Apex’s trading operation, and the absence of each allegedly would severely disrupt Apex’s operations. Stinnes, for its part, points to two non-party witnesses, former employees of Stinnes, who reside and work near New York. One is self-employed and the other is vital to his employer. So it appears that on this point there is a mutual standoff; a transfer would merely switch the balance of inconveniences from one side to the other. The same can be said for the relative degrees of inconvenience to the parties. Although Stinnes is not now located in New York, it is not far from here, in suburban New Jersey. True, Apex is located within St. Louis, presumably nearer to E.D.Mo. than Stinnes is to this Court. But surely small differences in the distance of each party’s commute to the courthouse are at best of minor significance.

Nor is access to documents and other proof a particularly persuasive factor in favor of transfer. Apex has not shown that its documents and other proof are particularly bulky or difficult to transport, or that it is somehow a greater imposition for Apex to bring its proof to New York than for Stinnes to bring its proof to St. Louis.

Nor is the fact that Missouri law controls this action relevant to this inquiry. This case is governed by the Uniform Commercial Code, which is the prevailing law in both New York and Missouri.

Given the above facts, it does not appear that relative speed of the respective district courts in disposing of litigation is a weighty consideration. This is particularly so in a case as uncomplicated as this one seems.

In sum, I do not see how transferring this case to E.D.Mo. would yield a substantial gain in overall convenience. Absent proof of such a gain, plaintiffs choice of forum should not be disturbed. A § 1404(a) motion should not be granted if all transfer would accomplish is to shift the inconveniences from one party to the other. See Brierwood Shoe Corp. v. Sears, Roebuck & Co., 479 F.Supp. 563, 566 (S.D.N.Y.1979). Since Apex has not met the heavy burden imposed on it, see Factors Etc., supra, its motion must be denied.

SO ORDERED.

      . Federal jurisdiction herein is premised on the parties’ diversity of citizenship, under 28 U.S.C. § 1332 (1982). Plaintiff Stinnes Interoil, Inc. is a Delaware corporation with its principal place of business in New Jersey. Defendants Gold-stein Oil Co. and Novelly Oil Co. are incorporated and have their principal places of business in Missouri. They are general partners of Apex Oil Co., which is a Missouri partnership. Apex’s principal place of business is in Missouri, though it has a small office in New York.

      . Section 1404(a) reads as follows:
      (a) For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

      . The complaint alleges that delivery was to be at New York Harbor (¶ 7). Defendants’ papers pinpoint the place of delivery at Carteret, N.J.

      . Stinnes supports its argument of no substantial impairment by pointing to the absence in the contract of any indication that time was of the essence. Apex, on the other hand, asserts that because there was a falling market at the end of February, any delay necessarily impaired the value of the gasoline to a trader. This dispute demonstrates that there is indeed a set of facts which, assuming an installment contract, could be proved in support of Stinnes's claim.
      Apex correctly points out that failure to comply with a delivery deadline can constitute substantial impairment. See UCC § 2-612, comment 4 ("Substantial impairment of the value of an installment can turn not only on the quality of the goods but also on such factors as time....”). That does not mean, however, that any delay necessarily impairs the value of an installment in all circumstances. See, e.g. Dangerfield v. Markel, 252 N.W.2d 184, 192 (N.D.1977) (one day delay in payment of potato shipment found not to be a substantial impairment).

      . Apex relies on Neal-Cooper Grain Co. v. Texas Gulf Sulphur Co., 508 F.2d 283, 292 (7th Cir.1974) to prove that where a contract calls for delivery of a quantity of goods during a specified period of time, it is a unitary contract contemplating delivery in lots rather than an installment contract. That case does not, however, hold that such a contract as a matter of law is a unitary contract. In Neal-Cooper, the defendant simply had offered no proof that more was involved than the surface meaning of the contract implied. In the posture of the instant case, however, Stinnes should not be precluded from introducing proof that the parties did indeed intend to create an installment contract, regardless of how a third party like the Court might otherwise read the words of the agreement. See infra note 6.

      . The fact that the written January 25 agreement included a merger clause which purports to exclude all "promises, agreements or warranties" beyond the four corners of the writing does not stand in the way of Stinnes proving its case. Sections 1-205(4) and 2-208(2) direct that whenever possible, the language of the contract should be harmonized with usages of trade, the parties' prior course of dealing, and the prior course of performance of the contract in question. See Federal Express Corp. v. Pan Am. World Airways, Inc., 623 F.2d 1297, 1300-01 (8th Cir.1980). Furthermore, these three factors may be used to explain or supplement even a written agreement which, like this one, is intended as a “final expression" of the contract as to the terms contained in the writing. UCC § 2-202. Thus, it is conceivable that Stinnes could prove that the intent of the parties was to create an installment contract.

      . Of course, it would be open to Apex to claim and prove retraction of any waiver Stinnes might establish. See UCC § 2-209(5).

      . Marcello lives in New Jersey and is employed in Connecticut. Bertolami resides and works in New Jersey.

      . I note that Missouri law in this area is not the least bit distinctive. In fact, my research has uncovered a marked paucity of Missouri cases in this area.


author: RICE, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. Jeffrey KNIGHT, Defendant.
    No. CR-3-84-33.
    United States District Court, S.D. Ohio, W.D.
    March 11, 1985.

      James A. Wilson, Asst. U.S. Atty., Dayton, Ohio, for plaintiff.
    Douglas Casteel, Dayton, Ohio, for defendant.
   VERDICT OF NOT GUILTY; TERMINATION ENTRY

RICE, District Judge.

Defendant Jeffrey R. Knight was charged in a two count indictment with possession and transfer of a “sawed-off” shotgun in violation of 26 U.S.C. §§ 5861(d), (e) and 5871. Doc. #4. The Defendant, with the consent of the Government, waived his right to a jury trial. Doc. # 11. Having heard the evidence as the finder of fact, this Court now makes its findings on whether the Government has sustained its burden of proving Defendant’s guilt, beyond a reasonable doubt. See, Rule 23(c), Fed.R.Crim.P.

At trial, the Defendant admitted the essential elements of the offenses charged in the indictment and raised the defense of entrapment. See also, Defendant’s Post-Trial Brief (Doc. # 14). Indeed, based upon the evidence adduced at trial, the Court concludes that the Government has established each and every essential element of the offenses charged in the indictment with proof beyond a reasonable doubt. Therefore, the asserted defense of entrapment will be the focus of the Court’s findings.

At the conclusion of the trial, the Court informed counsel that it questioned whether there was sufficient evidence in the record to raise the defense of entrapment in the first instance. As the Sixth Circuit said in United States v. Ambrose, 483 F.2d 742, 753 (6th Cir.1973), “... the defendant was required to introduce evidence of inducement before the prosecution would be required to prove beyond a reasonable doubt that the defendant was predisposed ...,” citing, United States v. Sherman, 200 F.2d 880, 882-83 (2d Cir.1952) (Per Learned Hand, J.) Thus, the Court must initially decide whether the Defendant introduced sufficient evidence of inducement by an undercover agent of the Government to place upon the Government the requirement of proving the Defendant’s predisposition to commit crime, beyond a reasonable doubt.

There is a paucity of authority in the Sixth Circuit which addresses the issue of the sufficiency of the evidence of inducement necessary to raise the defense of entrapment. In United States v. Jones, 575 F.2d 81, 83-84 (6th Cir.1978), the Court said:

Simply stated, when entrapment is asserted as a defense, if the defense raises the issue by evidence either in the government’s case in chief, or in the defense, the burden of proof is on the government to prove beyond a reasonable doubt that the defendant had a predisposition to commit the crime.
In United States v. Ambrose, 483 F.2d 742, 753 (6th Cir.1973) the court said, “... the defendant was required to introduce evidence of inducement before the prosecution would be required to prove beyond a reasonable doubt that the defendant was predisposed ...” See also United States v. Eddings, 478 F.2d 67 (6th Cir.1973).
In Kadis v. United States, 373 F.2d 370 (1st Cir.1967) the court said at 373-374, “Henceforth we will look, singly, at the ultimate question of entrapment. If the defendant shows, through government witnesses or otherwise, some indication that a government agent corrupted him, the burden of disproving entrapment will be on the government; but such a showing is not made simply by evidence of a solicitation. There must be some evidence tending to show readiness.”
As to quantity of “some evidence” see further discussion in Kadis at p. 374.

In Kadis, the First Circuit said that the amount of evidence “tending to show unreadiness” need not be so substantial as to require a directed verdict in favor of the Defendant, if uncontroverted; however, the quantum of evidence must be more than a mere scintilla. 373 F.2d at 374. See also, United States v. Kakley, 741 F.2d 1, 3 (1st Cir.1984); United States v. Luce, 726 F.2d 47, 49 (1st Cir.1984); Tzimopoulos v. United States, 554 F.2d 1216, 1217 (1st Cir.), cert. denied, 434 U.S. 851, 98 S.Ct. 164, 54 L.Ed.2d 120 (1977). In other circuits, courts have established different tests to determine whether sufficient evidence has been introduced to raise the defense of entrapment. For instance in United States v. Andrew, 666 F.2d 915, 922 (5th Cir.1982), the court said:

We note at the outset that the mere assertion of entrapment does not require the trial judge to automatically instruct the jury on it. Defendant must first present evidence showing both (1) lack of his predisposition to commit the crime, and (2) some governmental involvement and inducement more than just providing an opportunity or facilities to commit the crime.

Accord, United States v. Kidd, 734 F.2d 409, 413 (9th Cir.1984); United States v. Watson, 489 F.2d 504, 508-09 (3rd Cir.1973).

It does not matter whether this Court applies the test set forth in Kadis (more than a mere scintilla of evidence tending to show unreadiness) or the two factor test set forth in Andrew. The Court is convinced that under either standard, the Defendant has introduced sufficient evidence to raise the defense of entrapment, to wit: The Defendant’s testimony that he offered to sell the weapon in an wwsawedoff state, but that the government agent indicated, on both the first and second contact with the Defendant, that he would buy the weapon only if it were sawed off; the Defendant finally agreeing on the second contact, after having first refused the agent's request to saw off the barrel of the weapon, because he needed the money.

Accordingly the Court turns to the issue of entrapment.

In the recent case of United States v. Pennell, 737 F.2d 521, 534 (6th Cir.1984), the court succinctly summarized the law of entrapment.

The central inquiry in entrapment cases is whether law enforcement officials implanted a criminal design in the mind of an otherwise law-abiding citizen or whether the government merely provided an opportunity to commit a crime to one who was already predisposed to do so. See, e.g., United States v. Russell, 411 U.S. 423, 93 S.Ct. 1637, 36 L.Ed.2d 366 (1973); Sherman v. United States, 356 U.S. 369, 78 S.Ct. 819, 2 L.Ed.2d 848 (1958); United States v. Norton, 700 F.2d 1072, 1075 (6th Cir.), cert. denied, [461] U.S. [910], 103 S.Ct. 1885, 76 L.Ed.2d 814 (1983). If a defendant raises the entrapment defense, the government bears the burden of proving predisposition beyond a reasonable doubt. United States v. Jones, 575 F.2d 81, 83 (6th Cir.1978).

Entrapment may be established in either of two ways. First, the defense may be proved as a matter of law when the facts are undisputed (the court may not make credibility findings or choose between conflicting testimony) and this undisputed evidence demonstrates a clear absence of predisposition. Pennell, 737 F.2d at 534. See also, United States v. Henciar, 568 F.2d 489 (6th Cir.1977), cert. denied, 435 U.S. 953, 98 S.Ct. 1582, 55 L.Ed.2d 803 (1978). “If either of these elements is missing, then the predisposition question is for the [fact finder] to decide.” Pennell, 737 F.2d at 534. In other words, if either of the elements is missing, entrapment presents a fact question. In the present case, there was conflicting testimony about the event surrounding the Defendant’s possession and sale of the “sawed-off” shotgun. Therefore since the facts were disputed, entrapment was not established as a matter of law. Accordingly, the Court, sitting as fact finder, must analyze the evidence before it to determine whether entrapment was established as a matter of fact. Stated somewhat differently, the issue before the Court is whether the Government proved predisposition beyond a reasonable doubt.

The Sixth Circuit has established clear standards to help guide a Court through its analysis of the evidence relating to predisposition. First in United States v. Lasuita, 752 F.2d 249 (6th Cir.1985), the court emphasized that the Government must prove predisposition at the time of the initial contact between the Government and the Defendant, rather than at the time the offense is actually committed. Second in United States v. McLernon, 746 F.2d 1098 (6th Cir.1984), the court listed a number of factors relevant to determining predisposition which include:

the character or reputation of the defendant, including any prior criminal record; whether the suggestion of the criminal activity was initially made by the Government; whether the defendant was engaged in criminal activity for profit; whether the defendant evidenced reluctance to commit the offense, overcome only by repeated Government inducement, or persuasion; and the nature of the inducement or persuasion supplied by the Government.

746 F.2d at 1112 (quoting United States v. Reynoso-Ulloa, 548 F.2d 1329, 1336 (9th Cir.1977), cert. denied, 436 U.S. 926, 98 S.Ct. 2820, 56 L.Ed.2d 769 (1978) and United States v. Kaminski, 703 F.2d 1004, 1008 (7th Cir.1983)).

Applying these factors to the evidence before it, this Court concludes that it entertains a reasonable doubt as to whether the Defendant had the predisposition to commit the offenses charged in the indictment when he first came into contact with Mr. Shanks, the Government informant. The Court has already informed counsel that it credits the version of events contained in the testimony of the Defendant and Mr. Fraley, as opposed to the version contained in the testimony of Mr. Shanks. This testimony reveals that the Defendant was willing to sell a shotgun with the legal barrel length to the Government informant Shanks. However, the informant insisted that he would purchase a shotgun only if the barrel were “sawed-off.” The Defendant’s reluctance to sell such a weapon was overcome by repeated Government inducements and the Defendant’s precarious financial condition. Furthermore, the evidence also revealed that the Defendant did not cut the barrel until repeated Government importuning overcame his reluctance to do so. Herein, the nature of the Government’s inducements (the type of pressure it took to overcome Defendant’s reluctance to sell the gun with a shortened barrel) is circumstantial evidence that the Defendant had the requisite predisposition, because there was no overreaching by preying on an established relationship between the informant and Defendant in order to induce the commission of the crimes. Cf. McLernon, 746 F.2d at 1113-14. Nevertheless, in the absence of any other evidence of predisposition, such as a prior record or that the Defendant had a reputation for criminal behavior, this alone is not sufficient to prove beyond a reasonable doubt that the Defendant had the predisposition to commit the offenses for which he is charged in the indictment.

Based upon the foregoing, the Court, sitting as the trier of fact, herein finds the Defendant Jeffrey R. Knight Not Guilty of Count 1 and Count 2 of the indictment.

      . Although the McLernon court addressed the question of entrapment as a matter of law, common sense dictates that the same factors are relevant in determining whether the evidence establishes entrapment as a matter of fact.