author: MIHM, District Judge.

text:
    Timothy G. KLING, M.D., Albert Petrone, M.D., Lawrence M. Kerr, M.D., and Thomas Koch, M.D., Plaintiffs, v. ST. PAUL FIRE & MARINE INSURANCE COMPANY, a Minnesota corporation, and McDonough District Hospital, an Illinois municipal corporation, Defendants.
    No. 85-1342.
    United States District Court, C.D. Illinois, Peoria Division.
    Jan. 30, 1986.

      John H. Bisbee, Macomb, Ill., for plaintiffs.
    Daniel G. O’Day, Peoria, Ill., and James H. Sneed, Chicago, Ill., for McDonough Dist. Hosp.
    Jack B. Teplitz, Peoria, Ill., and Lawrence R. Samuels, Chicago, Ill., for St. Paul Ins.
   ORDER

MIHM, District Judge.

This case is an antitrust case in which the Plaintiffs allege that the Defendant insurance company and hospital have entered into an agreement which violates federal and state antitrust laws and deprives the Plaintiffs of their civil rights. This case is before the Court upon the Defendant McDonough District Hospital’s motion to dismiss counts I and II of the complaint, which are based upon federal antitrust law, and count IV of the complaint, which is based upon the Illinois Antitrust Act. The Plaintiffs’ civil rights claim under count III of the complaint is not before the Court in this motion.

The Defendants have argued that the Court should dismiss the Plaintiffs’ complaint on the separate grounds that the Court lacks subject matter jurisdiction over the complaint and that the complaint fails to state a claim upon which relief can be granted. Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), respectively. With regard to their 12(b)(1) motion, the Defendants argue that the Court lacks subject matter jurisdiction because the Plaintiffs’ complaint alleges activity which is wholly local in nature and does not have a substantial and adverse affect upon interstate commerce. In their 12(b)(6) motion to dismiss, the Defendants argue that the Plaintiffs have not sufficiently alleged the necessary elements to raise an antitrust claim. Because this is a complex and complicated area of the law, the Court will discuss the points raised by the Defendants in some detail.

In reaching a decision on the Defendant’s motion, the Court takes its cue from the Seventh Circuit ease of Seglin v. Esau, 769 F.2d 1274 (7th Cir.1985). The plaintiff in Seglin, a physician, had brought an antitrust action against a hospital and numerous other defendants, alleging that the defendants had violated federal antitrust law when they suspended the plaintiff’s hospital staff membership and privileges. The defendants responded with a motion to dismiss on the grounds that the federal court lacked subject matter jurisdiction and that the complaint failed to state a claim. The district judge dismissed the complaint for lack of subject matter jurisdiction and for failure to state a claim, and the Seventh Circuit proceeded to affirm on the ground of failure to state a claim. In deciding the ground upon which to base their dismissal of the plaintiff’s complaint, the Seventh Circuit noted that there is some uncertainty in the law as to whether the failure of an antitrust plaintiff to adequately allege an “effect on interstate commerce” is a failure to state a claim or a failure to allege subject matter jurisdiction. The court stated:

“[A]t least two commentators and one federal district court have argued persuasively that a failure to allege an effect on interstate commerce is a failure to state- a claim and not a failure to allege subject matter jurisdiction (citations omitted). In the instant case, however, it is unnecessary for us to decide whether rule 12(b)(6) or 12(b)(1) governs the defendant’s motion to dismiss, for even if we view this as a Section 12(b)(6) dismissal and consider only the well-pleaded facts of the complaint, plaintiff has simply failed to adequately allege any nexus with interstate commerce.” (footnotes omitted). 769 F.2d at 1278-79.

This Court likewise concludes that it is not necessary to determine whether the Defendant's motion is more appropriately a 12(b)(6) or a 12(b)(1) motion because the Court will assume that the Plaintiffs’ allegations are true when considering the Defendant’s motion to dismiss.

The Seglin case is also instructive in explaining the standard which a court should use in determining whether an antitrust complaint is sufficient to withstand a Rule 12(b)(6) motion to dismiss. The Seglin court first pointed out that it is not enough for a plaintiff to merely allege that the defendants acted in concert to temporarily interfere with the plaintiff’s employment opportunity in order to withstand a motion to dismiss. Rather, the court said:

“Under Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed 2nd 80 (1957), and Poller v. Columbia Broadcasting Systems, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491 7 L.Ed 458 (1962), ‘a complaint ... must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory.’ (citations omitted) In practice, this means that a plaintiff cannot survive a rule 12(b)(6) motion merely by alleging bare legal conclusions while failing to set forth facts that ‘at least outline or adumbrate’ a violation of the Sherman Act. Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir.1984), quoting Sutliff, Inc. v. Donovan Companies, Inc., 727 F.2d 648, 654 (7th Cir. 1984).” 769 F.2d at 1279.

Turning, then, to the Defendant’s argument that the Plaintiffs failed to allege a sufficient connection with interstate commerce, the Court notes that the Sherman Act, 15 U.S.C. §§ 1 and 2, contains an interstate commerce requirement. According to Seglin, “A plaintiff may adequately allege the requirement of ‘interstate commerce’ either by pleading sufficient facts that the defendants’ alleged illegal conduct is ‘in interstate commerce’ or has a substantial and adverse effect upon interstate commerce. McLain v. Real Estate Board of New Orleans, Inc., 444 U.S. 232, 241-42, 100 S.Ct. 502, 508-09, 62 L.Ed.2d 441 (1980); Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 743, 96 S.Ct. 1848, 1851, 48 L.Ed 2d 338 (1976).” 769 F.2d 1278 n. 2.

The Plaintiffs argue that they have alleged sufficient facts to meet both of these tests, but the Court concludes that the complaint fails to meet either of these tests. The focus of the Plaintiffs’ complaint is an alleged agreement between the Defendant hospital and the Defendant St. Paul Fire and Marine Insurance Company which requires that all doctors and dentists with staff privileges at the hospital carry a minimum of $1,000,000 in medical malpractice insurance coverage. The Plaintiffs claim that this agreement is a collective refusal on the part of the Defendants to deal with the doctors and a boycott of the doctors’ professional services, resulting in an unreasonable restraint of commerce in violation of § 1 of the Sherman Act. The Plaintiffs also claim that through this agreement, the Defendants have attempted to monopolize, have conspired to monopolize, or in fact, have monopolized the markets for furnishing hospital malpractice insurance and hospital and health care services in violation of § 2 of the Sherman Act. Count IV of the complaint realleges the same activity of the Defendants and alleges that they violate the Illinois Antitrust Act, Ill.Rev.Stat. ch. 38, §§ 60-1 — 60-7 (1983).

The Seglin case is a controlling case on the issue of what constitutes sufficient allegations of a nexus with interstate commerce. In Seglin, the court held that the plaintiff had failed to adequately allege any nexus with interstate commerce, explaining that antitrust plaintiffs are required to be specific as to the facts of the interstate commerce nexus before the court would compel defendants to engage in protractive expensive antitrust discovery. 769 F.2d at 1283. The court noted that the only facts alleged by the plaintiff were that the hospital suspended him and that the defendants provide psychiatric services to patients who travel in interstate commerce to receive such services, purchase equipment in interstate commerce, and receive insurance payments through interstate commerce. In response to the plaintiff’s contention that the interstate commerce nexus requirement had been satisfied by his allegations that several of defendant’s activities are in interstate commerce, the Seglin court said that for purposes of establishing the interstate commerce nexus “ ‘the inquiry must be whether the defendants’ activity that has allegedly been “infected” by unlawful conduct can be shown “ ‘as a matter of practical economics’ to have had a not insubstantial effect on the interstate commerce involved.” ’ Furlong v. Long Island College Hospital, 710 F.2d 922, 926 (2nd Cir.1983), quoting McLain v. Real Estate Board of New Orleans, Inc., 444 U.S. 232, 246, 100 S.Ct. 5Ó2, 511, 62 L.Ed 2d 441 (1980). Thus, to survive a motion to dismiss, the ‘plaintiff must allege sufficient facts concerning the alleged violation and its likely effect on interstate commerce to support an inference that the defendants’ activities infected by illegality either have had or can reasonably be expected to have a not insubstantial effect on commerce.’ Id.” 769 F.2d at 1280.

The Seglin court compared the specificity of the facts alleged in the case before it with the facts as alleged in complaints in other cases in which Courts had sustained the adequacy of the complaint, As a result, the Seventh Circuit concluded that Dr. Seglin’s complaint was insufficient because it was framed in terms of conclusory statements rather than specific facts. In a footnote, the court suggested that the court is not required to speculate as to the many possible facts that might have been alleged by the plaintiff, saying:

“[I]n the instant ease plaintiff might have alleged, for example, how many patients he treated at the defendant hospital, what percentage of his patients are from out of state, how much of his own revenue came from out-of-state insurers, at what other hospitals he had admitting privileges, or what particular acts of defendants have led to his de facto permanent suspension from the hospital. Instead, he chose to allege only the bare fact of his suspension and then ask this court to speculate as to the rest____ Unless the plaintiff admitted a substantial number of patients to the defendant-hospital and could not have admitted them elsewhere, his suspension or exclusion from the hospital could not substantially affect any of defendants’ interstate activities. On the other hand, it might possibly affect plaintiff’s interstate activities; but this plaintiff would know, and he should have pleaded it.” 769 F.2d at 1283 n. 11.

Similarly, in the instant ease, the complaint lacks adequate facts which indicate a not insubstantial connection between the Defendants’ alleged illegal activities and their activities in interstate commerce. The Seglin case gives some indication of the specificity with which an antitrust plaintiff must plead facts in his complaint. The Plaintiffs’ allegation that the Defendants are involved in treating out-of-state patients and obtain goods and services through interstate commerce are the same type of general allegations or conclusory statements which the court dismissed as insufficient in Seglin. Therefore, the Court concludes that the Plaintiffs in the present case have failed to adequately allege that the Defendants’ alleged illegal conduct would have a not insubstantial effect on interstate commerce.

The Court also rejects Plaintiffs’ contention that the alleged illegal activity of the Defendants is itself “in interstate commerce” simply because the. alleged agreement to require minimum insurance coverage involved an agreement between the hospital and the out of state insurance company. The Court is not persuaded by the Plaintiffs’ argument that the alleged agreement itself is in interstate commerce, by virtue of the fact that the home office of the insurance company is in another state. The effect of the alleged unlawful agreement setting the requirement of a minimum level of malpractice insurance would be felt only locally by the hospital and its doctors, which means that the requirement itself is not “in interstate commerce.”

The Plaintiffs’ failure to allege specific facts indicating a sufficient nexus between their claim and interstate commerce is a sufficient ground for the Court to grant the Defendants’ motion to dismiss counts I and II. In addition to dismissing those counts, the Court also dismisses count IV brought under the Illinois Antitrust Act under the principles of pendent jurisdiction and United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). Nevertheless, because the Court grants the Plaintiffs the opportunity to replead their complaint, the Court will discuss the other points raised by the Defendant in its motion to dismiss.

The Defendants argue that even if the Plaintiffs have alleged specific facts to indicate an effect upon interstate commerce, they have failed to allege the necessary elements for a violation of § 1 of the Sherman Act. Specifically, the Defendants argue that even though the Plaintiffs characterize the Defendants’ action as a boycott and refusal to deal, they have failed to allege a per se violation of the Sherman Act. Therefore, the Court must look to a rule of reason analysis in order to determine the sufficiency of the complaint, and, according to the Defendants, the Plaintiffs’ complaint lacks a proper allegation of the element of anticompetitive effects upon the market.

The Plaintiffs respond by saying that their complaint does make out a per se violation of the Sherman Act because the Defendants’ agreement to impose a minimum insurance requirement on physicians and dentists constitutes a boycott or a concerted refusal to deal. The Plaintiffs cite the case of St. Paul Fire & Marine Insurance Co. v. Barry, 438 U.S. 531, 98 S.Ct. 2923, 57 L.Ed.2d 932 (1978), for the proposition that a boycott is a “method of pressuring a party with whom one has a dispute by withholding, or enlisting others to withhold, patronage or services from the target.” 438 U.S. at 541. The Court then went on to state that “the enlistment of third parties in an agreement not to trade as a means of compelling capitulation by the boycotted group, long has been viewed as conduct supporting a finding of unlawful boycott.” Id. at 544, 98 S.Ct. at 2931. Finally, the Barry Court observed that the labor-boycott cases establish that the boy-cotters and the ultimate target may not be in a competitive relationship with each other. Id. at 543, 98 S.Ct. at 2930. The Plaintiffs argue that the agreement between the Defendants falls within this language of the Court and that, therefore, the activity alleged in the complaint is an illegal boycott which is a per se violation of the Sherman Act.

The United States Supreme Court, in the case of Arizona v. Maricopa County Medical Society, 457 U.S. 332, 102 S.Ct. 2466, 73 L.Ed.2d 48 (1982), explained what it meant by a per se violation of the Antitrust Act. According to the Court, “Once experience with a particular kind of restraint enables the Court to predict with confidence that the rule of reason will condemn it, it has applied a conclusive presumption that the restraint is unreasonable.” 457 U.S. at 344, 102 S.Ct. at 2473. This principle of per se unreasonableness allows Courts “to avoid the necessity for an incredibly complicated and prolonged economic investigation into the entire history of the industry involved.” Id. at 351, 102 S.Ct. at 2476. Thus, for such per se violations, an adverse effect on competition is presumed to exist as a matter of law. Continental TV, Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49-50, 97 S.Ct. 2549, 2557, 53 L.Ed.2d 568 (1977).

Even though the Supreme Court has found certain group boycotts per se illegal, see, e.g., Fashion Originators’ Guild of America, Inc. v. FTC, 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949 (1941); Klors, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959), most cases applying a per se rule involve price fixing or agreements among competitors. Neither of these situations exist in the present case, because there is no agreement as to price nor is the insurance company in competition with the hospital. Because of these facts, and also because the Court has difficulty in characterizing this alleged agreement as a “group boycott,” the Court concludes that this case is inappropriate for the application of the per se rule to the alleged agreement.

The Court refuses to accept the Plaintiffs’ position that the alleged agreement constitutes a boycott and is therefore a per se violation, because such a position would allow any plaintiff to claim a per se antitrust violation on the basis of allegations of group activity. Moreover, an agreement of the type alleged in the complaint is not the kind of restraint with which courts have had experience in the past, because this particular agreement does not at all resemble a price fixing restraint or an agreement among competitors. Therefore, the Court cannot conclude with confidence that the restraint is per se unreasonable, and the Court must instead analyze the alleged illegal agreement under a rule of reason approach.

The Supreme Court in the Maricopa County Medical Society case acknowledged that courts have analyzed most restraints under the so-called “rule of reason.” This rule requires the fact-finder to decide whether under all the circumstances of the case the restrictive practice imposes an unreasonable restraint upon competition. This analysis involves an inquiry into the facts peculiar to the business to which the restraint is applied, the business’ condition before and after the restraint was imposed, and the nature of the restraint and its effect, actual or probable. 457 U.S. at 343 n. 13,102 S.Ct. at 2472 n. 13. Under this approach, a plaintiff must plead and prove the anticompetitive effect of the alleged restraint; in the present case, this means that the Plaintiffs must plead that the Defendants’ activity in allegedly agreeing to impose a minimum medical malpractice insurance limit will result in an unreasonable restraint upon competition in the relevant market.

The Plaintiffs contend that they have properly alleged the anticompetitive effects of the Defendants’ alleged agreement. In the complaint, Plaintiffs allege that a number of results will follow from the Defendants’ agreement, including: requiring physicians to incur premium increases in order to reach the minimum level of malpractice insurance coverage; artificially and unreasonably increasing the cost of health care services, and unreasonably diminishing the quality of health care services and facilities within the relevant market due to the increased cost to physicians. The Plaintiffs add that they will be injured in their business and may eventually be forced to withhold medical services in the relevant market area or to move elsewhere in order to engage in the practice of medicine.

For purposes of a motion to dismiss, the Court must accept the Plaintiffs’ well-pleaded allegations as true, but even assuming that the alleged agreement will have the results indicated by the Plaintiffs, the Court does not feel that these are the types of harms which the antitrust statutes were meant to redress. The consequences alleged by the Plaintiffs are not a result of the requirement that physicians carry a minimum limit of malpractice insurance as such; rather, they would be the result of the physicians’ refusal to pay for this minimum level of malpractice insurance or their desire to retain the same profit margin while agreeing to pay for the increased insurance. The antitrust statutes are meant to protect competition, not competitors, Brown Shoe Co. v. United States, 370 U.S. 294, 320, 82 S.Ct. 1502,1521, 8 L.Ed.2d 510 (1962), and the harm alleged in the complaint is really only harm to the individual doctors and not to competition within the marketplace. As is made clear in Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1109 (7th Cir.1984), the Sherman Act was written to give redress to victims of antitrust activity only when there is a generalized injury to the market. The Plaintiffs have failed to allege any injury of this sort, and the Court agrees with the court in Pollock v. Methodist Hospital, 392 F.Supp. 393 (E.D.La.1975), a case similar on all fours with the present ease, that it is unable perceive how the adoption of a requirement that staff physicians carry a minimum level of insurance becomes an antitrust violation.

Lastly, the Court finds that the Plaintiffs’ complaint is inadequate in alleging a monopoly claim under § 2 of the Sherman Act. The Plaintiff argues that the existence of the agreement between the Defendant insurance company and hospital creates an inference that the Defendants have monopoly power and are using the agreement as a means of attempting to monopolize or maintain a monopoly in the relevant market area. Nevertheless, the Court finds the complaint severely lacking in specific facts which indicate the market power of the Defendants in the relevant market area. Perhaps more harmful to the Plaintiffs’ complaint, however, is a lack of factual allegations as to how the Defendants are using the alleged agreement in order to obtain or maintain their monopoly power. There is no indication in the complaint that physicians and dentists who would come under the hospital's requirement would be required to obtain the insurance from a specific insurance provider or group of providers, and it appears to the Court that other insurance providers are in fact available. The Court is even more at a loss to understand how the agreement can be of any aid to monopoly efforts by the hospital, since the hospital cannot control whether individual physicians will comply with the requirement and obtain privileges at the hospital or not comply with the requirement and practice medicine elsewhere.

Because of the similarity which exists in the interpretation of the Illinois Antitrust Act and the Sherman Act, the Court holds that because the Plaintiff has failed to state a claim under §§ 1 and 2 of the Sherman Act, the Plaintiffs have also failed to state a claim under the Illinois Antitrust Act.

In conclusion, the Court orders that the Defendants’ motion to dismiss counts I, II and IV of the complaint is GRANTED. It is further ordered that the Plaintiffs have until February 25, 1986, in which to replead and remedy the deficiencies in their prior complaint.


source: Caselaw Access Project

author: KRAM, District Judge.

license: Public Domain

text:
    AVIS RENT A CAR SYSTEMS, INC., Plaintiff, v. GARAGE EMPLOYEES UNION, LOCAL 272, Defendant.
    No. 85 Civ. 1894 (SWK).
    United States District Court, S.D. New York.
    Jan. 30, 1986.
    Dechert, Price & Rhoads by Lisa Filloramo, Jerome A. Hoffman, Marie L. Martino, New York City, for plaintiff.
    Dublirer, Haydow, Straci & Victor by Bruce J. Cooper, New York City, for defendant.
   KRAM, District Judge.

Plaintiff brought this suit to vacate an arbitration award decided against it on December 12, 1984. Plaintiff is Avis Rent A Car System, Inc., (“Avis”), and defendant is the Garage Employees Union, Inc., Local 272 (“the Union”). This case is presently before the Court on cross-motions for summary judgment, pursuant to Fed.R.Civ.P. 56. For the reasons stated below, summary judgment is GRANTED in favor of defendant.

A motion for summary judgment lies only when there is no genuine issue of material fact. This Court’s role is to determine whether there are issues to be tried. Heyman v. Commence and Ind. Ins. Co., 524 F.2d 1317, 1319-20 (2d Cir.1975). The burden is on the moving party to show that no such issues exist. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). In testing whether the movant has met this burden, the Court must resolve all ambiguities against the movant. Heyman, 524 F.2d at 1320. Nonetheless, “the mere possibility that a factual issue may exist, without more, is not sufficient to overcome a convincing presentation by the moving party.” Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir.1980) (emphasis in original). Speculation, conclusory allegations, and mere denials are not enough to raise genuine issues of fact. There is no genuine dispute as to the following material facts.

Meyer Brothers Parking (“Meyer”) operated a public parking garage at 240 East 54th Street in Manhattan until November 1983. The Meyer employees were covered by a collective bargaining agreement between the defendant Union and the Metropolitan Garage Owners’ Association, Inc. (the “Association agreement”).

In November 1983 Avis took over Meyer’s lease for operation of the parking garage. Avis’s employees, at that time, were represented by the Union under another collective bargaining agreement effective from November 3, 1983 until November 2, 1986- (the “Avis agreement”). A dispute arose as to whether the former Meyer employees’ rate of pay was to be governed by the Avis agreement or the Association agreement. The Association Agreement provided for a higher hourly wage.

The Union demanded arbitration of the dispute and, pursuant to Article XXIY of the Association agreement, submitted the dispute to the New York State Board of Mediation. Article XX of the Avis agreement, meanwhile, provided for arbitration by the American Arbitration Association. Pursuant to the Union’s demand for arbitration, the New York State Mediation Board appointed Henry Schuman to hear the dispute. On November 30, 1984 both Avis and the Union appeared with counsel before Schuman. The parties stipulated that Schuman hear and decide this issue:

“What is the proper rate of pay to be paid certain employees formerly employed by Meyers at the Terin garage location?”

On December 12, 1984, the arbitrator issued his award. He decided that the proper rate of pay to be paid to the former Meyer employees should be the higher hourly rate provided in the Association agreement. The arbitrator directed Avis to pay the employees the higher rate of pay retroactive to the last date prior to any reduction in the hourly rate. In his award Schuman named the parties and said, “The above named are parties to a collective bargaining agreement which provides for the resolution of disputes in Article XX thereof,” Schuman was referring to the Avis agreement arbitration clause.

The sole issue in question is whether Schuman exceeded his authority in deciding the dispute. Avis argues that Schuman’s authority, if any, was to resolve all disputes pursuant to the Association agreement, and once he found that the Avis agreement applied, his authority ended. Avis thus urges that the award be vacated under 9 U.S.C. § 10(d) which permits a district court to vacate an arbitration award "... where the arbitrators exceed their powers ...”

Federal policy favors arbitration. Allegaert v. Perot, 548 F.2d 432 (2d Cir.), cert. den., 432 U.S. 910, 97 S.Ct. 2959, 53 L.Ed.2d 1084 (1977); Demsey & Associates, Inc. v. Steamship Sea Star, 461 F.2d 1009 (2d Cir.1972); Necchi S.p.A. v. Necchi Sewing Mac., 348 F.2d 693 (2d Cir.1965), cert. den., 383 U.S. 909, 86 S.Ct. 892, 15 L.Ed.2d 664 (1966). A court’s only function in reviewing an arbitration award is to determine whether it “draws its essence from the collective bargaining agreement.” United Steelworkers of America v. Enterprise Wheel and Car Corp., 363 U.S. 593, 596-97, 80 S.Ct. 1358, 1360-61, 4 L.Ed.2d 1424 (1960). In determining whether an arbitration award “draws its essence from a collective bargaining agreement,” a court should interpret the “essence” standard “expansively so as to uphold the award, rather than restrictively.” International Association of Machinists v. Texas Steel Company, 538 F.2d 1116, 1121 (5th Cir. 1976), cert. den., 429 U.S. 1051, 97 S.Ct. 1110, 51 L.Ed.2d 542 (1977). The courts will enforce an arbitrator’s award concerning his own jurisdiction to decide a dispute where that award derives or reasonably could derive from some provision of the collective bargaining agreement. See Corallo v. Merrick Central Carburetor, 733 F.2d 248, 252-53 (2d Cir.1984); Ottley v. Sheepshead Nursing Home, 688 F.2d 883, 886-87 (2d Cir.1982); McAllister Brothers, Inc. v. A & S Transportation Co., 621 F.2d 519, 522-23 (2d Cir.1980); Rochdale Village v. Public Service Employees Union, 605 F.2d 1290, 1295-96 (2d Cir.1979). Based on this standard of review, the arbitrator’s award in this case must be upheld.

In the instant case, the arbitrator ruled that his jurisdiction was founded in the Avis agreement. The Avis agreement stipulated that in the event of an unresolved salary conflict, the matter would be resolved by arbitration before the American Arbitration Association. Avis is arguing that because the forum in which the arbitration took place is not the one named in Article XX, the arbitrator’s award is invalid. But the essence of the Avis Agreement was that in the event of an unresolved salary conflict, there would be an arbitration in New York, and that arbitration took place. Naming the American Arbitration Association was merely ancillary to the primary objective. Therefore, because the arbitration itself arises from the essence of the Avis agreement, the award does as well.

Plaintiff has failed to show any reason why a specific mode of arbitration should have been used, or any undue bias caused by the appointment of another arbitration association. In light of this, and because the award derives from the essence of the Avis agreement, the arbitrator’s award must be upheld.

SO ORDERED.

      . It appears that even if the dispute was presented to the American Arbitration Association, the issue would be the same. The plaintiffs do not contest the fact that the issue submitted to the arbitrator was arbitrable under either collective bargaining agreement.

      . An analogous case, Bell Aerospace Co. Div. of Textron v. Local 516, 500 F.2d 921, 923 (2d Cir.1974), involved the validity of an arbitration between an employer and a union. The original disagreement involved another union as well, and the arbitrator considered the certification of the second union in issuing his award against the first union. The first union claimed that the arbitrator exceeded his authority in considering the certification of the second union. The Second Circuit disagreed and upheld the arbitrator’s award.


author: McLAUGHLIN, District Judge.

text:
    RATES TECHNOLOGY, INC., a Delaware corporation, Individually and on behalf of Advanced Telecommunications and Manufacturing Corp., a Delaware corporation in formation, Plaintiff, v. Peter A. DIORIO and Universal Payphone Corporation, a New Mexico Corporation, Defendants.
    No. 85 CV 1819.
    United States District Court, E.D. New York.
    Jan. 30, 1986.

      Milbank, Tweed, Hadley & McCloy, New York City, (Howard Seife, of counsel) and Mershon, Sawyer, Johnston, Dunwoody & Cole, Miami, Fla. (Stephen M. Corse, of counsel), for plaintiff.
    Kenyon & Kenyon, New York City (Jonathan D. Reichman, of counsel) and Hinkle, Cox, Eaton, Coffield & Hensley, Roswell, N.M. (Richard E. Olson, of counsel), for defendants.
   MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

This is an action for breach of contract, fraud and breach of fiduciary duty arising out of the parties’ ill-fated attempt at a joint venture. Defendants move to dismiss the action for lack of personal jurisdiction. Fed.R.Civ.P. 12(b)(2).

Facts

Plaintiff is a Delaware corporation with its principal place of business in New York. Defendant Universal Payphone Corporation (“Universal”) is a New Mexico corporation having its principal place of business in New Mexico. Defendant DiOrio, a New Mexico resident, is the president of Universal.

On November 2, 1984, certain of Rates’ officers met with DiOrio and Lee G. Lovett, a co-owner of Universal, in New York for three to four hours. The parties differ in their characterization of this meeting.

Defendant contends that the meeting was in the nature of a sales presentation by Rates, designed to “show-off” the attractive features of its pay telephone system. Plaintiff, on the other hand, argues that the parties planned the basic structure of the deal at this meeting and that their subsequent negotiations merely involved working out the details of the contractual relationship.

In any event, on January 22, 1985, following further negotiations (which occurred over the telephone or at meetings outside of New York), the parties entered into a contract setting forth the terms of their agreement. The contract was signed by plaintiff’s representative in New York and by defendant D’Orio in Washington, D.C.

The contract called for the formation of a separate company, Advanced Telecommunications & Manufacturing Corporation (“AT&M”), which would “hold” certain patented telephone technology (to be supplied by Rates) and enter into manufacturing and marketing contracts (to be negotiated by DiOrio and Lovett). The agreement contemplated selling pay telephones throughout the country, including New York.

Shortly after the contract was executed, defendants paid the first installment of development costs due to Rates under the agreement. In turn, Rates issued a patent license to AT & M. The joint venture was underway.

On February 11, 1985, Lovett, acting on behalf of AT & M, entered into a manufacturing contract with Seiscor Technologies, Inc. (“Seiscor”). On February 24, 1985, however, Lovett cancelled this contract. Thereafter, DiOrio, acting on behalf of Universal (not the joint venture), entered into a similar contract with Seiscor.

Defendants have taken no further action with respect to the joint venture.

Accordingly, Rates commenced this action alleging that defendants (a) breached the contract, (b) breached their fiduciary duty by converting to their own use a business opportunity that belonged to the joint venture, and (c) fraudulently induced Rates to enter the contract.

Discussion

The question before this Court is whether long-arm jurisdiction can be asserted over the defendants under C.P.L.R. § 302. See Arrowsmith v. United Press International, 320 F.2d 219, 223 (2d Cir.1963). The issue of personal jurisdiction must be determined separately for each cause of action asserted in the complaint. Interface Biomedical Laboratories v. Axiom Medical, Inc., 600 F.Supp. 731, 734 (E.D.N.Y. 1985).

The Second Circuit has stated:
In deciding a pretrial motion to dismiss for lack of personal jurisdiction, a district court has considerable leeway. It may determine the motion on the basis of affidavits alone, or it may permit discovery in aid of the motion, or it may conduct an evidentiary hearing on the merits of the motion____ If the court chooses not to conduct a full-blown evidentiary hearing on the motion, the plaintiff need make only a prima facie showing of jurisdiction through its own affidavits and supporting materials. Eventually, of course, the plaintiff must establish jurisdiction by a preponderance of the evidence, either at a pretrial evidentiary hearing or at trial. But until such hearing is held, a prima facie showing suffices, notwithstanding any controverting presentation by the moving party to defeat the motion.

Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981) (citations omitted). Thus, where a court decides a motion to dismiss for lack of personal jurisdiction on the basis of affidavits and pleadings alone, it must resolve all doubts raised by the papers in the light most favorable to the plaintiff. Interface, supra, 600 F.Supp. at 735.

With these considerations in mind, I turn to defendants’ contention that the Court lacks personal jurisdiction over them.

1. Breach of Contract

Plaintiff claims that the defendants’ single meeting with plaintiff in New York constitutes a transaction of business in New York sufficient to establish personal jurisdiction with regard to the breach of contract claim.

In assessing whether this meeting is sufficient for the assertion of long-arm jurisdiction under C.P.L.R. § 302(a)(1), the “relevant inquiry is whether the defendant has performed ‘purposeful acts’ in New York ‘in relation to the contract, albeit preliminarily or subsequent to its execution.’ ” American Contract Designers, Inc. v. Cliffside, Inc., 458 F.Supp. 735, 739 (S.D.N. Y.1978) (quoting Longines-Wittnauer Watch Co. v. Barnes & Reinecke, Inc., 15 N.Y.2d 443, 457, 261 N.Y.S.2d 8, 18, 209 N.E.2d 68, 75, cert. denied sub nom., Estwing Manufacturing Co. v. Singer, 382 U.S. 905, 86 S.Ct. 241, 15 L.Ed.2d 158 (1965)). Indeed, the courts have held that contract negotiations occurring in New York can constitute the transaction of business in New York under § 302(a)(1) if the negotiations “substantially advanced” or were “substantially important” or “essential” to the formation of the contract, Bialek v. Racal-Milgo, Inc., 545 F.Supp. 25, 34-35 (S.D.N.Y.1982), or if they “merely create the likelihood of a more solid business relationship,” Round One Productions, Inc. v. Greg Page Enterprises, Inc., 566 F.Supp. 934, 937 (E.D.N.Y.1982).

Treating plaintiffs affidavit as true, as I must on this motion to dismiss, it is clear that at the New York meeting, the parties “concluded the substance of the agreement that forms the hard core of this litigation.” Trafalgar Capital Corporation v. Oil Producers Equipment Corporation, 555 F.Supp. 305, 309 (S.D.N.Y.1983).

Plaintiff’s president maintains in an affidavit that the New York meeting produced an agreement in principal with respect to the fundamental terms of the joint venture, including the apportionment of ownership shares, the profit margin per telephone sold, the issuance of a patent license, and the advance payment of development costs and royalties to Rates. He also states that the parties’ subsequent negotiations did not involve these essential terms (Weinberger Affidavit at 2-3).

In light of this affidavit, the Court finds that plaintiff’s allegation that defendants transacted business in New York is sufficient to withstand Universal’s motion to dismiss the first cause of action.

2. Breach of Fiduciary Duty

With respect to its claim that defendants converted certain business opportunities for their own benefit in violation of their fiduciary duty to the joint venture, plaintiff asserts personal jurisdiction over the defendants under C.P.L.R. § 302(a)(3). That statute empowers the Court to exercise jurisdiction over a non-resident who (1) commits a tortious act outside of the state that (2) causes injury within the state, so long as the non-resident (3) expects or should reasonably expect the act to have consequences in the state, and (4) derives substantial revenue from interstate commerce. Trafalgar, supra, 555 F.Supp. at 310.

Clearly, Rates’ allegations of a tort committed outside the state are sufficient. Defendants argue, however, that Rates has failed to proffer sufficient evidence of injury within the state.

The problems inherent in applying the “injury within the state” requirement to commercial cases continue to plague the courts. Clearly, “the occurrence of financial consequences in New York due to the fortuitous location of the plaintiffs in New York is not a sufficient basis for jurisdiction under § 302(a)(3).” Pocahontas Supreme Coal Company, Inc. v. National Mines Corp., 90 F.R.D. 67, 73 (S.D.N.Y. 1981).

In this case, however, plaintiff alleges a loss of customers in New York. Rates’ Executive Vice President states in an affidavit that the parties specifically discussed a plan for the joint venture to place pay telephones in rest stations along the Long Island Expressway (Sullivan Affidavit at 2). This allegation is sufficient for the purposes of § 302(a)(3). See Interface, supra, 600 F.Supp. at 740.

Likewise, it is clear, based upon the parties’ negotiations, that defendants should reasonably have expected their act to have consequences in the state.

Finally, Rates alleges that it “believes” that each defendant derives substantial revenue from interstate commerce. Plaintiff has failed to particularize this allegation. However, the Court deems it appropriate to permit limited discovery in aid of the motion on this issue. Accordingly, the Court’s ruling on this aspect of defendants’ motion is reserved pending the outcome of further discovery.

3. Fraud

In its third cause of action, Rates alleges that defendants fraudulently induced Rates to enter the joint venture by their representations, made in New York, that they were acting in good faith, interested in forming a joint venture, and that they would, in fact, form the partnership. Accordingly, Rates contends that defendants committed a tortious act within the state giving rise to personal jurisdiction over them pursuant to § 302(a)(2).

Despite Rates’ characterization of defendants’ representations as fraudulent, its claim sounds in contract. Indeed, the essence of Rates’ fraud claim is that defendants misrepresented that they were entering the contract in good faith and with the intention to perform in accordance with its terms. It is well-established that a party may not attempt to transform a breach of contract into a tort for jurisdictional purposes. Trafalgar, supra, 555 F.Supp. at 310; Stanat Manufacturing Co. v. Imperial Metal Finishing Co., 325 F.Supp. 794, 796 (E.D.N.Y.1971).

In this case, however, Universal is already subject to the Court’s jurisdiction based upon its transaction of business in the state. Since Rates’ fraud claim arguably arises from this transaction of business in New York, and since defendants have not yet moved to dismiss the fraud claim on substantive grounds, Universal’s motion to dismiss the claim at this juncture based upon lack of personal jurisdiction is denied.

4- The Fiduciary Shield Doctrine

Although the corporate defendant (Universal) is subject to this Court’s jurisdiction for the reasons discussed above, the question remains whether this Court may assert jurisdiction over DiOrio, the individual defendant, on the basis of conduct which, arguably, he engaged in solely in his capacity as a fiduciary of the corporation (Universal). Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 902 (2d Cir.1981). In fairness, however, neither party has raised the issue. Inasmuch as the Court is unable to determine the applicability of the fiduciary shield doctrine to this case upon the present record alone, the parties are directed to brief the issue.

Conclusion

Plaintiff shall conduct discovery and submit its brief on the open issues within forty-five days of this Order. Defendant shall respond within ten days after plaintiff’s submission. Defendant Universal’s motion to dismiss Count Two and defendant DiOrio’s motions are reserved pending further submissions. In all other respects, defendants’ motions to dismiss are denied.

SO ORDERED.


author: CALDWELL, District Judge.

text:
    Morris Allen APPLEBAUM, Administrator of the Estate of David Marc Applebaum, and all others similarly situated, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.
    Civ. A. No. 84-0686.
    United States District Court, M.D. Pennsylvania.
    Jan. 31, 1986.

      Neil J. Rovner, Angino & Rovner, P.C., Harrisburg, Pa. for plaintiff.
    Robert E. Kelly, Jr., Dwight Reginald Whitt, Duane, Morris & Heckscher, Harrisburg, Pa., Reginald Whitt, Duane, Morris & Heckscher, Philadelphia, Pa., for defendant.
   MEMORANDUM

CALDWELL, District Judge.

I. Introduction.

The parties have filed cross-motions for summary judgment. Plaintiff, Morris Allen Applebaum (Applebaum), administrator of the estate of David Marc Applebaum, filed this action in the Court of Common Pleas of Dauphin County, Pennsylvania, against defendant, State Farm Mutual Automobile Insurance Co. (State Farm), to recover work loss benefits due his decedent under the now repealed Pennsylvania No-Fault Motor Vehicle Insurance Act, Act of July 19, 1974, P.L. 489, No. 176, § 101-701. State Farm was decedent’s no-fault insurer. Plaintiff also sought to represent a class of “all others similarly situated.” The defendant removed the action to this court on the basis of diversity of citizenship. It has moved for summary judgment on Applebaum’s individual claim, contending that the claim is barred by: (1) the statute of limitations or statute of repose set forth in the No-fault Act; (2) the doctrine of lis pendens because Applebaum had filed a previous action for the same claim in the Court of Common Pleas of Philadelphia County; and (3) a release previously executed by decedent’s survivor and approved by Applebaum as administrator of decedent’s estate. Plaintiff contends that none of these arguments are applicable to him and he is entitled to summary judgment not only on his own claim but also on the claims of the class he purports to represent.

II. Factual Background.

From the pleadings, exhibits and affidavits submitted by both parties in connection with the motions, the following is the background of this litigation. Plaintiff’s decedent, David Marc Applebaum, died on December 24, 1977, when he was struck by a car being operated by an uninsured driver as decedent was walking along the side of a road. At the time of his death decedent was scheduled to begin employment on January 16, 1978 with the University of Miami-Jackson Memorial Medical Center as a respiratory therapy technician. His starting salary was to be $10,000 per year.

Applebaum was named administrator of the estate. He and the decedent’s surviv- or, decedent’s mother, Esther Applebaum, retained Marvin F. Galfand, Esq. to represent the estate and to collect any monies due from State Farm. In connection with claims against the no-fault policy, Galfand and Applebaum specifically asked defendant about liability for lost wages. A representative of the company told them that State Farm provided no coverage for such a loss and was responsible only for surviv- or’s benefits and uninsured motorist protection. Galfand and Applebaum relied upon these representations and the decedent’s mother executed the following release on August 7, 1978 in connection with her receipt of $2,500 in survivor’s loss benefits:

the undersigned hereby releases and forever discharges State Farm Mutual Auto Insurance Co. it agents and assigns, and all other persons, firms or corporations liable or who might be claimed to be liable, from any and all claims, demands, damages, actions, causes of action or suits of any kind or nature whatsoever, and particularly any and all claims arising out of the “survivor’s loss” of the personal injury protection endorsement of State Farm Policy No. [ AXXXXXX-XX ], which has resulted or may in the future develop from an accident which occurred on or about the 24[th] day of December, 1977....
Undersigned hereby declares that the terms of this settlement have been completely read and are fully understood and voluntarily accepted for the purposes of making a full and final compromise adjustment and settlement of any and all claims, disputed or otherwise, on account' of the injuries and damages above mentioned, and for the express purpose of precluding forever any further or additional claims arising out of the aforesaid accident.
Undersigned hereby accepts draft or drafts as final payment of the consideration set forth above.

Also on August 7, 1978, she executed another release after receiving $15,000.00-in payment of the uninsured motorist protection which read, in part, as follows:

Received of State Farm Mutual Auto Ins. Co. hereinafter called the company, the sum of Fifteen Thousand ($15,000.00) in full settlement and final discharge of all claims under the above numbered policy because of bodily injuries known and unknown and which have resulted or may in the future develop, sustained by David Applebaum by reason of an accident or occurrence arising out of the ownership or operation of an uninsured automobile ... which occurred on or about the 24[th] day of December 1977 at Lower Moreland Pa.

Further, Applebaum, as administrator of decedent’s estate, executed the following affidavit on August 14, 1978:

Morris Allen Applebaum, being duly sworn according to law, deposes and says as follows:

1. He is the administrator of the Estate of David Marc Applebaum.
2. He approves the settlement of the Uninsured Motorist claim against State Farm Automobile Insurance Company for the sum of $15,000.00
3. He approves the payment of the settlement directly to Esther Applebaum.
4. He will bring no claim against State Farm Automobile Insurance Company for Uninsured Motorist benefits or survivors benefits.
5. He approves the settlement of the claim for survivors benefits for the sum of $2,500.00
6. He approves the payment of the settlement directly to Esther Applebaum

Attorney Galfand was involved in the execution of the affidavit.

In Allstate Insurance Co. v. Heffner, 491 Pa. 447, 421 A.2d 629 (1980), the Pennsylvania Supreme Court held that the No-fault Act entitled the survivor of a person killed in an automobile accident to claim the decedent’s work loss benefits. Under the authority of Heffner, on May 20, 1983, attorney Galfand demanded $15,000 in work loss benefits plus 18% interest and counsel fees from State Farm. When no payment was forthcoming, on May 24, 1983, Applebaum filed a lawsuit in the Court of Common Pleas of Philadelphia County on behalf of his decedent’s estate to recover the work loss benefits payable under the policy. The within lawsuit was filed on April 17, 1984.

III. Discussion.

In disposing of the merits of the cross-motions for summary judgment we will adhere to the following well established standard:

Summary judgment under Federal Rule of Civil Procedure 56 is appropriate only where the moving party establishes that no genuine issue exists as to any of the material facts in the case, and that he is entitled to judgment as a matter of law. See, e.g., Hollinger v. Wagner Mining Equipment Co., 667 F.2d 402, 405 (3d Cir.1981). Courts should resolve any doubts as to the existence of issues of material fact against the moving party, and view all inferences in the light most favorable to the nonmoving party, [citation omitted].

Fragale & Sons Beverage Co. v. Dill, 760 F.2d 469, 472 (3d Cir.1985) (brackets added).

A. Applebaum’s Claim Was Timely Filed.

Defendant contends that this action is barred by the limitations period set forth in the No-Fault Act. Section 106(c)(1) provided, in pertinent part, as follows:

If no-fault benefits have not been paid for loss arising otherwise than from death, an action therefor may be commenced not later than two years after the victim suffers the loss and either knows, or in the exercise of reasonable diligence should have known, that the loss was caused by the accident, or not later than four years after the accident, whichever is earlier.

Two limitations periods are set forth in this section. The first bars an action for work loss benefits (which is a benefit for a loss arising otherwise than from death) brought later than two years “after the victim suffers the loss.” To determine when the victim has suffered a work loss the Pennsylvania Supreme Court has held that the loss accrues when he misses his first paycheck and that the limitations period begins to run anew with every missed paycheck. In other words, an action to recover work loss benefits under the Act may be commenced within two years from anytime the victim suffers work loss or, at the latest, within two years after the victim’s accrued work loss equals the maximum amount recoverable under the Act for work loss, $15,000. See Kamperis v. Nationwide Insurance Co., 503 Pa. 536, 469 A.2d 1382 (1983). The second limitations period is a statute of repose. It prohibits an action for work loss benefits later than four years after the accident. See Myers v. USAA Casualty Insurance Co., 298 Pa.Super. 366, 444 A.2d 1217 (1982).

Decedent died on December 24, 1977. This action was filed on April 17, 1984. State Farm argues, based upon decedent’s prospective salary as a respiratory technician, that decedent’s lost salary would have been equal to or greater than $15,000 by July of 1979. Hence, the limitations period would have run by July of 1981. Under the second limitations provision an action was required within four years of the accident or by December 24, 1981. Applebaum missed both of these deadlines and it is argued that his claim is time barred.

Plaintiff contends that previously filed class actions for post mortem work loss benefits have tolled the limitations period. See Kruth v. Liberty Mutual Insurance Co., 346 Pa.Super. —, 499 A.2d 354 (1985). He relies upon Wilson v. State Farm Mutual Insurance Co., No. 5116 S 1978 (Dauphin Co.), Nye v. Erie Insurance Exchange, No. 5349 S 1979 (Dauphin Co.), Seibel v. Aetna Casualty & Surety Co., No. 653 S 1981 (Dauphin Co.), and Neyhard v. State Farm Mutual Automobile Insurance Co., No. 608 March Term 1981 (Phila. Co.), as independent bases for tolling the statute in the instant case.

To rely upon a previously filed class action plaintiff must have been able to qualify as a member of the class in the previous action. See Kruth, supra. On November 3, 1980, the class action in Wilson was commenced by the filing of the complaint. Wilson purported to represent a broad class of previously employed Pennsylvania residents insured by State Farm who sustained fatal injuries. But on July 20, 1981, the court in Wilson certified the following class, broken down into two subclasses:

1) When a deceased motor vehicle accident victim is survived solely by a spouse or solely by a spouse and minor children or solely by minor children, these survivors shall 'constitute a subclass.
2) When a deceased motor vehicle accident victim is not survived by a spouse or by minor children, but is survived solely by other “survivors” delineated in § 103 of the Act and these other “survivors” have been recognized by the insurance carrier as dependent, either by the carrier’s having paid them “survivor’s loss” benefits or otherwise, then these other survivors shall constitute a subclass.

Defendant argues that Wilson was thus a survivor’s class action which could not toll an estate class action such as the instant one. Plaintiff points out that his decedent was a member of the second Wilson subclass because the decedent’s mother was recognized by State Farm as a dependent by paying her survivor’s loss benefits under the No-Fault Act. Thus, Wilson should toll the limitations period for him. In any event, plaintiff argues that it makes no difference whether an action for work loss benefits is brought by the administrator of the estate or the decedent’s survivor.

We do not have to resolve this issue. Even if Wilson could be relied upon by plaintiff, this lawsuit is still untimely under Wilson. As noted above, for the purposes of the limitations period, Wilson was commenced'on November 3, 1980. Decedent’s two year period for work loss benefits would have expired in July of 1981. Approximately, one year and three months of the limitations period had run, therefore, before Wilson tolled the statute, and left Applebaum with approximately nine months to bring suit if he chose not to join the class action. See American Pipe and Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974). On June 10, 1982, the court in Wilson approved a settlement of the class action which did not include Applebaum. The instant action, instituted to redress that omission, was not filed, however, until April 17, 1984, almost two years after the settlement and well beyond the nine month period remaining to bring suit. Accordingly, plaintiff cannot rely upon Wilson to support.timely filing in the instant case.

Plaintiff’s reliance upon Nye is misplaced for the same reason. Nye was filed on November 15, 1979, some three and one half months after the statute began to run on Applebaum. The trial court dismissed the suit against all defendant insurers except Erie Insurance Exchange on February 4, 1981. While the Pennsylvania Superior Court reinstated the suit on December 10, 1982, the state supreme court upheld the trial court’s decision and dismissed the class action against, among other defendants, State Farm, on December 30, 1983. From the time of the trial court dismissal until its reversal by the superior court, approximately one year and nine months, and from the date of the ultimate dismissal by the supreme court until the date of the filing of this lawsuit, April 17, 1984, some three and one half months, plaintiff could not have relied upon the Nye action. The total period of time the statute was not suspended was approximately two years and four months. Accordingly, plaintiff’s action was not timely within the chronology of Nye and Nye has not tolled the statute for him.

Plaintiff’s reliance upon Seibel is also misplaced for the simple reason that Seibel was not a contract action to recover post mortem work loss benefits. Contrary to plaintiff’s assertion, nowhere in the court’s opinion in Seibel is the action characterized as an attempted assumpsit action for failure to pay no-fault benefits. Rather, the claim raised in Seibel was for a state anti-trust violation claiming as damages no-fault work loss benefits wrongly denied, but nevertheless a common law anti-trust claim. We believe that plaintiff should not be permitted to rely upon this action to preserve a contract claim. See Crown, Cork & Seal Company, Inc. v. Parker, 462 U.S. 345, 355, 103 S.Ct. 2392, 2397, 76 L.Ed.2d 628, 636 (1983) (Powell, J., concurring).

Under the holding of Kruth, supra, however, the instant action was timely filed in the wake of Neyhard. The latter action was filed on March 4, 1981 against State Farm on behalf of the “legal representatives of deceased insureds of defendant who are entitled to work loss benefits” denied to them by defendant. Plaintiff had until July of 1981 to file his own lawsuit and thus the Neyhard suit, filed within that time frame and still being litigated, tolled the limitations period.

In so concluding, we reject defendant’s contentions that plaintiff cannot rely upon Neyhard because: (1) the filing of his own suit waives the protection of Neyhard; and (2) Neyhard, itself is untimely. Defendant’s argument that American Pipe should have limited applicability when a plaintiff has obviously not relied upon a prior class action has merit but we must reject it in light of Kruth, supra. Defendant has also not provided us with any facts to support his claim that Neyhard is untimely. To the contrary, it admits that the uñtimeliness of the Neyhard action is only now being litigated in the trial court. Under these circumstances, we decline to accept its contention that the untimeliness of the Neyhard action would bar the instant case.

B. Applebaum’s Individual Claim Is Barred by a Release.

The release executed in connection with the receipt of survivor’s loss benefits provides, in pertinent part, as follows (brackets added):

the undersigned [decedent’s mother] hereby releases and forever discharges State Farm Mutual Auto Insurance Co. ... from any and all claims, demands, damages, actions, causes of actions or suits of any kind or nature whatsoever ... which has resulted or may in the future develop from [decedent’s accident].
Undersigned hereby declares that the terms of this settlement have been ... voluntarily accepted for the purposes of making a full and final compromise adjustment and settlement of any and all claims, disputed or otherwise, on account of the injuries and damages above mentioned, and-for the express purpose of precluding forever any further or additional claims arising out of the aforesaid accident.

The release executed in connection with the receipt of uninsured ■ motorist’s benefits similarly was in “full settlement and final discharge of all claims” resulting from the accident. Applebaum, as administrator of the estate, executed an affidavit a week after the releases were signed in which he stated, in pertinent part, that he “approves the settlement of the Uninsured Motorist claim” and he “approves the settlement of the claim for survivors benefits----”

Defendant relies on the release executed in connection with the survivor’s loss benefits settlement to bar the instant action.

In Pennsylvania, the general rule for construction of releases is that the intention of the parties must govern, but this intention must be gathered from the language of the release. Evans v. Marks, 421 Pa. 146, 218 A.2d 802 (1966). A signed release is binding upon the parties unless executed and procured by fraud, duress, accident or mutual mistake. Kent v. Fair, 392 Pa. 272, 140 A.2d 445 (1958).

Three Rivers Motor Company v. Ford Motor Company, 522 F.2d 885, 892 (3d Cir. 1975).

Additionally, when the parties manifest an intent to settle all accounts, the release will be given full effect even as to unknown claims. Id.

Initially, it would appear that defendant cannot rely upon the release to bar the administrator’s claim. The release was only executed by the decedent’s mother. Applebaum merely approved that settlement while only agreeing, without mentioning work loss benefits, to bring no claim for uninsured motorist benefits or surviv- or’s benefits. In writing, reading the release and affidavit together, Applebaum only unambiguously approved the mother’s release of her claims against State Farm. Without more, as stated by Applebaum: “At no time was a settlement agreement reached whereby [Applebaum] ever agreed not to sue State Farm Insurance Company for work loss benefits____” (Affidavit of Applebaum, dated November 14, 1985, Exhibit 7 to plaintiff’s response to defendant’s motion and plaintiff's counter-motion) (brackets added).

Plaintiff, however, has not made this argument. He clearly understands himself to be bound by the release and argues that its scope was not intended to reach his claim for work loss benefits. Additionally, plaintiff points to the lack of court approval of the settlement as invalidating it.

As to the scope of the survivor’s loss benefit release the answer is clear. While plaintiff charges defendant with unfairly ignoring important language in the release, we believe that defendant has referred us to the pertinent and dispositive language. The release is obviously a general one, executed with the intention of waiving any and all existing or future claims, as well as a specific claim for survivor’s loss benefits, arising from decedent’s accident. It was meant to settle the matter finally and bars Applebaum’s individual claim here. See Three Rivers Motor Company, supra.

Plaintiff argues that section 106(b)(1) of the No-fault act required court approval of the settlement of the no-fault claim for survivor’s loss benefits. Since defendant did not obtain court approval, the release cannot be used to shield defendant from this action. Section 106(b)(1) provided, in pertinent part, as follows:

(b) Release or settlement of claim.—
(1) Except as otherwise provided in this subsection, no-fault benefits shall not be denied or terminated because the victim executed a release or other settlement agreement. A claim for no-fault benefits may be discharged by a settlement agreement for an agreed amount payable in installments or in a lump sum, if the reasonably anticipated net loss does not exceed two thousand five hundred dollars ($2,500). In all other cases, a claim may be discharged by a settlement to the extent authorized by law and upon a finding, by a court of competent jurisdiction, that the settlement is in the best interest of the claimant and any beneficiaries of the settlement, and that the claimant understands and consents to such settlement____

Contrary to plaintiff’s position this section did not require court approval for the discharge by release of every claim. A claim for no-fault benefits could have been discharged by settlement if the “reasonably anticipated net loss” did not exceed $2,500. In the instant case decedent's mother’s claim was settled for that amount. State Farm could not be charged with knowledge in 1978 that in 1980 the state supreme court in Heffner, supra, would allow work loss benefits for decedents. Hence, the reasonably anticipated net loss did not exceed $2,500 and court approval of this settlement was not necessary. It follows that section 106(b)(1) does not prohibit defendant from relying upon the release.

Plaintiff further claims that a release does not extend to claims of which one party was wrongfully kept in ignorance by the other. He asserts that State Farm’s “misrepresentations” as to coverage for work loss benefits constitutes such wrongful withholding of information. We disagree.

Mr. Galfand is an attorney. At most plaintiff has established that in defendant’s dealings with him in connection with his handling of the estate and settlement of the insurance claims, it took the position that it had no liability for payment of work loss benefits when the insured victim has died. (See plaintiff’s statement of uneontested facts, fill 22-24). This was an entirely reasonable position for State Farm to have taken at the time. See Heffner, supra, 491 Pa. at 454 n. 12, 421 A.2d at 633 n. 12; Gabovitz v. State Automobile Insurance Ass’n, 106 Dauphin Co. Rep. 289 (1985). Galfand was free to litigate this issue if he disagreed with State Farm’s interpretation of the Act. There was no misrepresentation or fraud here.

Plaintiff also asserts that the release is invalid because section 106(b)(3) provides that a release can be set aside if it is “procured by fraud or if its terms are unconscionable.” Based upon our discussion above, this section is inapplicable to the instant case.

C. Plaintiffs Motion For Summary Judgment and the Pending Motions to Intervene.

Because Applebaum cannot be a class representative, consideration now of a motion for summary judgment on behalf of the putative class would be premature. At this juncture, it is proper to consider the motions to intervene on behalf of those person^who believe that they could properly replacte Applebaum. In Haas v. Pittsburgh National Bank, 526 F.2d 1083 (3d Cir.1975), the Third Circuit Court of Appeals held that the timely filing of a class action by a purported class representative tolled the statute of limitations against a defendant that the plaintiff had no standing to sue. The court concluded that the amendment of the complaint to add a plaintiff who did have standing against the defendant was proper under American Pipe, supra, even though the latter case dealt only with the failure of a class action to satisfy the numerosity requirement. Haas indicates that this class action should remain viable until a decision has been made on the motions to intervene. If any of the movants qualify as a class representative, then the instant class action can proceed, including a disposition of plaintiff’s motion for change of venue.

We will issue an appropriate order.

ORDER AND JUDGMENT

AND NOW, this 31st day of January, 1986, it is ordered that:

1. Defendant’s motion for summary judgment as to the individual claim of plaintiff, Morris Allen Applebaum, is granted and judgment is hereby entered for defendant, State Farm Mutual Insurance Company, on plaintiff’s individual claim.
2. Defendant shall have twenty (20) days from the date of this order to file a brief in opposition to the various motions to intervene, including plaintiff’s motion for certification and intervention, dated October 11, 1985. Thereafter, further briefing shall be in accordance with local rules.

      . In its reply brief, defendant argues differently, taking the position that the limitations period began to run on the date of death and that therefore the period expired on December 24, 1979. Based upon Kamperis, we reject this argument.

        . We look to Pennsylvania law in this diversity action to determine whether the statute of limitations has been tolled. See Witherow v. Firestone Tire & Rubber Co., 530 F.2d 160 (3d Cir. 1976).

      . On November 17, 1978, in accordance with Pennsylvania procedural rules, a praecipe for writ of summons was filed but this did not begin the class action which could only be commenced by the filing of the complaint. See Pa.R.Civ.P. 1703(a).

      . It seems, however, that plaintiffs argument has little merit in light of Freeze v. Donegal Mutual Insurance. Co., 301 Pa.Super. 344, 447 A.2d 999 (1982), aff'd, 504 Pa. 218, 470 A.2d 958 (1983).

      . The court had broadened the class to include claimants like Applebaum but, nevertheless, Applebaum was not identified as a member of the final class.

      . Because Applebaum's claim must be dismissed based upon the release, we will not reach the Its pendens issue.


author: SPRIZZO, District Judge:

text:
    Theodore T. PETTUS, Plaintiff, v. Donald HAVRDA, Defendant.
    No. 83 Civ. 8513 (JES).
    United States District Court, S.D. New York.
    Jan. 31, 1986.
    Peter Kolodny, New York City, for plaintiff.
    Vincent P. Crisci, New York City, for defendant.
   SPRIZZO, District Judge:

This is an action for personal injuries and property damage allegedly sustained by plaintiff as a result of defendant’s negligence and recklessness. Specifically, plaintiff alleges that he was attacked by defendant’s dog while he was riding his bicycle in front of defendant’s premises. Defendant’s answer raises inter alia a statute of limitations affirmative defense and plaintiff has moved to strike that defense.

Both parties substantially agree that the action would be time-barred unless plaintiff served the summons and complaint upon defendant on or before January 28, 1984. See Affidavit of Peter Kolodny at 117, Defendant’s Memorandum of Law, at 10. Plaintiff claims that defendant was personally served on January 7, 1984. Defendant claims that he was not served until February 4, 1984. Thus, the only issue to be resolved by the Court is when service of the summons and complaint was effected.

Defendant has the burden of proof on this issue because the statute of limitations is an affirmative defense in New York. See Katz v. Goodyear Tire and Rubber Co., 737 F.2d 238, 243 (2d Cir.1984).

For the reasons which follow, the Court finds by a preponderance of the evidence that defendant was not served until February 4,1984. Plaintiff’s complaint therefore must be dismissed.

An evidentiary hearing was held to determine when the defendant was served with the summons and complaint. The defendant testified that he was served on February 4, 1984. See Hearing (“H”), at 38. He specifically recalled that date because he was wearing his tennis outfit when service was effected and he does not play tennis very often. Id. at 39. To corroborate his testimony, defendant produced a family calendar with the words “tennis Donald” written in for February 4, 1984. See Def. Ex. B.

The defendant’s testimony was corroborated by the testimony of his wife who was present in the house when defendant was served. She testified that she was certain that service was effected on February 4 because of the tennis date and because she wrote February 4 immediately on the copy of the summons and complaint when her husband was served. See Def. Ex. C; H. at 57, She also testified that she would have remembered if service had occurred on January 7, 1984, because that was the date of her daughter’s birthday party. See H. at 58. The family calendar further supports this contention. The Court finds the defendant’s wife’s testimony to be credible.

This Court does not find persuasive the testimony of the sheriff that he personally served the defendant on January 7, 1984. See id. at 6. The sheriff had no independent recollection as to when service was actually made but based his testimony solely on a note in a manila work folder, which to date has never been produced. See id. at 21. Having accepted as credible and correct the testimony of defendant and his wife, the Court is constrained to conclude that the sheriff is mistaken as to the date when personal service was made on defendant.

Accordingly, the complaint must be dismissed with prejudice as time-barred under the applicable statute of limitations.

It is SO ORDERED.

      . This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332 as plaintiff is á citizen of New York and defendant is a citizen of Connecticut. The amount in controversy exceeds 110,000.00.

      . Plaintiff asserts that he was required to serve defendant on or before January 28 while defendant asserts that plaintiff had until January 29. This discrepancy in dates is of no consequence on the facts of this case.
      Since this is a diversity jurisdiction case, the Court must apply the same statute of limitations provision that a New York court would apply. See Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945). This Court must also apply the same tolling provisions that a New York court would apply. See Walker v. Armco Steel Corp., 446 U.S. 740, 100 S.Ct. 1978, 64 L.Ed.2d 659 (1980); Somas v. Great American Insurance Co., 501 F.Supp. 96 (S.D.N.Y. 1980). Although this cause of action arose in Connecticut, since plaintiff is a resident of New York, a New York court would apply the applicable New York statute of limitations. See N.Y. Civ.Prac.Law and Rules (“CPLR”) § 202 (McKinney’s 1972).
      Plaintiff alleges and defendant agrees that the cause of action arose on November 29, 1980. New York law provides that an action to recover damages for personal injuries and injury to property must be commenced within three years from that date. See CPLR § 214 (McKinney Supp.1984). Generally, an action is commenced under New York law when the summons is served upon the defendant. See id. at § 203(b)(1) (McKinney’s 1972). Thus plaintiff was required to serve the defendant on or before November 29, 1983.
      However, plaintiff mailed the summons to the deputy sheriff of Fairfield County, Connecticut, where defendant resides, on November 23, 1983. Furthermore, plaintiff filed the summons and complaint with the clerk of this Court on November 22, 1983. Relying on CPLR § 203(b)(5), plaintiff argues that each of these actions extended the time within which plaintiff had to serve the defendant for an additional sixty days; until January 28, 1984. Defendant agrees that plaintiff acquired this sixty-day extension but only by virtue of plaintiffs filing with the clerk of this Court. Defendant’s Memorandum of Law, at 2.
      It is not clear, however, that the tolling provisions of § 203(b)(5) are available to plaintiff on the facts of this case merely because plaintiff filed the-summons and complaint with the clerk of this Court. It appears that the sixty-day extension provided for by § 203(b)(5) can only be acquired by filing if defendant resides, is employed, or is doing business in the State of New York or, if plaintiff cannot discover defendant’s residence, defendant once lived or worked in New York. See Parkhurst v. First & Merchants Corp., 100 Misc.2d 69, 418 N.Y.S.2d 260 (1979). No such factual showing was made in this case. Moreover, it does not appear that plaintiff can claim the sixty-day extension by delivery of the complaint to the Connecticut sheriff because § 203(b)(5) only applies to deliveries to New York sheriffs. See Butler v. UBS Chemical Co., 32 A.D.2d 8, 299 N.Y.S.2d 247 (per curiam 1969). In light of the Court’s holding that defendant has proved by a preponderance of the evidence that he was not served until February 4, 1984, outside of the statute of limitations period, the Court need not decide these issues. See id. at § 203(b).

      . The Court deferred its ruling at the close of the hearing pending the submission of further evidence by the parties. H. at 72.

      . Defendant’s wife also testified that she hand-delivered the complaint to her insurance broker the following Monday, February 7, 1984. H. at 59. This was corroborated by a letter to this Court from the insurance company, lending added support to defendant’s argument that he was served on February 4. The parties stipulated that this letter would constitute the testimony of the insurance broker in lieu of his personal appearance before the Court.

      . Two other notations by the sheriff as to the date of service were introduced into evidence at the hearing. These notations however have very little probative value. First, the affidavit of service indicates that the defendant was served on January 7, 1984. However, the sheriff completed and executed this affidavit simply by referring to his manila file and not from any independent recollection. See H. at 21A. Moreover, that affidavit was not prepared until October 20, 1984 because an earlier affidavit of service was apparently lost in the mail. See id. at 8.

        The sheriff also stamped the back of the summons and complaint which was served upon the defendant. See Def. Ex. C. The stamp indicated the sheriff’s name and title. Next to the stamp is the sheriff’s signature and the date written as "1/28/84." The sheriff testified that the date must have been altered and that it should be "1/7/84.” H. at 23. An inspection of the written date however reveals that it does not appear to be altered and it certainly does not look like it ever read "1/7/84.” See id. at H. 33. Furthermore, the Court is not persuaded by the sheriff's testimony that the date was altered since the sheriff did not even remember dating the summons and complaint in the first place. See id. at 24.

      . The sheriff did testify that on February 4, 1984 he was in another city in Connecticut attending to his plumbing business. H. at 69. However, the sheriff could produce no documentary support for this assertion, nor could he remember the names of any people who saw him there. See id. at 70.


author: YOUNG, District Judge.

text:
    RESEARCH CONSULTING ASSOCIATES, and Albert S. Richardson, Plaintiffs, v. ELECTRIC POWER RESEARCH INSTITUTE, INC. and James Baker, Secretary of the Treasury, Defendants.
    Civ. A. No. 84-1106-Y.
    United States District Court, D. Massachusetts.
    Jan. 31, 1986.
    See also, D.C., 104 F.R.D. 619.

      Paul R. Gupta, Thomas P. Gorman, Sherin & Lodgen, Boston, Mass., for plaintiffs.
    J. William Codinha, Peabody & Brown, ' Jeffrey Martin, Asst. U.S. Attys., J. William Codinha, Sloane & Walsh, Boston, Mass., for defendants.
   MEMORANDUM AND ORDER

YOUNG, District Judge.

This case presents the question whether the plaintiffs, Research Consulting Associates, Inc. (“Research Consulting”) and Albert Richardson, have standing to challenge the tax exempt status of the defendant Electric Power Research Institute (the “Institute”). In this lawsuit Research Consulting seeks, inter alia, to enjoin the defendant Secretary of the Treasury (the “Secretary”) from granting tax exempt status to the Institute. The Secretary has moved to dismiss the claim against him for lack of standing. For the reasons discussed below the motion is allowed.

I.

The complaint alleges the following facts, which the Court must assume are true for purposes of this motion to dismiss. Research Consulting is a small business located in Lexington, Massachusetts. Albert Richardson, the owner of Research Consulting, formed the company in 1957 for the purpose of researching and promoting products to be used by electric utility companies. In 1966 Research Consulting developed the “Windamper,” which was awarded patents in the United States and Canada. The Windamper is a device that attaches to overhead bulk power transmission lines for the purpose of controlling “galloping” of lines. Galloping is a condition typically caused by a combination of high winds and freezing weather in which electric transmission lines oscillate with sufficient amplitude and force so as to cause the line to fail. The United States’ electric utility industry (“the industry”) has long recognized the seriousness of the galloping problem, and the need to develop adequate antigalloping devices.

The Institute was organized in 1972, with the purpose “to promote, engage in, conduct, and sponsor research and development with respect to electricity production, transmission, distribution and utilization.” (Complaint ¶12) In addition to planning and managing research and development, the Institute acts as a trade association for the industry, and performs certain functions with respect to setting standards in the .industry. The Institute enjoys tax exempt status under § 501(c)(3) of the Internal Revenue Code. 26 U.S.C. § 501(c)(3).

Sometime prior to 1972, Dr. David G. Havard and other personnel of Ontario Hydro, a Canadian utility company, developed an anti-galloping device named the “Detuner.” The Detuner was introduced in the United States in 1977. Since that time the Institute has manifested a considerable interest in the capabilities of the Detuner. In order to collect data on the Detuner’s performance the Institute has given approximately 2,500 Detuners to utilities free of charge. The Institute has made no similar distribution of the Windamper.

The nub of Research Consulting’s complaint is that in order to profit from sales of the Detuner, the Institute is attempting to elevate the Detuner and diminish the Windamper in the eyes of the industry. The Complaint alleges that the Institute has acquired or is attempting to acquire the rights to license the Detuner. It further alleges that the Institute’s independent testing of the Detuner is only a guise, and that the systematic exclusion of the Windamper from all testing is designed to establish the Detuner as the only commercially marketable anti-galloping device.

The original complaint in this case was filed in April, 1984, and named only the Institute as a defendant. The complaint claimed rights to relief for antitrust violations (Count I), unfair competition (Count II), trade libel (Count III), tortious interference with economic relations (Count IV), breach of contract (Count V), and unfair and deceptive practices (Count VI). Subsequently, Research Consulting moved to amend the complaint to join the Secretary as a defendant, and seeking to enjoin the Secretary’s grant of tax exempt status to the Institute. After full briefing by Research Consulting and the Institute, another judge of this court, to whom this case was originally assigned, allowed the motion to amend. The only additional allegations in the amended complaint are that the Institute has engaged in conduct not substantially related to the purpose of its tax exemption, and that as a result Research Consulting has suffered “serious financial losses.”

II.

Before reaching the merits of the standing issue, it is necessary briefly to respond to Research Consulting’s characterization of the Secretary’s motion to dismiss as an effort “to place before the Court issues already fully addressed and properly resolved in connection with plaintiffs’ motion to amend its (sic) complaint.” If by so arguing Research Consulting means to imply that the order permitting amendment constitutes the “law of the case” on standing, it is wrong.

That the Institute cited many of the same cases in opposing the motion to amend that the Secretary cites here does not justify the conclusion that the first judge ruled on the standing issue. An order allowing a motion to amend will not act as law of the case so as to preclude a motion to dismiss by a party not present when the complaint was amended. Basic principles of fairness dictate that a nonparty who is joined involuntarily should be free to seek determination of dispositive issues. Cf. Wright, Miller & Cooper, 18 Federal Practice and Procedure § 4478 (1981). It is thus not surprising that in allowing the motion to amend the first judge noted in the margin that “standing may be raised by the defendant [Secretary].” Accordingly, the standing question is now properly before the Court.

III.

The genius of the tripartite system of government established by our constitution is that power is distributed so as to limit each branch to its proper role in a democratic society. Article III of the Constitution establishes that the role of the judiciary properly is limited to the adjudication of actual “cases” and “controversies.” Cf. Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975). Chief among the doctrines that “cluster about Article III,” Vander Jagt v. O’Neill, 699 F.2d 1166, 1178 (D.C.Cir.1982), is the requirement that a litigant have “standing” to invoke the power of the federal court. The standing requirement ensures that cases will “be presented in an adversary context and in a form historically viewed as capable of judicial resolution.” Flast v. Cohen, 392 U.S. 83, 101, 88 S.Ct. 1942, 1953, 20 L.Ed.2d 947 (1968). “In essence the question of standing is whether the litigant is entitled to have the Court decide the merits of the dispute or of particular issues.” Warth v. Seldin, 422 U.S. at 498, 95 S.Ct. at 2205.

The requirements imposed upon a litigant under the rubric of standing derive from two sources; Article III of the Constitution, and judicially self-imposed limits known as “prudential limitations.” Warth v. Seldin, 422 U.S. at 498, 95 S.Ct. at 2205; Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 471,102 S.Ct. 752, 757, 70 L.Ed.2d 700 (1982). For purposes of deciding this ease the Court need only discuss those requirements of standing that derive directly from the Constitution. As interpreted by the Supreme Court, Article III requires that a “plaintiff must allege personal injury fairly traceable to the defendant’s alleged conduct and likely to be redressed by the requested relief.” Allen v. Wright, 468 U.S. 737, 104 S.Ct. 3315, 3325, 82 L.Ed.2d 556 (1984).

It is clear that these requirements hardly are susceptible of mechanical application in a given case. This Court is far from alone in noting the inherent imprecision of the Supreme Court’s standing doctrine. See e.g., Allen v. Wright, 104 S.Ct. at 3325; Valley Forge v. Americans United, 454 U.S. at 475, 102 S.Ct. at 760; Tax Analysts and Advocates v. Blumenthal, 566 F.2d 130, 139 (D.C.Cir.1977). For example, it has been said that while the injury alleged must be “distinct and palpable,” Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 100, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979), any “identifiable trifle [of harm] is enough.” United States v. SCRAP, 412 U.S. 669, 689 n. 14, 93 S.Ct. 2405, 2417 n. 14, 37 L.Ed.2d 254 (1979). Likewise, although the causative link between the alleged injury and the challenged conduct cannot be “speculative” or “too attenuated,” Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 44, 96 S.Ct. 1917, 1927, 48 L.Ed.2d 450 (1976); Linda R.S. v. Richard D., 410 U.S. 614, 618, 93 S.Ct. 1146, 1149, 35 L.Ed.2d 536 (1973), it is unclear how directly linked the injury must be before it “fairly can be traced” to the challenged action, Simon v. Eastern Kentucky, 426 U.S. at 41, 96 S.Ct. at 1926. Recognizing this “flexibility” of current standing doctrine, the Court nonetheless is convinced that a faithful application of established principles compels the conclusion that in this case Research Consulting does not have standing to challenge the Institute’s tax exempt status.

The Secretary argues that the cases justify the conclusion that a litigant never has standing to challenge the tax exempt status of a third party. The Court concludes that while one might reasonably expect the Supreme Court to declare such a rule in the future, it is not an accurate statement of existing law. Although the Supreme Court has shown a discernible hostility to suits attacking the tax exempt status of a third party, see Allen v. Wright, 104 S.Ct. at 3315; Simon v. Eastern Kentucky, 426 U.S. at 26, 96 S.Ct. at 1917, the Court specifically has avoided reaching the question “of whether a third party ever may challenge IRS treatment of another.” Simon v. Eastern Kentucky, 426 U.S. at 37, 96 S.Ct. at 1923. Moreover, the leading Court of Appeals case dealing with competitor standing to challenge tax exempt status, American Society of Travel Agents v. Blumenthal, 566 F.2d 145 (D.C.Cir.1977), denied standing simply because the plaintiffs had not indicated with “sufficient specificity” the causal link between the tax exempt status and their injuries. Id. at 148. Implicitly, such a holding left the door open to other more directly injured litigants, even if that door is only “barely ajar.” Wright v. Regan, 656 F.2d 820, 828 (D.C.Cir.1981), rev’d 468 U.S. 737, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984). Hence, this Court recognizes the possibility of standing in these types of cases, and moves on to the question of whether this particular plaintiff has standing to bring this particular claim.

The conduct challenged here by Research Consulting is the Secretary’s grant of tax exempt status to the Institute. Therefore, for this Court to find standing Research Consulting must allege, at a minimum, (1) an injury in fact, (2) fairly traceable to the granting of tax exempt status to the Institute, (3) that is likely to be redressed by enjoining the further grant of tax exempt status. After reviewing the allegations of the complaint in the light most favorable to Research Consulting, the Court concludes that the second and third elements are missing, and that Research Consulting does not have standing to challenge the Secretary’s decision.

Viewed as a whole the complaint adequately alleges a threatened injury in fact. The complaint specifically alleges that the “plaintiffs have suffered ... serious financial losses” as a consequence of the Institute’s enjoying tax exempt status. While this allegation is somewhat vague, when considered in light of the other allegations of the complaint it satisfies the standard of notice pleading established by the Federal Rules of Civil Procedure. The core of Research Consulting’s complaint is that it is suffering a “competitive injury.” The cases are clear that in appropriate circumstances competitive injury due to government regulation constitutes injury in fact to fulfill that aspect of the Article III requirements. See e.g., Data Processing Service v. Camp, 397 U.S. at 157, 90 S.Ct. at 831; Investment Company Institute v. Camp, 401 U.S. 617, 620, 91 S.Ct. 1091, 1093, 28 L.Ed.2d 367 (1971); Rental Housing Association of Greater Lynn, Inc. v. Hills, 548 F.2d 388, 390 (1st Cir.1977).

It is when Research Consulting attempts to argue the causal connection between this alleged injury and the grant of tax exempt status that its case begins to unravel. Research Consulting argues that it has suffered, or may suffer in the future, financial loss due to the systematic exclusion of the Windamper from the Institute’s antigalloping device testing program. Complaint ¶¶ 36 and 37. What is missing is an allegation or explanation of how this systematic exclusion is fairly traceable to the Institute’s tax exempt status. The Court does not see how an independent determination by the Institute as to the relative quality of the competing anti-galloping devices in any way implicates the Secretary’s decision to grant the Institute tax exempt status. That Research Consulting miscomprehends the link between the Secretary’s actions and its competitive injury is evidenced by the following statement from its brief: “EPRI, by virtue of its tax exempt status, is able to spend hundreds of thousands of tax exempt dollars in testing and promoting the Detuner, while arbitrarily excluding the plaintiffs’ Windamper.” The ability to spend “hundreds of thousands of tax exempt dollars” is not the cause of Research Consulting’s injury. The real source of the alleged injury is that the Institute evidently has chosen the Detuner to be the superior anti-galloping device. That qualitative determination is not “fairly traceable” to the Secretary’s granting of tax exempt status to the Institute.

Similarly, it is doubtful that enjoining the grant of tax exempt status likely will redress the injury complained of here. There is nothing in logic or in the complaint which suggests that the Institute will include the Windamper in any testing or promotion if its tax exempt status is revoked. Indeed, it is not even alleged that the Institute is continuing to distribute the free Detuners or that it plans to distribute more anti-galloping devices in the future. Thus, the harm of the allegedly “subsidized” distribution would appear to be complete, and enjoining the Secretary would do nothing to alleviate the injury. In any event, because the Court already has found that Research Consulting’s injury is not traceable to the challenged conduct, it is enough to point out that the complaint fails to allege in what way the requested relief would likely redress the alleged injury.

Research Consulting places great reliance on the case of Abortion Rights Mobilization, Inc. v. Regan, 544 F.Supp. 471 (S.D.N.Y.1982) (hereinafter “Abortion Rights ”). Such reliance is not surprising since that is the only case of which the Court is aware where a litigant was found to have standing to challenge the tax exempt status of a third party. Nonetheless, the reliance is misplaced. Abortion Rights involved a constitutional challenge by 29 organizations and individuals to the Secre-' tary’s grant of tax exempt status to the Roman Catholic church. The plaintiffs, all of whom were “concerned about the right of a woman to choose to carry a fetus to term or to abort it, and about the constitutionally mandated separation of church and state,” Abortion Rights, 544 F.Supp. at 473, alleged that the grant of tax exempt status to the church was illegal because the church, in violation of the tax code, was lobbying in partisan political campaigns on behalf of candidates who supported the church’s view on abortion. The court found standing on two separate grounds. First, the court found standing under the Establishment clause for ministers of various faiths on the ground that “tacit government endorsement” of the church denigrated their religious communities and beliefs. Abortion Rights, 544 F.Supp. at 479. Second, the court found “voter standing,” see Baker v. Carr, 369 U.S. 186, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962), for the individual plaintiffs on the theory that they had alleged “government action which [had] improperly biased the political process against the discrete group to which they belong.” Id. at 481.

Without intending in any way to impugn the correctness of the result reached in Abortion Rights, the Court rules that the reasoning of that case is inapplicable to the dispute here. It is well established that the existence of standing “often turns on the nature and source of the claim asserted.” Warth v. Seldin, 422 U.S. at 500, 95 S.Ct. at 2206. Therefore, the Abortion Rights finding of standing under the Constitution is of the most limited relevance to a claim of standing under the Administrative Procedures Act. The “competitor” standing found in Abortion Rights is consistent with the heightened scrutiny federal courts historically have applied to government interference in the marketplace of ideas. It does not counsel the relaxation of well established standing principles in a case where the plaintiff alleges a commercial injury due to government regulation of a third party. In sum, Abortion Rights is inapposite because it involved an ideological competitor attempting to vindicate constitutional rights, not a commercial competitor alleging an attenuated connection between government regulation and financial loss.

In accordance with all that has just been said, the motion of the Secretary to dismiss is ALLOWED.

      . Because the interests of Research Consulting and Richardson are indistinguishable in this matter, the Court will refer to both plaintiffs simply as "Research Consulting.”

      . Although the amended complaint does not state a basis of jurisdiction for Research Consulting’s claim against the Secretary, the Court rules that § 10 of the Administrative Procedures Act, 5 U.S.C. § 702, provides it jurisdiction to hear the claim (Any person "aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review”). A plaintiff who asserts standing under § 10 must demonstrate, in addition to an injury in fact, that the alleged injury is within the zone of interests arguably protected or regulated by the relevant statute. Data Processing Service v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 829, 25 L.Ed.2d 184 (1970). Because the Court concludes that Research Consulting has not met the core constitutional requirements of standing, it need not reach the additional question of whether the alleged injury is within the "zone of interests" of § 501(c)(3).

      . “The ‘fairly traceable’ and ‘redressability’ components of the constitutional standing inquiry were initially articulated by [the Supreme] Court as ‘two facets of a single causation requirement.' ” Allen v. Wright, 104 S.Ct. at 3326 n. 19.