author: LATCHUM, Senior District Judge.

text:
    LOOK MAGAZINE ENTERPRISES S.A., Plaintiff, v. LOOK, INC. and Howard Kunitz, Defendants.
    Civ. A. No. 84-290-JLL.
    United States District Court, D. Delaware.
    Oct. 16, 1984.

      Henry E. Gallagher, Jr., of Connolly, Bove, Lodge & Hutz, Wilmington, Del., Richard Lehv of Weiss, Dawid, Fross, Zelnick & Lehrman, P.C., New York City, of counsel, for plaintiff.
    William E. Manning of Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, Del., Victor M. Wigman and Herbert Cohen of Wigman & Cohen, P.C., Arlington, Va., of counsel, for defendants.
   OPINION

LATCHUM, Senior District Judge.

This is an action for trademark infringement and dilution, unfair competition, and injury to business reputation. The case is before the Court on the defendants’ pre-answer motion for dismissal or, in the alternative, a stay of proceedings to allow resolution of related litigation before the Trademark Trial and Appeal Board (“TTAB”) of the United States Patent and Trademark Office (“PTO”). (Docket Item [“D.I.”] 6.)

I. FACTS

The plaintiff, a Swiss corporation named Look Magazine Enterprises S.A. (“LME”), is the owner by assignment of the trademark “LOOK,” familiar to many Americans as the title of a pictorial magazine. (D.I. 1 at 2-3.) The defendants are LOOK, Inc. (“LI”), a Delaware corporation, and its sole officer, shareholder, and director, Howard G. Kunitz (“Kunitz”).

In 1979, Kunitz began laying the groundwork for the publication of a magazine to be titled “LOOK.” (D.I. 17 at 30.) A magazine of that name was first published in 1936 and continued in successful publication for many years. (D.I. 1 at 2.) Despite its record of success, LOOK magazine apparently fell on hard times; it ceased publication, resumed it again sometime later, and then once more ceased. (See D.I. 13 at Ex. 5, p. 3.) Kunitz was “watching carefully the activities of LOOK magazine with great interest____” (D.I. 17 at 32.) He stated in deposition testimony that “when I noticed how [the magazine] was being handled, I remember ... I asked ... an attorney in Washington, D.C., to write to New Sound, Inc. [-the publisher and then-owner of the “LOOK” mark-], to find out if they ever had any intentions of doing this again,” (id.) meaning, it seems, did New Sound, Inc., intend to publish LOOK again. Although that company responded to Kunitz’s lawyer that “Look magazine was published and widely distributed in interstate commerce between January and September of 1979 and further uses of the trademark are contemplated,” (D.I. 13 at Ex. 4), Kunitz eventually determined to go forward with his plans to publish a new edition of LOOK. (D.I. 17 at 33.)

A part of those plans involved Delaware. In April of 1982, Kunitz retained a Delaware law firm to help him incorporate defendant LI (D.I. 6 at Kunitz Affidavit, p. 2; D.I. 17 at 22), and, at his request, these attorneys, representing his Delaware corporation, solicited investments. (D.I. 17 at 44-46.) A “pre-publication” issue of the magazine was prepared and sent to magazine distributors throughout the country, including Delaware {id. at 63-64); in that issue, the business address listed for the magazine is that of Kunitz’s Delaware attorneys. {Id. at 56.) Kunitz testified at his deposition that it was his intention to have inquiries about the magazine forwarded to him from Delaware. {Id. at 57.) Not only would Kunitz’s magazine-related mail be received at the Delaware address, his answering correspondence would appear to come from there because he had printed and used stationery with the “LOOK” logo and Delaware address. {Id. at 58, 60-61.)

In late December, 1982, after its attempts to raise money were consistently frustrated by the legal cloud over its claim to the “LOOK” mark {id. at 59-60), LI instituted proceedings before the TTAB to have the registration of LME’s marks can-celled. (D.I. 6 at Kunitz Affidavit, p. 4.) Nearly two years later, those proceedings have failed to produce any decision. It has been, as counsel for defendants noted more than once at argument in this Court, a frustrating and unproductive experience.

In May of this year, LME decided “that it could no longer tolerate defendants’ infringement of its valuable LOOK trademark,” and therefore filed this action. (D.I. 13 at Lehv Affidavit, pp. 13-14.) At roughly the same time, LME filed a motion with the TTAB for suspension of the cancellation proceedings, pending decision in this suit. The defendants moved the TTAB to stay decision on LME’s motion until this Court has ruled on the defendants’ present motion to dismiss this civil action. {Id. at 14.)

II. LAW

The defendants’ motion is, in the alternative, asking for either dismissal of the action because venue is improper, or a stay of proceedings until the TTAB has resolved the issue before it. (D.I. 6.) On a motion to dismiss, the facts must, of course, be construed in favor of the non-moving party. See Jenkins v. McKeithen, 395 U.S. 411, 421-22, 89 S.Ct. 1843, 1848-49, 23 L.Ed.2d 404 (1969). Each of the defendants’ requests is dealt with in turn. •

A. Venue

LME argues that its claims arose in this district and that venue is accordingly founded here under 28 U.S.C. § 1391(b). (D.I. 12 at 11.) The Court agrees.

The proper manner for determining where a claim arose has been a matter of some debate. Prior to the Supreme Court’s decision in Leroy v. Great Western United, 443 U.S. 173, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979), the leading precedent for courts of this circuit considering the issue was Tefal, S.A. v. Products International Co., 529 F.2d 495 (3d Cir.1976). The court in Tefal recognized, without making a qualitative judgment about them, that two alternative legal theories had developed in the district courts to deal with venue under 1391(b). In Honda Associates, Inc. v. Nozawa Trading, Inc., 374 F.Supp. 886, 892 (1974), the Southern District of New York applied a test which the Third Circuit characterized as “the ‘more than miniscule’ test,” 529 F.2d at 497, apparently meaning that venue was proper if, among the events giving rise to the claim, a more than miniscule number took place in the district in which venue was asserted to lie. In contrast, however, language in Scott Paper Co. v. Scott’s Liquid Gold, Inc., 374 F.Supp. 184, 189-90 (D.Del.1974), indicated to the Third Circuit that this Court considered venue to lie in any district in which the claim could be said to have arisen, whether or not that district was the location of most of the claim-creating conduct. 529 F.2d at 497.

New and decisive light was shed on the “claim arose” question by the Supreme Court’s Leroy opinion. The high court said, “[Congress] restricted venue either to the residence of the defendants or to ‘a place which may be more convenient to the litigants’ — i.e., both of them — ‘or to the witnesses who are to testify in the case.’ ” 443 U.S. at 185, 99 S.Ct. at 2717 (citations omitted). The Court went on to say that it would only be “the unusual case in which it is not clear that the claim arose in only one specific district,” id., and that in such a ease “a plaintiff may choose between those ... districts that with approximately equal plausibility ... may be assigned as the locus of the claim.” Id. Bearing on all this interpretation is the Court’s counsel that

[s]o long as the plain language of the statute does not open the severe type of “venue gap” that the amendment giving plaintiffs the right to proceed in the district where the claim arose was designed to close, there is no reason to read it more broadly on behalf of plaintiffs.

Id. at 184, 99 S.Ct. at 2717 (footnotes omitted).

Applying the Supreme Court’s guidance to the facts of this case yields the conclusion that venue is proper in this district. This is the judicial district which Kunitz selected as the center for the activities allegedly infringing the plaintiff’s trademark. It is the place of incorporation and the business location of the corporate defendant; it is the place to which people interested in the defendants’ magazine have their attention directed, both by the address printed at Kunitz’s direction in the pre-publication issue of the magazine and the address printed on the LOOK stationery made for and used by LI; it is the location of agents who acted on behalf of LI to solicit investment in the publishing venture; and it is incidentally the site of one of the magazine distributors solicited to move the magazine into widespread circulation.

Even if the Court were not satisfied that this district is the logical one to tap as the single district in which the claim arose for purposes of § 1391(b), the Court believes that this case could be called one of the unusual variety in which the claim arises in more than one district, one of them being Delaware, and that the plaintiff has properly exercised its option to select this district as the place to litigate its claim.

A third and powerful reason for judging venue correct in this jurisdiction is the Supreme Court’s counsel to interpret § 1391(b) more broadly in favor of plaintiffs when necessary to avoid a venue gap. See Leroy, supra, 443 U.S. at 184, 99 S.Ct. at 2716. Although, again, the Court is satisfied that Delaware is the logical locus to pick as being where the claim arose, it is significant that the potential of a venue gap lurks in this case. In their attempts to dissuade the Court from believing such a potential exists, the defendants have strengthened that belief. They assure the Court there is no venue gap because Kunitz concedes, although it is quite obvious anyway, that venue as to him would lie in Maine. (D.I. 14 at 12.) It is what they fail to say that tells: there is not the slightest indication that LI would concede to venue in Maine. The defendants have made the case for the plaintiff, because if venue as to Kunitz did not lie in this Court and venue as to LI did not lie in Maine, the plaintiff would be faced with the perfect example of a venue gap.

The defendants rely heavily {id. at 13) on the following passage from Leroy in contending that such a predicament is not the venue gap counseled against by the Supreme Court:

“The desirability of consolidating similar claims in a single proceeding may lead defendants, such perhaps as the New York and Maryland officials in this case, to waive valid objections to otherwise improper venue. But that concern does not justify reading the statute to give the plaintiff the right to select the place of trial that best suits his convenience____ It is absolutely clear that Congress did not intend to provide for venue at the residence of the plaintiff or to give that party an unfettered choice among a host of different districts.

Leroy, supra, 443 U.S. at 184, 185, 99 S.Ct. at 2717. However, the factual situation on which the Supreme Court based its opinion is manifestly different from that before this Court. LME is not trying to bring separate but similar claims against unrelated parties; it is asserting precisely the same claims against two inextricably linked defendants. This is the situation in which venue gaps can open and swallow claims against geographically dispersed defendants, claims which otherwise might prove meritorious. This Court will not allow that to happen.

B. Stay of Proceedings

The defendants have requested that, in the event the Court finds, as it has, that venue is proper in this district, the Court nevertheless stay the proceedings in this case. (D.I. 6.) Because the arguments made and the authority cited by the plaintiff in opposing the motion persuade the Court that a stay would be imprudent, the application will be denied.

In Landis v. North America Co., 299 U.S. 248, 57 S.Ct. 163, 81 L.Ed. 153 (1936), the Supreme Court set down the rule that “the suppliant for a stay must make out a clear case of hardship or inequity in being required to go forward, if there is even a fair possibility that the stay for which he prays will work damage to some one else.” Id. at 255, 57 S.Ct. at 166. To understand why the proposed stay does indeed pose the possibility of damage to the plaintiff and thus places the defendants under the rule of Landis, it is necessary to consider the nature of the substantive issue before the TTAB and the nature of TTAB proceedings.

Defendant LI has petitioned the TTAB for the cancellation of the plaintiff’s “LOOK” trademark registrations (D.I. 6 at Kunitz Affidavit, p. 4), the sworn and obvious purpose of the petition being to further Kunitz’s plan to publish a magazine bearing that trademark. (D.I. 13 at Exhibit 9, Attachment A, p. 4.) Counsel for the defendants represented to the Court at oral argument on the instant motion that the sole issue being pressed in the cancellation proceedings is whether the plaintiff has abandoned and thus lost the right to claim the “LOOK” mark. A statutory definition of abandonment, and the one on which the defendants are apparently relying in the cancellation proceedings (see D.I. 6 at Kunitz Affidavit, pp. 3-4), is the discontinuance of a mark’s use with the intent of not resuming use. 15 U.S.C. § 1127. In short, the whole of the cancellation proceedings turns on the issue of the plaintiff’s intent.

An issue of intent, by its very nature, is one which should generally be resolved by a fact finder that has had the opportunity to see the demeanor of witnesses under direct and cross-examination, to observe firsthand the subtle shifts in tone and behavior that are often decisive in judging the credibility of testimony. As Judge Leahy of this Court put it in another context thirty years ago: “True the paper formalities were practically pat, but the three principal parties were vague, hesitant, and unconvincing when cross-examined as to details. Intent although subjective as a state of mind, is of necessity ascertained from observable actions and course of conduct.” Maloney v. Collison, 119 F.Supp. 12, 15 (D.Del.), affd sub nom. 218 F.2d 705 (3d Cir.1954) (emphasis added). “Observable” is the operative word, and though seeing is not necessarily believing, it goes a long way toward determining believability.

This notion explains in part the reluctance of courts to grant summary judgment in cases involving questions of intent. See, e.g., Gifford v. Atchison, Topeka & Santa Fe Ry. Co., 685 F.2d 1149, 1156 (9th Cir.1982); Sterling Nat’l Bank & Trust Co. of N. Y. v. Fidelity Mortgage Investors, 510 F.2d 870, 875 (2d Cir.1975); In re Yarn Processing Patent Validity Litigation, 498 F.2d 271, 288 (5th Cir.), cert. denied sub nom. 419 U.S. 1057, 95 S.Ct. 640, 42 L.Ed.2d 654 (1974). It also explains this Court’s belief that the proceedings of the TTAB should not take precedence over proceedings in this Court. The TTAB’s procedures call not for live testimony before a fact finder, but for decision based on the submission of depositions, briefs, documentary evidence, and perhaps oral argument. 37 C.F.R. §§ 2.1200(3), 2.125, 2.128, 2.129. Such a process is unlikely to be as accurate a gauge of intent as a full trial, cf. Capetola v. Orlando, 463 F.Supp. 498, 507 (E.D. Pa.1978) (“a determination [of intent] is best made after a full trial on the merits”), and thus holds the potential of prejudice to the plaintiff.

That being the case, the relevant question is whether the defendants have “ma[d]e out a clear case of hardship or inequity,” Landis, supra, 299 U.S. at 255, 57 S.Ct. at 166, to justify a stay in this Court. The Court believes they clearly have not. Indeed, at oral argument, counsel for the defendants made much of the protracted proceedings before the TTAB, complaining of the financial burden and frustration of litigation without light at the end of the tunnel. Nevertheless, they argue that the proceedings should go forward there. Attempting to make out a case of inequity, the defendants have listed in one of their briefs the wrongs they feel they’ve suffered thus far at the hands of the plaintiff. (D.I. 6 at Memorandum, pp. 24-25.) Without running through their protests seriatim, suffice it to say that purple prose is no substitute for relevance, and a relevant argument of inequity is nowhere to be found for the defendants.

The defendants have raised two additional arguments to justify a stay of proceedings. First, they argue that the doctrine of primary jurisdiction precludes the Court from going forward until after the TTAB has concluded the cancellation proceedings. (D.I. 6 at Memorandum, pp. 18-20.) But the boundaries of that doctrine belie the defendants’ interpretation. According to the Supreme Court, primary jurisdiction is “a principle ... that in cases raising issues of fact not within the conventional experience of judges or cases requiring administrative discretion, agencies created by Congress for regulating the subject matter should not be passed over.” Far East Conference v. United States, 342 U.S. 570, 574, 72 S.Ct. 492, 494, 96 L.Ed. 576 (1952) (emphasis added). Questions of intent, such as that in issue in this case, are not beyond the conventional experience of judges; they are, on the contrary, a standard fare of the courts and accordingly outside the judicial policy of primary jurisdiction. A doctrine intended to satisfy “the need for an orderly and sensible coordination of the work of agencies and courts,” Cheyney State College Faculty v. Hufstedler, 703 F.2d 732, 736 (3d Cir.1983), should not be transformed into a woodenly applied commandment. See Continental Connector Corp. v. Continental Specialties Corp., 413 F.Supp. 1347, 1350 (D.Conn. 1976).

Of yet less merit is the defendants’ argument that judicial economy will be furthered by staying this case while the TTAB process works to a conclusion. Again, defense counsel’s complaints about the seemingly interminable proceedings before the TTAB undermine the defendants’ argument. But, beyond that, it is apparent on its face that judicial economy is not served by awaiting one tribunal’s resolution of a particular issue when another tribunal can resolve in a single proceeding that issue and all others disputed by the parties. “Congress has provided that all questions in respect to a registered trade-mark may be determined in one proceeding, thus preventing vexatious and harassing litigation as well as saving time, expense and inconvenience to the parties and to the courts and Patent Office Tribunals.” Simmonds Aerocessories, Ltd. v. Elastic Stop Nut Corp. of America, 257 F.2d 485, 491 (3d Cir.1958).

.III. CONCLUSION

For the foregoing reasons the Court will deny the defendants’ motion to dismiss or stay proceedings. An order will be entered in conformance with this opinion.

      . LME owns three related “LOOK” trademarks listed on the Principal Register in the PTO: Registration No. 781,779, for the mark "LOOK” for a magazine published every two weeks; Registration No. 1,132,175, for the mark "LOOK” for a pictorial magazine, and Registration No. 1,243,458, for the mark "NEW LOOK” for prerecorded video cassettes (video magazines). (D.I. 1 at 3.)

      . The cancellation proceedings involve only two of LME’s three LOOK marks, Reg. Nos. 781,779 and 1,132,175. (D.I. 6 at Kunitz Affidavit, p. 4.) See supra, n. 1.

      . 28 U.S.C. § 1391(b) reads: "A civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendants reside, or in which the claim arose, except as otherwise provided by law.”
      In its complaint, LME stated that venue was also proper under § 1391(c), (D.I. 1 at 1-2), but LME has apparently abandoned any plan to argue the propriety of venue on that basis. In its brief it cites and argues only § 1391(b).

      . On the assumption that this characterization of the "more than miniscule” test was the one intended by the Third Circuit, that court has been faulted for misreading the test applied by the Southern District of New York in Honda. See Wepner, "Determining Where the Claim Arose Under 28 U.S.C. § 1391(b) in Multi-State Trademark Infringement Actions," 72 Trademark Reporter 358, 365-66 (1982).

      . Leroy involved a tender offer for a corporation with ties to Idaho, New York, and Maryland. 443 U.S. at 175-76, 99 S.Ct. at 2712-13. Because of securities laws enacted independently by each of those states, the tender offeror found it more difficult than it liked to pursue the tender offer and attempted to bring state officials into court in the United States District Court for the Northern District of Texas so that they could be enjoined from enforcing their state laws. Id. at 177, 99 S.Ct. at 2713. In Leroy there is nothing of the concerted action giving rise to a single claim or set of claims against all defendants as there is in this case.

      . The alternative definition of abandonment given in the same statute is "[a] course of conduct of the registrant, including acts of omission as well as commission, [which] causes the mark to lose its significance as an indication of origin.” It is hard to imagine the defendants {see, infra, n. 7) relying on this definition, however, because it seems the very reason they want to use the LOOK mark is the distinction it retains as a trademark. {See, e.g., D.I. 17 at 65 ("Q: What was your purpose in sending [out to magazine distributors the pre-publication issue of Li's ‘LOOK’ magazine]? A: To excite the hell out of them, to make them understand that LOOK magazine was coming back____”).)

      . Although only one defendant, LI, is a party before the TTAB, for convenience the Court refers to both the defendants in connection with the cancellation proceedings because their interests are identical. (See D.I. 13 at Exhibit 9, Attachment A, p. 4.)


source: Caselaw Access Project

author: ANN ALDRICH, District Judge.

license: Public Domain

text:
    Robert B. DAVIS, et al., Plaintiffs, v. ROCKWELL INTERNATIONAL CORP., Rockwell International Corp. Reinforced Plastics Division, S.M.C. Corp., Sheet Molding Compound Machinery Co., Inc., Defendants.
    Civ. A. No. C82-1417.
    United States District Court, N.D. Ohio, E.D.
    Oct. 18, 1984.

      Richard Dempsey, Cleveland, Ohio, for plaintiffs.
    Roberta Y. Bavry, porter, Wright, Morris & Arthur, Columbus, Ohio, for defendants.
   MEMORANDUM AND ORDER

ANN ALDRICH, District Judge.

This Memorandum and Order sets forth the reasons for this Court’s September 25, 1984 Order denying defendant Rockwell International Corporation’s (“Rockwell”) motion for summary judgment.

Title 28 U.S.C. § 1332(a) provides subject matter jurisdiction in this diversity action.

I.

Robert B. Davis was formerly employed as a mixer machine operator at Rockwell’s Reinforced Plastics Division (“the Division”) plant located in Ashtabula, Ohio. On May 28, 1980, his hand was partially crushed when it became caught between two power-driven rollers which are parts of a fiberglass molding machine. The injury occurred when, in the normal course of employment, Davis was attempting to clean the machine.

Davis applied for and collected workers’ compensation benefits under the Ohio Workers’ Compensation Act (“OWCA”), Ohio Rev.Code §§ 4123.01 et seq. Rockwell, a self-insured employer as provided for in Ohio Rev.Code § 4123.35, complied with the law and has paid the administratively-determined amount of benefits to Davis and his doctors. Davis has also filed an “Application for Additional Award for Violation of Specific Requirement” as provided for by the Ohio Constitution.

On May 28, 1982, Davis and his wife Emilie commenced this action against Rockwell, the Division, and eight other defendants. The first three counts of the complaint concern the mixer machine and are not relevant to this motion. The fourth cause of action, however, states that the mixer was provided by Rockwell and the Division “for the use and operation by plaintiff and other employees in a dangerous and/or hazardous condition, thereby proximately causing his injuries.” Davis further “states that these defendants had knowledge of the dangerous and hazardous condition of the machine and failed to correct and warn with respect thereto.” Providing the mixer in such a condition and failing to correct it and warn employees of it “constituted intentional and malicious conduct and was in willful and wanton disregard of the health and safety of the plaintiff, and which proximately caused his injuries ...” Davis seeks $600,000 in compensatory damages and $1,000,000 in punitive damages.

In the fifth cause of action, Emilie Davis seeks $150,000 in compensatory damages and $300,000 in punitive damages for loss of her husband’s services.

II.

Rockwell claims that its participation in the workers’ compensation system protects it from suit over an employee’s work-related injury. It further contends that Davis’ decision to collect workers’ compensation benefits constitutes an election of remedies which precludes him from bringing a civil action for intentional tort.

In this diversity action, the Court must follow the substantive law of the State of Ohio even if the Court considers the pertinent law to be unsound in principle or another rule preferable. Erie v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Tennessee River Pulp & Paper Co. v. Eichleay Corp., 708 F.2d 1055, 1057 (6th Cir.1983). More precisely, only the law as expressed by the highest court of the state, in this case the Ohio Supreme Court, is binding on the Court. Ruth v. Bituminous Casualty Corp., 427 F.2d 290, 292 (6th Cir.1970). If the Ohio Supreme Court has not spoken, the Court is obligated to follow published intermediate Ohio appellate court decisions. Id. Absent any state cases, the Court must express its best judgment, based on available information, as to what the Ohio Supreme Court would hold if faced with the issue presented by this case. Tennessee River Pulp v. Eichleay Corp., 708 F.2d at 1057.

Under Fed.R.Civ.P. 56(c), summary judgment may be granted only if there is “no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law.” All evidence concerning the existence of a genuine issue of material fact must be viewed in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Hasan v. CleveTrust Realty Investors, Inc., 729 F.2d 372 (6th Cir.1984); Malis v. Hills, 588 F.2d 545 (6th Cir.1978).

III.

A. The Constitutional and Statutory Scheme

Workers’ compensation statutes, such as the OWCA, generally provide that benefits recoverable under the statute are the exclusive remedy available to an employee injured in the course of employment. See generally Roof v. Velsicol, 380 F.Supp. 1373 (N.D.Ohio 1974); 2A A. Larson, The Law of Workmens’ Compensation, § 65.-10, at 12-1 (1982 & Supp.1983) (“Larson”). Section 35, Article II of the Ohio Constitution establishes the groundwork for the OWCA. In pertinent part, it provides:

For the purpose of providing compensation to workmen and their dependents, for death, injuries or occupational disease, occasioned in the course of such workmen’s employment, laws may be passed establishing a state fund to be created by compulsory contribution thereto by employers, and administered by the state, determining the terms and conditions upon which payment shall be made therefrom. Such compensation shall be in lieu of all other rights to compensation, or damages, for such death, injuries, or occupational disease, and any employer who pays the premium or compensation provided by law, passed in accordance herewith, shall not be liable to respond in damages at common law or by statute for such death, injuries or occupational disease ... (Emphasis added).

Implementing the constitutional mandate, the Ohio legislature passed the OWCA. Ohio Rev.Code § 4123.74 provides:

Employers [in compliance with the OCWA] shall not be liable to respond in damages at common law or by statute for any injury, or occupational disease, or bodily condition, received or contracted by an employee in the course of or arising out of his employment ... whether or not such injury, occupational disease [or] bodily condition ... is compensable under Sections 4123.01 to 4123.94, inclusive, of the Revised Code.

For an injury resulting from an employer’s violation of a specific safety standard, an employee may be granted an additional award of up to fifty per cent of the maximum award. The award is in the form of a penalty against the employer. Ohio Constitution, Section 35, Article II; State ex rel. Zito v. Industrial Commission, 64 Ohio St.2d 53, 413 N.E.2d 787 (1980); State ex rel. Whitman v. Industrial Commission, 131 Ohio St. 375, 3 N.E.2d 52 (1936).

The Ohio legislature also established a rule of construction, Ohio Rev. Code § 4123.95, which has been termed “clearly of assistance in determining the scope of employer immunity.” Blankenship et al. v. Cincinnati Milacron Chemicals, Inc., 69 Ohio St.2d 608, 612, 433 N.E.2d 572, cert. denied, 459 U.S. 857, 103 S.Ct. 127, 74 L.Ed.2d 110 (1982). The section reads:

Sections 4123.01 to 4123.94, inclusive, of the Revised Code, shall be liberally construed in favor of employees and the dependents of deceased employees.

The constitution and code reflect a legislated compromise between the interest of the employees and the concerns of the employers. On both sides, there is a quid pro quo. In return for a greater assurance of recovery, the employees relinquish their common law remedy and accept lower benefits. Employers sacrifice their common law defenses and, in turn, are protected from unlimited liability. Blankenship, 69 Ohio St.2d at 614, 433 N.E.2d 572; Larson § 65.10 at 12-4.

B. Intentional Tort

Workers’ compensation statutes, designed to improve the plight of the injured worker, do not, however, afford an employer immunity for its intentionally tortious behavior. As the Ohio Supreme Court held:

An employee is not precluded by Section 35, Article II of the Ohio Constitution, or by R.C. 4123.74 and 4123.741 from enforcing his common law remedies against his employer for an intentional tort.

Blankenship, 69 Ohio St.2d at 608 (syllabus), 433 N.E.2d 572. While plain reading of the syllabus alone appears to indicate that Rockwell’s motion must be denied, the issue is complicated by the need to define an intentional tort and to resolve the election of remedies issues not decided in Blankenship.

Several reasons have been advanced to explain the intentional tort exception to the exclusive remedy provisions of workers’ compensation statutes. The most persuasive is that an employer who commits an intentional wrong should not be permitted to argue that the resulting injury was accidental and within the exclusivity terms of the act. See Larson § 69.10 at 13-41 to 13-42. Following Delamotte v. Midland Ross, 64 Ohio App.2d 159, 161, 411 N.E.2d 814 (Lucas County 1978), Blankenship allowed an intentional tort claim because “the substance of the claim is not an injury ... received or contracted by any employee in the course of or arising out of his employment within the meaning of R.C. 4123.-74.” Blankenship, 69 Ohio St.2d at 613, 433 N.E.2d 572. The court also stated that one of the avowed purposes of the act, promoting a safe and injury free work environment, would not be fulfilled if an employer could commit an intentional tort with impunity having only to worry about its workers’ compensation premiums rising. Id. at 615, 433 N.E.2d 572.

The majority of courts adopting the intentional tort exception have held that even egregious or reckless employer conduct that falls short of demonstrating a deliberate intent to injure will not permit an employee to overcome the exclusivity provision. For example, an employee who merely alleges constructive intent is limited to workers’ compensation remedies and cannot resort to a common law action. See, e.g., Houston v. Bechtel Association Professional Corp., 522 F.Supp. 1094 (D.D.C. 1981) (exclusivity provision of Longshoreman’s and Harbor Workers’ Compensation Act (“LHWCA”) bars employee’s action arising out of employer’s allegedly willful, wanton, reckless or unlawful conduct); Larson § 68.13. Employer misconduct that does not fall within the intentional tort exception includes: knowingly permitting a hazardous work condition to exist, Sanford v. Presto Mfg. Co., 92 N.M. 746, 594 P.2d 1202 (N.M.Ct.App.1979); willfully failing to furnish a safe place to work, Austin v. Johns-Manville Sales Corp., 508 F.Supp. 313 (D.Me.1981); intentionally failing to warn the employee of the dangers and health hazard to which he could be exposed, Johnson v. Kerr-McGee Oil Industries, Inc., 129 Ariz. 393, 631 P.2d 548 (Ariz.Ct.App.), appeal dismissed, 454 U.S. 1025, 102 S.Ct. 560, 70 L.Ed.2d 469 (1981); and willfully and unlawfully violating a safety statute, Cunningham v. Aluminum Co. of America, Inc., 417 N.E.2d 1186 (Ind.Ct.App.1981).

The Ohio Supreme Court, however, has taken a slightly different approach to this question. In Blankenship, employees and their spouses sued in tort for an employer’s intentional use of chemicals it allegedly knew were harmful, and for its failure to warn and to report the dangerous conditions to federal and state agencies as required. 69 Ohio St.2d at 608, 433 N.E.2d 572. The complaint alleged that, within the scope of their employment, the employees were exposed to fumes and other noxious characteristics of several chemicals. Like Davis, the employees further alleged that notwithstanding the employer’s knowledge that hazardous conditions existed, it “failed to correct said conditions, failed to warn ... [employees] of the dangers and conditions that existed ... [and] such failure on the part of the [employer] was intentional, malicious and in willful and wanton disregard of the health of [the employees].” Id. at 609, 433 N.E.2d 572. In reversing the lower court’s dismissal of the action, the Ohio Supreme Court did not define an intentional tort. Rather it concluded:

... it is for the trier of fact to initially determine whether the alleged conduct constitutes an intentional injury. In the instant case, the facts will demonstrate whether an intentional tort occurred or whether the injuries received by [the employees] were incurred in the course of and arising from ... employment such that worker’s [sic] compensation would be exclusive.

Id. at 615, 433 N.E.2d 572.

Some guidance is provided by the court’s reliance upon Mandolidis v. Elkins Industries, 161 W.Va. 695, 246 S.E.2d 907 (1978). See id. 69 Ohio St.2d at 614 n. 11, 433 N.E.2d 572. Mandolidis held that “the workers’ compensation system completely supplanted the common law tort system only with respect to negligently caused industrial accidents.” Id. 246 S.E.2d at 911 (emphasis in original). While the opinion included willful, wanton and reckless conduct within the category of unprotected employer activity, Mandolidis emphasized that “conduct removing the immunity bar must be undertaken with a knowledge and an appreciation of the high degree of risk of physical harm to another created thereby____ Liability will require ‘a strong probability that harm may result.’ ” Id. 246 S.E.2d at 914 (citing Restatement (Second) of Torts § 500, comment (f) (1965)). The Blankenship court’s reliance on Mandolidis implies that a plaintiff need only satisfy this lesser standard of proof to adequately allege deliberate intent and avoid the exclusivity of remedy doctrine.

The decision in Nayman v. Kilbane, 1 Ohio St.3d 269, 439 N.E.2d 888 (1982) (per curiam), offers some further guidance through the muddled state of Ohio law. In Nayman, an employee injured his hand while adjusting a punch press at his place of employment. He filed for, and was awarded, workers’ compensation benefits. He then sued his employer, alleging that his injuries resulted from intentionally tortious acts. The trial judge denied the employer’s motion for summary judgment and set the case for trial. The employer filed a complaint for a writ of prohibition in the Court of Appeals, which denied the requested relief. In a narrow holding based on its decision in Blankenship, the Ohio Supreme Court affirmed. It held that the Court of Common Pleas possessed subject matter jurisdiction over a suit in which an employee alleged that he had been intentionally injured by his employer. Nayman, 1 Ohio St.3d at 269-71, 439 N.E.2d 888.

While neither Blankenship nor Nayman deals precisely with the summary judgment issue presented by Rockwell’s motion, this Court is persuaded that, construing the evidence in a light most favorable to Davis, the Ohio Supreme Court would hold that the alleged intentional tort states a cause of action sufficient to withstand a motion for summary judgment. Rockwell’s attempt to draw a distinction between the single incident of injury suffered by Davis and the lengthy exposure to fumes alleged in Blankenship is immaterial. Under Ohio’s liberal definition of the intentional tort exception to the exclusive remedy doctrine contained in the OWCA, there is a genuine issue of material fact as to whether Davis’ injury was the result of an intentional tort or was incurred in the course of and arising from his employment.

This Court notes that another federal court in this state, in a lengthy and careful opinion, recently has reached the same conclusion. In Gross v. Kenton Structural & Ornamental Ironworks, 581 F.Supp. 390 (S.D.Ohio 1984), Judge Spiegel concluded that “Blankenship does not require that the plaintiff prove an actual intent to injure____ [Ujnder Nayman and Blankenship failure to warn of a known danger may amount to intentional tortious conduct.” Id. 581 F.Supp. at 397. Citing Blankenship’s admonition that “it is for the trier of fact to initially determine whether the alleged conduct constitutes an intentional injury,” 69 Ohio St.2d at 615, 433 N.E.2d 572, he denied a motion for summary judgment and permitted the plaintiff a jury trial to resolve the factual disputes.

C. Election of Remedies

Rockwell’s second contention is that Davis has elected his remedy — first by applying for and receiving workers’ compensation, and further by pursuing a claim for violation of a specific safety requirement. Rockwell argues that Davis cannot logically claim that his injury was caused by his employer’s intentional tort — and thus, under Blankenship, did not arise out of his employment — after his injury was found compensable under OCWA. Under Rockwell’s theory, Davis’ successful pursuit of his statutory remedy acts as an election which bars the pursuit of a common law action for intentional tort.

The Ohio Supreme Court has not yet addressed the election of remedies issue in the context of Blankenship actions. Traditionally, one purpose of the doctrine of election of remedies is to prevent double recovery and preclude a litigant from pursuing a remedy which, in a previous action, he rejected in favor of an alternative and inconsistent remedy. United States v. Thomas, 709 F.2d 968, 971 (5th Cir.1983); Landry v. Carlson Mooring Service, 643 F.2d 1080, 1087, reh’g denied, 647 F.2d 1121 (5th Cir.1981). Another purpose is to prevent needless experimentation with the remedies afforded by law. Great American Insurance Co. v. Merchants & Manufacturers Mutual Insurance Co., 423 F.2d 1143, 1146 (6th Cir.1970). The prerequisites to application of the doctrine are: (1) the existence of two or more remedies; (2) the inconsistency of such remedies; and (3) a choice of one of them. IB J. Moore, J. Lucas & T. Currier, Moore’s Federal Practice, ¶ 0.45[7] (2d ed. 1983 & Supp. 1983-84); 25 Am.Jur.2d, Election of Remedies, §§ 8, 22 and 23.

Nevertheless, the election of remedies doctrine is a harsh and technical rule of procedure that is not favored in Ohio. Great American Insurance Co. v. Merchants & Manufacturers Mutual Insurance Co., 423 F.2d at 1146; Singer v. Scholz Homes, Inc., 36 Ohio App.2d 125, 303 N.E.2d 86 (Montgomery County 1973). •Moreover, in the absence of an express legislative declaration to the contrary, courts have been reluctant to extend this harsh doctrine. See Landry v. Carlson Mooring Service, 643 F.2d at 1087 (citing Sun Ship, Inc. v. Commonwealth of Pennsylvania, 447 U.S. 715, 100 S.Ct. 2432, 65 L.Ed.2d 458 (1980)); Newport News Shipbuilding and Dry Dock Co. v. Director, Office of Workers’ Compensation Programs, United States Department of Labor, 583 F.2d 1273, 1277 (4th Cir.1978), cert, denied, 440 U.S. 915, 99 S.Ct. 1232, 59 L.Ed.2d 465 (1979) (citing Brooks v. United States, 337 U.S. 49, 53, 69 S.Ct. 918, 920, 93 L.Ed. 1200 (1949) and Friederichsen v. Renard, 247 U.S. 207, 38 S.Ct. 450, 62 L.Ed. 1075 (1918)) (LHWCA and state workers’ compensation claims are not mutually exclusive, but rather are complementary and may be pursued successively by litigant).

The jurisdictions which have decided the issue posed by Rockwell’s motion are, not surprisingly, divided. Some courts have applied the election of remedies doctrine when an employee filed for and collected workmens’ compensation benefits and then attempted to sue his employer in intentional tort. See, e.g., Martinkowski v. Carborundum Co./Electro-Mineral Div., 108 Misc.2d 184, 437 N.Y.S.2d 237 (1981) (proof that employee was unaware of intentionally tortious conduct on part of employer would not abort her election to take statutory remedy); Larson § 67.32. Other courts, however, have allowed an employee to sue his employer for personal injuries sustained in an attack by a fellow employee even though workers’ compensation benefits already had been accepted. Flaherty v. United Engineers and Constructors, 213 F.Supp. 835, 838 (E.D.Pa.1961).

In several unpublished decisions after Blankenship, the lower Ohio courts and one federal district court applying Ohio law have split on the election of remedies issue presented in this case. Compare Hamlin v. Snow Metals, Case No. 46299 (Cuyahoga County Court of Appeals Jan. 5, 1984), cert, granted, Case No. 84-409 (1984) (election would not apply if intentional tort existed), Tonya v. City of Barberton, Case No. CV82-7-2153 (Summit County Common Pleas Oct. 11, 1983) (compensation never intended to fully compensate for injury, election does not apply) and Ritchie v. Dravo Corp., 585 F.Supp. 1455 (S.D.Ohio 1984) (receipt of workers’ compensation means injury arose out of employment and bars claim that injuries were the result of intentionally tortious conduct) with Gains v. Webster Manufacturing Company and City of Painesville, Case No. 9-258 (Lake County Court of Appeals Jan. 8, 1984) (can pursue either civil action or administrative appeal but not both) and Wanda Mae Hunter v. Litton Industries, Case No. 82CV-03-1608 (Franklin County Common Pleas Apr. 29, 1983). See also Vames v. Willis Day Moving and Storage Company, 6 OBR 506 (Lucas County Common Pleas Mar. 31, 1983) (where intentional tort not alleged, election of remedies bar applies).

Rockwell cites Kaiser v. Strall, 5 Ohio St.3d 91, 449 N.E.2d 1 (1983) in support of its position. In that case, however, the Ohio Supreme Court held in its syllabus:

A party who is injured as a result of a co-employee’s negligent acts, who applied for benefits under Ohio’s workers’ compensation statutes, and whose injury is found compensable thereunder is precluded from pursuing any additional common-law or statutory remedy against such co-employee. (Section 35 of Article II of the Ohio Constitution and R.C. § 4123.741, construed).

In refusing “to countenance duplicative, wasteful litigation,” the court declined to allow an employee “to choose between workers’ compensation and common-law remedies where the former has been legislatively deemed to provide recovery.” Id. at 94, 449 N.E.2d 1. However, the decision sheds no light on how the court would decide the issue when, in a case of intentional tort by an employer, the legislature has not specifically deemed workers’ compensation to provide a remedy.

After a thorough examination of the current state of Ohio workers’ compensation law, the best judgment of this Court is that the Ohio Supreme Court, consistent with Blankenship and Nayman, would not permit an employer to shield itself behind the election of remedy doctrine when an intentional tort is alleged. The same court that expanded an employee’s right to sue in intentional tort is not likely to nullify that right through a rigid and expansive application of the election of remedies doctrine. Moreover, the election of remedies rule urged by Rockwell would not relieve employers of their obligations under the OWCA nor free them from the need to insure themselves against intentional tort claims that are filed prior to the receipt of benefits. Employers would still have to be covered for both possible routes that their employees could take. Furthermore, noting again that workers’ compensation statutes must be construed liberally in favor of the employees, Ohio Rev.Code § 4123.95, this Court observes that the rule urged by Rockwell would unfairly thrust employees back into the jurisdictional conundrum that the OWCA was enacted to alleviate. With no express legislative or judicial declaration to the contrary, this Court concludes that Davis must be allowed to pursue his remedies successively.

Finally, this Court notes that its conclusion is again consistent with Judge Spiegel’s excellent opinion in Gross v. Kenton Structural & Ornamental Ironworks. After reviewing Blankenship, Nayman, and the unpublished state court opinions cited above, he concluded:

... The Supreme Court’s intent in Blankenship was obviously to increase the protection available to the worker, not limit it. To hold that an employee allegedly injured by his employer’s intentional tort must forego the guaranteed protection of the Workers’ Compensation Act in order to gamble on being able to prevail in a common law action against his employer runs counter to the goals expressed in Blankenship.
* * * * Sj{ *
In summary, we conclude that the Blankenship action should be viewed as a supplemental remedy, rather than as an exclusive remedy, where an employee alleges injury resulting from his employer’s intentional tort. Accordingly, we hold that an injured employee who files for and accepts workers’ compensation benefits is not barred from proceeding with a common law action against the employer.

581 F.Supp. at 394, 396.

D. Double Recovery

While the issue of double recovery has not been briefed by the parties, it is elementary that the claimant should not be allowed to keep the entire amount of his compensation award as well as his common law damage recovery, if any. Supra, Sun Ship, 447 U.S. at 723-24, 100 S.Ct. at 2438; Landry v. Carlson Mooring Service, 643 F.2d at 1088. Ohio follows a collateral source rule which permits an employee to recover the full amount of damages in a negligence action against a third party tortfeasor without deducting awards made under the compensation system. Knappenberger v. Bittner, 524 F.Supp. 777 (W.D. Pa. 1981); Truscon Steel Co. v. Trumbull Cliffs Furnace Co., 120 Ohio St. 394, 166 N.E. 368 (1929). There is, however, ample precedent in the Ohio workers’ compensation statutes themselves to enable Rockwell to set off any damages awarded to Davis against payments already made in the form of workers’ compensation. See, e.g., Ohio Rev.Code § 4123.54 (benefits or damages recovered under laws of another state); § 4123.56 (prior temporary disability benefits paid under insurance, or other program, fully funded by employer); § 4123.75 (upon final judgment against non-complying employer, any sum recovered reimbursed to the commission). See also Tonya v. City of Barberton (suggests compensation fund could be reimbursed under theory of subrogation). If the trier of fact determined that an intentional tort occurred, Rockwell should be able to offset the benefits previously paid. Double recovery would thus be avoided.

IV.

Workmens’ compensation is social legislation designed to benefit the injured employee and does not prevent that employee from seeking out the true wrongdoer whenever possible. For the reasons set forth above, the motion for summary judgment is denied.

IT IS SO ORDERED.

      . "Davis” refers to Robert Davis unless otherwise noted.

      . This statement, of course, constitutes dicta. Except for per curiam opinions, the Ohio Supreme Court speaks as a court only through the syllabi of its cases. Migra v. Warren City School District Board of Education, -U.S. -, 104 S.Ct. 892, 898 n. 8, 79 L.Ed.2d 56 (1984); Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 441 n. 3, 72 S.Ct. 413, 416 n. 3, 96 L.Ed. 485 (1952); Cassidy v. Glossip, 12 Ohio St.2d 17, 18, 24, 231 N.E.2d 64 (1967).

      . It should be noted here that intentional tort is not the only exception to the general rule that workers’ compensation provides an exclusive forum and sole remedy. Other exceptions recognized under Ohio and federal law include: the dual capacity theory, Guy v. Arthur H. Thomas Co., 55 Ohio St.2d 183, 378 N.E.2d 488 (1978) (injured hospital employee’s suit not barred where employer hospital occupies second or dual capacity as administering hospital); the parent and sibling corporation exception, Boggs v. Blue Diamond Coal Co., 590 F.2d 655, 663 (6th Cir.), cert. denied, 444 U.S. 836, 100 S.Ct. 71, 62 L.Ed.2d 47 (1979) (without exception corporation could contract within itself for safety services and create immunity); third party suits for contribution and indemnity from employers, Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1956) (creates de facto exception to exclusive remedy rule); and allowing pursuit of Longshoremen’s and Harbor Workers’ Compensation Act (“LHWCA”) claims after recourse to state compensation, Landry v. Carlson Mooring Service, 643 F.2d 1080, 1087-88, reh’g denied, 647 F.2d 1121 (5th Cir. 1981) (complementary claims may be pursued successively by litigant).

      . In describing intentionally tortious conduct Dean Prosser states:
      Intent is the word commonly used to describe the desire to bring about the physical consequences [of an act]____ Intent, however, is broader than a desire to bring about physical results. It must extend not only to those consequences which are desired, but also to those which the actor believes are substantially certain to follow from what he does. Prosser, Law of Torts, § 8 (4th ed. 1971). Likewise, the Restatement (Second) of Torts § 8A, comment (a), states that "intent” refers to the consequences of an act rather than to the act itself. See id. at 15-16.

      . Even though the court failed to define what acts constitute an intentional tort, Larson calls the Blankenship holding a "distinctly out-of-line view.” See Larson § 68.13 at 13-8 n. 10.01; § 68.32(a) at 13-6 n. 43.8.

      . The quasi-legislative language of the Blankenship majority and concurring opinions conceivably supports an even broader interpretation, which this Court does not adopt. The majority opinion can be read as holding that an intentional failure to warn employees of dangerous conditions is by itself a "deliberate” intent to injure. Moreover, the statement that the OWCA affords protection for negligent acts, and the reliance on Mandolidis, could be read together to hold that intentional conduct comprises all that conduct beyond mere negligence, such as recklessness, willful and wanton behavior, even when entered into with presumed knowledge of the likely result but without specific intent to cause injury. 69 Ohio St.2d at 614, 433 N.E.2d 572; see also id. at 616-17, 433 N.E.2d 572 (Celebreeze, C.J., concurring) and at 618-20, 433 N.E.2d 572 (Brown, J., concurring).

      . However, although the majority did not reach the issue, Justice Holmes wrote in his dissent to Nayman v. Kilbane, 1 Ohio St.3d at 272, 439 N.E.2d 888, that when an employee files "a claim for his injuries with the commission and [has] in fact been awarded compensation from the Workers’ Compensation Fund for these injuries ... it should be held that this employee either [has] waived, or should be estopped from, bringing a civil action.”

      . While the inconsistent results highlight the controversy surrounding this issue, even if the unpublished decisions were consistent they would not be binding on this Court. See Ruth v. Bituminous Casualty Corp., 427 F.2d 290 at 292 (6th Cir.1970).

      . For a recent examination of changes in workers’ compensation law and of the efficiency advantages gained by imposing a greater share of accident costs on employers see Note, Exceptions to the Exclusive Remedy Doctrine of Workmens' Compensation Statutes, 96 Harv.L.Rev. 1641 (1983).


author: JOINER, District Judge.

text:
    Dennis P. COVILL, Plaintiff, v. UNITED STATES of America, Defendant.
    Civ. A. 84CV-7287-AA.
    United States District Court, E.D. Michigan, S.D.
    Oct. 18, 1984.

      Joseph Greenleaf, Jackson, Mich., for plaintiff.
    Ross I. MacKenzie, Asst. U.S. Atty., Detroit, Mich., for defendant.
   MEMORANDUM OPINION AND ORDER

JOINER, District Judge.

This case is before the court on defendant’s motion to dismiss. For the reasons stated herein, the motion is granted, and the complaint is dismissed without prejudice to refile once administrative procedures have been exhausted in this matter. FACTS

Taking the facts as alleged in the complaint as the court must on this motion to dismiss brought under Fed.R.Civ.P. 12(b)(6), Fifth Ave. Peace Parade Committee v. Gray, 480 F.2d 326, 331 (2d Cir.1973), cert. denied, 415 U.S. 948, 94 S.Ct. 1469, 39 L.Ed.2d 563 (1974), it appears that plaintiff served in the Coast Guard for over twenty years prior to his retirement in June of this year. During the last few years, plaintiff obtained consistently positive recommendations from his commanding officers. On November 1, 1980, he was promoted from the rank of CWO-3 to CWO-4

Plaintiff began to make preparations for his retirement in 1983. At that time, he served as the Exchange Officer at the Coast Guard Commissary in Detroit. Plaintiff was absent from his work for prolonged periods in 1983, apparently undergoing medical evaluations and undertaking other business in preparation for his scheduled retirement. While he was away, the Commissary was left under the control of another officer, the Exchange Manager. Plaintiff also alleges that a third officer was appointed as Exchange Officer in his absence during a period in 1983.

Upon discovery that certain merchandise was missing from the Commissary, an investigation was convened under Article 32 of the Uniform Code of Military Justice, 10 U.S.C. § 832. The investigating officer determined that plaintiff had been derelict in his duties to supervise his subordinates, and that he had abused his privileges by selling government property that he had purchased at a discount for his own pecuniary gain. The investigating officer determined that the evidence of malfeasance was insufficient to warrant a court martial. Nonetheless, the Commander of the Ninth Coast Guard District issued a Punitive Letter of Reprimand on March 23, 1984, pursuant to Article 15 of the UCMJ, which stated in part that plaintiff had acted in a “reprehensible manner (in failing) to obey a lawful general regulation by purchasing merchandise from a non-appropriated fund activity, for the purpose of resale and production of income” and that he had “negligently suffered the loss of about $10,000 from the activity.” In a memorandum dated June 8, the Commandant of the Coast Guard indicated that he had accepted the recommendation of a special board that plaintiff be retired at the CWO-3, rather than the CWO-4 rank, due to his unsatisfactory performance at the higher level.

Plaintiff brought this action, alleging that he is innocent of the charges against him, and that the investigating officer’s conclusions to the contrary are erroneous. He further argues that, even assuming that his conduct during the entire period when he served at the CWO-4 level was unsatisfactory, he is still entitled to be retired at that level. He draws this argument from 10 U.S.C. § 1371, which, according to plaintiff, entitles him to retirement at the highest rank he achieved so long as he performed satisfactorily for the first 30 days of service at that rank. The statute provides as follows:

§ 1371. Warrant officers: general rule Unless entitled to a higher retired grade under some other provisions of law, a warrant officer retires, as determined by the Secretary concerned, in the permanent regular or reserve warrant officer grade, if any, that he held on the day before the date of his retirement, or in any higher warrant officer grade in which he served on active duty satisfactorily, as determined by the Secretary, for a period of more than 30 days.

Finally, plaintiff presents a constitutional challenge to the procedures whereby he was demoted. He asserts that he was not permitted to present adequate evidence of his innocence to the special board, and this absence of adversarial procedures constituted a violation of his right to due process as guaranteed by the Fifth Amendment of the United States Constitution.

DISCUSSION

Defendant moves for dismissal of this action on the grounds that plaintiff has failed to exhaust his administrative remedies prior to initiation of this action. In particular, defendant argues that plaintiff should have, but failed to proceed before either the Personnel Records Review Board (PRRB), established by regulations propounded by the Commandant, or the Coast Guard Board for Correction of Military Records (BCMR), established by 10 U.S.C. § 1552.

The purpose of the PRRB is to “act initially on claims of error in personnel records within its competence before such claims are submitted ot the BCMR,” Commandant Instructions 1070.9. The PRRB is empowered to review all claims of error contained in Coast Guard personnel records, with the exception of certain types of administrative actions, including “nonjudicial punishment”, id. In the event that the PRRB determines that it is without power to grant relief requested by a complainant, it will forward the claim to the BCMR. That body has broad authority to remedy errors of Coast Guard personnel. Its function is described in 33 C.F.R. 52.-05-5 as follows:

§ 52.05-5 Function.
The function of the Board is to consider all applications properly before it together with all pertinent military records to determine whether an error has been made in the Coast Guard records, or whether, under normal standards of military law, administration, and practice, the subject of the application has suffered a wrong as the result of an error of omission or commission in his records, or through some manifest injustice in the treatment accorded him.

Plaintiff contends that exhaustion of administrative remedies before either of these bodies is not required in this case, because he is seeking a ruling on the construction of a federal statute, 10 U.S.C. § 1371, and is advancing a claim of violation of due process, legal issues that are beyond the competence of administrative agencies to resolve.

The answer to this contention is that, if the BCMR determines as a matter of fact that the charges against plaintiff were insufficient to justify the sanctions imposed against him, there will be no need for it to determine whether or not he is entitled to retire at the CWO-4 rank under 10 U.S.C. § 1371, see Seepe v. Department of Navy, 518 F.2d 760, 764 (6th Cir.1975); Hodges v. Callaway, 499 F.2d 417, 422 (5th Cir.1974). Further, to the extent that plaintiff is complaining of constitutional defects in the administrative process by which his wrongdoing was ascertained and the sanction of demotion imposed, this court adopts the reasoning of Horn v. Schlesinger, 514 F.2d 549 (8th Cir.1975), which stated as follows:

It is argued that there are no procedures for discovery before the Board, that there are no provisions of the compulsory attendance of witnesses, and that all members of the Board are appointed by the Secretary, it thus being, according to plaintiff, “absolutely inconceivable that [the Board] would declare one of his regulations unconstitutional.” These flaws plaintiff asserts, deprive him of due process. Such matters, however, whether or not fatal within context, as to which we express no opinion, will never be reached should the plaintiff prevail before the Board. We advert to the fundamental doctrine that the Court should avoid passing on unnecessary constitutional questions, a doctrine peculiarly applicable here in view of our traditional reluctance to interfere with the military establishment.

Id. at 553-54 (footnotes omitted).

Although plaintiff alleges that the matters raised by his complaint are outside of the jurisdiction of the agency, this court will excuse the exhaustion requirement only if (1) the agency’s jurisdiction is conspicuously lacking; (2) the agency’s expertise will not assist the court' in resolving the jurisdictional issue, or (3) requiring exhaustion will result in irreparable harm to the claimant, Shawnee Coal v. Andrus, 661 F.2d 1083, 1093 (6th Cir.1981). In this case, the court concludes that the matter in dispute, whether or not plaintiff was properly found to have violated Coast Guard regulations, and whether he was properly demoted, are matters over which the BCMR’s jurisdiction is conspicuously present. The fact that plaintiff’s complaint raises questions concerning the construction of statutory provisions under which the Coast Guard operates, as well as disputed questions of fact, does not divest the BCMR of its jurisdiction to hear the claim, cf. Linfors v. United States, 673 F.2d 332 (11th Cir.1982) (Coast Guard BCMR had jurisdiction to determine if the Commandant had erred in determining that plaintiff was not entitled to include time spent in Coast Guard Academy as a cadet as part of his twenty years of active service for purposes of retirement pursuant to 14 U.S.C. § 291, and claim was dismissed for failure to exhaust administrative remedies). Indeed, the BCMR was established by Congress precisely to deal with this kind of a dispute, see Horn, supra at 552 n. 9. Further, the court has already concluded, in an order denying plaintiff’s motions for a temporary restraining order, dated July 11 of this year, and in an oral ruling from the bench, denying plaintiffs motion for a preliminary injunction on July 24, that plaintiff will not suffer irreparable injury as a re-suit of being remanded to his administrative remedies at this time.

Were this a case where a regulatory agency sought to adjudicate the rights of plaintiff by its own initiative, e.g., an investigation and determination by the NLRB that an employer or labor organization had engaged in an unfair labor practice, and plaintiff was challenging the jurisdiction of the agency to render such a determination, a proper case might be made out for waiver of the exhaustion requirement, see, e.g. Leedom v. Kyne, 358 U.S. 184, 79 S.Ct. 180, 3 L.Ed.2d 210 (1958) (federal district court has jurisdiction of an original suit to vacate the determination of an administrative agency because it acted in excess of its powers). See generally 4 Davis, Administrative Law Treatise, 2d Ed. § 26.4 (1983). Further, if plaintiff were merely challenging the facial constitutionality of a federal statute that granted an administrative agency regulatory or adjudicatory authority, this might be an appropriate case for immediate judicial review, Weinberger v. Salfi, 422 U.S. 749, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975) (the purpose of exhaustion is served once the Secretary has satisfied himself that the only issue is the constitutionality of the statutory requirement, a matter which is beyond his jurisdiction to determine). See generally, 4 Davis, supra, § 26.6. In this case however, the administrative tribunal has not yet rendered a determination to which the plaintiff objects as beyond its proper authority. Further, plaintiff does not challenge the constitutionality of 10 U.S.C. § 1371, but merely seeks a determination of its meaning. Plaintiff has offered no compelling reason why this determination must be made in the first instance by this court rather than by the administrative tribunal charged with enforcement of the statute.

For the foregoing reasons, the defendant’s motion to dismiss is granted, with the implicit condition that plaintiff will be permitted to refile this action in the event that he is dissatisfied with the rulings of the appropriate administrative tribunals.

SO ORDERED.


author: GETZENDANNER, District Judge:

text:
    Samuel S. EPSTEIN, et al., Plaintiffs, v. James S. WILDER, et al., Defendants.
    No. 84 C 6293.
    United States District Court, N.D. Illinois, E.D.
    Oct. 18, 1984.

      John L. Rogers, Merle L. Rogers, Chicago, 111., for plaintiffs.
    No appearances for defendants.
   MEMORANDUM OPINION AND ORDER

GETZENDANNER, District Judge:

This diversity action is before the court on the motions of all defendants to dismiss the complaint under Fed.R.Civ.P. 12(b)(1), (2), (4), and (5) or to transfer pursuant to 28 U.S.C. § 1404.

Subject Matter Jurisdiction

Defendants move to dismiss under 12(b)(1), “diversity of citizenship not having been alleged in the Complaint.” (Defendants Motion to Quash and to Dismiss, 8-21-84, p. 2.) This claim, not raised once in the supporting memorandum or affidavits, borders on frivolous. The Complaint clearly alleges that jurisdiction is based on diversity (¶ 1), that plaintiff Environmental Toxicology, Inc. (“ETI”) is an Ohio corporation, the address of which is in Chicago (¶ 2), and that plaintiff Samuel Epstein is an Illinois resident (¶ 3) and a professor at the University of Illinois Medical School (116). It further alleges that all defendants are citizens of Tennessee (114), and defendants’ affidavits support this allegation. The amount in controversy is alleged to be in excess of $10,000, exclusive of interest and costs (¶ 1), and the allegations that defendants owe plaintiffs over $12,000 under their contract supports this allegation (¶ 16). Defendants have submitted no facts tending to show these allegations are incomplete or incorrect or that diversity does not exist. The motion to dismiss for lack of diversity jurisdiction is therefore denied.

Personal Jurisdiction

The Complaint names seven individuals as defendants, James S. Wilder, III, John S. Wilder, Sr., Sid Gilreath, T. Robert Hill, Jeffrey Garrety, George R. Fusner, Jr., and James Sanderson. It is alleged that plaintiffs were retained to prepare expert testimony in a case now pending in Tennessee. Money owed under this contract was allegedly not paid, and plaintiffs are now suing to recover those sums. Defendants present the court with affidavits generally showing that they are not residents of, and have few or no contacts with, Illinois.

A district court has great procedural leeway in determining how to handle a motion to dismiss. Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1285 (9th Cir.1977). It is generally acknowledged that, “[i]n the absence of a full-blown hearing on the merits, plaintiff need only make a prima facie showing that the court has jurisdiction under a long-arm statute.” Neiman v. Rudolf Wolff & Co., Ltd., 619 F.2d 1189, 1190 (7th Cir.), cert. denied, 449 U.S. 920, 101 S.Ct. 319, 66 L.Ed.2d 148 (1980); Visual Sciences, Inc. v. Integrated Communications Inc., 660 F.2d 56, 58 (2d Cir. 1981); Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981). Such a showing will not prevent a defendant from challenging the jurisdictional facts at trial or a pretrial evidentiary hearing, with plaintiff bearing the burden of demonstrating jurisdiction by a preponderance of the evidence. Visual Sciences, 660 F.2d at 58; Marine Midland Bank, 664 F.2d at 904. However, “until such a hearing is held, a prima facie showing suffices, notwithstanding any controverting presentation by the moving party, to defeat the motion.” Marine Midland Bank, 644 F.2d at 904. Under this standard, plaintiffs are entitled to resolution in their favor of all factual disputes. Neiman, 619 F.2d at 1190.

Plaintiffs have clearly made a prima facie showing of jurisdiction over the persons of James S. Wilder, III, John S. Wilder, Sr., and Sid Gilreath. According to Epstein’s affidavit, James Wilder contacted plaintiffs by phone to discuss a contract for their services as expert witnesses. (Epstein Aff. 112.) As a result of this conversation, Epstein agreed to review certain medical records and other documents, for which he was paid $1000. (Id. at 113 and Exhibit 1.) James Wilder sent payment and three packages of documents to Epstein at 880 North Lakeshore Drive, Chicago, IL 60611. (Id.) On or about May 4,1980, James Wilder and John Wilder came to Chicago to negotiate a contract for the performance of additional consulting services, at which time they entered into an oral contract with plaintiffs. (Id. at ¶ 4.) After the May 4 conference, James Wilder and Sid Gilreath came to Chicago to meet with Epstein and discuss his consulting work on at least three occasions. (Id. at ¶ 5.) While in Chicago, Epstein had numerous phone conversations with defendants, and “sent and received numerous correspondence to and from various defendants concerning my consulting work.” (Id. at ¶ 8.) Epstein received various payments from defendants in Chicago. (Id. at 1111.) Evidence exists that these three defendants are partners in the prosecution of suit for which the expert services were retained. (Id. at 117.)

Plaintiffs argue that jurisdiction over the defendants in this action is established under Ill.Rev.Stat., ch. 110, § 2-209(a)(1), which confers jurisdiction over a claim arising from the transaction of business in Illinois. By negotiating with Illinois residents, originally contacting these residents concerning provision of their services, sending payments and documents into the forum state, and visiting plaintiffs in Illinois in furtherance of the contract upon which the claim is based, these three defendants have purposefully availed themselves of the privilege of conducting business activities in the forum state. See Nieman, supra; Sonnenschein Carlin Nath & Rosenthal v. Gregory, No. 82 C 6960, slip op. (N.D.Ill. Jan. 20, 1984) (Marshall, J.). Defendants’ claim that this action should be joined with the Tennessee personal injury claim is frivolous and unsupported, and dismissal on this basis is denied.

Plaintiffs have not established a prima facie case for jurisdiction over the remaining defendants, however. Hill, Garrety, Fusner, and Sanderson are not even mentioned by name in the Complaint. All plaintiffs tell the court about these defendants’ involvement in the case is as follows:

During the period between May, 1980 and March, 1982, I became aware that defendants JAMES S. WILDER, JOHN WILDER, SR. and SID GILREATH had formed a partnership of plaintiffs’ attorneys for the prosecution of the lawsuit against Velsicol Chemical Corporation. I became aware of this through conversations with certain defendants and that correspondence would be copied to other defendants. From time to time, I would copy various defendants herein with correspondence. Also, correspondence which I received made reference to “Mr. [James] Wilder’s partners.”

(Epstein Aff. H 7.) There is no evidence whether these defendants are members of Wilder, Wilder & Johnson, the name on the letterhead of James Wilder’s stationery (neither defendants nor plaintiffs identify the contacts Hill, Sanderson, Fusner, and Garrety had with the underlying lawsuit or the contract for plaintiffs’ services). These defendants, in very short affidavits, assert that they are residents of and certified to practice law in Tennessee and that they are not residents of, nor licensed to practice law in, Illinois.

Defendants’ generally unhelpful affidavits notwithstanding, plaintiffs' allegations and evidence simply do not establish a prima facie case that jurisdiction exists over the persons of Hill, Sanderson, Funser, or Garrety, either through their own actions or as parties to the contract or partners to the Wilders and Gilreath. These defendants’ motions to dismiss under Rule 12(b)(1) are granted without prejudice. Plaintiffs may attempt to amend the complaint to add sufficient allegations against these defendants or to supplement the factual record, but on the present record, the court may not exercise personal jurisdiction over these defendants.

Motion to Quash

Defendants claim they were improperly served and that summons was improper. Fed.R.Civ.P. 12(b)(4) & (5). According to defendants, they should have been notified that, as out of state defendants, they had thirty (30) days to appear and defend this action. Instead, they were told they had twenty (20) days. (Defendants’ Memorandum in Support, 8-21-84, p. 4.) Defendants also claim that as out of state defendants, they were entitled to personal or publication service. However, in their affidavits, defendants claim they received service by registered mail. (James Wilder Aff., 8-15-84, receipt by registered mail 7-28-84; John Wilder Aff., 8-20-84, receipt by registered mail 7-27-84; Robert Hill Aff., 8-14-84, receipt by registered mail 7-27-84; Jeffrey Garrety Aff., 8-15-84, receipt by registered mail 7-31-84; James Sander-son Aff., 8-14-84, receipt by registered mail 7-27-84; George Fusner Aff., 8-14-84, receipt by registered mail 7-30-84; Sid Gilreath Aff., 8-15-84 ¶ 5, receipt by registered mail 7-27-84.) Defendants cite no authority for their proposition that mail service is insufficient.

Plaintiffs do not respond to defendants’ claim that process was insufficient by virtue of stating a 20-day period in which to appear. They do argue that mail service was proper for effecting service under the Federal Rules. As support, they simply cite Rule 4(c)(2)(C)(ii), without any analysis of the rule or citation of ease law.

Defendants have not claimed that were Rule 4(c)(2)(C)(ii) applicable to them, service was still improper because of failure to follow the procedures set forth therein. The court notes that the file in this case contains return receipts. Defendants have waived any claim that 4(e)(2)(C)(ii) was not followed.

The court’s own research reveals that the use of 4(c)(2)(C)(ii) for extraterritorial service is in dispute. Under Rule 4(c)(2)(C), service may be accomplished on individuals in accordance with Illinois law or mail service, as well as provided by 4(d)(1). Rule 4(e) provides for service on persons not inhabitants of the forum state. Under 4(e), when a federal statute allows extraterritorial service, service may be accomplished as provided in that statute or in the federal rules (which would include 4(c)(2)(C)(ii).) When a state statute provides for extraterritorial service, the state’s procedures may be followed. Green v. Carlson, 581 F.2d 669, 676 (7th Cir.1978), affd, 446 U.S. 14, 100 S.Ct. 1468, 64 L.Ed.2d 15 (1980) (4(d)(1) “inapplicable” to out of state service).

In this case, there is no federal statute providing for extraterritorial service. Two courts have held that as 4(c)(2)(C)(ii) did not attempt to supercede 4(e), 4(e) controls and mail service not authorized by the forum state rules cannot be used for extraterritorial service. William B. May Co. v. Hyatt, 98 F.R.D. 569, 570 (S.D.N.Y.1983); San Miguel & Compania v. International Harvester Export Co., 98 F.R.D. 572, 573 (D.P.R.1983). Furthermore, a court in this circuit has found Illinois would not allow service pursuant to 4(c)(2)(C)(ii) on out of state defendants. Chronister v. Sam Tanksley Trucking, Inc., 569 F.Supp. 464 (N.D.Ill.1983). Rule 4(f) does not independently authorize mail service on extraterritorial defendants. By returning the receipts, defendants did not estop themselves from moving to quash service. William B. May Co., 98 F.R.D. at 570-571. In any case, this argument is waived by plaintiffs’ failure to raise it.

Service was therefore improper, and the court need not reach defendants’ claim that they were entitled to 30 days in which to respond. The service of the summons and complaint is therefore quashed. However, dismissal is not warranted where there is a reasonable prospect that plaintiffs could properly serve defendants. Chronister v. Sam Tanksley Trucking, Inc., 569 F.Supp. 464, 470 (N.D.Ill.1983) (holding on 4(c)(2)(C)(ii) reversed in December 5, 1983 order). That prospect exists in this case. Service shall be made within the time provided in Rule 4(j) with any enlargement in time to be requested under Rule 6(b). Ruling on the motion to transfer is reserved pending service.

Conclusion

Plaintiffs have established a prima facie case that defendants James Wilder, John Wilder, and Sid Gilreath have enough contacts with Illinois to allow jurisdiction over their persons concerning claims arising from the negotiation of the alleged contract for plaintiffs’ expert services. Plaintiffs have not made such a showing concerning the remaining defendants, and they are dismissed from this action. Service of the summons and complaint for all defendants is quashed. Plaintiffs shall serve defendants within the time provided in Rule 4(j), measuring the time limit from the filing of the complaint. Ruling on the motion to transfer is reserved pending service.

It is so ordered.