author: SANDERS, District Judge.

text:
    Leslie YOUNG, et al., Plaintiffs, v. ARMSTRONG WORLD INDUSTRIES, INC., et al., Defendants. A.C. YOUNG, et al., Plaintiffs, v. ARMSTRONG WORLD INDUSTRIES, INC., et al., Defendants. Ray OTT, et al., Plaintiffs, v. ARMSTRONG WORLD INDUSTRIES, INC., et al., Defendants. Melvin WILLIAMS, et al., Plaintiffs, v. FORTY-EIGHT INSULATIONS, INC. et al., Defendants. George R. ODER, et al., Plaintiffs, v. H.K. PORTER COMPANY, INC., et al., Defendants. Charles OWENS, Jr., et al., Plaintiffs, v. H.K. PORTER COMPANY, INC., et al., Defendants. Josh PHILLIPS, et al., Plaintiffs, v. H.K. PORTER COMPANY, INC., et al., Defendants. James FRIEND, et al., Plaintiffs, v. H.K. PORTER COMPANY, INC., et al., Defendants. David L. LUSTER, et al., Plaintiffs, v. H.K. PORTER COMPANY, INC., et al., Defendants. James R. EPPS, et al., Plaintiffs, v. H.K. PORTER COMPANY, INC., et al., Defendants. Henry N. and Margaret ROPER, Plaintiffs, v. H.K. PORTER COMPANY, INC., et al., Defendants. Maurice LANE, Sr., et al., Plaintiffs, v. H.K. PORTER COMPANY, INC., et al., Defendants. Vernon W. NOBLE, et al., Plaintiffs, v. H.K. PORTER COMPANY, INC., et al., Defendants. Louise MILLER, Plaintiff, v. ARMSTRONG WORLD INDUSTRIES, INC., et al., Defendants.
    Civ. A. Nos. 3-84-1246-H, 3-84-1256-H, 3-84-1259-H, 3-84-1270-H, 3-84-1436-H, 3-84-1437-H, 3-84-1441-H, 3-84-1447-H, 3-84-1449-H, 3-84-1677-H, 3-84-1679-H, 3-84-1683-H, 3-84-1686-H and 3-84-1781-H.
    United States District Court, N.D. Texas, Dallas Division.
    Dec. 13, 1984.

      Brian Weinstein, Baron & Associates, Dallas, Tex., Monroe Kirby, Tyler, Tex., for plaintiffs.
    Jim E. Cowles, Clayton E. Devin, Charles A. Green, Cowles & Thompson, Dallas, Tex., for Pittsburgh Corning Corp.
    Dan E. Mayfield, Sheehy, Lovelace & Mayfield, Waco, Tex., for Fibreboard.
    Don W. Kent, Buchanan, Barnett, Schofield & Kent, Tyler, Tex., for Celotex.
    Joe Michael Russell, Smith, Ralston, Russell & Wright, Corsicana, Tex., for EaglePicher.
    J. Dennis Chambers, Howard Waldrop, Atchley, Russell, Waldrop & Hlavinka, Texarkana, Tex., for Keene.
    Tom Henson, Jack Flock, Ramey, Flock, Hutchins, Jeffus, McClendon & Crawford, Tyler, Tex., for Nicolet.
    Otto A. Ritter, Roberts, Harbour, Smith, Harris, French & Ritter, Longview, Tex,, for Unarco.
    Jeffrey S. Lynch, Vial, Hamilton, Koch, Tubb & Knox, Dallas, Tex., for Raybestos/Raymark.
    Robert B. Thornton, Thornton, Summers, Biechlin, Dunham & Brown, San Antonio, Tex., for Standard.
    James T. Foley, Tyler, Tex., for Crown Cork & Seal.
    Bill E. Bowers, Shannon, Gracey, Ratliff & Miller, Fort Worth, Tex., for Acands.
    Joe Riddles, Joe Riddles & Associates, Dallas, Tex., for Combustion Engineering.
    John H. Hall, Strasburger & Price, Dallas, Tex., for GAF.
    C. Edward Fowler, Jr., Bailey, Williams, Westfall, Lee & Fowler, Dallas, Tex., for Owens Corning.
    G. Duffield Smith, Gardere & Wynne, Dallas, Tex., for Forty Eight.
    Richard L. Josephson, Baker & Botts, Houston, Tex., for Owens-Illinois.
    J. Carlisle DeHay, Jr., Gary D. Elliston, DeHay & Blanchard, Dallas, Tex., for Armstrong.
    John H. Martin, Richard Gray, Thompson & Knight, Dallas, Tex., for Johns Manville.
   MEMORANDUM OPINION AND ORDER

SANDERS, District Judge.

These cases are before the Court on numerous Motions of various Defendants to Dismiss for Improper Venue, Motions to Transfer for Improper Venue, Motions to Transfer for Forum Non Conveniens, other Defendants’ adoptions of these motions, and Plaintiffs’ Responses and Supplemental Responses.

These lawsuits are all diversity cases involving injuries allegedly caused by the exposure to asbestos manufactured and marketed by various Defendants. In none of these cases are the Plaintiffs residents of the Northern District of Texas; rather all of the Plaintiffs reside in Alabama or Virginia, where the alleged exposure to asbestos also occurred.

Venue is proper in a diversity case under 28 U.S.C. § 1391(a) wherever “all Defendants reside.” Residence of corporate defendants is clarified in 28 U.S.C. § 1391(c):

A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.

Moreover, a corporation which is licensed to do business statewide is a resident of any district within the state pursuant to 28 U.S.C. § 1391(c). First Security Bank N.A. v. Aetna Casualty and Surety Company, 541 F.2d 869, 871 (10th Cir.1976); Williams v. Hoyt, 372 F.Supp. 1314 (E.D. Tex.1974). All of the Defendants are so licensed. Exhibits A-P, Supplemental Response. All Defendants have registered agents for service of process in Texas, and thus have consented to suit in any federal court within the state. Neirbo Company v. Bethlehem Shipbuilding Co., 308 U.S. 165, 175, 60 S.Ct. 153, 158, 84 L.Ed. 167 (1939).

Although it is permissible to lay venue here, it does not inexorably follow that the case may not be transferred to another district where venue is proper. 28 U.S.C. § 1404(a) reads:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district where it might have been brought.

A plaintiffs choice of a proper forum is a paramount consideration in any determination of a transfer request, and that choice should not be lightly disturbed. Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir.1970).

The court in Austin v. Johns-Manville Corp., 524 F.Supp. 1166 (E.D.Pa.1981) faced the same issues in a motion to transfer an asbestos case. Without restating at length that court’s analysis, the Court finds the considerations here to be virtually identical.

The most important consideration is access to sources of proof. The nature of the factual issues in these cases makes it difficult to determine a location most conveniently located to the sources of evidence. Plaintiffs and their physicians are for the most part closer to the proposed district, but they will, in accordance with the Federal Rules and the representations of counsel, travel to depositions in Dallas at Plaintiffs’ expense. Evidence on causation may come from expert witnesses selected on a national basis who may have no relation to the Northern District of Texas. The buyers’ records of asbestos purchases may be at or near the former workplaces in Alabama and Virginia, but the sales records may be more accessible at the sellers’ principal place of business located around the country. The question of the sellers’ knowledge or ignorance turns on the testimony of sellers’ then-employees who are more likely to be near the sellers’ principal place of business than the buyers’ factory.

The parties have not yet conclusively addressed which jurisdiction’s law will determine the substantial issues of liability and limitations. The record is not yet adequately developed for consideration of applicable law as a determinative factor.

The interests of prompt disposition are also served by retaining the case on this Court’s docket. Counsel in this District have developed a sophisticated and streamlined procedure for discovery and settlement negotiations. This Court will continue to set these cases for trial expeditiously.

Finally, the moving Defendants must prove with particularity the reasons why they are inconvenienced by Plaintiffs’ choice of forum:

The party seeking the transfer must clearly specify the key witnesses to be called and must make a general statement of what their testimony will cover. The emphasis must be on this showing rather than on numbers. One key witness may outweigh a great number of less important witnesses. If a party has merely made a general allegation that witnesses will be necessary, without identifying them and indicating what their testimony will be, the application for transfer will be denied.

15 Wright, Miller & Cooper, Federal Practice and Procedure ¶ 3851 at 270-71 (1976).

The movants here have not stated with specificity the witnesses who will be inconvenienced by a denial of their motions or other problems in the way of access to proof. Instead, Defendants have strenuously argued that the facts of these cases bear no special relation to the Northern District of Texas and the only reason they are here is because of Plaintiffs’ counsel. While undoubtedly true, this is irrelevant. Although convenience of counsel is not an appropriate consideration, Plaintiffs’ choice is and Plaintiffs have the option of choosing an inconvenient forum in order to obtain certain counsel or for other reasons. 524 F.Supp. at 1169. Unless Defendants make an affirmative showing of oppressiveness, Plaintiffs’ choices are not to be examined.

Accordingly, the Court is of the opinion that Defendants’ various Motions should be, and hereby are, DENIED.

SO ORDERED.


source: Caselaw Access Project

author: KRENZLER, District Judge.

license: Public Domain

text:
    POLO FASHIONS, INC., Plaintiff, v. ONTARIO PRINTERS, INC., Roland M. Kraus, Edward M. Lasky, Defendants.
    No. C83-1957.
    United States District Court, N.D. Ohio, E.D.
    Dec. 18, 1984.
    George F. Karch, Jr., Thompson, Hiñe & Flory, Cleveland, Ohio, Morton Amster, Philip Gottfried, Milton Springut, Roger Thompson, Amster, Rothstein & Engelberg, New York City, for plaintiff.

      Paul Greenberger, Gerald S. Gold, Cleveland, Ohio, for defendants.
   MEMORANDUM OF OPINION AND ORDER

KRENZLER, District Judge.

On August 31,1984, this Court issued its order of injunction and partial summary judgment in favor of the plaintiff and against the defendants Lasky and Ontario Printers. The Court also found that the defendant Kraus was an innocent infringer under Title 15 U.S.C. § 1114, and thus, dismissed the charge against him.

In its motion for reconsideration, the plaintiff claims that the defendant Kraus does not fall within the innocent infringer exception of 15 U.S.C. § 1114.

This Court recognizes that the defendant Kraus could be personally liable if the evidence warranted that conclusion. But this Court has determined that based on the evidence before it as stated in its previous order, the defendant Kraus is not personally liable. Further, if the defendant Kraus were personally liable, based on the evidence before the Court, he would only be an innocent infringer and, thus, only an injunction could be issued under 15 U.S.C. § 1114.

This Court is mindful of the fact that the volume of trademark infringement cases is increasing. Courts must be concerned for the rights of owners of trademarks.

The problem of commercial counterfeiting today has reached epidemic proportions. Montres Rolex, S.A. v. Snyder, 718 F.2d 524, 528 (2d Cir.1983), cert. denied sub nom., Grand Jewels, Inc. v. Montres Rolex, — U.S. -, 104 S.Ct. 1594, 80 L.Ed.2d 126 (1984).

Based on this Court’s personal knowledge from the volume of its cases, the trafficking in counterfeit merchandise constitutes a most serious problem for many manufacturers in this country. There are many sales of counterfeit infringing goods by numerous unscrupulous entities greatly damaging legitimate companies’ reputation for quality, both in the trade and with the purchasing public.

There must be objective standards imposed on businessmen in determining whether they are infringing on a trademark. There cannot be a subjective standard where each person makes his own determination.

Responsible business persons cannot avoid personal responsibility and liability for infringing on a trademark by contending that only the corporation is liable.

Business persons are cautioned that they shall be held to a duty of vigilance and sound, good business judgment. They cannot escape liability by asserting that there was a violation but that it was innocent and unintentional. If an individual comes to a business person and orders some material or a product that the business person knows, or should know, is not a valid, legitimate order, or that the person placing the order obviously had no authority to place that order, or it was readily apparent that the person placing the order was not the person or representative of the company, he cannot escape liability.

Briefly stated, business persons cannot be naive and be like ostriches and put their heads in the sand and ignore obvious facts that should be readily apparent to a reasonable business person. Whether or not there was an intentional violation shall be determined on an objective, reasonable business person test and not the subjective state-of-the-mind test.

When a person, such as a manufacturer or a printer, is approached by someone to make a product for a famous manufacturer, that business person has an affirmative duty to determine the legitimacy of the person placing the order. That person must make reasonable inquiry, and this will be determined from all of the facts and circumstances.

Some of the factors to be considered include (1) the extent of recognition and notoriety of the mark in issue; (2) the printer’s prior experience working for legitimate companies and the trademark owners and related industries; (3) the circumstances of the transaction; (4) the submitted basis for or proof of authorization provided by the customer; and (5) whether the printer contacts the owner of the mark. There may be additional factors to be considered, depending on all the facts and circumstances in the case.

A business person cannot avoid liability by merely accepting the order and making no further inquiry. By doing this, he is taking the risk of being found liable for trademark infringement.

In the present case, Kraus was not acting on his own as an individual but for and on behalf of Ontario Printers. Therefore, he is not personally liable.

Second, based on the facts presented, Ontario is an innocent infringer and can only be enjoined, and there can be no monetary damages. Therefore, the defendants’ motion for reconsideration will be overruled.

As to the remaining issues in the case in regard to monetary damages of Lasky and the attorney’s fees of Lasky and Ontario Printers, it is this Court’s understanding that the parties have amicably resolved these issues.

Therefore, all of the issues as to all of the parties have now been resolved and final judgment will be entered for the plaintiff against the defendants Ontario Printers and Lasky.

IT IS SO ORDERED.

FINAL JUDGMENT FOR POLO FASHIONS, INC.

This Court previously granted a partial judgment to the plaintiff on plaintiff’s motion for summary judgment. The Court also issued an order and an opinion in overruling the plaintiff’s motion for reconsideration. The issues as to monetary damage and attorney’s fees have now been resolved between the parties, and there are no remaining issues as to any of the parties. Final judgment is hereby rendered for the plaintiff and against the defendants Edward Lasky and Ontario Printers.

Accordingly, the Court enters a permanent injunction enjoining Ontario Printers, its stockholders, officers, directors, employees, and agents and those persons in active concert or participation with it:

A. from using any of the Polo Trademarks or any mark similar thereto in connection with the sale of any unauthorized goods or hang tags or the rendering of any unauthorized services;

B. from selling hang tags using any logo, trade name or trademark which may be calculated to falsely represent or which has the effect of falsely representing that the services or products of defendants or of third parties are sponsored by, authorized by, or in any way associated with the plaintiff;

C. from infringing plaintiff’s registered trademarks;

D. from themselves using or rendering it possible for third parties to use any reproduction, copy or colorable imitation of the authentic Ralph Laren Logo trademark or hang tag, in whole or in part;

E. from themselves or aiding and abetting third parties to apply, annex or use in connection with the sale of any goods, a false description or representation, including words or other symbols to describe or represent such goods as being those of plaintiff and offering such goods in commerce.

The Court permanently enjoins Edward Lasky from:

A. using any of the Polo Trademarks or any mark similar thereto in connection with the sale of any unauthorized goods or hang tags or the rendering of any unauthorized services;

B. selling hang tags using any logo, trade name or trademark which may be calculated to falsely represent or which has the effect of falsely representing that the services or products of defendants or of third parties are sponsored by, authorized by, or in any way associated with the plaintiff;

C. infringing plaintiff’s registered trademarks;

D. otherwise unfairly competing with plaintiff;

E. falsely representing themselves as being connected with plaintiff or sponsored by or associated with plaintiff or engaging in any act which is likely to cause the trade, retailers and/or members of the purchasing public to believe that defendants, or any one of them, are associated with plaintiff;

F. themselves using or rendering it possible for third parties to use any reproduction, copy or colorable imitation of the authentic Ralph Laren Logo trademark or hang tag, in whole or in part;

G. themselves or aiding and abetting third parties to apply, annex or use in connection with the sale of any goods, a false description or representation, including words or other symbols to describe or represent such goods as being those of plaintiff and offering such goods in commerce.

The action against the individual defendant Kraus is dismissed.

The defendants Lasky and Ontario Printers are to pay the costs of this action.

IT IS SO ORDERED.


author: SIMMONS, District Judge.

text:
    Douglas Lawrence OEFINGER, t/d/b/a D.L.O.; and David A. Goodman, t/d/b/a American Armament, Plaintiffs, v. Leroy ZIMMERMAN, Attorney General of the Commonwealth of Pennsylvania; Robert L. Keutch, Executive Deputy Attorney General, Commonwealth of Pennsylvania, and Executive Director, Bureau of Criminal Law Enforcement, Lawrence Claus, Deputy Attorney General, Commonwealth of Pennsylvania; and Robert L. Colville, District Attorney of Allegheny County, Defendants.
    Civ. A. No. 83-3013.
    United States District Court, W.D. Pennsylvania.
    Dec. 19, 1984.

      John W. Murtagh, Pittsburgh, Pa., for plaintiff Oefinger.
    Rochelle Friedman, Pittsburgh, Pa., for plaintiff Goodman.
    Joel M. Kaufman, Asst. Dist. Atty., John S. Sherry, Pittsburgh, Pa., for Dist. Atty.
    Jose Hernandez-Cuebas, Deputy Atty. Gen., Pittsburgh, Pa., for Commonwealth defendants.
   OPINION

SIMMONS, District Judge.

I.

This action was originally filed December 2, 1983, under the Commerce Clause of the United States Constitution, by Plaintiffs Douglas Lawrence Oefinger, t/d/b/a DLO and David A. Goodman, t/d/b/a American Armament, against the Attorney General and his representatives and the District Attorney of Allegheny County, seeking injunctive relief. Frankford Arsenal was originally named as a party to this action, but on June 20, 1984, this Court granted the Motion of Frankford Arsenal for Voluntary Dismissal.

Plaintiff Douglas Lawrence Oefinger, t/d/b/a DLO [hereinafter “Oefinger”], is federally licensed and registered by the Secretary of the Treasury to engage in foreign and interstate commerce by importing and manufacturing firearms pursuant to the National Firearms Act of 1934, 26 U.S.C. §§ 5801 et seq., and the Gun Control Act of 1968, 18 U.S.C. §§ 921 et seq.

Plaintiff David A. Goodman, t/d/b/a American Armament [hereinafter “Goodman”], is likewise federally licensed pursuant to the National Firearms Act and the Gun Control Act to engage as a Class 3 dealer in Title II firearms (including machineguns short-barrelled shotguns and silencers), and is also licensed by the Commonwealth of Pennsylvania to sell firearms through a license issued by the Sheriff of Allegheny County, Pennsylvania. American Armament is also registered as the manufacturer’s representative for the Plaintiff D.L.O.

The Original Complaint is based on the Plaintiff’s contention that the Defendants have interfered with foreign and interstate commerce and have arrested or threatened to seize firearms which were distributed through interstate commerce in full compliance with the requirements of federal firearms laws.

Specifically, the Plaintiffs allege that the Defendants have seized firearms lawfully maintained as sales samples at the principal place of business of American Armament and have subjected Plaintiff Goodman to prosecution for the possession of said firearms. Such actions were allegedly taken by the Defendants pursuant to 18 Pa.C.S.A. § 908 of the Pennsylvania Crimes Code, which prohibits the dealing in or possession of certain “offensive weapons”. Plaintiffs claim that Defendant Keuch has notified the Bureau of Alcohol Tobacco and Firearms that the Plaintiffs distribute “prohibited offensive weapons” under the Pennsylvania statute, 18 Pa.C. S.A. § 908, and as a result, the Bureau of Alcohol Tobacco and Firearms has not authorized the transfer of these firearms to and by the Plaintiffs in the Commonwealth of Pennsylvania.

Plaintiffs claim that the actions and threatened actions of the Defendants make it impossible for the Plaintiffs to do business in the Commonwealth of Pennsylvania as they are federally licensed to do, since they are threatened with arrest if they engage in their business and the seizure of their sales samples. As a result, the Plaintiffs claim that they are being deprived of their ability to freely engage in foreign and interstate commerce as they are federally licensed to do, and that they have suffered irreparable loss, damage and injury as a consequence of the actions of the Defendants. Plaintiffs seek an injunction restraining Defendants from prohibiting and interfering with interstate commerce and directing Defendants not to arrest, seize or threaten to arrest and seize the Plaintiff’s and their goods, providing that the Plaintiffs are in full compliance with the laws and regulations of the United States Department of Treasury pertaining to commerce in firearms.

Plaintiff Goodman filed a first amended complaint, stating causes of action under the Commerce Clause (U.S. Constitution, Article I, § 8), the Supremacy Clause (U.S. Constitution, Article VI, clause 2), the Fourteenth Amendment, and the Civil Rights Acts, 42 U.S.C. §§ 1983, 1985 and 1988, and seeking monetary damages in addition to injunctive relief.

Plaintiff Goodman then filed a Second Amended Complaint on June 22, 1984, based on the Commerce Clause (U.S. Constitution, Article I, § 8), the Supremacy Clause (U.S. Constitution, Article VI, clause 2), the Fourteenth Amendment, and the Civil Rights Acts, 42 U.S.C. §§ 1983, 1985 and 1988. The Second Amended Complaint is based on Plaintiff’s contention that the Supremacy Clause preempts interstate commerce as it relates to licensing to engage in foreign and interstate commerce in firearms, and that therefore, the Commonwealth of Pennsylvania may not impose criminal or civil sanctions against Plaintiff or interfere with his business.

Goodman also claims that Defendants have conspired to deny the Plaintiff of the equal protection of the law by causing the arrest of Plaintiff Goodman and threatening his re-arrest, and have permitted other arms dealers similarly situated to Plaintiff to engage in the same activities which Plaintiff is prohibited from engaging in by Defendants with respect to 18 Pa.C.S.A. § 908, such activity constituting a selective enforcement of the laws of the Commonwealth of Pennsylvania.

Plaintiff additionally claims that Defendants agreed among themselves that the Attorney General would investigate Plaintiffs activities, seize his firearms and institute a criminal complaint against Plaintiff when they knew or should have known that such investigation was not within their jurisdiction under the Commonwealth Attorney’s Act, 71 P.S. § 732-101 et seq. The Defendant Colville is claimed to have colluded with the Attorney General in the wrongful investigation of the Plaintiff. Such acts of conspiracy are alleged to have been undertaken by Defendants acting under color of state law.

Plaintiff claims actual and impending irreparable loss, injury and damages to business and goodwill, and seeks an injunction restraining the Defendants from enforcing 18 Pa.C.S.A. § 908, restraining the Defendants from arresting, seizing or threatening to arrest or seize, restraining Defendants from selective enforcement of the laws of the Commonwealth of Pennsylvania, a declaratory judgment that the Plaintiff has the right to engage in the interstate commerce of firearms without prosecution or threat of prosecution, and money damages, costs and fees.

The Second Amended Complaint is applicable to Plaintiff Goodman only. At a June 20, 1984 conference, Plaintiff Oefinger’s attorney indicated to the Court on the record that Plaintiff Oefinger would continue to rely on the Original Complaint. (Tr. at 18, 6-20-84).

All of the Defendants have filed Answers to the original and amended complaints, and seek dismissal of the complaints for various reasons, among them failure to state a claim for relief. Numerous briefs have been submitted and extensive oral arguments have been heard concerning the motions of the Defendants to dismiss this above-captioned action. From all that has been submitted thus far, it appears to this Court that the crucial issue to be decided by this Court is whether the federal government has preempted interstate commerce in firearms, as Plaintiffs allege it has, and whether the Pennsylvania Crimes Code, 18 Pa.C.S.A. § 908, which makes it an offense to make, repair, sell, deal in, use or possess any “offensive weapon”, is in direct and positive conflict with the Gun Control Act of 1968, 18 U.S.C. § 921 et seq. Since the thrust of both the original complaint (Oefinger) and the amended complaint (Goodman), is that the Defendants have impermissibly interfered with interstate commerce in an area which has been preempted by Congress, it appears that the resolution of this issue will determine whether or not this action can proceed.

If the Pennsylvania statute is in direct and positive conflict with the federal legislation, then the state statute must yield to the federal right to regulate this particular aspect of interstate commerce. However, if the state statute is not in direct and positive conflict on its face or as applied, then Plaintiffs would not be entitled to their requested injunctive relief, since there would be no impermissible interference with interstate commerce. Further, any actions of the Defendant taken pursuant to that state statute, if the state statute is not in conflict with the federal legislation, could not then be the basis for Plaintiff’s claim of a civil rights violation.

II.

This case involves the interplay of three legislative enactments, the National Firearms Act, the Gun Control Act of 1968, and the Pennsylvania Crimes Code section pertaining to prohibited offensive weapons. The relevant provisions and backgrounds of these enactments are especially important to the resolution of this case.

A. The National Firearms Act

The National Firearms Act of 1934 sets forth a comprehensive scheme assessing taxes on importers, manufacturers, and dealers in firearms and providing for a registration scheme for the same. The Act assesses an occupational tax on all importers, manufacturers, and dealers, and provides for the payment of a transfer tax. 26 U.S.C. §§ 5801, 5811. The transfer of possession of a firearm is subject to the approval of the Secretary of the Treasury, providing that certain application and registration forms have previously been properly filed with the Secretary. 26 U.S.C. § 5812. Additionally, the Act sets forth special taxes and registration requirements for the making of firearms, 26 U.S.C. §§ 5821, 5822, 5841, and 5842. Finally, the Act sets forth prohibited acts and criminal penalties and forfeiture for the violation of any provision of the Act. 26 U.S.C. § 5861, 5871, 5872.

The regulations pertaining to interstate commerce in firearms and machine guns are contained in 27 C.F.R. Parts 178 and 179. For the purposes of these parts, a person is defined as “any individual, corporation, company, association, firm, partnership, society or joint stock company.” 27 C.F.R. § 178.11; 27 C.F.R. 179.11.

In discussing licenses, Section 178.58 further sets forth:

§ 178.58 State or other law.
A license issued under this part confers no right or privilege to conduct business or activity contrary to State or other law. The holder of such a license is not by reason of the rights and privileges granted by that license immune from punishment for operating a firearm or ammunition business or activity in violation of the provisions of any State or other law. Similarly, compliance with the provisions of any State or other law affords no immunity under Federal law or regulations.

In discussing the special occupational tax liability of persons engaging in the business of manufacturing and dealing in firearms, 27 C.F.R. § 179.52 specifically states:

APPLICATION OF STATE LAWS
§ 179.52 State regulations.
Special tax stamps are merely receipts for the tax. Payment of tax under Federal law confers no privilege to act contrary to State law. One to whom a special tax stamp has been issued may still be punishable under a State law prohibiting or controlling the manufacture, possession or transfer of firearms. On the other hand, compliance with State law confers no immunity under Federal law. Persons who engage in the business of importing, manufacturing or dealing in firearms, in violation of the law of a State, are nevertheless required to pay special (occupational) tax as imposed under the internal revenue laws of the United States. For provisions relating to restrictive use of information furnished to comply with the provisions of this part see § 179.32.

B. The Gun Control Act of 1968

The Gun Control Act of 1968, 18 U.S.C. § 921, et seq., is designed to provide for better control of the interstate traffic in firearms. According to the House Report accompanying this legislation, the principal purpose of the enactment was “to strengthen Federal Controls over interstate and foreign commerce in firearms and to assist the States effectively to regulate firearms traffic within their borders.” H.Rep. No. 1577, 3 U.S.Code Cong. & Admin.News 1968, p. 4410 at 4411. The legislation was passed in response to widespread national concern that the increasing rate of crime and use of firearms in violent crimes manifested the need to strengthen Federal regulation of interstate firearms traffic. The Gun Control Act was designed “to control the indiscriminate flow of such weapons across State borders and to assist and encourage States and local communities to adopt and enforce stricter gun control laws.” Id. at 4413. The Attorney General of the United States, in an executive communication to the House of Representatives, in requesting the enactment of that legislation stated:

By recognizing the Federal responsibility to control the indiscriminate flow of firearms and ammunition across State borders, this bill will give States and local communities the capacity and the incentive to enforce effectively their own gun control laws. Once enacted into law, it will insure that strong local or State laws are not subverted by a deadly interstate traffic in firearms and ammunition.

Id. The above communication was made a part of House Report No. 1577.

The Gun Control Act includes in its definition of person “any individual, corporation, company, association, firm, partnership, society, or joint stock company. 18 U.S.C. § 921(a)(1). The Act specifies certain unlawful acts, and permits only a licensed importer, manufacturer or dealer to ship, transport or receive any firearm in interstate commerce. 18 U.S.C. § 922(a)(1). Importers, dealers and manufacturers are further forbidden, with several exceptions not relevant here, to ship or transport to any person other than a licensed importer, manufacturer, or dealer. 18 U.S.C. § 922(a)(2). Additionally, there are further restrictions placed on licensed importers, manufacturers and dealers limiting the sale and delivery of firearms. A licensed dealer may not sell to a person less than 18 years of age (shotguns and rifles) or 21 years of age (other than a shotgun or rifle). 18 U.S.C. § 922(b)(1). Significantly, firearms may not be sold by a licensed importer, manufacturer, or dealer to “any person in any State where the purchase or possession by such person of such firearm or ammunition would be in violation of any State law or any published ordinance.” 18 U.S.C. § 922(b)(2). A licensee may not sell to an out-of-State unlicensed resident, 18 U.S.C. § 922(b)(3); may not sell or deliver any destructive device or machinegun, 18 U.S.C. § 922(b)(4); or sell any firearm without making a record of its purchase, 18 U.S.C. § 922(b)(5). Licensed importers, dealers and manufacturers are prohibited from selling to a fugitive, felon, mental defective or drug addict. 18 U.S.C. §§ 922(d)(1) through (d)(4). Licensing and record-keeping requirements are imposed in 18 U.S.C. § 923. Criminal penalties are set forth in 18 U.S.C. § 924.

The effect of the Gun Control Act on State law is set forth specifically in 18 U.S.C. § 927:

No provision of this chapter shall be construed as indicating an intent on the part of the Congress to occupy the field in which such provision operates to the exclusion of the law of any State on the same subject matter, unless there is a direct and positive conflict between such provision and the law of the State so that the two cannot be reconciled or consistently stand together.

C. Pennsylvania Crimes Code Provision, 18 Pa.C.S.A. § 908

Title 18, Section 908, of the Pennsylvania Consolidated Statutes Annotated provides:

Prohibited offensive weapons
(a) Offense defined. — A person commits a misdemeanor of the first degree if, except as authorized by law, he makes, repairs, sells, or otherwise deals in, uses, or possesses any offensive weapon.

Section 908 defines an “offensive weapon” as “any bomb, grenade, machine gun, sawed-off shotgun, firearm specially made or specially adapted for concealment or silent discharge, any blackjack, sandbag, metal knuckles, dagger, knife, razor or cutting instrument, the blade of which is exposed in an automatic way by switch, push-button, spring mechanism, or otherwise, or other implement for the infliction of serious bodily injury which serves no common lawful purpose.”

Title 18 of the Pennsylvania Consolidated Statutes contains no definition of person, except with respect to Section 911, Corrupt Organizations, where person is defined as “any individual or entity capable of holding a legal or beneficial interest in property”, (18 Pa.C.S.A. § 911(h)(2)), and with respect to 18 Pa.C.S.A. § 5702, which contains definitions under the Wiretapping and Electronic Surveillance Control Act. There person is defined as “[a]ny employee, or agent of the United States or any state or political subdivision thereof, and any individual, partnership, association, joint stock company, trust or corporation.” 18 Pa.C.S.A. § 5702. These definitions are not relevant to the within action.

Definitions of words and phrases used in any statute finally enacted on or after September 1,1937, are contained in 1 Pa.C.S.A. § 1991 (Supplementary Pamphlet 1964 to 1983). There “person” is defined as including “a corporation, partnership, and association, as well as a natural person.”

Section 908 of Title 18 was amended by the General Assembly on July 6, 1984, Act No. 1984-134, H.B. No. 1799 as follows:

(b). Exceptions.—
(1) It is a defense under this section for the defendant to prove by a preponderance of the evidence that he possessed or dealt with the weapon solely as a curio or in a dramatic performance, or that, with the exception of a bomb, grenade or incendiary device, he complied with the National Firearms Act (26 U.S.C. § 5801 et seq.), or that he possessed it briefly in consequence of having found it or taken it from any aggressor, or under circumstances similarly negativing any intent or likelihood that the weapon would be used unlawfully.

[Amended matter underlined]. The effective date of the amended statute is 90 days after its July 6, 1984 passage.

III.

Plaintiffs contend that Congress has occupied the field with respect to interstate commerce in firearms and licensing procedures. Plaintiffs contend that the Pennsylvania statute pertaining to prohibited offensive weapons is in direct and positive conflict with federal law, and the Pennsylvania statute as interpreted by the Defendants, interferes with the free flow of interstate commerce. Plaintiff Oefinger also argues that the Plaintiffs, as federal licensees, should not be considered “persons” under 18 Pa.C.S.A. § 908. It is argued that the inventory of Plaintiff Oefinger t/d/b/a D.L.O. is an inventory held by a business which is a federal licensee and not by a natural person. Although the federal licensees act through the natural persons of Oefinger and Goodman, it is submitted that the natural persons do not possess the inventories of the federal licensees. It is when the Defendants interpret and apply 18 Pa.C.S.A. § 908 to the federal licensees as “persons” that the Plaintiffs claim that the statute is in direct and positive conflict with the federal law.

The pre-emption doctrine is based on the Supremacy Clause of the United States Constitution, Article VI, clause 2. When Congress has ordained that its enactments alone are to regulate an aspect of commerce, state laws regulating that aspect of commerce must fall, regardless of whether such command of Congress is explicitly stated in the language of the enactment or implicitly contained in the structure and purpose of the enactment. Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604, 614 (1977). In determining whether Congress has preempted a certain aspect of commerce, congressional intent must be examined.

Absent explicit pre-emptive language, Congress’ intent to supersede state law altogether may be inferred because “[t]he scheme of federal regulation may be so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it,” because “the Act of Congress may touch a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject” or because “the object sought to be obtained by federal law and the character of obligations imposed by it may reveal the same purpose.” Rice v. Sante Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1147 (1947).

Fidelity Federal Savings & Loan Association v. de la Cuesta, 458 U.S. 141, 153, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664, 675 (1982).

Even if Congress has not completely displaced State regulation, to the extent that a state law actually conflicts with the federal law, the state law is nullified. This is the situation when it is physically impossible to comply with both the federal and state regulations or when state law is an obstacle to the accomplishment and execution of the full purposes and objectives of the federal enactment. Id., 458 U.S. at 153, 102 S.Ct. at 3022, 73 L.Ed.2d at 675. (Citing Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963); Hines v. Davidowitz, 312 U.S. 52, 61 S.Ct. 399, 85 L.Ed. 581 (1941).

It is true as Plaintiffs contend, that Plaintiffs are federally licensed, both under the National Firearms Act and the Gun Control Act to engage in interstate commerce with respect to the sale of firearms. However, these two above-mentioned enactments do not confer upon Plaintiffs an absolute license to deal in firearms, nor do they evince a Congressional intent to preempt the field of commerce in firearms. The federal licenses that Plaintiffs have secured are not absolute licenses.

The Gun Control Act, 18 U.S.C. § 927, specifically provides that it is not to be construed as indicating Congressional intent to occupy the field to the exclusion of the law of any State unless there is a direct and positive conflict which cannot be reconciled. Although it is true that the Senate Amendment added to the anti-pre-emption provision “no governmental agency, including State ... may legalize the confiscation of otherwise legally held and used firearms”, this provision was not contained in the legislation as enacted. Nevertheless, the Conference Report No. 1956 indicated that the Act should not be construed to authorize the confiscation of “lawfully possessed firearms.” 3 U.S.Code Cong. & Admin.News 1968, at 4433. However, that deleted portion merely refers to “lawfully possessed” firearms, and not to firearms “lawfully possessed under federal law.”

Section 922(b)(2) of the Gun Control Act also makes it unlawful for a licensed dealer to sell or deliver a firearm to a person in any State where the purchase or possession by that person would be in violation of any State law. The legislative history of the Gun Control Act indicates that its principal purpose is to strengthen Federal controls and “to assist the States effectively to regulate firearms traffic within their borders.” [Emphasis added]. 3 U.S.Code Cong. & Admin.News 1968 at 4411. The Act was designed “to assist and encourage States and local communities to adopt and enforce stricter gun control laws.” Id. at 4413.

From the explicit words of the statute as well as a review of the legislative history of the enactment, this Court is convinced that the Gun Control Act of 1968 did not explicitly preempt state legislation pertaining to possessing and dealing in firearms. The purpose of the Gun Control Act was to assist the States in the regulation of firearms by strengthening Federal controls, and the legislation was designed to enhance, and not to supersede the efforts of the States and to encourage the adoption and enforcement of more stringent State gun control laws. This Court’s reading of the legislation is buttressed by the Federal Regulations, 27 C.F.R. §§ 178.58 and 179.-52, which specifically state that a license issued pursuant to the Federal Regulations confers no right to conduct business contrary to State law and grants no immunity from punishment for operating a firearm business or activity in violation of state law. (27 C.F.R. § 178.58). Payment of tax under federal law also confers no privilege to act contrary to State law. 27 C.F.R. § 179.52.

The federal scheme to license and regulate interstate traffic in firearms does not displace the power of the State to determine that certain offensive weapons should not be possessed within the boundaries of the State. The licenses granted to Plaintiffs by the federal government were not absolute licenses to do business in every State, rather, the licenses granted under the federal legislation permit the Plaintiffs to engage in their firearm business so long as they do not act contrary to State law. The legislation clearly permits the States to determine what firearms may lawfully be possessed within the boundaries and borders of that State.

The state law, 18 Pa.C.S.A. § 908 does not stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress which are re-fleeted in the Gun Control Act. As Congress clearly stated, the Gun Control legislation was designed to assist the states in regulating firearms within their own borders, and was never designed to prevent States from regulating firearms within their own borders.

There is no direct and positive conflict between the federal enactment and the Pennsylvania Crimes Code. As this Court has said previously, Congress chose to prohibit transactions in and possession of firearms which are contrary to state law. This is apparent from the explicit wording of the Gun Control Act, its legislative history, and the federal regulations. In reaching this conclusion, this Court also takes notes of decisions in other jurisdictions concerning the effect of federal legislation on state laws prohibiting the possession of firearms. For example, in Barkey v. Firearms Control Board, 293 F.Supp. 420 (S.D.N.Y. 1968), the Court specifically noted: “The Federal Firearms Act does not exempt anyone from state law, and the regulations promulgated under that Act, 26 U.S.C. § 5847, specifically indicate that the federal statute does not immunize from state law. Indeed, the very license plaintiff puts forth as evidence of compliance with the federal Act contains a warning that the license does not exempt from state law.” 293 F.Supp. at 421 [footnotes omitted]. In Rinzler v. Carson, 262 So.2d 661 (Fla. 1972), a state statute made possession of certain firearms unlawful, however, the state legislature specifically exempted from the operation of that statute “firearms in violation hereof which are lawfully owned and possessed under provisions of federal law.” 262 So.2d at 667. The firearm in question was registered under the National Firearms Act, and the Rinzler Court recognized that possession of that firearm was lawful in those circumstances because the state legislature specifically made such possession of a federally licensed firearm lawful, and not by the mere fact that the firearm was federally registered.

It is true that the registration with the federal authorities did not insulate its possession against a state statute which outlaws such possession or ownership. This is true because it is specifically provided in the registration certificate that the registration does not permit the registrant to possess the firearm in violation of state or local law. Were it not for the specific exception contained in [the state statute], the possession by the appellant would be unlawful. But the Legislature in enacting the statute specifically excepts from its operation weapons lawfully owned and possessed under the provision of federal law.

Finally, in Pettit v. State of Texas, 627 S.W.2d 453 (Tex.App.1981), Defendant appealed his conviction for carrying a handgun on grounds that he was a federally licensed firearms dealer. The Court, in affirming his conviction, stated: “The Gun Control Act contemplates obedience to relevant state statutes, and appellant cannot assert that he is here wrongly precluded from carrying a weapon pursuant to his federal license to deal in firearms under Texas law.”

Plaintiffs contend that the Pennsylvania statute as applied is in direct and positive conflict with federal law because the Plaintiffs as federal licensees should not be considered as persons since it is the federally licensed business which possesses the firearms. This Court cannot accept this argument for several reasons. First, while it is true that the Pennsylvania statute does not contain a definition of “person”, “person” is defined in 1 Pa.C.S.A. § 1991 to include a partnership and association as well as a natural person. That definition is to be used in any statute finally enacted on or after September 1, 1937, unless the context clearly indicates otherwise. There is nothing in § 908 to indicate that a contrary intention was desired by the legislature. Not only does section 908 prohibit the possession of an offensive weapon, it also prohibits making, repairing, selling or otherwise dealing in offensive weapons. There is nothing in the language of that act to indicate that dealers, whether natural persons or partnerships and associations, have a special status with respect to the making, selling or dealing in offensive weapons, which makes them immune to the operations of that act. We must assume that had the legislature originally wanted to so except federal licensees from the operation of the statute, they would have inserted the appropriate language to accomplish that result.

The Pennsylvania legislature has recently amended section 908 to allow as a defense under that section the showing of compliance under the National Firearms Act. The Pennsylvania legislature in its wisdom chose to make compliance with the National Firearms Act a defense to a section 908 prosecution. It was not required to do so, nor was it required to absolutely exempt federal licensees from the operation of the criminal statute. The legislature chose only to exempt police forensic firearms experts and laboratories from the operation of the statute. 18 Pa.C.S.A. § 908(b)(2). This Court cannot usurp the authority of the Pennsylvania legislature and hold that a federal firearm licensee is absolutely exempt from the operation of the statute. This Court reads section 908 as being designed to prohibit certain offensive weapons, including machine guns, which the legislature has determined are so offensive in themselves that except in the most narrow and obvious situations, should not be permitted at all within the confines of Pennsylvania. See Commonwealth v. Ponds, 236 Pa.Super.Ct. 107, 111, 345 A.2d 253 (1975); Commonwealth v. Adams, 245 Pa.Super.Ct. 431, 369 A.2d 479 (1976); Commonwealth v. McFarland, 252 Pa.Super.Ct. 523, 382 A.2d 465 (1977). This is consistent with the Congressional intent underlying the Gun Control Act of 1968, that states be permitted to regulate firearms within their own borders.

The amendment to section 908 is now in effect in Pennsylvania. This Court believes that this amendment to the Crimes Code moots Plaintiffs’ claim for injunctive relief. This Court must presume that the Defendants will act regularly and in good faith and not prosecute in cases where the existence of a federal license would be a valid defense to the action.

With respect to Plaintiff’s claim that 42 U.S.C. § 1985 has been violated by the actions of the Defendants in conspiring to deprive Plaintiff of the equal protection of the laws, this claim must be dismissed. Under section 1985, the plaintiff must allege some racial or otherwise class-based, invidiously discriminatory animus behind the action of the conspirators. Griffin v. Breckenridge, 403 U.S. 88, 91 S.Ct. 1790, 29 L.Ed.2d 338 (1971). The complaint here fails to allege any such class-based invidiously discriminatory animus. The Griffin requirement of such a class-based invidiously discriminatory animus applies to state action conspiracies as well as private conspiracies. See Petrone v. City of Reading, 541 F.Supp. 735 (E.D.Pa.1982); Lesser v. Braniff Airways, Inc., 518 F.2d 538 (7th Cir.1975); Landrigan v. City of Warwick, 628 F.2d 736, 739 n. 1 (1st Cir.1980). The claim based upon a violation of 42 U.S.C. § 1985 must be dismissed.

Plaintiff claims money damages for the income lost from the use and rights conveyed by the federal license and the income lost from firearms which were seized pursuant to the Pennsylvania statute, and damages to goodwill and reputation. In light of this Court’s decision that the state statute is not in conflict with the federal legislation, and that there is no impermissible interference with interstate commerce, Plaintiff is not entitled to recover money damages. As the Court has stated previously, the federal license is not an absolute license to engage in the commerce of firearms within Pennsylvania, the federal license merely permits Plaintiffs to engage in the firearm business so long as they do not act contrary to state law. Since Plaintiffs have no right to conduct their firearm business contrary to state law, they are not entitled to recover money damages when the proper enforcement of that state law results in a loss of income and/or seizure of their firearms. In any event, in prosecuting Plaintiffs for violations of the Pennsylvania statute, 18 Pa.C. S.A. § 908, the Defendants would be absolutely immune from a civil suit for money damages. Imbler v. Pachtman, 424 U.S. 409, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976).

For all of the reasons previously set forth, this Court concludes that Plaintiffs’ have failed to state a claim for relief, and that in the circumstances, the above-captioned case must be dismissed.

An appropriate Order will be entered.


author: BARRINGTON D. PARKER, District Judge:

text:
    MASSACHUSETTS LAW REFORM INSTITUTE, INC., et al., Plaintiffs, v. LEGAL SERVICES CORPORATION, et al., Defendants. WESTERN CENTER ON LAW AND POVERTY, INC., Plaintiff, v. LEGAL SERVICES CORPORATION, et al., Defendants.
    Civ. A. Nos. 84-190, 84-406.
    United States District Court, District of Columbia.
    Dec. 19, 1984.
    See also 592 F.Supp. 333.

      Max L. Gillam, Nancy G. Scheurwater, Los Angeles, Cal., Irwin GoMbloom, Latham, Watkins & Hills, Washington, D.C., Mary Burdick, Richard A. Rothschild, Western Center on Law and Poverty, Inc., Los Angeles, Cal., for plaintiff in No. 844.
    Joel P. Bennett, Sherrill R. Spatz, Bennett, Deso, Greenberg & Thomas, Richard N. Bagenstos, Legal Services Corporation Washington, D.C., for defendants in No. 84-406.
    Charles A. Horsky, Paul J. Tagliabue, Sonya D. Winner, Covington & Burling, Washington, D.C., for plaintiffs in No. 84-190.
    Joel P. Bennett, Eric J. Branfman, Bennett, Deso, Greenberg & Thomas, D. Clifford Crook, III, Asst. General Counsel Legal Services Corporation Washington, D.C., for defendants in No. 84-190.
   MEMORANDUM OPINION

BARRINGTON D. PARKER, District Judge:

INTRODUCTION

This matter comes before the Court on the parties’ cross motions for summary judgment in two related cases: Massachusetts Law Reform Institute v. Legal Services Corporation (“MLRI”), Civil Action No. 84-190 and Western Center on Law and Poverty, Inc. v. Legal Services Corporation (“Western Center”), Civil Action No. 84-406. The central legal issue presented is whether the defendant Legal Services Corporation (“Corporation” or “LSC”) lawfully refused to renew the plaintiffs’ regional training grants for fiscal year (“FY”) 1984.

The plaintiffs in both actions operate regional training centers which provide training and related services to lawyers and indigent clients. The MLRI plaintiffs include the Massachusetts Law Reform Institute, Inc. (Northeast Regional Training Center), Legal Services of Arkansas, Inc. (Southeast Regional Training Center), Legal Services Organization of Indiana, Inc. (Midwest Training Resource Center), and Colorado Rural Legal Services, Inc. (Western Regional Training Center). The plaintiff Western Center on Law and Poverty, Inc. operates the training center for Region VIII. Each plaintiff is hereinafter identified by the name of the training center it operates.

Earlier in these proceedings, the Court considered the legality of the Corporation’s decision to deny refunding to the MLRI plaintiffs. MLRI, 581 F.Supp. 1179 (D.D.C. 1984), aff'd 737 F.2d 1206 (D.C.Cir.1984). In granting those plaintiffs a preliminary injunction, the Court determined that the Corporation’s action was contrary to the applicable federal law. Although Western Center was not a party to the MLRI proceeding, the legal analysis and rationale of that decision applies with equal force to all of the training centers. Certain issues concerning the timeliness of Western Center’s application for 1984 funds and its request for prejudgment interest on its state support grant will also be resolved in this opinion.

The findings of fact and conclusion of law entered by the Court in granting the preliminary injunction in MLRI are adopted for purposes of deciding the pending summary judgment motions. These conclusions are reinforced by recent congressional action, see Pub.L. 98-411, 98 Stat. 1545 (1984), which confirms the correctness of the Court’s initial ruling that the LSC’s decision to deny refunding violated the FY 1984 Appropriations Act for the Departments of Commerce, Justice, State, the Judiciary and Related Agencies (“1984 Appropriations Act”), Pub.L. 98-166, 97 Stat. 1071 (1983), and the procedural provisions of the Legal Services Corporation Act of 1974 (“Act”), 42 U.S.C. § 2996 et seq. Accordingly, the Court grants the plaintiffs’ motions for summary judgment in MLRI and Western Center. The reasons for that determination are set forth below. Where appropriate, the Court refers to its specific findings in MLRI.

FACTUAL BACKGROUND

The LSC first awarded training grants to the centers in September of 1981. These grants were for a term of at least one year and provided funds for initial startup costs. The initial training grants were supplemented at the close of 1981. In two letters dated December 11, 1981, the LSC extended the terms of the September agreements and gave each MLRI plaintiff two additional grants. In each case, the smaller grant could be expended during the 1982 calendar year, while the larger grant was for the fifteen month period beginning October 1, 1982 and ending December 31, 1983.

The funds obligated for the latter period were not carryover funds from previous years, and were specifically provided for the operation of the training centers for the last three months of 1982 and all of 1983. Although the award letters stated that the second grant was awarded for the 1982 and 1983 fiscal years, the funds could not be expended prior to October 1, 1982. Under the terms of the second supplemental grant agreements, the regional training centers in MLRI received the following grants: Northeast ($160,000), Western ($170,000); Southeast ($130,000), and Midwest ($135,000).

In sum, the Corporation gave the centers advance funding for a two-year period. The grants were explicitly issued pursuant to the Legal Services Corporation Act of 1974, 42 U.S.C. § 2996e(a)(l)(B), (3)(B). The first type of grant funds general, support-related functions, while the latter covers training and technical assistance functions which relate to the delivery of legal services. The grant agreements cautioned that they “are awarded on a non-recurring basis and do not affect your program’s annual funding level” and that any decision not to renew the grants next year (i.e. 1982) would not “constitute a denial of refunding within the meaning of section 1011 of the Legal Services Corporation Act [42 U.S.C. § 2996j].” See, e.g. Rodgers Aff., Exs. 2, 3.

Prior to October 15,1983, all of the training centers except Western Center submitted applications for refunding of their training center grants. Shortly thereafter, Gregg Hartley, the Director of the LSC Office of Field Services, wrote letters notifying the plaintiffs, including Western Center, that:

Pursuant to the original grant award, Condition No. 12, this is notification that the Corporation will not renew your grant.

Condition No. 12 provided that:

In the event that the Corporation’s Congressional appropriation is not sufficient to enable the Corporation to renew this grant, at least sixty (60) days before the end of the grant term, the Corporation will notify the grantee that it does not intend to renew this grant.

The timing of the nonrenewal letters was directly tied to the requirements of Condition 12. Since the last of the centers’ three grants was to expire on December 31,1983, the Corporation wanted to ensure that it complied with the sixty day notice provision. Hartley Dec. at It If 41-47, filed Jan. 20, 1984; Hartley Dep. at 94-96, filed Feb. 15, 1984.

This alleged shortage of funds, however, presents an unlikely justification for the decision to deny refunding to the plaintiffs. At the time Hartley prepared the October 1983 letters, he was aware that LSC possessed more than $5 million in surplus funds which could be expended in FY 1984. Hartley Dep. at 65-66. While the exact amount of LSC appropriations for FY 1984 had not been determined when Hartley drafted the letters, any new appropriations would certainly increase the available pool of funds for grant expenditures. The LSC in fact received FY 1984 appropriations of $275 million, at 14.1 percent increase over its 1983 appropriations. 97 Stat. 1088. By the start of 1984, the Corporation had approximately $6 million in surplus funds, of which more than $4 million were available for expenditure in FY 1984. Hartley Dep. at 65-69, Ex. 10 at 19, 21, Ex. 11.

Nor was the Corporation’s decision related to its opinion of the centers’ performances under the terms of the grants. Hartley Dec. at 35; Hartley Dep. at 90-91. The Corporation has admitted that two of the training centers have excellent programs (Midwest and Western). Hartley Dec. at 48; Hartley Dep. at 89-90. The performance of the Northeast Center has been at least satisfactory, and Western Center’s performance has not been criticized. The Corporation is apparently less satisfied with the quality of services provided by the Southeast Regional Center. Id.

LEGAL ANALYSIS

The plaintiffs challenge the Corporation’s actions on two grounds: failure to comply with an affirmative rider attached to the 1984 Appropriations Act, Pub.L. 98-166 and failure to provide the procedural rights afforded by the Legal Services Corporation Act of 1974, 42 U.S.C. § 2996j. The Court will first examine these two arguments, then consider the specific procedural posture of Western Center’s request for refunding, and lastly, determine the amount of money the regional training centers are entitled to receive in 1984.

A.

Pub.L. 98-166: 1984 Appropriations Rider

The parties agree, as they must, that the affirmative rider to Pub.L. 98-166 imposed significant restrictions on the Corporation’s discretion to limit funding of its current grantees in FY 1984. The rider specifically directed the LSC to

insure that total annual funding for each [ ] current grantee [funded under section 1006(a)(1) and (3) of the Act] is maintained in fiscal year 1984 in the same proportion which total appropriations to the Corporation in fiscal year 1984 bear to the total appropriations to the Corporation in fiscal year 1983, unless action is taken by directors of the Corporation prior to January 1, 1984, who have been confirmed in accordance with section 1004(a) of the Legal Services Corporation Act.

Pub.L. 98-166, 97 Stat. 1071, 1088 (1983).

Congress previously approved measures containing nearly identical language on three other occasions. See Joint Resolution of Dec. 21, 1982, Pub.L. 97-377, 96 Stat. 1830, 1876 (1982); Pub.L. 98-107, 97 Stat. 733, 739 (1983) and Pub.L. 98-151, 97 Stat. 964, 973 (1983). These measures were broadly intended to preserve the funding status quo for LSC grantees, and to insure that “legal service programs not experience sudden funding losses.” East Arkansas Legal Services, Inc. v. Legal Services Corp. (“East Arkansas”), 742 F.2d 1472, 1480 (D.C.Cir.1984). In the absence of a congressionally confirmed Board of Directors, the LSC could not tip this carefully constructed balance.

A full Board has not as yet been confirmed, more than two years after Congress first took charge of the Corporation’s grant-making authority. In this situation, it is undisputed that the Corporation cannot change the terms and conditions of the grants protected by the affirmative rider. Thus, the crucial question is whether the terms of the rider apply to the centers, who received training center grants.

The terms of the 1984 rider protect current grantees whose grants are provided under sections 2996e(a)(l) and (3) of the Act. The measure of each grantee’s entitlement to funds is the grantee’s total annual funding, multiplied by the ratio of the Corporation’s 1984 appropriations to the Corporation’s 1983 appropriations. Since the Corporation’s 1984 appropriations were 14.1 percent greater than its 1983 appropriations, each qualified grantee may claim 14.1 percent more money than it received in 1983.

The plain language of Pub.L. 98-166 indicates that the regional training centers were entitled to receive this 14.1 percent increase. Their grants were funded under sections 2996e(a)(l) and (3) of the Act. They possessed the literal status of current grantees because they had received 1983 grants. Since the appropriations measure was enacted in 1983, the term “current” grantees would ordinarily include grantees -who had received funds for expenditure during that year. “[U]nless contrary indications are present, a Court can assume that Congress intended the common usage of [statutory terms] to apply” Inner City Broadcasting v. Sanders, 733 F.2d 154, 158 (D.C.Cir.1984) (cited with approval in East Arkansas, 742 F.2d at 1478). Here, there is no evidence that Congress intended its language to have an unusual meaning. Thus, grantees such as the training centers, who were given grants specifically targeted for expenditure in 1983, may claim the benefits of the rider.

The Corporation advances two hyper-technical arguments against this common sense interpretation. First, it argues that the plaintiffs did not satisfy the requirement that they receive “annual funding.” Second, it asserts that even if the plaintiffs were recipients of annual funding, they must have received funds from 1983 appropriations in order to be eligible for an increase. Since the centers’ 1983 activities were all funded in advance from funds obtained from previous years’ appropriations, the Corporation asserts that they are beyond the reach of the rider.

Unfortunately, the Corporation misconceives the relevance of its arguments. While the source of funds for the training grants is relevant to determining the size of the centers’ 1984 grants, the source of the funds does not define the reach of the statute. The Court has previously rejected the Corporation’s reasoning, see MLRI, 581 F.Supp. at 1184-85, and disagreed with the assumption that “the statutory formula is an additional requirement which the plaintiff must meet in order to qualify for increased funding.” Id. at 1185.

Recent FY 1985 legislative developments confirm that this Court’s initial conclusion was correct. In the Department of Justice and Related Agencies Appropriation Act, 1985, Pub.L. 98-411, 98 Stat. 1545, 1563, Congress has reconfirmed its long-standing commitment to continued funding for current LSC grantees. More specifically, the accompanying report from the Senate Appropriations Committee indicates that the regional training centers are entitled to an 8.2 percent increase over the funds received in 1984. S.Rept. No. 514, 98th Cong., 2d Sess. (1984). Once again, Congress has determined that grantees providing training services should receive increased funding. As Representative Kastenmeier stated one year earlier in reference to the 1984 appropriations measure:

it will allow the Corporation to increase its funding of local programs, as well as training and support grants.

129 Cong.Rec. H9561 (daily ed. Nov. 9, 1983).

The report also lays to rest the defendants’ argument that Congress’ statutory formula for the calculation of grant awards was intended to preclude the centers from qualifying for benefits. The report shows the Appropriations Committee’s belief that Pub.L. 98-166 guaranteed 1984 funding for the regional training centers, regardless of the mechanics of the statutory formula. During its deliberations, the Committee obviously was aware that the centers were funded in 1984; if the Committee believed that the centers were funded in violation of Pub.L. 98-166, it would certainly have registered its disapproval. Its failure to do so suggests that the Committee was in complete accord with full funding for the centers.

Moreover, the Committee’s ignorance of the precise impact of the statutory formula also shows that the formula was never intended as a bar to funding in 1984. In its report, the Committee expressed surprise that “inexplicably, [the centers were] funded in fiscal year 1984 entirely out of funds carried over from fiscal year 1983.” S.Rept. at 56. Congress was obviously unaware that the centers had not received 1983 appropriations and thus were prevented by the formula from claiming funds from 1984 appropriations. The statutory formula forced the centers to seek 1984 funding from funds carried over from previous years.

On the other hand, it is not surprising that Congress was unaware of the intricacies of the Corporation’s budget mechanics. It appears that the centers belonged to a very discrete group of grantees who received advanced funding from the Corporation, rather than being funded in the previous year for the next year’s activities. If Congress had been aware of these complexities, it could have closed the loopholes which the Corporation has relied on throughout this litigation. Fortunately, the Committee’s recent statements guarantee continued funding for the centers in 1985, and foreclose arguments in the future which are similar to those already presented to this Court.

B.

42 U.S.C. § 2996j(2): The Requirement of a Hearing

The procedural rights of the Act include the requirement that:

an application for refunding shall not be denied ... unless the grantee ... has been afforded reasonable notice and opportunity for a timely, full, and fair hearing, and, when requested, such hearing shall be conducted by an independent hearing examiner.

42 U.S.C. § 2996j(2). See also accompanying regulation at 45 C.F.R. § 1606. In MLRI, this Court held that “the plaintiffs have shown that they are likely to succeed in their claim that they are entitled to hearings pursuant to 42 U.S.C. § 2996j”, 581 F.Supp. at 1187, and detailed the reasons in support of that conclusion. Id. at 1186-87. The defendants have presented no new factual or legal arguments which detract from that initial conclusion. Accordingly, the Court reaffirms its conclusion that the LSC was required to comply with the requirements of 45 C.F.R. § 1606 before it could deny refunding to the plaintiffs. Because the legal rights of Western Center are identical with those of the MLRI plaintiffs, this holding also includes Western Center.

In addition, the recent decision of this Circuit in East Arkansas, supra, confirms that the plaintiffs deserved the procedural rights afforded by section 2996j(2). There, the Court held that the LSC could not reduce its grantee’s funds to,offset unspent funds carried over from previous years without first providing a hearing. 742 F.2d at 1473. Although the precise issue presented — the definition of termination of financial assistance — differs from the issues in this case, the Court’s analysis of 42 U.S.C. § 2996j is instructive. The Circuit Court stated that the hearing requirements were a “carefully drawn scheme of procedural rights created by the Congress to ensure that programs are not precipitously deprived of funding by LSC.” Id. at 1480. These procedural protections “ensure[d] that LSC and its grantees would be independent and free from outside interference.” Id.

Here, the plaintiffs seek the same rights guaranteed by statute and approved in Eastern Arkansas, namely, the right to a hearing before refunding can be summarily denied. In response, the LSC argues that the centers are not recipients of financial assistance, and are thus not entitled to hearings. This argument amounts to “a semantic sleight-of-hand [which] would end-run the clear procedural protections which Congress provided LSC grant recipients.” Id. The decision to deny hearings to the regional training centers was plainly unsupported by the language and purpose of the statute, and must be overturned.

C.

Western Center: Timeliness of Application for Refunding

The Court now considers whether the Corporation properly denied 1984 funding to Western Center. Although the preceding legal analysis applies to Western Center as well as to the MLRI plaintiffs, one additional issue is unique. That issue is whether Western Center is precluded from seeking funds because it failed to file a grant application by October 15, 1983, the asserted deadline for such applications. Despite the fact that Western Center protested the denial of funds three weeks later, LSC argues that it waived the right to any further challenge.

Under ordinary circumstances, the Corporation could deny refunding to a grantee on the grounds that the grantee failed to make a timely application for funds. Here, however, it is doubtful that the October 15 date constituted- a firm deadline, and, in any event, other circumstances require that Western Center be funded.

First, the Corporation determined that the Center’s grant would not be renewed because of insufficient congressional appropriations, not because the Center had failed to file a timely application for refunding. Burdick Dec., Ex. E (Letter dated Oct. 26, 1983). This letter was written after the October 15 deadline, when the Corporation could have asserted that Western Center had waived its right to continued funding. The fact that the Corporation did not rely on this justification suggests that it did not view the October 15 deadline as a prerequisite for continued funding.

The Corporation also asserted insufficient appropriations as the reason for refusing to renew the other four training grants. This suggests that LSC thought that Western Center’s procedural position was indistinguishable from that of the training centers who filed “timely” applications. The Corporation’s arguments to the contrary suggest that its heated clamor about the “mandatory” deadline is simply a desperate device to avoid refunding Western Center.

Second, the Corporation was in the process of revoking the training center grants before the receipt of the applications for 1984 funds. Although the record does not show the exact date when the Corporation decided to deny refunding of the training grants, it must have begun this process prior to October 26, the date the letters were written. See Hartley Dec. at ¶ 37-38. The regional training centers efforts in applying for refunding were thus futile, either at the time of the applications, or shortly thereafter. It is at best anomalous to argue that Western Center may not seek 1984 funds because it failed to follow a procedure which would not have resulted in refunding. See Lodge 1858, American Federation of Government Employees v. Paine, 436 F.2d 882, 896 (D.C.Cir.1970) (exhaustion of administrative remedies not required where attempt would be futile).

Third, the Corporation’s rigid adherence to the October 15 deadline is inconsistent with Congress’ express direction that the status quo should be maintained in the absence of a confirmed Board of Directors. See discussion supra at 419. Pub.L. 98-166 represents a strong congressional commitment to providing new funds to current grantees. This commitment would be seriously eroded by any decision to deny refunding which is premised on a rigid adherence to procedural requirements.

This provision does not mean that the Corporation could not deny funds to a current grantee who failed to comply with the substantive provisions of the Act or committed some other significant dereliction of duty. In the absence of some compelling justification, however, the Corporation may not deny refunding to a current grantee. Here, the Corporation has advanced no compelling reason to justify its denial of funds to Western Center. According to LSC, Western Center simply failed to apply for refunding by the applicable deadline. Whatever the merits of this argument, Western Center cured any defect by protesting the denial of funds several weeks later. In light of these circumstances, the Corporation may not assert a harmless fortuity as the basis for denying refunding to Western Center.

D.

The Statutory Formula: The Amount of 1984 Funds Due the Regional Training Centers

In MLRI, the Court calculated the amount of each center’s entitlement to FY 1984 funds on the basis of the funds provided by LSC for expenditure during 1983. The Court limited these amounts to the funds awarded by the second supplemental grants because these were the only LSC funds provided for expenditure during the relevant time period. Three months of funding were excluded to reflect the fact that a portion of these grants could be spent in 1982, and the funds provided by the initial startup grants and the first supplemental grants were omitted. Those funds were targeted for expenditure prior to the close of 1982. Finally, the Court stated that these amounts should be increased by 14.1 percent in accordance with the mandate of Pub.L. 98-166.

In their motions for summary judgment, the plaintiffs vigorously dispute several aspects of the Court’s computations. The MLRI plaintiffs contend that the Court incorrectly excluded three months of funding from the centers’ second supplemental grants, and erroneously omitted the first supplemental award in calculating the sums due the Northeast Regional Training Center and the Midwest Training Resource Training Center. These arguments are premised on documentary evidence which suggests that the Corporation subsequently approved the expenditure of these funds in 1983. In a related vein, Western Center argues that it is entitled to receive $117,000 in 1984, based on the amount of LSC funds it actually expended in 1983, increased by 14.1 percent. This amount includes most of the initial start up grant of $50,000, the supplemental grant of $50,000, and a portion of the interest earned on these funds. These contentions have already been considered and they are now rejected; the analysis set forth in MLRI is reaffirmed.

Although the plaintiffs have advanced creative arguments, they incorrectly emphasize factual issues involving the intent of various parties to the grant transactions. Instead, the provisions of Pub.L. 98-166 are the starting point for the analysis.

Under the terms of Pub.L. 98-166, the computation of most grantees’ 1984 fund allotments is a simple matter. Congress directed that each LSC grantee should receive 1984 funds in an amount equal to its 1983 annual funding, increased by 14.1 percent. In most instances, a grantee’s annual funding was equivalent to its 1983 appropriations. LSC’s procedure for funding the training centers, however, complicates this relatively simple procedure. Since LSC provided the centers with funds from previous years’ appropriations rather than 1983 appropriations, these appropriations cannot form the basis for the centers’ 1984 funding. Thus, the Court’s task is to identify which of the plaintiffs’ LSC funds constitute 1983 annual funds which are an appropriate substitute for 1983 appropriations.

A common sense appraisal of Pub.L. 98-166 and its funding formula suggests that the funds which LSC awarded for the 1983 calendar year bear the closest similarity to funds provided directly from 1983 appropriations. The purpose of the appropriations rider was to preclude any changes in the funding of LSC grantees. In order to effectuate this purpose, Congress provided a funding formula which measured the funds available to LSC grantees in 1984 by their receipt of 1983 appropriations. Congress apparently assumed that most grantees had utilized their 1983 appropriations to carry out their 1983 activities. If these appropriations were not spent during the same year, the formula would not have maintained the status quo. Thus, it is reasonable to conclude that the funds which the centers received for expenditure in 1983 stand in the shoes of funds which they otherwise would have received directly from 1983 appropriations.

LSC awarded funds for the 1983 calendar year in the second supplemental grants. These funds do not include the funds provided in the initial start up grants or the first supplemental grants. Both of these grants were provided for the grant period which ended by the close of 1982. The possibility that the Corporation may have authorized the expenditure of some of these funds in 1983 does not mean that these funds should be included in the calculation of the centers’ 1984 funding. The inclusion of these funds would discriminate in favor of the regional training centers and against other LSC grantees whose 1984 appropriations were unaffected by carryover funds from previous years. Since Congress intended that all LSC grantees should be treated equally, the centers' 1984 funding should be determined by reference to the amounts which LSC initially provided for expenditure in 1983.

Moreover, these amounts must be decreased by one-fifth to take into account the provision of these funds for a fifteen month period, rather than a twelve month period. A pro rata reduction ensures that the centers’ 1984 funding is commensurate with the funds initially provided for expenditure during 1983. Lastly, these amounts due each regional training center must be increased by 14.1 percent under the terms of the appropriations rider.

Under this analysis, the training centers are entitled to 1984 funding in the following amounts, increased by 14.1 percent: Northeast Regional Training Center ($128,-000); Southeast Regional Training Center ($104,000); Midwest Training Resource Center ($108,000); Western Regional Training Center ($136,000); and Western Center ($40,000). Of course, the funds tendered to the MLRI plaintiffs should be decreased by the amounts already paid pursuant to the preliminary injunction and temporary restraining orders. In effect, this ruling continues the MLRI centers’ funding for 1984 at the level already established in those previous orders, and provides funding for Western Center on a similar basis.

E.

Prejudgment Interest on Western Center’s State Support Grant

Western Center also seeks an award of prejudgment interest on the $50,560 it was initially underpaid on the amounts due under its state support grant. This amount represents the difference between Western Center’s rate of funding at its 1983 level and the 14.1 percent increase mandated by Congress for 1984 grants. Although LSC has apparently made timely monthly payments to Western Center at the 1983 level since January of this year, for the first six months of this period the payments did not include the 14.1 percent increase. Western Center did not receive this increase until September 21, 1984, when LSC made the $50,000 back payment. Accordingly, prejudgment interest is sought on the amounts underpaid each month, calculated from the date each monthly installment was due to the date of payment.

The availability of prejudgment interest is determined by the law which applies to the controversy. Shaw v. Library of Congress, 747 F.2d 1469, 1485 (D.C.Cir. 1984) (Ginsburg, J., dissenting). Under the federal law which applies here, an award of prejudgment interest is a matter within the Court’s discretion. Ambromovage v. United Mine Workers of America, 726 F.2d 972, 980 (3d Cir.1984). The purpose of such an award is to compensate the prevailing party for the financial loss represented by his inability to use the money due him between the date his claim accrued and the date of judgment. The goal of prejudgment interest is compensatory, not punitive, and a finding of wrongdoing is not required. Lodges 743 and 1746, International Ass’n of Machinists and Aerospace Workers, AFL-CIO v. United Aircraft, 534 F.2d 422, 447 (2d Cir.1975), cert. denied, 429 U.S. 825, 97 S.Ct. 79, 50 L.Ed.2d 87 (1976). Put another way, the award of prejudgment interest simply represents an attempt to make the plaintiff whole. Turgeon v. Howard University, 571 F.Supp. 679, 685 (D.D.C.1983).

Here, an award of prejudgment interest also reflects and effectuates the congressional purpose behind Pub.L. 98-166. This appropriations rider was designed to increase the 1984 funding of LSC grantees by 14.1 percent, beginning in January of 1984. An award of prejudgment interest carries out this intent by giving Western Center the financial equivalent today of the funds it was entitled to receive from LSC in earlier months. In the absence of this award, Western Center would not realize the full benefits mandated by the appropriations rider.

Accordingly, the Court determines that Western Center is entitled to prejudgment interest on the difference between the monthly installments owed on the state support grant and the amount actually paid. Although the parties have not ventured any opinion as the appropriate rate of interest, the Court concludes that the Corporation should pay prejudgment interest at the rate established in D.C.Code § 28-3302(c). Turgeon v. Howard University, 571 F.Supp. at 688 (Title VII); Silver Hill Concrete Corp. v. Thomason Industries Corp., 556 F.Supp. 291, 295 (D.D.C.1982) (Miller Act), aff'd 704 F.2d 1294 (1983). This interest should be calculated from the date each installment should have been paid and September 21, 1984, the date of actual payment.

CONCLUSION

The Court concludes that the Corporation’s decision to deny 1984 refunding to the five regional training centers involved in these proceedings violated the FY 1984 Appropriations Act for the Departments of Commerce, Justice, State, the Judiciary and Related Agencies, Pub.L. 98-166, 97 Stat. 1071 (1983) and section 2996j(2) of the Legal Services Corporation Act of 1974. Appropriate orders granting the requested relief accompany this Memorandum Opinion. The order entered in Western Center incorporates the rulings made on August 13, 1984 granting partial summary judgment on the state support grant claim in favor of Western Center.

JUDGMENT AND PERMANENT INJUNCTION

On the basis of the Court’s Memorandum Opinion entered on this date, it is this 19th day of December, 1984, hereby

DECLARED and ADJUDGED: That defendants’ notice of termination of plaintiffs’ funding and denial of refunding was unlawful under Pub.L. 98-166, 97 Stat. 1071 (1983) and Section 1011 of the Legal Services Corporation Act, 42 U.S.C. § 2996j. And it is further

ORDERED and DECREED: That defendants are permanently enjoined from failing to remit to plaintiffs their 1984 funding for the regional training centers. Defendants shall, within ten days of this date, provide to each plaintiff 1984 funding in the following amounts, increased by 14.1 percent, less any amounts already paid under the Preliminary Injunction and other Orders in this action:

Massachusetts Law Reform Institute, $128,000 Inc. (Northeast Regional Training Center)
Legal Services Organization of $108,000 Indiana, Inc. (Midwest Training Resource Center)
Legal Services of Arkansas, Inc. 104,000 (Southeast Regional Training Center)
Colorado Rural Legal Services, Inc. 136,000 (Western Regional Training Center)

And it is further

ORDERED and DECREED: That plaintiffs shall administer the funds received from defendants in compliance with the Special Grant Conditions and other conditions of the 1981 grant agreements. And it is further

ORDERED and DECREED: That defendants shall take no action to order or otherwise cause plaintiffs to cease the future operations of the regional training centers.

This paragraph does not preclude defendants from pursuing any lawful action to terminate the regional training centers for violations by plaintiffs of the Legal Services Corporation Act.

JUDGMENT AND PERMANENT INJUNCTION

On the basis of the Court’s Memorandum Opinion entered on this date, it is this 19th day of December, 1984, hereby

DECLARED and ADJUDGED: That defendants’ notice of termination of plaintiff’s funding and denial of refunding for its 1984 Region VIII regional training grant was unlawful under Pub.L. 98-166, 97 Stat. 1071 (1983) and Section 1011 of the Legal Services Corporation Act, 42 U.S.C. § 2996j. And it is further

DECLARED and ADJUDGED: That defendants’ notice of termination of plaintiff’s funding and denial of refunding for its 1984 state support grant was arbitrary, capricious and unlawful. And it is further

ORDERED and DECREED: That defendants are permanently enjoined from failing to remit to plaintiff its 1984 state support grant, computed by’reference to its 1983 state support grant, and increased by 14.1 percent. These funds shall be remitted forthwith in accordance with the defendants’ customary procedures, and shall include prejudgment interest calculated from the date each monthly payment was due and September 21, 1984. And it is further

ORDERED and DECREED: That defendants are permanently enjoined from failing to remit to plaintiff its 1984 Region VIII regional training grant. Defendants shall, within ten days of this date, provide to plaintiff funding for its 1984 Region VIII regional training grant in the amount of $40,000, increased by 14.1 percent. And it is further

ORDERED and DECREED: That plaintiff shall administer the training center funds received from defendants in compliance with the Special Grant Conditions and other conditions of the 1981 grant agreements. And it is further

ORDERED and DECREED: That defendants shall take no action to order or otherwise cause plaintiff to cease the future operations of the Region VIII regional training center or its state support center activities. This paragraph does not preclude defendants from pursuing any lawful action to terminate plaintiff’s funding for violations of the Legal Services Corporation Act, other than 1979 or 1980 activities relating to the plaintiff’s efforts in representing clients opposed to Proposition 9 on the California ballot.

      . Western Center filed suit shortly after the MLRI litigation ensued. It did not immediately press for injunctive relief on the training center issue, but rather, first challenged the termination of its state support grant. This grant was funded at a level which greatly exceeded its training grant. Western Center has already prevailed in its argument that the Corporation illegally withdrew the state support funds. Western Center v. LSC, 592 F.Supp. 338 (1984).

      . The September 1981 grant agreements for the MLRI plaintiffs are attached as exhibits to the affidavits of Gilbert Glover (Executive Director, Legal Services of Arkansas, Inc.) (Ex. 2), Allan Rodgers (Executive Director, Massachusetts Law Reform Institute, Inc.) (Ex. 1), Israel Galindo (Executive Director, Colorado Rural Legal Services, Inc.) (Ex. 1), and Norman Metzger (Executive Director, Legal Services Organization of Indiana, Inc.) (Ex. 2). All of these affidavits were filed on behalf of the plaintiffs on January 19, 1984.
      Western Center's agreement is attached as Exhibit A to the Declaration of Mary Burdick (Executive Director, Western Center), filed Aug. 24, 1984.
      The affidavits, declarations, and depositions filed in this proceeding are referred to by the name of the author and the relevant portion of the document. The title of the author and the date of filing are cited in the initial reference to each document.

      . In this Memorandum Opinion, the four smaller grants are described as the first supplemental grants, while the four larger grants are referred to as the second supplemental grants. The December 1981 grant agreements are attached as exhibits to the affidavits of Glover (Exs. 3, 4), Rodgers (Exs. 2, 3), Galindo (Exs. 2, 3) and Metzger (Exs. 3, 3A).

      . Western Center received a single supplemental grant of $50,000 under the same terms and conditions as the second and larger of the grants received by the MLRI plaintiffs. Burdick Dec., Ex. B.

      . Section 2996e(a)(l)(B) authorizes the Corporation to:
      make such other grants and contracts as are necessary to carry out the purposes and provisions of this title.
      In contrast, section 2996e(a)(3) authorizes the Corporation to:
      undertake ... by grant ... the following activities relating to the delivery of legal assistance [including] (B) training and technical assistance (emphasis added).

      . Both types of grants can be distinguished from grants which cover direct delivery of legal services to eligible clients. See 42 U.S.C. § 2996e(a)(l)(A).

      . Glover Aff., Ex. 5; Rodgers Aff., Ex. 5; Galindo Aff., Ex. 5; Metzger Aff., Ex. 7, Burdick Dec., Ex. D.

      . The third ground — breach of contract — need not be addressed in view of the Court's findings and rulings concerning the relevant federal law.

      . The plaintiffs set forth the basis of these calculations at page 25 of their Memorandum in Support of Summary Judgment, filed Oct. 1, 1984.