author: ROBERT H. HALL, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. ALL THAT TRACT AND PARCEL OF LAND: 2306 NORTH EIFFEL COURT, Defendant.
    Civ. A. C84-456A.
    United States District Court, N.D. Georgia, Atlanta Division.
    Feb. 8, 1985.

      Barbara Y. Tinsley, Asst. U.S. Atty., Atlanta, Ga., for plaintiff.
    Ralph Spain, Travis & Davidson, Atlanta, Ga., for Rowland Lamar Allen and Beulah Allen Powell.
    Thomas E. Prior, McCalla, Raymer, Padrick, Cobb & Nichols, Atlanta, Ga., for Goldome Realty Credit Corp. and Union Nat. Bank of Little Rock.
    Michael J. Egan, William R. Asbell, Jr., R. Michael Robinson, Sutherland, Asbill & Brennan, Atlanta, Ga., for Rowland Allen Mid-Town Contractors & Property Pickup.
   ORDER

ROBERT H. HALL, District Judge.

This is a forfeiture action pursuant to the Drug Abuse Prevention Act, 21 U.S.C. § 801 et seq., in which plaintiff (“the Government”) is seeking to have the defendant property condemned and forfeited on the theory that the property was purchased with proceeds allegedly traceable to an exchange for a controlled substance in violation of the federal drug laws. See 21 U.S.C. § 881(a)(6). Jurisdiction exists pursuant to 28 U.S.C. §§ 1345 and 1355.

Presently pending is the Government’s motion for default judgment.

BACKGROUND

A. Commencement of forfeiture action

The Government initiated this action on March 9, 1984, one day following the seizure of the defendant property by agents of the Drug Enforcement Administration, United States Department of Justice. The seizure was pursuant to a federal indictment returned on March 6, 1984.

All persons known to the Government to have a possible property interest in the defendant property were given personal service of this action on or before April 6, 1984. To notify those who had a possible property interest but were unknown to the Government, the Government posted a notice in the United States Courthouse in Atlanta, Georgia, on March 20, 1984, and published a notice in a newspaper of general circulation in DeKalb County, Georgia, on March 22, 1984. (See Tinsley Verification, motion for default judgment).

B. Noncomplying claimants

Pleadings styled “Claim and Answer” were filed March 27, 1984, by Rowland Lamar Allen and Beulah Allen Powell. The court ultimately granted the Government’s motion to strike the Answers of these claimants finding that the claimants had failed to establish their right to defend this action by the timely filing of verified Claims as defined by Rule C(6) of the Supplemental Rules for Certain Admiralty and Maritime Claims. (See Orders of October 1, 1984, November 9, 1984, and November 15, 1984).

C. Lienholder claimant

On May 29, 1984, Goldome Realty Credit Corporation (“Goldome Realty”) filed a timely, verified Claim asserting a lienholder interest in the defendant property. The Claim was followed by a timely Answer (filed August 9, 1984) to the Government’s forfeiture Complaint which proclaimed Goldome Realty’s lack of knowledge of or consent to the act or omission leading to this forfeiture action and denied that Goldome Realty’s interest in the defendant property was acquired with proceeds traceable to an illegal drug exchange.

Goldome Realty’s interest in the defendant property derives from a first lien security deed to the property acquired by Goldome Realty prior to the equitable interest in the property being purchased with proceeds allegedly traceable to an illegal drug transaction. The security deed secures the payment of a debt in the principal amount of $32,200.00 bearing interest at 8.5% per annum. Payment on the loan has apparently been made through March of 1984.

In addition to filing a Claim to the defendant property and an Answer to the Complaint, Goldome Realty also filed a Petition for Remission with the Attorney General of the United States. See 21 U.S.C. § 881(d) (incorporating the remission provision of the customs forfeiture law, 19 U.S.C. § 1618). Goldome Realty now contends this petition was filed “out of an abundance of caution [and] was not intended as a waiver of [its] right to dispute the Government’s right to forfeiture of Goldome [Realty’s] security deed interest in the property.” (Response of Goldome Realty in opposition to motion for default judgment, pp. 3-4).

The Government has promised Goldome Realty remission equal to its “net equity” in the defendant property if this court condemns and forfeits the property to the Government, “net equity” being defined by the Government as the unpaid principal due Goldome Realty plus interest up to the date remission was granted. See 28 C.F.R. Parts 9.7(c) and 9.2(d). (The remission is to be paid from the proceeds of the sale of the defendant property if the court condemns and forfeits the property to the Government.)

D. Notice of appeal

The Government filed the pending motion for default judgment on October 31, 1984. On November 30, 1984, claimant Beulah Allen Powell, a claimant whose Answer was stricken, filed a notice of appeal mistakenly thinking that the court had granted the Government’s motion for default judgment on November 15, 1984, and that default judgment had been entered by the Clerk on November 27, 1984.

DISCUSSION

A. Jurisdiction as affected by the notice of appeal

The Government contends that this court lacks jurisdiction to decide the pending motion for default judgment because a notice of appeal has been filed. (See supplemental brief of plaintiff filed January 25, 1985).

The court rejects this position. The notice of appeal filed in this case does not divest this court of its jurisdiction as the appeal is taken from nonappealable orders. There has been no “final decision” nor has this court granted permission to file an interlocutory appeal, thus the notice of appeal does not transfer jurisdiction over this case to the court of appeals, 28 U.S.C. §§ 1291 and 1292(b); jurisdiction necessarily remains in this court. See United States v. Hitchmon, 602 F.2d 689 (5th Cir.1979) (en banc) (“the notice of appeal from a nonappealable order does not render void for lack of jurisdiction acts of the trial court taken in the interval between the filing of the notice and the dismissal of the appeal....”). See also McLaughlin v. City of LaGrange, 662 F.2d 1385, 1387 (11th Cir.1981).

B. Motion for default judgment

With its motion for default judgment, the Government seeks a default judgment against the defendant property “as to all persons who could claim any ownership interest in the property.” The Government asserts that it is entitled to default judgment because no party with standing to •contest the Government’s forfeiture has filed a timely Claim and Answer. In the interest of clarity, the court will treat this argument as it respects the “noncomplying claimants” and the “lienholder claimant” separately.

1. Lienholder Claimant

The motion for default judgment as it concerns Goldome Realty is not easily disposed of.

Goldome Realty opposes the motion for default judgment to the extent it pertains to its interest in the defendant property, arguing that it has not defaulted its interest in the property, having filed a timely Claim to the defendant property as well as an Answer asserting a nonforfeitable interest in the property. Goldome Realty does not oppose the granting of a default judgment as to the equitable interest in the defendant property which may have been purchased with proceeds traceable to an illegal drug transaction and for which no timely Claim was filed, but strenuously opposes the entry of a default judgment as to its lienholder interest in the defendant property.

The Government’s response to Goldome Realty’s argument is that the Claim and Answer filed by Goldome Realty are immaterial because a lienholder such as Goldome Realty has no standing to challenge a forfeiture. “A mere security holder,” argues the Government, “must apply for remission of the forfeiture penalty with the Attorney General____[and t]he Attorney General’s discretion in these matters is not subject to judicial review____” (Memorandum in support of motion for default judgment, pp. 2-3).

The Government cites General Finance Corp. of Florida South v. United States, 333 F.2d 681 (5th Cir.1964), for its position that a lienholder has no standing to contest a forfeiture and is restricted to the remission process for relief. In that case, a forfeiture action under 49 U.S.C. § 782 (authorizing seizure and forfeiture of carriers transporting contraband articles), the holder of a security interest in the seized property (a car) intervened and filed a petition for remission. Remission was denied and the court ordered the property forfeited to the United States. The former Fifth Circuit, in affirming the trial court’s judgment condemning the seized property and declaring it forfeited to the United States, stated:

[I]t is well established that only an owner is entitled to set up a lack of forfeiture and to claim a remission or mitigation of that penalty. A mere security-holder, like the present one, must apply for remission of the penalty to the Secretary of the Treasury [now to the Attorney General]____

Id. at 682 (emphasis added).

While not recognizing a right to intervene for Goldome Realty, the Government does urge the court to recognize the interest of the lienholder as established through the remission process in the judgment of forfeiture by directing that Goldome Realty be paid its “net equity” in the defendant property (i.e., the unpaid principal due Goldome Realty plus interest up to the date remission was granted) prior to distribution of the proceeds from sale of the property to the Government.

Despite the clear language of General Finance Corp., Goldome Realty argues that a lienholder has standing to challenge a forfeiture under 21 U.S.C. § 881(a)(6). Goldome Realty’s contention is that a lien-holder should be considered an “owner” for the purposes of § 881(a)(6) in light of the legislative history of the statute.

Indeed, the legislative history of § 881(a)(6) does indicate that Congress intended for the term “owner” in the phrase, “except that no property shall be forfeited ... to the extent of the interest of an [innocent] owner,” to be construed broadly enough to include lienholders. The Joint House-Senate Explanation of Senate Amendment regarding § 881(a)(6) states:

The term “owner” should be broadly interpreted to include any person with a recognizable legal or 'equitable interest in the property seized.

See Congressional Record-Senate, October 7, 1978, page S 17649; Congressional Record-House, October 13, 1978, page H 12792.

The court, in light of the legislative history of § 881(a)(6), must conclude that Goldome Realty, as a lienholder with a security interest in the defendant property, is an “owner” as that term is used in § 881(a)(6), and, therefore, that it has standing to contest this forfeiture action to the extent of its interest in the defendant property. Accord United States v. One Piece of Real Estate, 571 F.Supp. 723, 734 (W.D.Tex.1983) (Recognized that a secured party’s remedy is to file a Claim and challenge a forfeiture proceeding under 21 U.S.C. § 881(a)(6)); United States v. Lot 43 in Block 13 of Eastgate Unit No. 1, No. CV-LV-81-535, HEC (D.Nev. Mar. 29, 1983) (unpublished) (Allowed, without discussion, a secured party to challenge forfeiture of its interest in the seized property).

While historically the exclusive remedy of an innocent lienholder with a secured interest in property forfeited under § 881 and other statutes may have been to petition the Attorney General for return of the property or for a portion of the proceeds from the sale of the property via a petition for remission, see, e.g., General Finance Corp., supra, the legislative history behind the 1978 addition of subsection (a)(6) to § 881 indicates that an innocent lienholder no longer has to rely on executive clemency in a § 881(a)(6) forfeiture but may intervene to prevent the forfeiture of its interest. One Piece of Real Estate, supra, 571 F.Supp. at 724.

Because a party with standing has filed a timely Claim and Answer, this forfeiture action is not in default with respect to that claimant’s interest in the defendant property; the defense of that claimant must be considered.

2. Noncomplying Claimants

Having previously found that claimants Rowland Lamar Allen and Beulah Allen Powell did not file timely Claims to the defendant property, the court agrees with the Government that these parties have lost their right to contest the condemnation and forfeiture of the defendant property. However, the court does not enter default judgment for the Government as to the property interest which these claimants allegedly held (i.e., declare that interest forfeited to the Government) in light of the lienholder interest which is not in default; the two property interests are so intertwined that the court cannot enter a “default judgment” as to one without effectively entering a forfeiture judgment as to the other. The court prefers to make the substantive determination of forfeiture separately. See discussion infra.

C. Forfeiture determination under 21 U.S.C. § 881(a)(6)

There being no dispute that Goldome Realty is an innocent lienholder (and by this Order, innocent owner) of the defendant property, and the parties having already briefed the extent to which Goldome Realty’s innocent interest is protected in forfeiture, the court goes forward with the determination of whether the defendant property is forfeitable to the United States and, if so, to what extent.

Section 881(a)(6), in pertinent part, provides:

all proceeds traceable to [an illegal drug transaction] [shall be subject to forfeiture to the United States] ... except that no property shall be forfeited ... to the extent of the interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner.

21 U.S.C. § 881(a)(6) (Emphasis added). Goldome Realty has stated in effect that it does not oppose a condemnation and forfeiture of the equitable interest in the defendant property as long as its lienholder interest is fully protected. The court, then, is confronted with two questions: what is the nonforfeitable interest which Goldome Realty had in the defendant property at the time of the seizure and how can this interest be protected if the remaining ownership interest in the property is forfeited?

Upon considering the arguments presented by both the Government and Goldome Realty, and considering the relevant authority, the court concludes that the nonforfeitable ownership interest which Goldome Realty had in the defendant property at the time of the seizure was the unpaid principal due on the promissory note underlying the security deed plus interest at 8.5% per annum until the principal is paid back. Accord United States v. Lot 43 in Block 13 of Eastgate Unit No. 1, supra. Contra One Piece of Real Estate, supra, 571 F.Supp. at 725.

Further, the court concludes that this interest can be protected in forfeiture of the remaining property interest, but only if the Government sells the property subject to the security deed, or, upon selling the property, pays Goldome Realty the balance of the principal due on the promissory note plus interest on that principal up to the date the principal is paid back.

In so concluding the court necessarily rejects the Government’s position that Goldome Realty’s lienholder interest is protected by paying it its “net equity” (i.e., principal plus interest up to the date remission is granted) as provided in the Code of Federal Regulations. See Footnote 5, supra. The court does not find that granting to Goldome Realty its “net equity” would adequately protect this innocent lienholder as mandated by § 881(a)(6). To the extent that the Regulations governing remission are applicable,

[a] regulation, promulgated by an agency, cannot control the interpretation of a statute. Although [this court] may give deference to an agency’s construction of a statute, it is the court, and not the agency, that has ultimate responsibility to construe Congress’s language.

United States v. Sarmiento, 750 F.2d 1506, at 1507 (11th Cir.1985), citing Frank Diehl Farms v. Secretary of Labor, 696 F.2d 1325 (11th Cir.1983). In this case, the court rejects the Government’s interpretation of the protection of lienholders afforded by § 881(a)(6), finding it contrary to the language and intent of that statute.

Having determined Goldome Realty’s nonforfeitable interest, and the way this interest can be protected, and further assuming the Government still wants the court to order the equitable interest in the defendant property forfeited on the terms set by the court, the court ORDERS that:

a. the equitable interest in the defendant property is condemned and forfeited to the United States of America;
b. the defendant property is to be disposed of by the United States Marshals Service according to law, either selling the property subject to Goldome Realty’s security deed or selling the property free of the security deed for a value sufficient to cover the principal and interest due Goldome Realty;
c. the Marshals Service shall recover from the value of the property its costs incurred in this proceeding and ' in disposing of the property; if the property is not sold subject to Goldome Realty’s security deed, the balance of the proceeds shall be first applied toward payment to Goldome Realty the balance of the principal due on the promissory note underlying the first lien security deed to the defendant property plus interest due on that principal at the time the principal is paid off; the remainder of the funds shall be deposited into the Treasury of the United States in accordance with the policies and procedures established in and for the National Asset Seizure and Forfeiture Program of the Department of Justice.

CONCLUSION

In sum, the court:

(1) DENIES the Government’s motion for default judgment; and

(2) CONDEMNS and FORFEITS the equitable interest in the defendant property to the United States of America; ORDERS the defendant property be disposed of according to law and the proceeds distributed as outlined above.

      . For the related criminal prosecution, see United States v. Rowland Lamar Allen, et al, No. CR84-66-A (N.D.Ga.).

      . The Government does not dispute Goldome Realty’s assertion that its Claim and Answer were timely.

      . The security deed, dated October 24, 1977, was originally executed by Scott Hudgens Mortgage, Inc., as grantee, and Randy R. Wimes, as grant- or. (Wimes owned the defendant property at that time.) The security deed was subsequently transferred to New York Bank for Savings, which then merged with Goldome Realty. The interest in the property formerly held by Wimes was then acquired by Property Pick-Up, Inc.; it is this purchase which the Government claims was made with proceeds traceable to an illegal drug exchange.

      . While Goldome Realty is the owner and holder of the Security deed to the defendant property, the underlying loan is serviced for Goldome Realty by Union National Bank of Little Rock.

      . The Regulations “designed to reflect the intent of Congress relative to the remission or mitigation of forfeiture of certain property as set out in [19 U.S.C. § 1618]....”, 28 C.F.R. Part 9, provide, in pertinent part, as follows:
      In th[e] event [that a lienholder elects to permit the forfeiture action to proceed to judgment], the court shall be advised that the [Attorney General] has allowed the petition for remission of the forfeiture and shall be requested to order the property sold by the U.S. Marshal at public sale and the proceeds thereof to be distributed as follows:
      (1) Payment to the petitioner [the lienholder] of an amount equal to his net equity if the proceeds are sufficient or the net proceeds otherwise, after deducting from the petitioner’s interest an amount equal to the Government’s costs and expenses incident to the seizure, forfeiture and sale.....
      28 C.F.R. Part 9.7(c) (Emphasis added). "Net equity” is defined in the Regulations as "the actual interest a petitioner has in the property seized for forfeiture at the time a petition for remission or mitigation of forfeiture is granted [making no allowances for unearned interest].” 28 C.F.R. Part 9.2(d).
      The Government interprets the Regulations to mean that a lienholder such as Goldome Realty is only entitled upon forfeiture of the secured property to its unpaid principal and interest up to the time the petition for remission was granted.

      . Claimant Powell’s confusion is somewhat understandable considering that the Government’s motions for default judgment in related forfeiture actions (see Civil Action Nos. C84-448A; C84-450A through 455A; C84-458A through 460A; C84-462A; C84-466A; C84-469A; C84528A; C84-529A; C84-1047A through 1049A) were granted on November 15, 1984, and default judgments entered in those cases on November 27, 1984.

      . Whether or not Goldome Realty’s Claim and Answer preclude the entry of default judgment in this forfeiture action turns on whether a lienholder such as Goldome Realty has standing to intervene and defend a forfeiture action. "[A] party seeking to challenge a forfeiture of money or property used in violation of federal law ... must first demonstrate an interest in the seized item sufficient to satisfy the court of its standing to contest the forfeiture.” United States v. $364,960.00 in United States Currency, 661 F.2d 319, 326 (5th Cir.1981) (Unit B). See also United States v. Currency Totalling $48,-318.08, 609 F.2d 210 (5th Cir.1980).

      . The principle that a claimant must own the seized property in order to challenge a forfeiture has been repeated by other courts. See, e.g., United States v. One 1945 Douglas C-54 (DC-4) Aircraft, 604 F.2d 27, 28 (8th Cir.1979) ("It is the owner or owners of the res who have standing to challenge a forfeiture.... Broadly speaking, ownership may be defined as having a possessory interest in the res, with its attendant characteristics of dominion and control.”), on appeal after remand, 647 F.2d 864, 866 (8th Cir.1981), cert. denied sub nom., Stumpff v. United States, 454 U.S. 1143, 102 S.Ct. 1002, 71 L.Ed.2d 294 (1982); United States v. One 1981 Datson 280ZX, 563 F.Supp. 470, 474 (E.D.Pa.1983) (“In order to challenge a forfeiture, the claimant must own the res.... Courts generally look to indicia of dominion and control such as possession, title and financial stake.’’). But see United States v. One 1961 Cadillac Hardtop Automobile, 207 F.Supp. 693, 698 (E.D.Tenn.1962) ("[T]he right to intervene in a judicial proceeding for the determination of issues relating to forfeitures for narcotics violations extends to any person or party having a legally recognized interest in the [property seized], whether he is owner or lienholder, and whether that interest is legal or equitable in nature.”); United States v. One 1951 Cadillac Coupe de Ville, 108 F.Supp. 286 (W.D.Pa.1952) (Chattel mortgagee allowed to file answer to forfeiture action).

      . The One Piece of Real Estate court even observed that "[t]he Attorney General now rejects petitions for remissions or mitigation filed in [§ 881(a)(6) ] cases as improvidently filed.” 571 F.Supp. at 725.

      . Goldome Realty argues that its lienholder interest is nonforfeitable because it was not purchased with proceeds of an illegal drug transaction, pointing out that the alleged drug trafficker acquired only an equitable interest in the property not the fee simple title held by Goldome Realty. Rather than reach this argument, the court prefers to rest on the simpler theory that Goldome Realty’s interest is nonforfeitable because of its undisputed innocence.

      . This court declines to adopt the reasoning of the District Court for the Western District of Texas in One Piece of Real Estate regarding the interest of an innocent lienholder which is protected under § 881(a)(6). In that case, the court held that a lienholder is entitled to the remainder of the principal owed and unpaid interest up to the date of seizure, but not interest or other charges that accrue after the date of seizure. 571 F.Supp. at 725. The court reasoned that to allow a lienholder to collect interest which accrues on the principal after the date of seizure would be contrary to the Supreme Court’s holding in United States v. Stowell, 133 U.S. 1, 10 S.Ct. 244, 33 L.Ed. 555 (1890), that the government’s forfeited interest is fixed as of the date of the illegal act. Id.

      This court does not follow the Texas court, finding that court’s application of Stowell erroneous. As this court reads Stowell, that case does not prohibit allowing an innocent lienholder to recover interest on a loan up to the date the principal is paid off when the secured property is forfeited. The lienholder’s property interest at the time of the seizure amounts to the unpaid principal and interest on the principal until the principal is fully paid (the “loan interest”); the government’s forfeited interest is the equitable interest which remains. Contrary to what the Texas court suggests, the lienholder’s property interest does not grow at the expense of the government’s forfeited interest by allowing the lienholder to recover the loan interest to which it was entitled all along. (Perhaps the Texas court confused the distinction between the two types of "interest.”)

      . The court questions whether the administrative remission process is even applicable to this action considering that the court has determined Goldome Realty's interest nonforfeitable. Remission is only applicable to mitigate the harshness caused by forfeiture.


source: Caselaw Access Project

author: MILTON POLLACK, Senior District Judge.

license: Public Domain

text:
    ARROW AIR, INC., Plaintiff, v. The PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Defendant.
    No. 85 Civ. 0037 (MP).
    United States District Court, S.D. New York.
    Feb. 11, 1985.

      Butler, Fitzgerald & Potter, by Thomas A. Butler, David G. Samuels, Michael G. O’Neill, New York City, for plaintiff.
    Patrick J. Falvey, Milton A. Pachter, Arthur Berg, Jay Selcov., The Port Authority of N.Y. and N.J., New York City, for defendant.
   DECISION AND OPINION

MILTON POLLACK, Senior District Judge.

Plaintiff, Arrow Air, Inc. (Arrow), a diversified passenger and cargo air carrier incorporated in 1981, seeks to enjoin The Port Authority of New York and New Jersey (Port Authority), the owner and operator of John F. Kennedy Airport (JFK), from enforcing its noise level restrictions which became effective on January 1, 1985, and which prevent Arrow from using DC-8 (60 series) equipment, referred to as Stage 1 aircraft, at JFK, since they do not comply with those noise restrictions. Federal noise restrictions similarly prevent using such equipment, effective January 1, 1985. However, the Federal Aviation Administration (FAA) on an application by Arrow, filed on August 2, 1984, granted Arrow, at the last minute, a limited exemption on December 28, 1984, until July 31, 1985, from the operation of the federal restrictions. The Port Authority has refused to grant a similar exemption from the noise requirement applicable to JFK to Arrow. Arrow sues for relief from the Port Authority’s refusal to grant an exemption similar to the federal exemption.

Jurisdiction is based upon diversity of citizenship, 28 U.S.C. § 1332, and federal question, 28 U.S.C. § 1331.

The suit was tried at a Bench trial. In conformity with Fed.R.Civ.P. 65(a)(2), the Court, at the commencement of the hearing on plaintiff’s application for a preliminary injunction, ordered the trial on the merits to be advanced and consolidated with the hearing on the preliminary injunction.

For the reasons shown hereafter, the injunction sought will be denied and the plaintiff’s amended complaint will be dismissed.

I. Regulatory Framework

Arrow intends to fly a DC-8 (60 series), Stage 1, aircraft from JFK to Borinquen, Puerto Rico daily, and from JFK to Georgetown, Guyana twice a week. The DC-8 (60 series) aircraft does not comply with either federal or Port Authority noise standards, both effective January 1, 1985, which require muted Stage 2 or 3 aircraft.

Under the Federal Compliance Program promulgated by the FAA in December 1976, air carriers were required to phaseout and replace all their noisier and older aircraft by January 1, 1985. The FAA established a phased-in compliance schedule by grouping aircraft by noise characteristics; it termed these groupings “stages.” Stage 1 aircraft are the oldest and noisiest equipment such as the Boeing 707 and the DC-8 (60 series). Stage 2 aircraft, which include the Boeing 747, are newer and somewhat quieter than the Stage 1 aircraft. Stage 3 aircraft are the most technically advanced and quietest aircraft, such as the Boeing 757, the Boeing 767, and the A-300. See 14 C.F.R. § 36.7. By January 1, 1985, all Stage 1 aircraft were to be replaced by Stage 2 or Stage 3 aircraft. See 14 C.F.R. § 91.303.

The Port Authority enacted a new Aircraft Noise Abatement Program on April 7, 1982. That program, like the FAA’s, provided for phased-in compliance. The Port Authority’s program consisted of an Interim Rule (520/0-00), a Nighttime Rule (530/0-00) (not questioned herein), and a Final Rule (540-0-00).

The Interim Rule, which took effect on March 7, 1984 following a legal challenge, required air carriers to operate 75% of their 4-engine aircraft movements with noise compliant equipment, i.e., with Stage 2 or Stage 3 equipment, or with any aircraft which is quieter than the noisiest Stage 2 aircraft operating at a particular Port Authority airport.

The Interim Rule also provided for a future owner’s exemption (560/0-04) under which the Port Authority would treat a carrier’s Stage 1 aircraft movements as Stage 2, where that carrier contracted with the Port Authority to utilize a Stage 3 aircraft at the Port Authority airports by January 1, 1985, and also had a lease or purchase agreement demonstrating that it would, in fact, have a Stage 3 aircraft by that date. The Port Authority’s Final Rule, which took effect on January 1,1985, provides that only noise compliant equipment can operate at the Port Authority’s airports. On December 13, 1984, the Port Authority’s Board of Commissioners enacted an exemption from compliance with the Final Rule for those carriers which could demonstrate that an exemption was necessary on the grounds of national security and foreign relations. Arrow does not qualify for such an exemption; it has not satisfied the conditions therefor.

II. The Equities

Arrow began its operations in 1981, five years after the FAA promulgated the Fleet Compliance Program and about a year before the Port Authority enacted its amended Noise Abatement Program. Arrow has concentrated on leasing noncompliant aircraft. In fact, as of the date of the trial, only two DC-10s in Arrow’s fleet comply with the federal and Port Authority noise standards; and its nine DC-8s (60 series) are noncompliant aircraft. Prior to January 1, 1985, compliant aircraft have been available in the market for lease or purchase. .

Pursuant to a contractual agreement entered into by Arrow with the Port Authority on March 7, 1984, Arrow was granted a future owner’s exemption from the Port Authority’s Interim and Nighttime Rules, and permitted to conduct its operations at JFK and Newark International Airports with Stage 1 aircraft, and have those aircraft treated as Stage 2 aircraft, provided that it would lease, in accordance with two existing aircraft leases between Arrow and its affiliate, International Air Leases, Inc. (IAL), in December 1984, a DC-8-73 CF aircraft (a re-engined DC-8-63) U.S. Registration No. N6161A, and a DC-10 aircraft, U.S. Registration No. N917C1, and immediately upon delivery place such aircraft in service at JFK and Newark Airports. In that future owner’s exemption contract, Arrow also agreed to “comply with all other applicable provisions of the Port Authority’s Interim, Nighttime, and Final Rules.”

Arrow has not re-engined the specified DC-8 aircraft, No. N6161A, and the specified DC-10 aircraft is no longer in Arrow’s fleet. Instead of having No. N6161A re-engined, Arrow scheduled this aircraft to be “Hush Kitted” by the Nacelle Corporation.

Arrow planned to install so-called Hush Kits on its noncompliant Stage 1 aircraft to make them compliant by January 1, 1985. Arrow contracted, on October 15, 1984, with the Nacelle Corporation, a company 50% owned by George Batchelor, Chairman of Arrow’s Board of Directors, for ten Hush Kits for its DC-8 (60 series) aircraft. However, technology for the Hush Kits to quiet the noise from the DC-8 (60 series) simply did not develop in time, ostensibly because of strike difficulties. As of this date, the FAA has not certified any Hush Kits, albeit that Arrow believes that the technology therefor will be available to it by July 31,1985, and that it will be successful. Arrow suggests that it did not learn, until November 1984, that the Hush Kit technology would be unavailable. However, the record indicates that on August 2, 1984, fully three months earlier, Arrow had applied to the FAA for an exemption from the January 1,1985 deadline for compliance with the federal requirements. Arrow asserted therein that it would be unable to install the Hush Kits by the January 1, 1985 deadline.

During most of 1984, Arrow had under lease from IAL, its affiliate, a compliant DC-8 (70 series) aircraft. Arrow and IAL are corporate members of the Batchelor group, so-called. George Batchelor is the Chairman of the Board of Arrow and owns 100% of IAL. The plane was sold by IAL in October, 1984, under a contract made earlier for a price of $20-$22 million, leaving Arrow without any compliant DC-8s.

Since it started operations, Arrow has been able to purchase noncompliant DC-8 (60 series) aircraft at a discount rate price of $5 million; a compliant DC-8 (70 series) aircraft costs $20-$22 million on the open market, while it costs $18 million to re-engine a DC-8 (60 series) aircraft into a DC-8 (70 series) aircraft. A DC-8 (60 series) costs $90,000 a month to lease, whereas a DC-8 (70 series) aircraft costs $240,000 per month to lease. Even after it became apparent that Hush Kits would be unavailable timely, Arrow made no effort to look for compliant aircraft. IAL’s Director of Sales and Marketing admitted in his testimony that in November, 1984, a compliant B-727-200 cost $8-$9 million, and that such equipment could have been acquired.

Arrow claims that it cannot possibly compete on the Georgetown and Borinquen routes unless it can use the Port Authority’s facilities in New York, and that it would be uneconomical to operate from JFK with the more expensive noise compliant equipment. However, Guyana Airways, Arrow’s competitor on the Guyana route, operates its flights from JFK to Georgetown fully with noise compliant aircraft and charges the same price for its Georgetown service as Arrow. Arrow estimates that the cost of operating a DC-8-73 versus a DC-8-63, is $21 per seat on a 100% load.

If Arrow operated a DC-8-73 aircraft to Borinquen, its prices would be “pretty close” to what is being charged to Puerto Rico by other airlines, even though the other airlines have noise compliant equipment.

The Port Authority, in the past, has been sued for damage by the communities around JFK and the freight and expense of defending such suits is a factor that the Port Authority properly takes into consideration in adhering to the noise control enactment. The enforcement of the Port Authority noise rules and the future owner’s exemption program have led to a decrease in noise at Port Authority airports as of January 1, 1985, due to the introduction of Stage 3 aircraft. The evidence fails to establish that the Port Authority’s Final Noise Rule will cause any irreparable harm to Arrow. It is conceded by Arrow that Georgetown is a very low budget operation, even with noncompliant equipment. The Port Authority contends, with considerable support, and Arrow disputes, that a DC-8 (70 series) aircraft is suitable for operation to Guyana and to Borenquin, Puerto Rico.

Even though Arrow applied for an FAA exemption in August, 1984, it made no similar request to the Port Authority until December 31,1984 in the afternoon before the long-awaited and expected date of compliance. Indeed, it attempted, and failed to obtain, a Temporary Restraining Order against the Port Authority from Judge Sofaer on December 31, 1984; that attempt was rejected as dilatory and wanting in equity. The equities do not favor imposing on the Port Authority and surrounding communities a further extension of the airport’s operating rules for noise control.

III. Preemption

The Second Circuit has repeatedly affirmed the Port Authority’s “power and ... responsibility to establish fair, evenhanded and nondiscriminatory regulations designed to abate the effect of airplane noise on surrounding communities.” British Airways Board v. Port Authority, 564 F.2d 1002, 1004 (2d Cir.1977) (“Concorde II”). See also Global Int’l Airways Corp. v. Port Authorities, 731 F.2d 127, 130 (2d Cir.1984) (“Global II”); Global Int’l Airways Corp. v. Port Authority, 727 F.2d 246 (2d Cir.1984) (“Global I”); British Airways Bd. v. Port Authority, 558 F.2d 75, 84 (2d Cir.1977) (“Concorde I”).

Contrary to Arrow’s assertion, nothing in City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624, 93 S.Ct. 1854, 36 L.Ed.2d 547 (1973), casts any doubt on the authority of an airport proprietor to regulate aircraft noise. In City of Burbank, the Supreme Court held only that a municipality, using its police powers, could not limit the time in which aircraft can takeoff and land. Id. at 635-36 n. 14, 93 S.Ct. at 1861 n. 14. The Court said, “We do not consider here what limits, if any, apply to a municipality as a proprietor.” Id. In fact, the Court noted that the Senate Report and a letter from the Secretary of Transportation said that airport owners acting as proprietors could continue to “deny the use of their airports on the basis of noise considerations so long as such exclusion is non-discriminatory.” Id.

Plaintiff’s argument that the Aviation Safety Noise Abatement Act of 1979 (“ASNA”), Pub.L. 96-193, 94 Stat. 50 (codified as amended at 49 U.S.C. §§ 2101-2125), limits airport proprietors’ rights to promulgate noise regulations, overshoots the mark. “The legislative history of ASNA indicates that it was not intended to alter the existing allocation of powers between the federal government and airport proprietors. S.Rep. No. 52, 96th Cong., 2d Sess. 13, reprinted in 1980 U.S.Code Cong. & Ad.News 89, 91-92, 117.” Global I, 727 F.2d at 249.

Moreover, in Global I and Global II, which were decided well after the enactment of the ASNA, the Second Circuit specifically reaffirmed the right of “airport proprietors to establish requirements as to the levels of permissible noise created by aircraft using their airports. This power includes the right to deny use of airports to aircraft on the basis of nondiscriminatory criteria.” Global I, 727 F.2d at 248.

In Global I, the Second Circuit upheld the facial validity of the Port Authority’s Interim Rule against preemption attacks. As mentioned, the Interim Rule required air carriers to perform 75% of their 4-en-gine movements with Stage 2 or Stage 3 aircraft, whereas the FAA rule required only that 50% of an air carrier’s 4 engine aircraft be Stage 2 or Stage 3 aircraft. Id. at 249. The court said, “The federal policy reflected by the Fleet Compliance Program is a measured change in fleet composition in the direction of noise reduction. Local regulations of noise levels which deter a carrier from purchasing and introducing Stage 1 aircraft into its fleet are not an ‘obstacle to the accomplishment’ of that program.” Id. at 252.

The Port Authority’s Final Rule does not “stand[] as an obstacle to the accomplishment and execution of ‘an established federal policy.’ ” Id. at 248, quoting, Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941). In granting the exemption to Arrow, the FAA said, “The goal of the FAA noise rule, as well as the ASNA, is to reduce the adverse effects of aviation noise on the public. It has been the intent of the FAA to implement the rule, while, if possible, attempting to avoid disrupting any significant segment of the aviation industry.”

The FAA granted the exemption to Arrow because it was concerned that, without an exemption, Arrow would have to curtail most of its flights to San Juan, Puerto Rico. Arrow has seven flights weekly to San Juan from JFK, five flights weekly from Miami, five flights weekly from Philadelphia, two flights weekly from Montreal, and two flights weekly from Toronto. The FAA noted that Arrow is “the third largest air carrier serving San Juan” and such service “constitute[s] a major source of its revenue.”

The Port Authority has not curtailed any of Arrow’s flights from JFK to San Juan since Arrow operates DC-10s on that route. It chooses not to operate DC-10s to Borinquen and Georgetown; neither of those routes were mentioned in the FAA exemption. Arrow continues to operate the rest of its service to San Juan from numerous points of departure.

The Port Authority’s Final Rule does not impede the FAA’s purpose in granting Arrow an exemption, namely to permit Arrow to fly to San Juan. Moreover, the Final Rule reenforces the ASNA and Fleet Compliance Program’s general policy of requiring air carriers to fly quiet, noise compliant aircraft by January 1, 1985 and thereafter.

IV. Reasonable and Nondiscriminatory

Since the Port Authority’s Final Rule is not preempted, the Court must determine whether it is being administered in a discriminatory manner. See Global I, 727 F.2d at 248. Arrow contends that the regulation is being administered in a discriminatory manner because the Port Authority permits Icelandair to fly noncompliant DC-8 (60 series) aircraft into JFK and allows other air carriers to land noncompliant BAC Ills, Boeing 737s, and DC-9s in Port Authority airports.

When local economic regulation is challenged as being discriminatory the court “presume[s] the constitutionality of the statutory discriminations and require[s] only that the classification challenged be rationally related to a legitimate state interest.” City of New Orleans v. Duke, 427 U.S. 297, 303, 96 S.Ct. 2513, 2517, 49 L.Ed.2d 511 (1976).

The Port Authority has so far authorized only one exemption to its Final Rule, and that was granted at the express request of the United States Department of State because of international policy considerations. Acting Secretary of State Van Dam requested that Icelandair be granted an exemption since it provides the only direct service between Iceland and the United States. Mr. Van Dam wrote, “This service is of significant strategic importance to the U.S. in light of the existence of military installations and equipment of the United States located in Iceland.”

Before granting any exemption to Icelandair, the Board of Commissioners of the Port Authority promulgated a rule of general applicability. Air carriers to foreign destinations may continue to operate non-compliant aircraft until November 30,1985, if they satisfy four criteria: 1) The carrier must provide the sole scheduled passenger service between New York and a foreign country with New York being the primary service to the United States; 2) The FAA must have exempted the carrier from the federal noise regulations; 3) The United States Department of State must request in writing that the Port Authority grant an exemption based on “foreign relations and national security” grounds and the unique situation of the airline; and, 4) The carrier must enter into an agreement with the Port Authority, providing among other things, that it will obtain and utilize any conforming aircraft in its fleet at JFK to the extent such aircraft can reasonably be used for such service. The Port Authority’s Deputy Director of Aviation, Mr. Sloane, testified that it is possible for other carriers to meet the exemption’s requirements.

The Port Authority gave Icelandair a limited exemption until November 30, 1985, to fly 2 DC-8 (60 series) aircraft into JFK. In consideration for the limited exemption, Icelandair agreed to employ a compliant DC-8-71 for at least 50% of its operations at JFK during the period of the Agreement.

Arrow, by contrast, is not the only air carrier operating from JFK to Georgetown. Guyana Airways operates from New York to Georgetown with only one stop and takes only IV2 hours longer than Arrow. The JFK-Borinquen service is a domestic operation and Arrow is not the only air carrier servicing Puerto Rico. There has been no showing that any of Arrow’s transportation is necessary for our national security, and the State Department has not requested a Port Authority exemption for Arrow, although Arrow has requested a letter similar to that written for Icelandair.

The Port Authority authorized the Icelandair exemption because the Secretary of State said that it was necessary for national security. The Port Authority made a distinction based on a reasonable classification to give exemptions only when the air carrier could show that the exemption was in the national interest.

Arrow contends that the Port Authority also discriminates by permitting noncompliant 2-engine BAC Ills, Boeing 737s, and DC-9s, to land and takeoff from JFK, Newark, and LaGuardia, but not allowing noncompliant 4-engine DC-8 (60 series) aircraft to have similar access. A Port Authority regulation permits an aircraft to come into a Port Authority airport if it is quieter than the noisiest federally certified aircraft. Federal Aviation Regulation, 14 C.F.R. Part 36.

A qualified expert explained that the FAA Advisory Circular on aircraft noise shows that the BAC 111, Boeing 737, and DC-9 aircraft are quieter than the DC-8 (60 series) aircraft on takeoffs and landings. The FAA Circular is accepted in the industry and trade. For example, the DC-8 (60 series) aircraft is about 13-14 decibels louder than the BAC 111, which means that it is “about two to three times as loud from a cumulative noise point of view____ [A]bout 20 BAC 111 takeoffs would have the same cumulative noise as one DC-8-62, or 63.”

Arrow contends that the FAA Advisory Circular assumes that an aircraft will cutback on thrust at takeoffs. If the BAC 111 uses full thrust, then it will emit a higher noise level. The Port Authority permits the pilot to use full thrust in emergency situations, but the airline must follow up with a satisfactory reason for the pilot’s decision. If the airline’s reason is not satisfactory, the Port Authority keeps “after them and they change their procedure so they can conform.”

The Port Authority’s rule reasonably permits certain 2-engine aircraft to continue operating since they are quieter than the noisiest Stage 2 aircraft operating at JFK. The Port Authority has established reasonable procedures to make sure that aircraft shall conform to the noise requirements.

V. Commerce Clause

Arrow urges that the Port Authority’s regulation violates the Commerce Clause because it imposes an undue burden on commerce.

“Evenhanded local regulation to effectuate a legitimate local public interest is valid unless preempted by federal action, [citations omitted], or unduly burdensome on maritime activities or interstate commerce.” Huran Portland Cement Co. v. City of Detroit, 362 U.S. 440, 443, 80 S.Ct. 813, 815-16, 4 L.Ed.2d 852 (1960).

Arrow points out that it is the only non-stop U.S. flag service from JFK to Georgetown and Borinquen. However, since Guyana Airways provides comparable service to Georgetown at the same charge, interstate commerce is not unduly burdened. Similarly, numerous air carriers fly to San Juan, Puerto Rico from JFK. Aircraft regularly fly between San Juan and Borinquen. Arrow urges that the Governor of Puerto Ri<?o estimated that 1000 jobs would be lost if Arrow stopped flying into San Juan and Borinquen. But the Governor was speaking about the effect on the Puerto Rican economy if Arrow stopped flying into both San Juan and Borinquen from numerous points of departure. He did not make any estimates of the effect of the loss of one DC-8 flight daily into Borinquen.

Since January 1, 1985, Arrow has been able to fly to Borinquen and Georgetown from Philadelphia and Stewart Airports. It has also subleased aircraft from two other airlines for its Borinquen route. Arrow complains that it probably cannot continue service to Georgetown from these airports because the State Department has only designated JFK as the point of departure in Arrow’s permit to serve an international route. However, Arrow’s President Murray acknowledged that Arrow has not tried to change its State Department designation.

Arrow urges that the noise regulation will alter its market and cause it economic harm. Arrow earns $10 million annually of which only $4 million comes from its numerous scheduled passenger flights. Although Arrow’s President Murray was unable to testify as to the fraction the Georgetown and Borinquen flights contribute to the $4 million in passenger revenue, he did testify that the Georgetown route has a low yield, even with noncompliant equipment.

If a regulation is otherwise valid under the Commerce Clause it is not rendered invalid simply because an operator has to change its market structure. In Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 127, 98 S.Ct. 2207, 2214, 57 L.Ed.2d 91 (1978), the Supreme Court rejected the “notion that the Commerce Clause protects the particular structure or method of operation in a retail market.” In Exxon, the Supreme Court upheld a Maryland statute which prohibited producers or refiners from operating retail service stations within Maryland, even though “the consuming public will be injured by the loss of high-volume, low priced stations.” Id. at 128, 98 S.Ct. at 2215.

This case is quite different from Raymond Motor Transportation, Inc. v. Rice, 434 U.S. 429, 98 S.Ct. 787, 54 L.Ed.2d 664 (1978), Bibb v. Navajo Freight Lines Inc., 359 U.S. 520, 79 S.Ct. 962, 3 L.Ed.2d 1003 (1959), and Hunt v. Washington State Apple Advertising Comm’n, 432 U.S. 333, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977), on which Arrow relies. In Raymond Motor, the Supreme Court struck down a state safety regulation which simply could not be justified on safety grounds because it did not “contribute to highway safety.” Raymond Motor, 434 U.S. at 444, 98 S.Ct. at 795. In Navajo Freight Lines, the Supreme Court struck down a questionable safety regulation because of its “clear burden on commerce.” Navajo Freight Lines, 359 U.S. at 530, 79 S.Ct. at 968. In Washington State Apple Advertising Comm’n, the Supreme Court struck down North Carolina regulations which constituted an unjustifiable preference to local producers.

The scientific data behind the ASNA, Fleet Compliance Program, and Final Rule make it clear that the Stage 1 aircraft used by Arrow are unquestionably noisier than either Stage 2 or Stage 3 aircraft. The Port Authority is pursuing an important local interest in “protecting the local populace from airport noise.” Concorde II, 564 F.2d 1010. Any affects on interstate commerce from the fact that Arrow Air cannot obtain an exemption from the Final Rule “are only incidental.” Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174 (1970). There is no claim of local preference.

Even if the Port Authority’s Final Rule had more than an incidental effect on interstate commerce, the Court would uphold it. “Where state or local government action is specifically authorized by Congress, it is not subject to the Commerce Clause even if it interferes with interstate commerce.” White v. Massachusetts Council of Construction Employers, Inc., 460 U.S. 204, 213, 103 S.Ct. 1042, 1047, 75 L.Ed.2d 1 (1983).

“[I]t is manifest from our scheme of aviation management that Congress has consciously committed to airport owners the responsibility for determining the permissible levels of noise for the facility and its environs.” Concorde I, 558 F.2d at 83 n. 2. So long as the “local action ... advances and is consistent with federal policy,” id. at 84-85, the airport proprietor can regulate the noise levels.

VI. Conclusion

Here, as in the Concorde and Global litigations, Congress has authorized airport proprietors to enact reasonable, nondiscriminatory noise regulations. The Port Authority’s Final Rule fully meets these criteria and any affect on commerce is both incidental and authorized by Congress.

The foregoing shall constitute the findings of fact and the conclusions of law pursuant to Fed.R.Civ.P. 52(a).

The complaint is dismissed, with costs. So Ordered.


author: WARREN, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. Curtis L. WILKS, Defendant.
    No. 84-CR-11.
    United States District Court, E.D. Wisconsin.
    Feb. 11, 1985.

      Jan Kearney, Asst. U.S. Atty., Milwaukee, Wis., for plaintiff.
    Louis B. Aderman, Milwaukee, Wis., for defendant.
   DECISION AND ORDER

WARREN, District Judge.

Presently before the Court in this matter is the defendant’s petition to vacate, set aside, or correct his sentence pursuant to 28 U.S.C. § 2255, the habeas corpus statute for prisoners in federal custody. Consistent with the Court’s scheduling order of August 16, 1984, the motion has been briefed and is now ripe for resolution.

The Court, having reviewed the parties’ motion papers and carefully considered their respective arguments, concludes, for the reasons stated below, that the motion must be denied.

BACKGROUND

On December 8, 1983, a criminal complaint and warrant were issued in this case, charging that on December 2, 1983, the defendant, Curtis Lee Wilks, took $8,201.00 from the M & I Northern Bank, 3536 West Fond du Lac Avenue, Milwaukee, Wisconsin, and, in so doing, assaulted the teller and put her life in jeopardy by the use of a dangerous weapon, all in violation of 18 U.S.C. § 2113(a) & (d). A one-count criminal indictment on the same charge was issued on January 17, 1984.

A three-day jury trial was held before this Court in March of 1984, throughout which the defendant was represented by Attorney Louis B. Aderman. The Government was represented by Assistant United States Attorney Jan E. Kearney. On March 30, 1984, the jury returned a verdict of guilty, and the defendant was so adjudged.

On May 16, 1984, the Court held a hearing for the purpose of sentencing the defendant. As before, Attorney Aderman appeared for the defendant and Assistant United States Attorney Jan E. Kearney appeared on behalf of the United States. The Court, pursuant to its well-established procedure, permitted the defendant and Attorneys Aderman and Kearney to make statements with respect to the proper sentencing disposition. Based on their remarks and it own consideration of the presentence report and the nature of the subject crime, the Court sentenced the defendant to ten (10) years in the custody of the Attorney General or his authorized representative. The Court noted that the sentence was imposed pursuant to 18 U.S.C. § 4205(b)(2). See Transcript of Proceedings at 12 (May 16, 1984). The Court also explained the defendant’s right to appeal and the filing requirements attendant on any timely appeal. See Transcript of Proceedings at 12-13 (May 16, 1984).

On June 25, 1984, the defendant filed a motion for a reduction of sentence, pursuant to Rule 35(b) of the Federal Rules'of Criminal Procedure. This motion and the accompanying memoranda in support and opposition were carefully considered by the Court, as was the Government’s opposing brief. The motion was denied by the Court’s Decision And Order of July 16, 1984.

On August 14, 1984, the defendant filed the present motion, pursuant to 28 U.S.C. § 2255, requesting the Court to vacate, set aside, or correct his sentence. In the memorandum in support of this motion, the defendant raises four related grounds which purportedly support the relief he requests — namely, that he was denied effective assistance of counsel; that improper procedures were used during sentencing; that hearsay evidence was relied on by the Court in imposing sentence, and that inconsistent assessments of his mental competence have been made throughout his criminal prosecution and incarceration. The Government has filed a brief, opposing the motion on all four grounds.

28 U.S.C. § 2255 AND THE MERITS OF THE DEFENDANT’S PRESENT MOTION

Section 2255 of Title 28 of the United States Code provides, in pertinent part, as follows:

A prisoner in custody under sentence of a court established by Act of Congress claiming the right to be released upon the ground that the sentence was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, or is otherwise subject to collateral attack, may move the court which imposed the sentence to vacate, set aside or correct the sentence ...
If the court finds that the judgment was rendered without jurisdiction, or that the sentence imposed was not authorized by law or otherwise open to collateral attack, or that there has been such a denial or infringement of the constitutional rights of the prisoner as to render the judgment vulnerable to collateral attack, the court shall vacate and set the judgment aside and shall discharge the prisoner or resentence him or grant a new trial or correct the sentence as may appear appropriate.

As indicated above, the defendant has articulated four arguments in support of his present motion. Because several of the substantive issues the movant raises by his motion are apparently offered in support of more than one of the related bases upon which he seeks relief, the Court will address each of the defendant’s particular contentions absent consistent reference to the four principal grounds upon which h¿ moves.

The petitioner’s first — and perhaps primary argument — is that he was denied effective assistance of counsel before, during, and after trial. Specifically, the defendant alleges that error was committed by his retained counsel in refusing to pursue a plea agreement, in compelling the defendant to testify at trial, in failing to object to certain prosecution evidence, and in purportedly advising the defendant that his right to appeal must be waived. Defendant’s Memorandum In Support Of Motion at 1-2 (August 14, 1984).

As counsel for the Government accurately notes in her opposing brief, the Court of Appeals for the Seventh Circuit has recently articulated clear standards to be used by trial courts in addressing a § 2255 challenge like the present. In United States v. Payne, 741 F.2d 887, 891 (7th Cir.1984), the circuit court stated that ineffective assistance claims must be evaluated in light of the purpose of the Sixth Amendment’s right to counsel, which is to ensure a fair trial, as follows:

“The benchmark for judging any claim of ineffectiveness must be whether counsel’s conduct so undermined the proper functioning of the adversarial process that the trial cannot be relied on as having produced a just result.” ... To establish that his counsel’s conduct was constitutionally defective, a defendant now is required to show both that the conduct was deficient and that this deficiency prejudiced the result ...
To establish that counsel’s conduct was deficient, the defendant must show counsel’s specific acts or omissions which, viewed from the perspective of counsel at the time of trial, fell below the standard of reasonable professional assistance ____ In making such a showing, defendant must overcome the presumptions that counsel’s conduct amounted to sound trial strategy ..., and that counsel “rendered adequate assistance and made all significant decisions in the exercise of reasonable professional judgment.” ... To satisfy the second prong, that counsel’s deficient conduct was prejudicial, defendant must establish “a reasonable probability that, but for counsel’s unprofessional errors, the result of the proceeding would have been different” [citations omitted].

See also United States v. Noble, 754 F.2d 1324 at 1335-36 (7th Cir.1985) (citing Strickland v. Washington, _ U.S. _, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984) for standards to be applied in evaluating Sixth Amendment ineffective assistance claims).

Even assuming that defense counsel in this case committed the several errors alleged — an assumption, as discussed below, wholly unsupported by the record— there is nothing to indicate that the disposition of the defendant’s case would have been different had they not occurred. The evidence of the defendant’s guilt, as adduced at trial, was overwhelming; indeed, the defendant himself testified to his participation in the robbery for which he was indicted and discussed in some detail the nature of the travels and drug purchases that followed. Because the Court finds no basis upon which the jury’s finding of guilt might reasonably be attacked as inappropriate or misguided, it must conclude that the movant has utterly failed to establish a probability that, but for the alleged errors, the disposition of his case would have been different. Accordingly, the Court rejects the defendant’s contention that he was somehow denied effective assistance of counsel.

The Court’s conclusion in this regard is further supported by its findings that none of the so-called errors committed by defense counsel “fell below the standard of reasonable professional assistance.” United States v. Payne, 741 F.2d 887, 891 (7th Cir.1984). With respect to his claim that counsel ineffectively handled matters regarding his competency to stand trial, the defendant is surely aware that his attorney properly brought this very issue to the Court’s attention prior to trial. Indeed, at counsel’s request, the defendant was examined by Dr. Donald Radke, who, pursuant to 18 U.S.C. § 4244, found him competent to understand the proceedings against him and able to assist in his own defense. Beyond that, defense counsel raised the defendant’s mental condition at the time of the robbery as a principal defense against the crime charged. The mere fact that the jury chose to reject that defense does not mean that counsel ineffectively handled matters arising from the defendant’s self-proclaimed incompetence.

Closely related to this untenable argument is the defendant’s principal contention that he was “found to be incompetant [sic] during the overt act ... yet now at the United States Medical Center for Federal Prisoners ... is found to be considered competent, normal and sane and has been released from Doctors care.” Defendant’s Memorandum In Support Of Motion at 2 (August 14, 1984). As the Court has just observed, the defendant’s claims of mental incompetence were rejected both by the examining physician prior to trial and by the jury itself at the close of all proceedings. The fact that physicians employed by the institution at which the defendant is now incarcerated apparently concur in the previous findings as to the defendant’s mental state in no sense supports the present petition to vacate, set aside, or correct the sentence imposed.

The defendant further maintains that his attorney wrongfully advised him that he had no right to appeal his conviction. Although the Court is inclined to disbelieve that defense counsel, well-schooled in the criminal law and practicing in the field for much of his career, improperly advised the movant of his appellate rights, it nonetheless rejects the present claim on the basis that the defendant was specifically and advised of his right to appeal by the Court at the sentencing hearing of May 16, 1984. The pertinent remarks of the Court at that time were as follows:

I also am required by law to advise the defendant of his right to appeal since there was a trial in this matter. If unable to pay the costs of an appeal, counsel, the defendant may apply for relief to appeal in forma pauperis. You are also informed, Mr. Wilks, that if you so request, the Clerk of Court shall prepare and forward forthwith a Notice of Appeal on your behalf.
The defendant is also advised that if after consultation with his attorney, he decides not to appeal, then the defendant and his attorney shall sign and file a written statement that he had been advised of his right to appeal and does not desire to appeal.
Any Notice of Appeal must be filed with the Clerk of Court within ten days of the date of sentencing, and I would opine that in view of his particular circumstances, why I would make the execution of the sentence forthwith so that he is remanded to the custody of the Marshal. I will put on the commitment order a recommendation that he be given a thorough mental examination and then recommend also that his period of initial incarceration be at Springfield where they do have psychiatric facilities and the ability to deal with his kind of problem.
Are there any questions?

Transcript of Proceedings at 12-13 (May 16, 1984). In short, the defendant’s argument that he was not aware of his appellate rights is wholly unfounded.

With respect to the information presented to the Court at the sentencing hearing, the defendant further argues that his counsel failed to object to hearsay evidence and that the Court should not have considered such evidence in reaching its sentencing decision. The apparent basis for the movant’s position in this regard is that the Court inquired of the defendant at the time of sentencing whether he had any knowledge of harassing phone calls apparently received by the bank teller from the time of the jury’s verdict of guilty in this matter. The Court’s inquiry in this regard was prompted by information received by the United States Probation Office that the victim teller, whose testimony was a critical element of the Government’s case, had received such threats.

In response, the defendant denied that he or any of his family members or friends were responsible for the harassing phone calls. In fact, subsequent to the sentencing hearing, the Federal Bureau of Investigation apparently determined that the timing of the calls received by the teller was entirely coincidental and not related to the present defendant’s criminal prosecution. See Affidavit of Jan E. Kearney at 1-2 (September 4, 1984). Moreover, the Assistant United States Attorney prosecuting this matter now urges that the record be amended to reflect that the defendant in this case was not responsible for the threatening phone calls received by the victim teller.

Recognizing that this matter perhaps provides the basis for the strongest argument in support of the defendant’s § 2255 petition, the Court nonetheless confirms that the inconclusive reports of threatening phone calls had absolutely no effect on its decision to sentence the defendant to a ten-year term of incarceration. The defendant’s unequivocal denial of any involvement in the initiation of any harassing phone calls, coupled with the Court’s own equivocal observation regarding responsibility for those calls, see Transcript of Proceedings at 11 (May 16, 1984), establishes that the subject information was not determinative of the Court’s sentencing disposition. Accordingly, the Court will decline to vacate, set aside, or correct the defendant’s sentence on this basis. See Hampton v. United States, 504 F.2d 600, 604 (10th Cir.1974), cert. denied, 421 U.S. 917, 95 S.Ct. 1578, 43 L.Ed.2d 783 (1975).

The other procedural error at sentencing with which the Court is charged is its purported failure to follow the disposition guidelines set forth in 18 U.S.C. § 4205(b). While the Court, as described above, made a specific recommendation as to parole under that statute, its sentencing disposition was in no manner violative of the provisions incorporated therein. The defendant’s mistaken belief to the contrary cannot form the basis for § 2255 relief.

Finally, the defendant apparently contends that his attorney prevented him from entering into a plea agreement with the Government and instead compelled him to testify in his own behalf, all the time aware of the defendant’s mental incompetence. As before, the Court must reject as wholly unsupported any claim to ineffective assistance of counsel on these grounds. Despite its serious doubts as to the factual support for the two claims, the Court finds that all of the defendant’s ineffective assistance claims must be viewed in the context of his failure to complain about the nature of his defense by retained counsel during pretrial, trial, and post-trial proceedings and his decision not to appeal his conviction. Parenthetically, the Court notes that the United States Court of Appeals for the Seventh Circuit has held that where no appeal is taken or the appellate process is exhausted, a petitioner moving under § 2255 on some new issue must show good cause for his or her failure to raise it on appeal and must demonstrate some actual prejudice as a result of this failure. Norris v. United States, 687 F.2d 899, 902-903 (7th Cir.1982).

Under the circumstances of the present case, the defendant is entirely unable to demonstrate a factual basis for any of the errors allegedly committed by his attorney or that counsel’s purportedly deficient conduct prejudiced him in any manner. Likewise, as discussed above, the Court finds no basis in its own supervision of the prosecution and defense of this criminal matter to support the defendant’s contention that the sentence imposed was “in violation of the Constitution or laws of the United States.” 28 U.S.C. § 2255.

CONCLUSION

For the reasons articulated herein, the Court hereby DENIES the defendant-petitioner’s motion for an order vacating, setting aside, or correcting his sentence, pursuant to 28 U.S.C. § 2255.


author: SCHWARZER, District Judge.

text:
    MESA VERDE CONSTRUCTION CO., Plaintiff, v. NORTHERN CALIFORNIA DISTRICT COUNCIL OF LABORERS, Defendant.
    No. C-84-4389-WWS.
    United States District Court, N.D. California.
    Feb. 11, 1985.

      Mark R. Thierman, Deborah E.G. Wilder, Thierman, Simpson & Cook, San Francisco, Cal., for plaintiff.
    Victor J. Van Bourg, Van Bourg, Weinberg, Roger & Rosenfeld, San Francisco, Cal., for defendant.
   ORDER

SCHWARZER, District Judge.

Defendant Northern California District Council of Laborers (the “Union”) has moved, pursuant to Fed.R.Civ.P. 59(e) and 60(b), for alteration, amendment or vacation of this Court’s order of December 13, 1984, 598 F.Supp. 1092, granting summary judgment in favor of Mesa Verde Construction Company (“Mesa Verde”). The Union seeks an order denying Mesa Verde’s motion for summary judgment, without prejudice, and granting the Union an opportunity to conduct further discovery on the issue of whether or not Mesa Verde’s payroll records demonstrate the existence of a core group of employees for purposes of establishing a presumption of majority status. On January 5, 1985, the Union filed an amended motion for alteration, amendment or vacation of judgment, requesting this Court to reconsider three issues addressed by the December 13 order: 1) whether this Court had jurisdiction to determine majority status; 2) whether the 1980 agreement was a “pre-hire” agreement; 3) whether Mesa Verde could repudiate the agreement when it had an on-going project at the time of repudiation.

A. Additional Discovery

The Union argues that summary judgment was premature because a fact issue continues to exist as to whether or not available evidence shows the existence of a core group of employees in Mesa Verde’s work force. According to the Union, it limited its analysis of majority status to the year 1981, rather than considering the entire five year period covered by the agreements with Mesa Verde, because of the supposedly voluminous nature of Mesa Verde’s payroll records. It argues that “there is a good possibility” that a core group of employees can be established for the year 1983 or by a combination of years.

A review of the proceedings is appropriate. On July 16, 1984, this Court stayed arbitration of a grievance filed by the Union pending resolution of Mesa Verde’s declaratory relief action before this Court. During the argument, the Court asked counsel for the Union whether the case was ready for summary judgment. Counsel responded that there had not been adequate time in which to conduct discovery and therefore summary judgment at that time was improper. The Court then set September 28, 1984, as the date for summary judgment motions to allow time for discovery. The Union was given leave to engage in any needed discovery in the interim.

On August 21, 1984, the Union asked Mesa Verde to produce various payroll and personnel records for inspection and copying at the office of counsel for the Union on August 30,1984. Mesa Verde agreed to produce payroll ledgers and trust fund reports for the period from June 20, 1980, to May 15, 1984, and to make these documents available for inspection at its corporate offices, but objected to any broader request. This discovery dispute was brought to the Court’s attention on August 31, 1984, at the hearing on reconsideration of the order staying arbitration. Counsel for both sides agreed to try to settle the discovery dispute without the assistance of the Court, but their efforts proved unsuccessful.

On September 14, 1984, the Union filed its opposition to Mesa Verde’s motion for summary judgment. It stated that it was unable to fully respond to Mesa Verde’s allegations concerning majority status since Mesa Verde had failed to provide the Union with the necessary documents pursuant to its document request. At the hearing on the motion on September 28, the Court directed both sides to file supplemental memoranda on the issue of majority status by October 26, 1984. The Court further directed Mesa Verde to make available at Mesa Verde’s corporate offices the documents requested by the Union and to have a copy machine available for the Union’s use. The Union thus had four additional weeks to accomplish necessary discovery and prepare its supplemental memorandum.

On October 4, 1984, Union’s counsel Paul Supton, accompanied by a law clerk, went to Mesa Verde’s corporate offices and met with Mesa Verde’s counsel. Payroll records and other relevant requested material for the entire five year period were produced. Supton has stated in a declaration filed with the Court that because of the voluminous nature of the material, he decided to limit his majority status analysis to the year 1981. The Union does not dispute that Supton and the law clerk spent only four hours at Mesa Verde’s offices reviewing and copying this material.

The Union’s attempt to suggest that it misunderstood the crucial issue in discovery to be whether laborers belonged to the union, rather than the stability of the work force, is disingenuous at best. In his letter of September 4, 1984, to counsel for Mesa Verde, Victor Van Bourg stated that items in the Union’s discovery request were “clearly relevant to Plaintiff’s claims that a stable work force never existed and/or that employees were not transferred from one jobsite to another.” Thus counsel for the Union was well aware of the critical issue in this case when they made their decision to limit their examination of payroll records to 1981.

Counsel were of course also well aware that they could have sought additional time under Fed.R.Civ.P. 56(f). The Union concedes that it did not do so, but seeks to escape the consequences by relying on Deiches v. Carpenters’ Health and Welfare Fund of Philadelphia, 572 F.Supp. 766 (D.N.J.1983), for the proposition that a court possesses the discretion to grant such a continuance despite a Rule 56(f) affidavit not having been filed. In Deiches, the plaintiff did not file a formal Rule 56(f) affidavit, but requested at oral argument that he be given an adequate opportunity to complete discovery and file affidavits. The Union here made no such request after having been twice afforded such an opportunity, first at the argument on July 16, 1984, and again at the argument on September 28, 1984. It could of course have made a further request at any time prior to December 13, 1984, when the Court issued its order on the summary judgment motions, but did not do so. The Deiches court noted, moreover, that “plaintiffs brief fairly implies that the [plaintiff] is not capable of responding to defendant’s affidavits without such discovery.” Id. at 776. By contrast, the Union asserted that it was entirely capable of responding to Mesa Verde’s affidavits and statistics on the basis of the discovery conducted. In its Memorandum of Points and Authorities re Majority Status, the Union stated in a footnote, “Defendant submits that the analysis of 1981 demonstrates conclusively that the Union attained majority status among the employer’s work force in 1981 and is therefore entitled to a presumption of majority status through the life of the agreement.” Memo at p. 16 n. 5.

The Union also claims that it preserved its right to further discovery in its October 26 memorandum (p. 16, n. 5). Buried at the end of a lengthy footnote devoted to the argument that the Union had gained majority status because Mesa Verde hired out of the Union hiring hall is a sentence stating that, “[i]f the Court disagrees, Defendant ... submits that an evidentiary hearing should be conducted for a thorough analysis of the employer’s other jobsites in 1982, 1983 and 1984.”

That hardly can be construed to be a reservation of rights to renew discovery should the ruling be adverse on the motion. Moreover, such a reservation would be wholly inconsistent with Rule 56. Subsection (e) specifically requires that “[w]hen a motion for summary judgment is made ... an adverse party may not rest upon the mere allegations or denials of his pleadings, but his response ... must set forth specific facts showing that there is a genuine issue for trial.” Subsection (f) further provides that if the adverse party “cannot for reasons stated present ... facts essential to his opposition, the court ... may order a continuance to permit ... discovery____” It would be wholly contrary to the letter or spirit of Rule 56 to permit a party to engage in the kind of sandbagging proposed by counsel for the Union. The Rule does not entitle a party unsuccessful in opposing a motion for summary judgment motion to get a second crack at trying to prevail.

B. Jurisdiction

The Union asks the Court to reconsider whether it had jurisdiction to determine the issue of majority status. First, it argues that Laborers Health & Welfare Trust Fund v. Kaufman & Broad of Northern Calif., Inc., 707 F.2d 412, 415-416 (9th Cir.1983) “simply has no application whatsoever to the instant case.” The Union misreads the language of the Court’s order. The point is not whether Mesa Verde is a Trust Fund as in Kaufman, but that the primary jurisdiction rule does not apply where a party has no standing to raise the issue before the National Labor Relations Board (NLRB). Kaufman, supra. This rule was extended In Operating Engineers Pension Trust v. Beck Engineering & Surveying Co., 746 F.2d 557 at 565 (9th Cir. Nov. 1, 1984), to apply to defenses which could not be presented to the NLRB. The defense raised by Mesa Verde to the Union’s charge of breach of a collective bargaining agreement is that the agreement was a voidable pre-hire agreement. The Trust Fund in Beck argued, as does the Union here, that a § 8(f) agreement may only be repudiated by means of an NLRB election pursuant to a petition filed by the employer. The court specifically found that it would have been futile for Beck to have filed an election petition because the “NLRB will not certify or find appropriate a single person unit in a representation proceeding.” Id. at 565. Similarly, it would have been futile for Mesa Verde to have filed an election petition since the NLRB cannot make a bargaining unit determination as to non-existent jobsites nor could an election be held.

Second, the Union attempts to rely on Daniel Construction Co., Inc., 133 NLRB 264 (1961), to support the argument that where employees are hired on a jobsite by jobsite basis, the fact that the representation issue may involve “future jobsites” is irrelevant. Daniel does not address the issue of permanent and stable work force and hence is not relevant. In any event, the Union’s quotations from it are out of context. It quotes Daniel as stating that the plumbers and pipefitters which were the subject of the agreement were hired by the employer “at the jobsites and terminated at the completion of the project,” but has failed to quote the full sentence which states:

While the various projects of the Green-ville divisions vary in size and duration, there is a nucleus of pipefitters and plumbers employed at all times. These are hired at the jobsites and terminated at the completion of the project.” (emphasis added)
133 NLRB at 265.

As the Court determined in its prior order, defendant failed to establish the existence of such a nucleus of employees here.

The arguments advanced by the Union are little more than an attempt to obfuscate the nature of § 8(f) agreements. There is an “undoubted right to repudiate a prehire agreement before the union attains majority support in the relevant unit....” Jim McNeff v. Todd, 461 U.S. 260, 103 S.Ct. 1753, 1759, 75 L.Ed.2d 830 (1983). It is also undisputed that a prehire agreement cannot be repudiated with respect to any job on which the union has a majority. The only issue in this case is whether Mesa Verde could repudiate it as to future jobs. The law is settled that the issue of majority status in that situation is not reached unless and until the employer is shown to have a stable and permanent work force. Construction Erectors, Inc., 265 NLRB 786 (1982). Mesa Verde has shown that it did not, and the Union has come up with no facts to the contrary. Thus the issues raised by the Union concerning the Board’s election procedures in the construction industry, including the determination of the appropriate bargaining unit for election purposes are never reached.

C. Beyond the Scope of the Pleadings

The Union requests the Court to reconsider its finding that, due to the absence of a permanent and stable work force, any binding collective bargaining relationship established at any jobsite under the 1979 agreement would have no effect on future jobsites. Order at 7. The Union argues that this finding goes beyond the scope of the pleadings and is not supported by record evidence; because Mesa Verde sought declaratory relief only as to the 1980 agreement, the Union did not conduct any discovery nor was any evidence presented with respect to the time period between the signing of the 1979 and 1980 agreements.

Why the Union raises this issue is obscure; the Court did not rely on the 1979 agreement but merely referred to and rejected an argument advanced by the Union. In its Memorandum of October 26, 1984, the Union stated:

The instant litigation involves only the June 26, 1980, agreement, the agreement which Plaintiff purports to have repudiated and as to which Plaintiff seeks declaratory relief from this Court. However, as admitted by Plaintiff in its pleadings (see Supplemental Declaration of Peter Zearbaugh) Plaintiff had Laborer employees on its payroll in 1979 and was making Trust Fund contributions on behalf of those employees in 1979, prior to the signing of the agreement at issue in this case. Those contributions were made pursuant to the 1979 agreement with the Union. Therefore, a collective bargaining relationship existed between these parties prior to the signing of the 1980 agreement, (emphasis added).
Memo at 6.

The Union’s contention that no evidence was presented with respect to the period between the signing of the 1979 and 1980 agreements is belied by its own statement, quoted above, referring to Mesa Verde’s analysis of laborers it employed from August, 1979, to June, 1980. In discovery, Mesa Verde provided pay roll records covering this period, and the Union reviewed them on October 4, 1984. It seems absurd for the Union, having raised the 1979 agreement and characterized it as a binding collective bargaining agreement, to argue that the Court went beyond the scope of the pleadings and the evidence in concluding that the 1979 agreement did not bind future jobsites.

D. Timing of Repudiation

The Union contends that the Court erred in its conclusion that repudiation was effective as to future jobsites, while being ineffective as to the ongoing Lucky Hercules project. It argues that an employer may not repudiate a pre-hire agreement at a time when the Union has attained majority status at any jobsite. Any attempt to repudiate during this time is ineffective as to both ongoing and future jobsites. (Memo Jan. 4, 1985, pp. 9 et seq.)

There is no support whatever for this argument in the cases cited or elsewhere, as the prior ruling shows. The argument is based on misleading references to or quotations from cases. For example, in Land Equipment, Inc., 248 NLRB 685, enforced 649 F.2d 867 (9th Cir.1981), the NLRB specifically stated:

The record further shows that the Respondent does not hire employees on a project-by-project basis but has a relatively stable complement of employees who move from job to job and who work between jobs in the Respondent’s yard performing maintenance and oiling work____ [A]s described by the Administrative Law Judge, the Union achieved majority status in the appropriate unit on August 17, 1977. In such circumstances, the General Counsel did not have the burden of establishing majority support at each jobsite here. Cf. Dee Cee Floor Covering Inc and its alter ego and/or successor, Dagin-Akrab Floor Covering, Inc., 232 NLRB 421 (1977), and other cases where the employer hires employees on a project-by-project basis. 248 NLRB at 685 n. 2

V M Construction Co., Inc., 241 NLRB 584 (1979) is also entirely distinguishable, as reflected in the Board’s statement in the opinion:

The repudiation in [Dee Cee Flooring Covering, Inc.] occurred between projects, when there was no employee on the payroll. In the present case, on the other hand, there not only were a payroll and a union majority at the time of repudiation, there was a union majority when the memorandum agreement was entered into, removing the situation from conventional 8(f) analysis. Beyond that, the appropriateness of a multiproject unit is established by the pleadings, obviating an assessment of majority at each project separately; by employee interchange among overlapping projects and carryover from completed to new projects; and by the non-segregation, by project, of payroll records.
Id. at 587.

The Union’s contention is squarely contrary to the Ninth Circuit decision in NLRB v. Pacific Erectors, Inc., 718 F.2d 1459 (9th Cir.1983), affirming Pacific Erectors, Inc., 256 NLRB 421 (1981). The court held that an employer who repudiated a pre-hire agreement during the course of a particular construction project continued to be bound by it on that project until its completion. The court stated that “where an employer has no stable work force and hires on a job-to-job basis” the union “must demonstrate its majority status at each new jobsite in order to invoke the provision of section 8(a)(5) of the Act.” Id. at 1463. In Pacific Erectors, Inc., the employer hired on a job-by-job basis and the union attained majority status at the Tualatin jobsite. The Board’s ruling limits the employer’s obligations under the agreement to that site. See Pacific Erectors, Inc., 256 NLRB at 421-422.

For the reasons stated above, the Union’s motion to alter, amend or vacate the Court’s order of December 13, 1984, is denied.

IT IS SO ORDERED.

      . The Court notes that neither now nor in its opposition to the motion prior to the ruling did the Union argue that there was a genuine issue as to any material fact. Their motion simply argues, without any factual support, that "there is a good possibility that a core group of employees can be established____” (Memo. Dec. 21, 1984, pp. 7-8)
      The Union also argues that the summaries submitted by plaintiff were unreliable. (Reply Memo Jan. 25, 1985, p. 5) The Union directed these complaints at the summaries and the declaration of Peter Zearbaugh filed by plaintiff on July 10, 1984. Zearbaugh revised his summaries and submitted a Supplemental Declaration on September 20, 1984. The Union asserted in its Reply Memo that the revised summary also deserves no weight and that a determination of the nature of the work force can only be made "through complete and full discovery.” (Reply Memo, p. 6). The Union was provided with such an opportunity for discovery, but limited its analysis to the year 1981. Therefore, Mesa Verde’s work force data for the remaining years, upon which this Court relied in its ruling, have not been disputed.


author: THEIS, District Judge.

text:
    Sammy C. LAINE, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    Civ. A. No. 83-1145-T.
    United States District Court, D. Kansas.
    Feb. 12, 1985.

      Jo Lynne Justus, Hays Legal Services, Hays, Kan., for plaintiff.
    Stephen K. Lester, Asst. U.S. Atty., Wichita, Kan., for defendant.
   OPINION AND ORDER

THEIS, District Judge.

On June 26, 1984, this Court granted plaintiff’s motion to remand the case to Margaret M. Heckler, Secretary of Health and Human Services (“the Secretary”), for review. Sammy C. Laine now moves for an award of costs and attorneys’ fees pursuant to the Equal Access to Justice Act, 28 U.S.C. § 2412 (EAJA). The Secretary contends that the EAJA does not apply to proceedings under the Social Security Act. The Tenth Circuit has not addressed the issue. In Cole v. Heckler, No. 82-2349 (D.Kan., unpublished, January 4, 1985), Judge Earl O’Connor applied the EAJA to a Social Security case. This Court will delineate the parameters of the EAJA as employed in Social Security cases.

Under federal law, attorneys’ fees may be awarded against the United States only if a statute specifically provides for such an award. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247, 95 S.Ct. 1612, 1616, 44 L.Ed.2d 141 (1975). The EAJA is an exception to the American rule that litigants pay their own attorneys’ fees. Cornella v. Schweiker, 728 F.2d 978, 981 (8th Cir.1984). The EAJA is designed to “diminish the deterrent effect of seeking review or defending against governmental action.” 5 U.S.C. § 504 note (1984). The EAJA, 28 U.S.C. § 2412(d)(1)(A), provides:

Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil action (other than cases sounding in tort) brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

Title 42 U.S.C. § 406 of the Social Security Act does not bar the application of the EAJA to Social Security cases, since § 406 is a fee limiting statute rather than a fee allocation statute. Section 406 is not inconsistent with the EAJA because it does not permit an award of attorneys’ fees against the United States, rather it “limits the amount which an attorney can take as a fee to 25% of the total amount of past-due benefits awarded his client.” Wolverton v. Schweiker, 533 F.Supp. 420, 422-23 (D.Idaho 1982). See also Gross v. Schweiker, 563 F.Supp. 260 (N.D.Ind.1983); Ocasio v. Schweiker, 540 F.Supp. 1320 (S.D.N.Y.1982). The Court finds that the EAJA is applicable to judicial review actions brought under the Social Security Act. Nothing in the EAJA excludes its application to social security cases, and the legislative history makes explicit Congress’ intent that, while the EAJA does not apply to administrative proceedings under the Social Security Act, it does cover civil actions to review social security decisions of the Agency. H.R.Rep. No. 1418, 96th Cong., 2d Sess. 12, reprinted in 1980 U.S.Code Cong. & Admin.News 4953, 4991. The exclusion of applications for attorneys’ fees in social security administrative proceedings apparently was intended to reduce the financial strain on the agency from the EAJA. Id. at 22. See also Berman v. Schweiker, 713 F.2d 1290, 1296 (7th Cir.1983).

Under the EAJA a prevailing party may obtain attorneys’ fees only when the position of the United States was not “substantially justified.” 28 U.S.C. § 2412(d)(1)(A). Although the EAJA is silent as to the meaning of “substantially justified,” the legislative history provides guidance: “The test of whether or not a Government action is substantially justified is essentially one of reasonableness. Where the Government can show that its case had a reasonable basis in law and fact, no award will be made.” S.Rep. No. 96-253, 96th Cong., 1st Sess. 6 (1979). Thus, the United States bears the burden of establishing the substantial justification of its position. A number of factors affect the determination of whether the government’s actions were substantially justified. Although the fact that the government lost the case does not raise a presumption that its position was not substantially justified, H.R.Rep., supra, at 11, when the government forces a party into “lengthy administrative proceedings before final vindication of his or her rights ... the government should have to make a strong showing ... that its action was reasonable.” Id. at 18.

On the merits in the instant action, since Laine was a prevailing party under the Act, the Secretary bears the burden to show that its position was substantially justified. The Secretary contends that although this Court remanded the case for consideration of new evidence, the evidence was not available to the administrative law judge (“AU”) and the AU had no duty to develop the record. On April 20, 1982, Laine requested a hearing before the AU, but waived the right to appear and proceeded unrepresented by counsel. Laine had recently been released from a voluntary conservatorship, which began November 9, 1981, and ended on February 11, 1982. In addition, Laine was completely illiterate. Numerous cases have held that the AU “must fully and fairly develop the facts.” Ford v. Secretary of Health and Human Services, 659 F.2d 66, 69 (5th Cir.1981). In Echevarria v. Secretary of Health and Human Services, 685 F.2d 751, 755 (2d Cir.1982), the court held that in a social security benefits proceeding, an administrative law judge, unlike a judge in a trial, must himself affirmatively develop the record. In the present case, no effort was made by the defendant on the administrative level or during this suit to develop evidence of a mental disability when it not only was an issue, but obviously impaired Laine’s ability to represent himself. Laine initially applied for benefits through a conservator. Tr. 18-21. He could neither read nor write. Tr. 6. The Social Security reviewer even noted that Laine had difficulty in comprehending the proceedings. Tr. 69. Furthermore, while the ease was pending, the Secretary was informed of additional evidence showing retardation. Despite this, the Secretary continued to oppose remand, perhaps on the theory that Laine had only recently become mentally retarded. This argument and the entire course of the Secretary’s actions are not reasonable. Therefore, the Court finds that the Secretary’s position was not substantially justified and attorneys’ fees should be awarded under the EAJA. The Court notes, however, that Laine’s counsel has requested fees for activities pursued during the administrative process. As stated above, only activities for the civil action to review the administrative decision are compensable.

IT IS THEREFORE ORDERED that Laine’s motion for attorneys’ fees is hereby granted and Laine is ordered to submit to the Court within twenty (20) days from the date of this Order a revised estimate of compensable time.