author: DUNCAN, District Judge.

text:
    Frank L. HOOK, Petitioner, v. Harry J. BERKEMER, Sheriff, Respondent.
    No. C-2-83-2269.
    United States District Court, S.D. Ohio, E.D.
    Nov. 6, 1984.

      Paul D. Cassidy, R. William Meeks, Columbus, Ohio, for petitioner.
    Karen Martin, Asst. Pros. Atty., Columbus, Ohio, for respondent.
   OPINION AND ORDER

DUNCAN, District Judge.

Petitioner Frank L. Hook brings this action for a writ of habeas corpus pursuant to the provisions of 28 U.S.C. § 2254. This matter is before the Court on the petition, return of writ and supplement thereto, the petitioner’s traverse and the supplement thereto, and the exhibits of the parties, including the transcript of proceedings in State v. Hook, et al, No. 82-CR-05-1645A (Ohio C.P. Franklin Co. 1982).

Petitioner was indicted by the Franklin County, Ohio Grand Jury on May 12,1982. The indictment charged petitioner with one count of operating a gambling house in violation of R.C. 2915.03 and two counts of gambling in violation of R.C. 2915.02. Petitioner entered pleas of not guilty to the charges. The case was tried to a jury, which found him guilty of operating a gambling house in violation of R.C. 2915.03 and guilty of gambling in violation of R.C. 2915.02. A not guilty verdict was rendered on the remaining gambling charge. Petitioner was sentenced to a term of imprisonment of two to five years and a fine of $5,000. The sentence was suspended upon the condition that petitioner serve a 90-day term in the Franklin County Corrections Center and be placed on probation for a period of five years. Petitioner’s sentence was stayed pending appeals, and as of this date he has not yet served the sentence imposed.

Petitioner’s conviction was affirmed on appeal to the Ohio Court of Appeals, Tenth Appellate District. State v. Hook, No. 83-AP-71 (App.Ct. Franklin Co., Sept. 15, 1983). The Supreme Court of Ohio denied a motion for leave to appeal.

The habeas petition alleges that petitioner’s conviction was obtained in violation of the United States Constitution on the following grounds:

1. Where a sworn trial juror, in the presence of the rest of the jury, states that Petitioner looks like a criminal and questions why the criminals are permitted to enter through the front door of the courtroom, the trial court should, upon proper motion, conduct inquiry of trial jurors to determine what effect, if any, such prejudicial comments had on their ability to remain fair and impartial toward Petitioner; and where the trial court refuses to conduct such inquiry, Petitioner’s right to a fair trial and due process of law as guaranteed by the federal and state constitutions is violated.
2. Where during trial defense counsel discovers that the prosecution intentionally failed to disclose critical impeachment evidence concerning a key prosecution witness, despite timely and specific motions for discovery, pursuant to Rule 16 and Brady v. Maryland, the trial court should, upon proper motion, provide for an appropriate sanction or, alternatively, permit a short continuance; and where the trial court rejects such motion, Petitioner’s right to a fair trial and due process of law as guaranteed by the federal and state constitutions is violated.

Petitioner has fully exhausted his habeas claims as required by 28 U.S.C. § 2254(b), (c).

I

Briefly summarized, the testimony presented at trial shows that, in August of 1981, the Columbus Police Department began an investigation into the possible gambling activities of defendants. Residences at 6547 Sawmill Road and 240 Odessa, in Dublin, Ohio, were placed under surveillance. A survey of the trash retrieved revealed sports schedules, mailing labels, envelopes, and bills addressed to petitioner Hook. On January 10, 1982, both premises were searched pursuant to warrants.

In executing the warrant for 6547 Sawmill Road, the officers were required to forcibly enter the premises. They also encountered two locked metal doors, one leading to the basement, the other in the basement leading to the room the officers intended to search. Three of the defendants, not including petitioner, were found in the locked basement room. Six telephones in the room had been destroyed by an axe. Sports schedules, water soluble paper, a telephone credit card bearing the name of Francis Tanner, and an Ohio Bell envelope sent to Francis Tanner at that address were found. The room was smoke-filled, and there were charred papers inside a sump pump. Partially dissolved paper was retrieved from a large aquarium in the room.

The Sawmill Road premises were served by five telephone lines, four of which bore consecutive numbers. This equipment was registered in the name of Francis Tanner, who was subsequently identified as petitioner Frank Hook. At trial, a number of witnesses testified to placing sports bets by calling 889-2900, one of the numbers in operation at the Sawmill Road residence. Furthermore, although petitioner had moved out of the Sawmill Road residence in 1978, he continued to pay rent for the premises.

At the 240 Odessa address, police confronted petitioner Hook handing money and a check to one of his daughters. The check was made out to cash for $4,416 and was signed by Lew Shore. Lew Shore testified that the check recovered at the Odessa address had been meant to cover his gambling debts with defendant Hook.

II

Because the Court reaches different conclusions as to the merits of petitioner’s claims, the Court will discuss those claims in reverse order.

In his second claim, petitioner contends that he was denied due process of law by the prosecutor’s failure to disclose allegedly vital impeachment evidence concerning an important government witness and by the trial court’s failure to grant a mistrial or a continuance, or to impose sanctions for the prosecutor’s alleged misconduct.

In Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1960) the Supreme Court stated that

the suppression by the prosecution of evidence favorable to an accused upon request violates due process where the evidence is material either to guilt or punishment, irrespective of the good faith or bad faith of the prosecution.

Id. at 87, 83 S.Ct. at 1196. Evidence favorable to an accused includes material which might be used to impeach a government witness. Giles v. Maryland, 386 U.S. 66, 87 S.Ct. 793, 17 L.Ed.2d 737 (1967); United States v. Sweeney, 688 F.2d 1131 (7th Cir.1982). In order to establish a breach of the Brady doctrine, petitioner must establish: (1) that the prosecution in fact suppressed the evidence; (2) that the evidence bears favorably on the defense at trial; and (3) that the evidence was material to the question of guilt or innocence. Moore v. Illinois, 408 U.S. 786, 794-95, 92 S.Ct. 2562, 2567-68, 33 L.Ed.2d 706 (1972). When a specific request for the evidence has been made, as in this case, the standard of materiality of whether the evidence, if disclosed, “might have affected the outcome of the trial.” United States v. Agurs, 427 U.S. 97, 96 S.Ct. 2392, 49 L.Ed.2d 342 (1976).

Petitioner’s claim revolves around the testimony of Joyce Carey, a government witness, who was a paid police informant during the pre-arrest investigation of petitioner’s alleged gambling operation. At trial, Ms. Carey testified that she had placed sports wagers by telephone during the 1981 football season by calling the phone number with the last four digits 2-9-0-0. She testified initially that she could recall neither the full telephone number nor another number later given to her by petitioner’s co-defendant Sam Minico.

Ms. Carey did not originally testify as to her relationship with the police. The day after her initial testimony, Ms. Carey was recalled to the witness stand. She testified that she now recalled the telephone numbers she had used to place bets, and that her initial reluctance to testify stemmed from her fear of defendant Minico.

Following Ms. Carey’s second appearance in court, defense counsel discovered through a private investigator that Ms. Carey was a police informant, and that she had been paid for her participation in the gambling investigation. When confronted in court with this information, the prosecutor admitted the truth of the statements. Ms. Carey was recalled yet again to the stand, and defense counsel questioned her out of the presence of the jury. She acknowledged her relationship with the Columbus Police Department, and stated that she was paid in cash for her participation. After overruling defense counsel’s motions for a mistrial, a continuance, exclusion of the testimony, and sanctions, the court permitted defense counsel to cross-examine Ms. Carey in the jury’s presence. She testified to her activities and the cash payments, and admitted that she had lied when testifying previously.

Brady claims involve “the discovery, after trial, of information which had been known to the prosecutor but unknown to the defense.” United States v. Agurs, 427 U.S. at 103, 96 S.Ct. at 2397 (emphasis added). Thus, even though the evidence might be material or might create a reasonable doubt as to guilt, due process, while requiring eventual disclosure, does not always require that the disclosure occur before trial. When evidence becomes known during trial, as it was in this case, the issue becomes “whether the disclosure came so late as to prevent the defendant from receiving a fair trial.” United States v. Sweeney, 688 F.2d 1131, 1141 (7th Cir.1982), quoting, United States v. McPartlin, 595 F.2d 1321, 1346 (7th Cir.), cert. denied, 444 U.S. 833, 100 S.Ct. 65, 62 L.Ed.2d 43 (1979).

A review of the transcript indicates that, after Joyce Carey’s status as a police informant became known, defense counsel was given the opportunity to cross-examine her, both outside the presence of the jury and with the jury present. The defense did, in fact, extensively cross-examine Ms. Carey, attacking her credibility not only by reference to her status as a paid informant, but also by reference to the inconsistencies in her testimony during the several occasions she was asked to take the stand. Though defense counsel’s trial tactics may have been affected by the late discovery, he was nevertheless able to introduce and utilize the evidence. Coming as it did after Ms. Carey had already changed her story once, the information made her even less credible as a witness than she would other; wise have appeared. This Court is unable to conclude that petitioner was prejudiced by the late discovery. While the conduct of the prosecutor is not to be condoned, the failure to produce this evidence did not, under the circumstances, violate due process. See, United States v. Samuelson, 697 F.2d 255, 260 (8th Cir.1983); United States v. Xheda, 704 F.2d 974, 983 (7th Cir.1983); United States v. Kopituk, 690 F.2d 1289, 1339 (11th Cir.1982); United States v. Wooten, 688 F.2d 941, 949 (4th Cir.1982).

Furthermore, even if the trial court erred in its handling of the discovery problem, no constitutional violation occurred. Where no specific guarantee of the United States Constitution has been violated, state trial errors are not cognizable in federal habeas corpus unless the trial court ruling renders the trial fundamentally unfair. Engle v. Isaac, 456 U.S. 107, 119, 102 S.Ct. 1558, 1567, 71 L.Ed.2d 783 reh. denied, 456 U.S. 1001, 102 S.Ct. 2286, 73 L.Ed.2d 1296 (1982); Moore v. Illinois, 408 U.S. 786, 799-800, 92 S.Ct. 2562, 2570, 33 L.Ed.2d 706 (1972); Logan v. Marshall, 680 F.2d 1121 (6th Cir.1982); Bell v. Am, 536 F.2d 123, 125 (6th Cir.1976); Reese v. Cardwell, 410 F.2d 1125 (6th Cir.1969); Kinser v. Cooper, 413 F.2d 730 (6th Cir.1969); Gemmel v. Buchkoe, 358 F.2d 338 (6th Cir. 1966). A fair reading of the record indicates no fundamental unfairness as a result of the trial court’s actions regarding the discovery violation. Defense counsel was permitted to recall the witness and to extensively cross-examine her. The jury was made aware of both her role as a paid informant and her untruthfulness earlier in the trial. There is no indication that the discovery violation significantly impaired the effectiveness of counsel or the fairness of the trial process in any way. This Court finds petitioner’s second claim to be without merit.

Ill

Petitioner’s first claim asserts that his rights to a fair trial and due process were violated by the trial court’s failure to either disqualify the jury or voir dire individual jurors following certain remarks by one juror concerning the appearance and conduct of petitioner.

Jury selection in petitioner’s case took place over the course of nine days, beginning November 9, 1982 and ending November 18, 1982. Counsel were permitted to inquire of members of the venire individually and apart from the remainder of the panel. After the jury had been impaneled, but before the taking of evidence, the following proceedings took place on the record:

THE COURT: Mrs. Yingling, you know, I don’t know how to go about this. It has come to the Court’s attention that you made a statement back there in the jury room, that on the surface, at least, it would appear that you might be prejudiced against the defendants.
The statement was that Frank Hook looks like a criminal.
MRS. YINGLING: I didn’t say that.
THE COURT: I don’t know. Of course, that is what has been told to the Court. Another statement you made was some comment about the criminals are allowed to come in the front door, but the jurors have to come through the back door. That doesn’t bother me as much as the statement that Frank Hook looks like a criminal.
MRS. YINGLING: I don’t think I said it like that.
THE COURT: Could you tell us what it was?
MRS. YINGLING: I don’t remember what I said. I don’t know what to say. I didn’t know that, at the time, that the people, you know — I didn’t know that they weren’t locked up or anything. I don’t know what the situation is I don’t know if they hold these people assumed guilty until proven innocent or whatever. I had seen one of them go out the same door. I didn’t mean it as a prejudiced statement. I meant they were going out and coming in, the same way we were. We had been talking about stairs, that it looked like they brought prisoners in and out. I am sorry.
THE COURT: Okay. What I am going to do, just so there is no possibility that, you know, in the event there is a conviction, that the defendants may be able to assert this as a possible grounds for appeal, I am going to have to excuse you. Okay?
Thank you very much.
MRS. YINGLING: I am sorry. I didn’t mean to.
THE COURT: Don’t apologize. I understand how people say things.
MRS. YINGLING: We talked about different things.
THE COURT: We have to be absolutely sure this case is done right.
MR. CASSIDY [attorney for Sam Mini-co]: Could I suggest, perhaps, Mrs. Yingling be requested not to discuss this with the other jurors.
MR. RIEBEL [attorney for Frank Hook]: Or other people, period.
THE COURT: Are you a second-week juror?
MRS. YINGLING: Yes.
THE COURT: She will be going home anyhow.
MR. MEEKS [attorney for Sam Minico]: I want to comment on Tom Warfel’s comment. He is the gentleman that came in here yesterday. The Court advised us yesterday, and we would certainly follow that Court’s ruling, you are not going to permit us to inquire of those seated jurors who have now been sworn who may have overheard Mrs. Yingling’s comments that Mr. Warfel related .in here yesterday.
Based on the Court’s ruling, I want to make a complete record in case there was a conviction in this case.
By way of factual statement, I want to get [the prosecutor] Dave Johnson’s input so the Court of Appeals can have our stipulated factual statement of what Warfel stated yesterday, since he is not in here right now. I will state it. Yesterday, November 17, 1982, Tom Warfel, a seated juror, who has now been sworn as a regular juror in this case, contacted Bill Sheehan, the bailiff for Judge Reda, and advised him of an apparent impropriety that occurred in the hearing of the jurors already seated in this case.
Mr. Warfel related to Mr. Sheehan, and in chambers in the presence of Judge Reda, the prosecution, Dave Riebel, Paul Cassidy and myself, and Mr. Sherman, that basically the following comments were overheard by him and the other jurors who are now regular jurors in this case.
The comments came from Betty Yingling. She stated words to the effect that Frank Hook looks like a criminal. And in addition to that, she made the comment that she did not understand why she, as a juror, had to come in and out of the back door when criminals can come in and out of the front door.
Is that basically a correct statement of facts?
MR. JOHNSON: Yes.
THE COURT: I think that is a correct statement of what he reported to us. Hé also said that some of the jurors got on this gal, but not all of them. He said the great majority were very upset with what she said.
MR. MEEKS: That is correct.
MR. JOHNSON: I think the comments were the other ten.
MR. MEEKS. It is clear that the seated jurors in this case have heard what I would characterize as prejudicial statements. The concern I have is, if those prejudicial comments have affected seated jurors in this case, we ought to find out about it now so we don’t have any more Betty Yinglings on this jury. The Court’s ruling yesterday, as I understand it, at this time we are not going to probe into this area of seated jurors, as to the effects of these statements.
I want to note an objection on behalf of Sam Minico, which may be joined in by Frank Hook and others at a later time. Also, in addition to that objection, I am going to move to strike the entire panel. I am going to do that to make the record complete. Otherwise, I would waive it. I want that motion and objection clear on the record for the Court of Appeals. THE COURT: The motion and objection is overruled.
MR. RIEBEL: Originally I made this motion to the Court. I joined Sam Mini-co and his lawyers on the motion. I just want to join in this same thing on behalf of all my clients.
THE COURT: Overruled.

Transcript of Trial Proceedings, pp. 20-25.

The state appellate court made the following findings with respect to petitioner’s claim:

The statements made by Yingling constituted an expression of personal opinion reflective of her possible prejudice against the defendant arguably necessitating her dismissal from the jury. The comments, even if made, did not contain any factual information relating to defendant’s innocence or guilt. In fact, the stipulation shows that many, if not all, of the other jurors were upset by the remarks. Therefore, the trial court’s action in correcting any possible prejudice by removing the offending juror was appropriate. The trial court did not abuse its discretion in refusing to allow a further voir dire of the other jurors. Had Yingling made a statement (for example) that she knew someone who had gambled with the defendant, then further questioning to determine any prejudicial effect would have been mandated. However, where a juror’s comment at its worst can only be interpreted, as it was by the jurors who complained, as an expression of personal prejudice relating to the defendant’s appearance and path of travel in and out of the courtroom, the trial court was not obligated to extend the trial further by allowing additional voir dire. A very lengthy voir dire had previously been allowed.

The right to trial by an impartial jury, as guaranteed by the Sixth and Fourteenth Amendments to the United States Constitution, assures “to the criminally accused a fair trial by a panel of impartial, ‘indifferent’ jurors.” Groppi v. Wisconsin, 400 U.S. 505, 509, 91 S.Ct. 490, 492, 27 L.Ed.2d 571 (1971); Irvin v. Dowd, 366 U.S. 717, 722, 81 S.Ct. 1639, 1642, 6 L.Ed.2d 751 (1961). In this regard the United States Supreme Court has defined the constitutional standard which all criminal trials must meet:

Due process means a jury capable and willing to decide the case solely on the evidence before it, and a trial judge ever watchful to prevent prejudicial occurrences and to determine the effect of such occurrences when they happen.

Smith v. Phillips, 455 U.S. 209, 217, 102 S.Ct. 940, 946, 71 L.Ed.2d 78 (1982).

When a non-frivolous suggestion is made that a jury may be biased or tainted, the court must undertake an adequate inquiry into whether the alleged tainting incident occurred and whether it was prejudicial. United States v. Corbin, 590 F.2d 398 (1st Cir.1979). In Remmer v. United States, 347 U.S. 227, 229, 74 S.Ct. 450, 451, 98 L.Ed. 654 (1954), the United States Supreme Court stated that in order to protect the integrity of jury proceedings, the trial court should not decide and take final action ex parte on allegations of jury prejudice, “but should determine the circumstances, the impact thereof upon the juror, and whether or not it was prejudicial, in a hearing with all interested parties permitted to participate.” Id. at 230, 74 S.Ct. at 451. See Smith v. Phillips, supra, 455 U.S. at 215, 102 S.Ct. at 944 (“This Court has long held that the remedy for allegations of juror partiality is a hearing in which the defendant has the opportunity to prove actual bias.”), and United States v. Pennell, 737 F.2d 521 (6th Cir.1984) (Remmer controls the question of how the court “should proceed where such allegations are made, i.e., a hearing must be held during which the defendant is entitled to be heard.”) Within that framework, a court has broad, though not unlimited, discretion to determine the extent and nature of its inquiry into allegations of juror bias. United States v. Corbin, supra, 590 F.2d at 400.

In a federal habeas action such as the one at bar, the Supreme Court has held that a trial judge’s findings with regard to juror prejudice are presumptively correct under 28 U.S.C. § 2254(d). Smith v. Phillips, supra, 455 U.S. at 209, 102 S.Ct. at 940. The Court added “that federal courts in such proceedings must not disturb the findings of state courts unless the federal habeas court articulates some basis for disarming such findings of the statutory presumption that they are correct and may be overcome only by convincing evidence.” Id. at 218, 102 S.Ct. at 946.

Petitioner claims that his rights to a fair trial and due process were violated by the trial court’s refusal to conduct further voir dire proceedings of the seated jury after their exposure to prejudicial comments by another juror, or in the alternative, to disqualify the jury entirely. The trial court overruled these motions without elaboration or comment.

One of the difficulties encountered in the resolution of the case at bar is the absence of any specific findings made by the trial court. This Court is highly sensitive to its obligation to defer to such fact findings if they are discernible. It is, however, reasonable to infer that after a hearing the trial court found (1) that the juror made the statements complained of in the presence of one or more of the other impanelled jurors and (2) that defense counsel’s suggestion that the statements may have biased or tainted the other jurors was frivolous, or that the damage, if any, that had been done was cured when the juror was excused.

As stated above, unless a suggestion that a jury may be biased or tainted is found to be frivolous, the court must undertake an adequate inquiry into whether the alleged tainting incident occurred and whether it was prejudicial. In my view, a suggestion of bias requiring an adequate inquiry need satisfy a rather low threshold of significance.

For example, in United States v. Corbin, supra, on the evening of the second day of trial, the court was told that a juror was alleged to have been overheard to say, while the jury was being impanelled, that Corbin (the defendant) was guilty. Such a statement made before any evidence was heard at trial is somewhat similar to the remark allegedly made by the offending juror in the case at bar to the effect that defendant Hook looked like a criminal.

The United States Court of Appeals for the First Circuit disagreed with Corbin’s contention that, in denying his motion for mistrial due to jury bias, the trial court’s investigation and findings thereon were insufficient. The First Circuit noted that the trial court had interrogated the jurors most likely to have heard the alleged prejudicial comment. The Court of Appeals also inferred from its remarks that, pursuant to the investigtion the trial court found that (1) the jurors’ testimony did not support a finding that the prejudicial statement had been made, (2) the possibility remained that the comment may have been made, and (3) whatever damage, if any, that had been done was cured when the offending juror was excused. Noting that the juror’s alleged statement seemed “more a piece of eccentricity than a meaningful comment,” the First Circuit concluded that the trial court did not err in its handling of the situation “[gjiven the circumstances, and the information that the court elicited from the jurors ...” Id. at 400. In sum, while discounting the importance of the offending juror’s alleged comment, the First Circuit rested its holding on the adequacy of the trial court’s investigation and findings.

As mentioned above, the trial court's findings, even those established solely by inference, are to be accorded deference by this Court and treated as presumptively correct.

Nevertheless, despite the most generous benefit of such inference drawing, any finding by the trial court in this case that the juror’s statements were frivolous must be found unreasonable by this Court in light of the generally prejudicial nature of the statements made and the total absence of facts of record supporting the trial court’s conclusion to the contrary. The Court does not hold that, as a matter of law, a trial court may never reasonably find statements such as those allegedly made in this case or in Corbin to be frivolous, but that, standing totally by themselves on the record, there is no reasonable basis for this Court to agree that such statements are on their face so frivolous or nonprejudicial as to obviate the trial court’s duty to conduct an adequate investigation into whether such statements were made and their actual prejudicial effect on the jury.

The Court of Appeals for Franklin County, Ohio, found and concluded that the alleged statements could not have prejudiced the other jurors because they constituted an expression of personal opinion on matters not at issue at trial. While in a habeas corpus proceeding this Court is obligated to also extend presumptive deference to findings or explanation made by a state appellate court, this Court must reject the general proposition that when a juror makes any allegedly offensive remark about a defendant to the other jurors which is a personal opinion and does not directly refer to an issue of trial, defense counsel should be denied any opportunity for a Remmer-type hearing. Depending on the totality of the circumstances, a general statement may well be just as potentially harmful as a statement of fact or opinion going to the merits of an issue at trial. In the instant case, and in light of the nature of the statements allegedly made herein, in this Court’s view the trial court’s duty to conduct a hearing concerning any potential effect on the other jurors cannot be avoided by, in effect, concluding without explanation that there is no reasonable doubt that such statements could not have caused any juror to be biased.

The record indicates that a hearing was held at which the trial court and both parties agreed that the allegedly prejudicial statements had indeed been made and had been heard by other members of the jury. It does not appear, however, that the court undertook any sort of inquiry into whether the statements actually resulted in jury prejudice or conducted a hearing at which defendant was given the opportunity to demonstrate actual jury bias. As the court stated in Remmer v. United States, supra, 347 U.S. at p. 229, 74 S.Ct. at p. 451, “We do not know from this record, nor does the petitioner know, what actually transpired, or whether the incidents that may have occurred were harmful or harmless.” It is just such uncertainty that gives rise to a constitutional necessity that defendant be given an opportunity to persuade the Court that there was bias.

Because of the Court’s inability to find, on the record before it, that the statements made were frivolous, or were subjected to an inquiry as to their actual prejudicial effect on the jury, the Court is unable to conclude that petitioner was accorded a fair trial.

This Court expresses no opinion on the issue of the most appropriate means now available to the State of Ohio by which the constitutional error in this case may be remedied. It is for the courts of this State to determine at this point whether or not petitioner’s constitutional right to an impartial jury may yet be assured by an evidentiary hearing into the issue of actual juror bias, without necessarily ordering a retrial of petitioner.

In accordance with the foregoing, it is hereby ORDERED that a writ of habeas corpus discharging petitioner shall issue sixty (60) days from the date of this order unless the State of Ohio releases petitioner, or provides petitioner an adequate opportunity to prove actual juror bias, or commences retrial within that period. If respondent files a timely notice of appeal, however, this Order shall be stayed until sixty (60) days following the docketing in this Court of the mandate from the United States Court of Appeals for the Sixth Circuit.

It is so ORDERED.

      . The nine-count indictment charged petitioner and co-defendants Robert Carter, David Cassan, Tonia Colley, and Samuel Minico with offenses including gambling, operating a gambling house, and possession of drugs. Petitioner was charged only in the first three counts of the indictment.

      . Violations of §§ 2915.02 and .03 are generally misdemeanors in the first degree; however, petitioner’s previous gambling conviction in 1981 raised the violations to felonies of the fourth degree. See, R.C. 2915.02(D) and 2915.03(B).

      . The Court notes that in United States v. Thomas, 463 F.2d 1061 (7th Cir.1972), after holding that the district court had insufficiently investigated allegations that the jury had read and discussed a prejudicial news article, the Court of Appeals stated, "we find that this failure necessitates a new trial. Remand for the purposes of investigating the jury would be fruitless at this point, over two years after the close of the original proceeding." Id, at 1065.


source: Caselaw Access Project

author: ROBERT L. CARTER, District Judge.

license: Public Domain

text:
    Ernestine JOHNSON, Plaintiff, v. Margaret M. HECKLER, Secretary of the Department of Health and Human Services, Defendant.
    No. 84 Civ. 1846 (RLC).
    United States District Court, S.D. New York.
    Nov. 9, 1984.
    On Motion to Reargue Dec. 21, 1984.

      Norman Siegel, New York City, for plaintiff; Gary S. Stone, New York City, of counsel.
    Rudolph W. Giuliani, U.S. Atty., S.D. N.Y., New York City, for defendant; Rosemarie E. Matera, Sp. Asst. U.S. Atty., New York City, of counsel.
   OPINION

ROBERT L. CARTER, District Judge.

Plaintiff Ernestine Johnson seeks review of a final order of the Secretary of Health and Human Services terminating her entitlement to Social Security disability benefits. 42 U.S.C. § 405(g). Plaintiff, now 50 years old, worked for 17 years as a machine operator in a book bindery until 1971, when she injured her left leg in a work-related accident. She was adjudged to be disabled in November, 1971, and began receiving disability benefits. The Secretary reviewed Johnson’s case in 1982; a determination that her disability had ceased as of March, 1982, was upheld on reconsideration and affirmed by an ALJ after an evidentiary hearing. The Appeals Council declined to review the ALJ’s ruling, which thereby became the final decision of the Secretary. 20 C.F.R. § 404.981.

I

The Secretary is authorized to terminate disability benefits to a claimant whose disability has ceased. 42 U.S.C. § 425(a). Under the medical improvement standard recently adopted by the Second Circuit, “the Secretary may terminate benefits to a person previously adjudged to be disabled only upon substantial evidence that the individual’s condition has improved to the point that he or she is no longer disabled, or that the initial finding of disability was erroneous.” De Leon v. Secretary of Health and Human Services, 734 F.2d 930, 936 (2d Cir.1984). See also Rush v. Secretary of Health and Human Services, 738 F.2d 909 (8th Cir.1984); Dotson v. Schweiker, 719 F.2d 80 (4th Cir.1983); Kuzmin v. Schweiker, 714 F.2d 1233 (3d Cir.1983); Patti v. Schweiker, 669 F.2d 582 (9th Cir.1982); Velazquez v. Heckler, 586 F.Supp. 125 (S.D.N.Y.1984) (Sweet, J.); Gibbons v. Heckler, 583 F.Supp. 1080 (S.D. N.Y.1984) (Carter, J.); Mersel v. Heckler, 577 F.Supp. 1400 (S.D.N.Y.1984) (Carter, J.).

The Secretary must compare the claimant’s condition at the time of the Secretary’s review, with the claimant’s condition when benefits were first granted. De Leon v. Secretary of Health and Human Services, supra, 734 F.2d at 937. Once it is established that a particular condition is disabling, the claimant “is entitled to a presumption that as long as there is no change in the condition itself, or in the governing statutes or regulations, neither will the statutory classification of disability be changed.” Id.

Here, the Secretary made no attempt to compare Johnson’s current condition with her condition in 1971. Instead, the AU, in her decision, merely followed the established five-step procedure for determining whether an individual is currently disabled, 20 C.F.R. §§ 404.1520, 416.920, and terminated benefits upon deciding that Johnson could return to her old job now. The record contains no substantial evidence that Johnson’s condition had improved since the 1971 disability determination. In fact, the little evidence there is in the record suggests that Johnson’s condition actually deteriorated. For example, the 1981 report of Dr. J. Samuel notes that Johnson apparently complained of more health problems in 1981 than in 1971. (Record at 73). And Johnson, describing the leg injury she sustained in 1971, testified at her hearing as follows:

Q: Alright [sic]. Does it ever get better or worse?
A: Well, at the beginning it got a little better and then it got worse.
Q: How is it now?
A: Well, its [sic] much worse than it was when it was first there. (Record at 53).

In failing to compare Johnson’s condition in 1971 with her condition in 1982, the Secretary applied an erroneous legal standard to her review of Johnson’s case. Accordingly, the Secretary’s determination is reversed. As was noted in Gibbons, supra, 583 F.Supp. at 1082, “[t]he court cannot, itself, apply the ‘medical improvement’ standard to the evidence in the record because the record is largely devoid of the detailed information about plaintiff’s previous medical condition that would allow the court to make such an evaluation.” We therefore remand this case to the Secretary for a rehearing to determine whether there has been improvement in plaintiff’s medical condition.

II

We also find that the Secretary’s determination that Johnson is now able to return to her old job at the book bindery is not supported by substantial evidence. Strictly speaking, we do not need to reach this issue, since the Secretary terminated benefits without first finding that the claimant’s condition had improved, and that by itself is sufficient ground to reverse the Secretary. However, it is appropriate to scrutinize the Secretary’s determination that Johnson can now go back to work since the Secretary may terminate benefits only if she finds both that the claimant’s condition has improved and that the claimant is not currently disabled.

The AU based her determination that Johnson could return to her old job on two factual findings: first, that despite her impairments Johnson could sit or stand for up to one hour, and second, that Johnson’s old job could be performed either sitting or standing, as Johnson’s condition required. (Record at 40-41). There is substantial evidence in the record to support the Secretary’s first finding: the report of the treating physician (Record at 116), the report of a consulting physician called in by the Secretary (Record at 105), and Johnson’s own testimony that she could sit for 45 minutes or stand for up to 30 (Record at 58). But there is no substantial evidence in the record to support the Secretary’s second finding — that book binders could alternate or choose between sitting and standing while on the job. In the Vocational Report Form submitted to the Secretary on November 8, 1981, Johnson reported that in an eight-hour workday at her former job, workers would walk and stand for the full eight hours, and sit for none. (Record at 89). It is true that at her hearing Johnson answered the question, regarding work conditions, “Did you sit or stand or both?” by saying, “Both at times.” (Record at 51). But this testimony alone would not be substantial evidence that she could sit and stand in units of time mandated by her weakened physical stamina. Moreover, Johnson explained her answer in an affidavit to the Appeals Council: “[T]he feeders stand and bend continuously for the entire work day, except for a ten-minute coffee break in the morning and afternoon, and a 45-minute lunch break____ The feeder’s job, therefore, demanded constant standing and bending. The only job on the bindery for which one could sit down was single sheet binding. This was a very rare assignment — perhaps once or twice a year. Indeed, they were in the process of phasing out this single sheet binding method.” (Record at 10-11). There is no other evidence in the record regarding work conditions at the bindery.

Taken as a whole, the record does not contain substantial evidence to support the finding that Johnson’s old job could be performed either sitting or standing. The final determination that Johnson, with her limited capacities for sitting and standing, is currently able to return to that job is thus also without substantial evidence and is, accordingly, reversed.

Under the applicable Social Security regulations, if there is no substantial evidence that the claimant can return to his or her old job, the Secretary’s next line of inquiry is to determine whether the claimant could perform any other job in the national economy. 20 C.F.R. §§ 404.1520, 416.920. It is inappropriate for the court to make that inquiry, since it is the Secretary’s burden to prove that there is other work which the claimant could perform. Parker v. Harris, 626 F.2d 225, 231 (2d Cir.1980). The question of claimant’s current disability is, therefore, remanded to the Secretary.

Ill

In sum, the Secretary’s determination is reversed and remanded for rehearing. The court hereby orders the reinstatement of plaintiff's benefits retroactive to the date of termination, unless and until the Secretary determines that plaintiff’s condition has improved to the point that she is no longer disabled, or that the initial finding of disability was erroneous.

IT IS SO ORDERED.

ON MOTION TO REARGUE

This action was commenced on March 15, 1984, when plaintiff filed a complaint seeking review of the final determination of the Secretary of Health and Human Services terminating her disability benefits. The Secretary answered on August 10, 1984. On November 9, 1984, the court reversed the Secretary’s decision because the Secretary had followed improper procedure in terminating benefits. The court was unable to determine, based on the evidence in the record before it, whether plaintiff’s benefits should have been terminated on the merits, so the case was remanded to the Secretary for rehearing. The court ordered payment of benefits retroactive to the date of termination because there had been no valid administrative finding overruling the original determination by the Secretary granting plaintiff benefits, and because of delays by the Secretary in responding to plaintiff’s complaint. The Secretary now moves to reargue that portion of the order directing the Secretary to pay retroactive benefits.

The Secretary has directed the court’s attention to § 2 of the Social Security Disability Benefits Reform Act of 1984, Pub.L. No. 98-460, § 2, 98 Stat. 1794, 1794-1799. The court was unaware of this provision when it rendered its opinion on November 9. Subsection 2(d) of the Reform Act requires the remand of all benefit-termination cases “relating to medical improvement” where judicial review was pending on September 19, 1984. Plaintiff and the Secretary agree that this includes the instant case. Section 2(e) of the Reform Act provides that any individual whose case is remanded under § 2(d) may elect to have benefits restored “beginning with the month in which he makes such election ...” Such payments, if elected, “shall begin with the payment for the month in which [the] individual makes such election” § 2(e)(2).

Plaintiff argues that the court retains the power to order remedies more expansive than the one provided for in the statute. The court disagrees. In providing for the particular remedy of payments beginning with the month of election, Congress intended to exclude more expansive remedies, such as payments retroactive to termination. Expressio unis est exclusio alterius. National Railroad Passenger Corp. v. National Association of Railroad Passengers, 414 U.S. 453, 458, 94 S.Ct. 690, 693, 38 L.Ed.2d 646 (1974). The Secretary’s motion is therefore granted. The order to pay retroactive benefits is hereby rescinded.

The Secretary filed this motion to reargue on November 20, 1984. Plaintiff indicated her intention to oppose the Secretary’s motion in a letter to chambers on November 30, 1984. A copy was sent to counsel for the Secretary. This letter evidenced plaintiff’s election to protect her benefits. The court holds that plaintiff would have elected to receive benefits in November had the court’s November 9 ruling not ordered retroactive benefits (thus eliminating the need for plaintiff to make the election herself). Consequently, the Secretary is ordered to pay benefits pursuant to § 2 of the Reform Act, commencing with the November payment.

IT IS SO ORDERED.

      . This case originally came before us on defendant’s motion to extend the time to answer, and plaintiff’s request for interim benefits. While the motion and request were sub judice, defendant answered. We are now exercising the power granted by 42 U.S.C. § 405(g) to review the Secretary’s determination upon the pleadings and transcript of the record. Since we are reversing the Secretary’s determination,, remanding for a rehearing, and ordering benefits reinstated, both defendant's original motion and plaintiffs request are now moot.

      . The standard of judicial review of the Secretary’s determination regarding current disability is whether the determination is supported by substantial evidence. 42 U.S.C. § 405(g). Substantial evidence means "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971).

      . The medical improvement standard requires "substantial evidence that the individual’s condition has improved to the point that he or she is no longer disabled," De Leon v. Secretary of Health, supra, 734 F.2d at 936, emphasis added. The Secretary could also terminate if she found, based on substantial evidence, that the initial finding of disability was erroneous. Id. In the instant case, however, there is no evidence in the record suggesting that the initial finding was erroneous.

      . The record shows that Johnson suffers primarily from a large ulcer on her left lower calf, and also complains of diabetes, hypertension, an enlarged heart, osteoarthritis, obesity and varicose veins.

      . New and material evidence submitted to the Appeals Council after the AU’s decision becomes part of the entire record. 20 C.F.R. § 404.970. This court is reviewing the Secretary’s determination, not the AU’s, 42 U.S.C. § 405(g), so it is proper for the court to take into account evidence available to the Appeals Council — and thus to the Secretary — even if the evidence was not available to the AU.


author: SHADUR, District Judge.

text:
    Spurgeon GREEN, M.D., Plaintiff, v. SILVER CROSS HOSPITAL, et al., Defendants.
    No. 83 C 5375.
    United States District Court, N.D. Illinois, E.D.
    Nov. 9, 1984.
    James T. Bradley, Stephen G. Seliger, Chicago, for plaintiff.
    Robert J. Baron, George J. Vosicky, Thomas, Wallace, Feehan, Baron & Kaplan, Ltd., Joliet, 111., Alan 0. Amos, Collins, Amos & Uscian, Chicago, 111., Richard T. Buck, McKeown, Fitzgerald, Zollner, Buck, Sangmeister, Hutchison, Joliet, 111., for defendants.
   MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

Spurgeon Green (“Green”) has brought a 15-count Complaint against Silver Cross Hospital (“Silver Cross”), where Green was formerly employed as a staff physician, and ten of Silver Cross’s officers and staff physicians. Complaint Count I charges defendants discriminated against Green because he is black, in violation of 42 U.S.C. § 1981. Count II asserts defendants conspired to deprive Green of equal protection of the laws in violation of 42 U.S.C. § 1985(3). Counts III through XV are pendent state law claims.

This Court’s December 7, 1983 opinion rejected defendants’ Fed.R.Civ.P. (“Rule”) 12(b)(6) motion to dismiss Green’s federal claims advanced in Complaint Counts I and II. Now various of the individual doctor defendants have moved (1) for summary judgment on the pendent state law claims in Counts VIII through XIV and (2) to dismiss the pendent claim in Count XV. For the reasons stated in this memorandum opinion and order:

1. Summary judgment is granted as to Counts VIII through XIV, which are dismissed with prejudice.
2. Green is given leave to amend Count XV as proposed in his response to the motion to dismiss that count (subject however to the application to Count XV of the principles expressed in this opinion as to the other counts).

Facts

Green complains of allegedly racially-motivated, invidiously discriminatory revocation of his staff privileges at Silver Cross. Complaint Counts VIII through XIV charge seven of the Silver Cross staff physicians with defamatory statements impugning Green’s competence as a doctor. Count XV says Silver Cross and the individual defendants engaged in conduct interfering with Green’s justified business expectations as a practitioner.

Though all the individual physicians named in Counts VIII through XIV filed what they label as motions for summary judgment, their supporting affidavits do not even address the truth or falsity of their statements the Complaint charges as false and defamatory. Instead they say only the statements were made as testimony at an April 14, 1983 hearing before Silver Cross’s Credentials Committee, which met at that time to consider the prior suspension of Green’s hospital privileges.

Defendants’ Summary Judgment Motions

Defendants’ motions for summary judgment were really ill-advised. Rule 56 is not designed for a motion addressing only one or more issues in a separate claim, as distinct from the claim itself. SFM Corp. v. Sundstrand Corp., 102 F.R.D. 555, 558-59 (N.D.Ill.1984). Rather summary judgment is supposed to be a substitute for trial where no questions of credibility or other factual disputes pose “a genuine issue as to any material fact” (Rule 56(c)). 10 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2712, at 564-67 & 567 n. 6 (1983). To the same effect, see the Advisory Committee on Rules comment on the 1963 amendment to Rule 56(e):

The very mission of the summary judgment procedure is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.

It is therefore the movant’s obligation to support its motion by advancing all the relevant facts, without holding back evidence that would be presented at trial. Keene Corp. v. International Fidelity Insurance Co., 561 F.Supp. 656, 665-66 (N.D.Ill.1983) (on motion for reconsideration), adopted and affirmed 736 F.2d 388, 393 (7th Cir.1984).

For those reasons, had this Court disagreed with defendants’ position as to the Illinois Medical Studies Act (the “Act”) dealt with hereafter, defendants might well have been foreclosed from disputing the falsity of their statements about Green. Of course they did not intend any such result, but fortunately this Court does not have to decide that question in light of its conclusion as to the scope of the Act. That misperception by defendants’ counsel, and the matching errors by Green’s counsel (see n. 3), have been just another illustration of a frequently-encountered phenomenon — a fundamental misunderstanding of what summary judgment practice is really about.

This opinion turns to the issue on which defendants thus staked their all (though they did not mean to): the effect of the Act, Ill.Rev.Stat. ch. 110, 11118-2101 and 8-2102:

§ 8-2101. Information obtained. All information, interviews, reports, statements, memoranda or other data of ... committees of accredited hospitals or their medical staffs, including ... Credential Committees and Executive Committees, (but not the medical records pertaining to the patient), used in the course of internal quality control or of medical study for the purpose of reducing morbidity or mortality, or for improving patient care, shall be privileged, strictly confidential and shall be used only for ... granting, limiting or revoking staff privileges, except that in any hospital proceeding to decide upon a physician’s staff privileges, or in any judicial review thereof, the claim of confidentiality shall not be invoked to deny such physician access to or use of data upon which such a decision was based.
§ 8-2102. Admissibility as evidence. Such information, records, reports, statements, notes, memoranda, or other data, shall not be admissible as evidence, nor discoverable in any action of any kind in any court or before any tribunal, board, agency or person.

Although those provisions have been and are categorized as “evidentiary” (both in their former home in the “Evidence and Depositions” chapter of the Illinois statutes and now in the “Evidence” article of the Code), their language and their history confirm they were intended to and do have an important substantive impact.

“Privileged” is a term with more than one possible meaning. In the purely evidentiary sense it denotes a communication that cannot be inquired into because public policy encourages full and free interchange between the parties to that communication in light of their special relationship — attorney-client, husband-wife and so on. By contrast, in substantive terms (when we speak of “absolute privilege” or “conditional privilege”) the word refers to an insulation from liability for like reasons. Though the two concepts may coexist, there is not a necessary one-to-one correlation between them.

Here the history of the statute and the case law applying it compel a decision for defendants. In the version of Act § 1 as amended in 1977, the word “privilege” did not appear at all and the “except” clause at the end of the statute was very different:

except that the claim of confidentiality shall not be invoked to deny a physician access to or use of data upon which a decision regarding his staff privileges was based.

Matviuw v. Johnson, 70 Ill.App.3d 481, 26 Ill.Dec. 794, 388 N.E.2d 795 (1st Dist.1979) If Matviuw I”) dealt with a defamation claim wholly parallel to Green’s in this case and held (1) the defamatory statements giving rise to the claim were within the just-quoted “staff privileges” exception of Act § 1 and (2) Act § 2’s prohibition against admissibility into evidence did not extend to statements that thus fell within that exception and were hence nonconfidential. In reaching those conclusions the Matviuw I court specifically characterized its search as one for the legislative intent as to the “privilege” to be accorded such statements (70 Ill.App.3d at 486, 388 N.E.2d at 798).

Almost immediately the Illinois General Assembly responded with material amendments to the Act (doubtless reflecting the lobby that had first produced the doctor-protective legislation was still both alert and effective). Later in 1979 the “except” clause in Act § 1 was changed to its current form, so that the only judicial proceeding within the exception (that is, as to which the claim of confidentiality would not bar access by the physician involved) was one to review the revocation of staff privileges itself. That of course carried the necessary implication that strict confidentiality did extend to another kind of judicial proceeding — such as the defamation actions in Matviuw and in this case. Then in 1981 any even arguable loophole in that respect was closed by insertion of the word “privileged” into Act § 1 and the words “nor discoverable” into Act § 2.

Those amendments were — on their face — plainly substantive in nature. And if any doubt could exist on that score, it would be dispelled by Matviuw v. Johnson, 111 Ill.App.3d 629, 67 Ill.Dec. 370, 444 N.E.2d 606 (1st Dist.1982) (“Matviuw 77”). In holding the amendments could not be applied retroactively to override Matviuw 1, the same Illinois Appellate court said (id. at 632, 67 Ill.Dec. at 372, 444 N.E.2d at 608, citations omitted):

Statutes and amendatory acts are generally presumed to operate prospectively absent clear statutory language to the contrary— One exception to this general rule allows retroactive application even absent such statutory language where the statute or amendment in question relates only to procedural matters---- This exception is inapplicable, however, when the operation of a procedural rule affects the assertion of a substantive right or destroys that right____ The amendments in question here do not contain language specifically requiring retrospective application to pending cases. Although rules pertaining to discovery and the admissibility of evidence would generally be characterized as procedural, we find the exception to be inapplicable under the circumstances of the present case. Since plaintiffs cause of action is based primarily on the statements in question, application of the amendments to bar this discovery and admissibility would in effect prevent plaintiff from proceeding with this action and would take on substantive dimensions.

Nor is there any question of the effect of the 1979 and 1981 amendments. On that score Matviuw II, id. said simply and without qualification:

We agree that the Act as amended, if applicable to the present case, would render privileged the statements in question.

Defendants here do not suffer from the infirmity of retroactivity that precluded application of the present version of Act §§ 1 and 2 to the plaintiff in Matviuw II. Defendants’ statements of which Green complains were made after the effective date of both statutory amendments. Accordingly the Act makes the statements “privileged” in the substantive sense: They cannot be the subject of a defamation claim.

Green responds by invoking Qasem v. Kozarek, 716 F.2d 1172 (7th Cir.1983). But Qasem involved the construction of the Wisconsin Peer Review Statute, Wis.Stat. § 146.37 (1981-82), which specifically limited immunity from civil suit to persons “acting in good faith” in medical peer review proceedings (the statute is quoted at 716 F.2d 1176). Illinois’ statute is not so restricted. It rather makes statements in such proceedings flatly “privileged” and “not ... admissible as evidence ... in any action of any kind in any court____” This Court cannot amend, under the guise of statutory construction, what the Illinois General Assembly has done with obvious deliberateness. Defendants are entitled to summary judgment on each of Counts VIII through XIV.

Complaint Count XV

Drs. Trager, Choksi and Ajmere assert claimed defects in Count XV. Green seeks to cure the complained-of matters by offering an amended version of that count. Those defendants do not object, and this Court will grant leave to file the amendment.

It should be observed however that to the extent the claim for tortious interference is sought to be grounded in statements wrapped in the mantle of the Act, the privilege and non-admissibility provisions of Act §§ 1 and 2 apply to the statements. After all, those statutory provisions are not limited to defamation actions — they extend to “any action of any kind in any court.”

Conclusion

There is no genuine issue of material fact as to Complaint Counts VIII through XIV, and the defendants named in those counts are entitled to a judgment as a matter of law. In accordance with Green’s request Count XV may be amended (and to avoid confusion, it should continue to be numbered Count XV despite the now-disposed-of intervening counts).

Green has in the past sought to modify his pleadings by language included in memoranda (and not in formal Complaint amendments), so that no self-contained current version of the Complaint exists. Green is therefore ordered to file a new complaint (except for the exhibits, which may simply be incorporated by reference) captioned the “Second Amended Complaint” on or before November 19, 1984. Then on or before November 29, 1984 defendants are ordered to answer or otherwise plead to any portions of the Second Amended Complaint to which they have not previously pleaded.

      . Before the recodification of chapter 110 (formerly the Civil Practice Act) into the Code of Civil Procedure, those sections were found at IU.Rev.Stat. ch. 51, ¶¶ 101 and 102 (to avoid confusion in referring to the successive versions of the statute, this opinion will speak of them simply as “Act § 1” and “Act § 2"). Just a few years ago this Court held the Act’s bar on admissibility of evidence was inapplicable to a federally -based claim (or, if viewed as applicable, would be void under the Supremacy Clause), Tambone v. Memorial Hospital for McHenry County, 79 C 2012 (Aug. 21, 1980). Our Court of Appeals sustained that holding sub nom. Memorial Hospital for McHenry County v. Shadur, 664 F.2d 1058, 1061-64 (7th Cir.1981). But nothing in those decisions impairs the validity of the Act as it impacts state claims (such as defamation claims), which are at issue here.

      . This should not be taken in a pejorative sense. Neither this Court nor any other sits in judgment on legislative motivations (unless of course those motivations bear on constitutionality).

      . Green’s counsel engages in his own casual disregard of Rule 56 by making unsupported assertions of fact in his responsive memorandum, even though Rule 56(e) clearly mandates any response purporting to show a genuine issue for trial must be presented by affidavit or otherwise admissible evidence. Even apart from that defect in the manner of presentation, however, Green’s added argument would appear to present problems under the Act. Essentially he urges a waiver of confidentiality because other persons were at the Credentials Committee meeting. That however confuses the first sense of "privilege” discussed in the text — as to which communication outside the privileged classes may destroy the right to absolute confidentiality — with the second and substantive sense of "privilege” as meaning no liability, as to which the same result does not necessarily follow. It will be remembered Act § 2 makes the statements "not ... admissible as evidence ... in any action of any kind ...” — as unlimited a prohibition as can be imagined.


text:
    FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, Petitioner, v. GLEN ELLYN SAVINGS AND LOAN ASSOCIATION, Respondent.
    No. 84 C 7685.
    United States District Court, N.D. Illinois, E.D.
    Nov. 13, 1984.

      H. Joan Nichols, Gerald F. Chapman, Rosemary Stewart, Washington, D.C., Linda A. Wawzenski, Asst. U.S. Atty., Chicago, 111., for petitioner.
    Robert C. Liston, Wheaton, 111., John Franklin Rosch, Glen Ellyn, III, for respondent.
   MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

Federal Savings and Loan Insurance Corporation (“FSLIC”) has filed its Petition under 12 U.S.C. § 1730(k)(2) for enforcement of a cease and desist order (the “Order”) issued August 11, 1976 against Glen Ellyn Savings and Loan Association (“Glen Ellyn”), an institution insured by FSLIC. For the reasons stated in this memorandum opinion and order, FSLIC’s petition is granted.

Background

In 1976 FSLIC charged Glen Ellyn with numerous violations of federal and state regulatory provisions applicable to Illinois-chartered, FSLIC-insured savings and loan associations. Those violations, in FSLIC’s view, were “unsafe or unsound practices” warranting the entry of a cease and desist order as provided in Section 1730(e). Glen Ellyn chose not to contest FSLIC’s judgment. It consented to entry of the Order, avoiding the institution of cease-and-desist proceedings under the statute.

Periodic examinations of Glen Ellyn since 1976 have revealed continuing violations of various provisions of the Order. FSLIC has not responded by seeking judicial enforcement of the Order. Instead it has engaged in frequent negotiation and discussion with Glen Ellyn to obtain correction of the violations — informal means upon which FSLIC typically relies to seek compliance with a cease-and-desist order. Only in cases where such efforts repeatedly fail does FSLIC resort to judicial enforcement proceedings. This year the examiner’s discovery of violations of ten of the Order’s 26 provisions prompted FSLIC’s resort to this Court for enforcement.

During this Court’s October 5, 1984 evidentiary hearing FSLIC presented the testimony of Larry E. Ferries (“Ferries”), the Federal Home Loan Bank Board (“Board”) examiner who conducted the 1984 examination. Ferries listed and explained the multiple violations of the Order reflected in the examination report. FSLIC also submitted copies of reports covering the preceding three years’ examinations.

Glen Ellyn offered no testimony at the hearing. It introduced copies of letters submitted in response to FSLIC’s examination reports. Def. Ex. 2-6. While those letters question the existence of some of the violations identified by the examiners, they acknowledge the accuracy of the examination reports as to numerous violations and indicate Glen Ellyn’s intent to take appropriate corrective action.

Glen Ellyn’s real defense to the Petition is a laches argument (tendered by an “Addendum to Answer and Affirmative Defenses,” filed the day of this Court’s hearing). It contends FSLIC had not sought enforcement of the Order in the more than eight years since it was agreed to, a period in which there have been changes in (1) the ownership of Glen Ellyn’s common stock, (2) the composition of Glen Ellyn’s board of directors and (3) Glen Ellyn’s management. Glen Ellyn asserts those changes were predicated, at least in part, on the belief FSLIC would seek no further enforcement of the Order. Under those circumstances, Glen Ellyn says, FSLIC should be barred from enforcement by the equitable doctrine of laches.

FSLIC’s Right to Enforcement

In both contractual and statutory terms, FSLIC’s right to enforcement is plain. Glen Ellyn’s consent to entry of the Order in 1976 — and to its enforceability thereafter — was unequivocal (PI. Ex. 1):

Glen Ellyn stipulates and agrees that said Order shall be deemed to be a “cease-and-desist order which has become final” as defined in Section 407(q)(l)(A) of the Act (12 U.S.C. § 1730(q)(l)(A)), that it fully complies with all requirements of law, and that the said Order shall become effective upon its issuance and be enforceable by the FSLIC under the provisions of Section 407(k)(2) of the Act (12 U.S.C. § 1730(k)(2)).

Nor does the Order contain any expiration provision. Indeed, Section 1730(e)(2) negates any concept comparable to a “sunset law":

A cease-and-desist order ... shall remain effective and enforceable except to such extent as it is stayed, modified, terminated, or set aside by action of the Corporation or a reviewing court.

FSLIC itself has declined to take any such action. In March 1980 Glen Ellyn petitioned FSLIC to terminate the Order. In denying that petition, Board supervisory agent David J. Kalina explained (Ans. Ex. B):

1. As a matter of policy, cease and desist orders will not be terminated until five years after issuance date.
2. The Board would usually require a record of no violations for at least two consecutive examinations immediately preceding the termination.

Neither of those conditions had been met in 1980, and the second has yet to be. Absent some specific action to terminate by FSLIC, the Order thus remains in effect and subject to enforcement at FSLIC’s discretion.

That conclusion is buttressed by the language of Section 1730(k)(2), which says in so many words (and without any qualifying language) FSLIC “in its discretion” may seek enforcement in the courts. That discretionary delegation is reflective of Congress’ aim in creating the cease-and-desist powers (S.Rep. No. 1482, 89th Cong. 2d Sess., reprinted in 1966 U.S.Code Cong. & Ad.News 3532, 3537-38 (hereafter cited “S.Rep. at — ”)):

to provide the federal agencies supervising savings and loan associations with “additional flexible and effective supervisory powers” to supplement existing remedies that had proved “too drastic for use in many cases” as well as “too cumbersome to bring about prompt correction [when] promptness is very often vitally important.”

And such vesting of discretion is consistent with the general doctrine that an administrative agency’s special knowledge and expertise in the areas of its jurisdiction command judicial respect for the agency’s choices as to how it will exercise its remedial powers. NLRB v. Gissell Packing Co., 395 U.S. 575, 612 n. 32, 89 S.Ct. 1918, 1939 n. 32, 23 L.Ed.2d 547 (1969).

Laches

Faced with such an uncontrovertible showing of FSLIC's power to obtain enforcement, Glen Ellyn is compelled to fall back on a laches defense. Surprisingly the availability of such a defense to bar enforcement of an FSLIC cease-and-desist order appears to be a question of first impression.

Glen Ellyn does not really support its position with reasoning or authority. Instead it simply asserts enforcement of the Order at this late date would be fundamentally unfair (R. Mem. 9-10):

Petitioner may not have it both ways. If the violations are as severe and serious as alleged, Petitioner should have, in the discharge of its duties as establish[ed] by Congress, brought suit long ago to enforce the “cease and desist order.” If, on the other hand, as Respondent contends, the violations, if any, are minor, clerical and inevitable, the action of the Petitioner is not only barred by laches but is an abuse of authority.

FSLIC, by contrast, offers three arguments for the proposition that laches is not an available defense:

1. Nothing in the statute under which FSLIC operates contemplates the effective termination of a cease-and-desist order by a district court presiding over an enforcement proceeding.

2. Case law involving other governmental agencies indicates laches is no defense to agency enforcement of an otherwise valid order.

3. Laches is not appropriate in the circumstances of this case.

Those contentions will be addressed in turn.

1. Statutory Provisions

Section 1730(k)(2), after authorizing FSLIC’s resort to a federal district court for enforcement of a final cease-and-desist order, goes on to say:

[E]xcept as otherwise provided in this section no court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice or order under this section, or to review, modify, suspend, terminate or set aside any such order or notice.

Section 1730(j)(2) confers such jurisdiction in the course of judicial review by courts of appeal of cease-and-desist orders issued after a hearing before FSLIC:

Any party to the proceeding, or any person required by an order issued under this section to cease and desist from any of the violations or practices stated therein, may obtain a review of any order served pursuant to paragraph (1) of this subsection (other than an order issued with the consent of the institution or the director or officer or other person concerned, or an order issued under subsection (h)(1) of this section), by filing in the court of appeals of the United States for the circuit in which the principal office of the institution is located, or in the United States Court of Appeals for the District of Columbia Circuit, within thirty days after the date of service of such order, a written petition praying that the order of the Corporation be modified, terminated, or set aside____ Upon the filing of such petition, such court shall have jurisdiction, which upon the filing of the record shall, except as provided in the last sentence of said paragraph (1), be exclusive, to affirm, modify, terminate, or set aside, in whole or in part, the order of the Corporation.

No comparable statutory provision deals in terms with orders entered by consent.

Were this Court to pass upon the laches defense, FSLIC argues, it effectively would have reviewed or even “terminated” the Order — something it has no jurisdiction to do under Section 1730(k)(2) and Section 1730(j)(2). There is perhaps some surface plausibility to drawing a negative inference from the absence of a specific statutory provision as to consent orders that would parallel the last-quoted sentence of Section 1730(j)(2) (limited as it is to orders entered after hearing). But on analysis that contention proves too much.

Sections 1730(j)(2) and 1730(k)(2) clearly reflect the congressional intention that an enforcement proceeding should not become the occasion for second guessing FSLIC’s judgment in issuing the Order in the first place. But that cannot mean a district court presiding over an enforcement proceeding is nothing more than a rubber stamp — or more accurately, a strong arm. Section 1730(k)(2) provides, after all, that FSLIC may “apply to the United States district court ... for enforcement” (emphasis added). To the extent such an application is opposed on an equitable ground that does not go to the propriety or effectiveness of the order itself, but only to the question of its enforceability, the district court in the proper exercise of its jurisdiction under Section 1730(k)(2) must address them.

Glen Ellyn’s laches defense calls on this Court to determine whether a fundamental equitable doctrine is applicable to and bars enforcement of an otherwise valid cease- and-desist order. Jurisdiction to entertain FSLIC’s enforcement petition must embrace the power to make that decision.

2. Case Law

FSLIC cites numerous cases as establishing laches “cannot be asserted against the United States in its sovereign capacity to enforce a public right or to protect the public interest.” United States v. Arrow Transportation Co., 658 F.2d 392, 394 (5th Cir.1981). As the Supreme Court explained in Costello v. United States, 365 U.S. 265, 281, 81 S.Ct. 534, 543, 5 L.Ed.2d 551 (1961):

The reason underlying the principle, said Mr. Justice Story, is “to be found in the great public policy of preserving the public rights, revenues, and property from injury and loss, by the negligence of public officers.” United States v. Hoar, 26 Fed.Cas. 329, 330 (No. 15,373).

What is at stake here, of course, is not precisely “preserving the public rights, revenues, and property from injury and loss.” S.Rep. at 3538 has rather east the policy FSLIC serves as one “to make sure our banks and savings and loan associations ... continue to serve the Nation effectively and well.”

Although direct authority as to FSLIC is lacking, there are analogous precedents that suggest laches may be a potentially available defense here. In NLRB v. Pool Manufacturing Go., 339 U.S. 577, 579-82, 70 S.Ct. 830, 831-33, 94 L.Ed. 1077 (1950), for example, the Supreme Court considered whether NLRB's delay of more than two years in seeking enforcement of a cease- and-desist order gave rise to a laches defense. In the course of its analysis (id. at 580-81, 70 S.Ct. at 832, citations omitted) the Court spoke in terms that might well be used to describe FSLIC’s supervisory authority over insured savings and loan associations:

The Board is of course charged with primary responsibility in effectuating the policies of the [National Labor Relations] Act. It has determined that those policies are advanced in some cases by resorting to the processes of negotiation with the employer rather than the compulsion, as well as the trouble and expense, of an enforcement decree____ In some cases delay in enforcement may be helpful in reaching an immediate solution of the problem; in others, exhaustion of negotiation techniques before a decree is requested may consume many months after the Board’s order and before such techniques fail. We are of the opinion that a strict judicial time limitation of the duration presented in the instant case would frustrate the deliberate purpose of Congress in permitting, but not requiring, resort to an enforcement decree____ We . must not forget that the “question whether the settlement [with the employer] shall be accepted as definitive is for the Board to decide____” ____The employer, who could have obtained review of the Board order when it was entered ... is hardly in a position to object____

On that reasoning, the Court concluded laches did not under the circumstances bar enforcement of the NLRB order, though it specifically reserved decision on the question (id. at 582, 70 S.Ct. at 833):

whether a period of delay through its length alone may mature into a denial of an enforcement decree or make necessary the adduction of additional evidence.

Pool’s failure to reject laches as a matter of law at least implies the availability of such a defense if the facts are right.

Costello provides less comfort to Glen Ellyn, for that case rehearsed the proposition that laches is not available against the sovereign. But the Court did not invoke the rule in upholding the government’s right to preserve denaturalization proceedings against an individual for an offense that had occurred 27 years earlier (365 U.S. at 282, 81 S.Ct. at 543):

None of the cases in this Court considered the question of the application of laches in a denaturalization proceeding. However, even if we assume the applicability of laches, we think that the petitioner failed to prove both of the elements which are necessary to a recognition of the defense. Laches requires proof of (1) lack of diligence by the party against whom the defense is asserted, and (2) prejudice to the party asserting the defense.

Again the Court held the defense had not been made out in the circumstances of the case.

Pool and Costello, then, do not necessarily foreclose Glen Ellyn’s laches defense. This Court will therefore take a leaf from the Costello book and assume arguendo the possibility such a defense could lie. Even if so, however, the cases clearly indicate how formidable a hurdle Glen Ellyn must surmount to prevail on such a defense. It must not only show lack of diligence by FSLIC and prejudice to itself; it must also overcome the substantial public policy favoring FSLIC discretion.

3. Propriety of Laches in the Circumstances

At last this opinion arrives at the merits (more accurately, the lack of merit) of Glen Ellyn’s assertion of laches. It has scarcely proved worth the trip, for Glen Ellyn plainly cannot make out the defense in the circumstances of the present case. Even if it were assumed granting the Petition after eight years would prejudice Glen Ellyn, no basis exists for charging FSLIC with lack of diligence as to the Order. In denying Glen Ellyn’s 1980 petition for termination, FSLIC noted recurring violations of the Order. Each of the four examination reports since then has done the same. In each instance FSLIC sought correction of the violations, as Glen Ellyn’s letters in response to the examination reports implicitly acknowledge.

Essentially Glen Ellyn argues for a rule that would force the administering agency to hale the offending institution into court for every violation (or at least material violation), rather than pursuing less formal means, on peril of losing the right to enforce a consensual cease-and-desist order. That kind of premium on litigiousness cannot represent sound public policy generally. It does not do so here, in part because it would subvert Congress’ announced purposes (quoted earlier in this opinion) to provide the savings and loan regulatory agencies with flexible and effective supervisory powers.

Conclusion

In sum (1) FSLIC is entitled to judicial enforcement of the Order and (2) Glen Ellyn cannot make out a defense of laches. Accordingly FSLIC’s Petition is granted. Glen Ellyn is ordered to comply with the provisions of the Order.

      . All citations to the relevant provisions of the statute will take the form "Section 1730 — " (as the quotation from the Order later in the text reflects, Section 1730 corresponds to Section 407 of the National Housing Act (the "Act”)). Section 1730(k)(2) provides:
      The Corporation [FSLIC] may, in its discretion, apply to the United States district court, or the United States court of any territory, within the jurisdiction of which the principal office of the institution is located, for the enforcement of any effective and outstanding notice or order issued by the Corporation under this section, and such courts shall have jurisdiction and power to order and require compliance therewith____

      . FSLIC has represented as much at Mem. 3, and this Court has no reason to doubt that representation.

      . In each of 1981 and 1982 the examinations disclosed violations of two provisions of the Order. Pl.Ex. 5, 6. In 1983 the examination revealed three such violations. Pl.Ex. 3. As the 1984 examination report states (Pl.Ex. 2 at 1):
      The association continues to violate the Cease and Desist Order which it has repeatedly done since the Order was issued by the Federal Savings and Loan Insurance Corporation on August 11, 1976 (Resolution No. 76-593). The Order prohibits 26 specific activities which pertain primarily to lending practices and conflict of interest situations.
      Our review of activities indicated that item Nos. 1, 6, 7, 8, 9, 13, 14, 15, 16 and 19 of this Order were violated.

      . Board oversees FSLIC. See 12 U.S.C. § 1725(a).

      . Glen Ellyn Ans. 18-19 questions Board’s power to adopt informally the five-year rule and the two-year no-violation rule. Such unwritten rules and policies, Glen Ellyn argues, are "at best arbitrary and capricious” (Ans. 19). Quite the contrary is true: There is nothing arbitrary and capricious in establishing such rules of thumb, plainly aimed at making sure the practices giving rise to a cease-and-desist order have been permanently corrected before acceding to the order’s termination. Both rules are well-adapted to that end and consistent with Congress’ aim in creating Board and FSLIC (discussed in the next paragraph of the text).

      . One of Glen Ellyn’s only persuasive points in its submissions is that a court mandated to give such an unreasoning, Pavlovian response would essentially be engaging in a nonjudicial exercise, posing possible constitutional problems.

      . FSLIC also points to the provision in Section 1730(e)(2) that a cease-and-desist order remains effective and enforceable until set aside by action of FSLIC or a reviewing court. It asserts Glen Ellyn had an obligation to raise its laches defense before the agency and to exhaust its administrative remedies before raising the argument before this Court. But even after Glen Ellyn’s petition for termination had been denied, FSLIC made no move toward enforcement of the Order. Glen Ellyn’s laches defense became relevant only when FSLIC decided to seek enforcement of the Order, thus disturbing Glen Ellyn’s expectations of repose. For FSLIC to urge such a defense is barred in the present action because it was not fully pressed in prior administrative proceedings is to put the cart before the horse.

      . FSLIC does not cite one of the strongest points in its favor: the Supreme Court’s pronouncement last term that little if any opening exists for the closely-related doctrine of estoppel against the government. Heckler v. Community Health Services of Crawford County, Inc., — U.S.-, 104 S.Ct. 2218, 2223-24, 81 L.Ed.2d 42 (Stevens, J., for the Court), 104 S.Ct. 2227-28 (Rehnquist, J., concurring) (1984). Given the remaining analysis in this opinion, that omission by FSLIC is simply another example of the sometimes-rumored sports refereeing principle: "No harm, no foul.”

      . That assumption is really not warranted. After all, the provisions of the Order simply require Glen Ellyn to comply with existing regulations. See NLRB v. LaSalle Steel Co., 178 F.2d 829, 836 (7th Cir.1949) (National Labor Relations Act case), cert. denied, 339 U.S. 963, 70 S.Ct. 996, 94 L.Ed. 1372 (1950). What Glen Ellyn "loses” by enforcement of the Order is the opportunity to get one more free bite at violating the law without being subjected to the potential of contempt sanctions. That is scarcely a "right” that merits interposition of this Court’s equitable powers.


text:
    Angelo J. DORIZAS, Plaintiff, v. K.L.M. ROYAL DUTCH AIRLINES, Defendant.
    No. 84 C 5911.
    United States District Court, N.D. Illinois, E.D.
    Nov. 21, 1984.

      Anthony E. Blumberg, Chicago, 111., for plaintiff.
    William J. Mullins, Catherine E. Tinker, Conklin & Adler, Ltd., Chicago, 111., for defendant.
   MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

K.L.M. Royal Dutch Airlines (“K.L.M.”) has moved to dismiss the Second Amended Complaint filed by Angelo Dorizas (“Dorizas”). For the reasons briefly stated in this memorandum opinion and order, K.L. M.’s motion is denied.

Dorizas seeks damages for the alleged loss of baggage on a flight between Athens and Amsterdam. That claim is asserted here under the Warsaw Convention, 49 U.S.C. § 1502 note (Article 28 of the Convention provides for jurisdiction over foreign carriers in damage claims where the carrier has a place of business through which the contract was made, and Dorizas says that applies here).

K.L.M. rests its motion to dismiss on the theory that the Warsaw Convention does not itself create a cause of action. With commendable candor, K.L.M.’s counsel acknowledges that the tide has turned to run against K.L.M. on this score. Benjamins v. British European Airways, 572 F.2d 913, 918 (2d Cir.1978), cert. denied, 439 U.S. 1114, 99 S.Ct. 1016, 59 L.Ed.2d 72 (1979), followed in In re Mexico City Air-crash of October 31, 1979, 708 F.2d 400, 409-16 (9th Cir.1983) and Enayati v. Lufthansa German Airlines, 714 F.2d 75 (9th Cir.1983); Seth v. BOAC, 329 F.2d 302, 305 (1st Cir.1964). K.L.M. contends the older law in the Second Circuit and elsewhere, as exemplified by Judge Van Graafeiland’s dissenting opinion in Benjamins, 572 F.2d at 919-23, is more sound.

Neither Judge Van Graafeiland nor K.L.M. cites any decisions by our own Court of Appeals, which does not appear to have spoken to the subject. And with all respect to K.L.M.’s characterization of Judge Van Graafeiland’s reasoning as a “thoughtful dissent,” both Benjamins and Mexico City Aircrash reflect equally thoughtful and reasoned treatment (each of those decisions reversed prior case law to the contrary in its Circuit). This Court will not accept K.L.M.’s invitation to swim upstream to spawn a return to the older law. K.L.M.’s motion is denied, and it is ordered to answer the Second Amended Complaint on or before November 30, 1984.

      . This Court’s July 17, 1984 memorandum order dismissed the original Complaint (which had then sought to join Athens Central Airport and Amsterdam Schiphol Airport) for lack of subject matter jurisdiction. That sua sponte dismissal did not comment as to the potential for acquiring jurisdiction over K.L.M. on the basis of new jurisdictional allegations. Dorizas’ later amendment alleged facts bringing the claim against K.L.M. within the Warsaw Convention.