source: Caselaw Access Project

author: GLASSER, District Judge:

license: Public Domain

text:
    John M. MURPHY, Petitioner, v. UNITED STATES of America, Respondent.
    No. 85 Civ. 676.
    United States District Court, E.D. New York.
    Nov. 7, 1985.

      Felix T. Gilroy, Staten Island, N.Y., for petitioner.
    Edward A. McDonald, U.S. Dept. of Justice, Organized Crime Strike Force, E.D. of N.Y., Brooklyn, N.Y., for respondent; Norman A. Bloch, Sp. Atty., New York City, of counsel.
   MEMORANDUM AND ORDER

GLASSER, District Judge:

John M. Murphy was convicted in 1981 of conspiracy, 18 U.S.C. § 371, and of acceptance of an unlawful gratuity, 18 U.S.C. § 201(g). These convictions were upheld on appeal to the United States Court of Appeals for the Second Circuit. United States v. Myers, 692 F.2d 823 (2d Cir. 1982). The Supreme Court subsequently denied a petition for a writ of certiorari. Murphy v. United States, 461 U.S. 961, 103 S.Ct. 2437, 77 L.Ed.2d 1322 (1983). Murphy now moves to set aside his convictions pursuant to 28 U.S.C. § 2255. Because Murphy’s moving papers do not reveal any constitutional violation, this motion will be denied.

Murphy’s convictions arose out of the criminal investigation known as Abscam. That investigation has been upheld against a due process challenge, 692 F.2d at 843-47, and is not the subject of this motion. Instead, Murphy makes a series of claims alleging prejudice stemming from two incidents during his trial before (then District) Judge George C. Pratt. Those incidents will be addressed in turn.

I.

The first incident, the passing of a cup of water from a government agent on the witness stand to a juror in the jury box was considered fully by Judge Pratt in denying a defense motion for a mistrial. While Judge Pratt and the prosecution and defense attorneys were engaged in a sidebar conference, spectators, including Murphy’s wife and son, observed FBI Agent Anthony Amoroso pouring a cup of water and handing it to a juror. When the jury had left the courtroom, one of Murphy’s trial attorneys, Michael E. Tigar, brought the incident to Judge Pratt’s attention and moved simultaneously for a mistrial. Judge Pratt asked for Agent Amoroso’s version of the events:

The Court: Would you tell me exactly what happened, Mr. Amoroso, please.
Agent Amoroso: Yes, your Honor. The lady at the far end asked me if she could have a glass of water for the gentleman sitting at her left. I poured the glass and handed it to her and she handed it to him.
The Court: Did you say anything to her?
Agent Amoroso: No.
The Court: You simply poured a glass of water and gave it?
Agent Amoroso: Yes. And gave it to. her and she handed it to him.

Tr. 1144. Pressing his motion for a mistrial, Attorney Tigar stated: “[W]e disagree with Agent Amoroso’s characterization of the conversation. It is my information that he initiated the contact.” Tr. 1146. Tigar revealed the source of his information as Murphy’s wife, who then testified:

The Court: Mrs. Murphy, would you just tell us in your own words what you saw?
The Witness: I was watching Agent Amoroso. And he was sitting here panting as though he had had a lot to say and his mouth was tired and his voice was tired. And he kept looking at the jurors and going (indicating). And, excuse me, that is what he was doing. And as he did this they were watching him and some exchange went on between them. I couldn’t of course hear what it was. And then he looked at them and handed them the water.
The Court: Was it one cup of water or more than one cup?
The Witness: I did not see him give two.
The Court: Did you see what juror drank the water?
The Witness: The second one.
The Court: No. 2?
The Witness: The man.

Tr. 1149. Because by this time it was late in the day on Friday, the court adjourned until Monday morning.

On Monday, Tigar renewed his motion for a mistrial, arguing that the water-passing incident was a prosecutorial impropriety designed to avoid an acquittal. Tigar explained:

[O]n Friday, we did cross examine all day and the cross examination was directed at questions of credibility. We are dealing with an agent who served sixteen years in Government. I can’t believe the conduct was unintentional or inadvertent. It was designed to curry favor with the jury.

Tr. 1157. However, he expressly disclaimed any desire to disqualify one or more of the jurors: “Specifically, we are not asking that any jurors be removed because we went through great pain to select this jury and we are pleased with them.” Tr. 1155. It was then decided that Judge Pratt would question the jurors, one by one, in chambers, to determine “whether what happened would in any way affect the[ir] approach to the case [or] their evaluation of Mr. Amoroso’s credibility in the case.” Tr. 1159-60. Murphy, through his attorney, waived his right to be present. Tr. 1159.

Having interviewed each of the jurors and alternates in the presence of a court reporter, Tr. 1161-85, Judge Pratt denied the motion for a mistrial:

I would find that there were no gestures by Mr. Amoroso toward the jury, that there was no attempt on the part of Mr. Amoroso to curry favor with the jury, that his response to the statement by Mr. Prout that it would be nice if he had a cup of water was prompted by feelings of altruism rather than a desire to take advantage of an opportunity to score some pluses in the minds of the jury. I would further find that the' event has had no significant impact upon the jury or any member of it and that none of them would, in any way, be influenced in their evaluation of the facts by wha.t has occurred.

Tr. 1187.

Murphy’s present motion is based on an affidavit obtained by his attorney from Ms. Anne Mullen, Juror No. 1 at Murphy’s trial. In pertinent part that affidavit declares as follows:

THAT during a lull in the testimony of one of the Government’s key witnesses, whom your deponent now believes was F.B.I. AGENT AMOROSO, your deponent was asked to pass a cup of water by the Agent to a fellow juror.
THAT at that time, your deponent attached no significance to this act.
THAT, however, on the evening of the following day, your deponent received two telephone calls from relatives who had read about the incident in the local press.
THAT they each, respectively, advised your deponent that while the jury had been excused from the courtroom, Defendant’s JOHN MURPHY, wife had created “a fuss.”
THAT at that time, your deponent did report this incident to presiding judge as your deponent attached no significance to the calls at the time they occurred.

From this affidavit, Murphy sets forth a series of arguments as to why his conviction should be overturned or, at a minimum, he is entitled to an evidentiary hearing. Each of these arguments lacks merit.

In seeking to relitigate the prejudicial effect of the water-passing incident, Murphy is faced with a heavy burden:

Where, as here, the incident was explored before submission to the jury, the trial judge’s initial appraisal of the ability of the jurors to render a fair verdict in light of the objective facts should stand unless it is manifestly unreasonable ... or significant new objective facts are developed.

Miller v. United States, 403 F.2d 77, 84 n. 11 (2d Cir.1968). Murphy makes no claim, and nothing in the record indicates that Judge Pratt’s “initial appraisal” was unreasonable. Therefore, Murphy’s only relief is available on a showing of “significant new objective facts” that would cast doubt on Judge Pratt’s ruling. Here, the only “new fact” that could possibly be relied upon is Ms. Mullen’s statement that she received telephone calls from relatives relating to the incident. However, those calls are simply not significant enough to raise a question about Judge Pratt’s determination.

First, those calls have no bearing at all on Judge Pratt’s finding that the incident was not an attempt by the prosecution to “curry favor” with the jury, the sole ground urged by the defense in moving for a mistrial. Even assuming that those calls were received, they reveal nothing about the motivation of the prosecution or of Agent Amoroso.

Second, those calls do not undermine Judge Pratt’s conclusion that the incident had “no significant impact” on the impartiality of the jury. According to Ms. Mullen’s affidavit, the calls told her only that the incident had been reported in the press, and that it had caused concern within the defense camp. That the incident was deemed newsworthy by the press is certainly not prejudicial in itself. Nor can any prejudice be inferred from the description of Mrs. Murphy having made “a fuss” about the incident. Judge Pratt adequately cautioned the jury that although the incident had been taken seriously by all parties, neither it, nor his questioning about it, should be accorded undue significance. As to Ms. Mullen in particular, her colloquy with Judge Pratt amply supports the conclusion that her ability to serve as a juror was not affected. See note 564 supra. That colloquy, which occurred on the Monday following the weekend in which the calls are said to have been received, stands for itself whether or not those calls were actually received.

The decision to conduct an evidentiary hearing on a § 2255 motion is discretionary. Newfield, v. United States, 565 F.2d 203, 207 (2d Cir.1977). Because I have found that proof of the statements made in Ms. Mullen’s affidavit would warrant no change in Judge Pratt’s determinations, no purpose would be served by holding such a hearing. In addition, even if Ms. Mullen were to testify about the telephone calls, she would be barred by Fed.R. Evid. 606(b) from giving any testimony as to their effect on her or on the deliberations of the jury. See, e.g., Owen v. Duckworth. 727 F.2d 643 (7th Cir.1984). Cf. Miller v. United States, 403 F.2d 77, 83 n. 11 (2d Cir.1968) (“Where an extraneous influence is shown, the court must apply an objective test, assessing for itself the likelihood that the influence would affect a typical juror.”).

In view of the foregoing, Murphy’s motion to vacate his convictions on this ground must be denied.

II.

Murphy’s second argument for a new trial is based on the assertion that prosecutor Thomas Puedo and Judge Pratt reacted with surprise (specifically, prosecutor Puedo jumped out of his chair) when it was revealed that Murphy would not testify in his own behalf. This argument is deficient both factually and legally.

As a factual matter, the record in this case contradicts Murphy’s assertion:

The Court: Before we begin with the defendant Murphy, why don’t we take a short recess.
Mr. Tigar: If your Honor please, Representative John M. Murphy rests.
The Court: All right, then we’ll take a short recess, ladies and gentlemen. Don’t discuss this case among yourselves. I want to talk to counsel.

(Whereupon, the jury left the courtroom). Tr. 2600-01. Moreover, Ms. Mullen’s affidavit provides no factual support. Her affidavit avers that “during deliberations the jury discussed Defendant MURPHY not taking the stand, and that he probably did so because he was afraid of being caught in a lie.” This statement is, of course, inadmissible under Fed.R.Evid. 606(b). See note 9 supra. Even if it were admissible, it provides no inference that either Judge Pratt or prosecutor Puccio acted wrongfully. The only evidence of wrongfulness submitted by Murphy is an unattested transcription of a conversation between Ms. Mullen, Murphy’s attorney, and a private investigator in his employ. In that conversation, Ms. Mullen is claimed to have said, after some prodding, “I could tell they were surprised.” Such a “frail and ambiguous showing,” King v. United States, 576 F.2d 432, 438 (2d Cir.), cert. denied, 439 U.S. 850, 99 S.Ct. 155, 58 L.Ed.2d 154 (1978), is wholly insufficient as a basis for further inquiry into the truth of Murphy’s assertion.

Whatever the truth of Murphy’s allegations, his argument is legally insufficient in any case:

In order to reverse a conviction for improper commentary on the right to remain silent, we must find that the comment was “manifestly intended or [was] of such a character that the jury would naturally and necessarily take it to be a comment on the failure of the accused to testify.”

United States v. Cicale, 691 F.2d 95, 107 (2d Cir.1982), cert. denied, 460 U.S. 1082, 103 S.Ct. 1771, 76 L.Ed.2d 344 (1983) (quoting United States v. Araujo, 539 F.2d 287, 291 (2d Cir.), cert. denied, 429 U.S. 983, 97 S.Ct. 498, 50 L.Ed.2d 593 (1976)). Murphy has cited no authority for the proposition that a wordless physical reaction can be found to be a comment, improper or otherwise. Even if this proposition is theoretically plausible, it is surely inapplicable to the factual circumstances of this case. If Judge Pratt or prosecutor Puccio did react with surprise, it was in response to an announcement that Murphy was resting his case. This announcement conveyed the information not only that Murphy himself would not testify but also that he would be presenting no witnesses in his behalf. A reaction of surprise, which is inherently ambiguous, to an ambiguous statement can hardly reflect a “manifest intent” to comment on a defendant’s failure to testify. Nor would it “naturally or necessarily” be taken as such by the jury. Thus, Murphy’s motion to vacate his convictions on this ground must also be denied.

Conclusion

For the reasons stated above, Murphy’s motion pursuant to 28 U.S.C. § 2255 is denied in full.

      . The Second Circuit reversed a third conviction for violating the conflict of interest statute, 18 U.S.C. § 203(a)(2). 692 F.2d at 853-58.

      . 28 U.S.C. § 2255 provides in pertinent part:
      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.
      A motion for such relief may be made at any time.
      Unless the motion and the files and records of the case conclusively show that the prisoner is entitled to no relief, the court shall cause notice thereof to be served upon the United States attorney, grant a prompt hearing thereon, determine the issues and make findings of fact and conclusions of law with respect thereto. 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.

      . Tigar quoted from United States v. Jorn, 400 U.S. 470, 485 n. 12, 91 S.Ct. 547, 557 n. 12, 27 L.Ed.2d 543 (1971): "Conversely, where a defendant's mistrial motion is necessitated by judicial or prosecutorial impropriety designed to avoid an acquittal, reprosecution might well be barred.”

      . With regard to the details of the incident itself, Ms. Mullen’s affidavit presents no significant conflict with either Judge Pratt’s findings, see page 564 supra, or with her own in-chambers testimony:
      The Court: Don’t be nervous. I just have to make some inquiry. At the end of the session on Friday, I am told something happened about a cup of water. Do you recall that?
      Juror No. 1: Yes.
      The Court: Would you tell me what you recall happening?
      Juror No. 1: Well, as much as I can put together, Juror No. 2 said to me he was having trouble with his throat. He said: "I wish I had some water.” We were sitting so close to the witness stand, I would say the witness heard him say that and poured a glass of water and handed it to me and I handed it to him.

        The Court: That is what happened?
      Juror No. 1: That is the whole story.
      The Court: Did the witness, Mr. Amoroso, did he say anything to you?
      Juror No. 1: Not a word.
      The Court: Did you say anything to him?
      Juror No. 1: Not a word.
      The Court: You just assumed he had heard?
      Juror No. 1: I said to him, a glass of water, with that the witness had poured water.
      The Court: For himself?
      Juror No. 1: Right. He said he wanted some water. He handed it to me and I handed it to him. The reason I handed it is because he would have to get out of the jury box. It was more convenient.
      The Court: It seemed like a normal thing to do?
      Juror No. 1: It did seem so at the time.
      The Court: Did you see Mr. Amoroso making any gestures or motions towards the jury in any way?
      Juror No. 1: No. The only thing I saw him do was pour the water and hand it to me. The Court: Is there anything in what happened that would affect your approach to this case?
      Juror No. 1: No, sir. That to me seemed like the thing to do. I gather it was wrong, I’m sorry. It didn’t dawn on me it was wrong.
      The Court: Don’t worry about it in any way. I should have made clear to the jury at the beginning if they needed a glass of water they should indicate it to me or to the Clerk.
      Juror No. 1: Now I know that.
      The Court: The witness happens to be very close to the jury box. Will anything that happened affect the way in which you will evaluate Mr. Amoroso’s credibility as a witness?
      Juror No. 1: It didn’t have anything to do with it.
      The Court: Thank you. Bill will escort you back to the jury room.
      Tr. 1161-63.

      . Attached to Murphy’s moving papers is a copy of an article from the New York Daily News that refers to the water-passing incident. Because Ms. Mullen’s affidavit does not state that she read any newspaper article, much less the one enclosed, the contents of this article need not be considered. Indeed, the one detail recited by Ms. Mullen, that Mrs. Murphy created "a fuss,” does not even appear in the enclosed article.

      . The Court: Good morning again, ladies and gentlemen.
      First off, to finish up what I began in chambers with you, I am sure you all understand that whenever anything occurs involving any kind of contact with any jurors, with any participants in the case, whether it be the attorneys or the parties or witnesses, it is a matter of potential problem in the case. As a matter of fact, most of the incidents of this type that do occur after we get through the questioning process that we have gone through turn out to be the result of innocent, well-intentioned, perhaps unthinking, as on the part of people and there is nothing improper whatsoever.
      I have questioned each of you and said that is precisely what is the situation here.
      I would instruct you to attach no significance for purposes of the case to the fact that the incident that I mentioned to you did occur, nor should you attach any particular significance to the fact that I have questioned you about it. I am simply doing my duty and seeing that the trial — every aspect of it is a fair trial.
      So, at this point, just put the whole thing out of your minds.
      Tr. 1188-89.

      . United. States v. Moten, 582 F.2d 654 (2d Cir. 1978), relied on by Murphy, is not to the contrary. In that decision, the Second Circuit, while quoting with approval the language cited by this court from Miller v. United States, 403 F.2d 77 (2d Cir.1968), see page 564 supra, found that the defendant had been denied the opportunity to develop "significant new objective facts.” The defendant sought, and was granted, disclosure of in camera examinations of two jurors, disclosure of grand jury materials, and permission to interview jurors. None of these restrictions were imposed on Murphy: Judge Pratt’s examination of the jurors during trial was on the record, he placed no restrictions on interviewing jurors after trial, and no grand jury materials are involved.

      . Murphy argues that a constitutional violation should be found if it is proved that Ms. Mullen received calls and communicated this information to Judge Pratt ex parte. However, in view of my conclusion that the calls were not prejudicial, and in view of the fact that Murphy had waived his right to be present at the judge’s interview of Ms. Mullen, any violation of this sort would certainly fall within the realm of harmless error. Cf. Rushen v. Spain, 464 U.S. 114 (1983) (per curiam).

      . Fed.R.Evid. 606(b) reads:
      (b) Inquiry into validity of verdict or indictment. Upon an inquiry into the validity of a verdict or indictment, a juror may not testify as to any matter or statement occurring during the course of the jury’s deliberations or to the effect of anything upon his or any other juror’s mind or emotions as influencing him to assent to or dissent from the verdict or indictment or concerning his mental processes in connection therewith, except that a juror may testify on the question whether extraneous prejudicial information was improperly brought to the jury’s attention or whether any outside influence was improperly brought to bear upon any juror. Nor may his affidavit or evidence of any statement by him concerning a matter about which he would be precluded from testifying be received for these purposes.


author: BALLANTINE, District Judge.

text:
    Roy Allen MELANCON, Plaintiff, v. BROWN & WILLIAMSON TOBACCO CORPORATION, et al., Defendants.
    No. C 85-1042-L(B).
    United States District Court, W.D. Kentucky, Louisville Division.
    Nov. 7, 1985.

      Roy Allen Melancon, pro se.
    Complaint was dismissed before answer filed; therefore, no entry of appearance by counsel for defendants.
   MEMORANDUM

BALLANTINE, District Judge.

Plaintiff, Roy Allen Melancon, pro se, has tendered a complaint under 42 U.S.C. Section 1983, accompanied by a motion to proceed in forma pauperis without the prepayment of fees, costs, or the giving of security therefor.

The motion is granted, and the complaint is ORDERED filed.

Plaintiff is attempting to bring this suit against the Brown & Williamson Tobacco Corporation, and alleges while he was incarcerated he was unable to afford the price for rolled cigarettes so he smoked Bugler brand of cigarette tobacco made by Brown & Williamson Tobacco Corporation and has acquired a serious cough. Plaintiff alleges this cough has caused him discomfort, irritation and embarassment, and very well could lead to serious complications including cancer.

Plaintiff claims that none of the Bugler packages contain a warning that cigarette smoking is hazardous to one’s health, the manufacturer should have known it was hazardous, and the warning should have been on the packages. As a result plaintiff alleges he continues to suffer with this cough which he believes Bugler cigarette tobacco contributed thereto.

Plaintiff alleges he is incarcerated in the Texas Department of Corrections.

Plaintiff has not alleged that the Brown & Williamson Tobacco Corporation was acting pursuant to color of state law, and therefore, does not fall with the ambit of the Civil Rights Statute, 42 U.S.C. Section 1983.

To establish a right to relief under Section 1983, a plaintiff must plead and prove at least two elements: (1) that he has been deprived of a right secured by the Constitution and laws of the United States; and (2) that the defendant deprived him of this right while acting under color of law. Flagg Brothers, Inc. v. Brooks, 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185 (1978); Paul v. Davis, 424 U.S. 693, 96 S.Ct. 1155, 47 L.Ed.2d 405 (1976), and Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).

Plaintiffs allegations do not state a cause of action pursuant to 42 U.S.C. Section 1983 as there is no allegation defendant was acting under of law as required by the statute which says in pertinent part:

“Every person who, under color of any statute, ordinance, regulation____”

Private citizens (corporations) cannot be sued under Section 1983 for nonstate related activities unless they have conspired with state officials. Kurz v. State of Michigan, 548 F.2d 172 (6th Cir.1977). Plaintiff has not alleged that Brown & Williamson Tobacco Corporation was involved in any conspiracy with state officials.

The usual procedure for such cases is for the matter to be referred to a Magistrate to file proposed recommendations, and the Magistrate generally follows the holding announced in Tingler v. Marshall, 716 F.2d 1109 (6th Cir.1983). However, this Court has reviewed the record submitted and is convinced beyond a reasonable doubt that this plaintiff could prove no set of facts in support of his claim which would entitle him to relief.

In Spruytte v. Walters, 753 F.2d 498 (6th Cir.1985) the Court of Appeals reviewed its holdings in Tingler, supra:

“In Tingler v. Marshall, 716 F.2d 1109 (6th Cir.1983), we held that a district court may not sua sponte dismiss a complaint without allowing service of the complaint on the defendant and permitting the plaintiff to amend the complaint or respond to the court’s notice of intent to dismiss. Id. at 1112. The Tingler rule does not apply to dismissals of in forma pauperis claims as frivolous under 28 U.S.C. section 1915(d). The district court’s dismissal, therefore, must meet the requirements of section 1915(d). In Malone v. Colyer, 710 F.2d 258 (6th Cir.1983), we held that a complaint may be dismissed under section 1915(d) ‘if it appears beyond doubt that the plaintiff can prove no set of facts which would entitle him to relief.’ Id. at 261.”

We hold this case is patently frivolous on its face, and the Court will dismiss it. 28 U.S.C. Section 1915(d).

An Order dismissing the action will be entered this date.


author: CHARLES SCHWARTZ, Jr., District Judge.

text:
    The COMPUTER CONNECTION, INC. v. APPLE COMPUTER CORPORATION and Compumark, Inc.
    Civ. A. No. 84-2382 “A”.
    United States District Court, E.D. Louisiana.
    Nov. 8, 1985.

      Jacques F. Bezou, New Orleans, La., for plaintiff.
    Michael R. Fontham and Denise M. Filié, Stone, Pigman, Walther, Wittmann & Hutchinson, New Orleans, La., for defendant Apple Computer.
    Richard M. Marchewka, Fawer, Brian, Hardy & Zatzkis, New Orleans, La., for defendant Compumark.
   ORDER AND REASONS

CHARLES SCHWARTZ, Jr., District Judge.

This matter is before the Court upon motions for summary judgment filed on behalf of defendants, Apple Computer and Compumark, Inc., seeking dismissal of plaintiff’s complaint for damages under the state and federal antitrust laws as a result of plaintiff’s termination by defendant Apple as a dealer of Apple computer products.

The motions for summary judgment were both filed September 10, 1985, together with supporting affidavits, deposition testimony and exhibits. On September 17, 1985, this Court granted plaintiff’s motion to continue hearing on the motions for summary judgment until October 9, 1985. On October 1, 1985, plaintiff filed opposition to defendants’ motions, together with a statement of material facts in dispute. No counter-affidavits or deposition testimony were submitted to the Court by the plaintiff.

At the hearing before the Court on October 9, 1985, plaintiff requested additional time for discovery to oppose the motions and particularly, to depose William Lucky, Chairman of the Board and Chief Operating Officer of defendant Compumark. The Court thereupon gave the parties an opportunity to submit supplemental memoranda following Mr. Lucky’s deposition, and supplemental memoranda were submitted by movants. Having now considered the memoranda of the parties, the arguments of counsel, the affidavits submitted by movants, the exhibits to movants’ papers and the deposition of Mr. Lucky, the Court concludes there is no issue of material fact and movants are entitled to judgment as a matter of law, dismissing plaintiff’s complaint with prejudice, due to the existence of valid business reasons for terminating the plaintiff as an Apple dealer and the absence of a conspiracy involving Apple and/or Compumark. The absence of any allegations or showing of public injury operates as a further ground to dismiss that portion of plaintiff’s complaint alleging vertical nonprice conspiracy, as will be explained more fully below.

Factual Background

The Computer Connection, run by Will Holmes, was an authorized Apple dealer from late 1982 to February 18, 1984. The only contract in the record of the Court is Apple’s Authorized Dealer Sales Agreement with plaintiff, attached as Exhibit “A” to Apple’s motion documents. This contract was dated May 31, 1983 and was, by its terms, to expire in March, 1984.

In January, 1984, Apple notified Mr. Holmes of the Computer Connection’s termination pursuant to paragraph 7(c) of the Sales Agreement, which provides:

(c) Either party may terminate this Agreement, at will, at any time, with or without cause, by written notice given to the other not less than THIRTY (30) DAYS prior to the effective date of such notice.

Termination was effective February 18, 1984.

Plaintiff’s counsel vigorously contested in open court the events leading to the termination as set forth by the movants in their statements of undisputed material facts. However, plaintiff provided the Court with no testimony or documentary evidence in support of plaintiff’s contentions.

From such uncontroverted testimony, it appears that in 1983 the contract signed by Mr. Holmes on behalf of Computer Connection with Apple authorized the sale of Apple II and Apple III products. See Exhibit A-l to Authorized Apple Dealer Sales Agreement. In 1983, however, Apple also began selling a new product called the “Lisa” computer, a more sophisticated product, intended for business rather than home use. The sale of the “Lisa” computer was permitted only by specifically authorized dealers, as the “Lisa” requires specially trained sales and service personnel and a special spare parts inventory. For these reasons, many Apple dealers either did not apply or were not approved to carry Lisas. See Affidavit of Rick Dyer, Southwest Region Manager of Apple Computer during the time in question, Exhibit “D” to Apple’s motion. See also Affidavit of Fritz Aldrine, Area Sales Manager for Apple Computer, Exhibit “E” to Apple’s motion.

The Computer Connection was never authorized to sell the Lisa computer but, nevertheless, procured and sold several Lisa computers in late 1983. When Apple Computer became aware of the sale of Lisa computers by the plaintiff, Apple advised Mr. Holmes to stop selling the Lisa computer and that Mr. Holmes could not sell Lisas without authorization. See Affidavit of Joe Grimes, Apple’s Exhibit “C”, and Affidavit of Mr. Dyer, Apple’s Exhibit “D”. See also Second Supplemental and Amending Complaint, Paragraph III. During a conversation with Mr. Dyer, Mr. Holmes conceded selling Lisas without authorization. Mr. Holmes represented he would stop selling Lisas, but it was later discovered he continued to do so even after being warned not to. See Affidavit of Mr. Dyer, Apple’s Exhibit “D”. See also Affidavit of Mr. Aldrine, Exhibit “E”, as to the confirmation that Mr. Holmes continued to place the Lisa computer for sale.

Thereafter, Mr. Holmes was terminated as an Apple authorized dealer, as permitted by the Sales Agreement. The uncontroverted affidavits show the termination was a result of the unauthorized sale of Lisas followed by Mr. Holmes’ deliberate misrepresentations regarding such sales. See Affidavits of Mr. Grimes, Mr. Dyer and Mr. Aldrine. Mr. Aldrine’s affidavit further shows he made the final decision to terminate plaintiff.

It is admitted by movants that co-defendant Compumark complained to Apple regarding Computer Connection’s sales practices. However, movants urge that the complaints concerned plaintiff’s advertising practices (e.g., Affidavit of Jim Ruhs, then a sales representative for Apple), whereas Mr. Holmes’ deposition testimony suggests that the complaints concerned plaintiff’s price cutting practices. For example, plaintiff alleges that Compumark’s principal, Mr. Lucky, contacted other Apple dealers to induce them to complain of plaintiff’s price cutting, and in support of this allegation, Mr. Holmes testified that Mr. Lucky complained to a competitor, David Graf, regarding price wars between Compumark and plaintiff, which complaints were relayed to Mr. Ruhs and from Mr. Ruhs to Mr. Holmes. See Deposition of Will Holmes, pp. 249-50 and 254. Mr. Holmes also testified to learning from Mr. Ruhs that Mr. Lucky called Apple’s Mr. Dyer in Mr. Ruhs’ presence to complain of plaintiff’s pricing. See Holmes Deposition, p. 249. However, Compumark submitted affidavits of Mr. Ruhs, Mr. Graf and Mr. Lucky to the contrary, and Mr. Holmes admitted he had no proof that any Apple dealers acted upon Mr. Lucky’s alleged request. See Deposition of Will Holmes, p. 273.

Pretermitting the question whether such hearsay within hearsay would be admissible at trial, the Court will accept as true, for purposes of this motion, that Compumark complained to other dealers and to Apple regarding plaintiff’s prices. Thus, the Court will not weigh the competing allegations or the alleged justifications for complaints about unauthorized sales, where the complaints emanate from an authorized competitor who has expended time and money to sell a product according to the manufacturer’s requirements. Nevertheless, movants’ affidavits show Apple had permissible and independent reasons for terminating plaintiff, and plaintiff has not rebutted this testimony by demonstrating in the record of these proceedings a discernible causal connection between Compumark’s complaints and plaintiff’s termination as an Apple dealer.

This absence of a conspiracy defeats plaintiff’s allegations of antitrust violations arising from both the conspiracy to fix prices and the conspiracy to enforce standardized terms and conditions upon which computers are sold, in light of the authorities discussed below. However, legal authority also reveals the insufficiency of plaintiff’s allegations as to the effects of any conspiracy, providing an additional basis for dismissal of plaintiff’s claims of vertical nonprice restrictions.

In this regard, plaintiff alleges that the defendants’ actions eliminated competition in the market for the sale of computers and raised, fixed and stabilized, at a high noncompetitive level, the prices plaintiff and others paid for computer services and products in Louisiana and standardized the terms and conditions upon which computers could be sold. Plaintiff nowhere specifies whether any computers other than Apple computers were affected by the alleged violations, and a reading of the First Amending and Supplemental Complaint as a whole shows that plaintiffs allegations are directed entirely toward Apple products. See paragraph XI.

By way of Second Supplemental and Amending Complaint, plaintiff sought to rectify certain deficiencies claimed by defendant Apple in a motion to dismiss filed October 22, 1984. Plaintiff there alleged facts which, if taken as true, would tend to establish that plaintiff ordered five Lisas which it was unable to sell as a result of its termination and that these events had the effect of causing fewer Lisa computers to be sold to the public. There are no other allegations, much less sworn testimony or documents, regarding the purported effects of the antitrust violations alleged upon intrabrand competition for any given market. There is absolutely nothing in the record regarding any adverse effect of the actions at issue on intrabrand competition.

In sum, the affidavits and documents attached to movants’ pleadings show that there were valid business reasons for plaintiff’s termination as an Apple dealer; that Apple acted unilaterally and for those reasons to terminate the plaintiff; that there was no concert of action among Apple dealers and Apple to terminate plaintiff because of any price cutting or other action on plaintiff’s part; and that the competition in the computer market remained vigorous throughout.

Discussion of Authorities

In order to recover damages under Section 1 of the Sherman Act, an antitrust plaintiff must prove a contract, combination or conspiracy in restraint of trade. See 15 U.S.C. § 1; Solomon v. Houston Corrugated Box Co., 526 F.2d 389, 394 (5th Cir.1976) (Court affirming grant of summary judgment in favor of defendant). Accordingly, a dealer who is terminated by the unilateral action of the manufacturer cannot recover antitrust damages from that manufacturer due to the termination. Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 104 S.Ct. 1464, 1469, 79 L.Ed.2d 775 (1985). Moreover, proof of termination following competitor complaints is not sufficient to support an inference of concerted action. Id.

As properly emphasized by movants, “When faced with defendants’ sworn denial of the existence of a conspiracy, it is encumbent upon the plaintiff to produce significant probative evidence demonstrating that a genuine issue of fact exists as to this element of the complaint.” Pan-Islamic Trade Corp. v. Exxon Corp., supra, 632 F.2d at 554 (Citing additional Fifth Circuit authority; Court upholding grant of summary judgment as to presence of conspiracy and conscious parallelism). Generally, summary judgment is not favored in antitrust cases. See Solomon v. Houston Corrugated Box Co., supra, 526 F.2d at 393. However, a mere allegation of conspiracy to restrain trade and resulting damages will not withstand summary judgment once sworn testimony is placed in the record to rebut those allegations. See In re Municipal Bond Reporting Antitrust Litigation, 672 F.2d 436, 440 (5th Cir.1982) (Court affirming grant of summary judgment in favor of defendant).

Proof on a motion for summary judgment that there was a valid business reason to terminate a dealer will shift the burden of proof to the plaintiff to produce “significant probative evidence” that the antitrust violation was the real purpose, or at least a substantial contributing purpose, of the termination. See Joe Regueira, Inc. v. Am. Distilling Co., supra, 642 F.2d at 832 (Court affirming grant of summary judgment to defendant on plaintiffs claims that its termination as dealer violated contractual and federal antitrust laws). See also Burlington Coat Factory Warehouse Corp. v. Esprit de Corp., 769 F.2d 919 (2d Cir.1985) (Distributor termination; Court affirming summary judgment in favor of defendant on antitrust claims).

The Courts have defined what are valid business reasons tending to support a finding of lawful dealer termination. See, e.g., Monsanto Co. v. Spray-Rite Serv. Co., supra, 104 S.Ct. at 1470; Joe Regueira, Inc. v. Am. Distilling Co., supra, 642 F.2d at 828-32 & n. 13; Oreck Corp. v. Whirlpool Corp., 579 F.2d 126, 128, 132 & n. 7 (2d Cir.), cert. denied, 439 U.S. 946, 99 S.Ct. 340, 58 L.Ed.2d 338 (1978). Under Joe Regueira, such valid business reasons may involve a dealer’s poor sales performance, if adequately proven, or a dealer’s bad record of paying its debts to a manufacturer. According to Monsanto, a manufacturer may also validly insure that its distributors earn sufficient profit to pay for programs such as hiring and training salesmen for demonstrating the technical features of a product. In Oreck, the Court ruled that a distributor’s disregard for terms of a contract, including its refusal to modify advertising campaigns in accordance with a manufacturer’s wishes and its failure to abide by the manufacturer’s marketing strategy, may also demonstrate the manufacturer’s independent and permissible action in terminating the dealer. The Oreck Court also noted the lack of renewal provisions in the dealer’s contract.

In this case, the defendants have demonstrated to the Court’s satisfaction valid business reasons for terminating the plaintiff, stemming from plaintiff’s unauthorized sale of a highly technical piece of equipment. Requiring training of dealer personnel and a special sales program were valid concerns of the manufacturer, imposed upon its dealers as a whole. The contract itself also provided for termination without cause. This showing shifted the burden to the plaintiff to create, at a minimum, an issue of fact as to whether there was a conspiracy or scheme with an unlawful purpose. Thus, the Court concludes that there is no genuine issue of material fact regarding the existence of a conspiracy to restrain trade, rendering appropriate summary judgment dismissing plaintiff’s federal antitrust claims. The same standards require summary dismissal of the state claims. See Red Diamond Supply, Inc. v. Liquid Carbonic Corp., 637 F.2d 1001, 1003 (5th Cir.), cert. denied 454 U.S. 827, 102 S.Ct. 119, 70 L.Ed.2d 102 (1981).

Summary judgment is further supported by plaintiff’s failure to allege or create a genuine issue of material fact that defendants’ actions brought about any public injury. See Monsanto Co. v. Spray-Rite Serv. Co., supra, 104 S.Ct. at 1470. There has been no showing that any alleged nonprice vertical restraints had or were likely to have a “pernicious effect” on competition. See Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 58-59, 97 S.Ct. 2549, 2561, 53 L.Ed.2d 568 (1977). Plaintiff’s allegations in this case, at best, place intrabrand competition at issue. However, it is interbrand competition that is “the primary concern of antitrust law,” Continental T.V., Inc. v. GTE Sylvania, Inc., supra, 97 S.Ct. at 2558 n. 19, and even if any alleged restrictions would presumably reduce intrabrand competition, this does not establish injury to competition. See Red Diamond Supply, Inc. v. Liquid Carbonic Corp., supra, 637 F.2d at 1005.

Accordingly, defendants’ motions for summary judgment are GRANTED, dismissing plaintiff’s complaint, as amended, and the Clerk of Court is hereby ordered to enter final judgment dismissing the suit with prejudice, each party to bear its own costs.

      . Apple submitted Affidavits of Messrs. Grimes, Dyer, Aldrine and Fiddler. Compumark submitted Affidavits of Messrs. Dyer, Ruhs, Graf, Weimer and Aldrine.

      . At the time in question, Mr. Grimes was employed by Computer Representatives Inc. as a District Sales Manager. Computer Representatives in turn acted as a sales representative for Apple to Apple dealers.

      . Mr. Ruhs is now employed as Major Accounts Representative of Epson America South West. His affidavit does not specify his employment at the time in question.

      . Inadmissible hearsay is not entitled to any weight in considering a motion for summary judgment. See Pan-Islamic Trade Corp. v. Exxon Corp., 632 F.2d 539, 556 (5th Cir.1980), cert. denied, 454 U.S. 927, 102 S.Ct. 427, 70 L.Ed.2d 236 (1981); Joe Regueira, Inc. v. Am. Distilling Co., 642 F.2d 826, 830 (5th Cir.1981). In this instance, the Court questions whether the hearsay statements of Mr. Graf, a non-party, would be admissible, and whether Mr. Ruhs is sufficiently identified with Apple so as to render his hearsay statements admissible as a party admission or otherwise. Plaintiff has not made any showing or argument as to the admissibility of such statements.

      . Nor has plaintiff submitted any argument or testimony to rebut the affidavit of Mr. Fiddler regarding the lack of involvement on the part of D.H. Holmes and/or Computer Depot in plaintiff's termination. Moreover, Mr. Holmes admitted he had no evidence that D.H. Holmes asked Apple to terminate Computer Connection as an Apple dealer. See Will Holmes Deposition, pp. 98-99. Plaintiff merely alleges that Mr. Dyer’s testimony would reveal a [presumably illegal] connection between the D.H. Holmes dealership and plaintiff's termination. No such testimony has been shown to the Court, and Mr. Dyer’s affidavit affirmatively contradicts Mr. Holmes’ admitted speculation.

      . Plaintiff alleges that Apple, Compumark and other Apple dealers were involved in a conspiracy "(a) to agree upon and fix prices charged to ultimate consumers of the Apple Computer; (b) to agree upon and enforce standardized terms and conditions upon which computers were to be offered for sale and to otherwise eliminate competition in the sale of computers but for defendant, Compumark." See Paragraph VIII, First Supplemental and Amending Complaint filed August 21, 1984.

      . ‘‘[C]omplaints about price-cutters are ‘natural —and from the manufacturer’s perspective, unavoidable — reactions by distributors to the activities of their rivals.’ Such complaints, particularly where the manufacturer has imposed a costly set of nonprice restrictions, ‘arise in the normal course of business and do not indicate illegal concerted action.’ [Citation omitted] Moreover, distributors are an important source of information for manufacturers. In order to assure an efficient distribution system, manufacturers and distributors constantly must coordinate their activities to assure that their product will reach the consumer persuasively and efficiently. To bar a manufacturer from acting solely because the information upon which it acts originated as a price complaint would create an irrational dislocation in the market.’’
      “Thus, something more than evidence of complaints is needed. There must be evidence that tends to exclude the possibility that the manufacturer and nonterminated distributors were acting independently. As Judge Aldisert has written, the antitrust plaintiff should present direct or circumstantial evidence that reasonably tends to prove that the manufacturer and others ‘had a conscious commitment to a common scheme designed to achieve an unlawful objective.’ [Citations omitted]”

        Monsanto Co. v. Spray-Rite Serv. Co., supra, 104 S.Ct. at 1470-71.


author: FELDMAN, District Judge.

text:
    Myroslaw Wasylowycz MEDVID, by his next friends, Paraska Medvid, Jezie Sky, Maria Filipovic, Anne Kent, U.S. Senator Gordon J. Humphrey, U.S. Senator Charles E. Grassley, and U.S. Representative Robert L. Livingston, Petitioner, v. David H. LAMBERT, Director, District 28, U.S. Immigration and Naturalization Service; Alan Nelson, Commissioner of the Immigration and Naturalization Service; Edwin Meese, Attorney General for the United States of America; George Schultz, Secretary of State of the United States of America; James Baker, Secretary of the Treasury of the United States of America; Rear Admiral Clyde T. Lusk, Jr,, District Commander, 8th District, United States Coast Guard; and Captain Lindak, Captain of the Port of New Orleans, U.S. Coast Guard, Respondents.
    Civ. A. No. 85-5150.
    United States District Court, E.D. Louisiana.
    Nov. 8, 1985.
    William P. Quigley, New Orleans, La., for petitioner.
    William F. Baity and Daniel S. Linhardt, Asst. U.S. Attys., New Orleans, La., for respondents.
   ORDER AND REASONS

FELDMAN, District Judge.

Before the Court is a Petition for Writ of Habeas Corpus in which the petitioners, as next friends on behalf of seaman Medvid, ask this Court to order the defendants to stop the departure of the SS Marshal Konev from leaving the territorial waters of the United States without first releasing seaman Medvid from the ship so that the defendants can present him before this Court in order to inquire into the voluntariness of his expressed desire to return to the Soviet Union.

Standing

This Court has doubts about the standing of the plaintiffs. Although in the prior application for a temporary restraining order in Civil Action No. 85-5065 this Court assumed that the plaintiffs there had standing, evidence offered by the plaintiffs themselves in that case now indicate to this Court that seaman Medvid was not under the influence of drugs during his several interviews with the on-site U.S. team on the Coast Guard vessel and at the Naval facility. Thus, the question of Medvid’s incompetence, for purposes of Rule 17(c) of the Federal Rules of Civil Procedure has been seriously cast in doubt. Nevertheless, Rule 17(c) might not be plaintiffs key to standing, and, therefore this Court continues to assume the plaintiffs here have standing. 28 U.S.C. § 2242; Weber v. Garza, 570 F.2d 511 (5 Cir.1978).

Entitlement To Relief

Is the Writ of Habeas Corpus appropriate here? Nothing is more fundamental in our law than that the Great Writ can only issue to the person having custody of the person detained so that the custodian can be directed to produce at the hearing the body of the person detained. See 28 U.S.C. § 2243. Plaintiffs admit that the defendants do not have actual custody but, rather, they argue that the defendants have constructive custody by virtue of their administrative ability to deter the ship’s departure. Such an argument strains reason and common sense, and does not contemplate the requisite constructive control over the person of seaman Medvid which this Court believes the law contemplates. The pivotal ingredient is control over the person. These defendants simply do not have control over Medvid except in the most indirect, metaphysical sense. See Billiteri v. United States Board of Parole, 541 F.2d 938, 948 (2 Cir.1976); Mackey v. Gonzalez, 662 F.2d 712 (11 Cir.1981); United States v. Roberts, 152 F.2d 841 (2 Cir.1946); McDowell v. Sacramento Local Board Group Boards 21, 22 and 23, Selective Service System, 264 F.Supp. 492 (E.D.Cal. 1967).

Further, this Court cannot ignore the fact that on this date the United States Supreme Court unanimously denied the application of the plaintiffs in the District of Columbia case for injunctive relief or, alternatively, for a writ of habeas corpus. Although the denial of the United States Supreme Court is not necessarily binding on this Court, it cannot be ignored as a guidepost, and an important one. Rule 27.3 of the Supreme Court.

Finally, this Court must reiterate what it said in its Order and Reasons on November 6, 1985. The charges regarding the circumstances of seaman Medvid are cruelly serious ones. They must not be treated callously. But a greater principle is at stake: the doctrine of separation of powers and the propriety of the Federal Judiciary in meddling with foreign affairs. Plaintiffs have candidly admitted that the relief they request, simply stated, is to ask this Court to stop the departure of the Marshal Konev from American territorial waters. That is a decision for the Executive and Legislative branches of our Government, not the Federal Judiciary. The independence of the Federal Judiciary is a marvel in the history of Western Civilization. Indeed, that independence at times has resulted in decisions which have had long lasting political and social consequences. We do not shirk from the responsibility of that independence. But we must balance the consequences of what plaintiffs seek against the public interest when an international confrontation could result. In the final analysis, this Court weighs the public interest as being the more serious one in these sobering circumstances.

Accordingly, for the reasons stated,

IT IS ORDERED:

The Petition for Writ of Habeas Corpus is DENIED. See 28 U.S.C.. § 2243.


author: MYRON L. GORDON, Senior District Judge.

text:
    Jimmie KAZEE, Petitioner, v. Warren YOUNG, Respondent.
    No. 84-C-1496.
    United States District Court, E.D. Wisconsin.
    Nov. 8, 1985.
    Louis B. Butler, Jr., Asst. State Public Defender, Milwaukee, Wis., for petitioner.
    Mary Batt, Asst. Atty. Gen., Dept. of Justice, Madison, Wis., for respondent.
   DECISION AND ORDER

MYRON L. GORDON, Senior District Judge.

The petitioner was convicted in Milwaukee County Circuit Court on April 9, 1981, of one count of robbery, in violation of Wis.Stat. § 943.32(1)(b), and one count of habitual criminality, in violation of Wis. Stat. § 939.62. The trial court sentenced the petitioner to a total of twelve years imprisonment for the robbery and habitual criminality conviction. The petitioner was also convicted of first degree sexual assault and robbery in a separate but consolidated case; the latter conviction is not challenged in the present petition.

The Wisconsin Court of Appeals affirmed the convictions in a decision dated June 15, 1982. Mr. Kazee’s petition for review was dismissed as untimely by the Wisconsin Supreme Court on July 27, 1982. His motion for reconsideration or, in the alternative, for leave to initiate an original action was denied by the state’s high court on August 17, 1982.

The petitioner now seeks a writ of habeas corpus pursuant to 28 U.S.C. § 2254. He alleges that the trial court violated the double jeopardy clause of the fifth amendment when it sentenced him for the robbery and habitual criminality conviction. The petition for habeas corpus relief will be denied.

As a preliminary matter, the state contends that the habeas corpus petition should be dismissed because the petitioner failed to exhaust his state remedies. The state asserts that the petitioner still may raise his double jeopardy claim in the trial court through a post-conviction motion under Wis.Stat. § 974.06.

The state court of appeals already has considered and rejected the petitioner’s double jeopardy claim. In addition, the state supreme court has declined to hear the" claim by dismissing the untimely petition for review and by denying the motion for reconsideration or, alternatively, for leave to initiate an original action. I am satisfied that the petitioner has exhausted his state remedies under 28 U.S.C. § 2254(b) and (c). An issue previously considered on direct appeal cannot be reconsidered under Wis.Stat. § 974.06. Brown v. State, 96 Wis.2d 238, 241, 291 N.W.2d 528, cert. denied, 449 U.S. 1015, 101 S.Ct. 576, 66 L.Ed.2d 475 (1980). Moreover, the exhaustion doctrine does not require the petitioner to file repetitious applications in the state courts. Humphrey v. Cady, 405 U.S. 504, 516 n. 18, 92 S.Ct. 1048, 1056 n. 18, 31 L.Ed.2d 394 (1972).

The state has not raised the defense of waiver. The waiver doctrine, in contrast to the exhaustion requirement, addresses “the situation in which there is no presently available state remedy but the petitioner bypassed an earlier opportunity to have a state court consider his constitutional claim.” Perry v. Fairman, 702 F.2d 119, 120 (7th Cir.1983). Waiver does not deprive the court of subject matter jurisdiction over a habeas corpus petition. Id. Because the state failed to raise the issue of waiver, it will be deemed to have waived this defense. See United States v. Angelos, 763 F.2d 859, 861 (7th Cir.1985). The court, therefore, will proceed to the merits of the petition.

The trial court made the following statement in sentencing the petitioner:

“The Court will sentence the defendant in Case J-4488 which is the robbery to ten years and on the habitual criminality will add two years to that.”

The petitioner alleges that he received two sentences for the same crime in violation of the double jeopardy clause of the fifth amendment. The state court of appeals, when presented with this challenge, held that the trial court imposed only a single sentence of twelve years for robbery, two years of which were imposed because the petitioner was a repeat offender. The factual findings of the state court are presumptively correct under 28 U.S.C. § 2254(d) and must be deferred to unless the federal court determines that the state court findings lack even “fair support” in the record. Marshall v. Lonberger, 459 U.S. 422, 432, 103 S.Ct. 843, 850, 74 L.Ed.2d 646 (1983). Far from concluding that the state appellate court’s finding lacks “fair support” in the record, the court agrees with the state court’s reading of the trial court’s sentence.

Wisconsin’s habitual offender statute, Wis.Stat. § 939.62, does not create a separate crime but authorizes the enhancement of a defendant’s sentence for an underlying conviction. State v. Upchurch, 101 Wis.2d 329, 332 n. 2, 305 N.W.2d 57 (1981); see also Wis.Stat. § 973.12(2). An enhanced sentence pursuant to a habitual offender statute is not a new jeopardy or additional punishment for previous offenses but “is a stiffened penalty for the latest crime, which is to be considered an aggravated offense because a repetitive one.” Gryger v. Burke, 334 U.S. 728, 732, 68 S.Ct. 1256, 1258, 92 L.Ed. 1683 (1948). The trial court’s action in the present case is not violative of the fifth amendment double jeopardy clause because the court merely used the petitioner’s status as a repeat offender to enhance his sentence for the robbery conviction. See Baker v. Duckworth, 752 F.2d 302, 304 (7th Cir.1985). Accordingly, the petitioner’s application for habeas corpus relief will be denied.

Therefore, IT IS ORDERED that the petition for a writ of habeas corpus be and hereby is denied.


author: WILLIAM C. LEE, District Judge.

text:
    WESTERN SMELTING & METALS, INC., Plaintiff, v. SLATER STEEL, INC.; Joslyn Manufacturing and Supply Co.; and Joseph Behr & Sons, Inc., Defendants.
    Civ. No. F 85-364.
    United States District Court, N.D. Indiana, Fort Wayne Division.
    Nov. 12, 1985.

      Verne W. Newcomb and Richard Pope, Newcomb, Sabin, Schwartz & Landsverk, Portland, Or., William L. Sweet, Jr., Barrett, Barrett & McNagny, Fort Wayne, Ind., for plaintiff.
    Carl R. Neil and William C. Campbell, Lindsay, Hart, Neil & Weigler, Portland, Or., Richard Blaich and Martin T. Fletcher, Rothberg, Gallmeyer, Fruechtenicht & Logan, Fort Wayne, Ind., for defendant Slater.
    R.G. Stephenson and Mary Danford, Bullivant, Houser, Bailey, Hanna, Pendergrass, Hoffman, O’Connell & Goyak, Portland, Or., Kenneth M. Waterman, Shoaff, Parker & Keegan, Fort Wayne, Ind., for defendant Joslyn.
    E. Richard Bodyfelt, Bodyfelt, Mount, Stroup & Chamberlain, Portland, Or., David K. Schmitt, Katten, Muchin, Zavis, Pearl & Galler, Chicago, Ill., Edward E. Back, Shambaugh, Kast, Beck & Williams, Fort Wayne, Ind., for defendant Joseph Behr & Sons.
   ORDER

WILLIAM C. LEE, District Judge.

This matter is before the court on the motion for partial summary judgment filed by defendant Slater Steel, Inc. (“Slater”). Plaintiff (“Western”) has filed a memorandum in opposition, and Slater filed a reply. For the following reasons, the motion for partial summary judgment will be granted in part and denied in part.

This action arises out of a contract entered into by Western, Slater and defendant Joslyn Manufacturing and Supply Company (“Joslyn”) under which Western would undertake to sell scrap metal to Slater and Joslyn. Defendant Joseph Behr & Sons, Inc. (“Behr”) acted as broker for the sales. In its amended complaint, Western alleges that Slater and Joslyn breached their contract, converted scrap metal that Western had sent to them, and that Slater, Joslyn and Behr engaged in acts of misrepresentation. The complaint seeks $300,-000.00 on the contract and misrepresentation claims, treble damages of $900,000.00 on the conversion claim, prejudgment interest, attorney fees and exemplary damages. Slater’s motion for partial summary judgment is directed solely at the request for exemplary damages.

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment may only be granted if “the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). Thus, summary judgment serves as a vehicle with which the court “can determine whether further exploration of the facts is necessary.” Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975).

In making this determination, the court must keep in mind that the entry of summary judgment terminates the litigation, or an aspect thereof, and must draw all inferences from the established or asserted facts in favor of the non-moving party. Munson v. Friske, 754 F.2d 683, 690 (7th Cir.1985). The non-moving party’s reasonable allegations are to be accepted as true for purposes of summary judgment. Yorger v. Pittsburgh Corning Corp., 733 F.2d 1215, 1218-19 (7th Cir.1984). A party may not rest on the mere allegations of the pleadings or the bare contention that an issue of fact exists. Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.), cert. denied, 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983). See Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). See also Atchison, Topeka & Santa Fe Railway Co. v. United Transportation Union, 734 F.2d 317 (7th Cir.1984); Korf v. Ball State University, 726 F.2d 1222 (7th Cir.1983). See generally C. Wright, Law of Federal Courts, § 99 (4th ed. 1983); 6 Moore’s Federal Practice, § 56.15 (2d ed. 1984).

Thus, the moving party must demonstrate the absence of a genuine issue of material fact. The court views all evidence submitted in favor of the non-moving party. Even if there are some disputed facts, where the undisputed facts are the material facts involved and those facts show one party is entitled to judgment as a matter of law, summary judgment is appropriate. Egger v. Phillips, 710 F.2d 292, 296-97 (7th Cir.1983); Collins v. American Optometric Assn., 693 F.2d 636, 639 (7th Cir.1982). See also Bishop v. Wood, 426 U.S. 341, 348, 348 n. 11, 96 S.Ct. 2074, 2079, 2079 n. 11, 48 L.Ed.2d 684 (1976).

In light of these principles, the facts relevant to this motion are as follows. Western is an Oregon corporation with its principal place of business in Oregon. It is engaged in the collection and sale of scrap metal, primarily high-nickel alloys. Joslyn, an Illinois corporation, owned a plant in Fort Wayne, Indiana until February, 1981, when it sold the plant to Slater. Slater, a Delaware corporation with its principal place of business in Fort Wayne, is a manufacturer of stainless steel, and needs high-nickel alloy scrap as raw material for its steel. Behr is an Illinois corporation which acted as a broker for Joslyn and Slater, soliciting scrap suppliers, arranging for shipment to Fort Wayne, and receiving a commission on the payment made by Joslyn or Slater to the scrap supplier.

Between September 1, 1980 and September 30, 1983, Western shipped to Joslyn and Slater a total of thirty-six loads of high-nickel scrap with varying metal contents. According to Western, the contract required Joslyn and Slater to melt and perform a meltdown analysis of all scrap metal in each shipment, and then to report to Western and pay for all nickel, chrome and molybdenum units recoverable from the scrap. The breach of contract claim asserts that Joslyn and Slater in effect shortchanged Western by underreporting the amount of alloy in the shipments, and the conversion count is based on the claim that the amounts not reported to Western were converted to Joslyn’s and Slater’s own use. The misrepresentation count is premised both on Slater and Joslyn’s underreporting and on certain representations made by Behr.

This lawsuit was originally filed in the District of Oregon, but was transferred to this court on August 14, 1985 after Magistrate William M. Dale found that the court did not have jurisdiction over Slater and recommended granting of Slater’s motion to transfer the cause in order to cure the jurisdictional defect. See Findings and Recommendations of Magistrate Dale, p. 9 n. 3 (Docket # 60).

Slater’s motion for partial summary judgment is based upon its belief that Indiana law prohibits the assessment of punitive damages in this action under the rule of Taber v. Hutson, 5 Ind. 322 (1854). Western’s opposition to the motion is based on its conclusion that Oregon, and not Indiana, law applies to the question of the availability of punitive damages, and that Indiana statutory law has in effect overridden the Taber rule. Slater admits that if Oregon law applies, punitive damages are available. The court must therefore determine whether Indiana or Oregon law applies, and if Indiana law applies, whether the rule of Taber v. Hutson will apply to this case.

In resolving a conflict of. laws question, a federal court sitting in diversity will generally apply the choice of law rules of the state in which it sits. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). The situation becomes more complicated when the federal court deciding the question has had the case transferred to it from another federal court. If a case is transferred under 28 U.S.C. § 1404(a) for the sake of convenience, then the transferee court should apply the law of the transferor forum. Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964); Nelson v. International Paint Co., 716 F.2d 640, 643 (9th Cir.1983). The rationale behind this rule is to prevent the party seeking a transfer to take advantage of more favorable laws in another forum. Van Dusen. However, when a case is transferred to cure a lack of jurisdiction, the law of the transferee forum must apply, in order to prevent plaintiffs from enjoying choice-of-law advanages to which they would not have been entitled in the proper forum. Tillett v. J.I. Case Co., 756 F.2d 591, 593 n. 1 (7th Cir.1985); Gonzalez v. Volvo of America Corp., 734 F.2d 1221, 1223 (7th Cir.1984); Nelson, 716 F.2d at 643; Roofing and Sheet Metal Services, Inc. v. La Quinta Motor Inns, Inc., 689 F.2d 982, 992 (11th Cir.1982); Ellis v. Great Southwestern Corp., 646 F.2d 1099, 1110 (5th Cir.1981); Reyno v. Piper Aircraft Co., 630 F.2d 149, 165 (3d Cir.1980), rev’d on other grounds, 454 U.S. 235, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981); Martin v. Stokes, 623 F.2d 469, 475 (6th Cir.1980). This conclusion is buttressed by the language of 28 U.S.C. § 1631, which provides that if a case is transferred because of a want of jurisdiction, the action “shall proceed as if it had been filed in ... the court to which it is transferred____” Therefore, the court must apply Indiana choice-of-law rules.

The Indiana choice-of-law rule for contract actions is the “most intimate contacts” approach, described by the Indiana Supreme Court as follows:

The court will consider all acts of the parties touching the transaction in relation to the several states involved and will apply as the law governing the transaction the law of that state with which the facts are in most intimate contact.

W.H. Barber Co. v. Hughes, 223 Ind. 570, 63 N.E.2d 417, 423 (1945). See Eby v. York Division, Borg Warner, 455 N.E.2d 623, 626 (Ind.App.1983); Suyemasa v. Myers, 420 N.E.2d 1334 (Ind.App.1981). Based upon the Restatement (Second) of Conflict of Laws, § 188 (1971), the Eby court listed the following contacts as representative of the contacts a court should consider:

(a) the place of contracting;
(b) the place of negotiation of the contract;
(c) the place of performance;
(d) the location of the subject matter of the contract; and
(e) the domicile, residence, nationality, place of incorporation and place of business of the parties.

455 N.E.2d at 626. An examination of the facts of this case indicate that, while the question is close, the state with the most significant contacts is Indiana. Because Behr was brokering transactions between Western and the Fort Wayne plant, the place of negotiation and contracting is somewhat nebulous. However, it is clear that the place of performance was the Fort Wayne plant. That was the place where the scrap was sent, where it was melted and analyzed, and where the contractual provisions concerning the determination of alloy content were to be performed. The breach alleged here was a breach of those particular provisions. Therefore, to the extent that Western seeks exemplary damages for the breach of contract, the availability of those damages will be governed by Indiana law.

The Indiana choice-of-law rule for torts is the rule of lex loci delicti — that is, the law of the place where the tort was committed. Bishop v. Firestone Tire & Rubber Co., 579 F.Supp. 397, 398 (N.D.Ind. 1983); Eaton Corp. v. Appliance Valves Corp., 526 F.Supp. 1172, 1177-78 (N.D.Ind. 1981); Eby, 455 N.E.2d at 626; Lee v. Lincoln Natl. Bank & Trust Co., 442 N.E.2d 1147 (Ind.App.1982). Under this rule, the place where the tort was committed (the place of wrong) is “the state where the last event necessary to make an actor liable for an alleged tort takes place.” Restatement of Conflicts of Laws, § 377 (1934). See Eby, 455 N.E.2d at 626. For the tort of conversion, the last act necessary to make the defendants liable is the misappropriation of the property itself, see Eaton Corp., 526 F.Supp. at 1178, and in this case that misappropriation occurred at the Fort Wayne plant, when Joslyn or Slater decided to underreport the amount of alloy present in the scrap and to keep the unreported alloy for itself. Thus, the law of Indiana would apply to the question of the availability of exemplary damages on. the conversion claim.

The misrepresentation claim presents a more difficult question: where does the last act necessary to make Slater, Joslyn, or Behr liable for misrepresentation occur? Slater argues that it is Indiana, because that is where the misrepresentations were made, and the damage to Western was complete once those misrepresentations occurred. Western argues (citing Oregon law) that the last act is the loss it suffered in Oregon, to which Slater replies that the loss occurred in the place and at the time of the misrepresentations.

Indiana case law indicates that “in claims for fraud and misrepresentation, the tort is considered to have been committed in the state where the loss occurred, typically because that is where the last event necessary to create liability takes place.” Eby, 455 N.E.2d at 626. However, a loss does not occur at the place where the misrepresentations are made, as Slater contends. The first Restatement of Conflicts, which is premised on the lex loci delicti rule, specifically makes a distinction in the note following § 377. That note provides in pertinent part:

When a person sustains loss by fraud, the place of wrong is where the loss is sustained, not where fraudulent misrepresentations are made.
Illustrations:
5. A, in state X, makes false representations by letter to B in Y as a result of which B sends certain chattels from Y to A, in X. A keeps the chattels. The place of wrong is in state Y where B parted with the chattels.
6. A, in state X, owns shares in the M company. B, in state Y, fraudulently persuades A not to sell the shares. The value of the shares falls. The place of wrong is X.

Restatement of Conflict of Laws, § 377 note (emphasis in original). From these illustrations, the court concludes that the place of loss is the place where the plaintiff suffers his damage. In illustration 6, A’s economic loss is in state X, even though the misrepresentations are made in another state and regardless of the location of the company. Illustration 5 is similar to this case, especially if one considers that Western kept sending shipments to Fort Wayne because of the misrepresentations made by the defendants. Therefore, because the economic impact of the misrepresentations is suffered by Western in Oregon (as that is where Western cashes the checks from the defendants and is thereby deprived of the money that is not paid because of the underreporting of the alloys), Oregon law would apply.

This conclusion is buttressed by case law. In Eby, the plaintiff was an Indiana resident who was allegedly promised a job in Florida. The misrepresentations about the existence of the Florida job were made by a Florida employee from the Florida office of the defendant. However, in applying the Indiana rule of “place of loss,” the court stated that “in the case here, the majority of the Ebys’ losses— wages, moving expenses — happened in Indiana. Therefore, the Ebys’ entire case is governed by Indiana law.” 455 N.E.2d at 626. Thus the place of loss is the place where the plaintiff suffered his damages, not where the misrepresentations were made. See also Pat J. Murphy, Inc. v. Drummond Dolomite, Inc., 214 F.Supp. 496, 498 (E.D.Wis.1963), adopted and affirmed, 346 F.2d 382 (7th Cir.1965) (applying Wisconsin law under lex loci delicti). Therefore, Oregon law governs the existence of exemplary damages on the misrepresentation claim. Because Slater admitted that Oregon law allows for punitive or exemplary damages for misrepresentation, the motion for summary judgment must be denied as to the misrepresentation claim.

'Under Indiana law, the general rule is that punitive damages are not recoverable in a contract action. However, there are exceptions to this rule. “Where the conduct of a party, in breaching his contract, independently establishes the elements of a common law tort, punitive damages may be awarded for the tort.” Art Hill Ford, Inc. v. Callender, 423 N.E.2d 601, 602 (Ind. 1981); F.D. Borkholder Co., Inc. v. Sandock, 274 Ind. 612, 413 N.E.2d 567 (1980); Hibschman Pontiac v. Batchelor, 266 Ind. 310, 362 N.E.2d 845 (1977). Even if an independent tort cannot be established, punitive or exemplary damages may be awarded if elements of fraud, malice, gross negligence or oppression mingle in the controversy, and it can be shown that the public interest would be served by the deterrent effect of punitive damages. Canada Dry Corp. v. Nehi Beverage Co., Inc., 723 F.2d 512, 524 (7th Cir.1983); Art Hill Ford, 423 N.E.2d at 602. Because Western has alleged tortious conduct in addition to the breach of contract, this court cannot say as a matter of law that Western would be unable to establish these elements so as to justify an award of punitive damages.

However, Slater argues that the rule of Taber v. Hutson, 5 Ind. 322 (1854), operates to prevent Western’s claim for exemplary damages. Under the Taber rule, punitive damages are not appropriate in a civil case when the defendant is or may be subject to criminal prosecution for the same act. See Husted v. McCloud, 450 N.E.2d 491, 493 (Ind.1983); Gomez v. Adams, 462 N.E.2d 212, 227 (Ind.App.1984); Moore v. Waitt, 157 Ind.App. 1, 298 N.E.2d 456, 461 (Ind.App.1973). The mere possibility of a criminal prosecution is sufficient to invoke the rule. Moore, 298 N.E.2d at 460. Although Indiana courts at one time held that corporations were explicitly excluded from this rule because of the inability of a corporation to be held criminally responsible for the crimes of its agents, see Peoples Trust & Savings Bank v. Humphrey, 451 N.E.2d 1104, 1114 (Ind.App.1983); Nicholson’s Mobile Home Sales, Inc. v. Schramm, 164 Ind.App. 598, 330 N.E.2d 785 (1975), this exception has been abrogated by I.C. 35-41-2-3, which provides that a corporation “may be prosecuted for any offense,” and can be “convicted of an offense ... if it is proved that the offense was committed by its agent acting within the scope of his authority.” See Gomez, 462 N.E.2d at 227 and n. 11 (explicitly pointing out that Peoples Trust & Savings Bank was in error). Because Slater could possibly be prosecuted under the criminal fraud statute, I.C. 35-43-5-4, or the criminal theft statute, I.C. 35-43-4-1, the rule of Taber v. Hutson would appear to apply and prevent Western from being able to recover punitive or exemplary damages on the contract and conversion claims.

Western claims that the Taber rule was overruled by I.C. 34-4-30-2, which became effective on September 1, 1984 and provides in pertinent part:

It is not a defense to an action for punitive damages that the defendant is subject to criminal prosecution for the act or omission that gave rise to the civil action.

Because the acts complained of in this cause all occurred from September 1, 1980 to September 30, 1983, Western in effect seeks to have this court apply I.C. 34-4-30-2 retroactively.

The general rule under Indiana law is that a statute will not be given a retroactive application unless the legislature unequivocally states a contrary intent. Tremps v. Ascot Oil Co., 561 F.2d 41, 45 (7th Cir.1977); Herrick v. Sayler, 245 F.2d 171, 174 (7th Cir.1957); State ex rel. Uzelac v. Lake Criminal Court, 247 Ind. 87, 212 N.E.2d 21 (1965); Davis v. State, 464 N.E.2d 926, 928 (Ind.App.1984). An exception to this general rule exists for remedial statutes which do not create new rights or take existing rights away. See Herrick, 245 F.2d at 174; Connecticut Mut. Life Ins. Co. v. Talbot, 113 Ind. 373, 14 N.E. 586 (1887); DeHart v. Anderson, 178 Ind.App. 581, 383 N.E.2d 431, 435 (1978). However, I.C. 34-4-30-2 cannot be said to be merely remedial. It creates a new right for civil plaintiffs: the right to seek punitive damages for acts that previously could not generate punitive damages because of their potential criminal implications. The Seventh Circuit’s Herrick decision makes clear that a statute which increases a defendant’s liability cannot be applied retroactively. 245 F.2d at 174. Because there is no evidence of any legislative intent to have I.C. 34-4-30-2 apply retroactively, the general rule requires that it be applied prospectively.

Western argues that this court should overrule Taber. However, at least two Indiana courts left the question to the legislature, see McCarty v. Sparks, 180 Ind.App. 251, 388 N.E.2d 296 (1979), and Glissman v. Rutt, 175 Ind.App. 493, 372 N.E.2d 1188 (Ind.App.1978), and the legislature responded by passing I.C. 34-4-30-2 in 1984. Given the fact that the Indiana Supreme Court appeared to follow the Taber rule as late as 1983 in Husted v. McCloud, it is clear that prior to the 1984 legislation the courts of Indiana preferred to follow the Taber rule. In light of such precedent, the court declines to ignore the Taber holding in this case.

Thus, Indiana law prohibits Western from receiving punitive or exemplary damages for the breach of contract and conversion claims, while Oregon law allows Western to seek those damages on the misrepresentation claim.

For the reasons set forth above, defendant Slater’s motion for summary judgment is hereby GRANTED as to the breach of contract and conversion claims, and is hereby DENIED as to the misrepresentation claims.

      . It is not completely clear whether Western seeks exemplary damages on some or all of its claims. According to the amended complaint, Western’s request for exemplary damages is stated only as to the misrepresentation claim. However, the briefs on the motion for summary judgment have not been directed solely at the misrepresentation issue. Therefore, the court will consider the question as to all three claims.

      . In 1965, the Seventh Circuit held that the choice-of-law rule for torts was the most significant contacts rule. Watts v. Pioneer Com Co., 342 F.2d 617 (7th Cir.1965); Gianni v. Fort Wayne Air Service, Inc., 342 F.2d 621 (7th Cir. 1965). With the exception of Witherspoon v. Salm, 142 Ind.App. 655, 237 N.E.2d 116 (1968), rev’d on other grounds, 251 Ind. 575, 243 N.E.2d 876 (1969), the Indiana Court of Appeals has unanimously held that the rule is lex loci delicti. Eby; Lee; Maroon v. State Dept. of Mental Health, 411 N.E.2d 404 (Ind.App.1980). Thus, the subsequent validity of Watts is questionable. See Sharp v. Egler and Bill Hanka Auto Sales, Inc., 658 F.2d 480 (7th Cir.1981); Eaton Corp., 526 F.Supp. at 1178. Because this court must give consideration to the rulings of the state intermediate appellate courts on questions of state law. In re Air Crash Disaster Near Chicago, Illinois, 701 F.2d 1189, 1197 (7th Cir.1983); Garris v. Schwartz, 551 F.2d 156, 158 (7th Cir.1977), the unanimous application of lex loci delicti convinces the court that this is the proper choice of law rule to apply to the conversion and misrepresentation claims. The court notes in passing, however, that its conclusion under the most significant contacts rule would be the same as set forth in the remainder of this order.


author: WILLIAM C. CONNER, District Judge.

text:
    TEXWOOD LIMITED, et al., Plaintiffs, v. Jordan GERBER, et al., Defendants.
    No. 83 Civ. 0304 (WCC).
    United States District Court, S.D. New York.
    Nov. 12, 1985.

      Kraver & Martin, New York City, Richard M. Kraver, Lewis S. Fischbein, Christopher Nolland, of counsel, for plaintiffs.
    Spengler Carlson Gubar Brodsky & Frischling, New York City, Robert Knuts, of counsel, for defendants Joseph Schacter & Co. and Joseph Schacter.
    Suzanne Antippas, New York City, for defendants Jordan Gerber and JoSo Consultants, Inc.
   OPINION AND ORDER

WILLIAM C. CONNER, District Judge.

Plaintiffs commenced this action some three years ago alleging violations of the federal securities laws and the statutory and common law of the state of New York. This case is now before the Court on defendants’ eleventh-hour motion, made pursuant to rule 12 of the Federal Rules of Civil Procedure (“Fed.R.Civ.P.”), to dismiss various counts of plaintiffs’ complaint for lack of subject matter jurisdiction and failure to state a claim upon which relief may be granted. As I write, it is literally the eve of trial.

There are three plaintiffs in this action: Texwood Limited (“Texwood Ltd”), Tex-wood Incorporated (“Texwood USA”), and Drager Industries, Incorporated (“Drag-er”). Texwood Ltd is incorporated and has its principal place of business in Hong Kong. It owns all the stock of Texwood USA, a New York corporation with its principal place of business in Manhattan. Drager is also a New York corporation with its principal place of business in Manhattan.

On December 27, 1979, Texwood USA entered into an agreement (“the stock purchase agreement”) to purchase 100 shares of Drager stock from Drager and from defendants Jordan Gerber (“Gerber”) and Scott Drake (“Drake”), two officers, directors, and shareholders of Drager, for $496,633. Texwood alleges that in making this purchase it relied on fraudulent misrepresentations and material omissions concerning Drager’s financial condition and business prospects, including financial statements and forecasts prepared by Drager’s accountants, Joseph Schachter & Co. (“JS&C”). The complaint also names as defendants Joseph Schachter (“Schachter”), Lawrence J. Kaplan (“Kaplan”), and Richard J. Stone (“Stone”), three of the members of JS & C; JoSo Consultants, Incorporated (“JoSo”), a consulting firm of which Gerber and Drake apparently were the sole officers, directors, and shareholders; and James K. Wat (“Wat”), the officer or director of Texwood USA who was principally responsible for overseeing the operations of Drager and reporting to Texwood Ltd. All defendants except Wat are residents or entities of the state of New York. Wat is a resident of the state of California.

Plaintiffs’ complaint sets forth eight counts against the various defendants. The first count alleges that defendants Gerber, Drake, JS & C, Schachter, Kaplan, Stone, and Wat induced plaintiffs to purchase 100 shares of Drager stock by making fraudulent misrepresentations and material omissions respecting Drager’s financial condition and business prospects in violation of § 10(b) of the Securities Exchange Act of 1934 (“the ’34 Act”), 15 U.S.C. § 78j(b) (1982), Securities and Exchange Commission rule 10b-5, 17 C.F.R. § 250.-10b-5 (1985), § 352-c of the General Business Law of the state of New York, N.Y. Gen.Bus.Law § 352-c (McKinney 1984), and the common law of the state of New York. Count two alleges that defendants Gerber and Drake breached various warranties made in the stock purchase agreement. Count three alleges that JS & C, Schachter, Kaplan, and Stone were negligent in preparing Drager’s 1978 and 1979 financial statements and Drager’s 1980 financial forecasts on which Texwood USA relied in purchasing the Drager stock. Count four alleges that defendants Gerber and Drake utilized defendant JoSo to convert Drager assets for their personal use and enjoyment and that Gerber, Drake, and JoSo breached a consulting agreement between Drager and JoSo. Count five alleges that Gerber, Drake, Wat, JS & C, Schachter, Kaplan, and Stone breached fiduciary duties owed to Texwood Ltd. Counts six and seven allege that defendants Gerber, Drake, and JoSo gave, and defendant Wat accepted, commercial bribes in violation of §§ 180.03 and 180.08 of the Penal Law of the state of New York, N.Y. Penal Law §§ 180.03, 180.08 (McKinney Supp.1984-1985). Finally, count eight alleges that Gerber fraudulently induced Texwood USA and Drager to issue him certain releases on August 27, 1981.

Defendants have moved to dismiss Drager as a plaintiff because, although the caption on the second amended complaint implies that Texwood Ltd and Texwood USA have brought this suit as a derivative action on behalf of Drager, the complaint does not include allegations required by Fed.R.Civ.P. 23.1 or § 626(c) of the Business Corporation Law of the state of New York, N.Y.Bus.Corp.Law § 626(c) (McKinney 1963). Most importantly, the complaint does not set forth that Texwood USA made a demand on Drager to bring an action in its own name on any of the claims asserted on its behalf, or that such a demand should be excused as futile. Moreover, as defendants correctly note, there is no reason to excuse the demand requirement under the facts of this case, since Texwood USA is the sole shareholder of Drager and presumably could secure compliance with a demand if one were made. For this reason, defendants’ motion to dismiss all claims on behalf of Drager must be, and hereby is, granted.

Second, although defendants have not raised this issue, it appears that Tex-wood Ltd should also be dismissed as a plaintiff in this case. The allegations of the complaint do not suggest that Texwood Ltd has any claims to assert against the defendants named in this action. The only connection between Texwood Ltd and the events giving rise to this lawsuit is that Texwood Ltd apparently gave or loaned Texwood USA the money to purchase the 100 shares of Drager stock and advanced money to Texwood USA to finance certain dealings with Drager after the stock purchase. If Texwood USA has not repaid these sums, Texwood Ltd’s action is against Texwood USA and is essentially unrelated to the claims asserted against the defendants in this suit. Consequently, Texwood Ltd must be, and hereby is, dismissed as a party plaintiff.

Finally, defendants question whether the Court has subject matter jurisdiction over some of plaintiff Texwood USA’s claims. Defendants concede that in count one Tex-wood USA properly alleges a cause of action under § 10(b) of the ’34 Act, and, thus, they acknowledge that the Court has subject matter jurisdiction over that claim pursuant to § 27 of the ’34 Act, 15 U.S.C. § 78aa (1982). However, this is the only federal question claim alleged in the complaint and therefore the Court has jurisdiction over the remaining claims alleged in the complaint only to the extent that they are pendent to the § 10(b) claim. Under United Mine Workers v. Gibbs, 383 U.S. 715, 725-26, 86 S.Ct. 1130, 1138-39, 16 L.Ed.2d 218 (1966), a federal court may exercise pendent jurisdiction over a state law claim if (1) the state law claim and the anchoring federal claim derive from a “common nucleus of operative fact,” and (2) the court decides that “considerations of judicial economy, convenience and fairness to [the] litigants” make exercise of that jurisdiction appropriate.

In view of these principles, it is clear that Texwood USA’s state law claims in counts one, two, and three are proper pendent claims. There is no dispute that they share a “common nucleus of operative fact” with its count one claim under the federal securities laws, and that Texwood USA “would ordinarily be expected to try them all in one judicial proceeding.” Id. at 725, 86 S.Ct. at 1138.

In concluding that Texwood USA’s claims in counts one, two, and three are properly before the Court, I am not suggesting that Texwood USA will be able to assert the claims therein for $2,779,099 for the net losses incurred by Drager in 1979, 1980, and 1981. See SAC 111157, 75, 81. These claims are properly Drager’s, and I have dismissed Drager as a party plaintiff above. Perhaps in fear that the Court would reach such a disposition of Drager’s claims, Texwood USA now argues in its memorandum of law submitted in opposition to defendants’ motion to dismiss that these losses are its own. Texwood USA contends that after it purchased the Drag-er stock it extended between three and three and one-half million dollars in trade credit to Drager for which it has not been repaid. It suggests that these are the same losses that the complaint alleges were incurred by Drager. It argues that it extended this credit in reliance on the very same misrepresentations and omissions on which it had relied in purchasing the Drag-er stock and suggests that its claim for these losses is pendent to its federal securities claim.

Had Texwood USA alleged in its complaint what it now contends in its brief, these losses might properly be viewed as pendent to its federal securities claim. However, even after meticulously reading the complaint, I was unable to discern even a hint of this theory. This case is now almost three years old and Texwood USA has had three opportunities to set out the basis of its claims. After a plaintiff has had three bites at the apple, the defendants should be able to assume that the only claims the plaintiff will present at trial are those pleaded in its complaint. Even under the liberal rules of notice pleading, it is not too much to ask that critical allegations appear somewhere in the complaint. Accordingly, at trial, Texwood USA will be limited to proving the claim for $496,638 that it alleges in its second amended complaint.

Count four alleges that defendants Gerber and Drake utilized JoSo to convert Drager assets for their personal use and enjoyment and that Gerber, Drake, and JoSo breached a consulting agreement between Drager and JoSo. It is plain that Drager is the proper party to assert these claims since it was the party directly injured by the alleged acts. As I noted above, if Texwood USA wished to assert this claim on behalf of Drager, it had to make the appropriate demand under Fed.R. Civ.P. 23.1 and N.Y.Bus.Corp.Law § 626(c). It did not do so, and thus, like the rest of Drager’s claims, the claim in count four must be dismissed.

Count five alleges that Gerber, Drake, Wat, JS & C, Schachter, Kaplan, and Stone breached fiduciary duties owed “to Tex-wood Limited, as the corporation that owned and controlled Texwood Incorporated and as the corporation that provided the $496,633 used to purchase 100 shares of Drager’s stock and the corporation that manufactured and financed the jeans shipped through Texwood Incorporated to Drager.” SAC 1197. Whatever fiduciary duties these defendants owed, they owed them to Drager, or at the very most to Texwood USA, as a Drager creditor or shareholder. But there is no allegation that Texwood Ltd was ever a Drager creditor or shareholder; indeed there is no suggestion that it was ever in a position in which any of the defendants might have owed it a special duty. Thus, Texwood Ltd’s claim in count five must be dismissed. Additionally, the breaches of fiduciary duty alleged in count five took place after Tex-wood USA’s purchase of the Drager stock, and have no connection to the facts underlying Texwood USA’s federal securities claim. Thus, to the extent Texwood USA asserts a claim in count five, it is not pendent to its securities claim and must be dismissed.

Counts six and seven allege that defendants Gerber, Drake, and JoSo gave, and defendant Wat accepted commercial bribes in violation of §§ 180.03 and 180.08 of the Penal Law of the state of New York. Plaintiff has not cited any authority for the proposition that a private right of action exists under these sections. However, it appears that an employer may recover from its employee bribes taken in violation of § 180.08. See, e.g., Sears, Roebuck & Co. v. Kelly, 1 Misc.2d 624, 149 N.Y.S.2d 133 (Sup.Ct.N.Y.County 1956). Since there is diversity of citizenship between Texwood USA and defendant Wat, there is federal jurisdiction over the claim against him, but recovery will be limited to the amount of the bribes. However, the claim as to Gerber, Drake and JoSo must be dismissed. There is no diversity of citizenship between Texwood USA and these defendants, and since all of the acts complained of occurred after Texwood USA’s purchase of Drager’s stock, I do not believe the bribery claim is pendent to Texwood USA’s federal securities claim. Additionally, the bribery claim cannot be pendent to Texwood USA’s claim against Wat because the doctrine of pendent party jurisdiction cannot be used to overcome the requirement of complete diversity. See Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-77, 98 S.Ct. 2396, 2492-04, 57 L.Ed.2d 274 (1978). For all of these reasons, count seven is dismissed.

Finally, count eight alleges that Gerber fraudulently induced Texwood USA and Drager to issue him certain releases on August 27, 1981. To the extent that this asserts a cause of action on behalf of Drag-er, it is dismissed for the reasons set forth above. To the extent it asserts a claim on behalf of Texwood USA, it is not pendent to Texwood USA’s federal securities claim since all of the fraudulent misrepresentations Gerber is alleged to have made in connection with securing these releases occurred between August 15, 1981 and August 27, 1981, long after Texwood USA’s purchase of Drager’s stock. Accordingly, count eight is dismissed.

Conclusion

For the reasons set forth above, all claims asserted by or on behalf of Texwood Ltd and Drager are dismissed. Counts four, five, seven, and eight asserted by Texwood USA are also dismissed. On counts one, two, and three, Texwood USA is limited to recovering the $496,633 it paid for the 100 shares of Drager stock. On count six, Texwood USA is limited to recovering the amount of any bribes accepted by Wat.

SO ORDERED.

      . Defendants' motion was not filed until three working days before trial, and plaintiffs’ opposing papers were received the day before trial which was a federal holiday (Veteran’s Day). This opinion has thus been written under extraordinary time pressure. The motion would have been denied as untimely if it had not raised questions of federal jurisdiction which the Court must consider sua sponte.

      . The caption on plaintiffs’ second amended complaint reads: "TEXWOOD LIMITED and TEXWOOD INCORPORATED (U.S.A.), individually and derivatively on behalf of DRAGER INDUSTRIES, INC.”

      . Since Texwood Ltd is not and has never been a Drager shareholder it could not under any circumstances bring a shareholder derivative suit on behalf of Drager.

      . I note that if Drager were a proper party to this action, the Court might have subject matter jurisdiction of its state law claims under the doctrine of pendent plaintiff jurisdiction. Cf. e.g., Weinberger v. Kendrick, 698 F.2d 61, 76-77 (2d Cir.1982) (approving pendent plaintiff jurisdiction in context of settlement of class claims under § 10(b)). But see In re Investors Funding Corp. of N.Y. Sec. Litig., 523 F.Supp. 550, 560-62 (S.D.N.Y.1980) (disapproving pendent plaintiff jurisdiction in context of litigation of class claims under § 10(b)).

      . The Court can only surmise that Texwood Ltd was joined as a party plaintiff in a futile attempt to create jurisdiction over certain counts based on the supposed diversity of citizenship of the parties. This Court has held, however, that Hong Kong corporations are not citizens of a foreign state within the meaning of the diversity statute. See Windert Watch Co., Inc. v. Remex Elees. Ltd., 468 F.Supp. 1242, 1246 (S.D.N.Y. 1979); but see Tetra Fin. (HK) Ltd. v. Shaheen, 584 F.Supp. 847, 848-49 (S.D.N.Y.1984) (dictum).

      . Although defendants have not raised this point, I note that after carefully reading plaintiffs’ complaint I am not convinced that plaintiffs have properly pleaded all three prerequisites for accountants’ negligence liability under New York law. See Credit Alliance Corp. v. Arthur Andersen & Co., 65 N.Y.2d 536, 483 N.E.2d 110, 493 N.Y.S.2d 435 (1985). Specifically, I am not sure that plaintiffs have pleaded "conduct on the part of the accountants linking them to [the relying party], which evinces the accountants’ understanding of that party or parties’ reliance.” 65 N.Y.2d at 551, 483 N.E.2d at 118, 493 N.Y.S.2d at 443. If Texwood USA expects me to charge the jury on this count, it should produce proof at trial consonant with the holding of the New York Court of Appeals in Credit Alliance.