text:
    INTERNATIONAL LONGSHOREMEN’S ASSOCIATION, AFL-CIO, Petitioner, v. WEST GULF MARITIME ASSOCIATION, Council of North Atlantic Shipping Associations, New York Shipping Association, Inc., New Orleans Steamship Association, Southeast Florida Employers Port Association, Inc., South Atlantic Employers Negotiating Committee, Mobile Steamship Association, Inc., Respondents.
    No. 84 Civ. 9080 (LBS).
    United States District Court, S.D. New York.
    Feb. 19, 1985.

      Thomas W. Gleason, Ernest L. Mathews, Jr., New York City, for petitioner Intern. Longshoremen’s Ass’n.
    Healy & Baillie, New York City, for respondent West Gulf Maritime Ass’n; Howard M. McCormack, New York City, of counsel.
    Clifton, Budd, Burke & DeMaria, Thomas W. Budd, Robert A. Wiesen, New York City, for respondent Council of North Atlantic Shipping Associations.
    Francis A. Scanlan, Philadelphia, Pa., for respondent and cross-petitioner CONASA.
    Lambos, Flynn, Nyland & Giardino, New York City, for respondent N.Y. Shipping Ass’n, Inc.; Peter Lambos, Sr., New York City, of counsel.
    Walker, Bordelon, Hamlin & Theriot, David Walker, New Orleans, La., Breed Abbott & Morgan, David Spellman, New York City, for respondent New Orleans Steamship Ass’n.
    Hogg, Allen, Ryce, Norton & Blue, Donald T. Ryce, Jr., Coral Gables, Fla., Free-hill, Hogan & Mahar, Nathan J. Bayer, New York City, for respondent Southeast Fla. Employers Port Ass’n, Inc.
    Adams, Gardner, Ellis & Engles, Sam Inglesvy, Savannah, Ga., Freehill, Hogan & Mahar, Nathan J. Bayer, New York City, for respondent South Atlantic Employers Negotiating Committee.

      Haight, Gardner, Poor & Havens, John Weir, New York City, for respondent Mobile S.S. Ass’n, Inc.
   OPINION

SAND, District Judge.

Before this Court is the International Longshoremen’s Association, AFL-CIO (“ILA”) Petition to Confirm and Enforce an Arbitration Award and cross-motions to vacate that award and to dismiss for lack of personal jurisdiction and failure to state a claim upon which relief can be granted. This is a subsequent stage in the proceedings which gave rise to this Court’s Opinion and order of October 4, 1984, International Longshoremen’s Association v. West Gulf Maritime Association, 594 F.Supp. 670 (S.D.N.Y.1984), familiarity with which is assumed, and the background issues of this controversy will not be repeated herein.

In our October 4th Opinion, we held that the question whether an arbitration award has been made should be determined by the arbitrators themselves, not the Court, and we accordingly remanded the matter to the Emergency Hearing Panel (“EHP”) for resolution of that question. The EHP then met to consider the effect that the abstention by a management representative had had on the vote taken at its June 12, 1984 meeting on the ILA resolution on container gang sizes. The EHP was unable to agree on the consequences of the June 12th abstention and, pursuant to deadlock procedures prescribed by the EHP by-laws, referred the matter to arbitration by a third-party arbitrator selected jointly by management and labor. The arbitrator, Arnold M. Zack, Esq., issued his award on December 10, 1984 (Ex. 4 to Petition to Confirm) finding that the ILA resolution received a majority of votes and that it therefore resulted in a final, binding and enforceable award under the relevant agreements of the parties.

The first issue to be addressed is the contention of WGMA and CONASA that the issue before Mr. Zack was not arbitrable or, if arbitrable, that his decision was “in manifest disregard of the undisputed facts and law and is an abuse of the arbitration process.” Affidavit of Walter A. Niemand in Opposition to Motion to Confirm, par. 10. This contention is without merit.

There is no need to restate the proposition, well understood by the parties, that the scope of judicial review of arbitration awards is severely limited. See eases cited in International Longshoremen’s Association v. West Gulf Maritime Association, 594 F.Supp. at 675. These principles were reaffirmed last month by the Court of Appeals for the Second Circuit in United States Steel and Carnegie Pension Fund v. Dickinson, 753 F.2d 250 (2d Cir.1985). There the court wrote:

We believe our decision in Advance Publications, Inc. v. Newspaper Guild, 616 F.2d 614 (2d Cir.1980), governs this case. There we held that if an arbitrator offers even a barely colorable justification for his decision, we will not vacate it on the basis of a claim he exceeded his authority by misinterpreting the parties’ contract. That holding reflects our recognition that arbitrators must have broad authority to interpret the contracts they apply. Id. at 617. It also reflects the narrow reading we have consistently accorded our authorization, under the Federal Arbitration Act, to vacate arbitration awards on the ground that the arbitrator has overstepped his power. Andros Compania Maritima, S.A. v. Marc Rich & Co., 579 F.2d 691, 703 (2d Cir.1978).

Slip op. at 252-53.

Here, the arbitrator, in a well-reasoned opinion, resolved precisely the specific issue referred to him. The concept advanced by respondents that only “substantive” and not “procedural” matters were subject to the EHP’s deadlock procedures is baseless and would frustrate the obvious intent of the EHP by-laws to avoid any impasses.

The question whether the EHP issued a final and binding award on June 12th thus has been answered in favor of the Petitioner. Accordingly, we proceed to the issues left undecided in our October 4th Opinion.

The Claims of WGMA and CONASA

WGMA and CONASA contend that the EHP award should be vacated pursuant to 9 U.S.C. § 10(d) which authorizes a court to vacate an award “where the arbitrators exceeded their powers or so imperfectly executed them that a mutual final and definite award upon the subject matter was not made.” At the heart of respondents’ claim is the contention that the ILA resolution before the EHP on June 12, 1984 addressed a matter appropriately dealt with at the local level and not one arising under the Master Contract. That, however, was the very issue raised by the June 12th resolution and decided adversely to respondents. In passing the resolution, the EHP rejected the argument of management that the Master Contract did not govern the minimum size of container gangs using more than two drivers.

The EHP unquestionably has the authority to determine whether an issue is covered by the containerization provisions of the Master Contract. Such authority is a necessary part of its general authority, expressly granted by the parties, to resolve disputes relating to the containerization provisions.

What respondents, in essence, now argue is that the EHP’s conclusion was wrong. But that argument, even if accepted, is not a basis for vacating the award. As the Second Circuit noted in Advance Publications, the parties “have agreed to accept the judgment of an arbitrator, not that of a judge. By doing so, each party also accepts the risk that the arbitrator’s interpretation of the contract will disagree with its own and may, in fact, be wrong.” Advance Publications, supra, 616 F.2d at 618. Unless the construction adopted by the arbitrator was irrational, it will not be overturned by the courts. United States Steel and Carnegie Pension Fund, supra. Respondents have offered no argument to support a conclusion that the construction of the Master Contract adopted by the EHP was irrational.

WGMA and CONASA also challenge the award on grounds of inadequate notice and failure to consider or allow presentation of pertinent evidence. These objections are somewhat more troubling. As noted in our October 4th Opinion, the issue decided on June 12th was one of considerable significance to the shipping industry, and the manner in which it was raised and decided was far from a model of orderly deliberation. Nonetheless, mindful of the strict limitations imposed upon judicial review of arbitration awards, we do not believe that these objections provide a basis for vacating the June 12th award.

Resolution of the procedural matters arising out of arbitration are generally left to the arbitrator. See John Wiley & Sons v. Livingston, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964). Here, the procedural objections that are now raised to the award were raised as well at the June 12th meeting and rejected by the EHP when the resolution was put to a vote.

An arbitrator’s ruling on procedural issues will not be overturned under 9 U.S.C. § 10(c) unless it had the effect of denying the parties a fundamentally fair hearing, or was otherwise an unreasonable decision that prejudiced the rights of a party. See Bell Aerospace Co. v. Local 516, 500 F.2d 921 (2d Cir.1974); Dan River, Inc. v. Cal-Togs, Inc., 451 F.Supp. 497 (S.D.N.Y.1978).

Here, the procedures expressly agreed to by the parties give the EHP considerable flexibility with respect to notice and presentation of evidence. An EHP meeting can be convened on “short notice by telephone” although five days’ notice is preferred. EHP Rules of Procedure, para. B. Notice must be given to a party against whom a grievance has been filed, but no amount is specified. Id. para. F. With respect to presentation of evidence, a party against whom a grievance has been filed must be given an opportunity to present “such evidence as may be reasonably necessary to support his position,” but the EHP may determine “whether to take testimony or to accept proof in any reasonable form acceptable to the panel.” Id.

Four days’ notice was given of the grievance against WGMA. No formal testimony or presentation of documentary evidence took place, but the ILA resolution was discussed at length by the members of the EHP, who were representatives of the parties affected, and who were clearly conversant with the issue of contractual interpretation raised by the resolution.

Given the importance of the issue, it might have been preferable to defer a vote on the ILA resolution until labor and management representatives had had an opportunity to consult at length among one another and with their membership, or until representatives of each side had made a formal presentation of their respective positions on the issue. However, we do not find that a failure to defer the vote was, under the circumstances, so unreasonable or fundamentally unfair to the parties as to justify judicial nullification of the vote.

The Claims of the Other Regional Employer Associations

The ILA has joined in this proceeding Other Regional Employer Associations (see fn. 2, supra) who were not parties to the prior proceeding before this Court and various objections are raised on their behalf relating to the basis for personal jurisdiction, adequacy of notice and the propriety of joining them as parties at this time. None of the objections is persuasive.

These associations first contend that they are not subject to this Court’s jurisdiction because they do not transact business here. However, they are signatories to the Master Contract, which entrusts to the EHP resolution of issues involving the containerization provisions of the Master Contract. Accordingly, as signatories to the Master Contract, they have consented to the jurisdiction of the EHP—and consequently to the jurisdiction of this Court to confirm its awards. Merrill Lynch, Pierce, Fenner & Smith v. Lecopulos, 553 F.2d 842 (2d Cir.1977).

The associations next contend that the petition should be dismissed as against them for failure to state a claim upon which relief can be granted. The basis of this contention is that WGMA was the only shipping association which was a party to the grievance that resulted in the arbitration award.

The situation is an unusual one. WGMA was, indeed, the only party named in the grievance. The grievance in question, however, was whether a particular practice was governed by the containerization provisions of the Master Contract. Since all signatories to that contract are bound by its terms, and since resolution of disputes relating to those terms have been entrusted to the EHP, the EHP’s vote on the June 12th resolution necessarily affected all signatories to the Master Contract and not simply the party against whom the original grievance was filed. In addition, the award simply requires future adherence to the terms of the Master Contract as interpreted by the EHP on June 12th. It does not, in other words, require any retroactive or remedial measures that might not be equally applicable to all signatory associations.

Under the unusual circumstances of this case, we believe that the Other Regional Employer Associations are parties to the arbitration award within the meaning of the Arbitration Act. Even if they are not, however, we believe that § 301 of the Labor-Management Relations Act, 29 U.S.C. § 185, provides a cause of action for enforcement of the award against the associations on the basis of their contractual obligation to abide by the terms of the Master Contract as interpreted by the EHP.

Finally, the Other Regional Employer Associations raise objections as to lack of adequate notice and failure to exhaust local grievance procedures. These objections fail, however, for the same reasons that those raised by WGMA and CONASA were rejected.

Accordingly, for the reasons stated, the motion to confirm the Petition is granted and the motions to vacate and dismiss are denied.

SO ORDERED.

      . Respondents West Gulf Maritime Association (“WGMA”) and Council of North Atlantic Shipping Associations ("CONASA”) so move.

      . Respondents Southeast Florida Employers Port Association, Inc. ("SFEPA”), New Orleans Steamship Association ("NOSA”), South Atlantic Employers Negotiating Committee (“SAENC”), and Mobile Steamship Association ("MSA”), so move. We refer to these movants collectively as the "Other Regional Employer Associations."

      . The West Gulf Maritime Association (“WGMA”) has appealed this Court's prior order to the Court of Appeals for the Second Circuit and initially moved in the District Court to stay proceedings pending a determination of that appeal. At oral argument on January 31, 1985, however, it appeared that the application was withdrawn with the understanding and agreement that the parties would join in a request to the Court of Appeals to consolidate the appeal from this Court’s decision on these motions with the pending appeal, request an expeditious processing of that appeal and refrain from instituting any new legal proceedings or job actions predicated on this ruling pending appellate review by the Court of Appeals. See transcript proceedings January 31, 1985. However, correspondence received subsequent to oral argument indicates that it is the position of several shipping associations that no such stipulation exists. The application for a stay is denied.

      . WGMA and CONASA also contend that the award (which relates generally to drivers) did not address the specific grievance that was before the EHP (which related to Port-O-Packer operators) and that the matter was not properly before the EHP because local grievance procedures had not been exhausted. These questions, too, are matters of contract interpretation that were, likewise argued before, and resolved by, the EHP at its June 12th meeting. Absent a showing that the constructions adopted by the EHP were irrational (and none has been offered), they will not be overturned by this Court.

      . In addition to arguing that this notice was inadequate, WGMA contends alternatively that it had no prior notice of the ILA resolution since the grievance placed on the agenda related to a local dispute about Port-O-Packer operators, not a Master Contract issue about utilization of drivers generally. We reject this alternative contention as'an indirect attempt to reargue the merits of the EHP’s resolution.

      . A final objection that WGMA and CONASA raise to the award is that it was the product of duress or coercion. We find this contention to be meritless.

      . SAENC disputes that it participated in the EHP proceedings in any fashion other than the appearance of its representatives as arbitrators, not as parties to a grievance. It claims that since these representatives were serving in the capacity of arbitrators at the June 12, 1984 hearing, it is immune from suits at law under Calzarano v. Liebowitz, 550 F.Supp. 1389 (S.D.N.Y.1982).
      Given our conclusion that the parties consented to the jurisdiction of the EHP, their presence in New York at the June 12th meeting is not a prerequisite to this Court’s jurisdiction over them in an action to enforce an award made by the EHP. Nonetheless, it is clear that the parties came to New York not solely in their capacity as arbitrators, but also in their capacity as management representatives. As a result, they are subject to this Court’s jurisdiction, both on the ground of consent, and on the ground that they transacted business in New York out of which this litigation arises. N.Y.C.P.L.R. § 302(a)(1).

        Calzarano related to the personal liability of an arbitrator acting in a quasi-judicial capacity and does not relate to the consequences of agreeing to and participating in an arbitration.

      . Nor is there any doubt that the EHP (whose members include representatives of all the Other Regional Employer Associations) understood the award to be binding on all signatories to the Master Contract. The announcement of the award, signed by representatives of management and labor, is addressed “To All Carriers, Direct Employers, Port Associations and ILA Locals," and states that ”[i]t is required that this determination be lived up to its fullest intent by all parties." Ex. 3 to Petition to Confirm.

      . In a motion filed after oral argument and the full submission of the petition to confirm and cross-motions, SAENC requests an evidentiary hearing with respect to the purposes for which the June 12th EHP meeting was called and whether job assignments within the container gang was a proper subject for consideration by EHP. The ILA opposes the request and seeks an award of costs incurred in connection with its opposition.
      Both applications are denied. No disputed facts need be resolved by this Court. The contentions were presented to and rejected by the EHP which was the appropriate fact-finding body. The Other Regional Employer Associations seek the opportunity to relitigate in this Court or in their local district courts the precise issues determined by the EHP. This would of course essentially defeat the purpose and intent of having a Master Contract and the concepts of conformity and expeditious dispute resolution embodied in that Master Contract and in the establishment of the EHP.

      . A defect in service of process was also raised by SFEPA, and conceded by the petitioner at oral argument, but has since been cured by proper service of process.


source: Caselaw Access Project

author: WILHOIT, District Judge.

license: Public Domain

text:
    Ruby M. BROOKS, Plaintiff, v. Margaret HECKLER, Secretary of Health and Human Services, Defendant.
    Civ. A. No. 83-358.
    United States District Court, E.D. Kentucky, Lexington Division.
    Feb. 19, 1985.
    J. Lee Oliphant, Central Kentucky Legal Service, Lexington, for plaintiff.
    Louis De Falaise, U.S. Atty., E.D. Kentucky, Lexington, for defendant.
   ORDER

WILHOIT, District Judge.

This case is before the Court on objections to the Magistrate’s report and recommendation regarding an award of interim benefits to the plaintiff. The Secretary’s memorandum cites many authorities as to why this Court cannot order such an award. The Court, however, consistent with its prior rulings in Flannery v. Secretary of Health and Human Services, 583 F.Supp. 347 (ED KY.1984) and Lewis v. Heckler (Secretary of Health and Human Services), 605 F.Supp. 9 (ED KY.1984) does not consider the objections well-taken.

This case is a perfect example of how the Secretary is not filing pleadings in good faith in this Court pursuant to the dictates F.R.Civ.P. 11. It has been represented to this Court that the reason the Secretary could not timely file her answer and transcript was because the administrative hearing tape was “inaudible.” This “inaudibility” excuse has cropped up in numerous cases, but because of certain recent events, the Court is seriously concerned that the excuse has been interposed solely for the purposes of delay.

In another social security case filed on this docket, Michael E. Fore v. Secretary of Health and Human Services, No. 83-173, a plaintiff in desperation to get the Secretary to file an answer and transcript, moved for a remand and de novo hearing before the Secretary even after this Court had awarded interim benefits to compel the Secretary to file her answer. The Secretary’s response to the remand motion was that the tape was inaudible, and therefore a remand was necessary. The Court found good cause existed to remand the case and so ordered. Recently, however, the Secretary filed a motion to redocket that case saying the tape in fact was not as inaudible as previously represented. The Secretary then tendered an answer and transcript of the administrative proceedings in this Court. That case has been pending for over one and one-half years on this docket, and the Secretary is just now admitting the tape was not in fact inaudible.

Likewise in this case, on April 16, 1984, the Secretary represented to the Court that the administrative tape was inaudible and moved for a remand. This Court, in order to find out for itself whether the tape was in fact inaudible, ordered that the United States Magistrate listen to the tape to determine its audibility. The Magistrate’s Memorandum Opinion and Order filed November 29, 1984 confirms what this Court feared all along, that the Secretary’s excuse that answers and transcripts could not be timely filed because tapes are inaudible is just that—an excuse.

To say the least, this Court’s patience has been more than exhausted. This action was filed November 18, 1983, it has been pending for almost one and a half years. The Secretary just recently filed her answer and transcript in this case on January 4, 1985, in response to the Magistrate’s Order to do so by January 15, 1985. Her undue delay in filing a transcript, however, is inexcusable especially in light of the Sixth Circuit Court of Appeal’s opinion in Webb v. Richardson, 472 F.2d 529, 538 (CA 6 1972).

Because of her recent filing of an answer and transcript, the Court cannot in this case adopt the report and recommendation with regard to an award of interim benefits. The Court notes, however, it would not have hesitated to make such an award if the Secretary had not so promptly filed.

The Court, nonetheless, takes this opportunity to put the Secretary and her counselors, the United States Attorney’s Office, on notice that its “excuse” of inaudible tapes are no longer credible in this Court. Respect for this Court’s orders as well as the requirements of F.R.Civ.P. 11 will hereinafter be strictly enforced. Interim Benefits as well as other equitable remedies including remedies directly against the Attorneys, the Secretary’s staff or the Secretary herself pursuant to F.R.Civ.P. 11 will be awarded should there continue to be inordinate delays in social security appeals on this docket.

Accordingly, IT IS ORDERED that the Magistrate’s Report and Recommendation be, and same is OVERRULED as moot with regard to the award of interim benefits although the Court strongly approves the reasoning of the recommendation.


author: EDWARD B. DAVIS, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. John CREWS and Hewitt Gaynor McGill, a/k/a Douglas J. Russel, Defendants.
    No. 84-246 CR EBD.
    United States District Court, S.D. Florida.
    Feb. 20, 1985.

      Helen Forsyth, Asst. U.S. Atty., Miami, Fla., for plaintiff.
    Paul A. McKenna, Asst. Federal Public Defender, Miami, Fla., Michael G. Smith, Fort Lauderdale, Fla., for defendants.
   ORDER DENYING MOTIONS TO DISMISS AND TO SUPPRESS

EDWARD B. DAVIS, District Judge.

THIS MATTER is before the Court upon Defendant’s Motions to Dismiss and Suppress. The Court held a hearing at which the parties presented witnesses and documentary evidence. For the reasons discussed below, it is hereby

ORDERED AND ADJUDGED that the Motions are DENIED.

FACTS

On Saturday, March 31, 1984, in international waters in the Windward Passage between Haiti and Cuba, United States Coast Guard Cutter “Gallatin” sighted and made radio contact with the sailboat “Chinook”. The Chinook was flying a Canadian flag but no home port was shown on the hull.

The Gallatin communicated with the Chinook by radio. The response indicated Canadian registration, a home port of Key West and the presence of two United States citizens on board. Pursuant to what the Coast Guard officers characterized at the hearing as a documentation boarding, the Gallatin requested, and received, consent to board. (Once aboard, the officers also made it clear that they would leave if asked to.) The boarding party brought with it cigarettes, water and a medical ointment, as requested by the Chinook.

Lieutenant Peter J. Bergeron testified that as the officers were boarding the Chinook, he observed one of the defendants throw a bag of white powder over the side. When questioned, the defendants said it was sugar. Next, the officers received permission from the defendants to do a space check of the boat. That check revealed unaccounted for space, but when the Defendants denied permission, the officers did not attempt to gain access to that space.

A number of further facts and circumstances raised the officers’ suspicions. While Defendant McGill did show a Canadian registration document, neither of the Defendants had proper identification—Defendants asserted that their identifications had fallen over the side. There was a radar fuzzbuster aboard, which the officers felt was odd for a pleasure craft. A removable name plate on the stern was all that indicated the boat’s name. The boat had been modified from two masts to one, and there was no access from the foredeck to the space which should have contained the chain locker. Additionally, the forward cushions had been cut down to conform to a new bow.

The Gallatin radioed the Coast Guard office in New Orleans to check their EPIC computer system to see if there was any information regarding the boat or its crew. The check revealed that the Chinook was suspected of smuggling cocaine. McGill had been suspected of smuggling since 1975, including suspicion of running narcotics from Jamaica to the United States in 1979. Crews had been arrested in Colombia in 1983 for possession of marijuana.

The officers informed the Defendants that they were contacting the Canadian government to request permission to search the boat. Defendants told the officers that if they did not get permission by 10 o’clock on the morning of April 1, they would be asked to leave. The permission was not forthcoming by that time, and the officers left the Chinook.

The Coast Guard, communicating through the State Department and the United States embassy in Ottawa, requested the permission of the Canadian government to board and search the vessel, and if contraband was found, to arrest the crew and seek prosecution under United States law. The communication further requested that the Government of Canada (GOC) make a choice: either (1) have the Coast Guard seize the vessel, take it to a U.S. port and institute forfeiture proceedings against it; or (2) seize the vessel on behalf of the GOC, take it to a U.S. port, and hold it for future action by the GOC.

The GOC’s response, which was received by the Gallatin on Sunday, April 1, at approximately 7:30 P.M., provided as follows:

A. IT IS NOT CLEAR IF THE CHINOOK IS A CANADIAN REGISTERED VESSEL.
B. IF IT IS A CANADIAN SHIP, CANADIAN AUTHORITIES HAVE NO OBJECTION TO THE U.S. AUTHORITIES BOARDING THE SHIP BASED ON THE UNDERSTANDING THAT THE U.S. AUTHORITIES:
1. HAVE REASONABLE GROUNDS TO BELIEVE THE CHINOOK IS ENGAGED IN ILLICIT TRAFFIC OF NARCOTIC DRUGS.
2. USE ONLY SUCH FORCE AS MAY BE REASONABLY REQUIRED TO BOARD OR TAKE OVER SHIP.
C. THE GOC PREFERS OPTION A, THAT THE SHIP, CARGO AND CREW BE DEALT WITH IN ACCORDANCE WITH U.S. LAW.

At approximately 8:00 p.m., acting in reliance on the message from the Government of Canada, the Gallatin crew made a second boarding of the Chinook. The officers pulled out molding and removed carpeting, and found a hole which led below. The vessel’s cargo consisted of approximately 1,900 pounds of cocaine. Defendants were charged with conspiracy to violate and violation of 21 U.S.C. Sec. 955a(b), which makes it unlawful for any citizen of the United States on board any vessel to intentionally possess with intent to distribute a controlled substance.

OPINION

I. Motion to Dismiss

Defendants’ Motion to Dismiss is based on two grounds, both of which the Court rejects. First, defendants contend that the United States lacks jurisdiction over criminal conduct performed outside its territory, in this case on a foreign vessel on the high seas, absent some nexus between the United States and the criminal conduct. While this may be an accurate statement of the law where foreign nationals are involved, it does not apply to a statute which refers to United States citizens “on board any vessel.” As a matter of international law, any country may exercise its jurisdiction to prescribe, i.e., it may apply its body of law, to its citizens anywhere in the world. See, e.g., Skiriotes v. Florida, 313 U.S. 69, 73, 61 S.Ct. 924, 927, 85 L.Ed. 1193 (1941) (“the United States is not debarred by any rule of international law from governing the conduct of its own citizens upon the high seas or even in foreign countries when the rights of other nations or their nationals are not infringed.”); see also Restatement (Second) of Foreign Relations Law, Sec. 30 (1965).

The issue then becomes whether Congress intended to exercise its extraterritorial jurisdiction. Regarding this statute, 21 U.S.C. Sec. 955a(b), Congress’ intent to exercise its extraterritorial jurisdiction is plain, because it applies to citizens of the United States aboard “any vessel,” which includes those flying foreign flags. United States v. Kaercher, 720 F.2d 5 (1st Cir.1983), held that Congress did intend to apply this law to United States citizens aboard foreign vessels on the high seas, and that this exercise of jurisdiction comports with international law.

Defendants’ second ground for the Motion to Dismiss asserts that the indictment fails to state where the alleged offense took place, and that this defect is fatal. It is true that the indictment does not specify the exact location of the Chinook on the high seas when it was seized. However, as the Government points out, the indictment does specify that the offenses took place aboard the vessel Chinook. An indictment need not specify the exact location of the offense, but rather must be sufficiently specific to allege that the crime was committed within the jurisdiction of the court. See Wright & Miller, Federal Practice and Procedure, Sec. 125 (1982). Because the statute in question, 21 U.S.C. Sec. 955a(b), applies to United States citizens aboard any vessel, the indictment is sufficiently specific to properly allege jurisdiction. In addition, the indictment says that Opa Locka, Florida, was the first place to which the defendants were brought. For crimes committed on the high seas, venue properly lies in the district to which the defendants are first brought. 21 U.S.C. Sec. 955a(f); United States v. Liles, 670 F.2d 989 (11th Cir.), cert. den., 456 U.S. 1008, 102 S.Ct. 2300, 73 L.Ed.2d 1303 (1982). Thus, the Court finds that the indictment sufficiently alleges proper jurisdiction and venue, and the motion to dismiss must be denied.

II. Motion to Suppress

Defendants challenge the search and seizure of the Chinook that has been referred to as the second boarding, on April 1, 1984 at about 8:00 p.m., maintaining that (1) it was not authorized by the Canadian government because the permission granted was conditioned on Canadian registry, which was not verified until later; and (2) it violated the Fourth Amendment because it was done without reasonable articulable suspicion or probable cause.

A. The Initial Boarding Was Valid Because Defendants Consented to it.

As a preliminary matter, the Court takes note of the legality of the initial boarding. The Coast Guard officers described the initial boarding as a documentation boarding. The Coast Guard has authority to stop and board American vessels on the high seas for documentation and safety inspections, without any sort of articulable suspicion, under 14 U.S.C. Sec. 89(a). United States v. Thompson, 710 F.2d 1500, 1504 (11th Cir.1983). With a foreign vessel, however, the Coast Guard may only order it to stop if there is reasonable suspicion of criminal activity in violation of United States law. United States v. Glen-Archila, 677 F.2d 809, 813 (11th Cir.1982); United States v. Williams, 617 F.2d 1063, 1076 (5th Cir.1980) (en banc). This is to protect the sovereign interests of the flag country.

In this case, there was no evidence presented of any facts creating reasonable suspicion prior to the initial boarding. Thus, the officers’ characterization of the boarding of the Chinook as a documentation boarding does not of itself allow the seizure to pass muster under international law. However, the concern for violation of the sovereign rights of the flag country is vitiated in this case by defendants’ free consent to the boarding. In response to the Coast Guard’s boarding request, defendants replied, “Sure, come on over,” and requested cigarettes and water. The Court finds this consent sufficient to make the initial boarding legal. Accord, United States v. Sainsbury-Suarez, Case No. 84-005-Cr-ALH (S.D.Fla. June 8, 1984).

B. The Second Boarding Was Made Pursuant To A Valid Grant Of Permission From the Government of Canada.

As discussed above, the United States has jurisdiction, under international law, to prescribe rules of law that apply to its nationals, wherever in the world they may be. However, the United States does not have jurisdiction to enforce its laws, i.e., to take measures directed toward compliance, on another nation’s sovereign territory, absent consent by the other nation. See, e.g., F.T.C. v. Compagnie de Saint-Gobain-Pont-A-Mousson, 636 F.2d 1300, 1315-17 (D.C.Cir.1980); Restatement (Second) of Foreign Relations Law, Sec. 7 and Sec. 44 (1965). A vessel on the high seas is considered to be a floating part of the flag nation’s sovereign territory, so consent of the foreign sovereign is necessary.

In this case, the necessary consent was obtained from Canada. Defendants attack the validity of the Canadian consent statement, as applied to the situation involved. First, the Defendants point out that the Canadian consent message (quoted infra in the FACTS section) said that it was not clear whether the Chinook was a Canadian vessel, and if it was in fact a Canadian vessel, the Canadian government had no objection to the boarding. This, Defendants maintain, means that the consent was conditioned on the Canadian government’s verification of registry, and the consent would not become active until that condition was fulfilled.

The Court does not agree. It is true that the Canadian government had not yet verified registry. But the consent statement did not explicitly order the United States officers to await that verification. Rather, it simply stated that “if it is a Canadian ship, Canadian authorities have no objection to the U.S. authorities boarding the ship ...” The fact that it was a Canadian vessel was verified by the Coast Guard officers through observation of the Canadian flag, defendants’ statement that it was a Canadian-registered ship, and the registration documents which were presented. Thus, in the minds of the Coast Guard officers, the condition to boarding was satisfied. And, in fact, an “Aide-Memoire” from the Canadian government was introduced into evidence which showed that the Canadians verified the Chinook’s Canadian registry the following day (April 2). The Court finds that the Canadians’ condition, that the vessel be in fact Canadian, was satisfied.

A second condition in the Canadian consent message was “that the U.S. authorities have reasonable grounds to believe the Chinook is engaged in illicit traffic in narcotic drugs.” While the Court does not know what the Canadians consider to be “reasonable grounds,” the Court finds that the Coast Guard officers had probable cause to believe the vessel contained contraband (see discussion below of the Fourth Amendment issues), and believes that this is more than adequate to constitute “reasonable grounds.”

Defendants’ final argument regarding the consent statement is that the Canadians consented only to a boarding, not a complete search. The statement does say that “if it is a Canadian ship, Canadian authorities have no objection to the U.S. authorities boarding the ship.” But the statement also says that “the GOC prefers ... that the ship, cargo and crew be dealt with in accordance with U.S. law.” The Government of Canada is well aware that when United States Coast Guard officers “deal with” vessels suspected of smuggling under U.S. law, they fully search the vessel for contraband. This awareness was surely heightened by the fact that the Coast Guard’s message requested permission to “completely search the vessel.” In addition, it is obviously not possible for U.S. authorities to deal with the cargo contained in a suspected smuggling vessel “in accordance with U.S. law,” unless they first search for and find contraband. Thus, viewing the statement as a whole, the Court finds that the Canadian consent to a “boarding” was in fact consent to a boarding and search.

C. The Second Boarding Did Not Violate The Fourth Amendment’s Prohibition Of Unreasonable Searches And Seizures.

As discussed earlier, the initial seizure and boarding of the Chinook were lawful because consented to by defendants. As to the second boarding, Defendants maintain that the evidence found must be suppressed because the search was performed without reasonable suspicion or probable cause that a crime was being committed.

The preliminary issue that the Motion to Suppress raises is whether the constitutional guarantees of the fourth Amendment apply when United States enforcement officers act against United States citizens on another nation’s sovereign territory (in this case another nation’s sovereign flag ship on the high seas). The answer is yes. United States v. Toscanino, 500 F.2d 267, 280 (2nd Cir.1974) (going further than today’s holding in applying the constitutional guarantees to aliens as well); Best v. United States, 184 F.2d 131, 138 (1st Cir.1950); see also Jean v. Nelson, 727 F.2d 957, 973 (11th Cir.1984); Cardenas v. Smith, 733 F.2d 909, 915 (D.C.Cir.1984); United States v. Demanett, 629 F.2d 862, 866 (3rd Cir.1980); Transportes Aeros Mercantiles v. Boyatt, 562 F.Supp. 707, 709-10 (S.D.Fla.1983).

The next issue involves the level of suspicion required before Coast Guard officers acting on the high seas may perform a full search of a vessel. Because of the inherent problems involved in policing activity at sea, the power of the Coast Guard has historically been construed broadly. See United States v. Williams, 617 F.2d 1063 (5th Cir.1980) (en banc). Thus, the Coast Guard may stop and board an American vessel on the high seas, for purposes of a documentation and safety check, based on no suspicion at all. 14 U.S.C. Sec. 89(a); United States v. Thompson, 710 F.2d 1500, 1504 (11th Cir.1983). The Coast Guard may stop and board a foreign vessel on the high seas upon reasonable suspicion of criminal activity in violation of United States law. United States v. Glen-Archila, 677 F.2d 809, 813 (11th Cir.1982); United States v. Williams, 617 F.2d 1063, 1076 (5th Cir.1980) (en banc).

Once properly aboard, Coast Guard officers are given considerable opportunity to detect illegal activity pursuant to their document and safety inspection authority. As the Court stated in United States v. Garcia, 598 F.Supp. 533 (S.D.Fla.1984):

[The officers] may visit public areas of the boat and observe anything in plain view. They may enter the hold to check the main-beam identification number, and again may observe anything in plain view. United States v. Odom, 526 F.2d 339 (5th Cir.1976). If the door to the main hold is locked, they may properly break it open. United States v. Thompson, 710 F.2d 1500 (11th Cir.1983). Further, if a cabin is used for multiple purposes, the fact that one of its uses is private, i.e., it serves as living quarters, does not shield it from the legitimate scope of a safety inspection. Id. at 1506-7.

Id.

There is, however, a limit to the scope of the permissible investigation. As implied in the discussion above, anything in plain view during a legal document and safety inspection is deemed not to be subject to a legitimate expectation of privacy. United States v. Williams, 617 F.2d 1063, 1086 (5th Cir.1980). Conversely, anything not in plain view (or smell, as the case often is when marijuana is involved) from a legal vantage point during a permissible document and safety inspection does have a legitimate expectation of privacy attached to it. In order to perform a full search, as was performed in this case when the officers pulled up carpet and molding to access interior portions of the vessel, the officers’ suspicions must first have risen to the level of probable cause. United States v. Andreu, 715 F.2d 1497, 1500 (11th Cir.1983); United States v. Herrera, 711 F.2d 1546, 1556 (11th Cir.1983); United States v. Gollwitzer, 697 F.2d 1357, 1362 (11th Cir.1983); United States v. Gray, 659 F.2d 1296, 1299 (5th Cir.1981); United States v. D’Antignac, 628 F.2d 428, 434 (5th Cir.1980); United States v. Kleinschmidt, 596 F.2d 133, 136 (5th Cir.1979); United States v. Whitmire, 595 F.2d 1303, 1308 (5th Cir.1979); United States v. Garcia, 598 F.Supp. 533 (S.D.Fla.1984).

In this case the officers did have probable cause to search. A strong suspicion was raised during the initial boarding by the unaccounted for space and structural modifications; by the radar fuzzbuster which is unusual for a pleasure craft; by a removable name plate on the stern; and by a positive EPIC check indicating that both the vessel and the defendants were suspected of narcotics trafficking. When all these factors are added to Lieutenant Bergeron’s testimony that he saw one of the defendants throw a bag of white powder over the side during the initial boarding, the Court concludes that probable cause, justifying a full search, existed. Accordingly, the search did not violate the Fourth Amendment and the Motion to Suppress must be denied.

      . International law is incorporated into the law of the United States. See The Paquete Habana, 175 U.S. 677, 20 S.Ct. 290, 44 L.Ed. 320 (1900).

      . While the United States may exercise its jurisdiction to prescribe over its own citizens anywhere in the world, it does not have jurisdiction to enforce its laws on another country's sovereign territory (in this case a Canadian flag vessel, which is considered a floating piece of territory), absent the foreign sovereign’s permission. The issue is addressed in the Court's discussion of the motion to suppress. See infra.

      . See generally NEPA’s Role in Protecting the World Environment, 131 U.Pa.L.Rev. 353 (1982).

      . The indictment reads, in pertinent part, "... while aboard the vessel Chinook with Opa-Locka, in the Southern District of Florida, being the first place to which the defendants were brought ...”

      . The accuracy of characterization of a vessel on the high seas as a floating piece of territory has been questioned, especially regarding the situation of concurrent jurisdiction which arises when a flag vessel is located in the territorial waters of another state. However, the characterization holds strong regarding jurisdiction to enforce aboard another nation's sovereign flag vessel when it is on the high seas.


author: ATKINS, Senior District Judge.

text:
    Jorge E. GARZON, Plaintiff, v. UNITED STATES of America, Defendant.
    No. 84-2381-Civ-ATKINS.
    United States District Court, S.D. Florida.
    Feb. 21, 1985.

      Stanley P. Kaplan, Miami, Fla., for plaintiff.
    Stephen Kwartin, U.S. Dept. of Justice, Tax Div., Washington, D.C., for defendant.
   MEMORANDUM OPINION AND FINAL ORDER

ATKINS, Senior District Judge.

This is an action brought by plaintiff, Jorge E. Garzon, against the United States of America pursuant to 26 U.S.C. § 7429. Garzón is seeking judicial review of a termination assessment of income taxes against him by the Internal Revenue Service. The assessment of $38,346 was made on July 23, 1984. The plaintiff timely requested administrative review under 26 U.S.C. § 7429(a)(2) and timely commenced this action by the filing of his complaint on October 9, 1984 pursuant to 26 U.S.C. § 7429(b)(1). Hearings in this matter were held on October 27,1984 and November 16, 1984.

The plaintiff alleges that this court has jurisdiction under the provisions of 26 U.S.C. § 7429 and 28 U.S.C. §§ 1346(e) and 1402(c). The defendant, Government, asserts that this court lacks venue under 26 U.S.C. §§ 7429(e) and 28 U.S.C. § 1402(a)(1) because the plaintiff is a nonresident alien.

Facts

Plaintiff, Garzón, is a citizen of the Republic of Colombia. On the evening of July 17, 1984, plaintiff’s automobile was stopped by officers of the Metro-Dade Police Department on a traffic violation. Plaintiff was accompanied in his car by a passenger named Luis Hernando Juban.

After an initial conversation between the officers and Garzón, the officers indicated that they were suspicious of Garzon’s and Juban’s immigration status. When questioned by the police officer, Garzón stated that he had cash in a shopping bag in the rear of the vehicle. Garzón further stated that the amount was $91,000, and that the cash was to be used to purchase some shoes. Plaintiff has also asserted that he is the manager of a shoe store called Emerald Shoes.

The police officers called in detectives from the Organized Crime Bureau of the Miami-Dade County Public Safety Department who, in turn, called in agents of the U.S. Customs Service and the Immigration and Naturalization Service. Garzón was interrogated by the agents of these various investigative agencies for several hours. He voluntarily consented to a search of his vehicle and apartment. A dog trained to sniff narcotics was used to search for evidence of criminal activity. The dog sniffed Garzon’s currency, automobile, and apartment. No evidence of criminal activity was found as a result of this investigation.

Garzón was released but his money was retained by the Property Clerk’s Office of the Organized Crime Bureau. Special Agent Ronald Anderson of the U.S. Customs Service notified the I.R.S. about the possibility of a termination assessment. Internal Revenue Agent Rosa Blanco determined that Garzón owed $38,346 in taxes for the period between January 1, 1984 and July 1984.

At the hearing held in this case, Garzón testified that when his father died in Colombia in 1981, he became heir to a considerable inheritance. A substantial portion of this inheritance consisted of a farm in Colombia which he sold to Hernán Cortes Ortiz. The selling price was the equivalent of $80,000 in U.S. dollars which was paid by Ortiz to Garzón in various installments sometime between June, 1982 and June, 1983. Ortiz made these payments by bringing the U.S. currency from Colombia to the United States. Garzón stated that this additional currency was all part of his inheritance from his father’s estate. Although neither Garzón nor Ortiz could recall the exact amount brought into the United States, they did testify that it was not less than $100,000. According to Garzon, the currency which he had in his possession on July 17, 1984 was part of the inheritance transported by Ortiz.

Ortiz’ passport established that he had, in fact, made numerous trips between Colombia and the United States during 1982 and 1983. He stated that he was a merchant in Colombia who traveled to the United States to purchase merchandise for export to his native country. These purchases were often made for cash which he brought into the United States along with Garzon’s money. Since he often carried in excess of $5,000 in currency, he would report said currency to Customs on its form 4790, commonly referred to as a CMIR. Based upon entry dates stamped in Ortiz’ passport, Customs was able to locate CMIR’s which reflected that Ortiz reported bringing in currency in excess of $350,000 during the period from September 1982 through July 1983.

Garzón was aware that a Custom’s Form 4790 was required to be filed whenever more than $5,000 in currency was transported into the United States. On the evening of July 17, 1984, Garzón was unsure as to whether Ortiz had, in fact, declared the currency he was transporting. In order to protect Ortiz, Garzón concocted a story that the currency in his vehicle had been sent to him via an Avianca Airlines flight on July 12, 1984.

Garzón was employed until sometime in February, 1984, as a part time waiter (working three days a week) at Jacaranda night club. He earned a salary of $15.00 a day plus tips of approximately $60 to $70 a day. He was unemployed from February 1984 until June 16, 1984 when he went to work as a manager at Emerald Shoe Store. His monthly salary there was $1,350 from which his employer deducted FICA tax of $90.45 and income tax of $209.55.

Pursuant to the termination assessment in the amount of $38,346, the defendant, through the Internal Revenue Service, levied upon the $90,780 held by the Property Clerk’s Office of the Organized Crime Bureau. Upon payment to the Internal Revenue Service by the Property Clerk, the balance of the money was returned to Garzón.

Immigration Status

On or about December 30, 1981, the plaintiff applied for and received a nonimmigrant B-l/B-2 multiple entry visa from the United States Consulate in Bogota, Colombia, valid through December 30, 1985. A B-l/B-2 visa permits the visa holder to apply for multiple entries into the United States, provided that no stay exceeds six months in duration. At the time this cause of action arose, Garzón had exceeded the maximum six month stay allowed to him under his multiple-entry visa.

In his affidavit filed with the Internal Revenue Service on September 25, 1984, Garzón stated: “[I]t was never his intention permanently to reside here or to apply for U.S. citizenship.” He also recited in that affidavit that he was in the United States only to recover money taken from him by the Internal Revenue Service.

The plaintiff married a United States citizen on September 10, 1984. Garzón, however, never claimed to be a resident alien until October 25, 1984, the day after the defendant, Government, moved to dismiss this action for lack of venue by alleging that the plaintiff is a nonresident alien.

Jurisdiction and Venue

Although this court has jurisdiction of this cause under 26 U.S.C. § 7429(b)(1) and 28 U.S.C. § 1346(e), the defendant has filed a Motion to Dismiss for improper venue alleging that Garzón is a nonresident alien and, therefore, barred from bringing this action in this court. The first issue to be considered by the court, therefore, is whether Garzón is a resident or a nonresident alien. Once this issue is resolved the court must then determine whether a nonresident alien has the right to contest termination assessments under I.R.C. § 7429.

There are few reported cases which deal with the venue issues raised by 26 U.S.C. § 7429(e). Under section 7429(e) a civil action such as the one we have before us, “shall be commenced only in the judicial district described in section 1402(a)(1) ... of Title 28, United States Code.” Section 1402(a)(1) provides that a civil action may be prosecuted against the United States under 28 U.S.C. § 1346(a) only “in the judicial district where the plaintiff resides.” The defendant, Government, argues that Garzón is a nonresident alien and not a resident in any judicial district in this country.

The applicable case law supports the proposition that the issue of residency is a factual one and must be determined through a consideration of all relevant facts and circumstances. Williams v. United States, 704 F.2d 1222 (11th Cir.1983); Park v. Commissioner, 79 T.C. 252 (1982); Adams v. Commissioner, 46 T.C. 352 (1966); Jellinek v. Commissioner, 36 T.C. 826 (1961). The court finds that on the facts and circumstances in this case, plaintiff, Garzón, is a nonresident alien. In further support of its decision the court relies on Constantinescu v. Commissioner, 11 T.C. 37 (1948), where the court held that petitioner, an alien physically present in the United States, was not a resident of the United States within the meaning of Treasury regulations. The Tax Court further held that as a nonresident alien, petitioner was not taxable on her capital gains.

Having now determined that the plaintiff is a nonresident alien, the court must turn to the difficult question of whether Garzón, as a nonresident alien, has the right to contest the termination assessment under 26 U.S.C. § 7429(e). The court in Williams v. United States, 704 F.2d 1222, 1227 (llth Cir.1983) specifically reserved this question: “If the court finds that Williams is a nonresident alien taxpayer, it must consider the difficult constitutional question of whether the government may constitutionally raise improper venue to bar a nonresident alien taxpayer from use of the jeopardy assessment review procedures provided by section 7429 I.R.C.”

Section 7429(e) effectively provides that venue is improper in all districts for nonresident alien taxpayers. This provision necessarily gives rise to questions concerning plaintiffs due process (equal protection) rights under the Fifth Amendment of the United States Constitution. This case, thus, places in issue the constitutionality of 26 U.S.C. § 7429(e) and 28 U.S.C. § 1402(a)(1). At the outset, the court recognizes that it is settled law that the constitutionality of a statute should be scrutinized as it applies to the case before it. See Broadrick v. Oklahoma, 413 U.S. 601, 610-12, 93 S.Ct. 2908, 2914-16, 37 L.Ed.2d 830, 838-40 (1973); United States v. Raines, 362 U.S. 17, 21, 80 S.Ct. 519, 522, 4 L.Ed.2d 524, 529 (1960).

There is no doubt that resident alien taxpayers may avail themselves of the benefits of 26 U.S.C. § 7429. This is consistent with the purpose of section 7429 which basically provides for an “expedited” means of judicial review of jeopardy assessments made by the IRS. S.Rep. No. 938, (Part I), 94th Cong.2d Sess. 364 (1976), reprinted in 1976 U.S.Code Cong. & Ad. News (90 Stat.) 2897, 3439. In addition, Judge Spellman in Botero v. United States, 560 F.Supp. 616 (S.D.Fla.1983), stated that jeopardy and termination assessment provisions were included in the Internal Revenue Code to help prevent evasion of federal taxes through secretion of assets and transfers of property beyond the reach of federal law and federal agencies. Id. at 618.

The plaintiff, Garzón, has been saddled with all of the burdens and obligations of taxation yet the Government contends that he is not entitled to the expedited remedies allowed to all other taxpayers. Congress enacted section 7429 so that summary action could be taken with jeopardy and termination assessments in certain situations. The provisions for swift review in section 7429, however, suggest that Congress was also aware that such assessments are made by the Internal Revenue Service without time to fully investigate all the factors required for a proper determination as to whether the making of the assessment was reasonable and/or the amount assessed was appropriate. Prior to the assessment in this case, Garzón was given no opportunity to present evidence that the source of the money seized and used to support the assessment came from a non-taxable source.

Under Treas.Reg. § 1.871-l(a) (1984), the status of an alien taxpayer is divided into two classes: (1) nonresident alien or (2) resident alien. An alien’s status is important because its resolution determines how the alien will be taxed by the United States. A resident alien is taxed the same way a United States citizen is taxed. A nonresident alien is taxed according to three defined sub-classes. See Treas.Reg..§ 1.871-1(b).

In Revenue Agent Blanco’s report, she refers to Internal Revenue Form 1040 which is the form used by United States citizens and resident aliens for filing their annual income tax returns. In addition, she relied exclusively on section 61 of the Internal Revenue Code as authority for including the $93,280 as gross income. If she considered Garzón a nonresident alien, she should have relied on section 872 of the Internal Revenue Code and referred to Internal Revenue Form 1040 NR (U.S. Nonresident Alien Income Tax Return).

The defendant, Government, argues that venue is improper under section 7429(e) because Garzon is a nonresident alien. At the same time, however, the Government, in effect, argues that taxing Garzón as a resident alien under section 61 of the Internal Revenue Code is reasonable. This court cannot condone what appears to be a logically inconsistent and patently unfair result.

The court holds that venue in the federal district court is proper under section 7429(e) even for a nonresident alien. To hold otherwise would constitute a taking of plaintiffs property without due process of law and a denial of equal protection under the fifth Amendment. Even if we assume that the jeopardy and termination assessment provisions were included in the Internal Revenue Code to help prevent evasion of federal taxes, there is no rational basis for finding that United States citizens and resident aliens may seek review in federal district court but nonresident aliens must seek a remedy only in the Tax Court and the Court of Claims.

The court finds further support for its holding in Plyler v. Doe, 457 U.S. 202, 102 S.Ct. 2382, 72 L.Ed.2d 786 (1982). In Plyler, the Supreme Court held that a Texas statute which denied undocumented school age children the free public education that it provides to children who are citizens of the United States or legally admitted aliens violated the Equal Protection Clause of the Fourteenth Amendment.

The Assessment

Having determined that venue is proper in this federal district court, we must examine whether the termination assessment was reasonable under the circumstances. This issue arises under section 7429(g)(1) where the burden of proof is on the Secretary.

Prior to the enactment of section 7429, certain standards were utilized by the IRS in determining whether the circumstances of a particular case warranted the use of a jeopardy or termination assessment. In considering the enactment of section 7429, Congress expressed its approval of these standards. See Penner v. United States, 582 F.Supp. 432, 434 (S.D.Fla.1984).

There are three criteria which must be considered:

(i) The taxpayer is or appears to be designing quickly to depart from the United States or to conceal himself or herself.
(ii) The taxpayer is or appears to be designing quickly to place, his, her, or its property beyond the reach of the Government either by removing it from the United States, by concealing it, by dissipating it, or by transferring it.
(iii) The taxpayer’s financial solvency is or appears to be imperilled.

Treas.Reg. § 1.6851-l(a) (1978). Based upon the court’s consideration of the record, the exhibits, and the testimony in this case, the court has determined that the defendant has not met its burden of proof under section 7429(g)(1) and that the termination assessment against the plaintiff was unreasonable under the circumstances.

Since the court finds that the making of the termination assessment was unreasonable under the circumstances, the court does not have to reach the question of whether the amount assessed was reasonable under section 7429(g)(2). The court would like to note, however, that if we had found the assessment to be reasonable under section 7429(g)(1), the court would have found the amount of the assessment to be unreasonable under section 7429(g)(2). There is little amplification on the boundaries of “reasonableness” as used in section 7429. After struggling to identify some parameters, the court in Loretto v. United States, 440 F.Supp. 1168 (E.D.Pa.1977), concluded that “reasonable under the circumstances” as used in section 7429 “means something more than not arbitrary or capricious and something less than supported by substantial evidence.” Id. at 1172. On a continuum with arbitrary and capricious at one end and substantial evidence at the other, the termination assessment in this case falls uncomfortably near the arbitrary and capricious end of the continuum.

The defendant bases its assessment primarily upon the cash found in the possession of Garzón and refers the court to a laundry list of cases supporting their contention that where there were large amounts of cash in a taxpayer’s possession, then there is automatically a reasonable conclusion that there is taxable income. Loretto v. United States, 440 F.Supp. 1168 (E.D.Pa.1977); Ratzlaff v. United States, 52 AFTR 2d 83-5438 (W.D.Wis.1983); Billig v. United States, 49 AFTR 2d 82-479 (N.D.Ga.1981); Serpa v. United States, 47 AFTR 2d 81-1281 (D.Neb.1981); Auth. v. United States, 45 AFTR 2d 80-756 (D.Utah 1979); Lace v. United States, 45 AFTR 2d 80-367 (D.Vt.1979); McAvoy v. Internal Revenue Service, 44 AFTR 2d 79-5337 (W.D.Mich.1979); Noell v. United States, 43 AFTR 2d 79-1194 (S.D.Cal.1979); Erath v. United States, 43 AFTR 2d 79-1192 (S.D.Cal.1979); Santini v. United States, 43 AFTR 2d 79-885 (N.D.Cal.1979); Nichols v. United States, 43 AFTR 2d 79-835 (E.D.Cal.1979); Gaston v. United States, 43 AFTR 2d 79-470 (N.D.Ga.1978). All of the cases couple the cash factor with some proven criminal activity such as drug trafficking or gambling. In this case, there is no insinuation or suspicion that Garzón was engaged in any sort of criminal activity. In addition, the court is satisfied that the currency found in the plaintiff’s possession was derived from a non-taxable source.

Under section 7429(b)(3), if the district court determines that the making of the assessment is unreasonable, then the court may order the Secretary to abate the assessment. Accordingly, it is

ORDERED AND ADJUDGED that:

1. Judgment for the plaintiff, Jorge E. Garzón, and against the defendant, United States of America, is entered in the amount of $38,346.00.

2. Defendant shall abate its termination assessment in the amount of $38,346.00 made against the plaintiff, Jorge E. Garzón.

3. Defendant shall release any liens recorded by the defendant in connection with termination assessment by recording such releases as are appropriate under the terms of this Order.

4. Within 15 days from the date of this Order, the plaintiff shall submit to the court an application for attorney’s fees delineating the time spent, the work done, and amount claimed on each item, and expenses supported by two affidavits regarding reasonableness of the attorney’s fees. Defendant may submit two counter affidavits within 15 days after service of plaintiff’s application.

      . Title 26 U.S.C.A. § 7429 provides:
      (a) Administrative review.—
      (1) Information to taxpayer.—Within 5 days after the day on which an assessment is made under section 6851(a), 6861(a), or 6862, the Secretary shall provide the taxpayer with a written statement of the information upon which the Secretary relies in making such assessment.
      (2) Request for review.—Within 30 days after the day on which the taxpayer is furnished the written statement described in paragraph (1) , or within 30 days after the last day of the period within which such statement is required to be furnished, the taxpayer may request the Secretary to review the action taken.
      (3) Redetermination by Secretary.—After a request for review is made under paragraph (2) , the Secretary shall determine whether or not—
      (A) the making of the assessment under section 6851, 6861, or 6862, as the case may be, is reasonable under the circumstances, and
      (B) the amount so assessed or demanded as a result of the action taken under section 6851, 6861, or 6862 is appropriate under the circumstances.
      (b) Judicial review.
      (1) Actions permitted.—Within 30 days after the earlier of—
      (A) the day the Secretary notifies the taxpayer of his determination described in subsection (a)(3), or
      (B) the 16th day after the request described in subsection (a)(2) was made, the taxpayer may bring a civil action against the United States in a district court of the United States for a determination under the subsection.
      (2) Determination by district court.—Within 20 days after an action is commenced under paragraph (1), the district court shall determine whether or not—
      (A) the making of the assessment under section 6851, 6861, or 6862, as the case may be, is reasonable under the circumstances, and
      (B) the amount so assessed or demanded as a result of the action taken under section 6851, 6861, or 6862, is appropriate under the circumstances.
      (3) Order of district court.—If the court determines that the making of such assessment is unreasonable or that the amount assessed or demanded is inappropriate, the court may order the Secretary to abate such assessment to redetermine (in whole or in part) the amount assessed or demanded, or to take such other action as the court finds appropriate.
      (c) Extension of 20-day period where taxpayer so requests.—If the taxpayer requests an extension of the 20-day period set forth in subsection (b)(2) and establishes reasonable grounds why such extension should be granted, the district court may grant an extension of not more than 40 additional days.
      (d) Computation of days.—For purposes of this section, Saturday, Sunday, or a legal holiday in the District of Columbia shall not be counted as the last day of any period.
      (e) Venue.—A civil action under subsection (b) shall be commenced only in the judicial district described in section 1402(a)(1) or (2) of title 28, United States Code.
      (f) Finality of determination.—Any determination made by a district court under this section shall be final and conclusive and shall not be reviewed by any other court.
      (g) Burden of proof.—
      (1) Reasonableness of termination or jeopardy assessment. In an action under subsection (b) involving the issue of whether the making of an assessment under section 6851, 6861, 6862 is reasonable under the circumstances, the burden of proof in respect to such issue shall be upon the Secretary.
      (2) Reasonableness of amount of assessment.—In an action under subsection (b) involving the issue of whether an amount assessed or demanded as a result of action taken under section 6851, 6861 or 6862 is appropriate under the circumstances, the Secretary shall provide a written statement which contains any information with respect to which his determination of the amount assessed was based, but the burden of proof in respect of such issue shall be upon the taxpayer.

      . Title 28 U.S.C.A. § 1346(e) provides:
      (e) The district courts shall have original jurisdiction of any civil action against the United States provided in section 6226, 6228(a), 7426, or 7428 (in the case of the United States district court for the District of Columbia) or section 7429 of the Internal Revenue Code of 1954.

      . Title 28 U.S.C.A. § 1402(c) provides:
      (c) Any civil action against the United States under subsection (e) of section 1346 of this title may be prosecuted only in the judicial district where the property is situated at the time of levy, or if no levy is made, in the judicial district in which the event occurred which gave rise to the cause of action.

      . Title 28 U.S.C.A. § 1402(a)(1) provides:
      (a) Any civil action against the United States under subsection (a) of section 1346 of this title may be prosecuted only:
      (1) Except, as provided in paragraph (2), in the judicial district where the plaintiff resides;

      . As part of the Tax Reform Act of 1976, Congress added section 7429 to the Internal Revenue Act. That section is applicable to jeopardy and termination tax assessments made pursuant to sections 6851, 6861 and 6862 of the Internal Revenue Code for which notice of the assessment and demand for payment are made after February 28, 1977. The assessment in this case is a "termination assessment” for the period January 1, 1984 to July, 1984.
      Sections 6851, 6861 and 6862 embody methods of assessment and collection available to the Internal Revenue Service in cases where the more routine methods for collection of taxes may be rendered ineffective, or may be "jeopardized” to some degree if collection efforts are delayed. The special types of assessments are divided into two categories: "termination” and "jeopardy.” Section 6851 contains the provisions governing the making of termination assessments of income, and sections 6861 and 6862 contain the authority for making jeopardy assessments.
      The basic distinction between the two types of assessments is that a termination assessment (§ 6851) is made for a tax year which has ended but for which the due date for filing the required return has not yet passed. By contrast, a jeopardy assessment (§§ 6861 and 6862) is made for a tax year which has ended and for which the due date for filing the required return has passed.

      . Williams v. United States, 704 F.2d 1222, 1227 n. 5 (11th Cir.1983).

      . Treasury Regulation § 1.871-l(a) provides:
      (a) Classes of aliens. For purposes of the income tax, alien individuals are divided generally into two classes, namely, resident aliens and nonresident aliens. Resident alien individuals are, in general, taxable the same as citizens of the United States; that is, a resident alien is taxable on income derived from all sources, including sources without the United States. See § 1.1—1(b). Nonresident alien individuals are taxable only on certain income from sources within the United States and on the income described in section 864(c)(4) from sources without the United States which is effectively connected for the taxable year with the conduct of a trade or business in the United States. However, nonresident alien individuals may elect, under section 6013(g) or (h), to be treated as U.S. residents for purpose of determining their income tax liability under chapters 1, 5, and 24 of the code. Accordingly, any reference in §§ 1.1-1 through 1.1388-1 and §§ 1.1491-1 through 1.1494-1 of this part to nonresident alien individuals does not include those with respect to whom an election under section 6013(g) or (h) is in effect, unless otherwise specifically provided. Similarly, any reference to resident aliens or U.S. residents includes those with respect to whom an election is in effect, unless otherwise specifically provided.

      . Treasury Regulation §§ 1.871-l(b) provides in part:
      (b) Classes of nonresident aliens—(1) In general. For purposes of the income tax, nonresident alien individuals are divided into the following three classes:
      (i) Nonresident alien individuals who at no time during the taxable year are engaged in a trade or business in the United States.
      (ii) Nonresident alien individuals who at any time during the taxable year are, or are deemed under § 1.871-9 to be, engaged in a trade or business in the United States, and
      (iii) Nonresident alien individuals who are bona fide residents of Puerto Rico during the entire taxable year.

      . Title 26 U.S.C.A. § 61 provides in part:
      (а) General definition. Except as otherwise provided in subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
      (1) Compensation for services, including fees, commissions, and similar items;
      (2) Gross income derived from business;
      (3) Gains derived from dealings in property;
      (4) Interest;
      (5) Rents;
      (б) Royalties;
      (7) Dividends;
      (8) Alimony and separate maintenance payments;
      (9) Annuities;
      (10) Income from life insurance and endowment contracts;
      (11) Pensions;
      (12) Income from discharge of indebtedness;
      (13) Distributive share of partnership gross income;
      (14) Income in respect of a decedent; and
      (15) Income from an interest in an estate or trust.

      . Title 26 U.S.C.A. § 872 provides:
      (a) General rule.—In the case of a nonresident alien individual, gross income includes only—
      (1) gross income which is derived from sources within the United States and which is not effectively connected with the conduct of a trade or business within the United States, and
      (2) gross income which is effectively connected with the conduct of a trade or business within the United States.
      (b) Exclusions. The following items shall not be included in gross income of a nonresident alien individual, and shall be exempt from taxation under this subtitle:
      (1) Ships under foreign flags.—Earnings derived from the operation of a ship or ships documented under the laws of a foreign country which grants an equivalent exemption to citizens of the United States.
      (2) Aircraft of foreign registry.—Earnings derived from the operation of aircraft registered under the laws of a foreign country which grants an equivalent exemption to citizens of the United States and to corporations organized in the United States.
      (3) Compensation of participants in certain exchange or training programs.—Compensation paid by a foreign employer to a nonresident alien individual for the period he is temporarily present in the United States as a nonimmigrant under subparagraph (F) or (J) of section 101(a)(15) of the Immigration and Nationality Act, as amended. For purposes of this paragraph, the term "foreign employer" means—
      (A) a nonresident alien individual, foreign partnership, or foreign corporation, or
      (B) an office or place of business maintained in a foreign country or in possession of the United States by a domestic corporation, a domestic partnership, or an individual who is a citizen or resident of the United States.
      (4) Certain bond income of residents of the Ryukyu Islands or the Trust Territory of the Pacific Islands.—Income derived by a nonresident alien individual from a series E or series H United States savings bond, if such individual acquired such bond while a resident of the Ryukyu Islands or the Trust Territory of the Pacific Islands.