author: ORRICK, District Judge.

text:
    ADAMS HOUSE HEALTH CARE, et al., Plaintiffs, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendants.
    No. C-83-3020 WHO.
    United States District Court, N.D. California.
    Aug. 10, 1984.

      Eugene Tillman, Pierson, Ball & Dowd, Washington, D.C., Stephen P. Oggel, Christison, Martin & Oggel, San Diego, Cal., for plaintiffs.
    Joseph Russoniello, U.S. Atty., N.D. Cal., George C. Stoll, Asst. U.S. Atty., San Francisco, Cal., for defendants.
   OPINION AND ORDER

ORRICK, District Judge.

This case, before the Court on cross-motions for summary judgment, concerns the statutory and regulatory scheme of the Medicare Act by which the government reimburses those who provide health care to Medicare recipients. The Court is asked to interpret the statute and regulations that allow a provider of services to obtain review by the Secretary of Health and Human Services (“the Secretary”) of the amounts reimbursed to it.

In an opinion filed April 2, 1984, the Court granted the Secretary’s motion for summary judgment and denied plaintiffs’ motion. Plaintiffs then moved for reconsideration, contending that the Court based its decision on a mistaken apprehension of a fact crucial to the outcome of the case. Oral argument on the motion for reconsideration was heard on June 8,1984. For the reasons following, the Court now grants the motion for reconsideration and also grants plaintiffs’ motion for summary judgment; the Court vacates its earlier decision in favor of the Secretary and denies her motion for summary judgment.

I

A

Title XVIII of the Social Security Act, popularly known as the Medicare Act, 42 U.S.C. § 1395 et seq., establishes a federally funded health insurance program that provides medical care to the aged and disabled. Skilled nursing facilities, such as plaintiffs in this case, participate in the program by entering into “provider agreements” with the Secretary, under which the facilities furnish services to Medicare beneficiaries. 42 U.S.C. § 1395x(j). Such facilities are referred to as “providers” in the statute and pertinent regulations. Pursuant to these agreements, the Secretary reimburses providers for the reasonable cost of caring for Medicare recipients. 42 U.S.C. §§ 1395f(b), 1395x(v); 42 C.F.R. §§ 405.401 et seq. The provider appoints a “fiscal intermediary,” usually a private insurance company, that acts as the Secretary’s agent for the purpose of reviewing and awarding reimbursement claims. 42 U.S.C. § 1395h. Providers are reimbursed at least monthly, subject to later adjustment. 42 C.F.R. § 405.405. At the end of the provider’s fiscal year, it submits a cost report to the intermediary. 42 C.F.R. § 405.406. The intermediary then determines the actual amount of reimbursement to which the provider is entitled and issues a “notice of program reimbursement,” or “NPR.” If the actual reimbursable amount differs from the amount already paid for that period, an appropriate adjustment is made in later payments to recoup or repay the discrepancy. Id.

In general, when a provider is dissatisfied with the intermediary’s final reimbursement decision and the amount in controversy is $10,000 or more, the provider may within 180 days of the receipt of the NPR request a hearing “with respect to such report” before the Provider Reimbursement Review Board (“the Board”). 42 U.S.C. § 1395oo(a). Alternatively, a group of providers, each of whom would individually be entitled to a hearing under § 1395oo(a), may request a group appeal if the matters in controversy in their cost reports involve a common question of fact or interpretation of the statute or regulations, and if the total amount in controversy is $50,000 or more. 42 U.S.C. § 1395oo(b).

The Board, a statutorily created body within the Department of Health and Human Services, may affirm, modify, or reverse reviewable reimbursement decisions of the fiscal intermediary. 42 U.S.C. § 1395oo. Within sixty days after a final decision of the Board, the Secretary may review the Board’s decision on her own motion or on motion by the provider. 42 U.S.C. § 1395oo(f); 42 C.F.R. § 405.1875. The provider may also obtain judicial review of a final decision by the Board or the Secretary, by filing a civil action within 60 days of the date of such a final decision. Id.

B

Congress authorized the Secretary to promulgate regulations governing what costs incurred by the provider are reimbursable. See 42 U.S.C. §§ 1395hh, 1395x(v). The underlying dispute in this case, which is not before the Court, concerns plaintiffs’ right to reimbursement pursuant to 42 C.F.R. § 405.429(a)(l)(i). That regulation provides:

“A reasonable return on equity capital invested and used in the provision of patient care is paid [to the provider] as an allowance in addition to the reasonable cost of covered services furnished to beneficiaries by proprietary providers.”

This provision is in apparent conflict with the Medicare Provider Reimbursement Manual, which requires the provider to exclude from the computation of return on equity capital funds remaining in investment status for more than six months. Prov.Reim. Manual, Part I, § 1218.2. Further, in computing reasonable cost of services provided, otherwise allowable interest expenses must be reduced by the income from invested funds. 42 C.F.R. § 405.-419(b)(2)(iii). Thus, the reimbursement authorized by 42 C.F.R. § 405.429 is significantly reduced by the exclusions required in the Provider Reimbursement Manual, Part I, § 1218.2, and 42 C.F.R. § 405.-419(b)(2)(iii).

C

Plaintiffs in this case are eighty-two skilled nursing facilities owned by Hillhaven Corporation. Certain administrative and management functions are carried out on behalf of plaintiffs through the Hillhave home office. The costs incurred by the home office are reimbursed by the Medicare program to plaintiffs using allocation methods prescribed in Medicare regulations and instructions. Plaintiffs’ costs of providing services to Medicare beneficiaries are determined based on cost reports for each plaintiff and the Hillhaven Corporation home office, which are submitted on an annual basis. See Affidavit of R.L. Kearney, Reimbursement Manager for Hillhaven Corporation.

During the corporation’s fiscal year ending May 31, 1981, plaintiffs, through the Hillhaven home office, had funds invested for more than six months in certificates of deposit, treasury bills, and similar notes. Plaintiffs filed their 1981 cost reports, complying with the rules governing the offset of interest income against allowable interest expense, and the exclusion of invested funds held for more than six months from the computation of return on equity capital. Plaintiffs did not object to the application of those rules to their cost reports at the time of filing. The fiscal intermediary issued NPRs to seventy-six of the plaintiffs between February 16, 1982 and June 18, 1982.

On March 26, 1982, plaintiffs requested the intermediary’s permission to amend their 1981 cost reports to include invested funds held longer than six months in the computation of the return on equity capital. The intermediary did not allow the amendment.

Plaintiffs then filed a group appeal before the Board requesting a hearing on the validity of the simultaneous application of the Medicare rules discussed above, claiming that the simultaneous application of those provisions results in undercompensation of plaintiffs for the reasonable cost of providing medical services to Medicare beneficiaries as required by the Medicare statute and regulations. See 42 U.S.C. § 1395x(v)(l)(A); 42 C.F.R. § 405.401 et seq.

On April 19, 1983 the Board declined to review plaintiffs’ claim. The Board held that the providers had not met the jurisdictional requirement for review because they had not claimed the disputed amounts in their cost reports. The Board stated that its jurisdiction depended on the provider having made an overt disclosure to the intermediary of its posture on a particular issue, which ordinarily would be evidenced by claiming reimbursement for the item in the cost report. See Administrative Record, 5-7. Plaintiffs argued unsuccessfully that claiming reimbursement for the disputed amounts would have put them in violation of the Medicare regulations.

Plaintiffs next requested that the Administrator of the Health Care Financing Administration, on behalf of the Secretary, reverse the Board’s decision. On June 2, 1983, the Administrator declined to review the case. The Board decision thus became the final decision of the Secretary and is now before this Court for review.

II

This Court’s jurisdiction over this case is based on 42 U.S.C. § 1395oo(f)(l) of the Medicare Act, which provides in pertinent part:

“Providers shall have the right to obtain judicial review of any final decision of the Board, or of any reversal, affirmance, or modification by the Secretary, by a civil action * * *. * * * Such action shall be brought in the district court of the United States for the judicial district in which the provider is located

(Emphasis added.)

A Board decision not to exercise jurisdiction is a “final decision” under § 1395oo(f)(l). Athens Community Hospital Inc. v. Schweiker, 686 F.2d 989, 993-94 (D.C.Cir.1982), citing Cleveland Memorial Hospital, Inc. v. Califano, 444 F.Supp. 125 (E.D.N.C.1978), aff'd, 594 F.2d 993 (4th Cir.1979). Although the parties in this case have not raised the issue, the Court notes that if a refusal by the Board to exercise jurisdiction were not reviewable, “the [Board] could effectively preclude any judicial review of its decisions simply by denying jurisdiction of those claims that it deems to be non-meritorious.” Cleveland, 444 F.Supp. at 128. The Cleveland court analogized the jurisdictional question to 28 U.S.C. § 1291, which grants courts of appeal the power to review “final decisions” of the district courts. Under that statute, dismissals for lack of jurisdiction have consistently been understood as “final” and hence, reviewable, decisions. See, e.g., W.E. Hedger Transportation Corp. v. Ira S. Bushey & Sons, 155 F.2d 321 (2d Cir.), cert. denied, 329 U.S. 735, 67 S.Ct. 100, 91 L.Ed. 635 (1946).

This Court finds the jurisdictional rationale in Athens and Cleveland persuasive. Because the Board’s refusal to exercise jurisdiction over plaintiffs’ claims is a final decision pursuant to 42 U.S.C. § 1395oo(f)(l), this Court has jurisdiction to entertain plaintiffs' appeal of the Board’s refusal to review their claims.

Ill

A

The precise issue before this Court is whether the Board properly refused to review the fiscal intermediary’s determination of the reimbursements due plaintiffs for the 1981 fiscal year. In other words, did the Board lack jurisdiction to hear plaintiffs’ appeal from the intermediary’s decision?

The statute granting the Board jurisdiction to hear appeals from final decisions of the fiscal intermediary is 42 U.S.C. § 1395oo(d), which provides as follows:

“The Board shall have the power to affirm, modify, or reverse a final determination of the fiscal intermediary with respect to a cost report and to make any other revisions on matters covered by such cost report (including revisions adverse to the provider of services) even though such matters were not considered by the intermediary in making such' final determination.”

It is clear from the statute that the Board’s jurisdiction turns on whether a matter was “covered” by a cost report. See generally Athens Community Hospital, supra, 686 F.2d at 997 (D.C.Cir.1982).

In this case the Secretary takes the position that an item is “covered by the cost report” within the meaning of 42 U.S.C. § 1395oo(d) only if the provider has affirmatively claimed it for reimbursement. Plaintiffs are not entitled to Board review, the Secretary insists, because they “self-disallowed” these items? rather than claiming reimbursement for them.

B

By “self-disallowance” a provider recognizes that an incurred cost is not reimburseable under the Medicare regulations. A provider could either not record the self-disallowance amount on the cost report, or could record the expenditure and then subtract it out of the claim for reimbursement. Plaintiffs chose the latter method.

Hillhaven Corporation, the home office for the individual plaintiffs in this case, submitted to the fiscal intermediary a “home office” cost report that recorded all home office costs, including an amount for reasonable return on equity capital invested and used in the provision of patient care. Adjustments were then made to the total equity capital cost by offsetting investment income against allowable interest expense and by excluding the funds invested for more than six months. These exclusions, or disallowances, were recorded on the cost report. See Affidavit of R.L. Kearney and exhibits thereto.

The reporting technique used by plaintiffs is in accord with the Secretary’s regulations and instructions governing the filing of cost reports. Section 2150.3 of the Provider Reimbursement Manual (HIM-15) requires the home office of a provider chain to submit a cost report identifying its total operating costs. This report “must delete all costs which are not allowable in accordance with program instructions.” Id. Although plaintiffs believed that the rules limiting the amount reimbursable for return on equity capital were inconsistent, a claim for full reimbursement would have violated the regulations.

C

The Secretary does not contest the fact that plaintiffs reported the disputed costs in the fiscal 1981 cost reports. She does, however, contend that this Court should ignore the evidence of what was in the cost report, which was presented by plaintiffs to the Court in litigation affidavits. Instead, the Secretary would have the Court confine its review to the Administrative Record, which purports to contain those documents before the Board and generated by the Board when it declined to review plaintiffs’ claims. The Administrative Record as filed with the Court does not contain plaintiffs’ fiscal 1981 cost report.

Defendant in taking this position relies on Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). That case holds that a court reviewing an administrative decision must review the whole record upon which the agency’s decision was based. Id. at 419-20, 91 S.Ct. at 825. That decision does not hold that the Court may consider only the agency record.

“[S]ince the bare record may not disclose the factors that were considered or the Secretary’s construction of the evidence it may be necessary for the District Court to require some explanation in order to determine if the Secretary was acting within the scope of his authority * * *

Id. at 420, 91 S.Ct. at 825. Although the administrative record does not contain the cost report, this Court cannot determine whether the Board “acted within the scope of [its] authority” without considering the affidavits containing pertinent sections of that report. The Court, therefore, finds it appropriate and necessary to consider plaintiffs’ 1981 cost report in order to determine whether the Board erred in refusing jurisdiction over plaintiffs’ claims.

D

The central disagreement between the parties remains to be addressed: Does the jurisdiction of the Board depend on plaintiffs’ having actually claimed reimbursement, or is it enough that they recorded the total cost of equity capital and then self-disallowed certain amounts as required by the disputed regulations? The Secretary contends, despite her own regulations discussed above, that plaintiffs should have claimed the full amount for reimbursement. This interpretation of 42 U.S.C. § 1395oo(d) unacceptably strains the language of the statute and has been rejected by those courts that have considered the question.

The statute conferring jurisdiction on the Board to review the fiscal intermediary’s reimbursement decisions is clear on its face. .The Board may review “matters covered by such cost report * * * * even though such matters were not considered by the intermediary in making such final determination.” 42 U.S.C. § 1395oo(d)(em-phasis added). The statute does not require that the provider claim the disputed amount, only that it be “covered” by the report. Indeed, claiming an item for reimbursement in contravention of a regulation disallowing that item may subject the provider to charges of fraud. The conclusion that an item need not be claimed is buttressed by the last clause of the section, which explicitly allows the Board to review matters not considered by the intermediary.

In a case on all fours with this litigation the Seventh Circuit defined the scope of Board jurisdiction. St. Mary of Nazareth Hospital v. Department of Health and Human Services, 698 F.2d 1337 (7th Cir.), cert. denied, — U.S. -, 104 S.Ct. 107, 78 L.Ed.2d 110 (1983). St. Mary of Nazareth was a consolidated appeal of two district court cases, St. Mary of Nazareth, 531 F.Supp. 419 (N.D.Ill.1982), and St. James Hospital v. Harris, 535 F.Supp. 751 (N.D.Ill.1981). The question of Board jurisdiction was raised in the appeal from the lower court's decision in St. James Hospital.

During the 1977 fiscal year, St. James Hospital installed bedside telephones for all its patients including those on Medicare.

“In their annual report to the fiscal intermediary and in order to comply with the Secretary’s regulations St. James entered the cost of this ‘personal comfort item’ on worksheet A-8 of the 1977 Medicare Costs Report. The effect of this worksheet (A-8) entry acted as a ‘self-disallowance’ of the overall patient telephone costs ($17,000) and thus the question of the telephone costs was not presented to the fiscal intermediary for review.”

Id. at 1340-41. The hospital recognized that telephone costs had been found by the Secretary to be a nonreimburseable “personal comfort item” and so self-disallowed the expense on the cost report, just as plaintiffs did in this case.

Also as in the case at bar, the Board refused to review St. James Hospital’s claim because the hospital had itself disallowed the telephone costs, the Secretary taking the position that the statute required that a claim for reimbursement be made to the intermediary as a prerequisite to Board jurisdiction. Id. at 1346. The circuit rejected the Secretary’s restrictive reading of § 1395oo(d):

“This section vests broad authority in the Provider Reimbursement Review Board to review the finding of the fiscal intermediary and make any adjustment to the cost reports the Board deems necessary. As the statute itself expressly states, the Board may consider any matter ‘even though such matters were not considered by the intermediary in making such final determination.”

Id. at 1346. The court then held that the Board had jurisdiction to review St. James Hospital’s claims, because the self-disallowance procedure resulted in the claims being covered in the cost report. Accord Our Lady of Lourdes Memorial Hospital, supra,

Similar reasoning was followed in Athens Community Hospital, supra, 686 F.2d 989 (D.C.Cir.1982). The court noted that by recording a “self-disallowance” in the cost report, the provider gives the intermediary an opportunity to decide that reimbursement is proper and notifies the Medicare system that the costs exist and may be claimed in the future. The fact of the self-disallowance is “analogous to a disallowance by the intermediary of costs claimed in the initial cost report. Review of self-disallowance claims in the context of an existing appeal is therefore not at all the same as the review of claims for costs not disclosed in the initial cost report * Id. at 997.

The Secretary argues that St. James and Our Lady of Lourdes are not on point because in those cases the providers had in some manner brought the disputed items to the fiscal intermediaries’ attention, in addition to self-disallowing the costs. Because “there was a history of conflict on the disputed costs between the provider and the intermediary,” the Secretary contends that those decisions should be distinguished from the case at bar. See Def.Opp. to Plf. Motion for Reconsideration, at 5-6. Although the district court’s decision in St. James mentioned that conflict, (535 F.Supp. at 755), the appellate court did not, (698 F.2d at 1340-41); neither court held or even intimated that Board jurisdiction required anything more than recording the disallowance in the cost report. Similarly, the district court in Our Lady of Lourdes reported the history of the provider’s dispute with the intermediary over emergency room costs (see note 4, supra), but did not suggest that Board jurisdiction turned on the existence of that dispute.

Although this Court is not bound by St. James or Our Lady of Lourdes, the reasoning in those decisions is persuasive. The statute makes no further demands on a provider beyond including the costs in the report. If the provider did not make an appropriate disallowance, it would clearly be out of compliance with the regulations. Thus, to follow the Secretary’s interpretation of the statute, the provider would have to choose between claiming a nonreimbursable expense and risking possible fraud' charges, or losing the right to challenge the disallowance before the Board. Such a result is clearly not what Congress intended. The Court, therefore, holds that an item is “covered by” the cost report within the meaning of 42 U.S.C. § 1395oo(d) if a “self-disallowance” of the cost is reported in the cost report, and that the Board has jurisdiction to review disputes regarding such disallowed costs.

Accordingly,

IT IS HEREBY ORDERED that

(1) Plaintiffs’ motion for summary judgment is granted; and

(2) The Board shall accept jurisdiction over plaintiffs’ request that their fiscal 1981 cost reports be reviewed with respect to the application of the regulations governing reimbursement of reasonable return on equity capital pursuant to 42 C.F.R. § 405.429(a).

      . Six members of the Hillhaven Group had not received NPRs before plaintiffs sought PRRB review. As to those six, the Board declined to review their cost reports because receipt of an NPR is a jurisdictional prerequisite to Board review. The correctness of that decision has not been challenged.

      . Mr. Kearney’s affidavit states:
      In preparing the Medicare cost reports for plaintiffs and the Hillhaven Corporation home office for the fiscal year ended May 31, 1981, plaintiffs followed the requirements on reductions in interest expense and exclusions from net equity capital, notwithstanding their position that the requirements were mutually exclusive. Each individual cost report identified the interest expense incurred by that plaintiff. Pursuant to the Medicare regulations and instructions, the Hillhaven Corporation, by adjustment to the home office cost report, reduced allowable home office costs by the amount of the interest income from the invested funds. This reduction in cost contained in the home office cost report was reflected in the share of home office costs allocated to each plaintiff on its cost report. Further, each individual cost report identified that plaintiff's net equity capital. Pursuant to the Medicare instructions, the Hillhaven, by adjustment on the home office cost report, reduced allowable home office equity capital contained by the amount of invested funds. This reduction in equity capital contained in the home office cost report was reflected in the share of home office equity allocated to each plaintiff."
      Affidavit of R.L. Kearney, ¶ 8.

      . Assuming that the Board denied jurisdiction because the record before it was incomplete, the Court points out that it was the Board’s duty to request such information as would allow it to determine its own jurisdiction. The Provider Reimbursement Review Board Manual provides that:
      "Where the hearing request does not provide sufficient information with respect to the identification of issues, the amount in controversy, etc., the provider wilt be given an opportunity to perfect the appeal. The Board will advise the provider in writing of the deficiencies and allow 30 days from the date of such letter to respond with the appropriate information."
      PRRB Hearing Manual § 1100.2. Instead of complying with its own mandatory rules, the Board sua sponte dismissed the appeal for lack of jurisdiction. See Administrative Record at 5. If the Board was in doubt as to whether the items for which review was sought were covered by the cost report, the proper response would have been a request for the providers to submit the relevant cost report. See Alexandria Hospital v. Heckler, 586 F.Supp. 581 (E.D.Va.1984) (remanding action to Board to take more evidence on the question whether disputed costs were covered by the cost reports).

      . The impossible position providers are put in by the Secretary’s understanding of the procedures necessary to obtain Board jurisdiction is demonstrated by Our Lady of Lourdes Memorial Hospital v. Schweiker, No. 80-CV-226 (N.D.N.Y., July 26, 1982), CCH Medicare and Medicaid Guide, ¶ 32,154. After regulations governing reimbursement for physician emergency standby fees were changed, the provider continued to claim reimbursement and objected to the new regulations. The provider was warned by the intermediary that if it continued to claim reimbursement under the former system it would be subject to fraud charges pursuant to 42 U.S.C. § 1395nn. At the end of the next fiscal year the provider recorded the emergency room standby costs, but self — disallowed them in accordance with the intermediary’s instructions. Shortly thereafter, the regulations were again changed, reverting to the former means of reimbursing emergency room costs. The provider then asked the Board to review its reimbursements, pursuant to the new regulations. The Board refused, stating that it had no jurisdiction because the costs were not "claimed” in the cost report. The District Court reversed, finding that because the self-disallowance was recorded in the cost report, the item was "covered” therein and so reviewable pursuant to 42 U.S.C. § 1395oo(d).

      . "Personal comfort items” are not reimbursable. See 42 U.S.C. § 1395y(a)(6). The provider in St. James argued unsuccessfully that bedside telephones provided therapeutic benefits and were incorrectly categorized by the Secretary as a “personal comfort item.”

      . See discussion of Our Lady of Lourdes Memorial Hospital, at note 4, supra.

      . In Athens Community Hospital v. Schweiker, 686 F.2d 989 (D.C.Cir.1982) the court found that the Board did not have jurisdiction over a provider's claim, where the provider had entirely omitted any mention of the item for which it later sought Board review. The court distinguished St. James because that hospital had made self-disallowances, and commented that that factual distinction was "sufficient to eliminate [St. James] as precedential support for appellees.” Id. at 997.


source: Caselaw Access Project

author: WILLIAM C. LEE, District Judge.

license: Public Domain

text:
    Merritt L. HETHCOTE, Petitioner, v. UNITED STATES of America and Ralph R. Smith, Revenue Agent of the Internal Revenue Service, Respondents.
    Civ. No. F 83-154.
    United States District Court, N.D. Indiana, Fort Wayne Division.
    Aug. 10, 1984.

      Merritt L. Hethcote, pro se.
    Matthew Yackshaw, Trial Atty., Tax Div., Dept, of Justice, Washington, D.C., David H. Miller, Asst. U.S. Atty., Fort Wayne, Ind., for respondents.
   ORDER

WILLIAM C. LEE, District Judge.

This matter is before the court on a Petition to Quash an Internal Revenue summons. The United States filed a response to that petition and further filed a “Motion for Summary Enforcement of Summons and for an Award of Attorneys’ Fees and Costs.” For the reasons set forth below, the petition to quash will be denied, and the United States’ request for summary enforcement and for an award of attorney fees, costs and expenses will be granted.

Discussion

The relevant facts appear to be as follows. Petitioner, Merritt L. Hethcote, brought this action pursuant to 26 U.S.C. § 7609(b) to quash an Internal Revenue Service summons issued to the Marion Independent Federal Circuit Union of Marion, Indiana. Revenue Agent Ralph R. Smith is assigned to conduct an examination for the Internal Revenue Service regarding the income tax liabilities of petitioner for the calendar years 1980, 1981 and 1982. It appears that petitioner failed to file federal income tax returns during those years though he was employed as a tool and die smith for the Fischer Body Plant in Marion, Indiana.

In furtherance of the examination into the potential tax liability of the petitioner, Revenue Agent Smith issued the challenged Internal Revenue Service summons to the Marion Independent Federal Credit Union for the years in question. The summons seeks testimony and documents relating to the petitioner’s accounts and transactions with the Marion Independent Federal Credit Union.

The authority of the Internal Revenue Service to conduct examinations regarding the tax liability of individuals and to issue summonses in conjunction with such examinations is set forth in 29 U.S.C. § 7602 which provides in pertinent part:

For the purpose of ... making a return where none has been made, determining the liability of any person for any Internal Revenue tax or the liability at law ... the Secretary is authorized—
[1] To examine any books, papers, records or other data which may be relevant or material to such inquiry;
[2] To summon any person having possession, custody or care of books of accounts containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the Secretary may deem proper, to appear before the Secretary at a time and place named in the .summons and to produce such books, papers, records ... as may be relevant or material to such inquiry ...

26 U.S.C. § 7602(a). In order to obtain enforcement of a summons, the United States need only show that the summons was issued for a legitimate purpose; that the summoned data are relevant to that purpose; that the data are not already in the government’s possession; and that the administrative steps required for issuance and service of the summons have been followed. United States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 254-255, 13 L.Ed.2d 112 (1964); United States v. LaSalle National Bank, 437 U.S. 298, 313-14, 98 S.Ct. 2357, 2365-66, 57 L.Ed.2d 221 (1978). “The requisite showing is generally made by the affidavit of the agent who issued the summons and who is seeking enforcement,” United States v. Garden State National Bank, 607 F.2d 61, 68 (3d Cir.1979), and generally, nothing more than an affidavit is necessary to make out a prima facie case for enforcement of the summons. See United States v. Kis, 658 F.2d 526 (7th Cir.1981), cert. denied, 455 U.S. 1018, 102 S.Ct. 1712, 72 L.Ed.2d 135 (1982).

In the present matter, the United States has made out a prima facie case for summons enforcement through the “Declaration of Revenue Agent Ralph R. Smith” and the response filed by the government in this cause. First, it appears clear that the questioned summonses were issued “in good faith pursuit of the congressionally authorized purposes of § 7602,” United States v. LaSalle National Bank, 437 U.S. 298, 318, 98 S.Ct. 2357, 2368, 57 L.Ed.2d 221 (1978), since valid purposes under section 7602 include “determining the liability of any person for any Internal Revenue tax.” As the “Declaration of Revenue Agent Smith” makes clear, the summonses involved in this case were issued to determine petitioner’s correct income tax liability for the years 1980, 1981 and 1982 in which he did not file a return.

Second, the summoned data appears to be relevant to the purposes of the investigation. Unlike some cases which require a showing of probable cause before summons can issue, an investigation by the Internal Revenue Service into the affairs of taxpayers requires only a showing that the material sought “may be relevant or material.” See United States v. Bisceglia, 420 U.S. 141, 95 S.Ct. 915, 43 L.Ed.2d 88 (1975); also Kis, supra, 658 F.2d at 535-37. Thus, the Internal Revenue Service must surmount only a very low threshold in order to enforce a summons, namely “whether the inspection sought might have thrown light upon the correctness of the taxpayer’s returns.” United States v. Noall, 587 F.2d 123, 125 (2d Cir.1978), cert. denied, 441 U.S. 923, 99 S.Ct. 2031, 60 L.Ed.2d 396 (1979). In the present matter, the summonses in question seek testimony and records relating to bank accounts maintained by the petitioner during the tax years under investigation. As the government points out, it would be difficult to imagine information which could be more relevant to an investigation of a person’s income tax liability.

Third, with respect to a prima facie case, it appears that the government is not in possession of the information sought through the summonses. In fact, declarant Ralph R. Smith avers that the government is not, in fact, in possession of such records.

Finally, there is no indication that the administrative steps required for issuance and service of the summonses have not been followed. Thus, in balance, it appears clear to the court that the United States has established a prima facie case for enforcement of the summons.

Since the United States has established a prima facie case, “the burden therefore falls upon petitioner to disprove the existence of a valid purpose or to show that enforcement of the summonses would be an abuse of the court’s process or otherwise would be improper.” Godwin v. United States, 564 F.Supp. 1209, 1213 (D.Del.1983), citing United States v. Powell, supra, 379 U.S. at 58, 85 S.Ct. at 255; United States v. LaSalle National Bank, supra, 437 U.S. at 316, 98 S.Ct. at 2367. Here, the petitioner has not only failed to allege that the summons was not issued for a proper purpose, he has not even alleged any facts which remotely suggest that the summons in question are unenforceable. There simply is no basis on the record before the court for quashing the summonses.

Aside from the foregoing, petitioner levels various arguments, most of which appear to be protesting the entire theory behind the tax laws of this country, and all of which are frivolous and without merit. Petitioner appears to be asserting that he is not subject to this nation’s revenue laws. Of course, such a determination is not for petitioner to make but rather has been made by the United States Congress through the enactment of the Tax Code. See, e.g., Oldland v. Kurtz, 528 F.Supp. 316, 320 (D.Col.1981); 26 U.S.C. § 6001; 26 U.S.C. § 7601. Equally frivolous is petitioner’s argument to the effect that wages which arise from an equal exchange of labor or services for property are not income since no gain is derived. For petitioner’s benefit, this court quotes a decision by the United States Court of Appeals for the Seventh Circuit wherein it was stated: “WAGES ARE INCOME.” United States v. Koliboski, 732 F.2d 1328, 1329 n. 1 (7th Cir.1984).

The other arguments advanced by petitioner are similarly meritless. Contrary to petitioner’s contention, Congress has lawfully delegated authority to the Internal Revenue Service and other administrative agencies. 26 U.S.C. §§ 7601, 7602; United States v. Euge, 444 U.S. 707, 100 S.Ct. 874, 63 L.Ed.2d 141 (1980), Further, while the Freedom of Information Act (contrary to petitioner’s assertions) does not apply to IRS summonses, United States v. Fain, 42 A.F.T.R.2d 78-5494 (M.D.N.C. 1978), a careful examination of the summons in this case indicates that all requirements of the law were met. And, to the extent that petitioner may be asserting that the Administrative Procedure Act, 5 U.S.C. § 556, applies to this case, such a contention is without merit since none of the applicable statutes requires a hearing. See United States v. Taylor, 43 A.F.T.R.2d 79-789 (E.D.Va.1979); also United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 92 S.Ct. 1941, 32 L.Ed.2d 453 (1972).

Thus far, the court has determined that petitioner’s request that the summons in question be quashed should be denied and that the government’s motion for summary enforcement should be granted. There remains, the question of the government’s request for attorney fees, costs and expenses.

“The American rule is that absent specific statutory or other expressed authorization, attorney’s fees are not recoverable by the prevailing party to a lawsuit.” International Union, etc. v. J. Pease Construction Co., 541 F.Supp. 1334, 1337 (N.D.Ill.1982). One exception to the American rule is recognized where a losing party has “acted in bad faith, vexatiously, wantonly, or for oppressive reasons ... ”. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-9, 95 S.Ct. 1612, 1622-23, 44 L.Ed.2d 141 (1975); see F.D. Rich, Inc. v. United States ex rel. Industrial Lumber Co., Inc., 417 U.S. 116, 94 S.Ct. 2157, 40 L.Ed.2d 703 (1974). Essentially, a court’s inherent equitable powers may only be invoked to award attorney’s fees to prevent gross injustice, fraud, or bad faith. See Bailey v. Meister Brau, Inc., 535 F.2d 982 (7th Cir.1976). And, “the standards for determining bad faith necessarily are stringent.” International Union, supra, at 1337.

Given the meritless nature of petitioner’s claim, the court is of the view that the government should be compensated for having to defend the same. There is no justifiable reason for petitioner’s action in this case. Petitioner has failed to allege one single defense to the summons that has not been decisively rejected by the courts or eliminated by Congress. About the only conclusion which can be based on this record is that the petitioner is attempting to delay a legitimate examination by the Internal Revenue Service. The vague and frivolous allegations set forth in the petition fail to establish any substantive claim.

In an analogous situation, the United States Court of Appeals for the Seventh Circuit stated as follows:

The doors of this courthouse are, of course, open to good faith appeals of what are honestly thought to be errors of the lower courts. But we can no longer tolerate abuse of the judicial review process by irresponsible taxpayers who press stale and frivolous arguments, without hope of success on the merits, in order to delay or harass the collection of public revenues or for other nonworthy purposes____ ... Abusers of the tax system have no license to make irresponsible demands on the courts of appeals to consider fanciful arguments put forward in bad faith. In the future we will deal harshly with frivolous tax appeals and will not hesitate to impose even greater sanctions under appropriate circumstances.

Granzow v. Commissioner of Internal Revenue, 739 F.2d 265, 269-270 (7th Cir.1984). Similarly, the doors of this courthouse are open to good faith litigation but abuse of the judicial process, as in this case, will not be tolerated. Accordingly, the government’s request for attorney fees, costs and expenses will be granted. This court finds the reasonable attorney fees to be $200.00.

Conclusion

On the basis of the foregoing, it is hereby ORDERED as follows:

1. The Petition to Quash summons in the above entitled cause is DENIED;

2. The summoned party, Marion Independent Federal Credit Union, shall comply with and obey the summons served upon it on May 2, 1983, by appearing at the offices of the Internal Revenue Service, before Revenue Agent Ralph R. Smith or his designee, at a date and time to be specified by Revenue Agent Smith or his designee, then and there to testify and to produce for inspection and copying all of the books, papers, records, and other data described in the summons served upon it on May 2, 1983, such appearance, testimony, inspection and copying to continue from day to day until complete; and

3. That the United States be awarded its costs, expenses and further be awarded attorney fees in the amount of $200.00.


text:
    Luberta JONES, Individually and as next friend of Gregory Jones; and Gregory Jones, a minor, Plaintiffs, v. HOWE MILITARY SCHOOL; Eugene D. Scott; and James E. Malerich, Defendants.
    Civ. No. F 84-122.
    United States District Court, N.D. Indiana, Fort Wayne Division.
    Aug. 10, 1984.

      John R. Marsh, Detroit, Mich., for plaintiffs.
    Richard A. Bone, Detroit, Mich., Alan YerPlanck, Barrett, Barrett & McNagny, Fort Wayne, Ind., Herbert E. Boase, La-Grange, Ind., for defendants.
   ORDER

WILLIAM C. LEE, District Judge.

This matter is before the court on a “Motion for Summary Judgment” filed May 11, 1984 by defendants Howe Military School, Eugene D. Scott and James E. Malerich. Plaintiffs have failed to respond to that motion. For the reasons set forth below, defendants’ motion for summary judgment will be granted.

Factual Background and Procedural Posture

Plaintiff, Luberta Jones, is the mother and next friend of Gregory Jones, formerly a cadet at Howe Military School. The defendants include Howe Military School, its Superintendent, Eugene D. Scott, and the Principal of the lower school at Howe, James E. Malerich. The action was originally filed in the United States District Court for the Eastern District of Michigan, but was transferred to this court on April 12, 1984.

As originally filed, the complaint consisted of three counts. Counts II and III, which allege that plaintiff was denied due process of law as guaranteed by the Fourteenth Amendment, were dismissed by order of this court on May 11, 1984. There remains for consideration, Count I which asserts diversity jurisdiction and alleges a breach of contract by defendants. The pending “Motion for Summary Judgment” addresses that remaining claim.

The undisputed facts underlying plaintiff’s complaint are as follows. On August 9, 1982, Mrs. Jones signed a “conditional agreement.” In accepting that agreement, Greg Jones was conditionally admitted into the 7th grade at Howe Military School. One of the conditions for enrollment was that the prospective cadet would abide by the “Rules and Regulations Handbook” then in effect at Howe Military School.

While enrolled at the Howe Military School, Cadet Jones compiled a less than exemplary record. In fact, the record indicates that Cadet Jones had been in numerous altercations with other cadets at Howe Military School. He continuously received demerits for pushing, punching, teasing, and shoving other cadets as well as demerits for other forms of bad conduct.

At the end of each six weeks, cadets at Howe Military School receive a “conduct grade” which is based upon the cumulative scores of demerits received within that period. A cadet receiving more than 121 demerits during a given six week period received a “F” conduct grade. For the first six weeks of plaintiff’s enrollment, his conduct grade was 85 which translated into the letter grade “C.” For the second six weeks of enrollment, however, Cadet Jones had accumulated a total of 270 demerits for a conduct grade of “F.” By December 9, 1982, which was four weeks into the third period, Cadet Jones had accumulated an additional 515 demerits for a grand total of 870 demerits over a sixteen week period. According to an affidavit filed by William C. Trout, Commandant of Cadets at Howe Military School, Cadet Jones’ conduct record was the worst of any cadet under his command within the past thirteen years.

Because of his poor conduct record, Cadet Jones was counseled on at least two occasions by General Eugene D. Scott, Superintendent of Howe Military School. During those sessions, Cadet Jones was lectured on the consequences of continued misbehavior. Further, plaintiff’s mother was informed in writing by the Commandant of Cadets about her son’s unsatisfactory conduct scores at the end of the first and the second six week grading periods. In addition, a grade card which shows the conduct grade was sent by the Headmaster to plaintiff’s mother at the end of those grading periods. Plaintiff met informally with the Commandant of Cadets on at least two occasions in the fall of 1982.

Despite the warnings, Cadet Jones continued upon his chosen course of misbehavior. Cadet Jones was suspended for the last week of the first semester after brutally beating another cadet. That cadet, as a result of the beating, suffered a ruptured eardrum. Because of that altercation and Cadet Jones’ repeated poor conduct, it was decided that he would be denied enrollment into the second semester.

Based upon the foregoing factual scenario, plaintiffs filed suit asserting in Count I (the sole remaining claim) that defendants’ activities constituted a breach of the contract between the parties because plaintiff was not allowed to complete his 7th grade education at Howe Military School. Defendants in moving for summary judgment assert that they were wholly justified under the terms of the agreement between the parties in refusing to allow Cadet Jones to enroll for the second semester. This court is in agreement with the defendants.

Application of Law

As indicated, plaintiffs have failed to file a brief in opposition to defendants’ motion for summary judgment. Under Local Rule 7(b) of the Rules of the United States District Court for the Northern District of Indiana, this court could summarily grant defendants’ “Motion for Summary Judgment” because of plaintiffs’ failure to file a responsive brief. The court, however, will address the merits of plaintiffs’ claim vis-avis defendants’ “Motion for Summary Judgment.”

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. Peoples Outfitting Co. v. General Electric Credit Corp., 549 F.2d 42 (7th Cir.1977). Further, “in order to avoid the grant of summary judgment, a party must demonstrate both the existence of a material fact and a genuine issue as to that material fact,” Kennett-Murray Corp. v. Bone, 622 F.2d 887, 892 (5th Cir.1980), and thus may not rest on the mere allegations contained in the pleadings or bare contentions that an issue of fact exists. Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.1983). See Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); generally, C. Wright, Law of Federal Courts § 99 (4th ed.1983).

Taking the foregoing principles together, it can be said that the proper scope of inquiry under Rule 56 requires the answering of two essential questions: “First, is there any genuine issue as to any material fact? Second, if there is no genuine issue of fact, then viewing the evidence and the inferences which may be drawn therefrom in the light most favorable to the adverse party, is the movant entitled to prevail as a matter of law?” Radobenko v. Automated Equipment Corp., 520 F.2d 540 (9th Cir.1975).

Utilizing the above considerations, this court is of the view that the undisputed material facts entitle defendants to judgment as a matter of law. The rationale for that conclusion is as follows.

“There is no question that the relationship between the parties here is a contractual one; that terms of that relationship may be implied from the nature of the relationship; and, that those implied terms may govern the procedure by which a student may be disciplined and the sanctions imposed.” Wisch v. Sanford School, Inc., 420 F.Supp. 1310, 1315 (D.Del.1976) (citations omitted). Because contracts for education have unique qualities, they “are to be construed in a manner which leaves the school sufficient discretion to ‘properly exercise its educational responsibilities.’ ” Jansen v. Emory University, 440 F.Supp. 1060, 1062 (N.D.Ga.1977), quoting Mahavongsanan v. Hall, 529 F.2d 448 (5th Cir.1976). “Implicit in the student’s contract with the [school] upon matriculation is the student’s agreement to comply with the [school’s] rules and regulations, which the [school] clearly is entitled to modify so as to properly exercise its educational responsibilities.” Mahavongsanan, supra, at 450; see generally 68 Am.Jur.2d § 315.

Thus, “in order to state an actionable claim in these circumstances, the plaintiff must adduce evidence of a violated contractual right or improper motivation or irrational action on the part of [Howe Military School].” Giles v. Howard University, 428 F.Supp. 603, 605 (D.D.C.1977).

In the present matter, plaintiffs have failed to adduce any evidence of a violated contract right. They have also failed to present any facts to show improper motivation or irrational action on the part of Howe Military School or any of its officials.

On the contrary, all of the evidence introduced suggests that the defendants acted within their proper discretion in deciding to refuse to allow Cadet Jones to enter the second semester. His initial acceptance at Howe Military School was conditional. That plaintiff’s mother understood the conditional nature of the acceptance cannot be disputed for on August 9, 1982 she signed a statement which read as follows:

It is understood that tlowe Military School is accepting Gregory Charles DeRoy Jones as a 7th grade cadet conditionally. His continuance will be based upon his maintaining acceptable standards of conduct and grades.
It is understood that he may be dismissed if his conduct grades are “F” for 12 weeks, or if he commits an act that warrants expulsion under the Rules and Regulations Handbook.
It is understood that if he is dismissed, there will be a forfeiture of all payments.
/s/ Luberta Jones Aug. 9, 1982
Parent Signature Date

(Exhibit B attached to- Answer of defendants filed April 25, 1984). It is further undisputed that on several occasions Cadet Jones was counseled about his poor performance and overall bad conduct. His mother was also aware of his continued troubles at Howe Military School and, she too, knew that continued misbehavior could result in Cadet Jones’ dismissal. Despite all of the warnings and counseling, Cadet Jones participated in an altercation with another student which resulted in that student’s ear drum being ruptured.

Given the repeated course of performance by Cadet Jones it appears clear to the court that the school’s refusal to allow him to continue into the second semester was not violative of the agreement of the parties nor was it an action which was improperly motivated or irrational. Accordingly, defendants’ “Motion for Summary Judgment” must be granted.

Conclusion

On the basis of the foregoing, defendants’ “Motion for Summary Judgment” filed May 11, 1984 must be and hereby is GRANTED.


author: SCOTT O. WRIGHT, Chief Judge.

text:
    Sandra FRILEY, et al., Plaintiffs, v. INTERNATIONAL PLAYTEX, INC., Defendant.
    No. 82-4103-CV-C-5.
    United States District Court, W.D. Missouri, W.D.
    Aug. 13, 1984.
    Roger C. Brown, Jefferson City, Mo., for plaintiffs.
    Thomas O. Baker, Thomas N. Sterchi, Kansas City, Mo., for defendant.
   ORDER

SCOTT O. WRIGHT, Chief Judge.

Before entering judgment in this strict products liability/negligence case, the Court must consider whether the jury’s punitive damage award must be reduced by the plaintiff’s percentage of fault. Missouri law, which has only recently adopted a system of comparative fault, has not addressed this issue. Nevertheless, Missouri law is quite clear that punitive damage awards are intended not to compensate the plaintiff, but to punish the defendant and to deter the defendant and others from similar conduct. See MAI 10.02 (1983 Revision), 10.04 (1983 Revision). Consequently, the Court is of the opinion that the punitive damage award in this case should not be reduced by the plaintiff’s percentage of fault because punitive damages are designed to benefit and protect society as a whole. The extent of the particular plaintiff’s fault is simply irrelevant. This view is in accord with the overwhelming weight of authority. See, e.g., Campbell v. Van Roekel, 347 N.W.2d 406 (Iowa 1984); Shahrokhfar v. State Farm Mut. Auto. Ins. Co., 634 P.2d 653 (Mont.1981); Amoco Pipeline Co. v. Montgomery, 487 F.Supp. 1268 (W.D.Okla.1980).

Of course, the jury’s award of $6,500.00 in compensatory damages must be reduced by the plaintiff’s percentage of fault. Gustafson v. Benda, 661 S.W.2d 11 (Mo.1983) (en banc). The jury found that the plaintiff was 49% at fault. Consequently, the plaintiff will be entitled to recover 51% of her compensatory damages. ’

Accordingly, it is hereby

ORDERED that the punitive damage award of $50,000.00 shall not be reduced by the plaintiff’s percentage of fault. It is further

ORDERED that the compensatory damage award shall be reduced to $3,315.00.


author: RICE, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. RICHARDS ELECTRIC SUPPLY CO., Defendant.
    No. CR-3-83-56(5).
    United States District Court, S.D. Ohio, W.D.
    Aug. 15, 1984.

      Irving Rosner, U.S. Dept, of Justice, Antitrust Div., Cleveland, Ohio, for plaintiff.
    John K. Rose, Cincinnati, Ohio, for defendant.
   DECISION AND ENTRY OVERRULING PLAINTIFF’S MOTION TO VACATE THE SENTENCE WHICH THE COURT IMPOSED ON RICHARDS ELECTRIC SUPPLY CO., INC.

RICE, District Judge.

This cause is before the Court on Plaintiff’s Motion to Vacate the Sentence (Doc. # 47) which this Court imposed upon Defendant Richards Electric Supply Co., Inc. (“Richards Electric”). See Rule 35, Fed.R. Crim.P. Richards Electric, along with four other corporations and five individuals, was indicted for price fixing in the electrical supply business in the Dayton, Ohio area.

Subsequently, Richards Electric appeared in open court and plead guilty to the charge in the indictment. On March 9, 1984, this Court imposed sentence on Richards Electric. This Court imposed a fine of $150,000, to be paid over an eighteen month period. The Court added the proviso that Richards Electric could reduce the fine by hiring and keeping on its payroll a number of probationers or parolees from the Hamilton County area.

Plaintiff then filed the instant Motion, seeking to have the Court vacate the sentence imposed upon Richards Electric. Plaintiff argues that neither the Sherman Act, 15 U.S.C. § 1, nor the Probation Act, 18 U.S.C. § 3651, authorizes the Court to provide for a reduction of Richards Electric’s fine in the manner that the Court so provided. Plaintiff contends that under the Probation Act, 18 U.S.C. § 3651, the Court has authority to require only three types of payments: fines payable to the United States Treasury, restitution to aggrieved persons who are damaged by the offenses and support to persons whom the defendant is legally obligated to support. Plaintiff argues that allowing Richards Electric to reduce its fine by amounts it expends in hiring, retaining and training Hamilton County area probationers and parolees is a payment not authorized by the Act. In making its argument, Plaintiff relies on decisions by the Fourth and Tenth Circuits, United States v. Wright Contracting Co., 728 F.2d 648 (4th Cir.1984); United States v. Prescon Corp., 695 F.2d 1236 (10th Cir.1982); United States v. Clovis Retail Liquor Dealers Trade Association, 540 F.2d 1389 (10th Cir.1976).

The Court has considered Plaintiff’s Motion and Richards Electric’s Memorandum Contra (Doc. # 53) and concludes that the sentence which it imposed upon Richards Electric is lawful. Accordingly, the Court overrules Plaintiff’s Motion.

First, in the Court’s opinion, the Probation Act does not apply to the sentence imposed upon Richards Electric. The Court did not place Richards Electric on probation. The Court fined Richards Electric and gave it the option of reducing that fine by hiring and retaining on its payroll certain Hamilton County area parolees and probationers. Section 1 of the Sherman Act, 15 U.S.C. § 1, authorizes the Court to impose a fine on Richards Electric. Hence, reliance on the Probation Act for authority to fine Richards Electric is unnecessary. In this manner, the present case is distinguishable from United States v. Wright Contracting, supra; United States v. Prescon Corp., supra and United States v. Clovis Retail Liquor Dealers Trade Association, supra.

Second, assuming arguendo that the Probation Act does apply, the sentence that this Court imposed upon Richards Electric does not violate the Act. This Court is not willing to read the Probation Act as narrowly as Plaintiff suggests. On the contrary, this Court concurs with the statement made by Judge Edelstein in United States v. Danilow Pastry Co., Inc., 563 F.Supp. 1159 (S.D.N.Y.1983):

Courts have broad discretion under § 3651 to impose probation as long as the conditions bear “ ‘a reasonable relationship to the treatment of the accused and the protection of the public.’ ” United States v. Pastore, [537 F.2d 675, 680 (2d Cir.1976)], quoting, Porth v. Templar, [453 F.2d 330, 333 (10th Cir.1971)]. Additionally, as the court in United States v. Pastore stated in discussing the language of §' 3651: “[i]t would be hard to use more general words than ‘upon such terms and conditions as the court deems best.’ ” Id.

563 F.Supp. at 1169.

Similarly, the Court in United States v. William Anderson Co., Inc., 698 F.2d 911 (8th Cir.1982), addressed and rejected the same argument that the Plaintiff makes herein.

The Government’s argument is that no payment of money to any party other than the Treasury may be required except as provided in this paragraph. It is said that this paragraph is exclusive, that the maxim expressio unius exclusio alterius governs. We do not find this contention convincing. When specifying certain particular terms as includible “among” the conditions of probation, the statute simply wishes to put beyond question per cautelam the propriety of the particular terms specified. The meaning is the same as if the familiar corporate draftsman’s locution “including but not limited to” had been used.

698 F.2d at 914 (footnote omitted).

This Court is persuaded by the reasoning in United States v. Danilow Pastry Co., supra and United States v. William Anderson Co., supra. Consequently, the Court concludes that courts are not limited to the specific types of monetary payments listed in the Act. Rather, the types of payments listed are merely illustrative. This Court holds that as long as there was a rational relationship between the fine, which the Court imposed upon Richards Electric, and the treatment of the accused and protection of society, United States v. Danilow Pastry, supra, the fine does not violate the Probation Act.

The Court acknowledges that there is contrary authority. United States v. Wright Contracting, supra; United States v. Prescon Corp., supra; United States v. Clovis Retail Liquor Dealers Trade Association, supra. See also United States v. Turner, 628 F.2d 461 (5th Cir.1980), cert. denied, 451 U.S. 988, 101 S.Ct. 2325, 68 L.Ed.2d 847 (1981) (Requiring a defendant to pay for court-appointed attorney as a condition of probation violates the Probation Act.); United States v. Jimenez, 600 F.2d 1172 (5th Cir.), cert. denied, 444 U.S. 903, 100 S.Ct. 216, 62 L.Ed.2d 140 (1979) (same). Nonetheless, the Court will follow United States v. Danilow Pastry, supra, and United States v. William Anderson Co., supra. As those courts pointed out, the Probation Act provides that the listed payments are “among” the conditions of probation that a court may impose. Plaintiff does not suggest that the conditions of probation which a court may impose are limited to those set forth in § 3651. Indeed, no court would so limit a courts’ discretion. See e.g., United States v. Prescon Corp., supra, 695 F.2d at 1242 (“We do not suggest that listing of the four specific conditions of probation ‘closes the door’ to other conditions.”) Additionally, sentences such as the one herein are necessary for dealing with the “troublesome area” of sentencing corporate criminal defendants. United States v. Mitsubishi International Corp., 677 F.2d 785, 787 (9th Cir.1982) (Approving “creative” condition of probation which required corporate defendant to loan executive to community service agency for one year). See also United States v. William Anderson Co., supra; United States v. Danilow Pastry Co., supra.

Based upon the foregoing, Plaintiffs Motion to Vacate the Sentence is overruled.

      . This Court said:
      Secondly — and the second modification is this: That the defendant company can reduce the amount of its obligation by hiring and keeping on its payroll a certain number of probationers or parolees from the Hamilton County area, who are to be paid the prevailing or minimum wage, whichever is agreed upon, wage rate. These people are not to be kept on the payroll as a means to simply discharge your obligation to the Government, but they should be given meaningful training and they should be given the opportunity to become integrated into the ways of business so that they can help you, Mr. Misrach, and help your business and so that they can help themselves to lead decent productive lives.
      This is purely as an example. If one of these individuals should be paid a total of $10,000 over the course of the eighteen months, then that would reduce your obligation to the United States Government from $150,000 to $140,-000.
      Transcript of March 9, 1984 Proceedings (Doc. # 54) at 9.

      . Section 3651 provides, in part:
      Upon entering a judgment of conviction of any offense not punishable by death or life imprisonment, any court having jurisdiction to try offenses against the United States when satisfied that the ends of justice and the best interest of the public as well as the defendant will be served thereby, may suspend the imposition or execution of sentence and place the defendant on probation for such period and upon such terms and conditions as the court deems best.
      * * * * * *
      While on probation and among the conditions thereof, the defendant—
      May be required to pay a fine in one or several sums; and
      May be required to make restitution or reparation to aggrieved parties for actual damages or loss caused by the offense for which conviction was had; and
      May be required to provide for the support of any persons, for whose support he is legally responsible.

      . In each of those cases the appellate court reversed a sentence which, in part, required a payment to some third party who was not an aggrieved party. In each instance, the district court conditioned probation on the payment, and the appellate court concluded that the sentence violated the Probation Act.

      . The Eighth Circuit has recently considered the Plaintiffs arguments en banc. United States v. Missouri Valley Construction Company, 741 F.2d 1542 (8 Cir.1984). However, the Eighth Circuit has yet to issue its decision in that case. This Court notes that in Missouri Valley Construction Co., the district court and a panel of the appellate court rejected the arguments that Plaintiff raises herein.


author: NEALON, Chief Judge.

text:
    Richard C. LOE, et al., Plaintiffs, v. Warden WILKINSON, et al., Defendants.
    Civ. No. 83-1773.
    United States District Court, M.D. Pennsylvania.
    Aug. 22, 1984.

      Richard C. Loe, pro se.
    James W. Walker, Asst. U.S. Atty., Scranton, Pa., for defendants.
   MEMORANDUM AND ORDER

NEALON, Chief Judge.

Plaintiff, an inmate incarcerated in the United States Penitentiary System, filed this civil rights action dated December 8, 1983, alleging violations in the conditions of confinement while incarcerated in the [Special Housing Unit (hereafter S.H.U.)] at the United States Penitentiary, Lewisburg, Pennsylvania. The eight defendants in the case include the Warden and various officers at the institution. The complaint alleges that the conditions under which the plaintiff was confined constitute an infliction of cruel and unusual punishment prohibited by the Eighth Amendment and an abridgement of his First Amendment right of freedom of worship. This complaint also includes a request for class certification. By Order dated December 27, 1983, plaintiff was required to file an amended complaint in compliance with Rule 8 of the Federal Rules of Civil Procedure. The amended complaint was filed January 16, 1984. Plaintiff has filed a large number of discovery and other pretrial motions. In order to facilitate disposition of this matter, a pretrial conference was held pursuant to Rule 16 of the Federal Rules of Civil Procedure. During the conference, plaintiff alleged the following constitutional violations existed at the Lewisburg Penitentiary: inadequate heating system, inadequate ventilation, inadequate living space, inadequate lighting and denial of attendance at group worship; in disciplinary segregation specifically the denial of personal property for one week and inadequate clothing; in administrative detention specifically the lack of adequate recreational and educational opportunities, limited telephone and television privileges, inadequate access to entertainment and inadequate access to the general library.

The court will first consider the plaintiffs request for class certification. The plaintiff has the burden of demonstrating that the requirements of Rule 23 of the Federal Rules of Civil Procedure have been satisfied. The plaintiff has failed to address any of these requirements in his complaint. In addition, in light of the fact that the case will ultimately be dismissed and closed by this Memorandum and Order, the court will deny plaintiffs request for class certification.

The plaintiffs Eighth Amendment claims relate to conditions of confinement in the S.H.U. at Lewisburg. The Eighth Amendment standards for the S.H.U. are the same as those which apply to inmates housed in general population. Prison officials must provide all prisoners with adequate food, clothing, shelter, sanitation, medical care and personal safety. Newman v. State of Alabama, 559 F.2d 283, 291 (5th Cir.1977), cert. denied, 438 U.S. 915, 98 S.Ct. 3144, 57 L.Ed.2d 1160 (1978). See also Wolfish v. Levi, 573 F.2d 118 (2d Cir.1978). The test to determine whether an inmate is subjected to cruel and unusual punishment is whether the resulting conditions, alone or in combination, deprive the inmate of the minimized civilized measure of life’s necessities as measured under contemporary standards of decency. Rhodes v. Chapman, 452 U.S. 337, 101 S.Ct. 2392, 69 L.Ed.2d 59 (1981). In considering the totality of the circumstances, the court must examine all of the circumstances that bear on the nature of the shelter provided. Union County Jail Inmates v. Di Buono, 713 F.2d 984, 999 (3d Cir.1983) citing Hoptowit v. Ray, 682 F.2d 1237, 1247 (9th Cir.1982).

The substance of plaintiff’s claims concerning the conditions in the S.H.U. was clarified during the course of the pretrial conference. The plaintiff initially contends that the institution’s heating and ventilation system is inadequate. The operation of the system was explained during the conference by James Swartz, the building engineer at Lewisburg. While there is no control over the temperature from inside the cell, the temperature is monitored by a unit outside the prison which senses the outside temperature and activates the heat automatically. While this system may not be the most desirable system, considering all of the proposed testimony produced at the conference, the court finds the heating system to be adequate. It may be more desirable for the inmate to have a system which provides individual temperature controls, however, the failure to provide such is not a constitutional violation.

Similarly, the operation of the ventilation system was discussed and explained at the pretrial conference. The plaintiff concedes that there are approximately fifty small holes in the cell walls in addition to a window and openings in and around the door which allow for an exchange of air. According to Mr. Swartz, the holes and other openings constitute a “natural” ventilation system, whereby the air passes to the chimney pulling air from other openings in a modified suction motion. In addition, he asserted the screened box apparatus attached to the window for security purposes does not dissipate the amount of air entering the cell to any great extent. While the S.H.U. may not contain the same ventilation system as exists in general population, it is sufficient for Eighth Amendment purposes. The court has no doubt that humidity and temperatures are high in the hot summer months. This alone, however, or in combination with other conditions existing in the S.H.U., does not offend contemporary standards of decency.

The plaintiff also contends that the amount of light existing in the S.H.U. is inadequate. As the pretrial transcript reveals, there is one bare bulb in each cell, generally 100 to 150 watts. Transcript at 68-69. In addition, the cell ceilings are painted white to allow reflecting light. Plaintiff asserts that while the lighting may be adequate for the inmate on the top bunk it is inadequate for the inmate on the lower bunk. In the S.H.U., since there are generally no chairs provided, as distinguished from general population, the bunks are the only place to sit and read. If the entire cell provided a dark, dungeon type atmosphere, the court might be inclined to agree with the plaintiffs contentions. However, in light of the fact that plaintiff concedes the inmate on the top bunk receives adequate lighting, and the white ceilings would reflect the light throughout the cell, the court finds no constitutional violation present. The Constitution does not mandate comfortable prisons, and prisons which house persons convicted of serious crimes cannot be free from discomfort. Rhodes v. Chapman, supra, 452 U.S. at 349, 101 S.Ct. at 2400. As long as the conditions within the cell meet Eighth Amendment standards, no constitutional violation is present. Therefore, the Court has determined the allegations concerning the physical conditions do not either singly, or in combination, approach constitutional inadequacy.

The plaintiff next contends that the policy of denying S.H.U. inmates participation in group worship contravenes his right to worship as guaranteed by the First Amendment. In Bell v. Wolfish, 441 U.S. 520, 545-46, 99 S.Ct. 1861, 1877-78, 60 L.Ed.2d 447 (1979), the Supreme Court noted that prisoners do not lose all constitutional protection by reason of conviction and confinement. However, prisoners’ rights are subject to restrictions and limitations and that “even when an institutional restriction infringes a specific guarantee, such as the First Amendment, the practice must be evaluated in light of the central objective of prison administration, safeguarding prison security.” Id. at 547, 99 S.Ct. at 1878 (citing Jones v. North Carolina Prisoners’ Labor Union, 433 U.S. 119, 97 S.Ct. 2532, 53 L.Ed.2d 629 (1977), Pell v. Pecunier, 417 U.S. 817, 94 S.Ct. 2800, 41 L.Ed.2d 495 (1974), and Procunier v. Martinez, 416 U.S. 396, 94 S.Ct. 1800, 40 L.Ed.2d 224 (1974). In St. Claire v. Cuyler, 634 F.2d 109, 114 (3d Cir.1980), the court determined that a “reasonable justification” concept for such a prison practice is not appropriate when evaluating a restriction of a constitutional right. It explained “ ‘[reasonableness’ imposed too rigid a burden on prison authorities ... [t]he state needs only to produce evidence that to permit the exercise of first amendment rights would create a potential danger to institutional security.”

At the pretrial conference, it was explained plaintiff was initially confined in the S.H.U. pending investigation of a variety of disciplinary charges, including assault on a staff member. The remainder of his time there was in response to conviction on those charges. The court can think of no more serious threat to prison security than an assault on the prison staff. Prison officials must be able to detain prisoners pending investigation of serious charges which threaten the internal stability of the institution. Conditions encountered during detention were a direct response to the increased security threat posed by the inmate awaiting a hearing before the prison’s disciplinary committee. The court cannot say that a policy of preventing potentially explosive inmates from mixing with the general population at a group worship service is not a policy without justification.

The court must defer to the expert judgment of the prison officials unless the prisoner proves by “substantial evidence ... that the officials have exaggerated their response” to security considerations or the officials beliefs are unreasonable. Id. at 115 (citing Pell v. Procunier, 417 U.S. 817, 827, 94 S.Ct. 2800, 2806, 41 L.Ed.2d 495 and Jones, supra, 433 U.S. at 128, 97 S.Ct. at 2539). The discussion at the pretrial conference demonstrated the propriety of the prison officials’ actions and that it was not exaggerated under the circumstances. Accordingly, plaintiff’s First Amendment claim will be dismissed.

Additionally, the plaintiff complains that he was required to share his cell with another inmate. The Special Housing Unit at the prison is utilized for the confinement of inmates awaiting disciplinary hearings, inmates actually being punished, inmates there for security reasons and inmates anticipating transfer to another institution. The cell-sharing here was obviously necessitated by the volume of the prisoners confined in the Unit and is “justified by the considerations underlying our penal system.” Price v. Johnston, 334 U.S. 266, 68 S.Ct. 1049, 92 L.Ed. 1356 (1948). In Bell v. Wolfish, 441 U.S. at 546, 99 S.Ct. at 1877, Justice Rehnquist emphasized: “[Mjaintaining institutional security and preserving internal order and discipline are essential goals that may require limitation or retraction of retained constitutional rights of both convicted prisoners and pretrial detainees. Central to all other correction goals is the institutional consideration of internal security within the corrections facilities themselves. Pell v. Procunier, supra, [417 U.S. at 823, 94 S.Ct. at 2804]; see Jones v. North Carolina Prisoners Labor Union, supra, [433 U.S. at 129, 97 S.Ct. at 2539]; Procunier v. Martinez, 416 U.S. 396, 412 [94 S.Ct. 1800, 1811, 40 L.Ed.2d 224] (1974).”

In Rhodes v. Chapman, 452 U.S. 337, 101 S.Ct. 2392, 69 L.Ed.2d 59, the Supreme Court held that, in and of itself, double celling is not unconstitutional. Prisoners spend most of the day in their cells. The amount of living space which is ideal for one inmate is not always attainable in the real world of prison administration. One cannot expect prison officials to anticipate the number of prisoners who will need to be separated from other inmates and still insure that each prisoner receives his own cell. “There must be a mutual accommodation between institutional needs and objectives and the provisions of the Constitution that are of general application.” Wolf v. McDonnell, 418 U.S. 539, 556, 94 S.Ct. 2963, 2975, 41 L.Ed.2d 935.

In the case sub judice, as in Rhodes, the double-celling did not lead to deprivations of medical care, food or sanitation. There was no allegation of increased violence as a result of double-celling. The court has determined the cell in the Unit have adequate heating, ventilation and lighting. Therefore, plaintiffs claim of a constitutional violation due to double-celling will be dismissed.

With respect to the plaintiffs stay in disciplinary segregation, he asserts the denial of his personal property and the necessity to wear cloth slippers as Eighth Amendment violations. He claims he was denied his personal property for approximately one week. This was explained at the conference as the time necessary to remove the property from plaintiffs cell in general population, inventory it and have it transferred to the S.H.U. Prison officials also stated plaintiff was given whatever hygienic products he needed to maintain himself while his property was being transferred.

Inmates in disciplinary segregation are not permitted to wear their own shoes, but are given cloth slippers with rubber soles to be worn during confinement. The denial of their own shoes, prison officials explained at the conference, is attributed to the frequency of prisoners using their shoes as an object to throw at prison staff members. Since plaintiff was given shoes, although not the ones he would have liked during his confinement in disciplinary segregation, the court finds no constitutional violation.

Finally, the plaintiff alleges the conditions in administrative detention constituted cruel and unusual punishment due to the lack of recreation and educational opportunities, diminished telephone and television privileges and inadequate access to entertainment and the general library. The plaintiff does not allege that he is denied the opportunity for recreation. Under prison policy, he is allowed one hour of exercise a day, five days a week. He contends that this amount of exercise is insufficient.

It is true that inmates need regular exercise to maintain reasonably good physical and psychological health. See Dorrough v. Hogan, 563 F.2d 1259 (5th Cir.1977), Frazier v. Ward, 426 F.Supp. 1354, 1367-69 (N.D.N.Y.1977), Pugh v. Locke, 406 F.Supp. 318, 332 (M.D.Ala.1976), Osborn v. Manson, 359 F.Supp. 1107 (D.Conn.1973). In Spain v. Procunier, 600 F.2d 189 (9th Cir.1979), the court found that where prisoners were confined for a period of years, prison officials must provide one hour of outdoor exercise five days a week, unless inclement weather, unusual circumstances or disciplinary needs made that impossible. This court also finds that one hour of exercise, five days a week is sufficient where all other conditions in the unit are adequate, as was shown here.

With regard to educational opportunities, and the balance of the plaintiff’s claims concerning administrative detention, it is true that some opportunities and privileges given to members of the general population are not afforded inmates confined in the S.H.U. However, if the prisoner is furnished with reasonably adequate basic necessities (e.g. food, clothing, shelter, sanitation, medical care and personal safety), so as to avoid the imposition of cruel and unusual punishment, prison official’s obligations under the Eighth Amendment are satisfied. The Constitution does not require that prisoners, as individuals or as a group, be provided with any and every amenity a prisoner may think is needed to avoid mental, physical or emotional distress. Newman, supra, at 291. The plaintiff was afforded the basic human needs required by the Eighth Amendment. The court finds that the restrictions the plaintiff had to endure during his stay in administrative detention — lack of educational programs, diminished access to the general library, denial of participation in group entertainment programs, limited use of the telephone — were a necessary part of prison security and do not amount to an infliction of cruel and unusual punishment.

Therefore, the plaintiff’s claims will be denied and his complaint dismissed.

An appropriate Order will enter.

      . Rule 16 is intended as a flexible device to be adapted to the problems of the particular case. See 6 C. Wright & A. Miller, Federal Practice & Procedure, Civil § 1521, at 565-66 (1971). Just as the court may render judgment on immaterial issues and issues for which there is no dispute of material fact, "judgment may be ordered ... if there is no triable issue left at the end of the discussion.” Id. § 1525, at 592-93. See Stackhouse v. Marks, 556 F.Supp. 270 (M.D.Pa.1982), aff’d 707 F.2d 1404 (3d Cir.); Pifcho v. Brewer, 77 F.R.D. 356 (M.D.Pa.1977). See also Newman v. Granger, 141 F.Supp. 37, 39 (W.D.Pa.), aff'd per curiam, 239 F.2d 384 (3d Cir.1957) (agreement on all necessary and relevant facts permits decision on the merits). Prior to the beginning of the discussion plaintiff was reminded that the court had sent him a letter informing him of the potential for elimination of issues or dismissal of the entire case should that course be appropriate at the end of the conference.

      . See Blumenthal v. Great American Mortgage Investors, et al., 74 F.R.D. 508 (N.D.Ga.1976). This means showing, inter alia, that all the prerequisites outlined in Rule 23(a) and that one of the prerequisites outlined in Rule 23(b) have been met. Rule 23(a) provides:
      Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
      Also, a definable class must exist and the representatives must be members of that class. See 1 Wright & Miller, Federal Practice and Procedure, Civil § 1759, p. 573 (1972).

      . Testimony at the conference indicated:
      MR. SWARTZ: There is an automatic control ... that is called a weatherstat that senses outdoor conditions and will turn the steam on and off as it gets cold or hot.
      THE COURT: Would that be for all three floors?
      MR. SWARTZ: Yes....
      MR. LOE: But can like the heat remain on, can staff like leave the heat on irregardless of what the sensor — sensor says?
      THE COURT: I imagine you can switch it from automatic or manual; can't you or can you?
      MR. SWARTZ: No, there’s a valve in the basement of the building, the steam valve, automatic valve, that is called a regulator opening and closing. There is no way to keep the valve open if the regulator wants to close it____
      THE COURT: The weatherstat, does it have a degree control, a thermostat control?
      MR. SWARTZ: Yes.
      THE COURT: And what would that be?
      MR. SWARTZ: I really couldn’t say offhand.
      MR. LOE: I don’t see how. There is no thermostat inside the building that I know of.

        MR. SWARTZ: It’s not based on indoor temperature. It’s based solely on outdoor conditions____
      THE COURT: Well, would it ever get to 85 degrees or something like that?
      MR. SWARTZ: Inside the—
      THE COURT: Yes.
      MR. SWARTZ: It's possible it could.
      MR. WALKER: And along those lines, Your Honor, if the temperature in the particular cell, let’s say, reached a degree of 85 degrees, what means could an inmate take to lower the temperature if it hadn't automatically shut down?
      THE COURT: So he can open the window, can’t he?
      MR. SWARTZ: The means available, he can open the window, yes. The window does have a screen on it, but it still allows 40% of open area, so it’s roughly two square feet of free air to enter through the window.
      MR. LOE: I’d like to point out that the screen is removed from the window by approximately a foot and a half. It’s like a black box surrounding the window____
      MR. WALKER: Is there any reason why that would reduce the flow of air into the window?
      MR. SWARTZ: If the wind direction was along the side of the building it would probably have some effect, in that you wouldn’t have the suction created by passing directly by the window opening. But, no, not to pny great extent.
      Transcript of pretrial conference, Document No. 37 of the Record at 45-49.

      . At the conference Mr. Swartz stated:
      The holes in the wall that he was referring to allow air to pass into a pipe chase or a chimney-type affair that aids in circulation of the air inside the cell. No air comes out of the hold, the air goes into those holes and up like a chimney into the attic and then it’s dispersed into the atmosphere on the basis that hot air will rise.
      When the hot air starts to rise through that chimney, it pulls air into any available opening, which would be the outside window, the two-inch under cut under the door, or the cracks around the door, which does not seal air tight. And so basically the ventilation is natural ventilation based on dynamic rules, so there is no mechanical ventilation in the building.

        Id. at 43-44.


text:
    Derek A. FARMER, Plaintiff, v. Arthur P. ANNINOS, et al., Defendants.
    No. C-3-84-212.
    United States District Court, S.D. Ohio, W.D.
    Aug. 31, 1984.
    Derek A. Farmer, pro se.
    Stephen L. Black, Cincinnati, Ohio, for defendants.
   DECISION AND ENTRY SUSTAINING DEFENDANTS’ MOTION TO DISMISS; PLAINTIFF’S COMPLAINT DISMISSED IN ITS ENTIRETY; PLAINTIFF DIRECTED TO FILE SUPPLEMENTAL COMPLAINT UNDER CASE NO. C-3-81-285; INDIVIDUAL PARTIES ORDERED TO SUBMIT AFFIDAVITS UNDER CASE NO. C-3-81-285; TERMINATION ENTRY

RICE, District Judge.

Based upon the reasoning and citations of authority set forth by Defendants in support of their Motion to Dismiss (Doc. # 4), filed pursuant to Fed.R.Civ.P. 12(b)(1), the Court concludes that Defendant’s Motion, as it pertains to Plaintiff’s state law claims, is well-taken and dismisses said claims for lack of subject matter jurisdiction. With reference to Plaintiff’s claims under 42 U.S.C.A. § 1983, the Court treats Defendants’ Motion as one asserting that Plaintiff has failed to state a claim under Fed.R.Civ.P. 12(b)(6), and sustains said Motion. Simply stated, Defendants, Plaintiff’s counsel, under facts as alleged in the Plaintiff’s Complaint, do not act under col- or of state law. See Henderson v. Fisher, 631 F.2d 1115, 1119 (3d Cir.1980) (per curiam) (private attorney does not act under color of state law); Moss v. Varian, 537 F.Supp. 711, 712 (N.D.Ohio 1982) (same); see also Black v. Bayer, 672 F.2d 309, 314 (3rd Cir.) cert. denied, sub nom. Stoica v. Stewart, 459 U.S. 916, 103 S.Ct. 230, 74 L.Ed.2d 182 (1982) (court appointed counsel does not act under color of state law); Polk County v. Dodson, 454 U.S. 312, 325, 102 S.Ct. 445, 453, 70 L.Ed.2d 509 (1981) (public defender does not act under color of state law), state action being one of the required elements of a § 1983 civil rights claim. Parratt v. Taylor, 451 U.S. 527, 535, 101 S.Ct. 1908, 1912, 68 L.Ed. 420 (1981); Brandon v. Allen, 719 F.2d 151, 153 (6th Cir.1983). Thus, Plaintiff has failed to state a cause of action under § 1983.

Despite the fact that the Court sustains Defendants’ Motion, dismisses Plaintiff’s Complaint and terminates the instant case infra, the Court states that it does have supervisory jurisdiction over contingent fee contracts arising out of attorney services rendered in cases before it. See Allen v. United States, 606 F.2d 432, 435-36 (4th Cir.1979). See also Cooper v. Singer, 719 F.2d 1496, 1504-07 (10th Cir.1983); Jersey Land and Development Corp. v. United States, 342 F.Supp. 48 (D.N.J. 1972). Exercise of this supervisory jurisdiction over Plaintiff’s allegations seems particularly appropriate in that the complained of conduct arose out of the attorney-client relationship created with the assistance of this Court. Furthermore, the contingent fee arrangement that grew out of that relationship specifically concerns settlement of at least one ease, namely, C-3-81-285, which was previously pending in this Court. See attached Special Power of Attorney. For these reasons, the Court directs Plaintiff to file the allegations which initiated the captioned cause, as a supplemental complaint, under the terminated case, number C-3-81-285, if Plaintiff wishes to proceed with these matters. After Plaintiff’s complaint is properly filed under C-3-81-285, the individual parties to the captioned cause are ordered to promptly file affidavits (with authenticated supporting documents, if necessary) specifically setting forth facts relevant to the allegations made by Plaintiff in his supplemental complaint. In the event that an oral evidentiary hearing is needed by the Court in order to dispose of Plaintiff's supplemental complaint, said hearing will be held in Cincinnati.

Plaintiff, in his Complaint filed in this case on March 21,1984, seeks the return of his property, presumably including a copy of a Motion to Vacate Judgment, court orders, trial transcripts, etc. (Doc. # 1 at If 25), allegedly withheld by Defendants. The Court notes, however, that on March 30, 1984, Judge Spiegel, in case number C-l-80-647, ordered Defendant Anninos “to return all files and documents, the property of plaintiff, to plaintiff forthwith and without charge”. See attached Order. The Court is confident that by this time Defendants) has fully complied with Judge Spiegel’s Order. If this is not the case, Plaintiff should promptly so advise this Court by filing a motion and affidavit under case number C-3-81-285.

WHEREFORE, based upon the aforesaid, the Court sustains Defendants’ Motion to Dismiss and, accordingly, dismisses Plaintiff’s Complaint in its entirety. If Plaintiff wishes to proceed in this Court with his allegations, he is directed to file a supplemental complaint under the terminated case, C-3-81-285. After said filing, the parties are directed to file affidavits addressing Plaintiff’s allegations.

The captioned cause is hereby ordered terminated upon the docket records of the United States District Court for the Southern District of Ohio, Western Division, at Dayton, Ohio.

APPENDIX

SPECIAL POWER OF ATTORNEY

I, DEREK A. FARMER, hereby appoint A. P. Anninos my Attorney-In-Fact, to endorse the draft issued in the settlement of my case against the Sheriff's Department of Montgomery County, Ohio, in the amount of Seven Thousand Five Hundred ($7,500.00) Dollars. Said case is presently pending in the Court of Common Pleas, Montgomery County, Ohio, being Case No. C-3-81-285 > and which case involves an occurrence at the Montgomery County, Ohio, jail in which I sustained injury. Said Attorney-In-Fact is hereby authorized to act for me and in my name, plaaa, and stead, for my use, and to sign said draft in my name, for me, and in my name, place, and stead, and to pay all cost3 and attorney's fees incurred by my attorney in the said cause of action.

I further give and grant unto my said Attorney-In-Fact full power and authority to perform every act and deed necessary and proper to be done in the exercise of any and all of the foregoing powers as fully as I might or could do if personally present, with full power of substitution and revocation, hereby ratifying and confirming all that my said Attorney-In-Fact may lawfully do or cause to be dpne by virtue hereof.

This power of attorney shall further authorize my Attorney-In-Fact to deposit the remainder of the proceeds from said draft in an interest-bearing savings account for me, and in my name, place and stead, and I further hereby ratify and confirm any and all such transactions.

This power of attorney shall not be affected by my disability, incapacity, or adjudged incompetency.

For value received in the form of legal services in resolving the said case against the Sheriff's Department of Montgomery County, Ohio, on my behalf, I do hereby grant said Attorney-In-Fact a thirty-three and 1/3 percent (33 1/3%) interest in the resulting sum of Seven Thousand Five Hundred ($7,500.00) Dollars, and by such grant do intend that this power of attorney be coupled with an interest, and I do hereby make and declare this power of attorney to b*» irrevocable by me or otherwise, renouncing all rights to revoke this power or to appoint any other person to perform any of the acts innúmerated herein.

Further, I grant and authorize my Attorney-In-Fact to deduct any and all expenses incurred by him and co-counsel Peter E. Koenig in their representation of me in this cause of action.

APPENDIX

NO: C-l-80-647

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION MARCH 30, 1984

DEREK A. FARMER, Plaintiff,

vs.

RON C. MARSHALL, Defendant.

ORDER SUSTAINING IN PART AND OVERRULING IN PART OBJECTIONS TO MAGISTRATE’S RULINGS

This matter came on for consideration of plaintiff’s motion to review and objections (doc. 41) to the rulings of the Magistrate (doc. 40), together with plaintiff’s supplemental memorandum (doc. 42). No opposition has been filed thereto. We have carefully reviewed the Magistrate’s ruling (doc. 40), and we make the following orders:

(A) Plaintiff’s ex parte motion (doc. 37) asking the Court to order that A.P. Anninos, Esq., return documents and files to plaintiff. We sustain plaintiff’s objections to the Magistrate’s order denying his motion and hereby order A.P. Anninos, Esq., to return all files and documents, the property of plaintiff, to plaintiff forthwith and without charge. A copy of this Order shall be served upon A.P. Anninos, Esq. by certified mail.
(B) The objections of plaintiff to the Magistrate’s rulings denying him leave to file an amended complaint are sustained as being well-taken. Plaintiff is granted to July 1, 1984 to file an amended complaint.
(C) The plaintiff’s objections to the Magistrate’s overruling his motion for reconsideration is denied. The Magistrate observed that plaintiff’s motion seeking an order to permit him to interview 21 witnesses was denied on December 8,1982 because of security considerations (doc. 31). In addition, the defendant has admitted in his answer the facts that the testimony of plaintiff’s 16 inmate witnesses is intended to establish so that the allegations in the pleadings on this matter are no longer at issue in the case.

Plaintiff has asked that this case be transferred from the docket of The Honorable Robert A. Steinberg, United States Magistrate, to the docket of another Magistrate. We believe the interests of justice would be served if the plaintiff’s motion to transfer this matter is granted. Accordingly, it is hereby ordered that this action is transferred from the docket of The Honorable Robert A. Steinberg, United States Magistrate, to the docket of The Honorable J. Vincent Aug, Jr., United States Magistrate, for further proceedings.

SO ORDERED.

/s/ S. Arthur Spiegel

S. Arthur Spiegel

United States District Judge

      . In the event that Plaintiff wishes to pursue these claims in state court, he is reminded that a one year statutory limitations period applies to malpractice actions in Ohio. See Ohio Revised Code § 2305.11(A).

      . The Court is aware that Defendant, Plaintiff’s counsel, could have acted under color of state law if he had conspired with state officials to deprive Plaintiff of his federally protected rights. See Tower v. Glover, — U.S. -, -, 104 S.Ct. 2820, 2826, 81 L.Ed.2d 758 (1984). Plaintiffs Complaint herein, however, contains no allegation of such a conspiracy. In the absence of said allegation, the Court concludes that Defendant did not act under col- or of state law, and, therefore, that Plaintiff has failed to state a claim under 42 U.S.C.A. § 1983.

      . It appears to this Court that while its supervisory jurisdiction over the attorney-client relationship includes authority to order a refund of excessive fees, said jurisdiction does not include authority to award damages.

      . Yet to be determined is the impact of this settlement agreement on case number C-3-81-286, another suit filed by Plaintiff in this Court.