author: CYR, Chief Judge.

text:
    Leroy CRANE, et al., Plaintiffs, v. COMMISSIONER OF DEPARTMENT OF AGRICULTURE, FOOD AND RURAL RESOURCES, et al., Defendants.
    Civ. No. 85-0010-B.
    United States District Court, D. Maine.
    Feb. 7, 1985.

      Linda Smith Dyer, and Clifford Goodall, Dyer, Goodall & Zeegers, Augusta, Me., for plaintiffs. •
    Jeffrey M. Frankel, and Cabanne Howard, Asst. Attys. Gen., Augusta, Me., for defendants.
    Richard A. Spencer, Kathleen Barry, Drummond, Woodsum, Plimpton & MacMahon, Portland, Me., for intervenors.
   MEMORANDUM DECISION ON MOTION FOR PRELIMINARY INJUNCTION

CYR, Chief Judge.

Five Maine milk producers brought this action against the Commissioner of the Maine Department of Agriculture, Food and Rural Resources and against the Maine Milk Commission, challenging the constitutionality of the Maine Milk Pool Act [Act], the core provisions of which appear in 7 M.R.S.A. §§ 3153 and 3154. Plaintiffs preliminarily sought to enjoin defendants from disbursing monies pooled under the Act; ultimately, they demand permanent injunctive relief and a judicial declaration that the Act violates the supremacy, commerce, and equal protection clauses of the Federal Constitution. Defendants assert that the Act is constitutional, that injunctive relief is inappropriate and that the action is barred by the principles of res judicata.

Upon consideration of all of the pleadings, affidavits and memoranda, and after hearing and consideration of all representations and arguments of counsel, the court is satisfied that plaintiffs are not entitled to preliminary injunctive relief.

The Act and the Classified Pricing System for Milk

Prices paid to Maine dairy producers are established under two separate regulatory schemes: (1) the Maine Milk Commission Law, 7 M.R.S.A. §§ 2951-61 (1979 & Supp. 1983-84), and (2) Federal Milk Order No. 1 [Order], 7 C.F.R. § 1001 (1984), promulgated pursuant to the Agricultural Marketing Agreement Act of 1937, as amended, 7 U.S.C.A. §§ 601-24 (1980 & Supp.1984). Under both regulatory schemes dairy producers are paid for their milk according to a “classified pricing system,” which requires dealers to pay for milk according to the nature of the actual use to which the milk is put. 7 M.R.S.A. § 2954(2)(A); 7 C.F.R. § 1001.40 et seq. Thus, if the dealer sells his milk in fluid form for drinking purposes the dealer is required to pay a higher “Class I” price, but if the milk is sold by the dealer for other purposes, such as for cheese or ice cream, the dealer pays a lower “Class II” price. 7 M.R.S.A. § 2954(2)(A); 7 C.F.R. § 1001.50. The dairy producer in turn receives a “blend price” calculated on the basis of the weighted average of Class I and Class II sales. 7 M.R.S.A. § 2956(3); 7 C.F.R. §§ 1001.60, 1001.73.

Under the Maine statutory scheme, 7 M.R.S.A. §§ 2951-61, the blend price paid to Maine market producers, see 7 M.R.S.A. § 3152(1), is calculated by computing the percentages of Class I and Class II milk sold by each dealer, so that the blend price paid to Maine market producers varies from dealer to dealer. 7 M.R.S.A. § 2956(3). Maine producers selling to different Maine market dealers generally receive different blend prices per hundred weight for their milk. See generally Maine Milk Producers, Inc. v. Commissioner of Agriculture, Food and Rural Resources, 438 A.2d 1213, 1216 (Me.1984).

Maine’s Boston market producers, that is, Maine milk producers who sell their milk to dealers subject to the regulatory authority of the Federal Order, see 7 M.R.S.A. § 3152(3), are paid a blend price for their milk calculated on the basis of the weighted average of all Class I and Class II milk sold in the entire Boston market. 7 C.F.R. § 1001.73. The result is that under the Federal Order all dealers pay their producers the same marketwide blend price, irrespective of the actual use to which any particular Boston market dealer’s milk is put. The uniform payments to Boston market producers are accomplished by means of a “producer settlement fund,” which requires dealers with above average Class I sales to pay their producers the marketwide blend price and to pay any Class I premium into the producer settlement fund. The settlement fund is later disbursed to dealers with below average Class I sales to enable them to pay their producers the average blend price. 7 C.F.R. §§ 1001.70-1001.72.

These dual marketing and pricing schemes have produced certain discrepancies between the prices received by Maine market producers and those received by Maine’s Boston market producers. As the Maine Supreme Judicial Court observed:

Historically, Maine market dealers have had higher Class I utilization rates than their Boston market counterparts. As a result, producers selling on the Maine market get a higher price for their milk than producers selling on the Boston market. This extra amount is sometimes referred to as the ‘Maine market premium.’ The Maine market dealers’ higher utilization rates come from their practice of buying ‘short’; they purchase locally only enough milk to satisfy their average needs and buy any additional amounts needed or sell any local surplus on the Boston market. That practice benefits both Maine market producers, who receive higher blend prices as a result, and Maine dealers, who avoid handling large amounts of excess local production for which they have little use and on which they sometimes bear a cost. The Maine market premium has been going to fewer and fewer producers in the recent past. As Maine market producers increase production and add to the Maine dealers’ milk supply, the dealers drop some producers onto the Boston market.

Maine Milk Producers, Inc. v. Commissioner of Agriculture, Food and Rural Resources, 483 A.2d at 1216-17. To correct these inequities the Maine Legislature enacted the Act, the purpose of which, inter alia, is to serve “a redistributive function to the end of achieving substantial price equality for all Maine produced milk,” id. at 1217.

Under the Milk Pool Act, each Maine market dealer must compute its blend price twice, 7 M.R.S.A. § 3153(2)(A): the first computation is based on its individual utilization rate, while the second is based on the combined utilization rates of all the Boston market dealers. The producers selling to these Maine market dealers are immediately paid the Boston market blend price. The dealers then pay the difference between their individual blend prices and the Boston market blend price into the Maine Milk Pool. At this point in the process, the Maine market producers and the Boston market producers have received the same price for their milk, namely, the Boston market blend price, while the Maine market premium has been paid into the pool. Then, the pool is equally allocated among Maine market and Boston market producers on a per hundredweight basis.

Id.

PRELIMINARY INJUNCTIVE RELIEF

In order to obtain preliminary injunctive relief the plaintiffs must show: (1) that they will suffer irreparable injury if the injunction is not granted; (2) that such injury outweighs any harm which granting injunctive relief would inflict on the defendants; (3) that plaintiffs are likely to succeed on the merits; and (4) that the public interest will not be adversely affected by the granting of the injunction. Planned Parenthood League of Massachusetts v. Bellotti, 641 F.2d 1006, 1009 (1st Cir.1981); Women’s Community Health Center, Inc. v. Cohen, 477 F.Supp. 542, 544 (D.Me.1979).

Likelihood of Success

I. Res Judicata

On May 17, 1984, two weeks before the Act was to take effect, Maine Milk Producers, Inc. [MMP], a membership corporation comprised of Maine market producers, and certain of its member producers filed a civil action in the Kennebec County Superior Court against the Commissioner of the Maine Department of Agriculture, Food and Rural Resources [Commissioner] and the Maine Milk Commission [Milk Commission], seeking preliminary and permanent injunctive relief enjoining implementation of the Act, as well as a judicial declaration that the Act violated certain provisions of the Maine Constitution and the supremacy, commerce, equal protection and due process clauses of the Federal Constitution. Because there was no dispute as to the material facts underlying the litigation the presiding justice consolidated the requests for preliminary and permanent injunctive relief.

On June 29, 1984 the superior court entered its judicial declaration that the Act violated Article I, § 6-A (equal protection clause) and Article IX, § 8 (tax clause) of the Maine Constitution, and enjoined the Commissioner from implementing the Act. The state court defendants timely appealed the order of the superior court to the Law Court and on October 31, 1984 the Law Court reversed the judgment of the superi- or court and vacated the injunction. The Law Court held that the Act is a valid exercise of the legislative power to engage in economic regulation. The Law Court expressly found no merit “in any of the alternative arguments presented by plaintiffs for affirming the Superior Court’s declaration of unconstitutionality.” Maine Milk Producers, Inc. v. Commissioner of Agriculture, Food and Rural Resources, 483 A.2d at 1221. Plaintiffs’ motion for reconsideration was denied on December 5, 1984. On December 6,1984 the Law Court issued its mandate. Plaintiffs did not seek review by the United States Supreme Court.

Under general principles of res judicata a final judgment on the merits bars further claims by parties or their privies based on the same cause of action and prevents litigation of all grounds for, or defenses to, recovery that were previously available to the parties, regardless of whether they were asserted or determined in the prior proceeding. Ramirez Pluguez v. Cole, 571 F.2d 70, 71 (1st Cir.1978), citing Lovely v. Laliberte, 498 F.2d 1261, 1263 (1st Cir.), cert. denied, 419 U.S. 1038, 95 S.Ct. 526, 42 L.Ed.2d 316 (1974). Res judicata not only encourages reliance on adjudications and reduces unnecessary and vexatious litigation, but also promotes that comity between state and federal courts which has been recognized “as the bulwark of the federal system.” Allen v. McCurry, 449 U.S. 90, 95-96, 101 S.Ct. 411, 415-416, 66 L.Ed.2d 308 (1980). See also Brown v. Felsen, 442 U.S. 127, 131, 99 S.Ct. 2205, 2209, 60 L.Ed.2d 767 (1979). In applying res judicata “a federal court must give to a state court judgment the same preclusive effect as would be given that judgment under the law of the State in which the judgment was rendered.” Migra v. Warren City School District Board of Education, _ U.S. _, 104 S.Ct. 892, 896, 79 L.Ed.2d 56 (1984). See Kremer v. Chemical Construction Corp., 456 U.S. 461, 466-67, 102 S.Ct. 1883, 1889-90, 72 L.Ed.2d 262 (1982).

For the Maine doctrine of res judicata to apply, “the court must satisfy itself that (1) the same parties, or their privies, are involved; (2) a valid final judgment was entered in the prior action; and (3) the matters presented for decision were, or might have been litigated in the prior action.” Kradoska v. Kipp, 397 A.2d 562, 565 (Me.1979). See also Beegan v. Schmidt, 451 A.2d 642, 644-45 (Me.1982).

A. Identity of Parties

The principal state court plaintiff, MMP, is a non-stock membership corporation made up of individual Maine market producers subject to the pricing authority of the Milk Commission. The federal court plaintiffs are five individual Maine market producers. The attorney representing the federal court plaintiffs represented all plaintiffs in the state court litigation. It is undisputed that MMP is financing the federal court action and that four of the five federal court plaintiffs are members of MMP who contributed money towards meeting MMP’s expenses in litigating the state court action. Because the named plaintiffs in the state and federal court actions are not identical, the issue is whether the federal plaintiffs are in privity with MMP for res judicata purposes.

The applicability of res judicata generally and preclusion by representation specifically “must be determined as a matter of substance and not of mere form,” based in part on an identification of the interests advanced in the first proceeding. Chicago, Rock Island & Pacific Railway Co. v. Schendel, 270 U.S. 611, 620, 46 S.Ct. 420, 424, 70 L.Ed. 757 (1926). See also Expert Electric, Inc. v. Levine, 554 F.2d 1227, 1233 (2d Cir.), cert. denied, 434 U.S. 903, 98 S.Ct. 300, 54 L.Ed.2d 190 (1977). Cf. 18 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 4448 at 408-09 [court must look to reasons for holding a person bound by a prior judgment].

An analysis of the preclusive effect of association representation requires consideration of several factors, including: (1) the adequacy of representation; (2) whether individual members of an association have interests which conflict with those of the association; (3) the degree to which the association is involved in the activities of its individual members; (4) whether, and to what extent, individual members participated in earlier litigation involving the association; and (5) whether, and to what extent, individual members have authorized the association to represent their individual interests. See 18 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction, § 4456 (1981).

In the vast majority of cases the determination as to whether individual members of an association or membership organization are bound by a judgment in an earlier action involving the organization usually turns upon whether the members consented to or otherwise authorized the association or organization to represent their individual interests. See, e.g., Ellentuck v. Klein, 570 F.2d 414, 425-26 (2d Cir.1978) [individual property owners, who had authorized neighborhood association to represent their interests in litigation, bound by judgment in ensuing action]. Compare Grossman v. Axelrod, 466 F.Supp. 770, 774-75 (S.D.N.Y.1979), aff'd, 646 F.2d 768 (2d Cir.1981) [nursing home proprietor bound by judgment in state court action litigated by trade association of which he was a member, even though he had never authorized association to pursue the action on his behalf]. See also Expert Electric, Inc. v. Levine, 554 F.2d at 1232-33; Panza v. Armco Steel Corp., 316 F.2d 69, 70 (3d Cir.), cert. denied, 375 U.S. 897, 84 S.Ct. 174, 11 L.Ed.2d 125 (1963).

The authorization by individual members may be express or implied. Thus, in General Foods Corp. v. Massachusetts Department of Public Health, 648 F.2d 784, 788 (1st Cir.1981), the First Circuit held that members of a trade association who had financed an earlier action brought by the association on behalf of its members impliedly authorized the association to represent them in the earlier proceeding; the members were deemed in privity with the association for res judicata purposes. Central to the court’s decision in General Foods were the facts that the challenged regulation did not directly affect the trade association itself but only its members and that the trade association’s standing to sue in the earlier proceeding had depended on its claimed right to represent its members as the real parties in interest. Id. at 787.

As in General Foods, implementation of the Act will not directly affect MMP itself, but its individual members. MMP’s standing in the earlier state court action was predicated on its right to represent its members. Four of the five plaintiffs in the present action are members of MMP and have contributed money towards MMP’s expenses in litigating the state court action. MMP’s state court challenge to the Act was not limited to attacking specific provisions of the Act, but was broadly based, seeking nothing less than total nullification of the Act. The harm alleged by MMP in the state court action is identical to the harm alleged by the federal court plaintiffs. The similarity of interests between MMP and these plaintiffs and the identity of purposes behind the state and federal court actions are made manifest by the fact that MMP is financing the present action as well. Moreover, inasmuch as the attorney representing the federal court plaintiffs is the same attorney who represented MMP in the state court action, there is little question that the representation of MMP in the earlier action was adequate. See General Foods Corp. v. Massachusetts Department of Public Health, 648 F.2d at 788. Therefore, under the reasoning in General Foods, these four MMP-member plaintiffs impliedly authorized MMP to represent their interests in the state court action and are deemed to have been in privity with MMP in its earlier challenge to the Act.

The fifth plaintiff, Thomas Campbell [Campbell], presents a closer question. Plaintiffs commenced this suit on January 7, 1985. Campbell was not one of the original named plaintiffs. On January 9, 1985 Agri-Mark, Inc. filed its application for leave to intervene as a party defendant and raised the res judicata issue. On January 16,1985, plaintiffs filed their amended complaint, which is identical in all respects to their original federal complaint except that it added Campbell as a plaintiff. At the hearing on plaintiffs’ motion for a preliminary injunction Campbell testified that on January 15, 1985 he received a telephone call from the president of MMP, an acquaintance of Campbell’s, who asked if Campbell would join the federal court action. During this telephone conversation Campbell was told by plaintiffs’ attorney that she needed someone who was not a member of and had not contributed money to MMP.

In these circumstances the court is satisfied that Campbell was enlisted as a plaintiff by the president of MMP to evade and defeat the preclusive effect of the earlier state court judgment against MMP. However, the inquiry does not end there. Campbell testified that he first learned of MMP when it was in the process of being organized. According to Campbell, the president of MMP had invited him to join at that time, but Campbell declined for personal and financial reasons. Campbell testified that he has (1) never been a member of MMP, (2) not contributed any funds to the organization, and (3) not attended any meetings or otherwise been involved in MMP’s decisionmaking process.

In the present state of the development of the law in this field it remains unclear whether Campbell is precluded from litigating his federal constitutional claims in the absence of express or implied authorization, General Foods Corp. v. Massachusetts Department of Public Health, 648 F.2d at 788, 790, participation in or control over the prior state court proceedings, Montana v. United States, 440 U.S. 147, 151, 99 S.Ct. 970, 972, 59 L.Ed.2d 210 (1979); Gerrard v. Larsen, 517 F.2d 1127, 1134-35 (8th Cir.1975), or evidence suggesting the kind of relationship between Campbell and MMP from which it could be found that MMP was in some way accountable to Campbell in the earlier state court proceeding, Hardy v. Johns-Manville Corp., 681 F.2d 334, 340 (5th Cir.1982); United States v. ITT Rayonier, Inc., 627 F.2d 996, 1003 (9th Cir.1980). What is clear is that mere similarity of interests and a “quantum” of representation of those interests in the earlier action, without more, are insufficient to preclude a nonparty. See Griffin v. Burns, 570 F.2d 1065, 1071 (1st Cir.1978). See also Dills v. City of Marietta, 674 F.2d 1377, 1379-80 (11th Cir.1982), cert. denied, 461 U.S. 905, 103 S.Ct. 1873, 76 L.Ed.2d 806 (1983). Similarly, the fact that the parties are represented by the same attorney in both actions is not determinative of the privity question. See Pollard v. Cockrell, 578 F.2d 1002, 1007 (5th Cir.1978).

The defendants would have the court rely on the “virtual representation” theory of preclusion. Under this approach a non-party may be bound by a prior judgment if a named party in the prior action was so clearly aligned with the interests of a non-party (who is a named party in the subsequent action) as to be considered his virtual representative. See Aerojet General Corp. v. Askew, 511 F.2d 710, 719 (5th Cir.), cert. denied, 423 U.S. 908, 96 S.Ct. 210, 46 L.Ed.2d 137 (1975); Grossman v. Axelrod, 466 F.Supp. at 774-75. More recently, the virtual representation theory has been criticized and limited by the Fifth Circuit, see Southwest Airlines Co. v. Texas International Airlines, Inc., 546 F.2d 84, 95, 97 (5th Cir.), cert. denied, 434 U.S. 832, 98 S.Ct. 117, 54 L.Ed.2d 93 (1977), and, in the First Circuit, at least to the extent that it is predicated solely on a similarity of interests, virtual representation has been all but rejected, General Foods Corp. v. Massachusetts Department of Public Health, 648 F.2d at 790. See Griffin v. Burns, 570 F.2d at 1072.

However, a respected authority suggests that virtual representation may retain “a narrow role ... so long as adequate litigation remains the central requirement.” 18 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 4457 at 502. Accordingly, “[c]lose nonlitigating relationships with a party, participation, apparent acquiescence, and perhaps deliberate maneuvering to avoid the effects of the first action are among the factors to be weighed “in determining whether a nonparty may be bound by the earlier judgment. Id.

Campbell was aware of the earlier state court action. He was invited to join MMP by its president. Except for reasons totally unrelated to the litigation position taken by MMP in the state action, with which Campbell was in full sympathy, he would have joined MMP before the state court action began. It is clear that the identical interests were at stake in both actions and that those identical.interests were mutually shared by MMP and Campbell. When the Law Court reversed the superior court, Campbell immediately responded by contacting the president of MMP for the purpose of inquiring whether anything more could be done. Moreover, MMP is financing the federal court action, as it did the earlier one. Far from separately pressing his individual rights, Campbell alleges harm identical to the harm previously asserted by MMP in the state court action and by the four MMP-member plaintiffs in the present action. Finally and as more fully discussed below, MMP was provided a full and fair opportunity to litigate all of its claims in the state court action. These considerations, together with MMP’s efforts to defeat preclusion through its enlistment of Campbell, may well be sufficient to establish virtual representation. See General Foods, at 790 [One relevant inquiry is whether a named party in the earlier action “is using [a nominal party in the later action] as its agent for the purpose of evading the [earlier] ... judgment----”]. {Dictum).

ll. The State Court Judgment

Under Maine law a judgment is final when it is properly docketed and directs a specific disposition of the matters in issue, Fernald v. Maine State Parole Board, 447 A.2d 1236, 1237 (Me.1982); Breau v. Breau, 418 A.2d 193, 195 (Me. 1980), and where it finally disposes of the action and leaves no further question for consideration by the court, Martel v. Inhabitants of the Town of Old Orchard Beach, 404 A.2d 994, 995 (Me.1979), citing In Re Spring Valley Development, 300 A.2d 736, 754 (Me.1973).

On December 6, 1984 the Law Court entered its mandate vacating the declaration of unconstitutionality and the injunction enjoining the Commissioner from implementing the Act. Nothing was left for consideration by the Law Court. Any contention that the judgment lacks finality was foreclosed by the Law Court’s later denial of appellees’ motion for reconsideration.

Nor is there any question that the Law Court’s judgment was “on the merits.” The requirement that for purposes of claim or issue preclusion a judgment must be on the merits “guarantees to every plaintiff the right once to be heard on the substance of his claim,” Saylor v. Lindsley, 391 F.2d 965, 968 (2d Cir.1968). A judgment on the merits thus differs from a judgment that merely disengages the parties through matters of practice, procedure, jurisdiction or form. Clegg v. United States, 112 F.2d 886, 887 (10th Cir.1940).

The state court plaintiffs fully presented their state and federal constitutional claims to the state superior court. Although plaintiffs merely mentioned their supremacy clause argument in their brief to the Law Court, without fully briefing or arguing that or their other federal constitutional claims, the Law Court reached and decided both the state and federal constitutional issues in its decision. The Law Court expressly found no merit “in any of the alternative arguments presented by the plaintiffs for affirming the Superior Court’s declaration of unconstitutionality,” 483 A.2d at 1221. The Law Court’s terse disposition of the federal constitutional claims does not vitiate the res judicata effect of its judgment or render it any less a judgment “on the merits.” Cf. Friarton Estates Corp. v. City of New York, 681 F.2d 150, 159 (2d Cir.1982) [where state trial court opinion may not satisfactorily have addressed plaintiff’s constitutional claims, intermediate appellate court wrote no decision and highest court branded constitutional claims as insubstantial, the constitutional claims were nevertheless held to have been entertained and denied on the merits]; Brown v. Georgia Power Co., 371 F.Supp. 543, 548 (S.D.Ga.1978), aff'd, 491 F.2d 117 (5th Cir.1974) [although record disclosed that state court did not specifically rule on plaintiff's constitutional claim, a holding adverse to the plaintiff was implied by the judgment]; Mertes v. Mertes, 350 F.Supp. 472, 474 (D.Del.1972), aff'd mem., 411 U.S. 961, 93 S.Ct. 2141, 36 L.Ed.2d 681 (1973) [where state’s highest court refused to consider plaintiff’s constitutional claims because of plaintiff’s failure to raise them in trial court, constitutional issues treated as though decided adversely to the plaintiff].

C. Cause of Action

Whether “the matters presented for decision were or might have been litigated in the prior action” depends upon whether the same cause of action was before the court first entering judgment. Kradoska v. Kipp, 397 A.2d at 568. Under the “transactional” or “pragmatic” test of Maine law, a cause of action is “the aggregate of connected operative facts that can be handled together conveniently for purposes of trial.” Id., quoting 1 Field, McKusick & Wroth, Maine Civil Practice § 18.1 (1959). See Roy v. City of Augusta, 712 F.2d 1517, 1520 (1st Cir.1983) [applying Maine rules of preclusion]; Harrington v. Inhabitants of the Town of Garland, 551 F.Supp. 1371, 1376 (D.Me.1982), aff'd, 715 F.2d 1 (1st Cir.1983). Cf. Landrigan v. City of Warwick, 628 F.2d 736, 741 (1st Cir.1980) [permitting subsequent § 1983 action based on “distinct wrongs resting on different factual bases”].

There can be no question that the underlying transactions in the federal and state court actions are identical. The same legislative enactment is at the heart of both actions. The various state and federal constitutional claims asserted before the state court and the identical federal constitutional issues raised in the present action are simply alternative legal theories supporting the same claim. Nor have the federal plaintiffs presented any new or different facts which would distinguish the present action from the state court action. Both actions have as their common object relief from the alleged harm flowing from implementation of the Act. See Kradoska v. Kipp, 397 A.2d at 569. Cf. Capraro v. Tilcon Gammino, Inc., 751 F.2d 56 (1st Cir.1985) [failure of company to employ truck drivers was at the heart of both federal and state court complaints].

Moreover, the record fully warrants the conclusion that the state court plaintiffs were provided a “full and fair opportunity to litigate” their federal constitutional claims in state court. Kremer v. Chemical Construction Corp., 456 U.S. at 481, 102 S.Ct. at 1897 [“state proceedings need do no more than satisfy the minimal procedural requirements of the Fourteenth Amendment’s Due Process Clause in order to qualify for the full faith and credit guaranteed by federal law”]. See Lee v. City of Peona, 685 F.2d 196, 201 (7th Cir.1982) [procedures and avenues of review afforded plaintiff a full and fair opportunity to litigate his claims].

The state court plaintiffs tendered all of their state and federal constitutional claims to the superior court. There was nothing to prevent the plaintiffs from more actively pursuing their federal constitutional claims before the Law Court. In fact the plaintiffs fully briefed and argued their “void for vagueness” claim before the Law Court, in addition to asserting the supremacy clause issue as an alternative ground for upholding the superior court’s declaration of unconstitutionality. That they chose not to press their other federal constitutional claims more vigorously before the Law Court is immaterial. For purposes of res judicata it is enough that they could have raised them.

II. Preemption

It is undisputed that Maine’s Boston market producers, by virtue of the Act, will realize a return for their milk greater than that received by non-Maine Boston market producers who are subject only to the pricing scheme established by the Federal Order. Plaintiffs contend that the higher price received by Maine’s Boston market producers under the Act would violate the uniform pricing authorization contained in section 608c(5)(B)(ii) of the Agricultural Marketing Agreement Act of 1937 [AMAA], as amended, 7 U.S.C. §§ 601 et seq., as implemented by 7 C.F.R. § 1001.61. Plaintiffs therefore argue that the Act is preempted to the extent that its redistribution scheme is inconsistent with the “uniform” pricing imposed by the Federal Order. Plaintiffs further assert that the Act will encourage increased production of milk by Maine’s Boston market producers and thereby frustrate the central purpose of the Dairy Production Stabilization Act of 1983.

The United States Supreme Court recently summarized the standards applicable in the field of federal preemption:

Federal law may preempt state law in any of three ways. First, in enacting the federal law, Congress may explicitly define the extent to which it intends to preempt state law. E.g., Shaw v. Delta Air Lines, 463 U.S. 85, _, 103 S.Ct. 2890, 2899, 77 L.Ed.2d 490 (1983). Second, even in the absence of express preemptive language, Congress may indicate an intent to occupy an entire field of regulation, in which case the States must leave all regulatory activity in that area to the Federal Government. E.g., Fidelity Federal Savings & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 153, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664 (1982); Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947). Finally, if Congress has not displaced state regulation entirely, it may nonetheless preempt state law to the extent that the state law actually conflicts with federal law. Such a conflict arises when compliance with both state and federal law is impossible, Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-143, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963), or when the state law ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941). See also Fidelity Federal Savings & Loan Ass’n, supra, 458 U.S. at 153, 102 S.Ct. at 3022.

Michigan Canners and Freezers Ass’n, Inc. v. Agricultural Marketing and Bargaining Board, _ U.S. _, 104 S.Ct. 2518, 2523, 81 L.Ed.2d 399 (1984).

A. The AMAA

Whether the Act conflicts with the uniform pricing scheme of the AMAA and the Federal Order depends first on whether compliance with both state and federal law would be impossible. Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963). A comparative analysis of the applicable federal pricing provisions and the Act’s provision for higher minimum prices for Maine’s Boston market producers fails to reveal any inconsistency or conflict.

In order to promote orderly marketing conditions and to provide stable prices for milk and dairy products, see 7 U.S.C. § 602; see also United States v. Rock Royal Cooperative, 307 U.S. 533, 543-46, 59 S.Ct. 993, 1000, 83 L.Ed. 1446 (1939); Bailey Farm Dairy Co. v. Anderson, 157 F.2d 87, 90 (8th Cir.), cert. denied, 329 U.S. 788, 67 S.Ct. 355, 91 L.Ed. 675 (1946), section 608c(1) of the AMAA authorizes the Secretary of Agriculture to issue orders regulating the handling of certain commodities, including milk. Section 608c(5) enumerates the types of provisions that a federal milk market order may include and has as its principal purpose the establishment of uniform producer prices for all sales subject to the market order. Zuber v. Allen, 396 U.S. 168, 179, 90 S.Ct. 314, 320, 24 L.Ed.2d 345 (1969).

Section 608c(5)(A) authorizes the Secretary of Agriculture to classify milk according to its use and to fix the minimum price for each such classification. See 7 C.F.R. §§ 1001.47, 1001.50. The minimum price set by the Order is not the amount the producer actually receives, but merely determines the “use value” to each handler and the amount each handler either pays into or collects from the producer settlement fund. See United States v. Rock Royal Cooperative, 307 U.S. at 554-55, 59 S.Ct. at 1004-05; Jones v. Bergland, 456 F.Supp. 635, 638 (E.D.Pa.1978). See also Green Valley Creamery, Inc. v. United States, 108 F.2d 342, 343-44 (1st Cir.1939), disapproved on other grounds, Zuber v. Allen, supra.

Section 608c(5)(A) does not even purport to set a ceiling on the price a handler may pay a producer. Nor does the AMAA authorize the setting of maximum prices. Clearly, producers are free to bargain with handlers for prices higher than the Federal Order minimum. Stark v. Wickard, 321 U.S. 288, 291, 64 S.Ct. 559, 562, 88 L.Ed. 733 (1944); Schepps Dairy, Inc. v. Bergland, 628 F.2d 11, 15 (D.C.Cir.1979).

Because serious inequities could result if the prices individual producers received depended solely on the use to which milk is put, see Stark v. Wickard, 321 U.S. at 295, 64 S.Ct. at 563, section 608c(5)(B) permits the Secretary of Agriculture to establish individual handler pools, § 608c(5)(B)(i), or marketwide pools, § 608c(5)(B)(ii), see Zuber v. Allen, 396 U.S. at 177 n. 10, 90 S.Ct. at 320 n. 10, as an equalization device under which the individual producer is paid a uniform composite price, not less than the minimum imposed by the Federal Order pursuant to section 608c(5)(A), see 7 U.S.C. § 608c(5)(C), for the milk he sells to the handler. Under the Federal Order the uniform blend price is based on the weighted average of the minimum prices established by the Order, less certain deductions and adjustments, for each class of milk. See Stark v. Wickard, 321 U.S. at 295 n. 9, 300 & n. 11, 64 S.Ct. at 563 n. 9, 566 & n. 11. See also Green Valley Creamery, Inc., v. United States, 108 F.2d at 343. Thus, while handlers are required to pay into the producer settlement fund established by the Order, see 7 C.F.R. § 1001.70, varying amounts determined on the basis of the use to which the milk is put, every producer receives “a uniform minimum price for the milk he sells regardless of its use,” Blair v. Freeman, 370 F.2d 229, 233 (D.C.Cir. 1966).

The Act’s pooling arrangement, which results in Maine’s Boston market producers receiving prices for their milk above the uniform prices established by the Federal Order, is not inconsistent or in conflict with the federal regulatory scheme. Under the Act, both Maine market producers and Maine’s Boston market producers initially receive the same Boston market blend price. The Act creates a further and different source of payment for Maine’s Boston market producers; in effect a subsidy to Maine’s Boston market producers funded at the expense of Maine market producers and consumers. The Act merely reallocates among both Maine market producers and Maine’s Boston market producers the premium price available on the Maine market under the pricing scheme of the Milk Commission. On the present record there is no evidence that the redistributive function served by the Act will in any way impact the uniform minimum pricing scheme established for the Boston milk market by the Federal Order. Absent such evidence, the court finds that there is nothing to prevent compliance with both the federal and state programs. Nor is there any basis for finding that the Act is inconsistent with the federal regulatory scheme, either as written or as applied. See United Dairy Farmers Cooperative Ass’n v. Milk Commission of Pennsylvania, 335 F.Supp. at 1013; Medo-Bel Creamery, Inc. v. State of Oregon, 65 Or.App. 614, 673 P.2d 537, 544 (1983). Cf. Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. at 143, 83 S.Ct. at 1217.

Similarly, plaintiffs have failed to show that the Act erects any obstacle to the accomplishment of the objectives of the AMAA. The federal regulatory scheme was designed to benefit producers by preventing destructive competition and by maintaining orderly marketing conditions. The Act reflects these same purposes. See 7 M.R.S.A. § 3151. Both the federal and state regulatory schemes have as one of their principal objectives the promotion of greater price equality among all producers in the fluid milk market. The pool established under the Act serves the same redistributive function as the producer settlement fund established under the Federal Order. And, as with the Federal Order, the Act provides first for uniform prices to all producers. The Maine milk pool serves the broad purpose of attempting to ensure the vitality of the entire Maine dairy industry. The court is satisfied that the means chosen by Maine to effectuate its legitimate state interest in safeguarding its dairy industry do not frustrate the purposes underlying the AMAA.

B. The DPSA

Plaintiffs’ second preemption claim is that by encouraging increased production of milk the Act will frustrate the congressional purposes underlying the Dairy Production Stabilization Act of 1983 [DPSA]. Enacted as part of the Dairy and Tobacco Adjustment Act of 1983, P.L. 98-180, 97 Stat. 1128-1143 (November 29, 1983), codified as and amending 7 U.S.C. § 1446(d), the DPSA primarily was designed to curb overproduction of milk and to reduce the high cost of federal government dairy price supports. See, e.g., South Carolina ex rel. Tindal v. Block, 717 F.2d 874, 877-78 (4th Cir.1983), cert. denied, _ U.S. _, 104 S.Ct. 1444, 79 L.Ed.2d 764 (1984) [construing former section 1446(d)(2)], See also S.Rep. No. 98-163, 98th Cong., 1st Sess., reprinted in 1983 U.S.Code Cong. & Ad.News 1658, 1673-75. Because the essence of plaintiffs’ challenge is that the Act will encourage overproduction of milk and since plaintiffs have presented no evidence to support that contention, preliminary injunctive relief would be inappropriate. Cf. McDonough v. Trustees of the University of New Hampshire, 704 F.2d 780, 784-85 (1st Cir.1983) [upholding denial of preliminary injunctive relief where claim involved intensely fact-specific dispute and record had not been fully developed].

In summary, the court finds that plaintiffs have fallen far short of demonstrating a likelihood of success on the merits on their preemption claim. Although the criteria for determining the appropriateness of preliminary injunctive relief ordinarily are to be weighed inter sese, see Maram v. Universidad Interamericana de Puerto Rico, 722 F.2d 953, 958 (1st Cir.1983), where plaintiffs have failed to show a likelihood of success, the court need go no further, e.g., Spath v. National Collegiate Athletic Association, 728 F.2d 25, 27 (1st Cir.1984).

Accordingly, plaintiffs motion for a preliminary injunction is DENIED.

SO ORDERED.

      . Argi-Mark, Inc., a Massachusetts-based dairy farmer cooperative, and two of its individual members were granted leave to intervene as parties defendant.

      . For purposes of preliminary injunctive relief, plaintiffs do not rely on their commerce clause and equal protection challenges.

      . Contending that amounts deducted for promotional purposes from monies pooled under the Act are taxes, defendants assert that this court lacks subject matter jurisdiction to enjoin collection or disbursement of such monies by virtue of 28 U.S.C. § 1341. .The Anti-Injunction Act provides that—
      [t]he district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where, a plain, speedy and efficient remedy may be had in the courts of such state.
      In Maine Milk Producers, Inc. v. Commissioner of Agriculture, Food and Rural Resources, 483 A.2d 1213 (1984), the Maine Supreme Judicial Court [Law Court] concluded that payments made into the Milk Pool by Maine market dealers for redistribution to producers are neither taxes nor assessments but "are simply the mechanism adopted by the legislature for effectuating equalization of the price received by all Maine dairy farmers for their milk.” 483 A.2d at 1219. The Law Court did hold that amounts deducted for promotional purposes are properly characterized as taxes. Id. at 1218.
      Because the meaning of the term "tax under state law” as used in § 1341 is a matter of federal law, see Robinson Protective Alarm Co. v. City of Philadelphia, 581 F.2d 371, 374 (3d Cir.1978), the Law Court’s characterization is not dispositive. In view of this court's conclusion that preliminary injunctive relief is not warranted, the Anti-Injunction Act issue need not be decided at this juncture.

      . The Act was enacted in June 1983 and signed into law on July 1, 1983, but was not to take effect until June 1, 1984.

      . The presiding justice expressly recognized but did not decide the federal constitutional issues.

      . As used throughout this opinion, res judicata refers to the preclusive effect of the earlier state court judgment as to all matters which were or could have been litigated in the state court action; customarily referred to as "claim preclusion,” it encompasses the law of merger and bar. See I.A.M. National Pension Fund v. Industrial Gear Manufacturing Co., 723 F.2d 944, 947 n. 2 (D.C.Cir.1983). See also 18 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 4402 (1981).

      . If, as defendants represented at oral argument, MMP was organized solely for the purpose of challenging the validity of the Act, the members' authorization of MMP to represent the members’ interests would be even clearer.

      . Upon questioning by counsel for the defendants, Campbell stated that he was not contributing funds to MMP "at this time.”

        . In their brief to the Law Court plaintiffs specifically requested a remand to the superior court for rehearing of all unresolved issues in the event the Law Court reversed the superior court’s declaration of unconstitutionality. That the Law Court declined to remand buttresses the conclusion that it found no merit in any of plaintiffs’ constitutional claims.

      . Plaintiffs do not contend that the AMAA expressly prohibits states from establishing minimum producer prices above those established under the Order. Nor do they assert that under the federal statutory scheme Congress has clearly manifested an intent to preempt or occupy the entire field of milk pricing. E.g., Schwegmann Brothers Giant Supermarkets v. Louisiana Milk Commission, 365 F.Supp. 1144, 1157 (M.D. La.1973), aff'd, 416 U.S. 922, 94 S.Ct. 1920, 40 L.Ed.2d 279 (1974); United Dairy Farmers Cooperative Ass’n v. Milk Control Commission of Pennsylvania, 335 F.Supp. 1008, 1014-15 (M.D.Pa.), aff’d, 404 U.S. 930, 92 S.Ct. 280, 30 L.Ed.2d 244 (1971). Cf. Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 146-50, 83 S.Ct. 1210, 1219-21, 10 L.Ed.2d 248 (1963) [nothing in AMAA’s establishment of minimum standards reveals congressional design to displace state regulation setting more stringent state standard for importing avocados than set by federal marketing regulations],

      . Section 608c(5)(A) & (B) reads:

        Milk and its products; terms and conditions or orders. In the case of milk and its products, orders issued pursuant to this section shall contain one or more of the following terms and conditions, and (except as provided in subsection (7)) (sic) no others:
      (A) classifying milk in accordance with the form in which or the purpose for which it is used, and fixing, or providing a method for fixing, minimum prices for each such use classification which all handlers shall pay, and the time when payments shall be made, for milk purchased from producers or associations of producers. Such prices shall be uniform as to all handlers, subject only to adjustments for (1) volume, market, and production differentials customarily applied by the handlers subject to such order, (2) the grade or quality of the milk purchased, and (3) the locations at which delivery of such milk, or any use classification thereof, is made to such handlers.
      (B) Providing:
      (i) for the payment to all producers and associations of producers delivering milk to the same handler of uniform prices for all milk delivered by them: Provided, That, except in the case of orders covering milk products only, such provision is approved or favored by at least three-fourths of the producers who, during a representative period determined by the Secretary of Agriculture, have been engaged in the production for market of milk covered in such order or by producers who, during such representative period, have produced at least three-fourths of the volume of such milk produced for market during such period; the approval required hereunder shall be separate and apart from any other approval or disapproval provided for by this section; or
      (ii) for the payment to all producers and associations of producers delivering milk to all handlers of uniform prices for all milk so delivered, irrespective of the uses made of such milk by the individual handler to whom it is delivered; subject, in either case, only to adjustments for (a) volume, market, and production differentials customarily applied by the handlers subject to such order, (b) the grade or quality of the milk delivered, (c) the locations at which delivery of such milk is made, (d) a further adjustment to encourage seasonal adjustments in the production of milk through equitable apportionment of the total value of the milk purchased by any handler, or by all handlers, among producers on the basis of their marketings of milk during a representative period of time, which need not be limited to one year, and (e) a provision providing for the accumulation and disbursement of a fund to encourage seasonal adjustments in the production of milk may be included in an order.
      7 U.S.C. § 608c(5)(A) & (B).

      . "Handler” is defined in 7 C.F.R. § 1001.9.

      . Plaintiffs cite one case in support of their preemption claim. In Pearce v. Freeman, 238 F.Supp. 947 (E.D.La.1965), the court struck down as violative of the commerce clause a state regulatory scheme requiring dealers to pay producers according to the dealers’ individual utilization rates, whereas the federal market order covering part of the state required that producers be paid according to the order-wide utilization rate. The sole issue before the court in Pearce was whether the Secretary of Agriculture could establish a marketwide pool which was inconsistent with and not solely complementary to the state regulatory scheme under 7 U.S.C. § 610(i). 238 F.Supp. at 949. The court observed in passing that, to the extent that the state scheme established minimum producer prices greater than those established under the Federal Order, there was no conflict because "both were minimum rather than maximum prices,” 238 F.Supp. at 950.

      . Plaintiffs do not assert that Congress either expressly or impliedly preempted state regulatory milk pricing schemes by its enactment of the DPSA. Plaintiffs do conclusorily assert that the Act will result in higher prices being paid to Maine’s Boston market producers and that this result would conflict with the DPSA, which plaintiffs contend in their memorandum "reduces the price paid to farmers in an effort to regulate the production of milk within the United States.” Memorandum In Support Of Plaintiffs’ Motion For Temporary Restraining Order And Preliminary Injunction, at 6. What plaintiffs apparently intend to convey by this statement is that as a result of their receiving higher milk prices Maine’s Boston market producers will be encouraged to produce and deliver more milk to the Boston market. The court has already observed that plaintiffs’ mere assertion, without more, cannot provide the basis for granting preliminary injunctive relief. Moreover, the court has serious doubts as to whether the Act has any significant bearing on the purpose of the regulatory scheme established pursuant to the DPSA. It is clear that the primary objective of the DPSA is to limit the exposure of the federal government to the high cost of maintaining the federal dairy price support program. See S.Rep. No. 98-163, 98th Cong., 1st Sess., reprinted in 1983 U.S.Code Congressional & Ad. News 1658, 1670-76. The court has not been apprised of nor can it discern any congressional intent to prevent a state from enhancing the minimum milk prices received by Federal Order milk market producers, so long as the costs of any such program are not borne by the federal government.

      . There is no question that Maine has a substantial interest in a well regulated and stable dairy industry, e.g., Nebbia v. State of New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940 (1934), and an equally important interest in the prompt implementation of state laws designed to promote that state interest. The Act was enacted in response to a legislatively-perceived need to correct disparities in dairy product pricing which posed a threat to the continued vitality of the Maine dairy industry. See 7 M.R.S.A. § 3151. Further delay in the implementation of the Act due to litigation would harm these defendants and the public interest far more than plaintiffs would be harmed by denial of preliminary injunctive relief. Moreover, the apparent delays in plaintiffs’ efforts to seek a judicial forum for the resolution of their claims, see Memorandum of Intervenors In Opposition To Plaintiffs’ Motion For Temporary Restraining Order at 7-9, militates strongly against preliminary injunctive relief.
      The court is mindful that plaintiffs will receive less for their milk under the Act than they did prior to its enactment. See, e.g., Affidavits of Ronald Price and Leroy Crane. However, there are approximately 625 Maine producers selling their milk on the Boston market who will suffer considerable financial losses should implementation of the Act be enjoined. See Affidavit of Richard Phillips. Balancing the anticipated injury to these plaintiffs against the injury to all of Maine’s Boston market producers and considering the important public interest at stake, plaintiffs’ delay in pursuing judicial relief and the failure of plaintiffs to demonstrate a likelihood of success on the merits, the scales are decidedly tipped in favor of the defendants and against the granting of injunctive relief.


source: Caselaw Access Project

author: SAFFELS, District Judge.

license: Public Domain

text:
    SECURITY NATIONAL BANK, a Kansas corporation, as Representative and Conservator for Sara RUIZ, a Minor, Plaintiff, v. CHLORIDE, INCORPORATED, d/b/a Chloride Industrial Battery; and Chloride Group, Limited, Defendants.
    Civ. A. No. 83-2125.
    United States District Court, D. Kansas.
    Feb. 8, 1985.

      Steven P. Denton, Eugene F. De Shazo, Denton & De Shazo, Kansas City, Mo., Murray Ogborn, Tim Engler, Nelson & Harding, Lincoln, Neb., Kurt Schoeb, Vader & Schoeb, Olathe, Kan., for plaintiff.
    Robert D. Ochs, Brad Ralph, Fisher, Ochs & Heck, Topeka, Kan., Andrew J. Hamilton, Neely & Player, Atlanta, Ga., for defendants.
   MEMORANDUM AND ORDER

SAFFELS, District Judge.

This matter is before the court on the motion of plaintiff Security National Bank, a Kansas corporation, as representative and conservator for Sara Ruiz, a minor, for judgment notwithstanding the verdict or alternatively for a new trial. Plaintiff has also requested leave to contact the jurors pursuant to Rule 23a of the Rules of Practice for the United States District Court for the District of Kansas. The court has determined that oral argument would not be of material assistance. Rule 15(d), Rules of Practice.

Plaintiff brought this suit seeking damages for birth defects to Sara Ruiz allegedly as a result of her mother’s exposure to lead while employed at defendants’ battery manufacturing plant. After a lengthy trial involving extensive medical testimony regarding the effects of lead exposure to a pregnant woman and her fetus, the jury returned a general verdict for defendants. Plaintiff’s counsel requests leave - of court to approach the jurors and discuss with them their impressions, thought processes and reaction to the trial. Plaintiff argues that an opportunity to approach the jurors and the information gathered from these interviews would be useful information for future trials and improving trial techniques. The court finds these reasons are insufficient to satisfy the “just cause” requirements of the local rule as to contacting jurors, and the court will deny plaintiff’s request for leave to contact the jurors.

In considering a motion for judgment notwithstanding the verdict, the evidence must be viewed in the light most favorable to the party against whom the motion is made. Wilkins v. Hogan, 425 F.2d 1022 (10th Cir.1970); Rule 50(b), Federal Rules of Civil Procedure. A judgment notwithstanding the verdict may not be granted unless the evidence points one way and is susceptible to no reasonable inferences which may sustain the position of the party against whom the motion is made. Symons v. Mueller Co., 493 F.2d 972 (10th Cir.1974). It is not the court’s duty to weigh the evidence [Wilkin v. Sunbeam Corp., 377 F.2d 344 (10th Cir.1967)], or to pass upon the credibility of the witnesses [C. Wright and A. Miller, 9 Federal Practice and Procedure: Civil, § 2527], or to substitute its judgment of the facts for that of the jury [Swearngin v. Sears Roebuck & Co., 376 F.2d 637 (10th Cir.1967)].

The standard for granting a new trial is less rigorous than the standard for granting judgment notwithstanding the verdict. The decision to grant a new trial “involves an element of discretion which goes further than the mere sufficiency of the evidence. It embraces all the reasons which inhere in the integrity of the jury system itself. Tidewater Oil Co. v. Waller, 302 F.2d 638, 643 (10th Cir.1962). A new trial is not in order unless the court finds that prejudicial error has entered the record or that substantial justice has not been done. Seven Provinces Ins. Co., Ltd. v. Commerce & Industry Ins. Co., 65 F.R.D. 674 (W.D.Mo.1975).

Although plaintiff has raised several arguments in support of its motion, the court finds only one argument needs discussion.

Prior to submission of the case to the jury, plaintiff requested the court to instruct the jury that violation of the Final Standard for Occupational Exposure to Lead [hereinafter the Lead Standard] by defendants constituted negligence. The specific proposed instruction stated as follows:

As standards of ordinary care certain duties are imposed by law, regulation, or administrative ruling. Some of these laws, regulations, and rulings apply to employers who have employees exposed to airborne lead in the work place. The violation of a duty is negligence. It is for you to determine from the evidence whether any of the following duties apply in this case and whether or not any have been violated.
1. The Final Standard for Occupational Exposure to Lead, 29 C.F.S. (sic) § 1910.1025(1)(1), “Training Program,” page 53013 of the Federal Register, Vol. 43, No. 220, which is in evidence as Exhibit [1],

At trial, the above standard, known as the Lead Standard, was admitted into evidence solely for the purpose of showing the knowledge of defendants of the dangers of lead. The evidence indicated that the appropriate persons at Chloride had read and studied the Lead Standard and were aware of its provisions and policies. This standard was adopted by the Occupational Safety and Health Administration [hereinafter OSHA] and imposed regulations on employers. Plaintiff introduced evidence at trial from which it could be reasonably determined by the jury that the defendants violated the Lead Standard. That same evidence, if accepted by the jury, would also show that the defendants violated the reasonable-man standard, which is the basis of negligence under Kansas law. (Establishing “negligence” on the part of the defendants was the lesser of plaintiff’s two burdens herein. The defense concentrated on proving there was no causation, and the court is of the opinion that the verdict herein most likely turned on the issue of causation.) The court did give appropriate instructions as to the standard for negligence in Kansas.

The court chose not to give the instruction proffered by plaintiff because it was an incorrect statement of the law, it would have diverted the jury’s attention from the issues which were properly before it, and it would have been confusing to the jurors.

Under Kansas law, the breach of a duty imposed by law or ordinance is negligence per se. Plains Transport of Kansas, Inc. v. King, 224 Kan. 17, 578 P.2d 1095 (1978); Noland v. Sears, Roebuck & Co., 207 Kan. 72, 483 P.2d 1029 (1971); Kendrick v. Atchison, T. & S.F. Rld. Co., 182 Kan. 249, 320 P.2d 1061 (1958). To determine whether a law or ordinance, or in this case, an administrative regulation, imposes a breach of duty for which negligence per se will be adopted, the court must look to other factors.

The court may adopt as the standard of conduct of a reasonable man the requirements of a legislative enactment or an administrative regulation whose purpose is found to be exclusively or in part
(a) to protect a class of persons which includes the one whose interest is invaded, and
(b) to protect the particular interest which is invaded, and
(c) to protect that interest against the kind of harm which has resulted, and
(d) to protect that interest against the particular hazard from which the harm results.

Restatement 2d of Torts, § 286 (1965).

Thus, it is within the court’s discretion to determine whether the Lead Standard sets forth the standard of reasonable care in Kansas. The testimony at trial provided conflicting evidence on what levels of airborne lead would be reasonable under the circumstances and the types of exposure to airborne lead which might harm the fetus of a pregnant woman under certain circumstances. Under these facts it is more appropriate for the jury to determine from the evidence presented at trial, which was substantial, what was reasonable under the circumstances. For the court to have directed that a violation of the Lead Standard was negligence per se, without taking into account the circumstances of this particular case, would have been error. In adopting the position that a law or ordinance violation may be negligence per se under Kansas law, this court does not believe that the Kansas law intended to incorporate every violation of OSHA standards, but rather the Kansas cases speak of “laws” and “ordinances,” not administrative regulations by agencies of the federal government.

Even if the court had found that the standard of conduct of a reasonable man parallels the standard of conduct required by the Lead Standard, this court would have erred had it instructed the jury pursuant to the instruction proffered by plaintiff. The Lead Standard is a lengthy and confusing document with several appendices. Under the instruction proffered by plaintiff, the jury is given no guidance as to what the Lead Standard does and does not require. To require the jury to read the entire Lead Standard and make a meaningful interpretation of the Lead Standard without guidance from the court would be to divert the jury from the issues in this case and most certainly would confuse the jury. The testimony of the witnesses at trial indicated substantial differences of opinion as to the requirements of the Lead Standard within the industry, and also established the complexity of the Lead Standard. To instruct the jury to refer to Exhibit 1 as the law in this case would have been gross error. If plaintiff had actually intended for the jury to consider the Lead Standard as the appropriate statement of the law, plaintiff should have proffered an instruction setting forth clearly and succintly the requirements of the Lead Standard as to a battery manufacturer and under what circumstances those duties are violated. It would have been pure speculation on the part of the jury to have determined those issues without such guidance.

The court has additionally considered the other arguments raised by plaintiff in its motion and has determined those arguments to be without merit.

IT IS BY THE COURT THEREFORE ORDERED that plaintiff’s request for leave to contact the jurors is hereby denied. IT IS FURTHER ORDERED that plaintiff’s motion for judgment notwithstanding the verdict, or in the alternative for new trial, is hereby denied.


author: EDELSTEIN, District Judge:

text:
    UNITED STATES of America, v. Kwang Fu PENG, Defendant.
    No. S 84 Cr. 823 (DNE).
    United States District Court, S.D. New York.
    Feb. 8, 1985.
    Rudolph W. Giuliani, U.S. Atty., S.D. N.Y., Martin J. Auerbach, Asst. U.S. Atty., New York City, for plaintiff.
    Polstein, Ferrara & Compriello, New York City (Anthony J. Ferrara, New York City, of counsel), for defendant.
   OPINION AND ORDER

EDELSTEIN, District Judge:

Information that came to light during the trial of this case presents this court with serious dilemmas. During the cross-examination of the government’s first witness, the defendant’s attorney made reference to a conference held at the defense attorney’s office involving the witness, the defendant, the attorney, and one of the attorney’s partners. The attorney therefore is a potential witness in the trial. This presents two problems. First, whether the defendant’s attorney must be disqualified pursuant to Rule 5-102 of the Disciplinary Rules of the American Bar Association Code of Professional Responsibility (“DR 5-102”) and second, whether such disqualification would require the court to declare a mistrial for one of the few times in this judge’s thirty-three years on the bench.

BACKGROUND

The defendant in this action is charged with one count of wire fraud in violation of 18 U.S.C. § 1343 and one count of interstate transportation of stolen property in violation of 18 U.S.C. § 2314. The government alleges, in substance, that defendant Peng stated to Geoffrey Galley, among others, that he was a representative of a far eastern government and that he was authorized to sell a large quantity of gold on behalf of that government. Galley allegedly entered into an agreement with Peng whereby Galley was to find a buyer for the gold. Pursuant to this agreement, Galley and the potential buyers gave Peng over $200,000.00, which money, according to the government, Peng took across state lines and spent for his personal use. Peng’s defense at trial was that he believed in good faith all along that there was gold to sell, but that the transaction simply fell through. Moreover, Peng contends that under his agreement with Galley, the money was Peng’s to spend and not refundable.

Galley was the government’s first witness. He had the most contact with Peng during the period described in the indictment, and he testified as to his discussions and agreements with Peng. The subject of conversations Galley had after Peng’s arrest was broached during the cross-examination of Galley by Peng’s trial counsel, Mr. Ferrara. The relevant portion of the testimony is as follows:

Q: Did you negotiate with Mr. Skourlis in an attempt to resurrect this transaction after July 18, 1984?

A: No, sir.

Q: Did you have any discussions with Mr. Skourlis regarding his obtaining for you the identity of the seller of the gold involved in this transaction?

A: That is not an accurate representation of the discussion which took place which I will be delighted to state if you will allow me to.

Q: You did talk to Mr. Skourlis about this gold transaction, correct?

A: No.

Q: You did not talk to him about this gold transaction?

A: I don’t believe an answer yes or no is adequate for the question.

Q: Did you talk to Mr. Skourlis?

THE COURT: Please give the answer you believe is adequate.

Q: Mr. Skourlis approached me and said, “Do you, sir, wish to meet with me,” because there was a terrible misunderstanding. Mr. Peng had all the money and had not in fact, touched the money, and he could prove that all the statements that he had made concerning the availability of the gold were true, and so “I came to meet you at your office”.

MR. FERRARA: I move to strike the response, Judge.

THE COURT: Denied.

Q: Did you offer to discontinue this proceeding, this criminal proceeding, if the money was returned to you?

A: You said to me—

Q: Answer the question.

A: No I did not offer to discontinue because it is not my proceeding.

Q: Aside from the conference in my office, aside from that conference, did you attempt, through Mr. Skourlis, to induce Mr. Peng to identify the ultimate seller of the gold?

A: No, sir.

Q: Did you discuss that with Mr. Skourlis?

A: No, sir.

Q: Did you discuss Mr. Peng with Mr. Skourlis after the meeting in my office?

A: Mr. Skourlis, on several occasions, came to me with messages from yourself and Mr. Peng or what he told me were from yourself and Mr. Peng.

Q: Mr. Skourlis told you the messages were from me?

A: Yes.

Q: Did the meeting that we had in my office, did it end with a demand being made upon you for an additional two-hundred-thousand-dollars’ payment?

A: It ended with a threat from you.

Q: Did it end with a demand?

A: No. it did not end with a demand; it was a threat.

Following this exchange, the court attempted to determine when this meeting took place. It was determined that the meeting occurred in July 1984, following the arrest of the defendant but prior to the original indictment handed down in October 1984. The court also inquired regarding the circumstances of the meeting, information which the court determined the jury was entitled to know. The following testimony was given:

Witness: Mr. Skourlis said to me that Mr. Peng and his lawyer were stating there was a complete misunderstanding. He still had all of our money and was able to prove that the material, the gold, was available for sale and the bank didn’t know it.

I said he said the lawyer would like to meet with you. I said I would be happy to go and meet with him.

Court: Meet whom?

Witness: Meet the lawyer, not Mr. Peng, because the last thing I would like to do would be responsible for a man being incarcerated or found guilty of something if there was genuine error, but I did not believe this was the case. I now was convinced he had been lying to me all the time.

The testimony places Mr. Ferrara, the defendant’s trial counsel, in the position of a participant in one of the contested events relating to the alleged fraud. Thus, Mr. Ferrara is a potential witness in this action regarding the meeting at his office.

DISQUALIFICATION

Disciplinary Rule DR 5-102(A) of the American Bar Association Code of Professional Responsibility states:

If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that he or a lawyer in his firm ought to be called as a witness on behalf of his client, he shall withdraw from the conduct of the trial and his firm, if any, shall not continue representation in the trial, except that he may continue the representation and he or a lawyer in his firm may testify in the circumstances enumerated in DR 5-101(B)(1) through (4).

DR 5-101(B)(4) states that a lawyer may testify:

As to any matter, if refusal would work a substantial hardship on the client because of the distinctive value of the lawyer or his firm as counsel in the particular case.

The Second Circuit has examined the applicability of DR 5-102 in two recent cases. In both cases, the court stated the need to disqualify defense counsel when it becomes apparent that defense counsel is a potential witness. In United States v. Cunningham, 672 F.2d 1064 (2d Cir.), cert. denied, _ U.S. _, 104 S.Ct. 2154, 80 L.Ed.2d 540 (1982), the trial attorney was a likely witness to rebut the testimony of the government’s witness regarding a conversation between the witness and the attorney. The court in Cunningham balanced the defendant’s sixth amendment right to counsel of his choice against the need to preserve the highest ethical standards of professional responsibility. 672 F.2d at 1070. The court quoted Ethical Consideration 5-9 in stating that DR 5-102(A) would require the attorney and his firm to withdraw as trial counsel. Id. at 1074. This position was reaffirmed in United States v. McKeon, 738 F.2d 26, 34-35 (2d Cir.1984).

Mr. Ferrara contends that there are alternatives to disqualification which would permit him to continue as trial counsel without violating the ethical rules. Ferrara states that he will not testify; instead he will have a member of his firm who was present at the meeting with Galley testify. This proposal is rejected.

Ferrara’s suggestion that the member of his law firm who also attended the meeting may testify is patently contrary to both the letter of DR 5-102 as well as the court’s decision in Cunningham, supra, 672 F.2d at 1074 (“Disciplinary Rule 5-102(A) would require that [defense counsel] and his firm withdraw as trial counsel”). It is clear that even if Ferrara does not testify, “the impropriety forseen by the drafters of the Disciplinary Rules” is not avoided. Cunningham, supra, 672 F.2d at 1074.

As in Cunningham, there remains the danger that “if [Ferrara] were to cross examine [Galley and/or Skourlis], ... or if in his summation to the jury he were to argue the plausibility of [Galley and/or Skourlis’] testimony or to offer an interpretation of the words attributed to him, he would implicitly be testifying as to his version of the conversation____ Since as an unsworn witness he would not be subject to cross-examination or explicit impeachment, the interest sought to be protected by the Disciplinary Rules would be even more seriously eroded than if [Ferrara] appeared as a sworn witness.” Id. at 1074-75; see People v. Bonilla, 101 Misc.2d 146, 149, 420 N.Y.S.2d 665, 668 (Bronx Cty. Sup.Ct. 1979) (“testimony” under code includes attorney’s direct or indirect participation in the events being litigated). Accordingly, the ethical concerns are not at all alleviated by Ferrara’s proposal not to testify.

The suggestion is also unacceptable because a jury, whether it is the one originally impanelled or one impanelled in a new trial, would learn that Ferrara was present during the post-arrest discussions with Galley. Thus, even if someone other than Ferrara testifies as to the conversation, Ferrara would still be placed before the jury in the dual roles of both advocate and unsworn witness, with personal knowledge of disputed facts. Moreover, as the government points out, the fact that Ferrara’s proposed witness is his partner would inevitably be disclosed to the jury. The government on cross-examination of the witness would be entitled to impeach his credibility and competence by showing that he is affiliated with defense counsel’s firm and thus benefitting from the legal fee paid by defendant Peng. Clearly, the need to preserve the highest ethical standards of professional responsibility require that Ferrara’s partner not be permitted to testify.

Ferrara directs the court to cases which he views as supporting his continued participation as trial counsel. The reliance on these cases is misplaced. In United States v. Armedo-Sarmiento, 545 F.2d 785 (2d Cir.1976), cert. denied, 430 U.S. 917, 97 S.Ct. 1330, 51 L.Ed.2d 595 (1977), defendants contended on appeal that it was improper for an Assistant United States Attorney, who did not prosecute the case, to testify on behalf of the government. The court noted that, while it does not encourage testimony by members of the United States Attorneys staff, “we would not go so far as to disqualify such person as witness in a case in which he plays no other role.” Id. at 793. Further, the defendants did not voice a timely objection at trial to the government’s use of an Assistant United States Attorney as witness. Id. Had they timely objected “perhaps a less controversial [witness] could have been found.” Id. In this case, no witness “less controversial” than Ferrara’s partner is available to testify. Moreover, the imputed disqualification rule must be applied differently to United States Attorneys. It would not have been feasible for the court in Armedo-Sarmiento to disqualify all the attorneys in the United States Attorneys office, merely because one of them was to be a witness. On the other hand, there are numerous defense lawyers capable of handling Peng’s defense besides Ferrara and the members of his firm.

Ferrara cites United States v. Fiorillo, 376 F.2d 180 (2d Cir.1967), as an example of an attorney being able to testify while remaining as trial counsel. In Fiorillo, the court of appeals found no error in the trial court’s refusal to allow defendant’s trial counsel to withdraw after trial counsel decided to take the stand to contradict the testimony of a government witness. Fiorillo, however, was decided before the promulgation of the Code by the American Bar Association in 1969, its adoption by the New York State legislature effective January 1, 1970, and before the Second Circuit’s decisions in Cunningham and McKeon. To the extent that Fiorillo permits trial counsel to serve as both advocate and witness, it has been overruled by subsequent cases. Any attempt to distinguish Cunningham and McKeon would subvert the purpose of the Disciplinary Rules and the spirit of these cases.

Ferrara further contends that his testimony would not be material, but merely concerns an ancillary matter,, insufficient to justify his disqualification. Under Ethical Consideration 5-10, the materiality of the attorney’s testimony is an important factor in determining whether he should remain. All doubts, however, under EC 5-10, are to be resolved in favor of the attorney’s withdrawal or disqualification. The court finds that the subject of Ferrara’s testimony is highly material to the proper cross-examination of the government’s witnesses as well as the defense raised by Ferrara in his opening statement.

Both Galley and Skourlis, both of whom engaged in post-arrest conversations with Ferrara and Peng, are important government witnesses. At trial, Ferrara raised the issue of Galley’s hostility and/or bias against Peng. Ferrara stated,

In short, ladies and gentlemen, this is a failed business deal. Even now Mr. Galley is suing the Golden Nugget, trying to get $200,000 from them. I submit to you that he is trying to use the criminal term of this court to get a civil recovery. No crime was committed.

Excerpt of Defendant’s Opening Statement, January 29, 1985 (“Ferrara’s Opening”), at 4. Based on his questioning of Galley on cross-examination, Ferrara apparently was trying to prove that after Peng’s arrest, Galley offered to “discontinue” this criminal proceeding if the $200,000 was returned to him. However, Ferrara could not properly do so without him or his partner becoming a sworn witness to testify as to what transpired during the conference in Ferrara’s office. Peng is entitled to have his attorney zealously cross-examine Galley and Skourlis and to offer evidence as to their possible pecuniary interest in the outcome of this trial and their possible hostility towards the defendant. United States v. Gambler, 662 F.2d 834, 837, 839 (D.C.Cir.1981).

The discussions in Ferrara’s office also go to the heart of Peng’s “good faith” defense. Ferrara in his opening statement stated:

Indeed, I submit to you that the documents produced in this trial will show that Mr. Peng had a good faith basis to believe that there was a deal to be made, and that beginning in the summer of 1983, and continuing to the summer of 1984, he worked very hard in order to attempt to bring the deal about; and indeed, after he was arrested, people still approached him in an attempt to bring the deal about.

Ferrara’s Opening at 4. The post-arrest conference in Ferrara’s office, as well as any other post-arrest communications by Galley and/or Skourlis with Peng and Ferrara are relevant to Ferrara’s proffered good faith defense. Ferrara is therefore a material witness on the issue of Peng’s fraudulent intent, an element of the wire fraud count.

Peng contends that under the circumstances of this case, the disqualification of Ferrara’s “distinctive” services would work a “substantial hardship” on Peng. Accordingly, he contends that under the exception to DR 5-102, his retention of Ferrara would not violate the rule. Ferrara points out that because the superseding indictment in this case charges a complex scheme to defraud, involving numerous documents, he has had to spend over one hundred hours in preparation for trial. Mr. Peng, understandably, does not want to pay another fee for substituted counsel. Moreover, Peng desires a speedy resolution of this criminal matter.

The court does not find that the disqualification of Ferrara will work a “substantial hardship” on Peng sufficient to justify Ferrara’s continued representation. Because of the strong policy considerations in support of the advocate-witness rule, courts have given the “substantial hardship” exception “a very narrow reading.” United States v. Johnston, 690 F.2d 638, 642 n. 9 (7th Cir.1982). Thus, it has been noted:

the additional financial burden placed upon the client by having to retain new counsel, as well as the fact that the attorney can more effectively represent the client in the matter do not in and of themselves present ‘substantial hardship’ within the meaning of DR 5-101(B)(4), and thus do not constitute sufficient bases upon which to accept or continue legal representation.

Digest of Opinion of Maryland State Bar Association Committee on Ethics, Opinion 84-96, printed in ABA/BNA Lawyers’ Manual on Professional Conduct 402, 402-03 (received July 17, 1984); see Grossman v. Commercial Capital Corp., 59 A.D.2d 850, 850, 399 N.Y.S.2d 16, 17 (1st Dep’t 1977) (“pecuniary hardship alone is insufficient to avoid disqualification”).

Withdrawal of counsel and substitution of new counsel is usually costly to the client. As the court stated in MacArthur v. Bank of New York, 524 F.Supp. 1205, 1210 (S.D.N.Y.1981), “if the expense and delay routinely incident to disqualification satisfied the substantial hardship exception, that exception would soon swallow the rule.” Ferrara knew or should have known since the original indictment was filed in October, if not from the time of his participation is the meeting itself, that he or a member of his firm was a potential witness. He could have minimized the expense to his client by bringing the ethical problem to this court’s attention sooner. See id.) see also United States v. Ricotta, 84 Cr. 288 (DNE), transcript of September 11, 1984 conference at 20-32, transcript of September 12, 1984 conference at 1-12. The court will not provide an incentive to counsel to accumulate the financial hardship to his client of withdrawal, in order to circumvent the requirements of DR 5-102.

Moreover, Ferrara possesses no “distinctive value” which would warrant his retention. As in Norman Norell, Inc. v. Federated Dep’t Stores, 450 F.Supp. 127, 130 (S.D.N.Y.1978), “the ‘distinctive value’ of [Ferrara] to [Peng] would appear not to be as counsel but as witness, the very role barred by DR 5-102.” That Ferrara has prepared extensively for trial does not make his services distinctly valuable within the meaning of the rule. The court recognizes that this fraud action is somewhat complicated; however, the need to preserve the highest ethical standards of the legal profession is as imperative in complex cases as it is in simple ones. Substituted counsel will be provided ample time to prepare for trial, pursuant to the provisions of the Speedy Trial Act. See infra note 6.

Ferrara contends that the American Bar Association Project on Standards for Criminal Justice, Standards Relating to the Prosecution Function and the Defense Function § 4.3(d) applies to the situation presented here. The standard permits a lawyer to remain as trial counsel in situations where he is using statements made in his and a third person’s presence to impeach the testimony of that witness at trial.

There is a major defect in applying this standard to the present situation. The standard applies to witness interviews. Galley’s testimony at trial indicates that the meeting was more than a witness interview. The meeting was arranged to clear up a possible misunderstanding regarding the completion of the gold transaction. Thus, the events transpiring at Ferrara’s office are of such a nature as to be relevant to the alleged fraud and will be contested at trial. This certainly cannot be within the situations contemplated by the Bar Association Standard.

The court finds that the “taint” of the trial that would occur if counsel were to remain outweighs the defendant’s sixth amendment interest in choice of counsel, see United States v. McKeon, 738 F.2d 26, 35 (2d Cir.1984), and therefore Ferrara must be disqualified as trial counsel.

MISTRIAL

The defendant’s attorney requested a mistrial at trial following the disclosure of the meeting at his office. This motion was subsequently withdrawn at a conference held the following day. The withdrawal of the motion, however, does not preclude the court from declaring a mistrial on its own initiative. United States v. Scott, 437 U.S. 82, 92, 98 S.Ct. 2187, 2194, 57 L.Ed.2d 65 (1978).

A mistrial is appropriate “whenever, in [the trial judge’s] opinion, taking all the circumstances into consideration, there is a manifest necessity for the act, or the ends of public justice would otherwise be defeated.” United States v. Perez, 9 Wheat. 579, 580, 6 L.Ed. 165 (1824). This standard is not a rigid one, rather the standard “abjures the application of any mechanical formula by which to judge the propriety of declaring a mistrial in the varying and often unique situations arising during the course of a criminal trial.” Illinois v. Somerville, 410 U.S. 458, 462, 93 S.Ct. 1066, 1069, 35 L.Ed.2d 425 (1973).

In this casé, a finding of “manifest necessity” is based on several grounds. Foremost is the affect on the weight the jury will give to Ferrara’s opening statement and examination of Galley once Ferrara is substituted and he or a member of his firm takes the stand. This is precisely the taint that the Disciplary Rules seek to avoid. Specifically, it is “the fear that the ... argument might be so identified in the minds of the jury that they would give to the argument a testimonial credit and effect, as if the oath of the counsel as witness were pledged to it, and thus be unduly impressed with its weight.” 6 Wigmore, Evidence § 1911 (Chadbourn rev. 1976). This is the same rationale that requires Ferrara’s disqualification. See MacArthur v. Bank of New York, 524 F.Supp. 1205, 1207 (S.D.N.Y.1981). Under these circumstances, the absence of a viable alternative to disqualification also forecloses any alternative other than a mistrial.

Ferrara suggests that the taint could be avoided by instructing the jury to disregard Galley’s testimony and not to give Ferrara’s testimony undue weight. This proposal, however, would not ameliorate the taint. It is naive to assume that the prejudicial effect of statements made during trial can always be overcome by jury instructions. Krulewitch v. United States, 336 U.S. 440, 453, 69 S.Ct. 716, 723, 93 L.Ed. 790 (Jackson, J., concurring). In this case, the court finds that the prejudicial effect of Ferrara’s remarks during his opening statement and Galley’s testimony cannot be remedied by jury instructions. Any testimony the jury hears regarding post-arrest conversations with Peng will be identified with Ferrara’s opening remarks. Moreover, because Ferrara, now a likely witness, has cross-examined Galley as to the post-arrest conversations, the jury will be confused as to Ferrara’s dual roles. Finally, “the jury would conceivably speculate to the prejudice of either party as to the reason counsel had been changed after two days of testimony.” McArthur v. Bank of New York, 524 F.Supp. 1205, 1207-08 (S.D.N.Y.1981).

The second basis for the mistrial is that an extended period of time will elapse before the resumption of trial with the defendant’s new counsel. It is true that a short continuance is not in and of itself sufficient to warrant a mistrial, see Dunkerley v. Hogan, 579 F.2d 141, 147 (2d Cir.1978) (“short” 7-10 day continuance does not provide “manifest necessity”), cert. denied, 439 U.S. 1090, 99 S.Ct. 872, 59 L.Ed.2d 56 (1979); see also Mizell v. Attorney Gen. of the State of New York, 586 F.2d 942, 947 (2d Cir.1978) (continuance from Thursday until Monday did not require dismissal of jury), cert. denied, 440 U.S. 967, 99 S.Ct. 1519, 59 L.Ed.2d 783 (1979), however, in this instance the length of the continuance is uncertain and is likely to be lengthy.

Mr. Ferrara stated that over 100 hours of preparation were involved in this very complex case and that a new attorney may require even more time. Further, defendant will require additional time to obtain new counsel. It is thus impractical to retain the jury that had already been impanelled. See MacArthur v. Bank of New York, 524 F.Supp. 1205, 1207 (S.D.N.Y.1981).

The court finds that based on these factors there is a “manifest necessity” to declare a mistrial because it is impossible at this point for both sides to receive a fundamentally fair trial, see Dunkerley v. Hogan, 579 F.2d 141, 145 (2d Cir.1978), cert. denied, 439 U.S. 1090, 99 S.Ct. 872, 59 L.Ed.2d 56 (1979), as well as the impracticality of holding the jury.

Finally, it must be noted that the cause of the mistrial falls squarely on the shoulders of Mr. Ferrara. The court was not given the slightest indication that a problem existed regarding meetings with Galley. At the least, Ferrara should have brought this matter to the court’s attention so that it could be resolved before the jury was empanelled. The court has been faced with similar situations in the past in which the court avoided the need for a mistrial by resolving the ethical dilemma well in advance of trial. See, e.g., United States v. Ricotta, 84 Cr. 288 (DNE), transcript of September 11, 1984 conference at 20-32, transcript of September 12, 1984 conference at 1-12.

CONCLUSION

The court finds that DR 5-102 requires that Mr. Ferrara be disqualified from continuing as the defendant’s trial counsel in this case. The court also finds that a mistrial must be declared because of “manifest necessity.” The defendant will be given an opportunity to obtain substitute counsel and for that counsel to prepare before the new trial is commenced. A conference wiil be scheduled one week from the filing of this Opinion with substitute counsel to establish a schedule for the commencement of the trial.

SO ORDERED.

      . EC 5-9 states:
      If a lawyer is both counsel and witness, he becomes more easily impeachable for interest and thus may be a less effective witness. Conversely, the opposing counsel' may be handicapped in challenging the credibility of the lawyer when the lawyer also appears as an advocate in the case. An advocate who becomes a witness is in the unseemly and ineffective position of arguing his own credibility.

      . Mr. Skourlis was scheduled to be the government witness following Galley.

      . Rule 3.7 of the American Bar Association Model Rules of Professional Responsibility are more liberal in allowing a member of an attorney’s firm to act as trial counsel when the attorney is likely to be a necessary witness. See also Model Rules 1.10, 1.7 and 1.9. The Model Rules, however, have not been enacted by New York State, see N.YJud. Law, app. DR 5-102(A) (McKinney 1975), nor were they applied or even cited by the second circuit in the very recent case of McKeon, supra, 738 F.2d at 34-5. Moreover, based on the reasons stated above, the court finds that the jury taint will not be alleviated by use of Ferrara’s partner as trial counsel. Under the prevailing ethical standards in the legal profession, Ferrara’s disqualification necessarily precludes the retention of his partner as trial counsel.

      . Section 4.3(d) states:
      Unless the lawyer for the accused is prepared to forego impeachment of a witness by the lawyer’s own testimony as to what the witness stated in an interview or to seek leave to withdraw from the case in order to present his impeaching testimony, the lawyer should avoid interviewing a prospective witness except in the presence of a third person.

      . The court is hesitant to keep the jury for an extended period. The jury would need to be called back well beyond their appointed term. Compare Mizell, supra, 586 F.2d at 947 (five day continuance would not require jury to serve beyond their appointed term).

      . It is unclear whether the Speedy Trial Act would establish a 30 day minimum on the resumption of trial. While trials have been recommenced shortly after the declaration of a mistrial, the rationale for the 30 day minimum — insuring that defense counsel have adequate time in which to prepare for trial — is applicable to a mistrial resulting from the substitution of counsel.


author: EDWARD WEINFELD, District Judge.

text:
    ACME ANALGESICS, LTD., Plaintiff, v. LEMMON COMPANY and Claridge Laboratories, Inc., Defendants.
    No. 84 Civ. 7946 (EW).
    United States District Court, S.D. New York.
    Feb. 8, 1985.
    Northrop & Jessop, New York City, for plaintiff; Leon S. Harris, New York City, of counsel.
    Schneck, Weltman & Ives, New York City, for defendants; Edward S. Weltman, Jonathan I. Price, New York City, of counsel.
   MEMORANDUM OPINION

EDWARD WEINFELD, District Judge.

It is difficult to understand the opposition to this motion to disqualify Leon S. Harris, Esq., and his law firm, Northrop & Jessop, from representing plaintiff, a corporation of which Mr. Harris is an officer and a major shareholder. It is undisputed that Mr. Harris negotiated, executed, and administered the contract upon which this action is based, and further, that he is a material, if not the key, witness upon a trial. The mandate of the Code of Professional Responsibility is clear. Disciplinary Rule 5-102(A) expressly provides, with exceptions not here applicable:

If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that he or a lawyer in his firm ought to be called as a witness on behalf of his client, he shall withdraw from the conduct of the trial and his firm, if any, shall not continue representation in the trial____

N.Y.Jud.Law App. (McKinney 1975).

Applied to this case, it must have been evident that Mr. Harris and his firm were disqualified from representing the plaintiff. See Mac Arthur v. Bank of New York, 524 F.Supp. 1205 (S.D.N.Y.1981); North Shore Neurosurgical Group, P.C. v. Leivy, 72 A.D.2d 598, 421 N.Y.S.2d 100 (2d Dep’t 1979); Tru-Bite Labs, Inc. v. Ashman, 54 A.D.2d 345, 388 N.Y.S.2d 279 (1st Dep’t 1976). The threat of “taint” of the trial was present from the very inception of this lawsuit. The exchange of correspondence between the parties before the commencement of the action in which Mr. Harris was the spokesman for the plaintiff makes this abundantly clear. Here, the motion to disqualify was made promptly and before discovery was commenced. In fact, the Court stayed discovery proceedings pending its decision. Moreover, Mr. Harris is not an individual litigant; the corporation of which he is a major shareholder is the plaintiff. Neither Mr. Harris’ stock ownership, nor his status as an officer, grants the corporation an individual right to select its own counsel when such selection is clearly contrary to the Code of Professional Responsibility. See Gasoline Expressway, Inc. v. Sun Oil Co., 64 A.D.2d 647, 407 N.Y.S.2d 64 (2d Dep’t 1978), aff'd, 47 N.Y.2d 847, 392 N.E.2d 572, 418 N.Y.S.2d 585 (1979) (per curiam).

The cases relied upon by plaintiff in urging nondisqualification are inapposite and distinguishable upon their facts. See Bottaro v. Hatton Assoc., 680 F.2d 895 (2d Cir.1982) (attorney-witness is a party); International Electronics Corp. v. Flanzer, 527 F.2d 1288 (2d Cir.1975) (former partner is a party defendant); Theobald v. Botein, Hays, Sklar & Herzberg, 465 F.Supp. 609 (S.D.N.Y.1979) (law firm is party defendant); cf. Gasoline Expressway, Inc. v. Sun Oil Co., 64 A.D.2d 647, 648, 407 N.Y.S.2d 64, 65 (2d Dep’t 1978) (disqualifying attorney-witness who was sole shareholder of plaintiff corporation), aff'd, 47 N.Y.2d 847, 392 N.E.2d 572, 418 N.Y.S.2d 585 (1979) (per curiam).

Equally unavailing is plaintiff’s plea that a “rule of reason” be applied. See MacArthur v. Bank of New York, 524 F.Supp. 1205 (S.D.N.Y.1981); Tru-Bite Labs, Inc. v. Ashman, 54 A.D.2d 345, 388 N.Y.S.2d 279 (1st Dep’t 1976). So, too, is the claim of “substantial hardship,” due to legal expenses if it is required to retain other counsel. See North Shore Neurosurgical Group, P.C. v. Leivy, 72 A.D.2d 598, 421 N.Y.S.2d 100 (2d Dep’t 1979). The amounts involved in the contract at issue and the plaintiff’s claims for damages are substantial. Plaintiff seeks to recover upon its various separately stated claims a sum in excess of $5 million — no small change even in this day of astronomical requests for damage awards.

Accordingly, defendants’ motion to disqualify Leon S. Harris, Esq. and Northrop & Jessop from representing plaintiff is granted.

So ordered.