author: DIANA E. MURPHY, District Judge.

text:
    Eugene C. MATSON, Plaintiff, v. CARGILL, INC., Defendant.
    Civ. No. 4-84-516.
    United States District Court, D. Minnesota, Fourth Division.
    Sept. 17, 1985.

      Michael H. Hennen, Minneapolis, Minn., for plaintiff.
    Roy A. Ginsburg, Dorsey & Whitney, Minneapolis, Minn., for defendant.
   MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

Plaintiff Eugene C. Matson brought this action against Cargill, Inc., alleging age discrimination in violation of the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-634, breach of contract, and breach of an implied covenant of good faith and fair dealing. Plaintiff seeks compensatory and punitive damages, as well as reinstatement. Jurisdiction is alleged under 29 U.S.C. § 626(b) and 28 U.S.C. §§ 1331 and 1337. The matter is now before the court upon defendant’s motions for summary judgment on claims 1 and 2 of plaintiff’s complaint and to dismiss claim 3.

Background

The relevant facts are essentially undisputed. Plaintiff began working for Cargill on May 1, 1951 at the age of seventeen. He worked for Cargill until May 16, 1983, when he was discharged at the age of 49.

During this time, plaintiff worked in several positions. From 1972 through his termination, he worked on the corporate staff of Cargill’s Commodity Marketing Division (CMD). His primary responsibilities concerned purchasing materials, equipment, and parts for CMD’s Project Engineers and Plant Superintendents. In 1975, plaintiff was promoted to the position of Senior Purchasing Agent, but his basic responsibilities did not change. Matson depo. at 67.

While working with Cargill, plaintiff received a document entitled “Your Guide to Cargill, A Handbook for Salaried Employees” (thé Handbook) and another entitled “Cargill’s Supervisor’s Manual” (Supervisor’s Manual). Each of these documents contains provisions relating to termination and plaintiff claims that these provisions became part of his employment contract.

In the early 1980s, the business activity of CMD’s Plant Operations Department dropped precipitously. From a high of 120 million dollars in construction spending in 1981, Cargill expended only about 30 million dollars in the 1982 crop year and only about 18 million in the 1983 crop year. See Aff. Joseph P. Botos.

Because of this sudden decline in the work performed by CMD Plant Operations, the individuals in charge of the division began considering the possibility of reducing the staff. Cargill states that Robert Hubbard, CMD Vice President and Manager of Plant Operations, Joe Botos, Assistant Manager of Plant Operations and the individual who succeeded Hubbard in 1984, and Donald Biorn, Manager of Engineering, all concluded in late 1982 or early 1983 that a reduction in force (RIF) was necessary.

Plaintiff asserts that he spoke with Hubbard in October 1982 who assured him that he would always have a job at Cargill. Hubbard apparently told plaintiff that he was subject to a transfer to a Cargill terminal because of his experience. Matson aff. at II10.

The preliminary task of evaluating the department’s employees and making a recommendation for a staff reduction was assigned to Biorn. Biorn states that he obtained a memorandum from the Human Resources Department regarding the way a RIF should be handled, reviewed it, and then requested two of his Project Coordinators, Doug Jensen and Allan Johnson, to assist him in rating each of the CMD employees with whom they worked.

Biorn, Jensen, and Johnson prepared a matrix by which to evaluate each employee. The criteria included:

1) seniority; 2) ability; 8) quality of work; 4) qhantity of work; 5) absenteeism; 6) tardiness; 7) performance appraisal; 8) attitude; 9) stretch; 10) promotability; 11) education; 12) experience; 13) job skill; and 14) know how.

Each of the criteria was weighed to reflect its importance. Using these criteria, Biorn, Jensen, and Johnson independently evaluated each employee potentially affected by the lay-off. Then, they met and reviewed the assessments. Where they differed as to ratings, they discussed the differences and arrived at a compromise rating.

These tentative appraisals were submitted to Hubbard, who, along with other managerial employees modified the recommendations slightly. Cargill’s Human Resources Department then assessed the grid, focusing upon the criteria selected and the weight attached to each criteria. It recommended that the categories of “tardiness”, “performance appraisal,” and “education” be deleted and that the one entitled “seniority” be changed to “length of service.” The employee rankings were recalculated accordingly. Cargill asserts that its Human Resources Department discussed the revised grid with its Law Department to ensure that it had complied with all federal and state laws.

A final matrix was then prepared and submitted to the department and division heads for approval. Hubbard subsequently announced the reduction in force on May 16, 1983 to the nine affected CMD employees which included plaintiff. Six of the discharged nine were under the age of 40. Similarly, of the eleven individuals who were assessed and retained, five were 50 or over.

When plaintiff was terminated he was provided with 52 weeks of severance pay, 19 more than the severance compensation to which he was entitled. Cargill also arranged and paid for outplacement services for plaintiff with Clyde Meredith & Company. Plaintiff has submitted a document showing that his purchasing duties were temporarily assigned to younger employees after he was discharged. See Ex. D to plaintiff’s memorandum in opposition to defendant’s motions for summary judgment and to dismiss.

Discussion

In passing upon a motion for summary judgment, the court is required to view the facts in a light most favorable to the non-moving party, and the movant has the burden of establishing that no genuine issue of material fact remains and that the case may be decided as a matter of law. Buller v. Bueckler, 706 F.2d 844, 846 (8th Cir.1983); Ralph’s Distributing Co. v. AMF, Inc., 667 F.2d 670 (8th Cir.1981). The non-moving party is entitled to the benefit of all reasonable inferences to be drawn from the underlying facts disclosed in pleadings and affidavits. Vette Co. v. Aetna Casualty & Surety Co., 612 F.2d 1076 (8th Cir.1980). The nonmoving party may not merely rest upon allegations or denials of the party’s pleadings, however, but must set forth specific facts by affidavits or otherwise showing that there is a genuine issue for trial. Burst v. Adolph Coors Co., 650 F.2d 930, 932 (8th Cir.1981).

A. Age Discrimination Claim

These general principles apply to age discrimination claims as well. To resist a motion for summary judgment, a plaintiff must establish a prima facie case of age discrimination. See, e.g., Kephart v. Institute of Gas Technology, 630 F.2d 1217 (7th Cir.1980), cert. denied, 450 U.S. 959, 101 S.Ct. 1418, 67 L.Ed.2d 383 (1981); Stock v. Horsman Dolls, Inc., 27 FEP Cases 1423 (D.S.C.1981). To do this, the plaintiff cannot simply show that he is a member of a protected group and was the victim of an adverse employment decision. He must show that there is some causal connection between his age and the adverse employment action about which he complains.

Because direct evidence of discrimination is rarely found, a prima facie case can be established by evidence from which the causal connection can be inferred. The most common formula for doing this is to meet the criteria set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), as adapted to ADEA cases. See Halsell v. Kimberly-Clark Corp., 683 F.2d 285 (8th Cir.1982), cert. denied, 459 U.S. 1205, 103 S.Ct. 1194, 75 L.Ed.2d 438 (1983). The plaintiff must show: (1) that he is within the protected age category under the statute, (2) that he was performing his job at expected levels of performance, (3) that he was discharged, and (4) that the employer sought a replacement to do the same kind of work, thus demonstrating a continued need for the same services and skills.

If the prima facie case is made, the burden shifts to the employer to articulate a valid reason other than age for firing the plaintiff. If the employer does this, the burden shifts back to the plaintiff to demonstrate that the reasons advanced by the employer are pretextual. Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981).

Establishment of a prima facie case, however, does not necessarily mean that the case must be submitted to the jury or that summary judgment is improper. Lovelace v. Sherwin-Williams Co., 681 F.2d 230, 241 at n. 12 (4th Cir.1982). As stated by the Eleventh Circuit in Pace v. Southern Railway System:

A plaintiff when faced with a motion for summary judgment cannot rely on attenuated possibilities that a jury would infer a discriminatory motive, but rather must come forward with sufficient evidence to ... respond sufficiently to any rebuttal by the defendant to create a general issue of material fact. Even where a prima facie case has been established but the defendant has rebutted with a proffer of legitimate, non-discriminatory reasons for the discharge, a genuine issue of material fact is not automatically presented.

701 F.2d 1383, 1391 (11th Cir.), cert. denied, 464 U.S. 1018, 104 S.Ct. 549, 78 L.Ed.2d 724 (1983). If the plaintiff cannot produce sufficient evidence to create an inference of discriminatory motive, then the employer’s articulated business reasons remain unrebutted, and summary judgment is appropriate. Steckl v. Motorola, Inc., 703 F.2d 392 (9th Cir.1983).

Even viewing the facts in a light most favorable to Matson, the court finds that plaintiff has not established a prima facie case. To be sure, plaintiff has shown that he was in the protected group, was adversely affected by an employment decision and was qualified. He has also produced a document which suggests that Car-gill temporarily assigned parts of his purchasing duties to employees who were younger than plaintiff. A prima facie case may only be established, however, when there is a basis for inferring that discrimination is the reason for the employment decision. The court is aware of no federal case which holds that a prima facie case is established simply because the plaintiff was replaced by a younger person. See Holley v. Sanyo Manufacturing, Inc., 771 F.2d 1161, 1167 (8th Cir.1985); Pace v. Southern Ry. System, 701 F.2d 1383 (11th Cir.), cert. denied, 464 U.S. 1018, 104 S.Ct. 549, 78 L.Ed.2d 724 (1983). In cases like Spagnuolo v. Whirlpool Corp., 641 F.2d 1109 (4th Cir.), cert. denied, 454 U.S. 860, 102 S.Ct. 316, 70 L.Ed.2d 158 (1981), Douglas v. Anderson, 656 F.2d 528 (9th Cir.1981), or Moore v. Sears, Roebuck & Co., 464 F.Supp. 357 (N.D.Ga.1979), there was other evidence of discrimination based on age, in addition to a younger replacement. In none of these cases was the fact that the replacement was younger than the plaintiff enough to give rise to an inference of discrimination.

Plaintiff further tries to establish the necessary causal connection between his age and his termination by referring to the contents of two confidential memoranda. The first was written well over a year before the RIF took place and was sent from Hubbard to Bill Boyt of Cargill’s Human Resources Department. The memo notes that the support groups to the CMD Engineering Department — estimating purchasing and contract management — are affected by the decrease in the number of construction projects. It discusses several employees in those departments, including plaintiff.

The second memorandum is dated January 27, 1983 and is from Botos to Dan Huber. This memorandum discusses the function of Cargill’s Central Purchasing and plaintiff himself, and refers to plaintiff’s age in one sentence.

Taken as a whole, these memoranda do not support a prima facie case of age discrimination. The memo from Hubbard to Boyt was written well before the force reduction went into effect, and there is no evidence that the individuals who primarily conducted the RIF ever saw it. Furthermore, the memo did not give the plaintiffs age and it recommended that Matson be considered for any other sales openings. Far from showing evidence of discrimination against Matson sufficient to make a prima facie case, the memo is some proof that he was treated fairly by Cargill.

Similarly, the January 27, 1983 memo from Botos to Huber cannot be said to have unnecessarily alerted the recipient of Matson’s age. Rather, the purpose of the memo was to commend his work and explore other job possibilities for him.

Because the temporary replacement of plaintiff by younger persons is insufficient, standing alone, to give rise to an inference of discrimination, and because plaintiff can show no statistical or other evidence of discrimination, the court concludes that plaintiff has failed to establish a prima facie case of age discrimination. Summary judgment is therefore appropriate on plaintiff’s age discrimination claims. See, e.g., Pace v. Southern Ry. System, 701 F.2d 1383 (11th Cir.), cert. denied, 464 U.S. 1018, 104 S.Ct. 549, 78 L.Ed.2d 724 (1983), Kephart v. Institute of Gas Technology, 630 F.2d 1217 (7th Cir.1980), cert. denied, 450 U.S. 959, 101 S.Ct. 1418, 67 L.Ed.2d 383 (1981). See also, Holley v. Sanyo Manufacturing, Inc., 771 F.2d 1161 (8th Cir.1985).

Even assuming arguendo that plaintiff’s evidence established a prima facie case, Cargill has persuasively demonstrated that its actions were taken for legitimate, nondiscriminatory reasons. The record shows that Cargill believed a reduction in staff was necessary because of a precipitous drop in its construction and engineering business. Using eleven legitimate non-discriminatory criteria, it systematically evaluated the CMD employees who were potentially affected by the decline, ranked them accordingly and terminated nine employees.

Once Cargill has articulated business reasons, plaintiff is not required to prove that these reasons are pretextual at this stage in the proceedings. He is, however, required to present sufficient rebuttal to create a genuine issue of fact. See, e.g., Pace v. Southern Railway System, 701 F.2d 1383, 1391 (11th Cir.), cert. denied, 464 U.S. 1018, 104 S.Ct. 549, 78 L.Ed.2d 724 (1983).

Even viewing the record in a light most favorable to plaintiff, the court finds that he is unable to respond to Cargill’s evidence or to demonstrate sufficient evidence to create an inference of discriminatory motive. The discovery deadline in this case was April 1, 1985, but the only evidence plaintiff points to showing age discrimination is his temporary replacement by younger persons and the two confidential memoranda. For the reasons discussed above, if this case were to go to trial on this evidence alone, the court would be compelled to enter a directed verdict. In light of the discovery already conducted, the court concludes that it is highly doubtful that additional evidence would be developed at trial which would change the present posture of the case.

The record currently before the court indicates that there is substantial evidence that Cargill’s articulated justification is not pretextual. Plaintiff admitted at his deposition that he knew of no facts which suggested that age was considered in the evaluation process or that he was treated differently because of age when the staff was cut. Matson depo. at 124-125. He also stated in his deposition that he was not aware of any other Cargill employee who had been discriminated against, that he had never experienced any age discrimination there, and that none of the individuals involved in the RIF ever said anything, wrote anything or behaved in a way which led him to think they had a discriminatory attitude toward employees between the ages of 40 and 70. Id. at 129, 130, 142-51.

Moreover, the final results of the RIF study and recommendations reflect age neutrality. Of the nine employees discharged, six were under the age of 40. Of the eleven employees who were retained, five were over the age of 40.

Upon the unrefuted record, the court finds that even if a prima facie case was established, plaintiff has failed to rebut Cargill’s articulated business reasons or show sufficient evidence from which an inference of discriminatory motive could be properly drawn. Thus, summary judgment is appropriate on the age discrimination claims.

B. Contract Claims

Plaintiff claims that the termination provisions in the Handbook and Supervisor’s Manual given to him by Cargill became part of his contract with Cargill. He contends that Cargill breached these provisions. Cargill, by contrast, argues that neither provide specific procedural guarantees, and thus may not be considered contract’s. Moreover, it states that even if the manuals are found to be a contract, the undisputed facts show that the contract was not breached.

Under Minnesota law, the existence of a contract, as well as the terms and construction of that contract are generally questions of fact to be determined by the fact-finder. Bergstedt, Wahlberg, Berquist Assoc., Inc. v. Rothchild, 302 Minn. 476, 480, 225 N.W.2d 261, 263 (1975). It is established in Minnesota that a manual such as those distributed by Cargill may contractually modify an at-will employment agreement. Pine River State Bank v. Mettille, 333 N.W.2d 622, 626 (Minn.1983). To be construed as a contract, however, the provisions of the manual must be an offer definite in form and they must be communicated to the offeree. An employee’s general statements of policy do not meet the contractual requirements for an offer. Id. at 626. See Degen v. Investors Diversified Services, Inc., 260 Minn. 424, 110 N.W.2d 863 (1961). When language in an employment manual is definite, a legitimate question for the fact-finder is raised as to the terms of the contract. Hunt v. IBM Mid America Emp. Fed. Cred. Union, 358 N.W.2d 461 (Minn.App.1984). An employees’ retention of employment after the offer is communicated accepts the offer of a unilateral contract. Pine River State Bank v. Mettille, 333 N.W.2d 622, 627 (Minn.1983).

In the instant case, the section of the handbook dealing with “company-initiated ... involuntary terminations not for serious cause” provides:

Terminations of this type usually result from a condition or circumstances over which the employee has no control, such as reductions in staff, the closing of a department, or inability to perform the job.
Every effort is made to avoid such terminations. Where changes in the requirements of the work become necessary, a displaced employee will be transferred to another job whenever it is possible. When a termination is unavoidable, the employee will be given reasonable notice or severance pay related to length of service, plus any accrued vacation.

The language in the last paragraph is sufficiently definite and mandatory to raise an issue for the finder of fact as to whether the language in the handbook is an offer which was accepted by plaintiff’s continued employment.

Cargill argues that even if these provisions are considered part of plaintiff’s contract, the court should find as a matter of law that it complied with the requirements. Plaintiff concedes that Cargill complied with the requirement of termination with notice or severance pay, but contends that it did not adhere to the provisions regarding efforts to avoid termination or transfer. He notes that Cargill itself supplied to its supervisors a document detailing the efforts it expected to be taken prior to terminations, including, among other things, a hiring freeze, a cost-reduction program and shorter work weeks. See plaintiffs ex. H. Plaintiff cites the deposition of Biorn, who headed the group deciding which employees to terminate, to show that he did not discuss these measures with regard to plaintiff and that little effort was made to transfer plaintiff.

Construing the evidence in a light most favorable to plaintiff, as the court is required to do, the court finds that genuine issues of material fact remain as to whether Cargill complied with this language in the handbook. Summary judgment is inappropriate, therefore, on this part of plaintiffs claim.

The court does find as a matter of law, however, that plaintiff cannot base a breach of contract claim on the language in the Supervisor’s Manual. Even assuming arguendo that plaintiff properly possessed the Supervisor’s Manual and that all the terms inside were communicated to him, many of the statements within are no more than general statements of policy. This is particularly true of those statements which refer to “fair treatment” of the employees.

In particular, plaintiff relies on four provisions of the Supervisor’s Manual to create a contract. Analysis of the “due notice” provision, the “no surprise” provision, and the “two management employees present” provision shows that these sections are merely guidelines which set forth the general company policy. Similarly, the “transfer possibility” provision provides guidance to supervisory employees who must reduce the staff. To be sure, the portion of this provision which deals with outplacement is mandatory and could be said to form an offer. It is undisputed, however, that Cargill arranged and paid for outplacement service for plaintiff, satisfying the provision as a matter of law. Accordingly, summary judgment on that part of plaintiff’s claims which are based on the Supervisor’s Manual is appropriate.

Plaintiff also claims that Hubbard’s alleged promise to plaintiff that, because of his experience and length of service, there would always be a job for him at Cargill could overcome the presumption that he was terminable at will. Under Minnesota law, however, a promise of “permanent” employment does not change the at-will nature of the hiring. Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn.1983); Skagerberg v. Blandin Paper Co., 197 Minn. 291, 266 N.W. 872 (1936). Before an employee’s claim of “life-time” employment can be valid, the employee must demonstrate that he gave additional consideration which is uncharacteristic of the employment record itself. Bussard v. College of St. Thomas, 294 Minn. 215, 200 N.W.2d 155 (1972). The record is devoid of such consideration in this case. Summary judgment is appropriate on this aspect of plaintiff’s contract claim as well.

C. Contract and Tort Claims

Plaintiff claims that the Handbook and the Supervisor’s Manual, along with the alleged promise of Hubbard, create an implied covenant of good faith and fair dealing between the parties. He claims that Cargill breached this covenant by terminating him. Cargill, on the other hand, maintains that this allegation must be dismissed for failure to state a claim.

The court agrees that the plaintiff’s claim fails to state a cause of action. Minnesota does not recognize a cause of action for breach of an implied covenant of good faith and fair dealing in an employment context. Mason v. Farmers Ins. Cos., 281 N.W.2d 344 (Minn.1979); Wild v. Rang, 302 Minn. 419, 234 N.W.2d 775 (1975), cert. denied, 424 U.S. 902, 96 S.Ct. 1093, 47 L.Ed.2d 307 (1976). Bad faith termination of a contract does not give rise to a cause of action independent of a contract action, except in exceptional cases where the defendant’s breach is or is accompanied by an independent tort. Id. The employment relationship between Cargill and the plaintiff could be terminated without cause, and the good faith of the termination is not a valid issue under Mason.

ORDER

Accordingly, based on the above and all the files, records, and proceedings herein,

IT IS HEREBY ORDERED that

1. Defendant’s motion for summary judgment is granted with respect to the age discrimination claims in Claim One of plaintiff’s complaint; that claim of plaintiff’s complaint is dismissed. Summary judgment is also granted with respect to the contract claims based on “Cargill’s Supervisor’s Manual” and the alleged promise of Hubbard of permanent employment in Claim Two of plaintiff’s complaint, and those aspects of Claim Two are dismissed. The motion for summary judgment is denied as to plaintiff’s contract claims arising out of “Your Guide to Cargill, A Handbook for Salaried Employees” in Claim Two of plaintiff’s complaint.

2. Defendant’s motion to dismiss Claim Three of plaintiff’s complaint is granted, and Claim Three of plaintiff’s complaint is dismissed.

LET JUDGMENT BE ENTERED ACCORDINGLY.

      . Cargill asserts that the plaintiff benefited by these deletions since he rated poorly in these categories.

      . Cargill suggests that the court follow the approach taken by the Fourth and Fifth Circuits in age discrimination cases involving a reduction in force. The Fifth Circuit in Williams v. General Motors Corp., 656 F.2d 120 (5th Cir.1981), cert. denied, 455 U.S. 943, 102 S.Ct. 1439, 71 L.Ed.2d 655 (1982), replaced the fourth part of the McDonnell Douglas test by the following two-prong test:
      a) Plaintiff must show that he was qualified to assume another position at the time of discharge or demotion; and (b) plaintiff must produce evidence, circumstantial or direct from which a factfinder might reasonably conclude that the employer intended to discriminate in reaching the decision at issue. 656 F.2d at 129.
      Similarly, the Fourth Circuit in EEOC v. Western Electric Co., Inc., 713 F.2d 1011 (4th Cir.1983) found that an age discrimination plaintiff must produce some evidence to show that the defendant did not treat age neutrally in its demotion selection.
      The Eighth Circuit has recently stated that to establish a prima facie case, a plaintiff in a reduction-in-force situation must come forward with additional evidence to show that age was a factor in the employee’s termination. Holley v. Sanyo Manufacturing, Inc., 771 F.2d 1161, 1165, 1166 (8th Cir.1985).

      . Matson stated in an affidavit that a part of his duties were assigned to Allan Johnson, age 31 at the time of Matson’s termination, Sharon Emsminger, age 34, and Diane Hopkins, age 36.

      . The December 23, 1981 memorandum provides in pertinent part:
      A more serious situation is the support groups: estimating, purchasing and contract management. There are two young women in these departments that would make very valuable supervisors in any of the local office departments. The purchasing agent [plaintiff] is only an average performer as he spends too much time and conversation on the type of purchasing and expediting that we require. Purchasing is way off, and with no new projects, we must combine this with some other job by March. My only recommendation here is that he be considered for any sales openings, especially technical sales. As you have openings and need additional information, please give me a call.

      . The part which pertains to plaintiff provides in full: Enclosed is a memo from Gene Matson, currently employed in CMD Plant Operations as a Senior Purchasing Agent. During the past several years his job developed due to the CMD construction program and a need to coordinate conveyor and leg belt purchasing. As you might suspect, there is no longer a need in CMD for a full-time person in this capacity. However, with proper communication our needs in the area could be filled by a Central Purchasing coordinator. Other divisions or departments could have the same circumstance.
      Gene is 49 years old and has 32 years service with Cargill in the Grain Lab and CMD Operations. He is very dedicated and thorough and enjoys the job of matching equipment specifications to plant applications. His skills do not necessarily lend themselves to a field position in Plant Operations.
      We need to have some idea of what Cargill’s intention is in Central Purchasing to assist us in identifying all potential employment possibilities for Gene Matson.

      . Where the evidence is overwhelming that dismissal was not based on age discrimination, a directed verdict is proper. See, e.g., Holley v. Sanyo Manufacturing, Inc., 771 F.2d 1161 (8th Cir.1985); Gairola v. Commonwealth of Va., Dep. of General Services, 753 F.2d 1281 (4th Cir.1985); see also, Jorgensen v. Modern Woodmen of America, 761 F.2d 502 (8th Cir.1985).

      . The court finds it unnecessary to decide the issues at this time, but notes that it is far from evident that the provisions of the Supervisor’s Manual could be construed as an offer communicated to the plaintiff.

      . The introduction to the handbook stresses: Each Cargill location has the responsibility of putting Cargill policies into actual practice. Some policies permit no deviation in individual interpretation; others, however, are general guidelines to be interpreted in the manner that best suits the needs of the location involved. Some manual pages include the interpretation of corporate guidelines that are followed in the Minnetonka offices. These may assist other locations in adapting general policies to meet their location’s needs. (Emphasis added). See R.A. Ginsberg Aff., Ex. O.

      . The due notice provision of the Supervisor’s Manual states:
      Under normal conditions, it is contrary to the general policy of the Company to terminate the services of employees without due notice. The standard amount of notice, or severance pay in lieu thereof, ... is outlined in the schedule below. (Emphasis added.)

        See R.A. Ginsburg Aff., Ex. O.

      . One "no-surprise” provision is located under the section of the Supervisor’s Manual which is entitled "Terminations Resulting from Unsatisfactory Performance” and states:
      Being terminated for unsatisfactory performance should never come as a surprise to an employee.

        See R.A. Ginsburg Aff., Ex. O. Another is located under “Terminating an Employee” and states "Being fired should not come as a surprise to the employee: timely and regular performance reviews should have been conducted.” Id.

      . The "two management employees present” provision appears under a section in the Supervisor’s Manual entitled "Terminating an Employee”. This sentence is one of the "guidelines for a meeting” and it1 is contingent upon the possibility of future complaint or litigation. It provides:
      Two management representatives should be present at the termination interview if there is a possibility of future complaint or litigation.
      The next sentence states that these guidelines "are not requirements for a valid termination.” See R.A. Ginsburg Aff., Ex. O.

      . The "transfer possibility” provision reads:
      If it appears that there is a possibility that an employee (or employees) faces termination due to job elimination or staff reduction. Corporate Employment should be notified immediately in order to identify transfer possibilities within the company. If no suitable transfer can be found, Corporate Employment will provide outplacement services to assist the employee in finding a job outside of Cargill. See R.A. Ginsburg Aff., Ex. O.


source: Caselaw Access Project

author: BARRINGTON D. PARKER, District Judge.

license: Public Domain

text:
    Perry L. PICKERT and Sara M. Pickert, Plaintiffs, v. CAMBRIDGE SAVINGS BANK, Defendant.
    Civ. A. No. 85-1608.
    United States District Court, District of Columbia.
    Sept. 17, 1985.

      Edward N. Reiner, Alexandria, Va., for plaintiffs.
    Richard J. Leidl, Reid & Priest, Washington, D.C., for defendant.
   ORDER OF DISMISSAL

BARRINGTON D. PARKER, District Judge.

This matter is before the Court on a motion to dismiss on the grounds that this Court lacks personal jurisdiction over the defendant, Cambridge Savings Bank (“Cambridge”), Fed.R.Civ.P. 12(b)(2), or that in the interest of justice the matter should be transferred to a District Court in Massachusetts. Fed.R.Civ.P. 12(b)(3). Defendant also raises questions of res judicata and collateral estoppel. After consideration of the motion, the opposition, and a District of Columbia Superior Court ruling in an action involving these same parties and the same facts, the Court concludes that defendant’s motion should be granted.

It is quite clear that the property which is the subject of this action is the same as was involved in a District of Columbia Superior Court proceeding, Civil Action No. 5490-83. That action was resolved against the plaintiffs on April 22, 1985 on grounds that “[the Superior Court] lack[ed] jurisdiction over [Cambridge], D.C.R.P.Civ.Rule 12(b)(2), and that in the interest of substantial justice, the action should be heard in a forum in Massachusetts, D.C.Code (1981) § 13-425.” Pickert v. Cambridge Savings Bank, No. 5490-83 (D.C.Super.Ct., April 22, 1985) (Hamilton, J.; Findings of Fact, Conclusions of Law and Order).

The Pickerts did not appeal that ruling and, thus, it is a final judgment. Subsequently, they filed this cause seeking the same relief as in the Superior Court proceeding, but adding additional counts claiming violations of unspecified federal and local consumer fraud laws. The pleadings also show that a law suit involving the same parties and arising out of the same factual dispute is pending in a Massachusetts court.

Defendant claims that plaintiffs are barred and estopped from bringing the present action by application of the principles of res judicata, and collateral estoppel. The plaintiffs, however, claim that since their Superior Court proceeding was dismissed for want of jurisdiction, it does not bar a subsequent suit since the merits of their claim were never considered.

Under the doctrine of res judicata, both parties are concluded from relitigating matters which were determined or might have been determined arising from the same cause of action. See, Lawlor v. National Screen Service Corp., 349 U.S. 322, 326, 75 S.Ct. 865, 867-68, 99 L.Ed. 1122 (1955); Tutt v. Doby, 459 F.2d 1195 (D.C.Cir.1972). It is well settled that the principles of res judicata apply to jurisdictional as well as other issues. Baldwin v. Iowa State Traveling Men’s Ass’n., 283 U.S. 522, 51 S.Ct. 517, 75 L.Ed. 1244 (1931), stands for the proposition that the court of one state must give full faith and credit to the judgment of a court of another state, despite the claim that the court rendering judgment lacked personal jurisdiction over the defendant when it is determined that the question of jurisdiction was fully litigated before that court. “Public policy dictates that there be an end to litigation; that those who have contested an issue shall be bound by the result of the contest, and that matters once tried shall be considered forever settled between the parties.” Id. at 525, 51 S.Ct. at 517-18. See also, American Surety Co. v. Baldwin, 287 U.S. 156, 53 S.Ct. 98, 77 L.Ed. 231 (1932); Durfee v. Duke, 375 U.S. 106, 84 S.Ct. 242, 11 L.Ed.2d 186 (1966). The res judicata principle also applies to a finding that personal jurisdiction over the defendant did not exist. Eaton v. Weaver Mfg. Co., 582 F.2d 1250, 1255-57 (10th Cir.1978).

The question of whether this or any District of Columbia court may secure jurisdiction over the defendant in this proceeding has been fully litigated. The Superior Court ruling of Judge Hamilton has a res judicata effect and these plaintiffs are precluded from presenting a claim in this Court. Any new claims do not alter this. Plaintiffs would still be collaterally es-topped from bringing their action in the District of Columbia. Collateral estoppel, as distinguished from res judicata, bars the parties from relitigating issues of ultimate fact in any future law suit once they have been determined by a valid and final judgment. See Swenson v. Ashe, 397 U.S. 436, 443, 90 S.Ct. 1189, 1194, 25 L.Ed.2d 469 (1970).

The doctrine of forum non conveniens also is involved in this decision. According to the Superior Court ruling, this case should be heard in Massachusetts, in the interest of justice. This Court agrees. The plaintiffs are not denied an avenue of relief, since an action is now pending in that jurisdiction. The plaintiffs can assert any claims by way of a counterclaim.

In accord with the above, it is this 17th day of September, 1985,

ORDERED

That defendant’s motion to dismiss is granted and this case is dismissed with prejudice.

      . The plaintiffs also mention some unspecified local mail law.


author: HOLDERMAN, District Judge.

text:
    DANA CORPORATION, Plaintiff, v. AMERICAN PRECISION COMPANY (DIVISION OF AVNET, INC.), Century Clutch and Brake Supply, Inc., Century Parts, Inc., and Illinois Auto Truck Co., Inc., Defendants.
    No. 82 C 6186.
    United States District Court, N.D. Illinois, E.D.
    Sept. 18, 1985.

      Robert L. Harmon & David A. Anderson, of William, Brinks, Olds, Hofer, Gilson & Lione Ltd., Chicago, 111., Scott E. Flick, of Howrey & Simon, Washington, D.C., for plaintiff.
    James D. Adducci, Michael Roche, Roger L. Longtin, L. Andrew Brehm of Schulyer, Roche & Zwirner, James B. Muska & Edward W. Osann, Jr. of Leydig, Voit, Osann, Mayer & Holt, Terrence W. McMillin, Marshall, O’Toole & Gerstein, Chicago, 111., Barry L. Grossman, Harold Birch, of Banner & Birch, Washington, D.C., for defendants.
   MEMORANDUM OPINION AND ORDER

HOLDERMAN, District Judge.

Plaintiff Dana Corporation (“Dana”) brought this action against defendants Century Clutch and Brake Supply, Inc. and Century Parts, Inc. (collectively “Century”), American Precision Company (division of Avnet) and American Precision Company, Inc. (“APC”), and Illinois Auto Truck Co., Inc. (“IAT”) for patent infringement and unfair competition.

PROCEDURAL BACKGROUND

The first count of the two-count amended complaint claims infringement of the following four patents allegedly held by Dana:

1. “Spring Loaded Clutch,” United States Patent No. 3,394,788, issued July 30, 1968 (“788 Patent”);
2. “Self-Adjusting Clutch,” United States Patent No. 3,752,286, issued August 14, 1973 (“286 Patent”);
3. “Clutch with Friction Reducing Lever Assembly,” United States Patent No. 4,034,836 issued July 12, 1977 (“836 Patent”); and
4. “Coaxial Spring Damper Drive,” United States Patent No. 4,254,855, issued March 10, 1981 (“855 Patent”).

(Amended Complaint II4.) Dana alleges that within six years of the commencement of this action, APC infringed the 788, 286, and 836 patents. IAT and Century are alleged to have infringed all the patents named in paragraph 4 of the amended complaint within six years of the commencement of the action. (Amended Complaint, ¶¶1 5, 6.)

Although the nature of the defendants’ allegedly infringing conduct is not specified in the amended complaint, it is now clear from the briefs of the parties that Century is accused of direct infringement by “reconstructing” Dana clutches and Coaxial Spring Driven Discs when it rebuilds them using one or more non-Dana “key” new parts. Dana has identified these “key” parts as follows:

Patent Description of Part
788 Pressure Springs Release Sleeve Retainer Flywheel Cover Spring Pivot
286 Adjusting Ring Release Sleeve Retainer Self-Adjusting Assembly
836 Adjusting Ring K/e Levers
855 C/A Assemblies Inner Cover Hubs

IAT and APC are accused of contributory infringement by selling these “key” parts to Century and other rebuilders for use in the allegedly impermissible reconstruction of clutches. IAT is also charged with directly infringing the Coaxial Spring Driven Disc patent.

The second count’s federal unfair competition claim is directed only against APC. It alleges that within three years of the commencement of this action, APC advertised, offered for sale, and sold in interstate commerce “disc assemblies as replacements for [Dana’s] patented Spicer Coaxial Spring Driven Disc, and replacement parts therefor,” (Id. at 1113.) These assemblies and parts allegedly compete with Dana’s “patented disc assembly” but differ in structure, function, and quality from Dana’s product. (Id. at 111113, 14.) However, APC represented to the purchasing public that its disc assemblies were equivalent to Dana’s Spicer Coaxial Spring Driven Disc, according to Dana, with the intent that the public rely on such representations. The public was allegedly misled and confused by these violations. Dana concludes that APC’s conduct violated federal trademark laws, specifically 15 U.S.C. § 1125(a).

The defendants responded to Dana’s amended complaint with motions for summary judgment, all raising the equitable defenses of laches and estoppel. On April 24, 1984, Judge Getzendanner, who originally presided over this matter, issued a 33-page opinion denying defendants’ motions based upon her understanding, gleaned from somewhat contradictory statements contained in Dana’s briefs, of the nature of the allegedly infringing conduct challenged by Dana. As Judge Getzendanner explained in a subsequent October 31, 1984 order:

The court’s original opinion concerning defendants’ assertion of the equitable defenses of laches and estoppel was based on a misunderstanding of Dana’s theory of infringement. In briefing the first motion for summary judgment, no party addressed the methods of clutch rebuilding and the differences between repair and return and production rebuilding. In defense of the previously filed motions for summary judgment, Dana argued that laches and estoppel could not be established because it had only recent knowledge of the infringing activities. Dana contended that even if evidence shows it knew of APC’s and IAT’s manufacture of component parts to its patented clutch assemblies and of Century Clutch’s rebuilding, that knowledge alone would not put it on notice that use of the parts was direct infringement. Attempting to reconcile these two claims, the court interpreted Dana’s claim of direct infringement as requiring a showing of rebuilding involving two or more key parts. When Dana finally explained that it sought to distinguish production rebuilding (infringing) and repair and return (noninfringing), the court granted Century Clutch leave to file a motion to reconsider.

The court considers Century Clutch’s motion to reconsider the laches and estoppel rulings based on the new theory of infringement and the new evidence in their supporting memorandum a serious motion, at the very least with respect to the two earlier patents. Several documents tend to show that Dana had early knowledge of the production rebuilding industry and of Century Clutch’s business as a production rebuilder. The seriousness of the motion has persuaded the court that a hasty ruling on the motion would be ill-advised. Moreover, Dana has intimated that production rebuilding even using only Dana-manufactured parts might constitute infringement. The court would have to consider this issue seriously and make a determination whether production rebuilding in general is infringement. This determination would affect the decision regarding laches and estoppel, perhaps as to all four patents.

ITA and APC have also renewed their motion for summary judgment.

Summary judgment is a drastic remedy which should be granted only when it is clear that the requirements of Rule 56, Fed.R.Civ.P., have been met. Poller v. Columbia Broadcasting, 368 U.S. 464, 467, 82 S.Ct. 486, 488, 7 L.Ed.2d 458 (1962). All allegations and inferences are to be construed in the light most favorable to the non-moving party. Id. However, as the Seventh Circuit has admonished, “[w]ith the ever increasing burden upon the judiciary, persuasive reasons exist for the utilization of summary judgment procedure whenever appropriate.” Kirk v. Home Indemnity Co., 431 F.2d 554, 560 (7th Cir.1970). Based upon the undisputed material facts, it is clear that defendants are entitled to judgment as a matter of law.

BACKGROUND FACTS

Since its founding in 1946, Century has been in the business of rebuilding clutches. There are essentially two types of clutch rebuilders. “R & R” or custom rebuilders disassemble a worn clutch, locate defective parts and replace them with new or salvaged parts, clean the useable parts, and then reassemble the clutch using as many of its original parts as are still serviceable. A “production” rebuilder acquires a number of worn clutches, called cores, primarily as trade-ins for rebuilt clutches, disassembles the cores, cleans and sorts individual parts, salvaging those that can be reused and placing them in bins. Then, using a production line set-up, a number of clutches will be reassembled from as many salvaged parts as possible (although no care is taken to ensure that the parts from core “A” are all used to reassemble rebuilt core “A”). To the extent there are insufficient used parts, new replacements are included in the assembly.

Century is a production rebuilder. APC and IAT have supplied Century with new parts, including those identified by Dana as “key” parts, for use in the rebuilding process. Century does not have records sufficient to show how many new or key parts have been used in any particular rebuilt clutch, but it is undisputed that Century uses as few new parts as possible in its rebuilding process.

DISCUSSION

It is important at the outset to determine exactly which conduct Dana alleges to constitute patent infringement. “R & R” rebuilding or “one-at-a-time repair of Angle Spring clutches, even with non-Dana parts, is not infringement.” (Dana’s Memorandum in Opposition to Summary Judgment, p. 5.) And rebuilding “without the use of any new parts (or using only unimportant new parts)” is also not challenged. (Id.) Rather, Dana poses the issue as follows:

The question in this case is whether rebuilding worn out Angle Spring clutches employing new [one or more] key parts [of non-Dana origin] — parts that are intimately connected with the essential gist of the patented inventions — amounts to infringing reconstruction.

(Id; emphasis supplied.)

Based upon a review of the case law on reconstruction, this Court concludes the answer to the above question is a resounding “No”.

The leading case on the repair/reconstruction distinction is Aro Manufacturing Company v. Convertible Top Replacement Co., 365 U.S. 336, 81 S.Ct. 599, 5 L.Ed.2d 592 (1961) (“Aro /”). Aro I was a contributory infringement action seeking damages and an injunction based upon the manufacture and sale of fabric replacements for convertible roofs on automobiles. The convertible roof was subject to a combination patent. The Court first found that no patent was claimed as to the fabric or its shape; that “the fabric is no more than an unpatented element of the combination which was claimed as the invention.” 81 S.Ct. at 601. Thus, “the principal and we think the determinative question presented here is whether the owner of a combination patent, comprised entirely of unpatented elements, has a patent monopoly on the manufacture, sale or use of the several unpatented components of the patented combination.” Id. But as the Court had held in Mercoid Corp. v. MidContinent Co., 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376 (1944):

The patent is for a combination only. Since none of the separate elements of the combination is claimed as the invention none of them when dealt with separately is protected by the patent monopoly-

64 S.Ct. 272. See, also, Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680, 64 S.Ct. 278, 88 L.Ed. 396 (1944), in which the Court explained:

The fact that an unpatented part of a combination patent may distinguish the invention does not draw to it the privileges of a patent. That may be done only in the manner provided by law. However worthy it may be, however essential to the patent, an unpatented part of a combination patent is no more entitled to monopolistic protection than any other unpatented device.

64 S.Ct. at 280.

Based on its holdings in the Mercoid cases, the Aro I Court concluded that the manufacture and sale of the replacement fabric was not itself a direct infringement under 35 U.S.C. § 271(a).

Aro was also charged with contributory infringement under 35 U.S.C. § 271(c) based upon the activities of Aro’s customers. Since there can be no finding of contributory infringement under § 271(c) without a finding of direct infringement by customers of the alleged contributory infringer, the question thus became whether purchasers of the replacement fabric directly infringed the subject patent by “reconstructing” the article or merely engaged in “permissible repair.” The Supreme Court found that the applicable test was stated in Wilson v. Simpson, 9 How. 109, 50 U.S. 109, 13 L.Ed. 66 (1850) as interpreted by United States v. Aluminum Company of America, 148 F.2d 416 (2d Cir.1945), which stated “the [patent] monopolist cannot prevent those to whom he sells from ... reconditioning articles worn by use unless they in fact make a new article.” 148 F.2d at 425, quoted at 81 S.Ct. at 603.

The Court of Appeals had adopted an erroneous test in Aro I by focusing upon the relative importance of the fabric to the patented combination and the fact that although the life span of the fabric top was expectably shorter than the other components, the fabric top was not “an element that would expectedly wear out in a very short period of use.” 270 F.2d 200, at 205, quoted 81 S.Ct. at 603. According to the Court of Appeals, only “minor” repairs were permissible and replacement of the fabric top was a “major reconstruction.” Id. The patent holders in Aro I defended the erroneous Circuit Court test arguing:

[T]hat when an element of a patented machine or combination is relatively durable — even though not so durable as the entire patented device which the owner purchased — relatively expensive, relatively difficult to replace, and is an “essential” or “distinguishing” part of the patent combination, any replacement of that element when it wears out or is otherwise spent, constitutes infringing “reconstruction” and, therefore, a new license must be obtained from, and another royalty paid to, the patentee for that privilege.

81 S.Ct. at 603.

The Court disagreed with this statement of the repair/reconstruction test:

[t]he basic fallacy in respondent’s position is that it requires ascribing to one element of the patent combination the status of the patented invention in itself . .. there is no legally recognizable or protected “essential” element “gist” or “heart” of the invention in a combination patent. ”

81 S.Ct. at 604 (emphasis added).

Noting that the owner of a patented article has an implied license “to preserve its fitness for use so far as it may be affected by wear or breakage,” the Court held

that the maintenance of the “use of the whole” of the patented combination through the replacement of a spent unpatented element does not constitute reconstruction.
[Reconstruction] is limited to such a true reconstruction of the entity as to in fact make a new article, after the entity viewed as a whole has become spent. In order to call the monopoly, conferred by the patent grant into operation for the second time it must indeed be a second creation of the patented entity ... [m]ere replacement of individual patented parts, one at a time, whether of the same part repeatedly or a different part successively, is no more than the legal right of the owner to repair his property.

81 S.Ct. at 604.

Relying upon Aro I, the Seventh Circuit in National Standard Co. v. UOP, Inc., 616 F.2d 339 (7th Cir.1980), similarly rejected a claim that replacement of a key or “dominant” part in a patented device constituted reconstruction. There plaintiff, the exclusive licensee of a combination patent on a device used in the coal industry for sorting or classifying particles of coal by size, sued a manufacturer of a replacement screen for the patented device. The plaintiff claimed that the screen was the most material or dominant part of the device and that defendant’s manufacture and sale of the replacement screen constituted contributory infringement because the replacements were used to reconstruct the device. Holding that such an argument was precluded under Aro I, the Seventh Circuit stated:

Plaintiff and its customers expected the sieves involved in this case to wear out after a relatively short period of use; the balance of the device was expected to remain operable for a much longer period. Plaintiff’s total device sells for three times the price of a replacement sieve, and the sieve is only one of three elements in the patented combination. Although the device would be useless without the sieve, it would be equally useless without either of the two other elements of the patented combination.

Id. at 340. See also Wells Mfg. Corp. v. Littelfuse, Inc., 547 F.2d 346 (7th Cir.1976) (replacement of entire switch, constituting the essential part, not reconstruction).

Aro I and its progeny thus clearly “eschewed the suggestion that the legal distinction between ‘reconstruction’ and ‘repair’ should be affected by whether the element of the combination that has been replaced is an ‘essential’ or ‘distinguishing’ part of the invention.” Dawson Chemical Co. v. Rohm and Haas Co., 448 U.S. 176, 217, 100 S.Ct. 2601, 2623, 65 L.Ed.2d 696 (1980). Dana’s claim that the use of even one new “key” part of non-Dana origin in production rebuilding constitutes reconstruction (Dana Memorandum in Opposition to Motions for Summary Judgment, p. 4) is therefore clearly without merit.

The question remains, however, how much is too much? Dana has identified four key parts for the 788 patent, three key parts for the 286 and 855 patents, and two key parts for the 836 patent. If Century utilizes, for example, all four “key” parts for the 286 patent, can it be said that it has “recreated a new article” in violation of the patent laws?

The case law suggests not.

In Wilbur-Ellis Co. v. Kuther, 377 U.S. 422, 84 S.Ct. 1561, 12 L.Ed.2d 419 (1964), petitioner was a second-hand purchaser of machines (on which respondent held a patent) which were originally designed to pack fish into “1-pound” cans, 3 inches in diameter and 4u/i6 inches high. When the machines were purchased by Wilber-Ellis, they were corroded, rusted and inoperable. After cleaning, sandblasting the machines and resizing 6 of the 35 elements that made up the patented combination, the machines could operate to pack fish into “5-ounce” cans, 2V3 inches in diameter and Zlk inches long. Both the trial court and the Ninth Circuit found impermissible reconstruction under Aro I, holding that the defendant’s activities were “a true reconstruction of the entity as to in fact make a new article.” 314 F.2d 71, at 73.

The Supreme Court reversed, summarily dismissing the claim that impermissible reconstruction was involved:

These four machines were not spent; they had years of usefulness remaining though they needed cleaning and repair. Had they been renovated and put to use on the 1-pound cans, there could have been no question but that they were “repaired”, not “reconstructed”.

377 U.S. at 424, 84 S.Ct. at 1563.

Since the sale of the machines was absolute with no limitation as to the size of the cans to be processed and since the size of the can to be used in the machine was not within the patent claims, the resizing of the machine was permissible repair. 377 U.S. at 424-25, 84 S.Ct. at 1563-64.

The Seventh Circuit in TSC Industries, Inc. v. International Harvester Company, 406 F.2d 53 (7th Cir.1968) has also indicated that substantial rebuilding of a non-spent patented item may be undertaken without engaging in reconstruction. In TSC Industries, plaintiff brought a declaratory judgment action seeking a declaration that its conduct did not constitute impermissible reconstruction. Defendant held a patent on a “doffer,” the heart of a mechanized cotton picking machine. The “doffer” was a rotating element consisting of a metal carrier plate that had spaced rubber coated fingers that removed the cotton from the picking spindles. The Seventh Circuit’s description of the defendants’ rebuilding activities is similar, to a certain decree, with the challenged activity here:

Plaintiff does not take the worn doffer to be repaired and thereafter return it to the original owner. Plaintiff purchases worn out '930 doffer assemblies for a nominal sum. After reclaiming the plate from the doffer assembly, plaintiff carries out additional steps which are identical with those performed by the defendant and which have been herein-before described. Plaintiff claims that what it has done is a “rerubbering” process and that it is a permissible repair and therefore, not an infringement.
After accumulating a substantial number of defendant’s worn and spent doffers, plaintiff follows the practice of initiating its “rerubbering” program. Plaintiff destroys what is left of the patented doffer combination by removing the molded rubber lugs and the wafer-like web including the resilient lug sustaining portions of the web, spanning the space between the fingers of the carrier plate. It is possible to reuse the metal plate a number of times.

Id. at 55. The trial court found that plaintiff had destroyed the patented doffer and then reconstructed a new one. The Seventh Circuit reversed, holding that the challenged conduct constituted permissible repair.

This Court therefore concludes that even if Century replaced all of the so-called “key” parts with new non-Dana parts, no “second creation” of the patented combination would occur. Accordingly, Century does not engage in reconstruction simply by using new key parts in rebuilding, and APC and ITA are not contributory infringers for selling such parts to Century or other rebuilders.

But Dana has one more argument. Dana argues that because in the production rebuilding process it is unlikely “that any two parts in a Century rebuilt Angle Spring clutch originated from the same clutch,” the rebuilt core loses its “identity” and is therefore “created” anew. (Dana Memorandum in Opposition, p. 11.)

This Court cannot agree. Dana’s argument, in essence, is that Century’s production line method of rebuilding can transform repair into reconstruction. Such a claim appears precluded by the Seventh Circuit’s decision in TSC Industries, supra. The rebuilding process there, while not precisely a “production line,” would seem similar enough to suggest a similar result here.

This conclusion is buttressed by the Court of Claims’ decision in General Electric Co. v. United States, 572 F.2d 745, 215 Ct.Cl. 636 (1978). In General Electric, G.E. held patents on certain naval gun mounts which the navy repaired pursuant to its Ordinance Replacement Program. The Replacement Program’s stated goal was to provide ships with “new or completely rebuilt” guns. 572 F.2d at 770. Under the Replacement Program, gun mounts with a history of frequent repair were sent to Louisville, Kentucky, where they were disassembled to their “smallest readily separable part.” 572 F.2d at 780. The parts from various mounts were treated as fungible and two out of five mounts were scrapped and cannibalized for parts. Id. Some parts, particularly wiring, were replaced without regard to wear. Finally, the result of the Replacement Program was to increase performance “beyond original specification” in many instances. Id. Relying in part on Monroe Auto Equipment Co. v. Precision Rebuilders, Inc., 229 F.Supp. 347 (D.Kan.1964) (a case relied upon here by plaintiff), the trial court found that the Navy had engaged in impermissible reconstruction. The Appellate Court reversed:

In these circumstances it seems to us that the user of the combination (the Navy) was not creating a “new article” in the sense of Aro I, even though the gun mounts were disassembled in order to be overhauled, and even though, in some or most or all instances, the reassembled elements were not returned to the same gun mount or the same ship ... The assembly-line method adopted at Louisville was simply a speedier, less expensive, more efficient, and more effective means of refurbishing the gun mounts than if they had been dissassembled and renovated gun mount by individual gun mount, and then returned to the same ship — and the end-result as precisely the same. Disassembly and renovation by individual gun mount would surely not be enough to show reconstruction — or Wilbur-Ellis could not have been decided as it was — but it would have been a much more burdensome, time-consuming, and costly procedure. Achieving precisely the same result by a more practical, economical and convenient process is surely not required by patent law in order to avoid imposition of further liability. The substance of what was done to the mounts would be the same by either method, the difference being simply that the procedure followed by the Navy at Louisville was easier, quicker and less expensive.

Id. at 784, 786. While it is true that the Navy utilized primarily GE parts for its reconditioning, the Court of Claims strongly suggested that the source of “one or two” elements would not alter its analysis. 572 F.2d at 785 n. 21. Assuming arguendo that replacement of all the “key” parts were accomplished with non-Dana parts, production line rebuilding would still not constitute reconstruction because as stated in General Electric:

Achieving precisely the same result by a more practical, economical and convenient process is surely not required by patent law in order to avoid imposition of further liability.

CONCLUSION

The Court accordingly concludes that, as a matter of law, Century’s production line rebuilding process utilizing one or more “key” parts of non-Dana origin does not constitute impermissible reconstruction. Century is therefore entitled to summary judgment on this claim. There being no direct infringement, there can be contributory infringement, and APC and IAT are therefore also entitled to summary judgment on this claim.

      . Apparently Century-Parts, Inc. no longer exists as a separate entity.

      . The assets of American Precision Company (division of Avnet) were sold to Everco Industries, Inc. in 1984, and were merged into American Precision Company, Inc., a wholly-owned subsidiary of Everco.


author: BUA, District Judge.

text:
    Stanley K. de FURGALSKI, Plaintiff, v. Eugene L. SIEGEL, Jerome Bennett, George A. Rywniak, Thomas A. Cooper, Donald A. Ryan, Charles E. Tokar, Lawrence Grove, Mary Macarol, Edward F. Buettner, Frank R. Angelotti, Carmen Dicarlo, Fred J. Speck and James McQuaid, Defendants.
    No. 85 C 1858.
    United States District Court, N.D. Illinois, E.D.
    Sept. 18, 1985.

      James W. Malloy, Chicago, Ill., for plaintiff.
    Thomas F. Bridgman, Edward J. Zulkey and Gerald L. Maatman, Jr., Baker & McKenzie, Chicago, Ill., for defendants.
   MEMORANDUM ORDER

BUA, District Judge.

Before the Court is defendants’ motion to dismiss the amended complaint for compensatory damages and declaratory relief. Plaintiff alleges violations of the Civil Rights Acts of 1866 and 1871, 42 U.S.C. §§ 1981, 1982, 1983, and pendent state law theories. Jurisdiction in this Court is based on Title 28, United States Code, Section 1331.

Defendants argue, among other things, that plaintiff’s claims are time barred by the two-year Illinois statute of limitations imposed by the Supreme Court’s decision in Wilson v. Garcia, — U.S. -, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985). For the reasons stated herein, the Court denies defendants’ motion to dismiss all counts of plaintiff’s amended complaint.

FACTS

The following facts are alleged in plaintiff’s amended complaint. For purposes of this order they are considered to be true.

Since 1973 plaintiff has attempted to build a group of apartment buildings. Plaintiff engaged subcontractors to perform the construction work in 1977. Three of these subcontractors were black. After the defendants discovered the subcontractors’ race, the defendants harassed plaintiff by initiating needless zoning and building restrictions in an attempt to prevent completion of the apartments.

From 1980 to 1982, defendants withheld police protection from the construction area and withheld zoning decisions with the intent to reduce the value of plaintiff’s property. Plaintiff initiated this litigation in March 1985 based on his belief that his civil rights had been violated.

DISCUSSION

I. § 1983 Statute of Limitations

Because the Reconstruction Civil Rights Acts do not contain a specific statute of limitation governing 42 U.S.C. § 1983 actions, the Court is obligated to adopt the forum state’s statute of limitation as federal law. Smith v. City of Pittsburgh, 764 F.2d 188 (3d Cir.1985). In 1977, the Seventh Circuit held that all claims founded on the Civil Rights Acts are governed by the five-year Illinois statute of limitations applicable to all statutory causes of action that do not contain their own limitations periods. Beard v. Robinson, 563 F.2d 331, 338 (7th Cir.1977).

In 1985, however, the Supreme Court characterized all § 1983 actions uniformly as personal injury actions and applied to § 1983 actions the state statute of limitations governing personal injury actions. Wilson v. Garcia, — U.S. -, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985). As a result of Wilson, the appropriate limitation period for § 1983 actions brought in Illinois is the two-year personal injury claim limitation provided by § 13-202 of the Illinois Code of Civil Procedure.

The issue before the Court is whether Wilson should be applied retrospectively to bar plaintiff’s claim, or whether the five-year limitation chosen in Beard should be applied to allow maintenance of plaintiff’s claim. The parties agree that plaintiff’s action was timely filed under the then-applicable Seventh Circuit decision in Beard. The parties also agree that plaintiff’s action would be untimely under a retrospective application of the Wilson decision because it was filed more than two years after the events surrounding plaintiff’s unsuccessful attempt to develop his property.

The Supreme Court addressed the issue of retrospective application of changes in the law of statutes of limitations in Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07, 92 S.Ct. 849, 355, 30 L.Ed.2d 296 (1971), applying a three-part analysis:

First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second, it has been stressed that “we must ... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.” Finally, we have weighed the inequity imposed by retroactive application, for “[w]here a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the ‘injustice or hardship’ by a holding of nonretroactivity.”

(Citations omitted). Plaintiff’s action must be analyzed in light of these factors.

A. The Change from Prior Law

Wilson established a new principle of law when it effectively overruled a long line of decisions by the Court of Appeals for the Seventh Circuit, starting with Beard. In the ease before this Court, plaintiff filed his suit in March 1985, shortly before Wilson was decided. The Seventh Circuit decision in Beard represented the law governing this case during the five years plaintiff was repeatedly injured and for the ensuing two and one half years until plaintiff instituted his lawsuit. It cannot be assumed that plaintiff could have foreseen that this consistent interpretation of Beard would be overturned. Plaintiff’s reasonable reliance upon the Seventh Circuit’s clear precedent in waiting to file suit should not result in a barred claim by retrospective application of Wilson. The Court “should not indulge in the fiction that the law now announced has always been the law and, therefore, that those who did not avail themselves of it waived their rights.” Griffin v. Illinois, 351 U.S. 12, 26, 76 S.Ct. 585, 594, 100 L.Ed. 891 (1955).

Not all courts are in agreement as to nonretrospective application of Wilson. The Court of Appeals for the Third Circuit applied Wilson retrospectively in Smith v. City of Pittsburgh, 764 F.2d 188 (3d Cir.1985). detailed analysis of Smith is enlightening. In Smith, plaintiff Smith brought a § 1983 racial discrimination claim alleging he was discharged from his employment in violation of the due process clause of the Fourteenth Amendment. The then-existing statute of limitations required Smith to file his claim within six years of the action’s accrual; he filed within two and one half years. Defendants argued that the statute of limitations should be two years for due process violations absent breach of contract allegations. The district court rejected defendants’ claim that the complaint was untimely, holding that the applicable state statute of limitations was six years.

The Third Circuit reversed the district court and granted summary judgment to defendants. The court held that Wilson should be applied retrospectively to Smith’s claim thus requiring application of the two-year state personal injury limitation. Since Smith filed after the two-year period, the court ruled that Smith’s claim was time barred.

The holding in Smith will not be followed because the key facts in Smith are distinguishable from the facts before this Court. In Smith, the plaintiff filed suit in the Third Circuit where application of the statute of limitations had been erratic and inconsistent, without clear precedent on which the plaintiff could have reasonably relied in waiting to file suit. The Third Circuit placed great emphasis on the absence of any definitive holding within the circuit and the existence of divided district courts within the circuit. Noting that Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971), only barred retrospective application when a change from prior law occurs, the Smith court applied Wilson retrospectively. The Smith court believed that the change from prior law factor in Chevron was not implicated in the absence of clear prior precedent. The Third Circuit reasoned that the absence of definitive interpretations espousing a limitation longer than two years and the district court’s support for the two-year limitation should have put Smith on notice that it would not have been reasonable to wait more than two years to file suit.

The existence of a prior precedent consistently applied in the Seventh Circuit distinguishes the facts before the Court from the facts present in Smith. Because the Seventh Circuit consistently applied the five-year limitation, Wilson effectively overruled clear past precedent. Under the Chevron analysis, retroactivity is inappropriate where past precedent on which the parties may have relied is overruled. The existence of clear precedent in the Seventh Circuit applying a five-year limitation period should not have put plaintiff on notice that it would be unreasonable to wait more than two years from the accrual of the action. The cases are therefore distinguishable by the consistency in the application of the longer time limitation.

B. Purposes of Wilson v. Garcia

The second step in the Chevron analysis is to determine whether the purposes of the new rule will be furthered or retarded by retrospective application. The purposes of Wilson were to promote uniformity and to minimize unnecessary litigation. These purposes are not retarded by following the previously acceptable Seventh Circuit five-year limitation rule in this case because a uniform approach already existed within the circuit. Even the Smith court could not “say that the policies referred to in Wilson v. Garcia militate clearly in favor of retrospective application.” 764 F.2d at 196 (3d Cir.1983). Applying the facts, the Court cannot say that retrospective application barring plaintiff’s claim would either hamper or promote the goals set out in Wilson.

C. The Equities of Retrospective Application

Finally, the Court must consider whether retrospective application would impose harsh, unjust, or inequitable results. The Court believes that it would under the circumstances of this case. In Chevron, the Supreme Court stated that where “a plaintiff could have reasonably waited to file suit under the established prior rule, it would be inequitable to say he had slept on his rights because of a later and unforeseeable Supreme Court decision.” 404 U.S. at 108, 92 S.Ct. at 356. From 1977 until the time this claim was filed, the Court of Appeals for this Circuit had clearly and consistently applied the five-year limitation period for § 1983 claims. Plaintiff justifiably relied on those cases in filing his suit. It therefore cannot be said that plaintiff slept on his rights when his action was timely under the law in effect at the time.

Accordingly, the Court concludes that the Supreme Court’s approach in Wilson should not be retroactively applied to bar plaintiff’s claim because plaintiff justifiably relied upon the Seventh Circuit’s prior precedent, the purposes of Wilson would not be retarded, and retrospective application would impose an unjust result.

II. § 1981 and § 1982 Claims

Defendant argues that Wilson mandates that the two-year statute of limitation that applies to § 1983 claims extends with equal force to time-bar claims brought under § 1981 and § 1982. The Court finds it unnecessary to make such an extension since plaintiffs claims also would not be time barred even assuming that the two-year personal injury limitation applies to § 1981 and § 1982 claims. Plaintiffs claims would not be barred because the Court holds that Wilson should not be retrospectively applied to bar claims brought in the Seventh Circuit. For the same reasons Wilson should not retrospectively apply to § 1983 claims, the Court also holds that the two-year limitation imposed in Wilson does not bar plaintiffs § 1981 and § 1982 claims.

III. Laches

The doctrine of laches is grounded upon the inequity of permitting enforcement of a claim where some change in circumstances has occurred which would make enforcement unjust. Harris v. Anaconda Aluminum Co., 479 F.Supp. 11, 20 (N.D.Ga.1979). Laches is comprised of two elements: inexcusable delay by a plaintiff in asserting his claim, and undue prejudice to a defendant as a result. Id.; Akers v. State Marine Line, Inc., 344 F.2d 217 (5th Cir.1965). The existence of the defense is left to the discretion of the trial court. Gardner v. Panama R.R., 342 U.S. 29, 72 S.Ct. 12, 96 L.Ed. 31 (1951).

Neither of the laches elements are present in the instant case. Plaintiff justifiably relied upon the then existing five-year limitation period. Plaintiffs decision to wait two and one half years from the accrual date to file was an acceptable tactical decision. The Court cannot say plaintiff slept on his rights.

Moreover, defendants do not support their assertion that they were unduely prejudiced by plaintiffs decision to wait two and one half years. Defendants’ simple, single sentence assertion that the delay prejudiced them is not compelling. Thus, the Court rejects defendants’ laches defense.

IV. Failure to State a Cause of Action

The guidelines used in considering a motion to dismiss a complaint for failure to state a claim are well defined. On a motion to dismiss under Federal Rules of Civil Procedure, a complaint must be construed in the light most favorable to the plaintiff, the allegations thereof being taken as true. Mathers Fund, Inc. v. Colwell, 564 F.2d 780, 783 (7th Cir.1977). A complaint should not be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to the requested relief. Cruz v. Beto, 405 U.S. 319, 322, 92 S.Ct. 1079, 1081, 31 L.Ed.2d 263 (1972); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). The Court finds that plaintiff has alleged sufficient facts to support his claim.

Plaintiff was required to allege two factors in order to state a cause of action under § 1983: (1) some person has deprived him of a federal right; (2) the person who has deprived him of that right acted under color of state law. Gomez v. Toledo, 446 U.S. 635, 638, 100 S.Ct. 1920, 1922, 64 L.Ed.2d 572 (1980). Plaintiff fulfilled these requirements. Plaintiff specifically pleaded the names of certain persons who allegedly deprived him of his constitutional rights. In addition, plaintiff alleged these persons deprived him of his constitutional rights by, among other things, depriving plaintiff of equal police protection and initiating policies establishing arbitrary and capricious procedural barriers in building and zoning requirements in order to limit the number of black condominium owners. Plaintiff also clearly pleaded that these persons acted in their official capacities thus under color of state law.

Plaintiff’s complaint also sufficiently pleads a § 1982 action. § 1982 prohibits racial discrimination in the sale and rental of real property. Southend Neighborhood Improvement Association v. County of St. Clair, 743 F.2d 1207, 1210 (7th Cir.1984). Defendants argue that the complaint is insufficient because it does not allege defendants’ conduct resulted in a denial of housing opportunities to blacks. A careful reading, however, reveals that plaintiff alleges in paragraph 8 that defendants’ actions effectively controlled and limited the number of black condominium purchases by reducing the construction of new apartments. This allegation states a cause of action under § 1982. Consequently, defendants’ motion to dismiss for failure to state a claim is denied.

V. Jurisdiction Over Pendent State Law Claims

In United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), the Supreme Court allowed state claims lacking federal jurisdiction to be adjudicated with closely related federal claims. Defendants before this Court argue that under Gibbs the dismissal of plaintiff’s civil rights claims should result in the dismissal of the pendent state claims. Such a dismissal would have been appropriate if the Court had dismissed the civil rights claims. In light of the Court’s decision to deny dismissal of these claims, defendants’ argument is unpersuasive. As a result, the state claims will be adjudicated with the federal civil rights claims.

VI. Conclusion

The plaintiff’s amended complaint is not barred by the statute of limitations nor the doctrine of laches. Moreover, plaintiff’s complaint states a cause of action. Accordingly, defendants’ motion to dismiss is denied.

IT IS SO ORDERED.