author: CRABB, Chief Judge.

text:
    KEALEY PHARMACY & HOME CARE SERVICE, INC.; Dawiedzyk Pharmacy, d/b/a Milton Avenue Pharmacy; Rademacher Drugs, Inc., d/b/a East Troy Drugs; Lake Mills Pharmacy, Inc.; Joseph Jameson, d/b/a Monticello Pharmacy; Philip L. Lutgen, d/b/a Delafield Pharmacy Walgreen Agency; Kunkel Pharmacy, Inc.; Langmack’s Inc., d/b/a Langmack’s Drugs; D & W Pharmacies, Inc., d/b/a Monona Drive Walgreen Agency; Busse Pharmacy, Inc.; Willis-Lauke, S.C., d/b/a Willis Drug, Plaintiffs, v. WALGREEN COMPANY, Defendant.
    No. 80-C-522-C.
    United States District Court, W.D. Wisconsin.
    April 19, 1984.

      Dennis L. Hansch, Janesville, Wis., for plaintiffs.
    H. Dale Peterson, Madison, Wis., and Howard J. Swibel, Arnstein, Gluck & Lehr, Chicago, Ill., for defendant.

       This opinion is one year old, and is submitted because of the Seventh Circuit opinion issued in April, 1985. 761 F.2d 345.

   OPINION AND ORDER

CRABB, Chief Judge.

This civil action is before the court after trial to the court on the issue of damages only. In earlier decisions, I denied plaintiffs’ motions for preliminary and permanent injunctions prohibiting the termination of their Walgreen dealerships and I granted partial summary judgment to plaintiffs on the issue of defendant’s liability for damages resulting from the termination of plaintiffs’ Walgreen dealerships. 539 F.Supp. 1357.

From the evidence adduced at the trial, and from the stipulations of the parties, I make the following findings of fact.

FACTS

Plaintiffs are independently owned drugstores located in southern Wisconsin.

Defendant Walgreen Company is an Illinois corporation with its principal place of business at 200 Wilmot Road, Deerfield, Illinois, 60015. It is engaged in the manufacture and sale of pharmaceuticals, drugs, and toiletries, and also owns and operates drugstores throughout the United States.

Plaintiff Kealey Pharmacy & Home Care Service, Inc. is a 4200 square foot drugstore located in Janesville, a city of 51,100. It was acquired by James Kealey as a Walgreen agency store in May, 1965. When he bought the store, Kealey believed the Walgreen agencyship to be an important factor in the purchase. Before he agreed to the purchase, Kealey checked with both the Walgreen agency representative in the area and with defendant’s home office to confirm that the store would remain a Walgreen agency.

Plaintiff Milton Avenue Pharmacy, is a 4,000 square foot drugstore also located in Janesville. Dennis Dawiedczyk purchased the store in June, 1973, when it was a Walgreen agency. As part of the purchase price, Dawiedczyk paid $10,000 for good will, despite the fact that the store had been losing money.

Plaintiff East Troy Drugs, is a 5000 square foot drugstore located in East Troy, Wisconsin, a town of 2,385. John Rade-macher bought the drug store in 1970 when it was a Rexall agency. In 1976 Rade-macher moved to a larger store in a shopping center strip mall and signed a retailer’s agreement with defendant.

Plaintiff Lake Mills Pharmacy, Inc. is a 1700 square foot drugstore located in Lake Mills, a town of 3,670. Kent Kautzer purchased the store in 1975, when it was an independent store. Kautzer executed a dealership agreement with defendant in November, 1976.

Plaintiff Monticello Pharmacy is a 2300 square foot drugstore located in Monticello, a town of 1,021, about 25 miles away from Madison. Joseph Jameson bought it in February, 1979, three to four months after the store had first opened. Jameson executed a dealership agreement with defendant in June, 1977.

Plaintiff Delafield Pharmacy Walgreen Agency, is a 1700 square foot drugstore located in Delafield, a town of 4,083, on the outskirts of the Milwaukee metropolitan area. Philip Lutgen'purchased the store in 1974 when it was a Walgreen agency, paying $10,000 for good will.

Plaintiff Kunkel Pharmacy, Inc. is a 4000 square foot drugstore located in Elkhorn, a town of 4,605. It was purchased as a Walgreen agency by Donald Kunkel in August, 1968. It has been remodeled twice since 1968.

Plaintiff Langmack’s Drugs, is a 5000 square foot drugstore located in Beaver Dam, a city of 14,100. It was purchased as a Walgreen agency store in 1963 by Carl Johnson.

Plaintiff Monona Drive Walgreen Agency, is a 3000 square foot drugstore located in Monona, a town of 8,809, bordering Madison. It was purchased as an independent store by Dennis Dawiedczyk in 1978. Daw-iedczyk signed a retailer’s agreement with defendant in October, 1978.

Plaintiff Busse Pharmacy, Inc. is a 5000 square foot drugstore located in Water-town, a city of 18,100. Busse was purchased as a Walgreen agency by Alfred Shumaker in 1978. In 1976, when Shumaker was a part owner, the store was remodeled and doubled in size.

Plaintiff Willis Drug, is a 4000 square foot drugstore located in Evansville, a town of 7,835. The store was established in 1956 by Arnold Willis. It was moved across the street to its present location in 1979, the same year in which plaintiff became a Walgreen agency store. The move enabled the store to expand from 1200 square feet to its present size.

In April of 1980, defendant decided to terminate its entire Agency Division nationwide because of unsatisfactory financial performance. Defendant sent letters to plaintiffs informing them of the decision and advising them that their dealership agreements would be terminated effective October 1, 1980.

Defendant’s Agency Division had serviced its agency stores, including plaintiffs, by assisting their owners with inventory, advertising, promotion, store layout, advertising, and other aspects of drugstore operation. Defendant employed agency representatives who solicited drugstore owners to affiliate with defendant. In 1978, for example, a Walgreen agency representative met with Arnold Willis to encourage him to make the Willis Drug Store in Evansville a Walgreen agency store. In early 1979, Willis and his partner traveled with the agency representative to defendant’s headquarters in Deerfield, Illinois, where they met with Walgreen officials. Defendant’s employees provided Willis with plans and blueprints for remodeling the newly-acquired building to make it look like the prototypical Walgreen drugstore and they took him and his partner to two Walgreen stores in the Chicago area to show them the newest Walgreen look and layout. Defendant projected plaintiffs first year sales in the new building as $390,000, second year sales as $475,000, and third year sales as $550,000. In fact, plaintiffs first year sales (for the year ending June 30, 1980) were $382,000, its second year sales were $443,000 (for the year ending June 30, 1981), and its third year sales (for the year ending June 30, 1982) were $471,000.

Under the dealership agreements plaintiffs had with defendant they were able to purchase merchandise from defendant and to designate their stores as Walgreen agencies. The agreements did not require plaintiffs to make an initial payment of a fee to defendant in order to become Walgreen agents. Plaintiffs paid money to defendant only as payment for merchandise or advertising materials which plaintiffs chose to purchase from defendant. The dealership agreements provided for nonexclusive territorial arrangements with defendant, which permitted the existence of Walgreen company-owned stores and other Walgreen agents in plaintiffs’ trading areas.

Although the dealership agreements required plaintiffs to purchase various minimum annual amounts from defendant, plaintiffs did not purchase such minimum annual amounts, and defendant made no effort to enforce the minimum purchase requirements. The following chart shows the percentage of their total cost of purchases represented by the purchases plaintiffs made from defendant from 1975 to September, 1980:

1975 1976 1977 1978 1979 1980

Kealey 11.1 ($34,774) 10.3 ($31,086) 9.4 ($29,878) 9.4 ($28,446) 8.8 ($29,875) ($8,697)

Milton Ave 9.8 ($22,213) 7.9 ($21,573) 7.6 ($24,921) 7.3 ($25,920) 10.1 ($32,891) ($6,090)

East Troy 4.6 ($8,662) 5.4 ($12,973) 6.3 ($19,207) 9.9 ($31,776) ($6,838)

Lake Mills 9.6 ($12,195) 10.8 ($16,481) 15.8 ($25,616) ($13,309)

Monticello 12.8 ($10,275) 16.1 ($14,172) ($2,100)

Delafield 4.9 ($7,170) 6.3 ($10,077) 6.4 ($11,334) 8.5 ($16,696) 8.7 ($18,289) ($4,895)

Kunkel 6.4 ($18,248) 6.5 ($20,556) 7.5 ($22,281) 8.5 ($29,124) 8.2 ($31,297) ($15,270)

Monona Dr. ($15,054) ($4,129)

Langmacks 3.6 ($10,903) 3.7 ($11,176) 4.5 ($11,991) 4.8 ($17,780) 7.6 ($21,162) ($11,880)

Busse 8.6 ($26,510) 5.8 ($19,257) 3.5 ($11,164) 3.0 ($10,881) 6.4 ($24,799) ($10,917)

Willis 13.7 ($29,000) ($3,820)

NOTE: The total cost of purchases would include defendant did not sell to plaintiffs. the cost of prescription drugs, which

Defendant’s agency representatives told the agency store owners that the secret to a successful drugstore operation was a five-part program: advertising, Walgreen products, store planning, display, and merchandising. Defendant believed, and told its agency store owners, that the Walgreen name on a sign outside the store had strong drawing power for transient traffic,

Defendant supplied its agency stores with both Walgreen branded products and with products of other manufacturers which were “drop shipped” to the stores. The agency stores usually added a fifty percent markup on the Walgreen products and twenty-five to forty percent markup on the drop-shipped items. The stores were free to set any prices they wished on the items they sold, whether they were Walgreen-branded products or nationally-advertised products. Ordinarily, an agency store owner could sell the Walgreen products for less than similar nationally-advertised products even with a fifty percent markup in the price. On certain yearly promotions of Walgreen vitamins, the owner could sell the vitamins at a competitive price with a one hundred percent markup. Defendants’ agency representatives encouraged the agency store owners to sell more CRW (Walgreen-branded) products by integrating them with other products.

The agency representatives never attempted to enforce the minimum purchase requirements contained in the Retailers Agreements. Such purchases were encouraged by the competitive pricing of the Walgreen products, the special promotions of certain products, and the representative’s demonstrations of the merchandising advantages of integrating the Walgreen products with the nationally-advertised brands to highlight the lower prices of the Walgreen items.

No other drugstore chain in the Midwest provides agency services to independently owned drugstores as defendant did through its agency division. The only drugstore chain that will sell to independently-owned drugstores is Snyder’s, a chain with headquarters in Minneapolis, Minnesota. Snyder’s is not well known in Wisconsin and does not provide the level of services defendant provided its agency stores.

Since their termination as Walgreen agency stores, plaintiffs Kealey and Milton Ave. have become affiliated with Family Drug Voluntary, a buying cooperative made up of about forty independent pharmacies under the sponsorship of the Zahn Drug chain. The cost of membership is $290 a month.

Plaintiff Delafield Pharmacy tried a one year affiliation with Valu-Rite Pharmacies, a division of McKesson, but found it unsatisfactory. Plaintiff Busse Pharmacy also had an affiliation with Valu-Rite, begun prior to its termination as an agency store. Plaintiff Busse discontinued this affiliation in December, 1981.

None of the other plaintiffs has affiliated with any organization or chain of drugstores since the termination by defendant of its agency division.

As Walgreen agency stores, all of the plaintiffs enjoyed the image of low price and good value to the consumer, the benefits of the use of the Walgreen logo, the assistance of the agency representative in merchandising and store layout, and the availability of advertising and promotional materials.

In the tourist areas of southern Wisconsin, such as East Troy and Lake Mills, the Walgreen name attracts visitors from Illinois who are familiar with the Walgreen name, logo, and products. In the small towns where many of the plaintiff stores are located, the plaintiffs benefited from their affiliation with defendant because the Walgreen image of value and low prices offset the usual perception that a store with a captive audience can charge whatever prices it wishes.

During the time they were Walgreen agencies, the plaintiff stores promoted the Walgreen name, image, and reputation in their communities. For example, although they could not purchase prescription drugs from defendant, all of the prescription drugs they sold promoted the Walgreen name because the prescription labels included the words, “Walgreen Agency.”

For a time after termination, customers continued to think of the plaintiff stores as Walgreen agencies and would bring Walgreen promotional coupons in for redemption, only to be told that they would have to go to a Walgreen-owned store instead. Following termination, plaintiffs experienced difficulties in ordering the kinds of sundries they had previously ordered from defendant. They found it difficult to locate distributors of such goods that were willing to sell to plaintiffs in small quantities, and to meet the new and varied credit requirements of the sources they were able to locate. Plaintiffs were unable to purchase CRW products from anyone.

None of the plaintiffs has ever had a prescription optical department, and none of the plaintiffs has ever sold liquor or provided food services. Each of the plaintiffs purchased merchandise from many suppliers other than defendant both before and after the termination.

From time to time, both before and after termination, plaintiffs, independently of each other, have made changes in the merchandise mix and brand labels carried in their stores; have made changes in the kind and level of their advertising expenditures; have participated in promotional campaigns; and have changed their pricing practices.

Both from a sales and profit perspective, the success of plaintiffs’ stores depends on a number of factors. These factors include plaintiffs’ management, pricing policies, advertising, location, size of store, hours of store, services provided by store, merchandise mix and type, the population of the town in which the store is located, the number of pharmacies and other competitors in the store’s trading area, as well as numerous other factors.

With the exception of Kealey Pharmacy and Milton Avenue Pharmacy, which are both in Janesville, each plaintiff is located in a different town, and each plaintiff faces competitive factors and environments that are different from those faced by the other plaintiffs. Many of the areas in which the plaintiff stores are located have experienced particularly adverse effects from the national economic recession.

The nature and identity of each plaintiff’s competitors changes from time to time. The success of a retail drug store depends to a great extent upon the competition that it faces.

Since 1980, defendant has made major increases in its expenditures for advertising in newspapers and on radio and television. Some of this increased advertising has been in areas where plaintiff stores are located.

During the term of the dealership agreements, défendant supplied various Walgreen branded products to plaintiffs. Upon termination, defendant refused to repurchase from the plaintiffs all inventories and merchandise with the Walgreen name or trademark. In selling this inventory, plaintiffs incurred losses as shown below.

Stipulated Whole Cost of Initial Inventory Doubled for Retail Less 9.4% Profit Factor Less Amount Recouped Through Sale Damages

Kealey $3,480.00 $ 6,305.00 $1,680.00 $ 4,625.00

Milton Ave 9,600.00 17,395.00 7,000.00 10,395.00

Monona Dr. 900.00 1,630.00 250.00 1,380.00

East Troy 2,600.00 4,711.00 450.00 4,261.00

Lake Mills 4,250.00 7,701.00 2,750.00 4,951.00

Monticello 992.00

Delafield 3,000.00 5,436.00 500.00 4,936.00

Kunkel 8,000.00 14,496.00 5,000.00 9,496.00

Langmacks 4,000.00 7,248.00 600.00 6,648.00

Busse 1,995.00*

Willis 5,000.00 7,880.00 2,500.00 5,380.00

$55,020.00

Also, plaintiffs incurred damages for removal of their Walgreen signs, for unused sales aids and promotion materials, and conversion expenses as set forth below:

Sign Removal Sales Aides and Promotional Materials Conversion Expenses Subtotal

Kealey $1,906.32 No claim $1,668.00 $3,574.32

Milton Ave 1,402.00 215.00 1,000.00 2,617.00

Monona Dr. 447.20 100.00 No claim 602.20

East Troy 390.00 250.00 2,245.00 2,735.00

Lake Mills 836.64 400.00 500.00 1,736.64

Monticello 400.00 100.00 400.00 900.00

Delafield 544.96 275.00 1,072.00 1,891.96

Kunkel 1,250.00 No claim 500.00 1,750.00

Langmacks 181.54 400.00 800.00 1,381.54

Busse 291.20 No claim 1,220.00 1,511.20

Willis 987.00 . 200.00 600.00 1,787.00

Paragraph 4(c) of plaintiffs’ dealership agreements provides that in the event of termination, plaintiffs may recover from defendant “an amount of cash equal to one-half of Dealer’s purchases of Walgreen products during the twelve month period immediately preceding the effective date of such cancellation or termination.” The amount of cash equal to one-half of plaintiffs’ purchases of Walgreen products during such twelve month period is as follows:

Busse Pharmacy $3,424.50
Delafield Pharmacy 1,497.00
East Troy Drugs 2,683.50
Kunkel Pharmacy 3,785.50
Kealey Pharmacy 2,628.50
Lake Mills Pharmacy 1,051.50
Langmacks, Inc. 2,482.00
Milton Ave. Pharmacy 2,581.50
Monona Drive Pharmacy 788.00
Monticello Pharmacy 201.50
Willis Drug 606.00

Defendant has delivered to plaintiffs’ stores various goods which were accepted by plaintiffs. The following amounts are due defendant for the goods which were delivered:

Kealey Pharmacy $3,607.00
Milton Ave. Pharmacy 2,066.00
Monona Dr. Pharmacy 1,800.00
East Troy Drugs 2,190.00
Lake Mills Pharmacy 1,500.00
Monticello Pharmacy 2,317.00
Delafield Pharmacy 3,750.00
Kunkel Pharmacy 6,048.00
Langmack’s Drugs 1,225.00
Busse Pharmacy 3,235.00
Willis Drug 2,126.00

Prior to the effective date of termination (October 1, 1980), plaintiffs had actual knowledge that their dealership agreements required them to remove their Walgreen signs, and that they would face a penalty of $500.00 per month for each month after the termination that they did not remove their Walgreen signs. Paragraph 6 of plaintiffs’ dealership agreements provided:

In the event of the cancellation or termination of this Agreement, Retailer agrees to pay Walgreen the sum of $500 per month for each month following said cancellation or termination during which Retailer maintains signs or other advertising matter designating Retailer as a distributor of Walgreen products.

Seven of the plaintiffs did hot remove their signs for more than one month after termination, as shown below:

Sign Removed
Monona Drive Pharmacy May, 1981
East Troy Drugs January, 1981
Delafield Pharmacy January, 1981
Langmack’s Drugs June, 1982
Willis Drug August, 1982
Kealey Pharmacy March, 1981
Busse Pharmacy November, 1980

Nothing prevented any of these seven plaintiffs from removing their Walgreen signs prior to October 1, 1980. It was the plaintiffs’ own choice not to remove their signs at that time.

Prior to termination, plaintiff Milton Avenue Pharmacy had two large signs: a freestanding one in front of the store that read “Milton Ave. Walgreen Drugs” and another one affixed to the side of the store that read “Walgreen Agency.” In September, 1980, plaintiff had the word Walgreen in the free-standing sign painted over, leaving a blank white stripe between the words “Milton Ave.” and “Drugs,” and had the word Walgreen on the other sign scraped off the sign, leaving only the word “Agency” in the lower right hand corner of an otherwise blank white oval.

As a result of defendant’s termination of its dealership, each of the plaintiffs has incurred costs in bringing this lawsuit. Such costs include actual attorneys’ fees of $75,407, and expenses of expert witnesses, deposition costs, and other disbursements connected with the lawsuit in the amount of $15,428.

Following its termination as an agency store, plaintiff Kealey Pharmacy had an eleven percent increase in gross sales. James Kealey attributes this increase to increases in the sales of durable medical equipment for the home care market and to a rise in the volume of prescription sales. Between October, 1980 and October, 1983, the percentage of sales of prescriptions and durable medical equipment increased and the percentage of sales of sundries decreased.

Since termination, plaintiff Milton Ave. Pharmacy has experienced an increase in the percentage of prescription sales in proportion to its total business, although the total number of prescriptions written has not changed significantly. Overall, plaintiff’s gross sales have increased since 1980.

Following termination, plaintiff East Troy Drugs’ sales of sundries decreased from $122,295 in 1980 to $100,931 in 1982, although, the store’s gross sales increased overall.

In the year following termination, plaintiff Lake Mills Pharmacy’s gross sales increased $10,000. In the second year following termination, plaintiff’s gross sales increased by, $29,000. Of the $39,000 increase, $35,000 was attributable to an increase in prescription sales. Sales of sundries and non-prescription drugs grew at a lower rate than they had been growing prior to termination.

During plaintiff Monticello Pharmacy’s first full year in business in 1978, 42 percent of its business was in sales of prescription drugs. In 1983, this percentage had grown to almost 65 percent. In 1982, plaintiff’s gross sales declined, despite an increase in prescription sales.

From 1975 through 1980 plaintiff Dela-field Pharmacy’s gross sales increased each year. In 1981, the first full year following plaintiff’s termination as an agency store, gross sales dropped from almost $300,000 to $285,000. In 1982, plaintiff’s gross sales dropped to $254,000. However, from 1980 through 1982, plaintiff’s prescription sales increased from $97,000 to $112,000. The percentage of prescription sales of prescription drugs to gross sales has increased every year since 1975.

From 1973-to the present, plaintiff Kunk-el Pharmacy has shown an annual increase in gross sales. Donald Kunkel attributes the increase in 1981 and 1982 to the growth of the population in the Elkhorn area and to his acquisition of drug service contracts with two area nursing homes.

From 1973 to 1981, plaintiff Langmack’s Drugs’ gross sales were either steady or in a slight decline. In 1981, plaintiffs gross sales declined by $25,000 to $378,000. In 1983 they increased dramatically to $519,-000. Johnson attributes the 1982 increase to the bankruptcy of plaintiffs nearest competitor and plaintiffs subsequent acquisition of the competitor’s prescription files. With the new business, prescription sales went up by $95,000.

Following its termination as an agency store, plaintiff Monona Drive’s gross sales increased 38 percent (or about $50,000) in 1981 and 15 percent in 1982.

Plaintiff Busse Pharmacy’s gross sales declined from 1975 to 1976, but increased steadily in 1977, 1978, and 1979. However, in the fiscal year ending June 30, 1981, its gross sales dropped from $598,000 to $500,-000. In the fiscal year ending June 30, 1982, sales went up about $13,000, but prescription sales went up by $23,000. In the fiscal year ending June 30, 1983, gross sales went up • 9.19 percent, to $561,000.

Their terminations as agencies were the substantial cause of the damages plaintiffs suffered in the form of lost future profits, losses on sales of Walgreen brand inventory, and on sales aids and promotional items, costs of sign removal, and attorneys’ fees and costs of litigation. Such damages arose naturally as a result of defendant’s illegal termination of its dealership agreements and are those that would be reasonably contemplated by the parties at the time they made their agreements the parties would have reasonably anticipated would be the probable result of a breach.

Donald Nichols analyzed plaintiffs’ claims for lost future profits. Nichols is chairman of the department of economics at the University of Wisconsin-Madison; he has served as deputy assistant Secretary of Labor, and he has appeared as an expert witness on the issue of lost future profits in two other fair dealership cases tried in the United States District Court for the Eastern District of Wisconsin.

Nichols found that six of the plaintiff stores had enough financial data to permit an evaluation of their performance for the years 1975 through 1982. Nichols compared this six-store group to a group of 29 Walgreen-owned stores located in Wisconsin for which similar financial data was available. From the tax returns of the plaintiff stores, Nichols allocated their costs into two categories, fixed and variable, in order to determine a variable profit rate which he estimated to be 9.4 percent.

During the five year period prior to 1980, the group of plaintiff stores grew at a rate essentially identical to that of the group of defendant’s company-owned stores (6.5 percent annual growth in gross sales compared to 6.6 percent). However, in the first two full years following their termination as agency stores, the plaintiff stores grew at a rate four percent less than the rate at which the defendant’s stores grew. The average annual rate of sales growth for the plaintiff stores in 1981 and 1982 was 3.9 percent. For the company-owned stores, the average annual rate of growth in this two year period was 7.9 percent.

The normal life of a franchise similar to those of the plaintiff stores is twenty years.

Projecting a one year, four percent decline in rate of increase of gross sales over the twenty year life of the plaintiff stores, using a real interest rate of three percent (“real interest” being the difference between the nominal interest rate and the rate of inflation), produces a present value of lost sales for the eleven plaintiff stores of $3,237,872. If these sales had not been lost, plaintiffs would have made a profit on them. Multiplying the present value of the lost sales by plaintiffs’ variable profit rate of 9.4 percent produces a loss of future profits for the eleven plaintiffs of $295,000.

If the average annual loss of increase of four percent observed in the first two years following termination is projected to occur every year for twenty years, plaintiffs’ loss of future profits, reduced to present value, would be $2,250,000.

Use of an asymptotic method of predicting future lost profits produces a final computation of loss of future profits of approximately $1,000,000.

During the period studied, 1975-1982, the only factor common to the stores’ performances was the termination of plaintiffs as Walgreen agencies.

OPINION

Before discussing the assessment and calculation of damages, I must address defendant’s contention that the plaintiffs were not “dealers” as that term is defined in the Wisconsin Fair Dealership Law. Defendant raised this issue for the first time at the trial on damages. Until then, the case had proceeded on the uncontested assumption that plaintiffs were dealers within the meaning of the Act. In its arguments in opposition to plaintiffs’ motions for injunctive relief and in support of its. own motion for summary judgment, defendant had argued that the provisions of the fair dealership act did not apply to an across-the-board termination of all dealerships, but had never raised the contention that plaintiffs were not dealers.

Defendant cited an opinion of the Court of Appeals for the Seventh Circuit, Wilburn v. Jack Cartwright, Inc., 719 F.2d 262 (7th Cir.1983), released the week before trial began in this case. In Wilburn, the court of appeals concluded that the Wisconsin Fair Dealership Law was not intended to cover a manufacturer’s representative who promoted the manufacturer’s products, solicited orders, and assisted buyers with filling out the order forms, but who paid no franchise fee, incurred no capital expense in undertaking to represent the manufacturer, maintained no showroom, had no office outside his home, was not required to do any advertising, did no selling from inventory, had no authority to accept orders, did not bill customers or participate in collections, and did not extend credit or assume any risk of late payment or nonpayment.

The court of appeals’ decision was based upon a decision by the Supreme Court for the State of Wisconsin, Foerster, Inc. v. Atlas Metal Parts Co., 105 Wis.2d 17, 313 N.W.2d 60 (1981), in which the state court had held that the protections of the Wisconsin Fair Dealership Law did not extend to a manufacturer’s representative who paid no dealership fee to the manufacturer, was not required to maintain an inventory of the manufacturer’s products, and left to the manufacturer the tasks of estimating, quoting, accepting, and rejecting orders, shipping, negotiating the terms of sales and credit arrangements, assuming credit risks, and collecting delinquent payments.

In holding that Foerster, Inc. was not protected under the fair dealership law, the state supreme court began by observing that the three federal district courts in Wisconsin which had addressed the issue of the applicability of the Act to manufacturer’s representatives had failed to reach a consensus on the issue. This divergence of opinion indicated that the statute was ambiguous as applied to manufacturer’s representatives, requiring resort to legislative history to determine the legislative intentions. The legislative history demonstrated that the Act

was meant to protect only those small businessmen who make a substantial financial investment in inventory, physical facilities or “good will” as part of their association with the grantor of the dealership and is, thus, consistent with common or accepted perceptions of the words franchise or dealership. It is these types of businesses whose economic livelihood would be imperiled by the termination of their dealership without good cause and adequate notice.

Id. at 24, 313 N.W.2d 60. As examples of such businesses the court cited those “where 50% to 60% of the business’ time is dedicated to the sale of one company’s line of products,” or those “in which the entire business is built around and relies on the sale, servicing, or representation of one grantor’s products.” Id. at 27, 313 N.W.2d 60. The state court then examined Foer-ster, Inc.’s activities in the light of the statutory criteria of a dealership, which are:

1. a contract or agreement between two or more persons;
2. by which a person is granted
a. the right to sell goods or services;
b. the right to distribute goods or services; or
c. the right to use a trade name, trademark, service mark, logotype, advertising or other commercial symbol; and
3. in which there is a community of interest in the business of
a. offering goods or services;
b. selling goods or services; or
c. distributing goods or services at wholesale, retail, by lease, agreement or otherwise.

The court concluded that although Foer-ster, Inc. had a contract with Atlas and a community of interest in the business of selling Atlas’s goods, it had not been granted the right to sell Atlas’s goods or to use Atlas’s trade name, logo, or advertising. Therefore, it was not a dealer as that term is defined in the fair dealership law.

Defendant contends that the holding in Foerster requires a finding that the plaintiff stores are not dealerships within the meaning of the fair dealership law. I disagree.

In Foerster, Inc., the state supreme court was addressing the law’s applicability to manufacturer’s representatives, and specifically, manufacturer’s representatives that had not made the kind of substantial investment in real estate, fixtures, signs, or inventory made by the small businesspeople the legislature intended to protect under the fair dealership law.

In the case before the court, there is no contention that plaintiffs were mere manufacturer’s representatives for defendant. There is nothing ambiguous about the statutory language as it applies to these plaintiffs that requires resort to legislative history to determine the legislature’s intentions. It is clear that the plaintiff stores met all the statutory elements for dealerships.

Unlike the plaintiffs in Foerster and in Wilburn, 719 F.2d 262, the plaintiffs in this case- made substantial financial investments in their stores and fixtures, in their Walgreen signs and in Walgreen inventory. They displayed the Walgreen trademark prominently outside their stores and on the labels of their prescription drug containers. The owners of two of the plaintiff stores paid $10,000 each for good will when they purchased the stores as Walgreen agencies. Plaintiffs spent their own money for advertising. They sold directly from inventory to customers, extended credit, and, as noted, assumed all the risks of late payment or nonpayment.

Plaintiffs depended on their affiliation with defendant for their image, an important factor in at least two respects: defendant’s nationally known name was a draw to tourists and others passing through towns in which the plaintiff stores are located, and the association with a chain known to be competitive in pricing offset the stereotype of the independent drugstore in a small town which can charge higher prices because it has a captive audience. The Walgreen trademark implied to the public that the plaintiff drugstores furnished the type of quality service and low prices associated with the defendant. Plaintiffs shared defendant’s interest in the promotion of its name and reputation for service, integrity, and value.

Defendant would like this court to read the court’s statements in Foerster, Inc. as applying to all business entities claiming dealership status and just to manufacturer’s representatives. Specifically, the defendant would like to draw from those statements an interpretation of the Wisconsin Fair Dealership Law that limits its coverage to only those businesses in which 50 to 60 percent of the business’ time is devoted to the sale of one company’s products, regardless of the business’ financial stake in its business quarters, its investment in an inventory of the grantor’s products, its assumption of the risks of payment, or its public identification in the community as the dealer representative of the grantors. I am not persuaded that there is any basis for such an expansive reading of the court’s comments.

In Foerster, Inc., the state supreme court was addressing the scope of the Wisconsin Fair Dealership Law only as it applied to one particular and unique type of business entity. It was not concerned with applicability of the law to any other kind of entity. In fact, throughout its opinion, the court was careful to note the many ways in which manufacturer’s representatives were distinguishable from those businesspersons that made substantial investments in real estate and inventory in connection with their agency relationship that take title to or possession of the grantors’ products, and typically displayed the grantors’ trademark prominently outside their businesses. It is fair to assume that before the state supreme court would apply the “bright line” criterion urged by defendant to businesses other than manufacturer’s representatives, the court would want an opportunity to address that issue directly.

If the court found it necessary to look to legislative history to determine legislative intent as it related to businesses such as plaintiffs’, the court might want to examine the extent to which the legislators had a common conception of a “franchise” in 1973 and, if so, what that common conception was. A review of the reported cases that have been brought pursuant to the Act reveals a great diversity of arrangements and relationships among the persons and entities considered to be dealers under the Act. It is logical to assume that the legislature was aware of the variety of forms a franchise or dealership might take and wrote the law to apply to those that met the criteria it considered critical. Certainly, if the legislature had wished to limit the Act’s protections to only those dealers that devoted at least 50 percent of their business time to the sale of the grantor’s products, or to only those businesses that were entirely dependent upon the dealership relation for their economic livelihood, it would have been an easy thing to do. The absence of any such requirement argues for the proposition that the legislature did not intend any such limit.

The form in which the fair dealership law is written indicates that the legislature believed that, in the competitive business of retailing, denial of access to a particular line of goods or the loss of identification with a nationally known organization can have significant adverse effects upon a small business person who has made a substantial financial investment in reliance upon its association with a grantor, whatever the relative size of the investment in the line of products or financial stake in the organization.

In summary, I am persuaded that Foer-ster does not require a holding in a case that does not concern a manufacturer’s representative that a business entity that meets the criteria of a dealership as set forth in Wis.Stats. § 135.02(2) is not a protected dealership unless it can also demonstrate that 50 to 60 percent of the business’ time is devoted to the promotion and sale of the grantor’s products. To add such a gloss to the legislation would abrogate the will of the legislature, which intended “to protect the thousands of small businessmen in Wisconsin who are franchisees.”

Plaintiffs had dealership agreements with defendant by which they were granted the right to sell defendant’s products and use defendant’s, trade name, logo, and advertising, and that under those dealership agreements, plaintiffs and defendant had a community of interest in the business of selling defendant’s goods at retail. Therefore, I find and conclude that plaintiffs are dealers as that term is defined in Wis.Stats. § 135.02.

Damages

1. Miscellaneous expenses

The parties have stipulated to the amount of damages incurred by plaintiffs for miscellaneous expenses, including the expense of sign removal, loss of sales aids and promotional materials, losses on Walgreen merchandise in stock at the time of conversion, and the expense of converting the stores after removal of the Walgreen stock. I have found that these damages were caused by defendant’s termination of its dealership agreements with plaintiffs. Therefore, plaintiffs are entitled to an award of damages for these losses and expenses in the amounts stipulated.

2. Inventory

As a consequence of their termination as agency stores, plaintiffs incurred losses in selling Walgreen-branded inventory that defendant refused to re-purchase. Plaintiffs are entitled to an award of damages to make them whole for these losses.

3. Contractual damages

Defendant contends that plaintiffs’ damages should be limited to the amounts specified in paragraph 4(c) of the dealership agreements; that is, cash equal to one-half of plaintiffs’ purchases of defendant’s products for the twelve month period preceding the termination. However, this provision is applicable to valid terminations occurring within the terms of the agreement. I have found - previously that defendant’s termination of plaintiffs’ dealerships was not a valid act. Thus, the measure of damages is governed by the provisions of the Wisconsin Fair Dealership Law. The dealers’ recoveries are not limited to amounts specified in the dealership agreements, but may include all “damages sustained by [the dealers] as a consequence of the grantor’s violation [of Chapter 135], together with the actual costs of the action, including reasonable actual attorneys’ fees.” Wis.Stats. § 135.06.

4. Cost of goods delivered to 'plaintiffs by defendant

The parties have stipulated to the cost of goods delivered to plaintiffs by defendant for which defendant has not yet received payment. Plaintiffs do not deny that the stipulated amendments are due and owing to defendant.

5. Contractual penalties for late sign removal

Plaintiffs were aware of their duty under their dealership agreements to remove their Walgreen signs immediately upon termination or risk a fine of $500 a month. Seven of the plaintiffs did not remove their signs until many months after October 1, 1980. Therefore, defendant contends, it is entitled to the penalties set forth in the agreements.

The provisions of penalties for late sign removal in the dealership agreements assumed a valid termination. As I have noted, defendant’s termination of plaintiffs’ agencyships was not valid under the Wisconsin Fair Dealership Law. In breaching its agreements with plaintiffs, defendant forfeited its right to hold plaintiffs to any obligations they had under those agreements. Therefore, defendant’s claim for damages for plaintiffs’ tardy removal of their signs will be denied.

6.Loss of future profits

Through the testimony of Professor Nichols, plaintiffs proved that future lost profits in the amount of $295,000 were the natural and probable results of defendant’s breach of their dealership rights. An award to plaintiffs of this amount would restore them to the same position they would have been in had the terminations not occurred.

The law is clear that loss of future profits need not be proved with mathematical certainty; it is sufficient if the factfinder can arrive at a just and reasonably certain estimate of the loss. Reiman Associates v. R/A Advertising, 102 Wis.2d 305, 323-24, 306 N.W.2d 292 (Ct.App.1981); Buxbaum v. G.H.P. Cigar Co., 188 Wis. 389, 393, 206 N.W. 59 (1925).

I am satisfied that it was reasonable for Professor Nichols to compare a group of plaintiff stores with a group of company-owned stores once it had been determined that sufficient data existed to permit such a comparison to be made. Further, from the observation that the two groups had the same rates of growth for the 1975-1979 period, it was reasonable to assume that they would continue to grow at the same rates in the future. (Individual differences among the stores within each group would not affect this assumption, since these same differences or others were present during the preceding years.) However, in the year 1980, there was an observable, distinct change in the relative behavior of the two groups. The best estimate of the size of that change is that it was a one-time decline in the rate of sales growth of four percent.

The testing procedure used by Nichols does not identify the cause of the change in the relationship. However, the only event common to all the stores is the plaintiffs’ termination as agency stores in October, 1980. It is more probable than not that this event was the cause of the 1981 decline in the rate of annual sales growth for plaintiffs. The probability is enhanced by the evidence adduced by defendant to show that in 1981 some of the plaintiffs had increased competition, some had less; that some plaintiffs increased their advertising budgets, some decreased them; that some plaintiffs felt the effects of the economic recession in their towns; that some plain-' tiffs increased their business dramatically by emphasizing a special line of products (for example, Kealey) or by negotiating exclusive prescription contracts with nursing homes (for example, Kunkel). In other words, defendant has helped to show that there was no one event common to all the plaintiffs that would account for the change in behavior in their average rate of sales growth other than their termination as Walgreen agencies.

The experience of Willis Drug tends to bolster Nichols’s testimony. When defendant was soliciting Willis Drugs as an agency store, its representatives estimated that Willis could expect that at the end of his first year as a Walgreen agent, his gross sales would be $390,000. In fact, his sales of $382,000 were remarkably close to that. At the end of the second year, after its agency agreement had been terminated, Willis Drug’s gross sales were seven percent short of defendant’s projection. In the third year they were 16.8 percent short of the projection. During this same period there were no changes in the size of his store, the store’s competition remained the same except for the acquisition of new company-owned stores in Janesville and Madison, and the store’s advertising expenditures increased.

At trial, defendant devoted a major portion of time to demonstrating the myriad of factors that bear on a particular drugstore’s profitability, including location, advertising budget, competition, floor space, interior layout, hours, availability, parking, etc. This was intended to undercut the force of Nichols’s testimony.

What defendant’s approach failed to acknowledge was that Nichols’s conclusions did not require any consideration of the individual factors that go into determining the profitability of a particular store. Nichols assumed that, on the average, the plaintiff stores would have continued to grow at the same rate as the company-owned stores after 1980, just as they had done for the five years before 1980, Using this averaging approach eliminated the need to take into account any of the factors that might help or hurt any one store’s profitability. Nichols acknowledged that he would be unable to predict the rate of future sales growth for the plaintiff stores; no such prediction was necessary to his calculations. All he was doing was predicting, from the pre-1980 experience, that the rate of growth for the plaintiff stores would be the same as for the company-owned stores.

Although Nichols provided three independent analyses of the plaintiffs’ loss of future profits, he testified, and the plaintiffs concede, that the most conservative estimate ($295,000) is the most valid. Given the limited number of years from which to analyze post-termination behavior, it makes sense to accept the average annual four percent reduced rate of growth as a onetime occurrence, rather than to project it as a continuing phenomenon.

I find and conclude that $295,000 is a just and reasonably certain estimate of the loss of future profits that plaintiffs suffered as a result of defendant’s termination of their dealership agreements.

7. Attorneys’ fees and disbursements

Under the fair dealership law, plaintiffs are entitled to recover their actual, reasonable attorneys’ fees and their costs of litigation. Plaintiffs’ actual attorneys’ fees are $75,907, which I find to be reasonable, in light of the length of the proceedings and the relative complexity of the case. The disbursements also appear reasonable, taking into consideration the fact that they include the fees charged by plaintiffs’ expert witness.

ORDER

IT IS ORDERED that plaintiffs are awarded damages for the losses suffered as a reasonable consequence of defendant’s illegal termination of its dealership agreements with plaintiffs in the total amount of $431,182.00, allocated among the plaintiffs as follows:

1. Kealey Pharmacy

(a) Miscellaneous expenses $3,574.00

(b) Inventory 4,625.00

(c) Offset due defendant (3,607.00)

(d) Future profits 39,235.00

(e) Costs of litigation 8,258.00

TOTAL $52,085.00

2. Milton Ave. Pharmacy

(a) Miscellaneous expenses $2,617.00

(b) Inventory 10,395.00

(c) Offset due defendant (2,066.00)

(d) Future profits 38,645.00

(e) Costs of litigation 8,258.00

TOTAL $57,849.00

3. East Troy Drugs

(a) Miscellaneous expenses $2,735.00

(b) Inventory 4,261.00

(c) Offset due defendant (2,190.00)

(d) Future profits 33,335.00

(e) Costs of litigation 8,258.00

TOTAL $46,399.00

4.Lake Mills Pharmacy, Inc.

(a) Miscellaneous expenses $1,736.00

(b) Inventory 4,951.00

(c) Offset due defendant (1,500.00)

(d) Future profits 16,815.00

(e) Costs of litigation 8,258.00

TOTAL $30,260.00

5.Monticello Pharmacy

(a) Miscellaneous expenses $900.00

(b) Inventory 992.00

(c) Offset due defendant (2,317.00)

(d) Future profits 10,030.00

(e) Costs of litigation 8,258.00

TOTAL $17,863.00

6.Delafield Pharmacy

(a) Miscellaneous expenses $1,891.00

(b) Inventory 4,936.00

(c) Offset due defendant (3,750.00)

(d) Future profits 17,405.00

(e) Costs of litigation 8,258.00

TOTAL $28,740.00

7. Kunkel Pharmacy

(a) Miscellaneous expenses $1,750.00

(b) Inventory 9,496.00

(c) Offset due defendant (6,048.00)

(d) Future profits 41,300.00

(e) Costs of litigation 8,258.00

TOTAL $54,756.00

8. Langmack’s Drugs

(a) Miscellaneous expenses $1,381.00

(b) Inventory 6,648.00

(c) Offset due defendant (1,225.00)

(d) Future profits 26,550.00

(e) Costs of litigation 8,258.00.

TOTAL $41,612.00

9. Monona Drive

(a) Miscellaneous expenses $602.00

(b) Inventory 1,380.00

(c) Offset due defendant (1,800.00)

(d) Future profits 11,505.00

(e) Costs of litigation 8,258.00

TOTAL $19,945.00

10. Busse Pharmacy

(a) Miscellaneous expenses $1,511.00

(b) Inventory 1,955.00

(c) Offset due defendant (3,235.00)

(d) Future profits 33,335.00

(e) Costs of litigation 8,258.00

TOTAL 41,824.00

11. Willis Drugs

(a) Miscellaneous expenses $1,787.00

(b) Inventory 5,380.00

(c) Offset due defendant (2,126.00)

(d) Future profits 26,550.00

(e) Costs of litigation 8,258.00

TOTAL $39,849.00

       Damages stipulated to by parties prior to trial.

      . In a press release accompanying the introduction of the 1973 Assembly Bill 873, the governor’s office stated:
      This bill is intended to protect the thousands of small businessmen in Wisconsin who are franchisees. These businessmen operate filling stations, building materials and supply houses, lumber yards, sports equipment tores, motels, hotels and restaurant chains. They sell farm implements, clothing, furniture, and many other types of goods under a franchise system. The intent in this legislation is to protect these Wisconsin businessmen from pressure from a franchisor which is not in their best interest.
      Quoted in Foerster, Inc. v. Atlas Metal Parts Co., 105 Wis.2d 17, 24, 313 N.W.2d 60 (1981).

      . Cf. Foerster, Inc., 105 Wis.2d at 29-30, 313 N.W.2d 60:

        "[Foerster, Inc.’s] extremely limited use of the Atlas name and trademark differs considerably from the use made of the grantor’s trademark in the typical ‘dealership’ intended by the legislation. In the situation of the service station, fast food franchise, machinery distribution or clothing retailer, the trademark of the grantor or of the dealership is often prominently displayed for several purposes, including as an implicit guarantee of a certain quality of product and service, frequently supported by the grantor’s national or statewide advertising. While the product may be that of the grantor, the dealer often uses the trademark to imply that his establishment furnishes the type of quality service associated with the grantor.
      In contrast, Foerster, Inc., used the Atlas logo on business cards only for the purpose of informing potential clients of his status without any notation as to the nature of the relationship. The fact that he was not allowed to adopt the trademark or symbol as his own is demonstrated by the fact that the card Atlas supplied to Foerster, Inc., identified Foerster in bold type in the center of the card with Foerster’s phone number and at the bottom left-hand corner in smaller type identified Atlas with a separate phone number.

      . See n. 2 supra. See also Foerster, Inc., 105 Wis.2d at 29, 313 N.W.2d 60:
      As in E.A. Dickinson v. Simpson Electric Company, [509 F.Supp. 1241 (E.D.Wis.1981) ], Foerster, Inc. was merely paid for its promotional services and did not take title or possession of the products sold by Atlas nor did it distribute them. The fact that Foerster, Inc. has no invovlement in the actual sale of Atlas products to manufacturers except to promote purchases by customers and service the customers after the sale, along with the clear legislative intent that the Wisconsin Fair Dealership Law apply only to franchises or dealerships which have a more direct involvement in sales compels the conclusion that under the facts of this case, Foerster was not granted the "right to sell” Atlas products.

      . See, for example, Reinders Bros. v. Rain Bird Eastern Sales Corp., 627 F.2d 44 (7th Cir.1980) (plaintiff sold many lines; the Rain Bird sprinkler system accounted for no more than four percent of plaintiff’s total sales in any one year); Suburban Beverages, Inc. v. Pabst Brewing Co.,
        462 F.Supp. 1301 (E.D.Wis.1978) (beer distributorship distributed several brands of beer; Pabst products represented bulk of its business); Paul Reilly Co. v. Dynaforce Corp., 449 F.Supp. 1033 (E.D.Wis.1978) (plaintiff corporation bought and sold equipment manufactured by a number of different companies).

      . The logical place in which to incorporate such a requirement would be Wis.Stats. § 135.02(4), which defines "community of interest." However, the legislature defined this in broad, rather than specific, terms:
      "Community of interest" means a continuing financial interest between the grantor and grantee in either the operation of the dealership business or the marketing of such goods or services.

      . In calculating plaintiffs' loss of future profits, Nichols made the assumption that their termination as agency stores was the factor responsible for the decline in the rate at which their gross sales grew. To test the validity of this hypothesis, Nichols used a common statistical procedure from which he was able to conclude that the hypothesis was valid: in 1980, there was an observable change in the relationship of the sales of the plaintiff stores to the sales of the company-owned stores.


source: Caselaw Access Project

author: KAZEN, District Judge.

license: Public Domain

text:
    Dora RAMIREZ, Plaintiff, v. Robert BURR, et al., Defendants.
    Civ. A. No. V-82-2.
    United States District Court, S.D. Texas, Victoria Division.
    May 7, 1984.

      Viviana S. Cavada, Cavada ,& Santiago, Victoria, Tex., for plaintiff.
    R.D. Cullen, Cullen, Carsner, & Seerden, Victoria, Tex., for Marvin Lockhart, Commissioner, Norman Jones, County Judge.
    Tom Garner, Jr., Garner & Roberts, Port Lavaca, Tex., for Robert Burr, Individually, Johnny Williams, Golden Crescent Regional Planning Commission — substituted, Harrison Stafford, II, Charles C. Carsner, Jr., Sam Seals, County Judge, Itasca Stafford, H.O. Gibson, Robert Kubena, Robert Sheppard, County Judge, Carroll Wiley, Mayor, Frances Strauss, Mayor, Gene Hobbs, May- or, Mitchell Harbus, Mayor, Jewel Fisher, H.H. Vollentine, Judge, Alvin Hahn, Her-nán Jaso, Mayor, Wilber Roznovsky, Judge, Tom Garner, Jr., Harry Meyer, Mayor, Rayburn Haynie, Mayor; Members of Board of Directors, in their Individual and Official Capacities, Patrick Kennedy, Mayor Shirley Young, Commissioner John Hammack, Dr. Marvin Kirkmann, Commissioner Harold Heyer, Judge John Barnhill, Councilwoman Cheryl Taylor, Commissioner Welly Gibson, Commissioner Lester Rogers, Lorrian Jones, Giles Joe Birchum.
   ORDER

KAZEN, District Judge.

This Court held a hearing on February 16, 1984, on Defendants’ motion for summary judgment and Plaintiff’s motion for partial summary judgment. The Court issues this Order after considering the evidence and arguments on file, the evidence and arguments submitted at the hearing, and the supplemental records submitted after the hearing.

Rule 56, Fed.R.Civ.P., provides that summary judgment is appropriate only if it appears from the pleadings and documents on file that (1) no genuine dispute as to material facts exists, and (2) undisputed facts entitle the moving party to judgment as a matter of law. That the nonmovant is unlikely to prevail at trial or that the movant’s facts appear more plausible are not reasons to grant summary judgment. Jones v. Western Geophysical Company of America, 669 F.2d 280, 283 (5th Cir.1982). The Court has no duty to weigh the evidence, assess its probative value, or decide the factual issues; its responsibility is only to determine whether there is an issue of fact to be tried. Id. Summary judgment should be granted only when the truth is clear and no genuine factual issue remains for trial. Strafford v. United States, 611 F.2d 990, 993 (5th Cir.1980). Furthermore, the Court must consider the whole file and not just the portion highlighted by the motion itself. Reiser v. Coliseum Properties, Inc., 614 F.2d 406, 410 (5th Cir.1980).

First, Defendants assert that the statute of limitations bars claims against the Defendant Board members. Ramirez did not name them when she filed her complaint. Rather, her original complaint listed “unnamed Board members” as Defendants. The Board members assert that claims against them are barred by limitations because Ramirez did not amend her complaint to include them by name during the 90-day filing period allowed by her E.E. O.C. right-to-sue letter. This claim is clearly without merit as to the Board members in their official capacities because Plaintiff may sue them in that capacity by “title rather than by name”. F.R.Civ.P. 25(d)(2).

Further, Defendants’ assertion is also without merit as to the Board members in their individual capacities. Rule 15(c) “provides that an amended complaint changing the name of a party relates back to the date of the original pleading if three requirements are met,” Kirk v. Cronvich, 629 F.2d 404, 407 (5th Cir.1980, citing Marks v. Prattco, Inc., 607 F.2d 1153, 1156 (5th Cir.1979)), and the Defendants are notified of the action within the limitations period. Id. First, the claim in the amended pleading must arise “out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading.” F.R.Civ.P. 15(c). This is clearly true here since the original and amended complaints address the same allegedly discriminatory firing.

Second, the party to be added by amendment must receive notice of the institution of the action so that he will not be prejudiced in maintaining his defense on the merits. Rule 15(c) does not require actual notice. “Where service of the original complaint is perfected upon an agent of a party sought to be brought in by amendment, there is adequate notice of the action to that party.” Id. at 407. Here, the director of the agency was served within the ninety (90) day time frame. He was an agent of the Board members, so service upon him was adequate notice to them. “Furthermore ... the requisite notice of an action can be imputed to a new defendant through his attorney who also represented the party or parties originally sued.” Id. at 408. Here, all Board members except Lockhart and Jones are represented by Tom Garner. Garner has represented the Council, the executive director, and Plaintiffs supervisor since Ramirez filed her original complaint against them.

Rule 15(c) also requires that the “party to be brought in by amendment ... knew or should have known that ... the action would be brought against him.” Ramirez sued the Council, under its former name. Since the complaint specified that the other unknown Defendants were members of the Council’s Board of Directors, in their individual and official capacities, the Court finds that the Board members knew or should have known that the action would be brought against them. Furthermore,

[sjince the effect of Rule 15(c) is to avoid the impact of the statute of limitations, the sufficiency of the notice must be evaluated in light of the policy objectives of the statute of limitations, i.e. to avoid undue surprise, to permit investigation and collection of evidence while it is fresh, and other similar considerations.

Id. at 408. These considerations are similar to the requirement that parties to be added receive such notice so that they will not be prejudiced in defending on the merits. The Board members could not have been prejudiced through loss of evidence or undue surprise because the Council and its employees, who are represented by the Board members’ attorney, could and have taken steps to adequately investigate the claim.

The Defendant Board members also move for summary judgment because they claim that they were not personally involved in the actions that allegedly harmed Ramirez. Of course, to the extent that she alleges a cause of action for back pay under Title VII, the Board members are not personally liable. Clanton v. Orleans Parish School Board, 649 F.2d 1084, 1099 (5th Cir.1981).

Board members can be liable in their individual capacities, however, if their actions violated Ramirez’ constitutional rights, as protected by §§ 1981 and 1983. Id. Therefore, the Board members’ motion for summary judgment to defeat liability in their individual capacities has merit as to the Plaintiff’s Title VII claims, but not as to her valid §§ 1981 and 1983 assertions.

Several of Ramirez’ §§ 1981 and 1983 claims, however, fail. “Remedies for employment discrimination under 42 U.S.C. § 1981 are considered only if the plaintiff asserts claims on grounds different from those underlying the Title VII claims.” Parson v. Kaiser Aluminum & Chemical Corp., 727 F.2d 473, 475 n. 1 (5th Cir.1984). The same is true of claims under § 1983. Carpenter v. Stephen F. Austin State University, 706 F.2d 608, 612 n. 1 (5th Cir.1983); Rivera v. City of Wichita Falls, 665 F.2d 531, 534 n. 4 (5th Cir.1982). Under this rule, Ramirez cannot obtain relief under §§ 1981 or 1983 for 1) denial of a raise equivalent to those given to Anglo counsellors because of a management study, 2) retaliation for filing with the E.E. O.C. in December, 1980 and 3) termination of her job because she is Mexican-American.

Ramirez further alleges that the retaliation against her for filing E.E.O.C. complaints also implicates her First Amendment rights to free speech and to petition the government. Therefore, she asserts claims for retaliation both under Title VII and under § 1983. It is not clear if these two claims are co-extensive, so the Court will not grant Defendants’ motion for summary judgment on these claims.

Finally, Ramirez claims that the Board’s failure to provide her with a hearing violated her due process rights. This § 1983 claim is independent of her Title VII claims and survives Defendants’ motion for summary judgment. See Carpenter, 706 F.2d at 630.

Plaintiff moves for summary judgment because Defendants dismissed her summarily without notice or hearing. She claims that the summary dismissal deprived her of a property right without due process of law, in violation of the Fourteenth Amendment of the United States Constitution. Since Plaintiff has not established that she had an entitlement to her job, Board of Regents of State Colleges v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972); Bueno v. City of Donna, 714 F.2d 484, 491-2 (5th Cir.1983), the Court cannot grant her summary judgment on this issue.

It is ORDERED that the Board members’ motion for summary judgment on the Title VII claims against them in their individual capacities is GRANTED. The Board members’ motion for summary judgment on the §§ 1981 and 1983 claims is granted for Ramirez’ claims about 1) denial of a raise equivalent to that given to Anglo counsellors, 2) retaliation for filing with the E.E.O.C. in December 1980, and 3) termination of her job because she is Mexican-American is GRANTED. In all other respects, their motion for summary judgment is DENIED. The Plaintiff’s motion for partial summary judgment is DENIED.


author: RAFEEDIE, District Judge.

text:
    GREATER LOS ANGELES COUNCIL OF DEAFNESS, INC., Barbara U. Sheridan, and Joy Anne Maucere, individually, and on behalf of all others similarly situated, Plaintiffs, v. Frank S. ZOLIN, individually, and as Jury Commissioner for the County of Los Angeles; Raymond F. Arce, individually, and as Director of Juror Services for the County of Los Angeles; County of Los Angeles; Superior Court of the State of California For the County of Los Angeles, Defendants.
    No. CV 81-6338-ER.
    United States District Court, C.D. California.
    July 2, 1984.

      David Grosz, Kristine Kravetz, Stanley Fleishman, Los Angeles, Cal., for plaintiffs.
    Lester J. Tolnia, Deputy County Counsel, Los Angeles, Cal., for defendants.
   MEMORANDUM OPINION

RAFEEDIE, District Judge.

BACKGROUND

This suit was brought by individual plaintiffs Barbara Sheridan and Joy Anne Mau-cere, and by the Greater Los Angeles Council on Deafness, Inc. (“GLAD”) against the County of Los Angeles (“County”); the Superior Court of the State of California for the County of Los Angeles (“Superior Court”); Frank Zolin, Jury Commissioner for the County; and Raymond Árce, Director of Juror Services for the County.

Sheridan and Maucere are both deaf. Plaintiffs allege that the defendants’ refusal to pay for, or provide, sign language interpreters for deaf or hearing impaired individuals so that such individuals may serve on juries violates § 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794 (1982); § 122(a) of the Revenue Sharing Act, 31 U.S.C. § 6716 (1982), and accompanying regulations (31 C.F.R. Part 51); § 1983 of Title 42; and California Government Code § 11135. Plaintiffs seek a mandatory injunction requiring defendants to pay for or otherwise provide interpreters for deaf individuals called to jury service in the Superior Court. Plaintiffs also seek monetary damages.

In 1981, both Sheridan and Maucere received trial jury summonses ordering them to appear at the San Antonio Municipal Court and the Van Nuys branches of the Superior Court, respectively. Each wrote a letter to the individual defendants, advising them that she was deaf and asking whether sign language interpreters would be provided. The plaintiffs informed the individual defendants that unless interpreters were provided or paid for by the Superior Court or County, they would be unable to serve as jurors due to the expense. The defendants advised the plaintiffs that interpreters would not be provided.

On August 14, 1981, Nathan Shapiro, a hearing impaired individual, received a jury summons to appear at the Van Nuys Courthouse mentioned above. Shapiro appeared for jury duty with a sign language interpreter provided by GLAD and was selected as an alternate juror. A GLAD representative spoke to a Superior Court employee about paying for the interpreter and was told that there was no provision for such payment. Shapiro attended court as a juror for 22 days with an interpreter provided by GLAD. At the end of the trial, GLAD submitted a bill of $2,022.63 to the Superior Court. Defendant Arce wrote a letter to GLAD informing GLAD that the bill would not be paid. At least 16 deaf or hearing impaired individuals have responded to jury summons to the Superior Court between April 1981 and January 1982, but only two have served. The rest refused to, without the provision of or payment for interpreters.

In fiscal year 1980-81, the County Clerk received $108,912 from the Law Enforcement Assistance Administration (“LEAA”), a United States government agency, for a microfilm project. In the same year, the Superior Court also received $211,880 from LEAA for the Jury Service Improvement Program and $210,000 from the United States Department of Health, Education & Welfare (“HEW”) for the Guardian Ad Li-tem Program. In fiscal year 1981-82, the Guardian Ad Litem Program received an additional $218,052 from HEW.

In fiscal years 1980-81, Los Angeles County received $76,438,294 from the Department of Justice, Office of Revenue Sharing. In fiscal year 1981-82, Los Ange-les County received $82,979,616 in revenue sharing funds. According to testimony, revenue sharing funds are used currently for capital improvements and no federal money was funneled through the County to the Superior Court in either 1980-81, 1981-82, or 1982-83. For at least one year between 1972 and 1979, however, between $65,000,000 and $120,000,000 of revenue sharing funds were used to meet the County’s contribution to the retirement fund, which includes Superior Court personnel.

Los Angeles County supplied $47,000,000 of the Superior Court’s 1982 budget of $52,000,000. Additionally, while the employees of the Superior Court, including defendants Zolin and Arce, are state employees, the County pays their salaries and includes them in the County medical and retirement funds. This Court takes judicial notice of the fact that the Superior Court is dependent upon the County for financing, housing, and a wide variety of support systems.

ANALYSIS

The thrust of plaintiffs’ case is that the defendants violated plaintiffs’ statutory rights by refusing to provide or pay for sign-language interpreters for deaf or hearing impaired individuals who are called for jury duty. Plaintiffs’ case rests largely upon a 1981 amendment to California law which removed the presumption that individuals who are deaf or hearing-impaired are incompetent to sit on juries. See Cal. Code Civ.Proc. § 198 (as amended January 1, 1981) (“§ 198”).

The plaintiffs are not, however, arguing that § 198 mandates California State Courts to provide sign language interpreters to deaf and hearing impaired individuals. Rather, they argue the state law proves that such individuals are qualified to be jurors. Plaintiffs rely upon federal and state civil rights and anti-discrimination statutes to prove that defendants must provide interpreters for deaf persons called to jury service.

Immunity

Before examining whether defendants have violated any of these statutes, this Court must examine which, if any, of these defendants are protected by immunity from the award of monetary damages. In Pomerantz v. County of Los Angeles, 674 F.2d 1288 (9th Cir.1982), the Ninth Circuit held that the Los Angeles County Jury Commissioner and other employees directly involved with the jury selection process for the superior court who excluded all blind persons from jury service solely because they were blind were protected by their quasi-judicial immunity. Id. at 1291. In Pomerantz, the Court said that “this circuit has repeatedly held that judges and other officers of government whose duties are related to the judicial process are immune from liability for damages under § 1983 for conduct in the performance of their official duties.” Id. (quoting Burkes v. Callion, 433 F.2d 318, 319 (9th Cir.1970)). The Ninth Circuit concluded that “the remaining individual defendants are entitled to quasi-judicial immunity from damages, both as to the § 1983 and the § 794 action.”

Under Pomerantz’ rationale, defendants, Zolin and Arce, who took the actions complained of in this suit in their official capacity, are protected from money damages by their quasi-judicial immunity. Pomerantz would also bar monetary relief against the Superior Court. For if the officials who serve the Superior Court are protected by quasi-judicial immunity, the court itself would be protected by judicial immunity. See, generally, Stump v. Sparkman, 435 U.S. 349, 98 S.Ct. 1099, 55 L.Ed.2d 331 (1978). Overseeing the selection of the jury is a judicial responsibility.

The decision whether to pay for interpreters for prospective jurors was made by the Superior Court and its officials. It is true that Superior Court Judge Schwartz relied upon advice that the County Counsel had supplied to the Superior Court’s Jury Commissioner’s Office “that there is no authority for the court to appoint said interpreters at public expense or to order reimbursement of their costs from public funds” in declining to appoint a sign language interpreter for Shapiro. Stipulation of Judge S.S. Schwartz. But it was the Superior Court judge who made the final decision. The County Counsel’s opinion and the County’s paying the salary of Zolin and Arce are not sufficient to show that the County itself participated in the jury selection process, such that it would be liable under either § 504 or § 1983. The district court in Pomerantz came to the same conclusion, which the Ninth Circuit affirmed. 674 F.2d at 1291. Thus the County, on the showing before the Court, cannot be held liable.

Rehabilitation Act of 1973

Section 504 of the Rehabilitation Act of 1973 states in pertinent part:

No otherwise qualified handicapped person in the United States ..., shall, solely by reason of his handicap, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.

29 U.S.C. § 794.

While all the defendants are immune from money damages, see supra at p. 179, the individual defendants and the Superior Court could still be subject to a mandatory injunction if the present practice of not providing or paying for sign language interpreters were found to violate the Rehabilitation Act. To prove a violation of the Rehabilitation Act, the plaintiffs must show that deaf and hearing impaired individuals are “handicapped person[s]” under the act, see 29 U.S.C. § 706(7) (1982); that they are “otherwise qualified” as juror, see 29 U.S.C. § 794 (1982); that the jury program or Superior Court is a federally funded program; and that the policy of not paying for or providing sign language interpreters is discriminatory or excludes such persons from being a juror. See Bentivegna v. United States Department of Labor, 694 F.2d 619, 621 (9th Cir.1982) (outlining elements to be proved).

There is no dispute that the individual plaintiffs would be considered to be handicapped persons under the Rehabilitation Act. Similarly, defendants do not dispute that Cal.Civ.Pro.Code § 198 renders the plaintiffs qualified as jurors. But before this Court may determine whether the practice complained about violates § 504, this Court must first determine that there is a federally funded program. In this respect, this case differs from Peck v. County of Alameda, No. C 80-3629, slip op. at 2 (N.D.Cal. Dec. 18, 1981), in which the plaintiff raised a similar claim. In Peck, it was undisputed that the municipal court received federal funding.

Additionally, defendants argue in their post-trial brief that § 504 is not applicable in this case because § 504 is intended :to eliminate discriminatory barriers that handicapped individuals face in education and employment, but that it is not intended to be a general civil rights bill for the handicapped.

Further, the defendants claim that the plaintiffs must show that the federal money received is for the principal purpose of providing employment. Both of these propositions are wrong.

Congress made explicit in its 1974 amendments to the Rehabilitation Act that that Act forbids all forms of discrimination in federally funded programs. The Senate Labor Committee Report explained that the definition of a handicapped individual was amended to clarify that “Section 504 was enacted to prevent discrimination against all handicapped individuals, regardless of their need for, or ability to benefit from, vocational rehabilitation services, in relation to federal assistance in employment, housing, transportation, education, health services, or any other Federally-aided programs.” S.Rep. No. 1297, 98d Cong. 1st Sess., reprinted in 1974 U.S.Code Cong. & Ad.News 6373, 6388. As for defendants’ argument that the federal funding must be for employment, the Supreme Court, in Consolidated Rail Corp. v. Darrone, 465 U.S. 624, 104 S.Ct. 1248, 79 L.Ed.2d 568 (1984), held that § 504 contained no such requirement, reversing the Ninth Circuit’s decision in Scanlon v. Atascadero State Hospital, 677 F.2d 1271 (9th Cir.1982).

Plaintiffs still, however, must show federal funding for “Section 504, by its terms, prohibits discrimination only by a program or activity receiving Federal financial assistance.” Consolidated Rail, 104 S.Ct. at 1255. While plaintiffs admittedly have shown federal financing of the Superior Court for fiscal years 1980-81 and 1981-82, they have not shown any federal funding of either the Superior Court in general or the jury system in particular after this date, or even the likelihood of such funding. The Jury Service Improvement Program grant expired in 1981, and no other direct federal funding of the jury system has been identified. Assuming arguendo that the proper unit of federal funding to look at is the Superior Court rather than the jury system, the only other direct federal funding of the Court, the Guardian Ad Litem grant, expired in 1982.

Indirect funding by the federal government would also be sufficient to meet this requirement under § 504, Grove City College v. Bell, 465 U.S. 555, 104 S.Ct. 1211, 79 L.Ed.2d 516 (1984), but the defendants testified that the Superior Court did not receive any Revenue Sharing Funds through the County in 1980 or 1981 and that there was no plan for it to do so in the future, as these funds were to be used for capital expenditures. Thus, plaintiffs have only shown past funding. Plaintiffs, have not, however, cited to this Court any discussion of § 504 in the legislative history nor any case support for the proposition that an injunction may be imposed upon defendants to pay for or provide for interpreters based upon § 504 when no showing has been made that the program is presently, or is likely to be in the future, subject to the section’s antidiscrimination prohibition. Nor did plaintiffs cite any support that an injunction can be based upon past program funding. Consequently, § 504 cannot provide a basis, in this instance, for injunctive relief. Thus, this Court’s decision does not reach the question of whether the Rehabilitation Act would require interpreters be provided for deaf or hearing impaired individuals called for jury duty in the Superior Court.

Revenue Sharing Act

Section 6716(b)(2) of the Revenue Sharing Act prohibits discrimination against otherwise handicapped individuals by units of general local or state government when the government receives a payment from Revenue Sharing. Before bringing a suit under the Revenue Sharing Act, however, plaintiffs must first exhaust their administrative remedies. See 31 U.S.C. § 6721(b) (1982). “Section 1244(d) [now § 6721(b)] and 31 C.F.R. § 51.64 (1980) provide that an action may not be brought if the complainant has not filed an administrative complaint with the Director of the Office of Revenue Sharing, 31 C.F.R. § 51.61 (1980), or with an agency with which the Director has an agreement under 31 C.F.R. § 51.74 (1980).” Meyerson v. State of Arizona, 507 F.Supp. 859, 863 (D.Ariz.1981), aff'd, 709 F.2d 1235 (9th Cir.1983). Plaintiffs’ failure to seek administrative relief bars any relief under § 6716.

Section 1983

Section 1983 provides a private cause of action for violation, under color of state law, of some federal statutes. Maine v. Thiboutot, 448 U.S. 1, 100 S.Ct. 2502, 65 L.Ed.2d 555 (1980). The Thiboutot doctrine does not apply, however, where Congress has foreclosed a § 1983 remedy through sufficiently comprehensive remedial devices in the underlying act, and where the statute at issue does not create “rights, privileges, or immunities” within the meaning of § 1983. Middlesex County Sewerage Authority v. National Sea Clammers Association, 453 U.S. 1, 19, 101 S.Ct. 2615, 2625, 69 L.Ed.2d 435 (1981); Pennhurst State School & Hospital v. Halderman, 451 U.S. 1, 27-30, 101 S.Ct. 1531, 1544-47, 67 L.Ed.2d 694 (1981). In this case, however, the Court need not decide if § 1983 provides a remedy for either § 504 or the Revenue Act because there is no demonstrated violation of either § 504 or the Revenue Sharing Act and because all defendants are immune from money damages.

California Statute

California Government Code § 11135 provides that no handicapped individual shall be denied benefits of a program which receives state funding because of his or her handicap. Without deciding if the defendants’ actions or policy qualify as prohibited discrimination under § 11135, as defined by Cal.Admin.Code Tit. XXII, §§ 98250-9 63 (1980), this Court notes that plaintiffs are required to seek relief through the process designated in Cal.Gov’t Code § 11136 (West 1980). Plaintiffs did not do so in this case. Although no cases seem to have been brought under § 11135, the legislative reports on this act stated that the intent in passing this section was to relieve the individual from enforcing the statute, and to place the burden upon the state agency funding the program.

Plaintiffs have not cited to any legislative history to the contrary, nor to any judicial or legislative reasoning supporting their implied position that § 11135 provide a private right of action. Plaintiffs only argument is that § 11135 is modeled after the federal § 504. In fact, it may be fairer to compare § 11135 to § 503 of the Rehabilitation Act, 29 U.S.C. § 793 (1982), which forbids discrimination against the handicapped by government contractors. There is no private right of action to enforce § 503 — federal agencies must bring the suit.

CONCLUSION

This Court finds that it is unable to give the plaintiffs the relief they seek. Defendants are protected by immunity from money damages, and plaintiffs have been unable to show the level of federal funding required for this Court to issue an injunction based upon § 504. The plaintiffs have not complied with the administrative requirement of the Revenue Sharing Act. The failure to meet the requirements of a violation under either of these two acts precludes this Court from finding the violation of a statutory right under § 1983. Finally, the plaintiffs have no private right of action under § 11135.

Let judgment enter accordingly.

      . Plaintiffs have also contended that the failure to provide sign language interpreters for deaf or hearing impaired persons called as jurors violated their constitutional rights. Plaintiffs do not press this argument now. See Plaintiffs’ Post Trial Memorandum Filed Pursuant to Court Order, 16 n. *.

      . The parties have stipulated to the amount of damages.

      . The Superior Court received a like amount in 1979-80 for this program. By the time of trial, all these funds had been expended and the grants had not been renewed.

      . Other County programs, which aid the Superi- or Court, received federal grants. The Sheriffs Department received $1,457,975.00 in federal money for specific projects, and $295,345.00 in 1981-82. The Sheriffs Civil Division provides services for the Superior Court, including bailiffs. The federal government also granted money to the Probation Department and the District Attorney.

      . Plaintiffs’ reliance upon § 198 and the recent decision in Pennhurst State School v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984), force this Court to decide whether the eleventh amendment bars the Court from acting. In Pennhurst, the Supreme Court held that the "federal courts lacked jurisdiction to enjoin [ ] state institutions and state officials on the basis of state law.” Id at 921. This decision was based on the principle of federalism as embodied in the eleventh amendment. The eleventh amendment, however, does not apply to "counties and similar municipal corporations,” Mt. Healthy City Board of Educ. v. Doyle, 429 U.S. 274, 280, 97 S.Ct. 568, 572, 50 L.Ed.2d 471 (1977), see Lincoln County v. Luning, 133 U.S. 529, 530, 10 S.Ct. 363, 363, 33 L.Ed. 766 (1890), such as defendants in this case. While the eleventh amendment bars relief if that relief runs against the state, the defendants have presented no evidence to show that would be the case here. Unlike the county defendant in Pennhurst, see 104 S.Ct. at 921, the Superior Court receives most of its funding from the County, rather than the state. Therefore, the eleventh amendment does not apply to this case, and there is no reason to reach one of the many questions created by the Pennhurst decision: what effect, if any, does the eleventh amendment have when a federal court enforces a federal law against a state entity or official, but, in so doing, relies upon a state statute in the interpretation or application of the federal right?

      . The Court took the immunity question raised in defendants’ Motion to Dismiss under submission at the opening of the trial in order to hear all the evidence which might be introduced against the defendants.

      . The Superior Court was not a defendant in Pomerantz,

      . If, however, the actions by the Superior Court to which plaintiffs object were characterized as not judicial in a strict sense, these actions would be legislative. The promulgation of policy regarding jury selection could arguably be considered legislative in character, albeit closely related to the task of conducting trials. Under this alternative view, Supreme Court of Virginia v. Consumers Union, 446 U.S. 719, 731-34, 100 S.Ct. 1967, 1974-76, 64 L.Ed.2d 641 (1980) (state supreme court immune when acting as legislature in promulgating attorney conduct rules), would grant absolute immunity to the Superior Court’s actions at issue in this case. Again, this defendant could not be found liable.

      . Because of the resolution of this issue, this Court does not reach the question of what the relevant "program" is in this case. See Consolidated Rail, 104 S.Ct. at 1256 (leaving open the question, but requiring program specificity); Meyerson v. State of Arizona, 709 F.2d 1235, 1237-38 n. 1 (9th Cir.1983) (not reaching the issue of the nexus required between the program receiving federal money and the plaintiffs injury in being excluded from a benefit). Plaintiffs, in their memorandum of fact and law, contend that the relevant program or activity is the Superior Court, although they occasionally refer to the jury system as the program.

      . The past funding, of course, would have allowed this Court to have awarded monetary damages if it had found a violation of § 504 and if the defendants had not been immune from monetary damages.

      . The relevant portion of this section states: § 6717. Prohibited discrimination
      (a) No person in the United States shall be excluded from participating in, be denied the benefits of, or be subject to discrimination under, a program or activity of a State government or unit of general local government because of race, color, national origin, or sex when the government receives a payment under this chapter.
      (b) The following prohibitions and exemptions also apply to a program or activity of a State government or unit of general local government when the government receives a payment under this chapter:
      (2) a prohibition against discrimination against an otherwise qualified handicapped individual under section 504 of the Rehabilitation act of 1973 (29 U.S.C. 794).

      .Section 6721(b) states:
      (b) A person adversely affected must file an administrative complaint with the Secretary of the Treasury or the head of another agency of the United States Government or the State agency with which the Secretary has an agreement under section 6716(d) of this title. Administrative remedies are deemed to be exhausted after the 90th day after the complaint was filed if the Secretary, the head of the Government agency, or the State agency—
      (1) issues a decision that the government has not failed to comply with this chapter; or
      (2) does not issue a decision on the complaint.

      . Cal.Gov’t Code § 11135 (West 1980) states:
      § 11135 Denial of benefits based on ethnic identification, religion, age, sex, color or disability; prohibition
      No person in the State of California shall, on the basis of ethnic group identification, religion, age, sex, color, or physical or mental disability, be unlawfully denied the benefits of, or be unlawfully subjected to discrimination under, any program or activity that is funded directly by the state or receives any financial assistance from the state.

      . The evidence shows that the Superior Court received $5,207,000 from the State of California or its agencies.

      . Section 11136 provides that:
      Whenever a state agency that administers a program or activity that is funded directly by the state or receives any financial assistance from the state, has reasonable cause to believe that a contractor, grantee, or local agency has violated the provisions of Section 11135, or any regulation adopted to implement such section, the head of the state agency shall notify the contractor, grantee, or local agency of such violation and shall, after considering all relevant evidence, determine whether there is probable cause to believe that a violation of the provisions of Section 11135, or any regulation adopted to implement such section, has occurred. In the event that it is determined that there is probable cause to believe that the provisions of Section 11135, or any regulation adopted to implement such section, have been violated, the head of the state agency shall cause to be instituted a hearing conducted pursuant to the provisions of Chapter 5 (commencing with Section 11500) of this part to determine whether a violation has occurred.

      .For example, the Senate Digest that explains the bill reads:
      Under current law and executive orders, all state agencies and entities receiving state funds are prohibited from engaging in employment discrimination in providing services. However, if an individual feels he or she has been discriminated against, they (sic) must go to court as individuals alleging discrimination under the United States Civil Rights Act.
      On the basis of applicable law and court decisions, each state agency under this measure would adopt such rules and regulations as it deemed necessary to define unlawful discrimination within the context of programs and activities operated by the agency. From that point on, the agency would become primarily responsible for nondiscriminority (sic) policies and this would lessen the need for individuals to seek a judicial remedy of their own. The major intent of this measure is to shift the burden of proving unlawful discrimination in a state funded program from the person being discriminated against to the state agency administering the program.