author: MOODY, District Judge.

text:
    LASKOWSKI, John T., Slepcevich, Emily, Kampo, Michael, Orze, Kenneth D. v. MEARS, Darlene Wanda, in her capacity as Senior Judge of the Juvenile Division of the Superior Court of Lake County, Indiana Deanna Young, Michael Fontaine, Juanita Anderson, Russell Phelps, Intervenors.
    Civ. No. H-78-444.
    United States District Court, N.D. Indiana, Hammond Division.
    Jan. 25, 1985.

      C. Jerome Smith, Smith & Funk, Hammond, Ind., for plaintiffs.
    Charles Graddick, Graddick & Harris, Gary, Ind., for intervenors.
    George Huff, Jr., Asst. Atty. Gen., Indianapolis, Ind., Stephen H. Meyer, Schererville, Ind., Martin H. Kinney, Merrillville, Ind., for defendant.
   ORDER

MOODY, District Judge.

This matter is before the Court on the Motion for Summary Judgment filed by defendant Mears on June 1, 1984. The intervening plaintiffs’ Response was filed on June 14, 1984; the original plaintiffs have not responded. The motion is GRANTED in part and DENIED in part.

The original plaintiffs in this action were former employees of the defendant, Senior Judge of the Juvenile Division of the Superior Court of Lake County, Indiana. They were dismissed by the defendant in April, 1978. The complaint, filed on November 15, 1978, alleged discrimination based on age (Age Discrimination Act, 29 U.S.C. § 621 et seq. (ADEA)) and handicap (Rehabilitation Act, 29 U.S.C. § 794, as well as violations of the plaintiffs’ procedural due process rights. On January 28, 1980, several other former employees of the defendant intervened in this action alleging procedural due process violations and discrimination based on age. The intervenors also claimed that they were dismissed for political reasons in violation of their rights under the First and Fourteenth Amendments. In an amended complaint filed on July 30, 1980 the original plaintiffs added a count in which one of the plaintiffs alleged dismissal for political reasons.

As the case now stands, three of the original complainants remain, along with four intervening defendants. These plaintiffs claim the following:

John Laskowski, former probation officer and original complainant, claims violations of 42 U.S.C. § 1983 for discharge without a hearing and discharge based on age, violations of the ADEA and violations of the Rehabilitation Act;
Kenneth Orze, former probation officer and original complainant, claims violations of 42 U.S.C. § 1983 for discharge without a hearing, discharge based on age, discharge based on political affiliation, and violations of the ADEA;
Deanna Young, former probation officer and intervening plaintiff, claims violations of 42 U.S.C. § 1983 for discharge without due process, motivated by age and political affiliation;
Michael Fontaine, former probation officer and intervening plaintiff, claims violations of 42 U.S.C. § 1983 for discharge without due process, motivated by age and political affiliation;
Juanita Anderson, former probation officer. and intervening plaintiff, claims violations of 42 U.S.C. § 1983 for discharge without due process, motivated by age and political affiliation, and violations of the ADEA;
Emily Slepcevich, former assistant superintendent of the Juvenile Detention Center and original complainant, claims violations of 42 U.S.C. § 1983 for discharge without a hearing, discharge based on age, and violations of the ADEA;
Russell Phelps, former teacher at the Lake County Juvenile Center and intervening plaintiff, claims violations of 42 U.S.C. § 1983 for discharge without due process, motivated by age and political affiliation.

Each of these plaintiffs requests reinstatement, compensation for loss of employment rights and benefits, and liquidated damages for intangible injuries.

In an order dated June 18, 1982, this court denied all pending dispositive motions. At that time, I ruled that Indiana Code § 33-5-29.5-8 is constitutional. Anciliary to that decision, I noted that “there is absolutely no language in the statute or in the case law interpreting that statute which indicates that the Indiana Legislature intended to permit state judges to dismiss court personnel for reasons of age or handicap where the dismissal would violate federal law.” Order of June 18, 1982, at page 3. The Order also states that the express language of § 33-5-29.5-8 forbids dismissal of court personnel based on their political affiliation. I reserved ruling on the questions of whether the defendant is an “employer” under the ADEA and whether certain Lake County officials should be joined in this action.

The Order of July 21, 1982 denied the defendant’s Motion for Dismissal filed July 12, 1982. In that order, I considered the defendant’s bare assertion that the plaintiff’s claims were barred by judicial immunity. Based on the defendant’s lone citation to Stump v. Sparkman, 435 U.S. 349, 98 S.Ct. 1099, 55 L.Ed.2d 331 (1978), I found that the judge’s acts dismissing plaintiffs were administrative rather than judicial.

The defendant’s motion for summary judgment now pending resurrects many of these old issues and raises new problems as well. The motion relies heavily on Blackwell v. Cook, 570 F.Supp. 474 (N.D.Ind.1983).

The defendant first asserts, based on the ruling in Blackwell and the decision in Pruitt v. Kimbrough, 536 F.Supp. 764, 767 (N.D.Ind.1982), that the discharge of a probation officer is a judicial act. Secondly, again citing Blackwell extensively, defendant Mears argues that none of the plaintiffs had a right to due process notice and hearing before discharge. This rule extends, the motion states, to both the non-probation officer parties and the probation officers. Further, defendant argues that the non-probation officers were discharged for cause. Finally, Mears asserts that Kenneth Orze’s termination was not a patronage dismissal, but a discharge for engaging in partisan political activity and for insubordination. In a supplement to the motion, filed July 20, 1984, the defendant sets out her reasons for discharging Russell Phelps from his teaching position.

The intervening plaintiffs’ Memorandum in Opposition to defendant’s motion is quite brief. These four plaintiffs simply question the Blackwell decision and reiterate plaintiff Anderson’s ADEA claim. The plaintiffs also contend without benefit of citation that I.C. § 11-13-1-1(c) is unconstitutional.

1. Judicial immunity

Defendant Mears is the- Senior Judge of the Juvenile Division of the Superior Court of Lake County, Indiana. As such, she is a judicial officer of the state judicial system, Pruitt v. Kimbrough, 536 F.Supp. 764, 766 (N.D.Ind.1982), and she may invoke judicial immunity for acts within her “judicial capacity.” Stump v. Sparkman, 435 U.S. 349, 362, 98 S.Ct. 1099, 1107, 55 L.Ed.2d 331 (1978); Blackwell v. Cook, 570 F.Supp. 474, 472 (N.D.Ind.1983). The question at bar is whether Mears’ acts in discharging the plaintiffs were acts taken in her judicial capacity.

Indiana Code § 11-13-1-1 governs the appointment of probation officers. The provision directs that “probation officers shall serve at the pleasure of the appointing court and are directly responsible to and subject to the order of the court.” Indiana Code § 35-5-29.5-8 further directs that such personnel shall serve at the pleasure of the senior judge of the division. It appears that Plaintiff Slepcevich, assistant superintendant of the Juvenile Detention Center, and Russell Phelps, former teacher at the center, were appointed pursuant to I.C. § 33-5-29.5-8. Paragraph (a) of that section provides for appointment of bailiffs, court reporters, probation officers, and “such other personnel” to serve “at the pleasure of the senior judge.” Paragraph (b) states that “[t]he court may appoint such number of deputy administrators as the court shall determine necessary to facilitate and transact the business of the court,” and that these administrators “shall serve at the pleasure of the chief judge.”

In Blackwell v. Cook, 570 F.Supp. 474 (N.D.Ind.1983), Judge Sharp of this District examined the availability of judicial immunity for acts taken pursuant to I.C. § 11-13-1-1. The facts were similar to those at bar. The case was filed under 42 U.S.C. § 1983 by a former employee of the Probation Department, against her putative employer, the Judge of the Marshall County Circuit Court. Ruling on a motion for summary judgment, Judge Sharp found that the defendant was wholly shielded from Blackwell’s claims by the doctrine of judicial immunity.

Blackwell holds that allowing the probation officer’s § 1983 suit could “impair, interfere, or otherwise affect the discretion” of the judge because of the “special and confidential relationship” between a judge and a probation officer. Id. at 479. The decision is not, however, of precedential value in this court. In light of the paucity of case law on the availability of judicial immunity for personnel decisions, I will re-examine the issue with reference to the history of judicial immunity and current doctrine. See generally Annot., 55 L.Ed.2d 850 (1978).

Long ago, the Supreme Court recognized that judicial officers in general are not subject to civil liability for judicial acts done within their jurisdiction. Wilkes v. Dinsman, 48 U.S. 89, 12 L.Ed. 618 (1849). In contemporary law, judges of general jurisdiction are granted immunity for judicial acts, even if they are in excess of the judge’s jurisdiction, so long as he or she has not acted in the clear absence of all jurisdiction over the subject matter. Pulliam v. Allen, — U.S. -, 104 S.Ct. 1970, 80 L.Ed.2d 565 (1984); Stump v. Sparkman, 435 U.S. 349, 98 S.Ct. 1099, 55 L.Ed.2d 331 (1978); Pierson v. Ray, 386 U.S. 547, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967); Alzua v. Johnson, 231 U.S. 106, 34 S.Ct. 27, 58 L.Ed. 142 (1913); Spalding v. Vilas, 161 U.S. 483, 16 S.Ct. 631, 40 L.Ed. 780 (1896); Bradley v. Fisher, 80 U.S. (13 Wall) 355, 20 L.Ed. 646 (1872); Randall v. Brigham, 74 U.S. (7 Wall) 523, 19 L.Ed. 285 (1869). In Pulliam v. Allen, — U.S. -, 104 S.Ct. 1970, 80 L.Ed.2d 565 (1984), a case decided since Sharp’s Blackwell opinion, the Supreme Court quoted an old chestnut which enunciated this “contemporary understanding” of the doctrine:

“It is essential in all courts that the judges who are appointed to administer the law should be permitted to administer it under the protection of the law, independently and freely, without favor and without fear. This provision of the law is not for the protection or benefit of a malicious or corrupt judge, but for the benefit of the public, whose interest it is that the judges should be at liberty to exercise their functions with independence, and without fear of consequences.” Scott v. Stansfield, 3 LR-Ex, at 223, quoted in Bradley v. Fisher, 13 Wall 335, 350 n, 20 L.Ed. 646 (1872).

Pulliam, — U.S. at -, 104 S.Ct. at 1976, 80 L.Ed.2d at 573.

Because the immunity doctrine was created to preserve judicial independence, the central debate has always been the limits of the judge’s power and responsibility to administer the law — his or her jurisdiction. The most recent Supreme Court statement of the two-part test for “judicial acts” was that quoted by Judge Sharp in Blackwell: (1) whether it is a function normally performed by a judge, and (2) whether the parties dealt with the judge in his judicial capacity. Stump v. Sparkman, 435 U.S. 349, 362, 98 S.Ct. 1099, 1107, 55 L.Ed.2d 331 (1978).

In Stump v. Sparkman, an Indiana Circuit Court judge approved a mother’s petition to have her “somewhat retarded” minor daughter sterilized. A few years later, the daughter discovered that she had been sterilized, and she sued the judge under 42 U.S.C. § 1983. The Supreme Court granted immunity because “[t]he Indiana law vested in Judge Stump the power to entertain and act upon the petition for sterilization.” To decide that the judge did not act in “a clear absence of all jurisdiction,” the Court examined Indiana code § 33-4-4-3 (1975). That provision is labeled “Jurisdiction” and sets out the jurisdiction of an Indiana Circuit Court.

The defendant here is a judge of the Lake County Superior Court. Her jurisdictional grant appears at I.C. § 33-5-29.5-4. Separate sections grant the “Power and authority of court” and “Additional circuit court powers.” Section 33-5-29.5-8 is titled “Appointment of personnel; duties; salaries;” it is this section under which defendant Mears discharged the former teacher and supervisor now suing. The probation officers were discharged under LC. § 33-5-29.5-8 and I.C. § 11-13-1-1, labelled “Probation officers; appointment; qualifications; term, responsibility, salaries, expenses, bond.”

These statutes clarify that hiring and firing are functions normally performed by a judge, meeting the first prong of the Stump v. Sparkman test. But unlike Judge Stump’s acts, the acts of which the plaintiffs complain here are not even arguably within the ambit of the Indiana Legislature’s jurisdictional grant or the “power and authority” extended to the Lake Superior Court. Defendant Mears might argue that the personnel statutes augment the jurisdictional provisions and specifically grant judicial power to appoint these officers. This is a hard case to make. No legislative history supports that construction. No Indiana cases speak to the point. And the provisions themselves are labelled to suggest that personnel decisions are separate from the jurisdiction, power and authority of the court.

The statutes are not decisive of the matter, however. The Stump v. Sparkman test deliberately alters the inquiry from one of formal jurisdiction to one which includes the parties’ own expectations and understandings. Whether the relationship between a given probation officer and a particular judge creates a need for immunity to preserve independent administration of the law, i.e. whether the relationship can be said to be dominated by acts taken in the judge’s “judicial capacity” within the meaning of Sparkman, is a question of fact. See e.g., Goodwin v. Circuit Court of St. Louis County, 729 F.2d 541, 548-59 (8th Cir.1984) (judge’s dismissal of hearing officer who exercised independent judgment and provided “advice” of a formal, detached nature to judge was administrative personnel decision). See generally Gabe v. County of Clark, 701 F.2d 102 (9th Cir.1983) (judge’s secretary may bring § 1983 suit against former employer); Cronovich v. Dunn, 573 F.Supp. 1340, 1342 (E.D.Mich.1983) (scope of immunity granted judges in making personnel appointments is confused); Lewis v. Blackburn, 555 F.Supp. 713 (W.D.N.C.1983) (state court judge not immune from § 1983 suit for decision not to reappoint magistrate); Marafino v. St. Louis County Circuit Court, 537 F.Supp. 206 (E.D.Mo.1982) (juvenile court staff attorney akin to law clerk and could invoke Title VII coverage for discriminatory dismissal); Clark v. Campbell, 514 F.Supp. 1300 (W.D.Ark. 1981) (county judge, in hiring or firing county employees, performs administrative and ministerial duties); Shore v. Howard, 414 F.Supp. 379 (N.D.Texas 1976) (circuit court judge’s dismissal of probation officer is ministerial act for which there is no immunity). Contra, Abbott v. Thetford, 534 F.2d 1101, 1103 (5th Cir.1976) (judicial officer entitled to immunity from suit for discharge of chief probation officer).

Judge Sharp is ready to impute a special status to the judge-probation officer relationship, writing that this “is [not] a situation where the judge is acting solely as an employer.” Blackwell, 570 F.Supp. at 479. I don’t agree with this rule of thumb. Employers in all professions enjoy close and interdependent relationships with their employees, yet they may be sued for civil rights violations. Unless the judge's relationship with his or her probation officer is something more unusual as a factual matter, a relationship which implicates the judge’s independence, then there is no argument that the “nature of the act” of discharge was “a judicial act.” Judge Mahan expressed this distinction eloquently in Shore v. Howard, 414 F.Supp. 379, (N.D.Texas 1976) writing that

Common-law immunities extend only so far as the interests of the common good demand protection for the holder of the office from liability for carrying out his official functions. The application of the doctrine of judicial immunity is restricted-to its single objective of protecting judicial freedom in the process of deciding civil and criminal cases. Where the initiative and independence of the judiciary is not effectively impaired, the doctrine of judicial immunity does not hold. See Doe v. County of Lake, Indiana, 399 F.Supp. 553, 555-560 (N.D.Ind.1975).

Id. at 385.

In the case at bar, the facts which might implicate judicial independence are as yet undisclosed. I do not know how closely Judge Mears worked with her probation officers, the teacher, or the supervisor, though the case for judicial immunity against the suits of these latter two is admittedly very weak. Summary judgment at this stage would be inappropriate.

2. Procedural due process

Blackwell rules in the alternative, and the second of its holdings is less controversial. Judge Sharp ruled that as a matter of law, no expectation of employment, no de facto tenure and no implied promise to dismiss could arise in the face of I.C. § 11—13—1—1(c): “Probation officers shall serve at the pleasure of the appointing court and are directly responsible and subject to the order of the court.” 579 F.Supp. at 480. This conclusion is sound, and this court concurs that the. ex-probation officers cannot sue Judge Mears for failure to accord procedural due process. See Memphis Light, Gas & Water Division v. Craft, 436 U.S. 1, 11, 98 S.Ct. 1554, 1561, 56 L.Ed.2d 30 (1978); Bishop v. Wood, 426 U.S. 341, 344-45, 96 S.Ct. 2074, 2077, 48 L.Ed.2d 684 (1976); Perry v. Sindermann, 408 U.S. 593, 602 n. 7, 92 S.Ct. 2694, 2700 n. 7, 33 L.Ed.2d 570 (1972).

Blackwell does not, of course, speak to the procedural due process rights of Stepcevich and Phelps. The second paragraph of I.C. § 33-5-29.5-8 specifically provides that deputy administrative officers serve at the pleasure of the chief judge. This section applies to Stepcevich. Mears is the senior judge rather than the chief judge, and it may prove that the court failed to follow statutory procedures. Since Stepcevich can claim a due process right in these statutory procedures, her procedural due process claim withstands the defendant’s challenge.

Phelps was a teacher, presumably appointed as “other court personnel” pursuant to I.C. § 33-5-29.5-8. Since the statute does not specifically name his position, a factual issue remains as to whether he knew or should have known of his quasi-“at-will” status. Phelps also withstands this portion of the motion for summary judgment, and may argue his procedural due process rights at trial.

3. Discharge for cause, partisan political activity, insubordination, and incompetence

As to Phelps, Orze, and Stepcevich, defendant Mears argues that each was dismissed for legitimate nondiscriminatory reasons, and she asserts facts in support of each discharge.

It is well established that in deciding a motion for summary judgment, the Court must take all inferences favorable to the non-moving party as true. Adickes v. Kress & Company, 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1608-09, 26 L.Ed.2d 142 (1970); Egger v. Phillips, 669 F.2d 497, 502 (7th Cir.1980); Peoples Outfitting Co. v. General Electric Credit Corp., 549 F.2d 42, 45 (7th Cir.1977). If any doubt remains as to the existence of a genuine issue of material fact, such doubt must be resolved against the movant of summary judgment. Wolston v. Reader’s Digest, 443 U.S. 157, 162 n. 5, 99 S.Ct. 2701, 2705 n. 5, 61 L.Ed.2d 450 (1979); United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). Further, summary judgment is appropriate only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. S.J. Groves v. International Brotherhood of Teamsters, 581 F.2d 1241 (7th Cir.1978).

Each of these three defendants alleges violations of § 1983 based on age. Orze and Phelps add a claim of discharge based on political affiliation. Orze and Stepcevich also claim under the ADEA. Mears’ affidavits and assertions regarding good cause for the plaintiffs’ discharge do not resolve the motivational elements required to prove each claim. The question is not whether there were any conceivable good reasons for the discharges, or whether some of the defendant’s reasons were good. The Court must determine whether discriminatory motives were present — a fact which is difficult to prove or disprove by affidavit. This portion of the motion for summary judgment is therefore denied.

4. Constitutionality of I.C. § ll-13-l-l(c).

The intervening plaintiffs’ Memorandum in Opposition to defendant’s motion contends that I.C. § 11-13-1-1(c) is unconstitutional. This is a bare assertion with no supporting citation or argument. Without more, it does not merit consideration.

Summary

It is therefore ORDERED that the Motion for Summary Judgment is GRANTED in part and DENIED in part, as follows:.

1. Summary judgment on the issue of judicial immunity is DENIED. The issue remains to be decided at trial.
2. Summary judgment is GRANTED as to the procedural due process claims for the ex-probation officer plaintiffs. Summary judgment as to the procedural due process claims of Stepcevich and Phelps is DENIED.
3. Summary judgment is DENIED as to the defendant’s claims that Phelps, Orze and Stepcevich were discharged for legitimate, non-discriminatory reasons. Factual issues remain to be resolved before such determinations can be made.
4. The intervening plaintiffs have not properly raised the issue of the constitutionality of I.C. § 11-13-1-1(e) and it will not be considered further at this time.

      . In 1982, the provision read in pertinent part
      The senior judge of each division may appoint such number of bailiffs, court reporters, probation officers, and such other personnel, as shall in the opinion of the senior judge be necessary to judicially and efficiently facilitate and transact the business of the division. The senior judge of the criminal division, with consent of the judges of said division, may appoint one commissioner pursuant to IC 34-1-25.1-1 and 34-1-25.1-2. All such appointments shall be made without regard to the political affiliation of the appointees. The salaries of the above personnel shall be fixed and paid as now or hereafter may be provided by law. The officers and persons so appointed shall perform such duties as are prescribed by the senior judge of each respective division. Any such bailiffs, court reporters, probation officers, and other personnel appointed by the senior judge of any respective division shall serve at the pleasure of said senior judge.
      The court shall appoint an administrative officer who shall have such duties as the court shall determine necessary to insure the efficient operation of the court. The court may appoint such number of deputy administrative officers as the court deems necessary to facilitate and transact the business of the court. Any appointment of an administrative officer or deputy administrative officer shall be made without regard to the political affiliation of the appointees. The salaries of the administrative officer and any deputy administrative officer shall be fixed by the court, to be paid out of the county treasury by the county auditor, upon the order of the court, and entered of record. Any such administrative officer or deputy administrative officer appointed by the court shall operate under the jurisdiction of the chief judge and shall serve at the pleasure of the chief judge.
      I.D. § 33-5-29.5-8 (1980).
      The statute was amended in 1983.

      . Indiana Code § 11 — 13—1—1(c) states that:
      Probation officers shall serve at the pleasure of the appointing court and are directly responsible to and subject to the orders of the court. The amount of time of payment of salaries of probation officers shall be fixed by the court consistent with section 8 of this chapter to be paid out of the county or city treasury by the county auditor or city controller. Probation officers are entitled to their actual expenses necessarily incurred in the performance of their duties. Probation officers shall give a bond if the court so directs in a sum to be fixed by the court.

      . The different provisions and duties noted in these statutes may affect the availability of the judicial immunity defense as to each plaintiff. The same act may be "judicial" when addressed to a probation officer, while outside judicial capacity when addressed to "such other personnel" as supervisors and teachers.

      . I.C. § 33-5-29.5-4 provides:
      The court, within and for the county of Lake, has the same jurisdiction as the Lake Circuit Court in all civil and probate cases and matters whether original or appellate, has original exclusive jurisdiction of all felony cases and such appellate jurisdiction in criminal cases as is vested in the circuit court, and has original exclusive juvenile jurisdiction.

      . I.C. § 33-5-29.5-6 grants that
      The court shall have full power and authority to make and adopt rules and regulations for conducting the business of the court, not repugnant to the laws of this state, and the rules of the Supreme Court of Indiana, and shall have all the powers incident to a court of record in relation to the attendance of witnesses, the punishment of contempts, and the enforcement of its orders. The judges shall have the full authority to administer oaths, solemnize marriages, take and certify acknowledgements of deeds, and all legal instruments, and to give all necessary certificates for the authentication of the records and proceedings in the court.

      . At I.C. § 33-5-29.5-7, the Lake Superior Court is given power ... to grant restraining orders, injunctions, and writs of ne exeat, to issue writs of habeas corpus, to appoint receivers, masters, and commissioners to convey real property, and to grant commissions for the examination of witnesses, .and to appoint other officers necessary to facilitate and transact the business of the court as is now or may hereafter be conferred on circuit courts or the judges thereof in counties where there is no criminal court.


source: Caselaw Access Project

author: GLASSER, District Judge.

license: Public Domain

text:
    WREN DISTRIBUTORS, INC. and Innovative Marketing Concepts, Inc., Plaintiffs, v. PHONE-MATE, INC., Defendant.
    No. 83 Civ. 4810.
    United States District Court, E.D. New York.
    Jan. 28, 1985.

      Zissu, Berman, Halper, Barron & Gumbinger, New York City, for plaintiffs.
    O’Melveny & Myers, New York City, for defendant.
   MEMORANDUM AND ORDER

GLASSER, District Judge.

This is a diversity action brought by Wren Distributors, Inc. (“Wren”) and a related company, Innovative Marketing Concepts, Inc. (“IMC”), which arises out of business transactions between plaintiffs and defendant Phone-Mate, Inc. (“Phone-Mate”). Phone-Mate has moved this Court for an order compelling plaintiffs to arbitrate this action pursuant to 9 U.S.C. § 4, and/or to stay this action pending arbitration pursuant to 9 U.S.C. § 3. Since the filing of this motion, IMC has consented to arbitrate its claims against Phone-Mate, and to stay its claims in this Court pending arbitration. Therefore, the only questions remaining before me are whether Wren can be compelled to arbitrate its claims against defendant, and if not, whether Wren’s claims against defendant may be stayed pending arbitration of IMC’s claims against defendant. For the reasons set forth below, Phone-Mate’s motion to compel Wren to arbitrate its claims is denied, as is Phone-Mate’s request that Wren’s claims in this case be stayed pending completion of the IMC/Phone-Mate arbitration.

Facts

Defendant Phone-Mate is a California corporation which designs, engineers and markets various telecommunications products throughout the United States for use in homes and in small businesses. In addition to its own personnel, defendant utilizes firms which act as distributors of its products as well as separate manufacturer representative firms (“sales reps” or “re()s”) to carry out its business. As detailed in both plaintiffs’ and defendant’s motion papers, the functions and methods of operation of the distributor and sales rep differ considerably.

The sales rep, who is active in the marketing and advertising of Phone-Mate’s product, acts as an agent for Phone-Mate. The rep arranges sales of Phone-Mate products to different accounts, and earns a 5% commission on sales to direct customers and 3% on sales to distributors such as Wren. Unlike the sales rep, the Phone-Mate distributor takes title to the company’s products and resells them to direct accounts. The distributor is compensated by receiving the margin of profit between the price paid to Phone-Mate and the price charged to the customer. The distributor is not an agent of Phone-Mate. Phone-Mate alleges that its policy has been to use separate firms as sales reps for and distributors of its products.

In the context of this action, Wren acted as distributor for Phone-Mate in the New York regional sales market from 1974 through August 1983. The parties transacted business informally, without a written contract. Prior to May 1983, Phone-Mate had engaged companies unrelated to plaintiffs as sales reps for their merchandise. In early 1983, however, plaintiffs and defendant worked out a plan under which Wren would form a separate sales rep organization so that it could, in effect, function as both sales rep and distributor for Phone-Mate. That sales rep “arm” of Wren is the other plaintiff in this action, IMC.

As stated above, Phone-Mate had a policy of utilizing separate organizations to function as sales reps and distributors. Therefore, defendant alleges, the following factors were important to its decision to use Wren as both distributor and sales rep:

(1) that Wren would form a separate sales rep organization to function as Phone-Mate’s rep; (2) that this organization would be adequately staffed to perform the duties of a sales rep; and (3) that this separate organization would not function as sales rep for any companies that competed with Phone-Mate.

Affidavit of Larry Kloman (Vice President of Sales, Phone-Mate) (“Kloman Aff.”) ¶ 14. It was hoped by Wren and Phone-Mate that by using Wren as master distributor of Phone-Mate products in the New York area and using IMC as the sales rep, the overall market for Phone-Mate products would grow “because Wren/IMC would control both the marketing arm as sales rep and the supply side as distributor.” Kloman Aff. ¶ 15.

As a result of negotiations between Wren and Phone-Mate, Wren developed an organizational chart for a separate sales rep organization, IMC, and conveyed to Phone-Mate assurances that IMC would be adequately staffed to meet Phone-Mate’s sales rep needs. Phone-Mate appointed IMC as its sales rep effective May 1, 1983, by a contract which was memorialized in a written Sales Representative Agreement (“the Agreement”) between those parties on June 3, 1983. Wren was not a party to the Agreement. The Agreement contained both an arbitration clause and a provision for termination of the contract by either party on thirty days’ written notice. Phone-Mate uses such Sales Representative Agreements when it contracts with sales reps throughout the country. Kloman Aff. ¶ 19.

IMC acted as Phone-Mate’s sales rep until August 30, 1983, when Phone-Mate terminated the Agreement effective September 30, 1983. See Kloman Aff., Exh. D. Although the parties disagree as to how the distributor relationship between Wren and Phone-Mate was terminated, it is clear that the distributorship arrangement ended on or about September 1983.

In November 1983, plaintiffs instituted this action against Phone-Mate, in which Wren alleges three claims for damages as follows: (1) damages due to excess inventory which defendant required Wren to purchase and which Wren could not sell due to the allegedly inferior quality of the goods; (2) defendant tortiously interfered with Wren’s relationship with its customers by conveying various misrepresentations to those customers and by committing theft of Wren’s customers; and (3) defendant refused to credit Wren for allegedly defective or unusable products returned to defendant by Wren.

Unlike Wren’s claims against-defendant, IMC’s two claims against Phone-Mate refer specifically to the Sales Representative Agreement. IMC alleges (1) that defendant refused to pay IMC commissions due under the Agreement, and (2) defendant caused IMC to lose valuable business opportunities as a result of alleged misrepresentations by defendant and breach of the Agreement.

Defendant’s instant motion to compel arbitration of the claims of both plaintiffs is based upon the existence of the arbitration clause in the IMC/Phone-Mate Sales Representative Agreement. See supra note 4. As mentioned above, IMC has consented to arbitrate its claims against Phone-Mate and to stay its claims in this Court pending the completion of that arbitration.

Phone-Mate also seeks, however, to compel Wren to arbitrate its claims despite the lack of any express agreement to arbitrate between those parties. Rather, Phone-Mate urges that Wren must be compelled to arbitrate because Wren is merely an “alter ego” of IMC and, as such, Wren must arbitrate its claims because IMC is compelled to' do so. In support of this argument, Phone-Mate alleges that Wren and IMC were not separate organizations because: (1) the companies had their offices at the same location and used the same telephone number; (2) the three principals and the personnel of both companies were identical; (3) the Wren sales staff was never replaced by a separate IMC sales staff — i.e., only two full time IMC sales staff were ever hired; and (4) IMC was a wholly-owned subsidiary of Wren. Kloman Aff. ¶¶ 13, 15. Wren disputes Phone-Mate’s contention, arguing that (1) Wren and IMC do not have a parent-subsidiary relationship; (2) Wren and IMC carry out entirely different functions, i.e., distributor vs. sales representative; (3) IMC employed several “detail persons” who performed services solely for IMC, and hired approximately 100 persons from time to time to demonstrate Phone-Mate’s products for IMC; and (4) IMC at all times maintained business records separate and distinct from those of Wren. Rubin Aff. ¶ 7.

For the reasons set forth below, I find defendant’s argument that Wren must be compelled to arbitrate its claims based on the alter ego theory to be unpersuasive.

Discussion

A. Power to Compel Wren to Arbitrate

The power to compel arbitration arises under 9 U.S.C. § 4, which provides in part:

A party aggrieved by the alleged failure, neglect or refusal of another to arbitrate under a written agreement for arbitration may petition any United States District court ... for an order directing that such arbitration proceed in the manner provided for in such agreement____ The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. The hearing and proceedings, under such agreement, shall be within the district in which the petition for an order directing such arbitration is filed.

It is settled law in this Circuit, however, that a court can compel a party to arbitrate a dispute even if that party did not enter into a written agreement containing an arbitration clause. This is so, for example, if the party sought to be compelled to arbitrate is merely the alter ego of a party that is clearly subject to arbitration. See, e.g., McAllister Brothers, Inc. v. A & S Transportation Co., 621 F.2d 519 (2d Cir.1980) {“McAllister ”); Interocean Shipping Co. v. National Shipping & Trading Corp., 523 F.2d 527, 539 (2d Cir.1975); cert. denied, 423 U.S. 1054, 96 S.Ct. 785, 46 L.Ed.2d 643 (1976). However, “absent findings of fraud or bad faith, a corporation ... is entitled to a presumption of separateness from a sister corporation ... even if both are owned and controlled by the same individuals.” American Renaissance Lines, Inc. v. Saxis Steamship Co., 502 F.2d 674, 677 (2d Cir.1974). In determining whether a party is bound by an arbitration agreement, a federal court will look to state contract law principles. McAllister, supra, 621 F.2d at 524; Farkar Co. v. R.A. Hanson DISC, Ltd., 441 F.Supp. 841, 845 (S.D.N.Y.1977), affirmed as modified, 583 F.2d 68 (2d Cir.1978), modified on other grounds, 604 F.2d 1 (2d Cir.1979) (decision on rehearing) (“Farkar ”).

In support of its argument that Wren must arbitrate its claims against Phone-Mate, Phone-Mate relies most heavily upon In the Matter of Sbarro Holding, Inc., 91 A.D.2d 613, 456 N.Y.S.2d 416 (2d Dep’t 1982) (“Sbarro ”) and the earlier two decisions in Farkar, supra. The facts of those cases differ substantially from those present in this action. Thus, even though “piercing of the corporate veil” in order to determine whether a corporation is the alter ego of another “ ‘is sui generis and must be evaluated on its own facts,’ ” Farkar, supra, 583 F.2d at 71 (quoting plaintiff’s brief), those cases do not aid Phone-Mate’s argument here.

In Sbarro, the court pierced the corporate veil of four related companies and compelled them all to arbitrate the plaintiffs’ claims against one of them upon finding a “thorough integration of the entire Sbarro franchising operation.” 456 N.Y. S.2d at 417. The court elaborated on the circumstances when one company will be compelled to arbitrate based on an alter ego theory:

Where one corporation merely acts as the alter ego of a second corporation, the second corporation can be compelled to participate in an arbitration proceeding although it is not a signatory of the contract containing the arbitration clause which was, however, signed by the alter ego----
The corporate veil will be pierced (1) to achieve equity, even absent fraud, where the officers and employees of a parent corporation exercise control over the daily operations of a subsidiary corporation and act as the true prime movers behind the subsidiary’s actions and/or (2) where a parent corporation conducts business through a subsidiary which exists solely to serve the parent____

Id. (citations omitted). Unlike the intertwining contractual relationships of the parties in Sbarro, the only contract at issue here — the IMC/Phone-Mate Sales Representative Agreement — dealt strictly with the relationship between those two parties. For example, Phone-Mate has submitted no evidence that could establish that Wren and IMC were “thoroughly integrated” in a manner similar to the Sbarro companies.

In Farkar, the district court, applying Washington law, pierced the corporate veil after finding that one company was the “barest shell” of the other and that their identities were so confused and intermingled that third persons would probably be defrauded in dealing with either of the companies within the special theory of Washington law. In affirming the district court, the Circuit Court observed “that the corporate veil was so diaphanous that it did not even require piercing.” 583 F.2d at 71. The Second Circuit, in other cases, has held that even if a corporation has “no mind of its own” and is completely dominated by a parent company, a showing of fraud or something akin to fraud “is a sine qua non to holding a non-signatory bound by an arbitration agreement.” Interocean Shipping Co. v. National Shipping & Trading Corp., supra, 523 F.2d at 539 (citing Fisser v. International Bank, 282 F.2d 231, 238-40 (2d Cir.1960)).

The case of McAllister Brothers, Inc. v. A & S Transportation Co., supra, is also distinguishable from the instant ease because the contract providing for arbitration in McAllister expressly bound the companies affiliated with the contract signatories. Here the only written agreement is between IMC and Phone-Mate and does not refer, by implication or otherwise, to Wren or any other party.

The most apparent difference between the “alter ego cases” discussed above and the instant case, however, is the manner in which the related companies came into being. Assuming the validity of Phone-Mate’s argument, based on Sbarro, supra at 1579-1580, that it is unnecessary to show fraud to compel a non-signatory to an agreement to arbitrate, the record here does not support the conclusions that “the officers and employees of a parent corporation ... [were acting] as the prime movers behind the subsidiary’s actions” and/or there is a “subsidiary which exists solely to serve the parent.” Sbarro, supra, 456 N.Y.S.2d at 417. Even if Phone-Mate had successfully established that IMC is a subsidiary of Wren, the plaintiffs’ papers show that IMC had many different personnel and, in fact, an entirely different function, than that of Wren.

In addition, the record makes clear that it was Phone-Mate’s instigation, more than Wren’s desire, that caused Wren to establish IMC as a separate sales rep organization. In addition, in contrast to the Sbarro plaintiffs, who were bound to agreements drawn up by the person who served as officer, director and shareholder of the four related companies, it was Phone-Mate that prepared the Sales Representative Agreement here in issue. See Kloman Aff., Exh. C.

For the reasons set forth above, I find that Phone-Mate has not established that Wren and IMC are alter egos for the purpose of compelling Wren to arbitrate Wren’s claims against defendant.

B. Power to Stay this Action

The only issue remaining is whether Wren’s claims in this action should be stayed pending the completion of the arbitration of IMC’s claims against Phone-Mate. As authority for the argument that this action should be stayed, defendant cites 9 U.S.C. § 3 as well as this Court’s inherent equitable powers. Because § 3 expressly governs situations in which the court has found the claim to be referrable to arbitration pursuant to a written agreement, see supra note 8, that section cannot serve as a basis for staying Wren’s claims here.

It is true, however, that the court may exercise its inherent equitable powers to stay Wren’s claims pending resolution of the arbitration between IMC and Phone-Mate. See, e.g., Landis v. North American Co., 299 U.S. 248, 57 S.Ct. 163, 81 L.Ed. 153 (1936). There, the Supreme Court stated that “the power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.” Id. at 254, 57 S.Ct. at 166. In order to obtain the stay of an action pending arbitration, the party seeking the stay

should demonstrate to the satisfaction of the court that they have not taken nor will take any steps to hamper the progress of the arbitration proceeding, that the arbitration may be expected to conclude within a reasonable time, and that such delay as may occur will not work undue hardship.

Nederlandse Erts-Tankersmaatschappij, N. V. v. Isbrandtsen Co., 339 F.2d 440, 442 (2d Cir.1964) (footnote omitted). See also American Home Assurance Co. v. Vecco Concrete Construction Co., 629 F.2d 961, 964 (4th Cir.1980) (entire court action stayed where pending arbitration might resolve questions of fact common to lawsuit); Home Life Insurance Co. v. Kaufman, 547 F.Supp. 833, 835-36 (S.D.N.Y.1982) (where defendant’s active attempt to compel arbitration indicated defendant’s expected effort to reach prompt disposition of dispute and arbitration of certain claims might clarify issues for court proceeding, entire action would be stayed). See also Janmort Leasing Co. v. Econo-Car International, Inc., 475 F.Supp. 1282, 1293 (E.D.N.Y.1979); Lawson Fabrics, Inc. v. Akzona, Inc., 355 F.Supp. 1146, 1151 (S.D.N.Y.), aff'd, 486 F.2d 1394 (2d Cir.1973).

The equities present in the above cited cases, however, do not compel this Court to stay Wren’s claims for several reasons. First, as described supra at 1578-1579, Wren’s claims differ substantially from those of IMC. In addition, Wren’s alleged damages arise from its informal business arrangement with Phone-Mate, while IMC’s claims are solely referable to the Sales Representative Agreement. While both plaintiffs allege some form of tortious interference with business by Phone-Mate, nowhere do plaintiffs allege that their business losses are identical in nature.

For the above reasons, I find no justification for the exercise by this Court of its equitable powers to stay Wren’s claims pending the resolution of the arbitration between IMC and Phone-Mate. Conclusion

For the reasons set forth above, defendant’s motion to compel Wren to arbitrate or to stay Wren’s claims pending the arbitration of IMC’s claims against Phone-Mate is denied in its entirety.

SO ORDERED.

      . See infra at 1579.

      . See infra note 8.

      . The descriptions of the functions of distributor and sales rep are not disputed by the parties, and are found in the Affidavit of Larry Kloman (Vice President of Sales, Phone-Mate) (“Kloman Aff.") ¶¶ 5-7.

      . The arbitration clause in the Sales Representative Agreement executed by IMC and Phone-Mate provided:
      EIGHTH: All questions or controversies arising out of or in any respect relating to this Agreement shall be submitted to the American Arbitration Association at its office in the city of Los Angeles for determination, and the parties hereto agree to be bound by the award or decision made by the Arbitrator or Arbitrators designated by the American Arbitration Association and that a judgement [sic] consistent therewith may be entered in any court of competent jurisdiction.

      . Phone-Mate alleges that it informed Wren that it would be happy to continue to use Wren as its distributor even though its relationship with IMC was terminated, and that Wren voluntarily terminated the distributorship due to its displeasure over Phone-Mate's cancellation of the Agreement with IMC. See Kloman Aff. ¶ 22; Affidavit of John Kavazanjian (Eastern Regional Sales Manager for Phone-Mate) ("Kavazanjian Aff.") ¶ 19. Wren, however, contends that in addition to terminating its agreement with IMC, Phone-Mate wrongfully terminated its informal distributorship arrangement with Wren. See, e.g., Complaint ¶ 19; Affidavit of Leonard Rubin (Senior Vice President, Finance and Administration, of Wren; consultant to IMC) ("Rubin Aff.”), If ¶ & n.*.

      . Rubin Aff. ¶ 7. Plaintiffs assert that Wren is wholly owned by Abraham Portnoy, its President and Chief Executive Officer, while IMC is wholly owned by Ronald Portnoy, who is the son of Abraham Portnoy. These allegations are concurred in by the affidavit of Ronald Portnoy. Plaintiffs do not dispute that Wren and IMC are related companies, however.

      . The circuit court in McAllister, however, reversed and remanded the action insofar as the trial court had declined to compel arbitration by two companies allegedly affiliated with the signatories. The appellate court found that the plaintiff was entitled to a trial on the issue of whether the alleged affiliates were bound by the arbitration agreement. 621 F.2d at 524. Although Phone-Mate suggested in its reply memorandum that a trial be held on the issue of whether Wren and IMC are alter egos, counsel for Phone-Mate conceded at oral argument of this motion that it could rely on its papers to support its motion to compel.

      . Section 3 of Title 9 provides:
      If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration,
      (emphasis added).

      . Even if this Court had determined that Wren should be compelled to arbitrate its claims against Phone-Mate, it is questionable whether this arbitration could be compelled to take place in Los Angeles, where the IMC arbitration will be conducted. This is so due to the venue restriction in 9 U.S.C. § 4, supra at 1579. See, e.g., Couleur International Ltd. v. Saint-Tropez West, 547 F.Supp. 176, 177-78 (S.D.N.Y.1982); E.C. Ernst v. Potlatch Corp., 462 F.Supp. 694, 697 (S.D.N.Y.1978). Assuming that this Court has the power only to compel Wren to arbitrate within the venue of this district, judicial economy would not be served at all if IMC arbitrates its claims in Los Angeles while Wren arbitrates its claims here.


author: SPELLMAN, District Judge.

text:
    FIMAB-FINANZIARIA MAGLIFICIO BIELLESE FRATELLI FILA S.p.A. and Fila Sports, Inc., Plaintiffs, v. HELIO IMPORT/EXPORT, INC.; Helio A. Gonzalez, Day Casual, Inc.; and John Does 1 through 10, Defendants.
    Civ. A. No. 83-1098.
    United States District Court, S.D. Florida.
    April 29, 1983.
    John Cyril Malloy, P.A., Miami, Fla., Flehr, Hohbach, Test, Albritton & Herbert, Elmer S. Albritton, Stephen E. Baldwin, William E. Levin, Pelavin, Norberg, Harlick & Beck, Alvin H. Pelavin, San Francisco, Cal., for plaintiffs.
    Helio A. Gonzalez, pro se.
   ORDER ON PLAINTIFFS’ APPLICATION FOR TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNCTION, SEIZURE OF COUNTERFEIT GOODS AND FURTHER RELIEF, INCLUDING ORDER TO SHOW CAUSE FOR A PRELIMINARY INJUNCTION WITH TEMPORARY RESTRAINING ORDER

SPELLMAN, District Judge.

THIS CAUSE came before the Court upon the verified Complaint For Trademark and Trade Name Infringement And Unfair Competition; Plaintiffs’ Application For Temporary Restraining Order, Preliminary Injunction, Seizure Of Counterfeit Goods, And Further Relief; the memorandum of law in support of that application; the evidentiary materials submitted by Plaintiffs, including samples of the allegedly counterfeit FILA goods sold and offered for sale by Defendants; and the Declarations filed by Plaintiffs of Alvin H. Pelavin, Elmer S. Albritton and Jim Beck.

The relief sought by Plaintiffs is hereby granted in- part for the reasons set forth below.

The Court finds that Plaintiffs have made a prima facie showing that Defendants Helio Import, Inc. (hereinafter HE-LIO) and Helio A. Gonzalez (hereinafter GONZALEZ) are selling and offering for sale in this Judicial District, at an office and store in Miami, Florida, counterfeit FILA goods — that is, tennis shoes which bear virtually identical imitations of Plaintiffs’ trade name and registered trademarks, including its “F” logo, which are being passed off as genuine FILA products. The Court has examined and compared the samples of Defendants’ counterfeit FILA goods with the genuine FILA goods submitted to the Court by Plaintiffs, and the photographs thereof attached as Exhibits K and L to the verified Complaint, and finds the goods confusingly similar, at the very least, in view of the repeated and prominent use of Plaintiffs’ “F” logo and “FILA” name on the Defendants’ goods, their packaging and containers. This “ocular test” is a proper one. Volkswagenwerk Aktiengesellschaft v. Tatum, 344 F.Supp. 235, 237 (S.D.Fla.1972), and the Court has considered the likelihood of confusion from the standpoint of the typical buyer of the product. Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 389 (5th Cir.1977).

The Court also finds that the Plaintiffs have made a sufficient showing under Rule 65(b), Federal Rules of Civil Procedure, that Plaintiffs and their attorneys have taken steps to avoid giving any notice to the Defendants of this proceeding, and that the giving of notice to the Defendants would be likely to result in the disappearance of the counterfeit FILA goods and related records, or the “dumping” or transfer of the counterfeit goods to unknown third parties, jeopardizing Plaintiffs’ ability to prevent irreparable injury, to stop the distribution of counterfeit FILA products, and to determine the source and extent of the Defendants’ dealings in the counterfeit FILA products. Plaintiffs have brought to the Court’s attention the bourgeoning case law around the country which has recognized and approved as both appropriate and necessary judicial relief the granting of temporary restraining orders without notice, expedited discovery, and similar relief.

Most of these cases are unreported, however, such relief has been granted many times in trademark counterfeiting cases, including to the Plaintiffs here. See, e.g., Fimab-Finanziaria Maglificio Biellese Fratelli Fila S.p.A. v. DeOcampo et al., C-80-1688 (SAW) (N.D.Calif.1980); Fimab-Finanziaria Maglificio Biellese Fratelli Fila S.p.A. v. Larracas, C-80-1816(SAW), (N.D.Cal.1980); Fimab-Finanziaria Maglificio Biellese Fratelli Fila S.p.A. v. Sebelen, C-81-1058-Civ.Je (S.D.Fla.1981). The weight of authority around the country appears to favor the granting of such ex parte relief in trademark counterfeiting cases, where fake versions of well-known brands are deliberately passed off to the public as the genuine article. See, e.g., Playboy Enterprises, Inc. v. P.K Sorren Export Company, Inc. of Florida, C-81-1264-Civ.-CA. (S.D.Fla.1981); Jordache Enterprises, Inc. v. Mustell Fashions, Calvin Klein Company and Centerfold Industries, Inc. v. Snooty Booty’s, C-80-2448 (D.C.Kan.1980); Rock Tours, Ltd. v. Various John Does, C-80-742 MA (D.Mass. 1980).

Many of these decisions derive from the recognition in the seminal case of In re Vuitton et Fils S.A., 606 F.2d 1 (2d Cir. 1979) that “dumping” of counterfeit goods or transfer of counterfeit goods to unknown third parties is a common practice in the counterfeiting industry. Fimab-Finanziaria Maglificio Biellese Fratelli Fila S.p.A. v. Kitchen, 548 F.Supp. 248 (S.D.Fla.1982) (same plaintiffs). See also, NEA Enterprises, Inc. v. Zack’s, 209 U.S. P.Q. 566 (S.D.Fla.1980).

Defendants in such counterfeiting cases often raise spurious, if any, defenses, and have few or no discoverable assets from which a monetary award of damages be satisfied. See CPC International, Inc. v. Albury Sales Co., 504 F.Supp. 549 (S.D. Fla.1980) (fake MAZOLA corn oil), appeal dismissed (5th Cir. 1981), appellate opinion reported in 1 J. Gilson, Trademark Protection and Practice § 8.12[15], (“the boll weevil” defense). As the Fifth Circuit stated:

Consent restraints have been entered but not abided____ While it appears that they [defendants] may have harvested some crop since the litigation commenced, they have infringed another’s land in the raising of it and, though under court order to account for its proceeds, they refuse.

Thus, monetary relief is often ineffective and the only effective relief available is frequently by way of an immediate injunction which curtails the damage to the trademark owner in a meaningful and prompt manner.

California, New York and Florida, particularly South Florida, have experienced a rash of counterfeits of famous trademarks. The spectrum of products which have been prey to this contagion appear to be limited only by the perimeters of human imagination. Designer clothing, well-known watches, major credit cards, and even such consumer items as MAZOLA corn oil have been slavishly copied. The public is deceived daily.

Plaintiffs also seek immediate discovery prior to a preliminary injunction hearing, to determine the source, magnitude, and distribution of the counterfeit FILA goods. Expedited discovery should be granted when some unusual circumstances or conditions exist that would likely prejudice the party if he were required to wait the normal time. Gibson v. Bagas Restaurants, 87 F.R.D. 60, 62 (W.D.Mo. 1980). Such relief may be granted ex parte. See K.J. Schwartzbaum, Inc. v. Evans, Inc., 279 F.Supp. 422, 424 (S.D.N.Y. 1968). Such prejudice is frequently the case where a well-known trademark, such as Plaintiffs here, has been counterfeited and the sources or purchasers of the counterfeit products are unknown to plaintiff. This Court reserves ruling on expedited discovery to the hearing hereinafter set.

Although temporary restraining orders without notice and the other relief requested by Plaintiffs should be entered only in the most unusual circumstances in which irreparable harm would otherwise occur, the Plaintiffs make a showing of such circumstances in this case. Therefore,

IT IS HEREBY ORDERED that Defendants HELIO, GONZALEZ, and DAY CASUAL, INC., their partners, subsidiaries, officers, agents, servants, employees, attorneys and those persons or companies in active concert or participation with them, or any of them, be and hereby are temporarily restrained from:

(a) Importing into or exporting to the United States, its territories or possessions, any goods which bear a copy of Plaintiff FILA’s “F” logo and/or the name “FILA” or any confusingly similar variations thereon, which goods are not authorized by Plaintiffs for sale in the United States or elsewhere (hereinafter called the counterfeit FILA goods);
(b) Exporting from, or importing into any foreign country from, the United States, its territories or possessions, any counterfeit FILA goods;
(c) Manufacturing, assembling, or participating in the manufacture or assembly of any counterfeit FILA goods;
(d) Infringing Plaintiffs’ established proprietary rights in the “F” logo and the name “FILA” and all protectable variations thereof, by further promoting, advertising, publishing or offering for sale, goods which bear a copy of Plaintiff FILA’s “F” logo and/or the name “FILA” or any confusingly similar variations thereof;
(e) Otherwise infringing Plaintiff FILA’s established proprietary rights at common law and in the above identified Federal and State of Florida registrations granted on the “F” logo;
(f) Competing unfairly with Plaintiffs in any manner by continued use or sale of counterfeit FILA goods or any goods bearing a copy of Plaintiff FILA’s “F” logo and/or the name “FILA” or any colorable variations or imitations thereof;
(g) Further damaging Plaintiffs’ established goodwill and reputation by diluting the distinctiveness of Plaintiffs’ established proprietary rights in the “F” logo and/or the name “FILA” by holding themselves out as having any business relationship with Plaintiffs, or either of them.
(h) Competing unfairly with Plaintiffs by passing off counterfeit FILA goods as genuine goods of Plaintiffs; and
(i) Buying, selling or in any way dealing with counterfeit FILA goods or any goods bearing a copy of Plaintiff FILA’s “F” logo and/or the name “FILA” or any colorable variations or imitations' thereof.

IT IS FURTHER ORDERED that, sufficient cause appearing hereof, personal service of a copy of this Order and the papers upon which it is based delivered to the Defendants, on or before May 2, 1983, by 4 p.m., shall be sufficient notice, and Defendants shall serve on Plaintiffs and file with this Court any opposing papers on or before May 4, 1983, by 4 p.m.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Defendants shall appear at the times indicated hereinafter and shall produce samples of all goods in their possession, custody or control which bear or display Plaintiffs’ name “FILA” and/or the “F” logo trademark, together with all documents referring or relating to Defendants’ purchases or obtaining of any such goods (whether or not presently in the custody of Defendants) and relating to the sale or other disposition of such goods.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that plaintiffs may, on three days’ notice, after May 5, 1983 unless otherwise ordered on said date, take the depositions of and subpoena the non-party witnesses who plaintiffs believe are in possession of information relating to the distribution of the counterfeit FILA goods, whether or not located within this district, and make limited document requests relating to such information and to the counterfeit FILA goods to such witnesses, such as the shippers who have handled transactions involving the counterfeit FILA goods; and

The United States Marshal for this District and persons acting under his supervision shall, on or before May 2, 1983, by 4 p.m., serve the initial process in this action on the Defendants, including but not limited to all Summons, Complaints, Applications, Declarations, Supporting Memoranda and Orders entered by this Court prior to such service, which said service shall be made to the extent possible at the same time the herein Order is served.

The Clerk for this District and, as appropriate, the District of Puerto Rico, is directed to seal the file in this action, so that it is not open to the public, but only until such time as the Defendants, including the John Doe defendants, have been served with initial process.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that if, after this order is served on them, Defendants or any of them, obtain the possession, custody or control of any additional quantity of the above-said counterfeit goods, whether by purchase or importation or otherwise, said Defendant or Defendants will immediately notify the Plaintiffs or their attorneys, and retain without sale until further order of this Court.

Defendants HELIO, GONZALEZ and DAY be and hereby are temporarily restrained from communicating in any manner to any third parties concerning the present lawsuit, including its existence or nature, except their own attorneys, plaintiffs’ counsel, or the Court and its staff, until pláintiffs have had an opportunity to identify and serve the John Doe defendants, but in no event for more than ten days from the date hereof.

Plaintiffs shall, within forty eight (48) hours, post security, in the form of a cash bond or corporate surety bond or other form approved by the Court, in the amount of $2500.00 for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully restrained, pending the hearing and determination of the continuation of this order and the setting of the Plaintiffs’ Application For Preliminary Injunction, which is hereby noticed and shall be heard on May 5, 1983, at 10 a.m., or as soon thereafter as counsel may be heard, in the Federal Courthouse, Courtroom VI, Miami, Florida before the Honorable Alcee Hastings, U.S. District Judge.


author: NEESE, Senior District Judge,

text:
    HICKMAN, WILLIAMS AND COMPANY, Plaintiff, v. INGRAM COAL COMPANY, etc., Defendant and Third-party plaintiff, v. P. & C. BITUMINOUS COAL COMPANY, INC., Third-party defendant.
    Civ. A. No. 3:83-0394.
    United States District Court, M.D. Tennessee, Nashville Division.
    Jan. 9, 1984.
    Barbara Moss, Gullett, Sanford & Robinson, Nashville, Tenn., for plaintiff.
    Jay Bowen, Bass, Berry & Simms, Nashville, Tenn., for defendant and third-party plaintiff.
    David G. Gray, Nashville, Tenn., for third-party defendant P. & C. Bituminous Coal Co., Inc.
   MEMORANDUM OPINION AND ORDER

NEESE, Senior District Judge,

sitting by designation.

This is a diversity-action, 28 U.S.C. § 1332(a)(1), (c), in which the plaintiff seeks reimbursement for demurrage it paid to the carrier of certain coal it had sold to the defendant. The defendant moved for a summary judgment on that claim and, alternatively, on its third-party claim. Rule 56(a), (b), F.R.Civ.P. Such motion lacks merit.

The pleadings and other documents of record reflect that the defendant Ingram Coal Company (Ingram) purchased from the plaintiff Hickman, Williams & Company (Hickman-Williams) a quantity of coal which was loaded on three barges for delivery: Contemporaneously therewith, Ingram resold the coal to the third-party defendant P & C Bituminous Coal Company, Inc. (P & C), and Hickman-Williams was so notified.

The barge-carrier was instructed to deliver the coal to P & C (or to its ultimate consignee(s)), which it did. As a consequence of the alleged undue delay in unloading the coal at its ultimate destination(s), the barge-carrier assessed Hickman-Williams $32,140 in demurrage, which sum the latter paid.

Initially, the Court notices that this is not an action brought by a carrier to recover demurrage; instead, it is an action brought by a charterer to be indemnified for demurrage which it paid to the carrier. Hickman-Williams appears to recognize that, as the charterer, it was liable to the barge-carrier for the demurrage that accrued as a result of any excessive detention of the barges. It seeks indemnification from Ingram for the demurrages it paid to the barge-carrier.

“ * * * A person compelled to pay demurrage may recover it from the person primarily liable, but only on clear proof that such demurrage has been or must be paid and that responsibility therefor rests on the person from which indemnity is sought * * 80 C.J.S. 1162, Shipping § 218. The thrust of the plaintiff’s claim is that responsibility for the demurrage paid by it rests on Ingram, not because of any fault on the part of Ingram, but because of an implied contractual undertaking by which Ingram would be responsible for any demurrage. Hickman-Williams claims (in its brief) that “ * * * pursuant to business usage and custom * * * an implied term of the sale of the coal to Ingram was that Ingram would be responsible for any charges, including demurrage, accruing after the transfer of title [to the coal]. * * ”

It is well settled that “ * * * a contract includes, not only the promises set forth in express words, but, in addition, all such implied provisions as are indispensible to effectuate the intention of the parties and as arise from the language of the contract and the circumstances under which it was made. * * * ” Sacramento Nav. Co. v. Salz, 273 U.S. 326, 329, 47 S.Ct. 368, 369[4], 71 L.Ed. 663 (1927); see Bailey v. Chattem, Inc., 684 F.2d 386, 396[15] (6th Cir.1982) (“Under Tennessee law contract terms may be implied in appropriate cases.”) A contractual obligation will be implied “ * * * when it is clear that such was intended. * * * ” Big Cola Corporation v. World Bottling Co., 134 F.2d 718, 721[2] (6th Cir.1943).

Whether an obligation on the part of Ingram to reimburse the plaintiff for its demurrage-expense should be implied in its contract with Hickman-Williams involves a consideration of what was “ * * * in the minds of the parties when the contract was executed * * * ” and “ * * * the intention of the parties as gathered from all of the terms of the contract considered in light of the surrounding circumstances. * * * ” E.O. Bailey & Co. v. Union Planters Title Guaranty Co., 33 Tenn.App. 439, 232 S.W.2d 309, 316[9, 10] (1949), cert. den. by Sup.Ct. of Tenn. (1949). These, however, are matters which are not subject to disposition on motion for summary judgment. Heheman v. E.W. Scripps Co., 661 F.2d 1115, 1128-1129 (6th Cir.1981); Proctor & Schwartz, Inc. v. U.S. Equipment Co., 624 F.2d 771, 774-776 (6th Cir.1980); Jones v. General Tire & Rubber Co., 541 F.2d 660, 663, n. 3 (7th Cir.1976).

It results, that the motion of the defendant and third-party plaintiff for summary judgment, in each of its alternatives, hereby is

DENIED.

      . For present purposes, the Court uses the term "demurrage” broadly so as to encompass what, strictly speaking, should be referred to as "damages in the nature of demurrage.”

      . The shipping party (charterer) is ordinarily responsible to the carrier for demurrage. See Crossman v. Burrill, 179 U.S. 100, 110, 21 S.Ct. 38, 41, 45 L.Ed. 106 (1900); Sause Bros. Ocean Towing Co., Inc. v. Gunderson, Inc., 265 Or. 568, 510 P.2d 541, 547[7] (1973); Gilmore & Black, The Law of Admiralty (2d ed. 1975) 210-215. This is so, because demurrage is generally based upon a contract, and since the contract of carriage is made with the charterer, and not the consignee, the former is responsible to the carrier for demurrage. 70 AmJur.2d 691, Shipping § 610. (There are exceptions, however, where the bill of lading contains a stipulation that the consignee will pay the demurrage and the consignee accepts delivery of the goods, or where the delay at the point of delivery is caused by the fault of the consignee. Id.) It is said, however, that the consignee " * * * is not liable for demurrage where he assigns the bill of lading before any cargo is delivered, and delivery is made to the assignee accordingly. * * * ’’ Id.


author: SCOTT O. WRIGHT, District Judge.

text:
    VETERANS OF FOREIGN WARS OF the UNITED STATES, Department of Missouri, Inc., Plaintiff, v. UNITED STATES of America, Defendant.
    No. 82-4250-CV-C-5.
    United States District Court, W.D. Missouri, C.D.
    May 10, 1984.
    John Lake, Jefferson City, Mo., for plaintiff.
    Ludwig H. Adams, Tax Div., Dept, of Justice, Washington, D.C., Judith M. Strong, Asst. U.S. Atty., Kansas City, Mo., for defendant.
   ORDER

SCOTT O. WRIGHT, District Judge.

This is an action for the refund of federal income taxes. The parties have filed a stipulation of uncontroverted facts and briefs in support of their respective positions.

Stipulated Facts

1. Plaintiff, Veterans of Foreign Wars of the United States, Department of Missouri, Inc., is a not-for-profit corporation organized and existing under the laws of the State of Missouri, with its principal office located at 1505 East High Street, Jefferson City, Missouri. Plaintiff is an exempt organization under Section 501(c)(19) of the Internal Revenue Code of 1954 (26 U.S.C.).

2. Plaintiff timely filed its Form 990-T Exempt Organization Business Income Tax Returns for the taxable years ending May 31, 1977, and May 31, 1978. These returns reported no unrelated business taxable income and no income tax due from plaintiff for those taxable years.

3. The Internal Revenue Service undertook an examination of plaintiff’s income tax return and liabilities for the taxable years ended May 31, 1977 and May 31, 1978.

4. From 1957 through the present, plaintiff has conducted a program of soliciting “contributions” from its members involving the use of greeting cards.

5. In connection with operation of this greeting card program during the taxable years ended May 31, 1977, and May 31, 1978, plaintiff arranged for Famous Artists’ Studios, Inc. to mail to certain of plaintiff’s members in each year the following items:

a. One box embossed with the seal of The Veterans of Foreign Wars which contains 20 standard-size Christmas cards and 20 envelopes;

b. One solicitation letter of a “contribution of $3.00 (or more)” to plaintiff;

c. A reorder form for more Christmas cards for an additional $3.00 per box.

6. Recipients of the cards were under no legal obligation to give or pay any money to plaintiff.

7. If the member did not send a contribution, Famous Artists’ Studios, Inc. mailed not more than three reminders to the member.

8. If the member did not send a contribution after the reminders were sent, no further solicitation was made for a “contribution.”

9. The wholesale cost of each box of Christmas cards and envelopes was $1.05, which amount was paid to Famous Artists’ Studios from the receipts for each box mailed. The retail value of each box of Christmas cards and envelopes was $2.00 and not more than $3.00. Plaintiff has requested a $3.00 contribution for each box of cards since 1966.

10. An average of approximately 45% of plaintiffs’ members who “contributed” to the program sent in more than $3.00 for the Christmas cards.

11. Operation of and bookkeeping for the greeting card program were among the duties of the Quartermaster and the Secretary, two full-time salaried employees of plaintiff.

12. For the taxable years ending on the dates indicated, the gross receipts, cost of cards, other expenditures and excess receipts over disbursements of the plaintiff’s greeting card program were as indicated in the following chart:

May 31, 1977 May 31, 1978
Gross Receipts $ 31,517.03 $ 32,547.82
Cost of Cards 18,198.01 16,786.21
Other Expenditures 2,966.74 3,127.43
Excess Receipts over disbursements $ 10,352.28 $ 12,634.18

These figures exclude the amounts by which each Christmas card “contribution” exceeded $3.00.

13. The net receipts from the card program were not reinvested into the card program but were used for the general operating fund of plaintiff and its service programs for military veterans, including the funding of its program to assist veterans with respect to obtaining benefits to which such veterans are entitled by law.

14. On November 30, 1978, State Quartermaster J.C. Bosch signed on behalf of plaintiff a Form 870 Waiver of Restrictions on Assessment and Collection of Deficiency in Tax with respect to $1,870.46 in income tax for the. taxable year ended May 31, 1977, and $2,326.84 in income tax for the taxable year ended May 31, 1978. These figures were derived from the proposed determination of the Internal Revenue Service that the Net Receipts calculated in paragraph 12 hereinabove was unrelated business taxable income (subject to a specific deduction of $1,000).

15. On April 28, 1980, a delegate of the Secretary of the Treasury assessed against plaintiff for its taxable year ended May 31, 1978, income tax in the amount of $2,326.84 and interest in the amount of $52.65. On July 7, 1980, a delegate of the Secretary of the Treasury made additional assessments of $26.77 in interest and $11.63 in late payment penalty. On June 5, 1980, plaintiff paid $2,417.89 in satisfaction of all of these assessments with respect to the taxable year ended May 31, 1978.

16. On May 21, 1980, a delegate of the Secretary of the Treasury assessed against plaintiff for its taxable year ended May 31, 1977, income tax in the amount of $1,870.46 and interest in the amount of $163.17. At other times, a delegate of the Secretary of the Treasury made additional assessments of $163.17 in interest and $9.35 in late payment penalty. On June 5, 1980, plaintiff paid $2,220.68 against these assessments with respect to the taxable year ended May 31, 1977.

17. On July 30,1980, plaintiff filed with the Internal Revenue Service claims for refund of $2,220.68 paid with respect to the taxable year ended May 31, 1977, and $2,417.89 paid with respect to the taxable year ended May 31, 1978. These claims were based upon plaintiff’s contention with the income described in paragraph 10 hereinabove was not unrelated business income.

18. The plaintiff’s claims for refund were disallowed by the Internal Revenue Service on August 3, 1982.

Conclusions of Law

1. The Court has jurisdiction of this action under 28 U.S.C. Sec. 1364(a)(1).

2. Plaintiff’s receipts from the greeting card program for the taxable years ending May 31, 1977 and May 31, 1978, did not constitute unrelated business income within the meaning of Sections 511-13 of the Internal Revenue Code, and the assessment and collection of income tax thereon by defendant was erroneous.

Opinion

Under Section 501(c)(19) of the Internal Revenue Code of 1954, plaintiff is granted a general exemption from federal income taxation as a non-profit organization of past or present members of the Armed Forces of the United States. Under Sections 501(b) and 511(a), plaintiff nevertheless may be taxed on its unrelated business income. The issue in this case is whether the net income received from plaintiff’s Christmas card contribution program was unrelated business taxable income within the meaning of Sections 512(a)(1) and 513(a). The facts in each case must be examined closely to determine whether an activity conducted by a non-profit organization is a trade or business within the meaning of the relevant statutes.

Section 513(a) defines the term “unrelated trade or business” as follows:

(a)ny trade or business the conduct of which is not substantially related (aside from the need of such organization for income or funds or the use it makes of the profits derived) to the exercise or performance by such organization of each charitable, educational, or other purpose or function constituting the basis for its exemption under Section 501....”

Section 512(a)(1) defines the term “unrelated business taxable income” to mean the net income derived from an unrelated trade or business. Section 511(a) imposes a tax on unrelated taxable income. Treasury Regulation § 1.513-l(b) provides that an organization does not engage in a trade or business when it sends out low-cost articles incidental to the solicitation of charitable contributions.

The Seventh Circuit in Hope School v. United States, 612 F.2d 298 (7th Cir.1980), was faced with a case identical in all material respects to the one presently before the Court. In Hope School, a charitable organization operated a Christmas card program for the solicitation of charitable contributions. The program was operated for the school by a private business which received $1.10 for each box of cards sold. The school requested contributions of $2.00 or more in conjunction with the cards mailed to potential contributors. The Internal Revenue Service held that the activity constituted a trade or business and, accordingly, taxed the school for the profits it derived from the program. The Seventh Circuit held that the Christmas card program came within the exception for low-cost articles incidental to the solicitation of charitable contributions. The court further held that recent amendments to the Tax Code had established that the tax on unrelated trade or businesses conducted by charitable organizations was imposed to prevent tax exempt organizations from deriving an unfair competitive advantage over non-exempt organizations. Id. at 304. Since the net proceeds of the Hope School campaign were used for the benefit of the school, and the school did not reinvest the proceeds in the greeting card business, the court held that the school was not receiving a competitive advantage because of its tax exempt status.

The defendant in this case asserts that the decision in Hope School was incorrect and contrary to the law in this circuit. In Clarence LaBelle Post No. 217 v. United States, 580 F.2d 270 (8th Cir.1978), the Eighth Circuit ruled that an exempt organization’s income from its bingo games was taxable pursuant to §§ 511-513, even if the games did not compete with any taxpaying organizations. The holding essentially was that an exempt organization could be taxed on its unrelated business income even when the organization was not competing with a non-exempt organization.

It is this Court’s determination that this case is directly controlled by the Seventh Circuit’s decision in Hope School. Further, the Seventh Circuit’s decision does not conflict with the Eighth Circuit’s decision in LaBelle because in this case the facts establish that plaintiff was not engaging in a trade or business under § 511-513. The greeting cards were distributed as low cost articles incidental to the solicitation of contributions. Further, according to the stipulation of facts, the plaintiff did not reinvest proceeds from its campaign into the greeting card program, thereby gaining no competitive advantage from its tax-exempt status and indicating that it was not operated as a trade or business. See Hope School, supra, at 304. In accordance with the foregoing, it is hereby

ORDERED that judgment is entered for the plaintiff in the amount of $4,638.57 with interest thereon, as provided by 26 U.S.C. § 6611 and 6621 from June 5, 1980. It is further

ORDERED that the government shall bear the costs of this proceeding.


author: CAHILL, District Judge.

text:
    Carolyn S. LOMBARD, Ruth Thompson, Kenneth Spilger and Elizabeth Spilger, Plaintiffs, v. UNITED STATES of America, Defendant. Elaine SPURGEON, Janet Carol Dunn, Jean Ann Matthews, and Mark Spurgeon, Plaintiffs, v. UNITED STATES of America, Defendant.
    Nos. 81-1600-C(4), 83-0754-C(4).
    United States District Court, E.D. Missouri, E.D.
    Aug. 17, 1984.
    Order Nov. 21, 1984.

      David J. Rauscher, Hirsch & Rauscher, Clayton, Mo., Robert F. Ritter, Gray & Ritter, St. Louis, Mo., for plaintiffs.
    E. Glenn Parr, Kathlynn G. Fadely, Trial Attys., Tort Branch, Civil Div., U.S. Dept, of Justice, Washington, D.C., Thomas E. Dittmeier, U.S. Atty., U.S. Dept, of Justice, St. Louis, Mo., for defendant.
   MEMORANDUM OPINION

CAHILL, District Judge.

This matter was tried to the Court without a jury. These actions arose from the crash of aircraft No. N4516L on September 17, 1980. The plaintiffs are the widows and children of the deceased and the sole survivor and his wife. The plaintiffs brought this action charging that defendant United States of America was liable for the negligent acts of its employees in causing the crash. The Court now makes and enters its findings of fact and conclusions of law and enters judgment for the defendant.

Findings of Fact.

1. At about 9:00 o’clock p.m. (Central Daylight Time) on September 16, 1980, Russell Spurgeon, a licensed visual flight rules (VFR) pilot, called the St. Louis Flight Service Station (FSS) located at the Spirit of St. Louis Airport and asked for weather information for his planned return flight to St. Louis. An FSS employee briefed Spurgeon on the weather and advised him that VFR flight was not recommended for his proposed route because of predicted low cloud layers and scattered thunderstorms associated with a cold front.

2. Spurgeon knew that weather conditions associated with cold fronts were dangerous to pilots because of sudden storms, high and gusty winds, and turbulence.

3. FSS personnel are not air traffic controllers and do not provide clearances or instructions to pilots. A flight service station is an air traffic facility which provides pilot briefings and in route communications, broadcasts aviation weather, processes flight plans, and offers other services to pilots.

4. At about 10:14 p.m., September 16, 1980, Spurgeon called the St. Louis FSS and received another weather briefing which again recommended against VFR flight.

5. At about 10:46 p.m., September 16, 1980, Spurgeon and his passengers, Donald Lombard, Lawrence Thompson, and Kenneth Spilger, took off from Kansas City Downtown Airport for St. Louis in disregard of the weather briefer’s warning against attempting VFR flight.

6. At about 12:18 a.m., September 17, 1980, Spurgeon called the Spirit of St. Louis tower stating, “We’re out near the outer marker here at, uh, 1300 feet, or, uh, do we have landings mínimums?” At about 12:19 a.m., he stated, “We’re out, uh, near the, uh, compass locator out here. Do we have, what is the, uh, uh, fog there?”

7. At about 12:19 a.m., Gilbert Carrol, an FSS employee, informed Spurgeon that the tower was not operating at that time and that he was flight service and would give an airport advisory. Carrol then stated, “Present weather St. Louis Spirit measured ceiling 1400 broken, 2,200 overcast, visibility 5, light rain shower and fog. Airport advisory winds are now 320 at 10 favoring runway 25, Spirit altimeter two niner seven two, over.” Except for the wind speed and direction this weather report was the same weather recorded at 11:53 p.m., September 16, 1980, roughly 26 minutes earlier.

8. Carrol did not reevaluate the weather, nor did he ask fellow FSS employees to do so. The evaluation relayed to Spurgeon had been taken 26 minutes earlier. FSS personnel were to maintain a Basic Weather Watch (BWW), take and record hourly observations beginning at roughly 15 minutes before the hour, and take and record special observations when specified weather conditions affecting aviation were observed. That is, FSS personnel performing a BWW were to recheck weather conditions to determine if a new observation is required when advised by any reliable source that existing conditions differ from those' reported in the last disseminated observation. Carrol was not advised of conditions different from those recorded 26 minutes earlier.

9. FSS personnel are required to record ceilings of less than 1,000 feet when they occur and not simply on an hourly basis. Also, a special observation must be recorded if a wind shift occurs. The FSS personnel did not observe any clouds below 1,000 feet prior to the accident, either visually or on the desktop rotating beam ceilometer.

10. At the time Carrol was talking to Spurgeon, passenger Spilger, who was sitting directly behind Spurgeon, could see the parallel rows of runway lights ahead and below at the airport. The Spirit of St. Louis runway lights were approximately 5.4 nautical miles ahead and 839 feet below the aircraft. Spilger did not observe any clouds at any time during the flight.

11. The weather observed by passenger Spilger and Spurgeon at the time he was talking to Carrol, about 12:19 a.m., was consistent with the weather Carrol reported in his airport advisory. Spurgeon made no indication to Carrol that he was having difficulty flying his aircraft, that he needed emergency assistance, or that he had encountered instrument flight rules (IFR) weather conditions.

12. At approximately 12:20 a.m., Spurgeon stated, “We just came over the outer marker, we’ll be making a descent for landing.” Spurgeon was then advised of another aircraft outside the outer marker making an instrument landing system (ILS) approach to runway 7. Spurgeon responded at about 12:21 a.m., “Affirmative, I’ll be coming for, uh, I’m also on approach to 7 right now inside the outer marker, inside the compass locator.”

13. Approximately 2 to 9 minutes later, Spurgeon’s plane crashed killing Spurgeon, Lombard, and Thompson, and severely injuring Spilger.

14. Spurgeon may have been suffering from fatigue as he made his approach to the Spirit of St. Louis Airport. At the time of the crash he had been awake at least 20 consecutive hours, had flown about three hours, and had spent 12 hours at an all-day conference.

15. The preponderance of the evidence leads the Court to conclude that Spurgeon did not circle after executing a missed approach. Passenger Spilger testified that although he could feel the plane descend on its approach to land, he never felt it climb again, never felt it turn, and never heard the pilot apply power for a go-around. Spurgeon never indicated to the FSS that he was making a missed approach and circling back even though he knew another plane was behind him.

16. It appears that Spurgeon flew the airplane into the ground because of insufficient altitude awareness while descending over darkened terrain.

Conclusions of Law.

1. This Court has jurisdiction over the parties and subject matter of this lawsuit pursuant to the Federal Tort Claims act, 28 U.S.C. § 1346(b).

2. Under the Federal Tort Claims Act the liability of the United States is governed by the law of the state where the negligence occurred. 28 U.S.C. § 1346(b).

3. In negligence actions, Missouri law generally requires the plaintiff to demonstrate that the defendant owed a duty to the plaintiff, that the defendant breached that duty, and that because of the breach the plaintiff was injured. See, e.g., Kim Manufacturing, Inc. v. Superior Metal Treating, Inc., 537 S.W.2d 424, 428 (Mo. App.1976).

4. The United States can be held liable under the Federal Tort Claims Act for the negligence of its Flight Service Station personnel. See Martin v. United States, 448 F.Supp. 855 (E.D.Ark.1977).

5. Since the FSS undertook to advise requesting pilots of weather conditions, thus engendering reliance, it was under a duty to see that the information which it furnished was accurate and complete. This duty is also owed to passengers. Pierce v. United States, 679 F.2d 617 (6th Cir.1982).

6. The FSS personnel’s actions were not negligent and breached no duty owed to Spurgeon or his passengers. It is not enough that the harm may not have occurred had FSS personnel taken additional measures of speculative value. The FSS personnel accurately reported the weather as recorded approximately 26 minutes earlier. The FSS personnel did not observe specified weather conditions affecting aviation that would have required a special observation before disseminating weather information to Spurgeon. Further, the weather observation reported was consistent with the weather observed by Spurgeon and passenger Spilger at 12:19 a.m. while communicating with FSS employee Carrol. Even assuming that Spurgeon’s 12:19 a.m. communication constituted an advisory of differing conditions, it does not appear that Carrol would have been able to take a new reading in time to prevent the crash. It takes about five to eight minutes to observe and record a weather observation at night at the Spirit of St. Louis Airport. If Carrol had taken a new reading immediately, he would have completed it between 12:24 a.m. and 12:27 a.m. The crash occurred sometime between 12:23:44 a.m. and 12:30 a.m.

7. The plaintiffs have failed to show by a preponderance of the evidence that any act or omission of the FSS personnel in reporting the weather was the proximate cause of the crash.

8. Russell Spurgeon was negligent in taking off from Kansas City and proceeding on his route to St. Louis despite two warnings that VFR flight was not recommended for that route.

ORDER

The Lombard plaintiffs filed a timely motion for reconsideration, for entry of new judgment and new findings of fact and conclusions of law, or in the alternative, for a new trial under Rule 59(a) of the Federal Rules of Civil Procedure. The Spurgeon plaintiffs have filed an identical motion under conditions the Government alleges are untimely. These were consolidated cases in which the testimony was presented at one trial and intermingled. Inasmuch as the motions are identical in scope and allegation, the Court will not dismiss the Spurgeon motion as untimely, but will rule on both motions on the merits.

The joint plaintiffs argue in detail and at length that the judgment of the Court is against the weight of the evidence. They reiterate again the opinions of the plaintiffs’ expert witnesses and the inferences drawn from their testimony. But the Court found that the plaintiffs failed to show by a preponderance of the evidence that any act or omission of FSS was the proximáte cause of the airplane crash.

This Court is not persuaded that its findings were erroneous. Accordingly,

Plaintiffs’ motions for entry of new findings, new conclusions, or in the alternative, for a new trial, are DENIED and OVERRULED.

SO ORDERED.

      . Because the field elevation at the Spirit of St. Louis Airport is 461 feet above mean sea level, Spurgeon’s altitude of 1300 feet placed him 839 feet above the field.


author: LAFFITTE, District Judge.

text:
    Eliut D. FLORES CARABALLO, Plaintiff, v. Wilfredo LOPEZ, et al., Defendants.
    Civ. No. 82-2559 (HL).
    United States District Court, D. Puerto Rico.
    Sept. 12, 1984.
    Wilfredo A. Geigel, Santurce, P.R., Thomas R. Lincoln, Old San Juan, P.R., for plaintiff.
    Pedro A. Del Valle Ferrer, Fed. Litigation Div., Dept, of Justice of P.R., Ponce, P.R., for defendants.
   OPINION AND ORDER

LAFFITTE, District Judge.

Plaintiff brought suit under 42 U.S.C. § 1983 against three Police officers of the Commonwealth of Puerto Rico, namely, Wilfredo López, Wilfredo Acosta, and José Arévalo, seeking recovery for his physical and emotional damages. Plaintiff predicated his claims for recovery on false arrest, unlawful search, and unreasonable and excessive use of force by defendants.

The jury returned a general verdict against defendants López and Acosta, but not against Arévalo, and awarded plaintiff $30,000.00 in compensatory damages.

Defendants López and Acosta move the Court for a partial new trial or, in lieu thereof, a remittitur, on the grounds that the award is highly excessive, unsupported by the evidence, and the product of passion and prejudice.

Defendants do not question the determination of liability made by the jury. By addressing the issue of damages on the basis of a request for a partial new trial or remittitur, they concede as much. Nevertheless, a short recital of the facts is in order.

■ Plaintiff was honeymooning with his wife at a country-side house, located near the vicinity of Ponce, borrowed from a friend. On June 9, 1982, he was returning to the city of Ponce to return the keys of the house to the owner. While plaintiff was driving on Fagot Avenue accompanied by his wife, he reached the intersection near the Ponce Judicial Center, where he almost collided with another vehicle carrying the three defendants. Defendants shouted at plaintiff with menacing gestures. Plaintiff continued to drive through the intersection. Defendants followed plaintiffs vehicle and a chase ensued. Plaintiff and his wife became frightened because they believed defendants to be ruffians. Defendants testified that plaintiff went through a red light and fled even though they sounded the siren of their unmarked police car. They followed plaintiff and signaled him to stop. Finally, when plaintiffs car entered Urbanización Constancia Gardens, a residential area, defendants pulled over and blocked plaintiffs car. Defendants stepped out and went over to plaintiffs car, shouted at him, banged the hood of his vehicle, at which point plaintiffs wife started screaming.

Plaintiff was ordered out of the car as defendants identified themselves as police officers. Plaintiff was then stricken on the face, chest, and lumbar region by defendant López, who also threw plaintiff against his car while searching him roughly. Defendant Acosta was nearby, while defendant Arévalo remained in the police car calling for a patrol when angry neighbors started to gather around the scene. At this point several neighbors gathered at the site and began shouting “abusadores” at defendants. Plaintiff did not offer any resistance.

Plaintiff was arrested and taken to the Police station. His car was unlawfully searched. He was then charged with three traffic violations. Plaintiff was subsequently tried and acquitted on all charges.

Dr. Manuel A. Rodríguez Zayas testified that on June 9, 1982, he examined plaintiff at the Ponce Municipal Hospital. Plaintiff had contusions on the face and thorax. He also found bruises on plaintiff’s back. Plaintiff was X-rayed and placed on observation. There were no fractures. Plaintiff was not hospitalized and suffered no serious physical injuries.

Plaintiff testified that he suffered extreme humiliations, fear, anxieties, emotional and mental distress, and was subjected to physical abuse in public. He had to undergo a humiliating search of his person and his car, and was exposed to a trial on fabricated evidence.

Defendants argue that the jury’s award of $30,000 for compensatory damages is highly excessive, not supported by the evidence, and the result of passion and prejudice.

The jury returned a general verdict on compensatory damages, including both physical and mental distress. This Court, after reviewing the evidence, is satisfied that the jury’s award is supported by the evidence. Under the facts of this case, it cannot be said that this award was either “grossly excessive” or “shocking to the conscience.” KOLB v. GOLDRING, 694 F.2d 869 (1st Cir.1982). In CLARK v. TAYLOR, 710 F.2d 4, 13 (1st Cir.1983), the following language used by the Court of Appeals is illuminating:

“Our proper review of such verdict is not to parse the award into its various components, but to determine whether the award as a whole is within the universe of possible awards which are supported by the evidence.” (Citations omitted.)

Plaintiff was illegally chased, frightened, assaulted, searched, arrested, and charged with alleged violations of the laws of Puerto Rico. The extreme humiliations, pain and mental sufferings experienced by plaintiff clearly justifies the award, which is supported by the evidence. STATHOS v. BOWDEN, 728 F.2d 15, 21 (1st Cir.1984). However, assuming that the award was generous, it may not be set aside so long as it is supportable, as in this case, “under some rational appraisal of the damages, based upon the evidence.” HEDDINGER v. ASHFORD MEMORIAL COMMUNITY HOSP., 734 F.2d 81, 86 (1st Cir.1984).

Finally, defendants’ claim that the award was the result of passion and prejudice is unsupported by the record. This conclusory allegation is lacking in merits. Defendants have failed to point out to the Court any circumstance or factor in this case in support of said allegation. It is questionable whether passion and prejudice may be inferred from the size of the verdict alone in this case, where the verdict comes within the range of possible awards.

WHEREFORE, defendants’ motion for a partial new trial or remittitur is hereby DENIED.

IT IS SO ORDERED.

      . Plaintiffs claim for punitive damages was rejected by the jury.

      . The partial new trial device is often used to limit the new trial to the issue of damages where liability has been completely determined by the jury and the damage issue is not interwoven with the liability issue. Yates v. Dann, 11 F.R.D. 386 (D.Del.1951); Calaf v. Fernandez, 239 F. 795 (1st Cir.1917).

      . Tomás Alcalá, a retiree who worked for 42 years in the Correctional System of the Commonwealth of Puerto Rico, who resides near the scene of the events and eye-witnessed the same, corroborated plaintiff s version of the facts. He further testified that the Police car was not sounding the siren; that plaintiff looked scared; that he did not offer any resistance; and that his wife was screaming. Other witnesses testified similarly. Plaintiffs version, corroborated by other witness, was to the effect that he did not run a red light.