author: VanARTSDALEN, District Judge.

text:
    W.C. SMITH, INC. v. YELLOW FREIGHT SYSTEMS, INC. v. PRICE CANDY COMPANY.
    Civ. A. No. 82-5229.
    United States District Court, E.D. Pennsylvania.
    Sept. 28, 1983.
    Larrick B. Stapleton, Philadelphia, Pa., for W.C. Smith, Inc.

      Mitchell S. Pinsly, Philadelphia, Pa., for Yellow Freight Systems, Inc.
    Joseph M. David, Jr., Philadelphia, Pa., for Price Candy Company.
   MEMORANDUM OPINION AND ORDER

VanARTSDALEN, District Judge.

This case involves a claim for damages in excess of $20,000 to a certain piece of machinery that defendant Yellow Freight Systems, Inc. transported by motor freight. Yellow Freight has moved for partial summary judgment, seeking to limit its liability to $400.00, the released value of the goods, pursuant to 49 U.S.C. § 10730. For the reasons that follow, the motion will be granted.

Plaintiff W.C. Smith, Inc. purchased the machinery in question from third-party defendant Price Candy Company. The machinery was located at Price Candy's place of business in or near Kansas City, Missouri, and was to be shipped by motor freight common carrier to Smith’s place of business in Philadelphia, Pennsylvania. Richmond Transfer, Inc., not a party to this action, received the machinery from Price Candy and delivered it to Yellow Freight in Kansas City, Missouri. Yellow Freight was the connecting carrier for transportation to Philadelphia. Richmond delivered the machinery to Yellow Freight upon a Uniform Straight Bill of Lading which stated that the shipper was Price Candy, and that the goods were consigned to W.C. Smith & Sons, Inc. Upon arrival in Philadelphia, the machinery was damaged extensively. Smith, the owner, sued Yellow Freight for the loss.

The printed form bill of lading provides in part:

Where the rate is dependent on value, shippers are required to state specifically in writing the agreed or declared value of the property. The agreed or declared value of the property is hereby specifically stated by the shipper to be not exceeding _per__

No one filled in the blank spaces declaring the value of the goods. The goods are described on the face of the bill of lading only as “9 crates — machinery,” and the weight is declared as “4000.”

The bill of lading further provides:

Shipper hereby certifies that he is familiar with all of the terms and conditions of the said bill of lading, including those on the back thereof, set forth in the classification or tariff which governs the transportation of this shipment, and the said terms and conditions are hereby agreed to by the shipper and accepted for himself and his assigns.

At all times in question, Yellow Freight had properly established and filed approved tariffs with the I.C.C. in the form of Supplement 102 to Tariff 533-E of the Eastern Central Motor Carriers Association, Inc. The tariff provides four different rates for used machinery, such as the one in question, based on the machinery’s released value. The lowest rate and tariff is based on a “released ... value not exceeding ten cents per pound,” which is “ninety two percent of applicable Class Rates.” The tariff further provides that “[i]f the consignor [in this case Price Candy] fails to declare a released value at the time of shipment, shipment will be subject to the lowest released value herein.” Because the lowest released value is ten cents per pound, application of the tariff in the present case would limit Yellow Freight’s liability for the 4000 pounds of machinery to $400.00.

The Carmack Amendment to the Interstate Commerce Act imposes absolute liability upon carriers for the value of goods lost or damaged during shipment, but permits carriers to limit their liability pursuant to section 10730. 49 U.S.C. § 11707(c)(4). Section 10730 provides in part:

a motor common carrier providing transportation or service ... may ... establish rates for the transportation of property ... under which the liability of the carrier for such property is limited to a value established by written declaration of the shipper or by written agreement between the carrier and shipper if that value would be reasonable under the circumstances surrounding the transportation.

49 U.S.C. § 10730(b)(1). In addition, section 10730 permits the I.C.C. to require carriers to maintain a rate for service that does not limit the carrier’s liability. 49 U.S.C. § 10730(b)(2). A carrier, therefore, may limit its liability if it maintains and charges I.C.C. approved lower rates, obtains the shipper’s agreement to the released value in writing, and provides the shipper with a reasonable opportunity to pay a higher rate and thereby increase the carrier’s liability. Anton v. Greyhound Van Lines, Inc., 591 F.2d 103 (1st Cir. 1978); Flying Tiger Line v. Pinto Trucking Service, 517 F.Supp. 1108 (E.D.Pa. 1981).

It is undisputed that Yellow Freight maintained an approved rate schedule that provided four progressively lower rates in exchange for greater degrees of limitation upon its liability. Plaintiff Smith, however, asserts that none of these tariff rates came into effect in the present case because no released value was filled in the blank spaces on the bill of lading. Plaintiff, therefore, contends that there was no agreement in writing between the shipper, Price Candy, and Yellow Freight as to the released value, citing the language of Greyhound Van Lines, 591 F.2d at 107-08, in support of its position.

According to the court in Greyhound Van Lines, a carrier may not limit its liability by unilateral action or by implication. Id. at 108. Although the shipper is charged with the knowledge of the tariff rates maintained by the carrier, the carrier must do more than simply maintain appropriate tariff rates in order to effectively limit its liability. Id. The shipper must enter “into an agreement limiting [the carrier’s] liability ‘as the result of an equally certain specified action ... in respect to a voluntary valuation of his goods.’ ” Id. (quoting Caten v. Salt City Movers & Storage Co., 149 F.2d 428, 432 (2d Cir. 1945)).

I find that the necessary written agreement exists in the present case. The Uniform Straight Bill of Lading, which was printed with shipper Price Candy’s name on its face, expressly incorporates all “tariffs which govern the transportation of this shipment.” Although as connecting carrier Yellow Freight had no direct contact with either the shipper or the consignee, it nonetheless is entitled to all of the benefits of the original contract of shipment as contained in the Uniform Straight Bill of Lading. Kansas Southern R.R. v. Carl, 227 U.S. 639, 33 S.Ct. 391, 57 L.Ed. 683 (1912). Price Candy, as shipper, therefore, expressly agreed to the terms of Yellow Freight’s tariff, which provides for the lowest released value where no value is affirmatively filled in the blanks.

In addition, I find that Price Candy, as shipper, made an “absolute, deliberate and well-informed choice,” Greyhound Van Lines, 591 F.2d at 108, in leaving the released value spaces blank. Price Candy expressly agreed to abide by Yellow Freight’s approved tariffs in the bill of lading. Although the released rates were not conspicuous on the face of the bill of lading, see, e.g., Flying Tiger Line, 517 F.Supp. at 1114, Price Candy is charged with the knowledge of the applicable tariff provisions, Greyhound Van Lines, 591 F.2d at 108, and thus knew the full consequences of leaving the spaces blank. The various rates and corresponding limitation on liability listed in Yellow Freight’s tariff provided Price Candy with a “fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser charge____” New York, New Haven & Hartford R.R. v. Nothnagle, 346 U.S. 128, 135, 73 S.Ct. 986, 990, 97 L.Ed. 1500 (1953). Smith and Price Candy cannot complain about the consequences of leaving the applicable spaces blank, when they could have chosen to increase Yellow Freight’s liability simply by declaring a higher value on the bill of lading.

From the documents and affidavits, there is no dispute as to the material facts. I find that Yellow Freight effectively limited its liability as a matter of law to $400.00. Partial summary judgment will be entered in favor of defendant Yellow Freight Systems, Inc.


source: Caselaw Access Project

author: SPENCER WILLIAMS, District Judge.

license: Public Domain

text:
    FRIENDS OF ENDANGERED SPECIES, INC., Plaintiff, v. Robert A. JANTZEN, et al., Defendants.
    No. C-83-3837 SW.
    United States District Court, N.D. California.
    Jan. 7, 1984.
    See also, 589 F.Supp. 113.

      Michael Freund, Albany, Cal., for plaintiff.
    Joseph P. Russoniello, U.S. Atty., Rodney H. Hamblin, Asst. U.S. Atty., Chief, Land and Natural Resources Div., Charles M. O’Connor, Asst. U.S. Atty., San Francisco, Cal., Dianne H. Kelly, Atty., U.S. Dept, of Justice, Washington, D.C., for federal defendant.
    Albert E. Polonsky, City Atty., City of Daly City, Daly City, Cal., for defendant, City of Daly City.
    David J. Byers, Deputy Dist. Atty., County of San Mateo, Redwood City, Cal., for defendant, San Mateo County.
    John D. Hoffman, Ellman, Burke & Cassidy, San Francisco, Cal., for defendant, Visitación Associates.
    Joseph J. Cook, II, Miller, Starr & Regalia, Oakland, Cal., for defendant, Presley of Northern California, Inc.
    George Silvestri, Jr., Bagshaw, Martinelli, Corrigan & Jordan, San Rafael, Cal., for defendant, City of Brisbane.
    George P. Agnost, City Atty., City of South San Francisco, South San Francisco, Cal., for defendant, City of South San Francisco.
    Heller, Ehrman, White & McAuliffe, San Francisco, Cal., for defendant, W.W. Dean & Associates, Inc.
    Charles E. Chase, Burlingame, Cal., for defendant, Foxhall Inv., Ltd.
   ORDER AND MEMORANDUM OF LAW DENYING MOTION FOR PRELIMINARY INJUNCTION

SPENCER WILLIAMS, District Judge.

Plaintiff, Friends of Endangered Species (FOES), came before this Court on November 21, 1983, seeking a preliminary injunction to stay the issuance of a permit by the United States Fish and Wildlife Service (FWS) to the County of San Mateo and the cities of Daly City, Brisbane, and South San Francisco. The permit allows the “incidental taking” of three federally protected endangered species by authorizing development of part of the San Bruno Mountain. Defendants are FWS, the County, the three cities named above, and five developers who own land slated for development on the Mountain. This Court had previously denied plaintiffs application for a temporary restraining order on November 17, 1983.

Plaintiff contends that the issuance of the permit violates the Endangered Species Act, 16 U.S.C. § 1531 et seq., and the National Environmental Policy Act (NEPA), 42 U.S.C. § 4321 et seq. Plaintiff claims, primarily, that irreparable harm will befall the Mission Blue butterfly by reason of grading activity by defendant Presley of Northern California, which was’ scheduled to begin on part of the Mountain known as the Saddle on November 17, weather permitting.

After consideration of the arguments presented, the Court finds that plaintiff has failed to demonstrate that impending irreparable harm will result from the proposed activities, that the public interest mandates an injunction, or that plaintiff has a substantial likelihood of success on the merits. Therefore, IT IS HEREBY ORDERED that plaintiffs motion is DENIED.

I. BACKGROUND

A brief history of the planned development of San Bruno Mountain is necessary to place the present controversy in context.

San Bruno Mountain is 3500 acres of undeveloped land on the San Francisco Peninsula. In 1975, defendant Visitación Associates and the Crocker Land Company, a co-owner of Visitación, owned virtually all of the Mountain. They proposed major development of the land there.

A citizens’ group, the Committee to Save San Bruno Mountain, formed to oppose the development. In response to the controversy, the San Mateo County Board of Supervisors passed the San Bruno General Plan Amendment (“Amendment”) in 1976.

By 1980, litigation between Visitación Associates and the County over the Amendment reached a mutually satisfactory solution. As a result of the settlement, Visitación and the Crocker Land Co. sold or donated over 2000 acres on the Mountain to the County and State for parkland. About one-third of the Mountain was therefore designated for development, while two-thirds was dedicated to parks.

On March 28, 1980, soon after the final conveyances of the property, FWS issued a re-proposal to list the Callippe Silverspot Butterfly, found in some numbers on the Mountain, as an endangered species, and to designate its critical habitat pursuant to Section 4 of the Endangered Species Act, 16 U.S.C. § 1533. The newly proposed critical habitat overlapped most of the remaining area on the Mountain reserved for development.

Nearly simultaneously, the Mission Blue Butterfly, which was already on the endangered species list, was found to inhabit some of the area to be developed. (Later in 1980, FWS allowed the proposal to list the Callippe Silverspot to expire, leaving the Mission Blue at the center of the current litigation. Two other endangered species, the San Bruno Elfin Butterfly and the San Francisco Garter Snake, also have habitat on the Mountain, but are not found in significant numbers in the areas to be developed.)

In order to adequately safeguard the endangered species, while fulfilling promised development opportunities, the San Bruno Mountain Steering Committee was formed in May of 1980. It was ultimately made up of representatives of San Mateo County, the three cities involved, prospective developers, FWS, the California Department of Fish and Game, and the Committee to Save San Bruno Mountain.

The Steering Committee initiated a two-year Biological Study of the Mission Blue and Callippe Silverspot butterflies to determine their population and distribution on the Mountain, and to determine whether development would conflict with the continued existence of the species. Although the Mission Blue and Callippe Silverspot were the focus of the study, it also gave consideration to several other species not listed as endangered. The County selected and hired Thomas Reid Associates, which had performed an earlier study for Visitación Associates when the butterfly situation had first come to light, to conduct the study.

The study concluded that the butterflies inhabited most of the grassland portions of the Mountain, including those areas slated for development. It also concluded that, if development did not occur, the species would be threatened through natural forces by the loss of its grassland habitat to encroaching brush, noxious to the butterflies.

In October of 1981, the Steering Committee began developing a Habitat Conservation Plan (“HCP”) based on the study. The final HCP, completed in November, 1982, was incorporated into an implementing document called the “Agreement with Respect to the San Bruno Mountain Area Habitat Conservation Plan” (the Agreement). The Agreement was executed by the County, the cities, the major landowners and developers involved on the Mountain, the California Department of Fish and Game, and the California Department of Parks and Recreation.

The Agreement dedicated 793 privately owned acres as open space, preserved 81% of the open space on the Mountain as undisturbed habitat, with another 3% to be restored after temporary disturbance during construction, and required contribution of $60,000 annually, adjusted for inflation, by lot owners on the Mountain to finance a permanent habitat conservation program. The County agreed to supervise the program through a conservation manager and an advisory committee of scientists. According to the HCP, 14% of the population of the Mission Blue on the Mountain would be disturbed by the development.

Notwithstanding the Agreement and HCP, before development could proceed on the Mountain, the Endangered Species Act required FWS to issue a permit pursuant to Section 10(a) of the Act, 16 U.S.C. § 1539(a) (“permit”), authorizing the “incidental taking” of the endangered species. As a prerequisite to its issuing the permit, FWS was required by Section 7 of the Act, 16 U.S.C. § 1536, to conduct an inter-agency consultation and issue a Biological Opinion certifying that the proposed permit was not likely to jeopardize the continued existence of the endangered species.

Also, NEPA required an Environmental Assessment (“EA”) to determine whether the permit would have significant adverse environmental consequences; if so, a full blown Environmental Impact Statement (“EIS”) would be necessary.

After public hearings and opportunity for written comment, as provided by the regulatory scheme, FWS issued a Biological Opinion on March 4, 1983, concluding that no jeopardy to the continued existence of the species would result from planned development under the permit. It also issued a final Finding of No Significant Impact (“FONSI”), based on a joint Environmental Impact Report/Environmental Assessment (“EIS/EA”) which had been prepared cooperatively by FWS and the State, pursuant to state and federal regulations. The FONSI permitted waiver of a full EIS. Finally, FWS issued the Section 10(a) permit on the same date.

The permit was conditioned upon the implementation of the Agreement and the HCP. It allows incidental taking of the Mission Blue on the Mountain, but prohibits the taking of the San Francisco garter snake and the San Bruno Elfin Butterfly within their designated habitat, unless an amendment to the permit is granted.

II. STANDARD OF REVIEW

To be entitled to a preliminary injunction, plaintiff must show likelihood of success on the merits; a threat of irreparable harm of injury outweighing the harm to defendants from an injunction; and that the public interest would be served by an injunction. National Wildlife Federation v. Adams, 629 F.2d 587, 590 (9th Cir.1980); Sierra Club v. Hathaway, 579 F.2d 1162, 1167 (9th Cir.1978).

III. LIKELIHOOD OF SUCCESS ON THE MERITS

Not surprisingly, the majority of the briefs and voluminous exhibits submitted in this case are directed to the merits. After carefully examining this material, the Court concludes that plaintiff’s likelihood of success on the merits is not great.

A. Violation of the Endangered Species Act

Plaintiff claims that the FWS violated Section 10(a) of the Act, as amended in 1982, and Section 7(a)(2). Section 10(a) allows FWS to permit an otherwise prohibited taking of an endangered species if the taking is incidental to an otherwise legal activity. That section requires, however, that an applicant submit a comprehensive conservation plan. Before FWS can issue a permit, it must scrutinize the plan and find that: (1) the taking will be incidental; (2) the applicant will minimize and mitigate the impacts to the extent possible; (3) adequate funding will be insured; and (4) the taking will not appreciably reduce the likelihood of survival of the species. 16 U.S.C. § 1539(a).

In this case, FWS found that the issuance of the permit would be likely to enhance the survival of the Mission Blue Butterfly and the other two endangered species on the Mountain by protecting the diminishing grassland portions of the Mountain which make up their habitat. FWS noted specifically that the HCP and Agreement would result in conveyance of 74% of the butterfly’s habitat on the Mountain into public ownership; provide for regulation of 88% of the habitat; initiate a program which would alleviate the threatening encroachment of noxious brush; and insure adequate funding. See Section 10(a) Permit Findings, App. A., Item 33. Plaintiff attacks these findings as unsupported by “substantial evidence.”

The standard of review for agency action such as FWS’s granting of a permit is set by the Administrative Procedure Act, 5 U.S.C. § 706, and caselaw interpreting it. Rather than “substantial evidence,” the proper standard is whether the challenged action is arbitrary or capricious, or an abuse of discretion. The court should not intervene unless there has been a “clear error of judgment.” Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971).

The ironic shortcoming of plaintiff’s attack on defendant FWS’s compliance with Section 10(a) is that the 1982 Amendment to that section, which allowed the issuance of the permit for “incidental takings” upon an approved conservation plan, was expressly based on the San Bruno Mountain situation. The HCP and the Agreement were extensively discussed in the legislative history of the Amendment. The House Conference Report states that “the adequacy of similar conservation plans [proposed as conditions for permits] should be measured against the San Bruno Plan.” H.R.Rep. No. 97-835 (97th Cong., 2d Sess. 30-32 1982), U.S.Code Cong. & Admin.News 1982, pp. 2807, 2872. The Senate Report cites it as an example of a case where the “overall effect of a project can be beneficial to a species even though some incidental taking may occur.” Senate Rep. No. 97-418 (97th Cong., 2d Sess.1982).

Plaintiff attempts to avoid the significance of these expressions of approval by stating that Congress never scrutinized the substantive content of the Biological Study or other environmental documentation. Essentially, plaintiff attacks the findings of FWS in support of the permit and the conclusions and methodology of the Biological Study, upon which they were based.

Plaintiff’s arguments overlook the determinative issue in this case: if the agency has considered all relevant factors, and a rational basis exists for its findings, the Court may not overturn those findings. Citizens to Preserve Overton Park v. Volpe, supra, 401 U.S. at 415, 91 S.Ct. at 823; Camp v. Pitts, 411 U.S. 138, 142-143, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1972). All of the material criticisms of the Biological Study and Permit Findings set forth by plaintiff in its papers were submitted during the public comment period for the issuance of the permit. FWS responded to every one in writing. See App. A, Items 32 and 33. The Court is unable to say that those responses, and the Permit Findings themselves, are unreasonable.

Moreover, the Biological Study was submitted to three independent experts for formal, written “Peer Review.” See App. A, Items 7, 8, and 9. All three concluded that the methodology of the study was sound, and two specifically endorsed the planned implementation of the HCP. Although plaintiffs primary criticism is that the mark-release-recapture rates yielded by the study’s field work are deficient, Dr. Ward B. Watt of Stanford University wrote: “State-of-the-art techniques have been employed to calculate or estimate the population parameters mentioned from an extremely extensive mark-release-recapture data base.” App. A, Item 8. Dr. Paul Ehrlich, also of Stanford University, wrote that “[t]his ‘biological study’ is unquestionably the most thorough and well-conceived ‘EIR-type’ report to pass through these offices.” App. A, Item 9. The third expert, Dr. Arthur Shapiro of U.C. Davis, commented that, based on the recapture rates and other butterfly studies, “this program was reasonably successfully.” App. A., Item 7.

In support of its criticisms, plaintiff submits affidavits by two of its own experts. See Declarations of Drs. Hafernik and Arnold. However, in a situation where experts may differ, the Court’s task is not to determine who is “right”, but to decide whether the agency arrived at a rational decision after consideration of all relevant criticisms.

Plaintiff also attacks compliance by FWS with Section 7(a)(2) of the Act. That section gives FWS the duty to “insure that any action authorized ... is not likely to jeopardize the continued existence of any endangered species or result in the destruction or adverse modification” of the species’ critical habitat. 16 U.S.C. § 1536(a)(2). In making that determination, FWS “shall use the best scientific and commercial data available.” Id. Plaintiff claims that FWS violated that section by: (1) not using the best data available in preparing its Biological Opinion finding no serious threat, and (2) by not deferring action on the permit pending resolution of the listing status of the “candidate” Tree Lupine Moth and eleven species of plant.

Plaintiff’s first argument lacks merit for the same reason that its Section 10(a) attack fails. The Biological Opinion prepared by FWS pursuant to Section 7 was necessarily based on the data in the Biological Study. The evidence in the record discussed above indicates that the data was, in fact, the best available.

Plaintiff’s second asserted violation of Section 7(a)(2) is based on the incorrect premise that FWS has an obligation to protect non-listed species which are under consideration for listing by preventing action which may threaten their habitat. Plaintiff asserts that the Tree Lupine Moth and eleven species of plant, all of which are in the earliest stage of consideration for listing, will also be threatened by construction activity.

A brief description of the procedure which leads to listing is appropriate here. A species becomes a “candidate” for listing when a petition from any interested party is received. After determining that a petition is “substantial,” FWS has twelve months to decide whether to designate the species as “proposed” by publication in the Federal Register. Finally, after a public comment period and extensive consideration, a proposed species becomes “listed.” See 16 U.S.C. § 1533; 48 Fed.Reg. 36062-36069 (Aug. 8, 1983).

The Tree Lupine Moth and eleven plant species discussed by plaintiff have never been more than candidates for listing, and had not even been designated as proposed when FWS issued its Permit Findings and Biological Opinion. Even had the species been proposed, however, the Act does not require a “limitation on the commitment of resources” until the species are listed. 16 U.S.C. § 1536(a)(4).

In Wilson v. Block, 708 F.2d 735 (D.C. Cir.1983), the court was faced with an argument similar to plaintiff’s in this case. After examining the legislative history and language of Section 7, the court held that that section was intended to protect only species actually listed, and not those in the process of evaluation. Id. at 748. The court also rejected the plaintiffs argument that a species under consideration for listing should be treated as if it were listed because of alleged unreasonable delay in .the evaluation process by the Forest Service. The court found no evidence of bad faith or unreasonable conduct by the agency in failing to list the species. Id. at 751. In the present case, plaintiffs also fail to demonstrate any bad faith by FWS.

B. Violation of NEPA

NEPA requires an agency to prepare a full blown Environmental Impact Statement (“EIS”) if “substantial questions are raised as to whether a [federal action] may cause significant degradation of some human environmental factor.” City of Davis v. Coleman, 521 F.2d 661, 673 (9th Cir. 1975). To determine whether an EIS is necessary, an agency performs an Environmental Assessment (“EA”). If the agency makes a Finding of No Significant Impact (“FONSI”), no EIS need be prepared.

In this case, the EA was prepared jointly with the Environmental Impact Report (“EIR”) by the County required by state regulations. Federal regulations require cooperation among local and federal officials, to the extent possible, in preparing environmental documents. See 40 C.F.R. §§ 1500.5(h) and 1506.2. Pursuant to this mandate, FWS and the County prepared a joint document.

Plaintiff claims generally that a full EIS should have been required under the circumstances of this case. Specifically, it argues that the EIR/EA was inadequate because it failed to properly consider the impacts of, and alternatives to, the issuance of the permit, as required by NEPA. Plaintiff also contends that FWS improperly delegated its authority by relying on the Biological Report of a private consulting firm with an alleged conflict of interest. In essence, plaintiff attacks the FONSI and granting of the permit as improper under the requirements of NEPA. In a recent NEPA decision, the Ninth Circuit stated the burden of proof on this point:

[It] is firmly established in this Circuit that an agency’s determination that a particular project does not require the preperation of an EIS is to be upheld unless unreasonable.

Foundation for North American Sheep v. Dept. of Agriculture, 681 F.2d 1172, 1177 (9th Cir.1982).

The inquiry is therefore very similar to the issue with respect to compliance with the Endangered Species Act, discussed above. The question here is not whether the issuance of the permit will in fact have no significant environmental impact. Rather, the court must determine only whether FWS “reasonably concluded” that the project will have no adverse environmental consequences. Moreover, it must be remembered that the focus of federal concern here, and therefore the focus of NEPA, is the impact of the issuance of a permit to take endangered species on the environment. The impact of the development of San Bruno Mountain on the environment, generally, is an issue of state and local concern which has been extensively considered at those levels.

In this case, FWS reached its conclusion after extensive consideration of information in the EIR/EA, the HCP, and the Biological Study upon which these were substantially based. These documents indicated that the issuance of the permit, conditioned upon compliance with the Agreement, would not seriously jeopardize the continued existence of the endangered species.

Moreover, the Ninth Circuit has held that where the initial plans for a project indicate adverse environmental impacts, modifications to the original plans, in the form of requirements of mitigating measures, may eliminate the need for an EIS. See Preservation Coalition, Inc. v. Pierce, 667 F.2d 851, 860 (9th Cir.1982) (upholding a FONSI for federal grants to aid a city redevelopment project).

Relying in part on Pierce, the D.C.Circuit has decided a case involving issues similar to those in the current case. In Cabinet Mountain Wilderness/Scotchman’s Peak Grizzly Bears v. Peterson, 685 F.2d 678 (D.C.Cir.1982), the Forest Service proposed to approve an exploratory drilling program that both that agency and FWS found harmful to the grizzly bear, an endangered species. In a Biological Opinion under Section 7 of the Endangered Species Act, the FWS recommended extensive mitigating measures such as restrictions on the activities and equipment of the drilling personnel. The Forest Service made the grant of the permit conditional upon compliance with these mitigating measures, and issued a FONSI. Citing Pierce and other cases, the court held that the FONSI was not unreasonable under those circumstances. In finding “that the agency’s decision not to prepare an EIS was reasonable and adequately supported,” the court stated:

Here the agency conducted a thorough analysis of the proposed action and imposed specific measures to address the relevant areas of environmental concern. The agency concluded the proposal as modified would not cause any significant environmental impacts.
For us to overturn it under these circumstances would require an unjustifiable intrusion into the administrative process.

Cabinet Mountains, 685 F.2d at 684.

As in that case, here the original proposal threatened an endangered species. Mitigating proposals in the form of the HCP were made, and the FONSI was based on a guarantee of compliance with those measures by the private parties involved. Interference by the Court in this instance would be similarly inappropriate.

Plaintiff also contends that the EIR/EA failed to assess the cumulative impacts of the various developments proposed for the Mountain, and that it did not adequately consider alternatives. Regulations under NEPA require the consideration of the impacts of, and alternatives to, the proposed federal action. See 40 C.F.R. § 1508.9(b).

Documents are sufficient under NEPA if they “provide decisionmakers with an environmental disclosure sufficiently detailed to aid in the substantive decision, and make available to the public information about the proposed project’s environmental impact.” Trout Unlimited v. Morton, 509 F.2d 1276, 1283 (9th Cir.1974). A reasonably thorough discussion is all that is required. Id. Moreover, “NEPA does not set forth significant substantive goals for the nation, but its mandate is essentially procedural.” Vermont Yankee Nuclear Corp. v. NRDC, 435 U.S. 519, 558, 98 S.Ct. 1197, 1219, 55 L.Ed.2d 460 (1978).

The EIR/EA prepared by FWS does discuss at length the cumulative impact of the takings allowed under the permit. See EIR/EA at III — 1 to III — 24, App. A, Item 25. It is important to keep in mind that it is only the cumulative impact of the takings, and not the non-federal impacts of the development to which they are incidental, which determines whether an EIS is necessary in this case. See Save the Bay, Inc. v. U.S. Corps. of Engineers, 610 F.2d 322, 326-27 (5th Cir.1980). As noted above, the general cumulative impact of the planned development upon the environment has been considered by state and local officials pursuant to statutes and regulations at those levels. Moreover, each development planned for the Mountain has been the subject of separate environmental impact reports by the County and concerned cities. FWS expressly relied on this “harmony” with local land use decisions in determining that the permit did not require an EIS. See FONSI, p. 1, App.A, Item 36. In another case where the validity of a FONSI was at issue, the Ninth Circuit said that it “specifically recognized such compliance as a factor pointing toward the validity of a conclusion that there is no significant impact on the environment.” Goodman Group, Inc. v. Dishroom, 679 F.2d 182, 186 (9th Cir.1982).

The EIR/EA also contains an adequate discussion of alternatives to the issuance of the permit. See EIR/EA VI-1 to VI-5, App.A, Item 25. The yardstick here, as elsewhere under NEPA, is one of reasonableness. There is no need even for a full EIS to consider alternatives whose effect cannot be reasonably ascertained, and whose implementation is deemed remote. Rather, the EIS need only set forth those “alternatives sufficient to permit a reasoned choice.” Life of the Land v. Brinegar, 485 F.2d 460, 472 (9th Cir.1973), cert. denied, 416 U.S. 961, 94 S.Ct. 1979, 40 L.Ed.2d 312 (1974). Also, NEPA does not require that “alternatives within alternatives” be separately considered and explored. Mid-Shiawassee v. Train, 408 F.Supp. 650, 656 (E.D.MI 1976), affd, 559 F.2d 1220 (6th Cir.1977). Most of the alternatives which plaintiff alleges were ignored by FWS are, in fact, similar to, or subsets of, alternatives which were considered. For example, plaintiff contends that FWS should have considered the alternative of deferring action on the permit pending the ultimate resolution of the listing status of the Tree Lupine Moth and eleven species of plants. This would amount, in effect, to delaying the project indefinitely, since the time table for final resolution is uncertain. This alternative is essentially the same as Alternative A in the EIR/EA, “No Project/No Action — Delay.” App.A., Item 25.

Other alternatives suggested by plaintiff are .simply unreasonable. Plaintiff suggests that a land swap be made which would place the Saddle portion of the Mountain in public ownership. The Saddle was, at one time, privately owned, and this would effectively reverse and unwind a transaction between the public and private actors made pursuant to the County’s previous land use decisions.

Plaintiff’s final argument is based on the fact that the private research contractor who conducted the Biological Study underlying the NEPA documents had previously performed a butterfly study on the Mountain for one of the defendants. Plaintiff alleges that the documents are therefore tainted with a bias toward development, and also that FWS improperly delegated its duty under NEPA.

In Life of the Land v. Brinegar, 485 F.2d 460 (9th Cir.1973), the Ninth Circuit upheld an EIS prepared in part by “a private consulting firm which had a major and direct contingent financial interest” in the project under review. Id. at 467. The consultant’s financial interest was in the form of a “Guaranteed Maximum Compensation” consisting of 15.5% of the estimated total project cost. Nevertheless, the court held that:

[Njothing ... in either the wording of NEPA or the case law ... indicates that, as a matter of law, a firm with a financial interest in the project may not assist with the drafting of the EIS ... While [the consultant] may have assisted with the EIS’ preparation, the significant and active participation by the [agency] therein precludes us from concluding that there was any improper or illegal delegation in this case.

Id. at 467-68.

Other circuits have also held that the substantial participation of a private consultant in the preparation of an EIS and its underlying documentation is not improper if the federal agency actively participates in the process and takes full responsibility for the final document. See, e.g., Sierra Club v. Lynn, 502 F.2d 43, 59 (5th Cir. 1974); Essex County Preservation Ass’n v. Campbell, 536 F.2d 956, 959-60 (1st Cir. 1976).

In this case, the participation by FWS was sufficient to insure that the final conclusions of the environmental documents were not merely “rubber stamped”, as plaintiff charges. Two FWS representatives participated actively in the review of the Biological Study by the Steering Committee, including the field data. One of the representatives, Ralph Swanson, worked with the County in reviewing the EIR/EA. See App. A, Items 16, 28. After the County had certified the EIR/EA under state regulations, FWS prepared its own addendum to clarify certain portions. App. A, Item 25B. In sum, the procedures followed by FWS fell within the requirements of NEPA, as those standards have been interpreted by the courts.

IV. IRREPARABLE HARM AND PUBLIC INTEREST

Even had plaintiff established a likelihood of prevailing upon the merits, the Court seriously doubts that the balance of hardships and the public interest support a preliminary injunction in this case. As the threatened irreparable harm from the failure to grant relief, plaintiff points primarily to grading by one of the defendants scheduled to begin in November on part of the Mountain known as Reservoir Hill. According to evidence supplied by experts, all of Reservoir Hill contains only 2% of the population of Mission Blues on the Mountain, and the part to be graded only .3%. Declaration of Reid (Nov. 3, 1983) pp. 4, 8. Even plaintiffs experts acknowledge that the Saddle area of the Mountain, of which Reservoir Hill is a part, is of “relatively poor habitat quality” for the Mission Blue and of “lowest biological value” for that species. Declaration of Hafernik, p. 5. Moreover, grading will not affect any area known to be Mission Blue habitat until February, at the earliest. Declaration of Reid (Nov. 3, 1983, p. 7). Because the Court can almost certainly consider the merits of this case before that time, provided that the parties cooperate, there is little justification for the extraordinary remedy of injunctive relief.

For their part, defendants contend that an injunction would have considerable adverse consequences for both public and private interests. In addition to increased interest cost resulting from delay of their projects, some of the private defendants are involved in option agreements which have already been extended multiple times. Further delay may cause some parties to fail to exercise these options. See, e.g., Declarations of Eubanks, Dolter, and Mezoian. The municipal defendants assert that delay of development will delay much needed public works which are part of the projects, cost them tax receipts, and deprive their residents of housing and commercial opportunities until the conflict is resolved. See, e.g., Declarations of Birkelo, Polonsky, and Koenig. Although these hardships might not, ipso facto, prevent the issuance of an injunction in the face of more substantial demonstration of irreparable harm and likelihood of success on the merits of plaintiffs arguments, in this case defendants clearly win the balancing test.

Finally, the public interest here does not favor the issuance of an injunction. In amending the Endangered Species Act to allow this and similar projects, Congress indicated its intent to encourage private participation in the conservation process, with adequate agency supervision to insure results consistent with the spirit of the Act. In discussing the Amendment to Section 10(a), the Conference Report states:

To the maximum extent possible, the Secretary should utilize his authority under this provision to encourage creative partnerships between the public and private sectors and among government agencies in the interest of species and habitat conservation.

H.R.Rep. No. 97-835 (97th Cong., 2d Sess. 30), U.S.Code Cong. & Admin.News 1982, at p. 2871.

The HCP in this case, the model for Section 10(a) permits under the 1982 Amendments, resulted from extensive cooperation between the private and public sectors, as well as numerous third parties. Although the Court is aware of plaintiff’s fundamental disagreement with the ultimate resolution of the parties to develop San Bruno Mountain, the Court is satisfied that defendants have complied in exemplary fashion with the requirements set for them by Congress. Therefore, plaintiff’s motion for a preliminary injunction must be DENIED.

IT IS SO ORDERED.


author: CAHN, District Judge.

text:
    UNITED STATES of America v. Sidney PERKINS, Bernard Osser, Rose Morris, North Broward Industries, Inc., Government Sales Division Southern Commercial, Inc.
    Crim. No. 83-00002.
    United States District Court, E.D. Pennsylvania.
    Feb. 13, 1984.

      Peter J. Smith, Asst. U.S. Atty., Philadelphia, Pa., for plaintiff.
    Thomas B. Rutter, Philadelphia, Pa., for defendants.
   MEMORANDUM OPINION

CAHN, District Judge.

Before me are motions for post-verdict relief filed by defendants Sidney Perkins, Bernard Osser and Rose Morris. The 42-count indictment in this case charged the above-named defendants with conspiracy to defraud the United States by rigging bids to a defense procurement agency. The Government alleged that defendant Sidney Perkins had set up six corporations to appear to be separate and independent vendors bidding competitively for defense contracts. Using these corporations, Perkins rigged and manipulated bids submitted to the Defense Industrial Supply Center in Philadelphia (DISC), an arm of the Department of Defense. The Government further alleged that Perkins, in exchange for cash and other gratuities, obtained technical drawings from Bernard Osser, a contracting officer at DISC, and Rose Morris, a file clerk at the Naval Air Technical Services Facility (NATSF) in Philadelphia. According to the Government, Osser assisted Perkins in preparing claims submitted to DISC in return for trips to Florida and other things of value and, in addition, negotiated with Perkins regarding future employment without informing his DISC superiors. The Government charged all defendants with conspiracy under 18 U.S.C. § 371, and with violations of the Racketeer Influenced and Corrupt Organization Act (RICO), 18 U.S.C. § 1961 et seq. The Government charged defendant Perkins with separate counts of bribery, 18 U.S.C. § 201(b), offering gratuities, 18 U.S.C. § 201®, wire fraud, 18 U.S.C. § 1343, and filing false claims, 18 U.S.C. § 287. The Government charged defendant Osser with accepting gratuities, 18 U.S.C. § 201(g), and acting, as a government official, upon a matter in which a contractor with whom he was negotiating future employment had a financial interest, 18 U.S.C. § 208(a).

A jury trial in this case began May 9, 1983. At the close of the Government’s case, I granted a motion for acquittal in favor of Rose Morris, under Federal Rule of Criminal Procedure 29, as to the conspiracy and RICO counts of the indictment (Counts 1 and 2) (N.T. 12-260). On June 6, 1983, the jury returned a verdict of “guilty” as to all defendants. Defendant Perkins was found guilty of the conspiracy and RICO counts, and in addition was convicted of two counts of bribery (Counts 3 and 5), five counts of offering gratuities (Counts 19, 22, 24, 26 and 28), three counts of wire fraud (Counts 30, 31 and 32), and nine counts of filing false, fictitious or fraudulent claims (Counts 33-39, 41 and 42). Perkins was acquitted on five counts of offering gratuities (Counts 9, 11, 13, 15 and 17). Defendant Osser was found guilty of conspiracy, of accepting gratuities (Count 18), and of participating personally and substantially as a government'officer in advising an entity with whom he was negotiating future employment (Count 20). Osser was acquitted of the RICO charge (Count 2), and of five charges of accepting gratuities (Counts 8, 10, 12, 14 and 16). Defendant Morris was found guilty of five counts of accepting gratuities (Counts 21, 23, 25, 27 and 29).

Each of these defendants seeks post trial relief. I will deny all of these motions for the reasons set forth below.

I.

Sidney Perkins

Perkins has filed two motions with this court: a motion for arrest of judgment as to Count 2 of the indictment (RICO) or in the alternative for judgment of acquittal as to Count 2; and a motion for a new trial as to the entire indictment or in the alternative as to Count 2.

The basis for the first motion is that the indictment’s description of the “enterprise” here, the corporations controlled by Perkins, does not conform to the statutory definition of enterprise found in 18 U.S.C. § 1961(4).

Perkins argues that a group of corporations is not included within the section 1961(4) enterprise definition, and that the Government therefore did not prove the existence of a RICO enterprise. Section 1961(4) provides:

“Enterprise” includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.

Perkins’ argument is not persuasive, for two reasons. First, there is no reason to believe that Congress intended to restrict the category of entities that may constitute RICO enterprises to only those listed in the statute. A more literal reading of the statute suggests that the statutory listing is non-exhaustive, and that by use of the words “Enterprise includes,” Congress intended the statutory language to be interpreted broadly. The Court of Appeals has recognized the non-exclusive nature of the statutory listing. See United States v. Aimone, 715 F.2d 822, 828 (3d Cir.1983) (group of individuals and single corporation may together constitute a RICO enterprise).

In addition, the Second Circuit Court of Appeals has explicitly held that an interpretation of section 1961(4) that would exclude a group of corporations from the enterprise definition would “make [njonsense of the statute,” United States v. Huber, 603 F.2d 387, 394 (2d Cir.1979), cert. denied, 445 U.S. 927, 100 S.Ct. 1312, 63 L.Ed.2d 759 (1980), especially in light of Congress’ mandate that RICO provisions shall be liberally construed to effectuate the statute’s remedial purposes. Id. Judge Feinberg’s reasoning in Huber is persuasive. See also United States v. Aimone, 715 F.2d at 828 (<citing Huber with approval).

Perkins’ motion for a new trial also relies upon a definitional section of the RICO statute. Perkins was convicted of five counts of offering gratuities to public officials in consideration of services performed, in violation of 18 U.S.C. § 201(f). Perkins argues that violations of section 201(f) should not be considered predicate offenses for purposes of the RICO statute.

In section 1961(1)(B), Congress has listed 18 U.S.C. § 201 as a predicate RICO offense, and following the section 201 listing is the parenthetical phrase “(relating to bribery)”. Defendant argues, first, that there is a meaningful distinction between offering bribes (§ 201[b]) and offering gratuities (§ 201[f]); and second, that by its use of the phrase “(relating to bribery),” Congress intended that the RICO statute cover only section 201(b) violations.

This argument is without merit. Following each of the twenty sections of Title 18 listed in section 1961(1)(B) which may be used as predicate RICO offenses, there is a parenthetical phrase briefly describing the criminal activity covered by the statute, usually in the form of a summary of the statute’s title. None of these parenthetical phrases are used to limit the reach or to discriminate among parts of the statutes they describe. The parentheticals are only “visual aids,” designed to guide the reader through what would otherwise be a litany of numbers.

It is true that under federal law the offenses of bribery and gratuities are not similar in all respects; bribery requires proof of a “quid pro quo”. State law bribery, however, defined as a predicate RICO offense in 18 U.S.C. § 1961(1)(A), includes any state statute covering “conduct which is intended, at least by the alleged briber, as an assault on the integrity of a public office or an official action.” United States v. Forsythe, 560 F.2d 1127, 1137 n. 23 (3d Cir.1977), citing United States v. Dansker, 537 F.2d 40, 48 (3d Cir.1976). The five section 201(f) counts allege that Perkins funneled cash to Morris and gave airline tickets to Osser “for and because of official acts performed and to be performed” by them. There is no basis for distinguishing between federal and state law offenses encompassed by the general bribery category, and the section 201(f) counts here clearly fall within the Forsythe and Dansker definitions of RICO bribery.

Even if there were a valid reason to distinguish between sections 201(b) and 201(f) for purposes of RICO, however, the RICO count against Perkins would stand. This is true by virtue of the fact that Perkins was also convicted on two counts of section 201(b) bribery and three counts of section 1343 mail fraud, all five of which indisputably are predicate offenses under RICO.

For all of the above reasons, defendant Perkins’ motions for post-verdict relief will be denied.

II.

Bernard Osser

Defendant Osser submits four bases for post verdict relief. First, Osser argues that there was insufficient evidence of conspiracy to submit the conspiracy count against him to the jury, and that his motion for acquittal as to the conspiracy count should have been granted at the close of the Government’s case.

I agree with the Government that there was sufficient evidence to warrant the conclusion that Osser knowingly participated in the conspiracy and thus to justify submitting the conspiracy count against Osser to the jury.

Osser's position at DISC was Chief of the Post Award Branch, and his function was to review non-deliveries and late deliveries. There is substantial evidence that Osser assisted the Perkins' companies outside of his official capacity, in the preaward stage. That evidence includes the repeated business and vacation trips taken by Osser to Florida at Perkins’ expense, and substantial testimony by Sharon Gray, an employee of Perkins at Southern Commercial in Florida, who in effect was an unindicted co-conspirator in this case. Gray, who had been granted immunity (N.T. 3-97), testified to the following: Perkins said he was paying Osser while Osser was employed at DISC (N.T. 3-82); Perkins sent Osser special lists of drawings for parts (N.T. 3-44), and sent many of these lists to Osser’s home address despite DISC office policy never to receive official mail at home (N.T. Berk 8-26); Osser, while a government employee, would send drawings via Federal Express in response to those requests to Perkins in Florida (N.T. 3-50, 3-242); Osser sent Perkins information on particular contracts filled by a Perkins company, which were the subject of a government investigation (N.T. 3-65); Osser retired early because of government investigations into his role at DISC (N.T. 3-80); Osser and Perkins reached an agreement about Osser's future employment with Perkins at North Broward Industries on April 24, 1981, and the employment contract stated that Osser's services had begun on February 16, 1981, the date of his early retirement from DISC (N.T. 3-86); Perkins stated, referring to the employment contract, that the contract would make it “legal” now (N.T. 3-84); Osser came to Perkins’ establishment in Florida 6 to 7 times prior to February of 1981, the date of his DISC retirement (N.T. 3-87); Perkins put expenses for airline tickets, food and accommodations for Osser and his wife on Perkins’ American Express card (N.T. 3-90); Osser aided Gray in formulating a letter on behalf of Bucks Aircraft Industries, Inc. (one of the Perkins’ controlled companies) addressed to a DISC employee, in response to an inquiry concerning eight orders that had not been shipped (N.T. 3-94); Osser then reviewed the letter to determine if the DISC employee would accept Bucks’ explanation (N.T. 3-236). Osser repeatedly failed to inform his superiors or to disclose to the appropriate people at DISC his continuing relationship with Perkins and with the Perkins-controlled companies (N.T. Burke 8-23-26).

In addition, Mr. William Redden, responsible as Branch Supervisor in the Quality Assurance Division at DISC for reviewing customer complaints about DISC material, testified that, from 1978 to 1979, he obtained aperture cards and paper copies of drawings 3 to 4 times every month from the DISC drawing repository for Osser at Osser’s request. He additionally testified that none of these drawings were ever returned to him (N.T. 6-46-7, 6-53).

Additional evidence came from Joel Lipschultz, owner of Precision Fasteners, Inc., one of the Perkins-controlled companies, who testified in accordance with a plea agreement with the United States government (N.T. 6-215). Lipschultz testified that in 1979, at the Elan Club in Philadelphia, he saw Perkins and Osser together. Osser was holding an envelope full of cash, and Perkins was holding an envelope containing aperture cards, and at least one card was stamped “limited,” i.e., proprietary (N.T. 7-36-38).

The jury was entitled to draw an inference of an illicit association from this evidence. As the Supreme Court has stated, the proof in these types of cases “by the very nature of the crime, must be circumstantial and therefore inferential to an extent varying with the conditions under which the crime may be committed.” Di rect Sales Co. v. United States, 319 U.S. 703, 714, 63 S.Ct. 1265, 1270-71, 87 L.Ed. 1674 (1943).

Counsel for Osser submits two cases in support of his position that the government did not prove the specific knowledge needed to submit the conspiracy count to the jury. These two cases are United States v. Tavoularis, 515 F.2d 1070 (2d Cir.1975), and United States v. Klein, 515 F.2d 751 (3d Cir.1975). In these two cases there was no quantum of evidence at all from which an inference might be drawn that the defendant knew of the conspiracy’s illicit purpose. The instant case is quite different. For this reason, neither case is controlling here.

In summary, the testimony as reviewed supports my prior ruling that the evidence was sufficient to warrant the inference that Osser was a knowing participant in the conspiracy.

Mr. Osser’s second basis for relief is that the testimony of William Redden regarding Redden’s obtaining drawings from the DISC repository for Osser at Osser’s request was unfairly prejudicial and should not have been admitted under Federal Rule of Evidence 403. I disagree. Osser testified that he obtained requests for drawings by Federal Express mail from Perkins at Osser’s home (N.T. 12-207, 12-242), and that he would expedite the requests for DISC documents on Perkins’ behalf (N.T. 12-208). The Redden testimony was offered to show that Osser had access to aperture cards, and used that line of access regularly over a substantial period of time. This evidence, together with Osser’s own testimony, legitimately gives rise to an inference that Osser knowingly furthered the objectives of the conspiracy by obtaining drawings for Perkins without disclosure to his superiors or fellow DISC employees.

Osser’s third basis for relief is that there is insufficient evidence to support the jury’s verdict of guilty on Count 20 of the indictment. Count 20 alleged a violation of 18 U.S.C. § 208(a), in that Osser, as a government employee, participated “personally and substantially” in a matter in which a company with whom he was negotiating employment had a financial interest. The jury found Osser guilty on Count 1, the conspiracy count, and I have found that there was sufficient evidence before the jury upon which it could base a finding that Osser knowingly furthered the criminal conspiracy. The evidence sustaining the conspiracy finding — the meeting at Elan, the Redden, Gray, and Lipschultz testimony, together with Osser’s own testimony that he expedited document requests for Perkins although his official dealings with contractors were limited to the post-award phase — taken together amply support a finding that Osser aided Perkins “personally and substantially”.

Osser’s fourth basis for relief is that two items of testimony did not fall within the co-conspirator exception to the hearsay rule, Fed.R.Evid. 801(d)(2)(E), and were improperly admitted. These items are the following: Sharon Gray, Perkins’ employee at North Broward Industries, testified that Perkins said he was paying Osser while Osser was employed at DISC (N.T. 3-82). Margaret Gureghian, an employee at E.J. Wirth Co., a Perkins-controlled company, testified that on January 23, 1981, Perkins told her he found out through Osser that two of the Perkins-eontrolled companies, Wirth and Bucks Aircraft, were being investigated (N.T. 4-96-97). She also testified that Perkins had told her he was waiting to receive drawings from Osser (N.T. 4-68).

Co-conspirator statements may be admitted under Rule 801(d)(2)(E) only if they satisfy three requirements. First, the statements must have been made during the life of the conspiracy. Second, there must be independent evidence establishing that Osser participated in the conspiracy. Third, the Perkins’ statements must be in furtherance of the conspiracy. See United States v. Nixon, 418 U.S. 683, 701, 94 S.Ct. 3090, 3104, 41 L.Ed.2d 1039 (1974); United States v. Ammar, 714 F.2d 238, 245 (3d Cir.1983).

The first requirement of the rule is satisfied here. Under the second requirement, the prosecution must lay a foundation for the admission of co-conspirator hearsay by establishing the existence of a conspiracy including Osser by “a fair preponderance of independent evidence”. United States v. Trotter, 529 F.2d 806, 811-13 (3d Cir.1976). This “preponderance” standard simply requires the trial judge to find “that the existence of the contested fact is more probable than its nonexistence.” United States v. Trotter, 529 F.2d at 812 n. 8. The prosecution must show Osser’s participation in the conspiracy, i.e., agreement, by independent evidence, United States v. Klein, 515 F.2d 751, 753, but “[participation in a criminal conspiracy need not be proved by direct evidence; a common purpose and plan may be inferred from a ‘development and collocation of circumstance.’ ” United States v. Schoenhut, 576 F.2d 1010, 1027 (3d Cir.), cert. denied, 439 U.S. 964, 99 S.Ct. 450, 58 L.Ed.2d 421 (1978), citing Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942). Evidence of participation in the conspiracy must be considered in the light most favorable to the government on review of the jury’s guilty verdict. Id. at 1014. The non-hearsay Gray testimony, the Lipschultz testimony, the Redden testimony, together with the repeated trips to Florida, the document requests addressed to Osser’s home, his own admission that he expedited matters at DISC for Perkins despite the fact that pre-contract matters were not within the scope of his DISC position, his failure to disclose at any time his dealings with Perkins to his DISC superiors, all support my initial finding that Osser participated in the conspiracy.

The third requirement that must be met in order for co-conspirators’ statements to be admissible is that the statement must be “in furtherance” of the conspiracy. It is true that statements made by Perkins about Osser to those who are not involved in the conspiracy in any way would not satisfy the “in furtherance” requirement. United States v. Provenzano, 620 F.2d 985, 1000-01 (3d Cir.), cert. denied, 449 U.S. 899, 101 S.Ct. 267, 66 L.Ed.2d 129 (1980). Here, both Gray and Gureghian were granted immunity by the government. Both were key employees in Perkins’ operation, essential figures in the process by which Perkins’ directives were carried out and low bid information was received and transmitted from DISC to Perkins’ offices in Florida. In effect, Gray and Gureghian were unindicted co-conspirators. As such, they were not mere bystanders to the conspiracy, mere “errand runners”. See Provenzano at 1001 (although statement to bystander does not fall within co-conspirator exception, statement to employee who ran conspirator’s business is “in furtherance” of conspiracy).

Accordingly, the three requirements are satisfied, and the Perkins’ statements were properly admitted under Rule 801(d)(2)(E).

For all of the above reasons, the Osser motions for post-verdict relief will be denied.

III.

Rose Morris

Morris submits three grounds in support of her motion for a new trial: first, that Morris was prejudiced by the U.S. Attorneys’ mischaracterization of some of the evidence against Morris in their closing arguments; second, that the court erred in permitting counsel for Perkins to question witness Daniel Lipschultz about his dealings with Morris immediately prior to the time period of the conspiracy; and third, that the court erred in denying a motion for severance or for a mistrial following the grant of Morris’ motion for acquittal as to the conspiracy and RICO counts of the indictment, and following the admission of the Lipschultz testimony. Each of these arguments will be considered.

A. Prosecutorial Misconduct

One Assistant United States Attorney, in his initial closing argument, mischaracterized the testimony of Dorothy Boggs, a government witness, as follows: “A fellow co-worker of Rose Morris ... observed that Rose Morris tried to carry out a whole shopping bag of drawings. What happened? She was stopped. They found out about it and she was admonished and told never to do it again.” (N.T. 13-210-11). In fact, the Boggs’ testimony was very different, as follows: “I had seen her put a stack of drawings in a shopping bag ... [ujnder her desk ... [jjust once.” (N.T. 7-214-5). Boggs also testified that she had mentioned the incident to another employee at DISC, Nancy Richardson, who talked to Morris and also mentioned it to Morris’ supervisor, but knew nothing about Morris’ being “admonished” or “told never to do it again.” (N.T. 7-215-16).

Counsel for Morris corrected any misimpression that the United States Attorney’s closing statement might have made by reminding the jury of the actual testimony. (N.T. 14-98).

In rebuttal, the other Assistant United States Attorney characterized Morris’ direct testimony incorrectly, taking as his point of departure that Morris had admitted that she had provided Joel Lipschultz with drawings even after she believed he had left government employ. He then analyzed the remainder of her testimony against this background and urged upon the jury his belief that, taken as a whole, her story was not believable. (N.T. 14-124-5). In fact, Morris had testified that she stopped expediting the processing of drawings for Lipschultz as soon as she believed he had left government employ.

In my charge to the jury, I emphasized that the lawyers’ statements are not evidence. (N.T. 14-132). I said the following: “There was so much evidence in this case that on occasion the lawyers, in their closing arguments, have presented what they thought the facts to be to you and another lawyer presented a different set of facts. You are not bound by what the lawyers say about the facts. You use your own collective judgment ... [Ijt’s your recollection that controls.” (N.T. 14-133). I repeated this instruction to the jury throughout the trial. Any prejudice that may have resulted to Morris from the prosecutors’ statements was neutralized by this instruction. See United States v. Brisco, 473 F.Supp. 303, 308 (D.Del.1979), affd w.o. opinion, 615 F.2d 1354 (3d Cir.1980).

B. Motions for Severance or a Mistrial

Counsel for Morris also argues that the court erred in not granting a severance or mistrial at several phases of the proceedings: before the start of the trial; following the grant of acquittal as to the conspiracy and RICO counts; and following two separate items of testimony. These items were, first, testimony by Margaret Gureghian that Perkins had identified Morris as one of the sources for drawings; and second, testimony by Daniel Lipschultz during cross-examination by counsel for Perkins that Lipschultz had gotten documents from Morris in the year before the start of the conspiracy alleged in the indictment. (Counsel for Perkins had alleged that this evidence was relevant to Perkins’ defense of extortion by Morris or other government officials.) Counsel for Morris asserts that the admission of this testimony, along with the spillover effect of the days of testimony relating to Perkins’ scheme to defraud the United States Government using documents supplied in part by Morris, taken together are sufficiently prejudicial to Morris to warrant a new trial.

There was no error in refusing a severance pretrial; there is no allegation that the naming of Morris in the conspiracy and RICO counts of the indictment was in bad faith.

The denial of Morris’ subsequent motions for severance is more troublesome, and warrants some discussion of each of the points raised by her counsel. On balance, I find that the highlighted testimony does not represent the compelling or substantial prejudice necessary to support her assertion that the trial as to Morris was unfair. My reasoning is as follows:

1. Spillover Effect and Gureghian’s Testimony.

The Government’s method of presenting its evidence in this case carefully delineated separate events and occurrences, and thus protected against confusion. My observation of the jury leads me to believe that it was able to follow my instructions to keep the evidence compartmentalized as to each defendant. (N.T. 14-141). The only point of intersection between the evidence presented relating to Perkins’ operations and the separate evidence about the dealings between Morris and the Lipschultzes came from Margaret Gureghian. Gureghian said that Perkins had told her that Morris was the source of the drawings from NATSF (N.T. 4-61; 4-68). This statement was clearly admissible against Perkins as an admission by a party opponent under Rule 801(d)(2)(A) and was offered by the government only against Perkins to show his knowledge and state of mind. I specifically instructed the jury that the statement was to be considered only as to Perkins and not against Rose Morris. (N.T. 4-67). In light of that instruction, this statement was not sufficiently prejudicial to warrant the grant of a new trial. See United States v. Losada, 674 F.2d 167, 171 (2d Cir.), cert. denied, 457 U.S. 1125, 102 S.Ct. 2945, 73 L.Ed.2d 1341 (1982).

2. Cross-Examination of Daniel Lipschultz.

Daniel Lipschultz testified that he worked for the Department of Defense until January of 1978, and then left to work for Pooley Machine Co. along with his son, Joel, where he met Sidney Perkins. While at Pooley, part of his responsibilities involved obtaining aperture cards from DISC and NATSF. He left Pooley in January of 1979 to work for Perkins. He testified that during the month he remained in Philadelphia as a Perkins employee he obtained drawings from Rose Morris at NATSF on an expedited basis, (N.T. 6-151), and in return would pay $5.00 in cash for each drawing. (N.T. 6-152-3). In addition, he received government request forms for drawings from Morris. (N.T. 6-166). On cross-examination by counsel for Perkins, I allowed inquiry into the start of the relationship between Lipschultz and Morris as relevant to Perkins’ defense that Morris was extorting the payments for drawings. (N.T. 6-83). The conspiracy alleged in the indictment began in January, 1979. Lipschultz revealed that his relationship with Morris began in 1978, (N.T. 6-189), and that at that point Morris said she would provide expedited service for $5.00 per drawing. (N.T. 6-191). Counsel for Morris moved for a mistrial based upon the admission of this evidence (N.T. 6-236). I held the evidence relevant to Morris’ state of mind as to the bribery counts in anticipation of Morris’ defense that she believed Lipschultz to be a government employee. (N.T. 6-236). I offered to give cautionary instructions to the jury that the evidence should not be used in evaluating the guilt or innocence of Morris but only in evaluating the Perkins’ defense of extortion. (N.T. 7-2). Counsel for Morris asked that the instruction not be given at that time but indicated that she would request such an instruction at the close of trial. (N.T. 7-3). Counsel for Morris did not ask that this instruction be given.

The case against Morris turned on the relative credibility of Morris and of Daniel and Joel Lipschultz. The Lipschultzes testified that they gave lists of drawings to Morris and received drawings in return at $5.00 per copy over the conspiracy time period. The drawing request rapidly accelerated to 500 to 600 per week. Morris filled 15 to 20 percent of their requests (N.T. 6-160-61) and they paid Morris approximately $2,000.00 per month over a substantial period of time during the conspiracy. The indictment alleged only five monthly payments to Morris of $2,000.00 each, spread over the period between January of 1981 and February of 1982. Subsequent to the Lipschultz testimony, I granted Morris an acquittal as to the conspiracy charge of the indictment and therefore the evidence from the Lipschultzes as to payments in 1979 and in 1980 in retrospect, under the defense theory, also should not have been admitted. However, I instructed the jury that Morris was not charged as a conspirator, (N.T. 14-147), and that she was charged only with five separate incidents in separate months of receiving $2,000.00 in exchange for the drawings. I explained: “She denies that she did that and that is a very clear factual decision for you to make. Do you accept the Lipschultz testimony or the Morris testimony? The burden of proof is on the government.” (N.T. 14-167; see also N.T. 14-132). “The defendants say ... that it is just as likely that Lipschultz was pocketing the money and pointing the finger at other persons. This is your function: to determine which of those contentions is correct, keeping in mind that for the government to sustain a conviction it must prove its contentions beyond a reasonable doubt.” (N.T. 14-171). I recommended to the jury that it evaluate the case against Morris first, at the very start of their deliberations, before they reached any of the other evidence in the case. (N.T. 14-180). I told the jury to focus on the credibility of the Lipschultz version as opposed to the Morris explanation. I also stressed that the jury’s job was to compartmentalize the evidence as to each defendant. (N.T. 14-141). The jury accepted the Lipschultz testimony, and there was more than an ample basis for its conclusion. In this fact situation, the admission of testimony as to activities by Morris in 1978, if it was error at all, was harmless.

For all of the above reasons, defendant Morris’ motions for post-verdict relief will be denied.

An appropriate order will be entered denying post-verdict relief as to all defendants.

      . In addition, the penalties for bribery are up to 15 years imprisonment and a $20,000 fine, while the penalties for gratuities are up to 2 years imprisonment and a $10,000 fine. This difference is insufficient to delete § 201(f) offenses from the category of RICO bribery, inasmuch as any state law bribery offense punishable by imprisonment for more than just a single year may serve as a predicate RICO offense under 18 U.S.C. § 1961(1)(A).

      . Aperture cards are government computer cards containing a microfilm copy of an engineering drawing for a defense-related part.

      . Tavoularis involved a conspiracy to possess treasury bills knowing the bills to be stolen from a bank, in violation of 18 U.S.C. §§ 211(3)(c) and 371. The court held that the government had failed to prove that the defendants knew that the bills they possessed were stolen from a bank, an essential element of the § 211(3)(c) offense, and that "an inference of participation in the theft” on the facts of Tavoularis "would verge on the irrational.” Id. at 1075. The § 211(3) offense was the centerpiece of the conspiracy and a failure of any proof at all as to the offense’s central element required reversal of the guilty verdicts. In Klein, the court reversed the conviction of a public insurance adjuster for mail fraud and conspiracy to defraud several insurance companies of proceeds owing on fire insurance policies, in connection with a scheme to destroy a hotel by fire for the policy proceeds. The appellant was hired after the arson to prepare proof of loss forms. The court found no evidence whatsoever of appellant's knowledge of an illicit purpose.

      . There is no requirement that the independent evidence of Osser’s involvement in the conspiracy be introduced prior to the introduction of the Perkins’ statements; and, accordingly, my decision to admit these statements subject to later validation by the prosecution’s laying of the proper basis for admitting the questioned evidence is not error. United States v. Ammar, 714 F.2d 238, 246-7 (3d Cir.1983); United States v. Zepeda-Santana, 569 F.2d 1386, 1388 (5th Cir.), cert. denied, 437 U.S. 907, 98 S.Ct. 3098, 57 L.Ed.2d 1138 (1978); United States v. Jackson, 549 F.2d 517, 533 (8th Cir.), cert. denied, 430 U.S. 985, 97 S.Ct. 1682, 52 L.Ed.2d 379 (1977).


author: DAVID L. RUSSELL, District Judge.

text:
    Chet Howard LEARNED, in his individual capacity, and as member of the 23rd Business Committee, Plaintiff, v. The CHEYENNE-ARAPAHO TRIBE, Maurice Babby, as Area Director of the Bureau of Indian Affairs, Juanita Learned, as Chairman of the 23rd Business Committee of the Cheyenne-Arapaho Tribe, the 24th Business Committee of the Cheyenne-Arapaho Tribe, Steve Birdshead, Wisdom Nibbs, Clinton Youngbear, Sr., Floyd Blackbear, Imogene Mosqueda as Chairman of the Election Board of the Cheyenne-Arapaho Tribes of Oklahoma, Defendants.
    No. CIV 84-61-R.
    United States District Court, W.D. Oklahoma.
    Feb. 16, 1984.

      John R. Hynson, Oklahoma City, Okl., for plaintiff.
    William S. Price, U.S. Atty., John E. Green, First Asst. U.S. Atty., Oklahoma City, Okl., Tom R. Stephenson, Watonga, Okl., Jim Merz, Oklahoma City, Okl., Cliff Shilling, Norman, Okl., for defendants.
   ORDER

DAVID L. RUSSELL, District Judge.

The Plaintiff, Chet Howard Learned, brought this action against the Defendants for declaratory and injunctive relief. Several of the Defendants, including the United States, on behalf of the Director of the Bureau of Indian Affairs (BIA), filed Motions to Dismiss for lack of subject matter jurisdiction. That issue was briefed by the interested parties, and a hearing on the matter was held. The Court ordered supplemental briefs on the jurisdictional issue, which were filed by the appropriate parties.

This action arose from a recent election held by the Cheyenne-Arapaho Tribe. The Plaintiff, a member of the Twenty-Third Business Committee of the Tribe, was unsuccessful in his bid for election to the Twenty-Fourth Business Committee. He sought relief from the tribal Election Board, alleging irregularities in the election process. When the accused members of the Board refused to recuse themselves, and the Board voted to include those members in the session considering the alleged violations, the Plaintiff terminated the proceeding without a decision on the merits. He then brought an action in the Court of Indian Offenses, a tribal court created under the Code of Federal Regulations to handle civil and criminal disputes. That Court found that although irregularities did occur, the relief sought by the Plaintiff was inappropriate. Spurning a possible appeal to the Court of Indian Appeals, the Plaintiff filed this action in this Court seeking relief from the alleged election violations.

In his Complaint, the Plaintiff alleges two bases of jurisdiction over the subject matter of this action. First, he alleges that because the Twenty-Third Business Committee adopted a resolution permitting this Court to hear the dispute, this Court has jurisdiction. The Plaintiff feels that the “trust relationship” between the quasi-sovereign Cheyenne-Arapaho Tribe and the United States gives rise to such a procedure, since the Tribe is a “ward” of the United States and should thus be afforded protection in federal courts. The Court finds this allegation of jurisdiction is patently without merit. The jurisdiction of this Court, or any federal court, is that which is conferred only by statutory enactment by the Congress of the United States. To hold otherwise would open the federal courts of the United States to actions arising under the laws of other nations, merely because a sovereign or quasi-sovereign had decided that a United States federal Court is the appropriate forum. Thus, the Court concludes that the action of the tribal Business Committee does not confer subject matter jurisdiction on this Court.

The Plaintiff also alleges jurisdiction under various federal statutes, most notably 25 U.S.C. § 1302(8) (1982) and 28 U.S.C. § 1343(a)(4). He alleges that the cause of action arises under § 1302, and that jurisdiction over that cause is established by § 1343(a)(4) or 28 U.S.C. § 1331 (1982), the general federal question jurisdiction statute. The Court will only consider the allegation of jurisdiction under § 1343(a)(4), since that section is universally deemed the proper jurisdictional basis for § 1302 claims. See Ramey Construction v. Apache Tribe of Mescalero Reservation, 673 F.2d 315, 319 n. 3 (10th Cir. 1982).

Section 1302, commonly referred to as the Indian Civil Rights Act (ICRA), gives causes of action to individuals wronged by the actions of Indian tribes and tribal officials. The Plaintiff argues that the election irregularities denied him the due process guarantee of § 1302(8), the analog to the federal due process clause of the Constitution. Thus claims the Plaintiff, this Court has jurisdiction over such a cause of action by virtue of § 1343(a)(4), which confers federal jurisdiction over cases arising under civil rights statutes.

The Court is cognizant of a substantial body of confusing case law regarding federal jurisdiction of tribal election disputes. Some measure of clarity was attained, however, by the recent Supreme Court decision in Santa Clara Pueblo v. Martinez, 436 U.S. 49, 98 S.Ct. 1670, 56 L.Ed.2d 106 (1978). In Martinez, the Court considered the purposes of § 1302 in light of an express Congressional intention to reserve sovereign autonomy to the independent Indian tribes. The Court noted that “it is highly unlikely that Congress would have intended a private cause of action for injunctive and declaratory relief to be available in the federal courts to secure enforcement of § 1302.” 436 U.S. at 69, 98 S.Ct. at 1682. The Court further stated that the “description of purpose of Title I, as well as the floor debates on the bill, indicates that the ICRA was generally understood to authorize federal judicial review of tribal action only through the habeas corpus provisions of § 1303.” Id. at 69-70, 98 S.Ct. at 1682-1683 [emphasis added, citations omitted]. This being so, the Court determined:

These factors, together with Congress’ rejection of proposals that clearly would have authorized causes of action other than habeas corpus, persuade us that Congress, aware of the intrusive effect of federal judicial review upon tribal self-government, intended to create only a limited mechanism, for such review, namely, that provided for expressly in § 1303.

Id. at 70, 98 S.Ct. at 1683. Based on such findings, the Court concluded:

Congress retains authority expressly to authorize civil actions for injunctive or other relief to redress violations of § 1302, in the event that the tribes themselves prove deficient in applying and enforcing its substantive provisions. But unless and until Congress makes clear its intention to permit the additional intrusion on tribal sovereignty that adjudication of such actions in a federal forum would represent, we are constrained to find that § 1302 does not implicitly authorize actions for declaratory or injunctive relief against either the tribe or its officers.

Id. at 72, 98 S.Ct. at 1684.

Despite the apparently clear language in Martinez, the Tenth Circuit Court of Appeals has concluded that the case can be distinguished and is thus not a bar to federal jurisdiction over § 1302 claims in all cases. In Dry Creek Lodge, Inc. v. Arapa hoe & Shoshone Tribes, 623 F.2d 682 (10th Cir.1980), cert. denied 449 U.S. 1118, 101 S.Ct. 931, 66 L.Ed.2d 847, reh. denied 450 U.S. 960, 101 S.Ct. 1421, 67 L.Ed.2d 385 (1981), that Court determined that Martinez applied only where tribal remedies were available. Id. at 685. The Court noted that the Supreme Court relied on the availability of tribal courts and the “intratribal nature of the problem sought to be resolved.” Id. The Court thus concluded that a federal forum was available for § 1302 claims where no tribal remedy was available to the plaintiff. Id.

However, this Court is not troubled by the Tenth Circuit’s amplification of the Martinez ruling. Unlike Dry Creek Lodge, this case involves available tribal remedies, judicial and otherwise, which were at least partially sampled by the Plaintiff. Further, the dispute encountered here is of the “intratribal nature” contemplated by Martinez; it is particularly significant that even before the restrictive holding in Martinez the Tenth Circuit refused claimants under § 1302 access to federal courts for redress of alleged election violations. See, e.g., Groundhog v. Keeler, 442 F.2d 674, 682 (10th Cir.1971) (“By its stated intentional exclusion from the Act ____any basis of federal court jurisdiction over tribal elections was definitely eliminated.”). Thus, this Court concludes, as did the Martinez Court, that federal jurisdiction is lacking over the § 1302 claims alleged herein.

Further, although Martinez purports to control only § 1302 actions against the tribes or tribal officials, the Court concludes as well that it has no jurisdiction over the alleged claim against the Bureau of Indian Affairs. The authorities examined by the Martinez Court indicated that the purpose of § 1302 was to remedy civil rights violations committed by the quasi-sovereign tribe. 436 U.S. at 61, 98 S.Ct. at 1678. It is nowhere stated that § 1302 confers a cause of action against the United States or any of its agencies. Thus, the Court is without jurisdiction of the claim as it related to the BIA on those grounds, and as the Plaintiff has alleged no other jurisdictional basis, the BIA will be dismissed as well.

At the hearing on jurisdiction the Court also heard argument on the Plaintiff’s Motion for a Preliminary Injunction. The Plaintiff sought to enjoin destruction of the election materials pending the outcome of the action. The temporary restraining order was dissolved, and the motion for a preliminary injunction denied, after the Court took possession of the materials in question. Because the Court is dismissing this action for lack of subject matter jurisdiction, those election materials, consisting of one box of ballots and envelopes, shall be returned to Imogene Mosqueda, tribal Election Board Chairman, from whom they were received.

In summary, the Defendants’ Motion to Dismiss for lack of subject matter jurisdiction is granted. The Clerk of the Court is ordered to return the election materials received at the hearing to Imogene Mosqueda, Defendant and tribal Election Board Chairman.

      . It is worthy of mention that the opinion in Dry Creek Lodge was met by unequivocal dissent. The dissenting judge concluded, as had the trial court, that Martinez compelled dismissal of the case. 623 F.2d at 685 (Holloway, J. dissenting).


author: ELLIOTT, District Judge.

text:
    William N. KNIGHT and J.T. Attaway, Plaintiffs, v. UNITED STATES of America, et al., Defendants.
    Civ. A. No. 84-53-COL.
    United States District Court, M.D. Georgia, Columbus Division.
    May 15, 1984.

      See also 596 F.Supp. 543.
    Jerry D. Sanders, Columbus, Ga., for plaintiffs.
    Gerald B. Leedom, U.S. Dept, of Justice, Washington, D.C., for defendants.
   MEMORANDUM AND ORDER ON MOTION OF UNITED STATES OF AMERICA TO DISMISS COUNT I OF PLAINTIFFS’ COMPLAINT

ELLIOTT, District Judge.

According to the allegations of the complaint above identified the Plaintiffs are engaged in “discounting federal income tax refund checks of private individuals”. The Plaintiffs pay a taxpayer a percentage of the claimed refund and obtain a purported assignment of the refund. They allege that they were informed by representatives of the Internal Revenue Service that the discounting of income tax refunds was not prohibited by law and that they were given the appropriate forms to effectuate such practices. Specifically, they refer to power of attorney forms pursuant to which an individual taxpayer would grant to one of the Plaintiffs or an agent of one of the Plaintiffs the right to receive the taxpayer’s income tax refund check. They allege that after they began their discounting operation they were notified that the Internal Revenue Service had decided to dishonor the purported powers of attorney and that the Atlanta Service Center would no longer send refund checks to the address of Plaintiff Knight or Plaintiff Attaway.

The Plaintiffs have requested that the Court restrain the Defendants both temporarily, preliminarily and permanently from “dishonoring the powers of attorney” for the tax returns identified in exhibits which are attached to the Plaintiffs’ complaint. The Court conducted a hearing on the application of the Plaintiffs for a temporary restraining order and denied the issuance of such an order, reserving ruling on the question of preliminary injunctive relief.

The United States of America has now filed a motion to dismiss Count I of the Plaintiffs’ complaint, that being the Count which seeks injunctive relief, and has filed a brief in support of the motion. The Plaintiffs have filed a brief in opposition to the motion.

The Plaintiffs’ contention is that they have expended money in their discounting operation and that the Internal Revenue Service should be required to forward individual taxpayer refund checks to the Plaintiffs instead of to the taxpayers whose returns form the basis of the refunds. The Plaintiffs rely upon purported assignments of the tax refunds to them by the individual taxpayers and in effect request the Court to require the Government to honor the purported assignments.

The Anti-Assignment Act (31 U.S.C. § 3727) unambiguously excuses the United States from purported private assignments of income tax refunds prior to submission of the tax return and allowance of the refund by the Internal Revenue Service, that being the circumstance here involved. The Plaintiffs are alleging in effect that by the actions, advice and conduct of agents and officers of the Internal Revenue Service, the Government bound itself to honor the assignments of the purported income tax refunds, the Plaintiffs taking the position that agents of the Government waived the protection or applicability of the Anti-Assignment Act. No such waiver may be asserted against the Government, it being recognized that the Anti-Assignment Act may not be waived by agents of the Government in advance of allowance of the claim which is the subject of the assignment. See United States v. Shannon, 186 F.2d 430, at 432-433 (4 Cir.1951); Marger v. Bell, 510 F.Supp. 9, at 12-13 (D.Maine, 1980); Augusta Aviation, Inc. v. United States, 671 F.2d 445, at 449 (11 Cir.1982).

The Court notes that in the brief filed by the Plaintiffs in opposition to the Defendant’s motion the Plaintiffs contend that the Anti-Assignment Act is not relevant to the injunctive issues in this case because they assert that they are not seeking relief designed to require the Defendants to honor any such assignment transactions with its various customers. However, regardless of how the Plaintiffs may characterize their claims, they are requesting in fact and in substance that the Internal Revenue Service be required to forward refund checks to the Plaintiffs rather than to the taxpayers whose returns support the claimed tax refunds. Simply because one of the documents involved in the assignments was a “power of attorney” form purporting to make the Plaintiffs “agents” of the taxpayers does not change the fact that the Plaintiffs are in fact asserting an ownership interest in the subject tax refunds. A review of the Plaintiffs’ complaint makes only one inference permissible, that being that the taxpayers purported to assign their claims to refunds to the Plaintiffs and the Plaintiffs now request enforcement of the assignments of those claims against the Internal Revenue Service. If the Plaintiffs did not intend to exercise full ownership rights in the refund checks they would not find it necessary to resist efforts to return the checks to the taxpayers instead of to the Plaintiffs.

With regard to the Plaintiffs’ professed reliance on the “power of attorney” forms, it is noted that there is a pertinent treasury regulation (§ 601.506(b)) which states specifically that the “Revenue Service is not bound to deliver any check in payment of refund of internal revenue taxes, penalties or interest to a representative of any taxpayer acting under authority evidence by a power of attorney.” That regulation is consistent with the provisions of the Anti-Assignment Act, and there appears to be no basis for suggesting that the regulation is invalid.

Consistent with the foregoing, the Court determines that the Defendant’s motion to dismiss Count I of the Plaintiffs’ complaint should be and the same is sustained and that Count of the complaint is stricken.

IT IS SO ORDERED.