text:
    Willetta ATKINS, Plaintiff, v. Barrett TOAN, Director of Mo. Dept. of Social Services, Joseph J. O’Hara, Director, Mo. Dept. of Family Services, Margaret M. Heckler, Secretary of Health and Human Services, Defendants.
    No. 83-4184-CV-C-5.
    United States District Court, W.D. Missouri, C.D.
    July 5, 1984.
    Richard Chase, St. Louis, Mo., for plaintiff.
    Paul T. Keller, Jefferson City, Mo., for defendants Toan and O’Hara.
    E. Eugene Harrison, Asst. U.S. Atty., Kansas City, Mo., for defendant Heckler.
   ORDER

SCOTT O. WRIGHT, District Judge.

A. Introduction

Plaintiff brings this action under 42 U.S.C. § 1983, individually and on behalf of all other persons similarly situated, seeking declaratory and injunctive relief. Plaintiff and the class she seeks to represent are non-income-eaming recipients of Aid to Families with Dependent Children (AFDC) benefits who have or will receive lump-sum income in the future. The defendant averages any lump-sum income received of an AFDC recipient over a number of months equal to the amount of the lump-sum divided by the AFDC monthly payment amount and does not grant benefits during those months. The plaintiff asserts that the defendant’s policy is in violation of the Social Security Act, 42 U.S.C. § 602(a)(17). The plaintiff asserts that the defendant’s “lump-sum” rule should be employed only in those cases where the AFDC recipient is also receiving earned income. Thus, the issue before the Court is whether the treatment of non-recurring lump-sum income in the AFDC program applies to all AFDC families or only those AFDC families with earned income in the month of receipt of a lump-sum payment. Pending before the Court are cross-motions for summary judgment and plaintiffs motion for class certification.

Plaintiff, a recipient of AFDC benefits, received a lump-sum worker’s compensation award. Plaintiff was unable to work and had no earned income. The Missouri Division of Family Services notified plaintiff that she would be ineligible to receive AFDC benefits for a number of months based upon their lump-sum rule. Plaintiff subsequently brought this action seeking declaratory and injunctive relief. During the discovery, plaintiff’s motion for a temporary injunction became moot. Plaintiff is now receiving AFDC benefits.

B. Class Action

Plaintiff brought this action pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(2), on behalf of herself and all other AFDC recipients who received or will receive lump-sum payments and who do not have earned income. The defendant opposes class action certification because plaintiff’s individual claim became moot during the pendency of this action. Rule 23(a) and (b)(2) provide as follows:

(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
(2) The party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive or corresponding declaratory relief with respect to the class as a whole ...

The Court finds that all of the requirements for a class action are satisfied under the facts presented in this case.

The numerosity requirement is clearly met because joinder of members of the class is impracticable. In their answer to the first interrogatory of plaintiff’s Second Set of Interrogatories, the state defendants responded that between August, 1982 and July, 1983, there were 416 AFDC cases closed due to the application of the lump-sum rule and only 74 of these families had earned income. Thus, there were 342 class members during that twelve-month time period. This is clearly a sufficient number to make joinder impracticable. Arkansas Education Association v. Board of Education of the Portland Arkansas School District, 446 F.2d 763 (8th Cir.1971). Furthermore, plaintiff seeks to represent not only those persons included in the plaintiff class who have been denied benefits, but also those persons who will be denied benefits in the future. Joinder of unknown persons is impracticable. Sperry Rand Corp. v. Larson, 554 F.2d 868, 871 at n. 2 (8th Cir.1977); Jones v. Diamond, 519 F.2d 1090, 1100 (5th Cir.1975); Jack v. American Linen Supply Co., 498 F.2d 122, 124 (5th Cir.1974). Joinder is also impractical because class membership is fluid. Santiago v. City of Philadelphia, 72 F.R.D. 619, 624 (E.D.Pa.1976).

The requirement of the existence of a common question of law or fact is also met. Plaintiff has raised a question of law which is common to all members of the class, namely, whether the defendants’ lump-sum rule can apply to AFDC recipients who do not have earned income. A common question is presented by the requested interpretation of the validity of a federal statute. Like v. Carter, 448 F.2d 798 (8th Cir.1971).

The typicality requirement is also met. Typicality requires “a demonstration that there are other members of the class who have the same or similar grievances as the plaintiff.” Donaldson v. Pillsbury Co., 554 F.2d 825, 830 (8th Cir.1977). In this case, the named plaintiff suffered the same deprivation as the unnamed members of the class. There is no actual or potential conflict between the interest of the plaintiff and the interest of the class. The complaint sees identical relief for all members of the class. The issues are pure issues of law.

The named plaintiff will fairly and adequately represent the interests of the class. The named plaintiff was unable to obtain class certification before her individual claim became moot because her period of disqualification ended before discovery could be completed. However, the mootness of plaintiffs individual claim due to the passing of time does not affect her adequacy as a class representative, since the underlying controversy remains “capable of repetition, yet evading review.” Gerstein v. Pugh, 420 U.S. 103, 110 at n. 11, 95 S.Ct. 854, 861 at n. 11, 43 L.Ed.2d 54 (1975). In the present case, in light of the fairly short length of disqualification based upon receipt of lump-sum payments, the substantive issue raised may never receive judicial scrutiny unless certification is permitted after the named plaintiff is once again receiving AFDC benefits. Thus, the certification will be construed as relating back to the filing of the complaint. Sosna v. Iowa, 419 U.S. 393, 402 at n. 11, 95 S.Ct. 553, 559 at n. 11, 42 L.Ed.2d 532 (1975).

The plaintiff is represented by experienced counsel who can be expected to ably represent the interest of the class. Plaintiffs attorney has expertise in handling this type of litigation. Ranschburg v. Toan, 540 F.Supp. 745 (W.D.Mo.1982), aff'd, 709 F.2d 1207 (8th Cir.1983); Williams v. Schweiker, 541 F.Supp. 1360 (E.D. Mo.1982); Chambly v. Freeman, 478 F.Supp. 1221 (W.D.Mo.1979), aff'd, 624 F.2d 1108 (8th Cir.1980), cert. denied, 450 U.S. 936, 101 S.Ct. 1401, 67 L.Ed.2d 371 (1981); Cunningham v. Toan, No. 81-4233-5 (W.D.Mo.1983). The interests advanced by the named plaintiff will not conflict in any way with those of the other members of the class.

Finally, the requirements of Rule 23(b)(2) are met. The defendants have “acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive ... or ... declaratory relief ...” Plaintiff claims that she and the class she seeks to represent have been or will be subjected to denial of AFDC benefits. Defendants have uniformly applied the lump-sum rule to deny AFDC benefits to families with no earned income during the month of receipt of the lump-sum income. Plaintiff seeks appropriate injunctive and declaratory relief in order to prevent this policy from being applied in the future.

For the foregoing reasons, the plaintiffs motion for an order certifying the named class is granted.

C. Opinion

This case presents a simple question of statutory interpretation. Plaintiff challenges the application of the new “lump-sum rule” enacted by the Omnibus Budget Reconciliation Act of 1981 (OBRA), Pub.L. No. 97-35, to individuals applying for or receiving assistance under the program of Aid to Families with Dependent Children who have no earned income. The new lump-sum rule, an amendment to the Social Security Act now codified at 42 U.S.C. § 602(a)(17), provides that when an AFDC family receives payment of non-recurring lump sum income which exceeds the family’s monthly need standard (established by the state), the family is considered ineligible for AFDC for a prescribed period of time. The period of ineligibility is obtained by dividing the lump-sum (added to the family’s other income, if any) by the family’s monthly need standard. Thus, the new rule treats nonrecurring lump-sum income as the equivalent of future AFDC aid, which should be prorated to meet the family’s needs over a period of months.

Plaintiff contends that the statute, 42 U.S.C. § 602(a)(17) should apply only to AFDC recipients who have earned income during the month they receive the lump-sum in question. To the contrary, however, the United States Court of Appeals for the Eighth Circuit has expressly held that the statute applies to all AFDC recipients, not merely those with earned income. Faught v. Heckler, 736 F.2d 1235 (8th Cir. 1984). At the outset, the Eighth Circuit noted that the statutory language was ambiguous. Nevertheless, the court found that the legislative history clearly indicated that Congress intended the lump-sum rule to reach all families. Id. at 1237; accord: Sweeney v. Murray, 732 F.2d 1022 (1st Cir., 1984).

Nothing can be added to the First and Eighth Circuits’ detailed analysis of the statute. Congress passed the statute to promote responsible budgeting of lump-sum income by all AFDC families and to reduce disbursements by a specified amount based on the amount of the lump-sum payment. Congress never intended the lump-sum rule to be limited to families who received earned income.

For the foregoing reasons, it is hereby

ORDERED that plaintiff’s motion for class certification is granted. It is further

ORDERED that defendant’s motion for summary judgment is sustained.


source: Caselaw Access Project

author: WILLIAM T. HART, District Judge.

license: Public Domain

text:
    ATTORNEY REGISTRATION AND DISCIPLINARY COMMISSION OF the SUPREME COURT OF ILLINOIS and Carl H. Rolewick, Administrator, on their own behalf and as trustees on behalf of all employees of the Commission past and present, Plaintiffs, v. Patricia HARRIS, Secretary of Health and Human Services, Philip J. DiBenedetto, Acting Regional Commissioner for Social Security, and G. William Miller, Secretary of the Treasury, Defendants.
    No. 80 C 3974.
    United States District Court, N.D. Illinois, E.D.
    July 6, 1984.

      John O’Malley, Chicago, 111., Rubin G. Cohn, Champaign, 111., Robert G. Cronson, Richard J. Prendergast, Chicago, III, for plaintiffs.
    Éd Moran, Asst. U.S. Atty., Chicago, 111., for defendants.
    Samuel W. Witwer, Sr., Witwer, Moran, Burlage & Witmer, Chicago, 111., for proposed intervenors.
   MEMORANDUM OPINION AND ORDER

WILLIAM T. HART, District Judge.

On July 29, 1980, the Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois (the “Commission”) instituted this action, seeking a declaration that: (i) certain actions taken by defendant Patricia Harris, former Secretary of Health and Human Services (the “Secretary”) were arbitrary, capricious, an abuse of discretion and illegal; (ii) the Illinois Supreme Court was not the employer of Commission personnel for Federal Insurance Contribution Act (“FICA”) and Federal Unemployment Tax Act (“FUTA”) purposes; and (iii) Commission personnel qualify for Social Security coverage. On August 23, 1982 and October 7, 1982, respectively, this Court granted the Secretary’s motion to dismiss and denied plaintiffs’ motion for reconsideration, holding that that jurisdiction did not exist under either 28 U.S.C. § 1331 (federal question), or 42 U.S.C. § 405(g) (judicial review of final decisions by the Secretary). Attorney Registration and Disciplinary Commission v. Schweiker, 545 F.Supp. 1098 (N.D.Ill.1982). On December 29, 1982, this Court also dismissed the Commission’s remaining mandamus count. 28 U.S.C. § 1361.

The Commission successfully appealed these rulings.. On August 11, 1983, the Seventh Circuit reversed the dismissals, stating:

The Disciplinary Commission has an interest independent of its employees in knowing whether it has gotten anything for the $180,000 it has contributed to the social security fund. That interest is sufficient to support its own action under 205(g) of the Social Security Act despite the possibility — no more than that — that its employees might be able one by one to obtain a determination of their coverage by proceeding under section 205(c).

Attorney Registration and Disciplinary Commission v. Schweiker, 715 F.2d 282, 290 (7th Cir.1983).

The Secretary has answered the complaint and has filed a certified copy of the administrative record, which consists largely of the documents and correspondence summarized below. Robert G. Cronson, the Auditor General of the State of Illinois, was given leave to intervene in this action on February 15, 1984. The Secretary has moved for summary judgment. The Commission has responded with a cross-motion for summary judgment. These are the matters currently before the Court.

Factual and Procedural Background

The complex procedural history of this action begins in 1973, shortly after the Illinois Supreme Court created the Commission. Prior to 1973, committees of the Illinois State Bar Association (“ISBA”) and the Chicago Bar Association (“CBA”) supervised disciplinary procedures brought against Illinois lawyers. Pursuant to Illinois Supreme Court Rules, these committees received complaints, made investigations, filed charges, heard evidence and made recommendations to the Court. Their work was financed by a portion of dues paid by CBA and ISBA members.

During 1973, the Illinois Supreme Court adopted new rules which established the Commission to perform these functions. The Court provided funds for the Commission by requiring all attorneys admitted to practice in Illinois to pay an annual fee. The Commission consists of five members, who along with the Commission’s Administrator, are appointed by the Court. Ill.Rev. Stat. ch. 110A, §§ 751 and 752. The Court also appoints the Review Board, which makes final recommendations to the Court as to the sanctions to be imposed by the Court upon attorneys. The Commission or the Administrator appoint the Commission’s staff of attorneys, investigators and clerks, see §§ 751 and 752, as well as the Inquiry and Hearing Boards, which conduct the initial stages of the disciplinary process. Each year the Commission is required to file a report of its activities with the Supreme Court.

The Commission first sought Social Security coverage for its employees during 1973, by requesting a ruling from the Internal Revenue Service (the “Service”) as to its liability for FICA and FUTA taxes on wages paid to its employees. On June 1, 1973, the Service concluded that the services performed by the Commission employees were not within FICA’s definition of employment, 26 U.S.C. § 3121(b)(7) (see also FUTA, 26 U.S.C. § 3306(c)(7)), basing its conclusion on its view that the Commission was “a wholly owned instrumentality of the State of Illinois.” On August 3, 1973 the Secretary notified the Service that she had reviewed the Service’s conclusions and agreed.

The Service also referred the Commission to the State Employees Retirement System of Illinois as a source of information on obtaining Social Security coverage for its employees. Since the Service viewed the Commission as a “state agency,” the only method by which it would permit the Commission to obtain Social Security coverage for its employees was under the existing “Section 218 agreement” between the State of Illinois and the federal government. To enable state and local government employees to obtain Social Security coverage, a state must agree to pay FICA taxes pursuant to Section 218 of the Social Security Act, 42 U.S.C. § 418. Illinois’ Section 218 agreement authorizes Social Security coverage for: (i) employees of the State or its political subdivisions and (ii) employees of instrumentalities of the State. Ill.Rev.Stat. ch. 108½, § 21-119.

Having been informed by the Service that it must proceed within the Illinois Section 218 agreement, the Commission requested opinions from the Illinois Attorney General and the Illinois Public Employees Pension Laws Commission as to which portion of the Section 218 agreement applied to its employees. On August 25, 1973, the Pension Laws Commission advised that Commission employees would not be able to obtain Social Security coverage as employees of the State because, although “technically employees of the State government,” Commission personnel were not paid by the State.

On July 31, 1974 the Illinois Attorney General determined that “the Commission is not an instrumentality of the State of Illinois, as defined in the State’s Social Security Enabling Act, ..., but rather that it is an agency of the judicial branch of the State of Illinois.” Op.Ill.Att’y Gen. S-793. Thus, Commission personnel were not eligible for coverage under either portion of the Illinois Section 218 agreement.

This unique status resulted from the manner in which the Commission is funded. As noted above, the Supreme Court of Illinois funded the Commission’s efforts by requiring all attorneys admitted to practice in Illinois to pay an annual fee to the Commission. These fees are held in a separate trust fund, from which the Commission pays its expenses, including salaries. The Illinois Public Employee Pension Laws Commission, in its 1973 opinion, pointed out that Commission personnel would become “state employees” if the Commission were to turn over these funds to the State Treasury and allow its employees to be paid by the State. The Commission has vigorously resisted this suggestion.

On January 10, 1975, based on the opinions of the Illinois Attorney General and the Pension Laws Commission to the effect that Commission personnel did not fall within either portion of the Illinois Section 218 agreement, the Commission requested reconsideration of the Service’s June 1, 1973 ruling. The Service remained unpersuaded. On May 9, 1975, the Service reaffirmed its earlier ruling that Commission personnel were in the employ of the State of Illinois.

On November 10, 1975, the Commission took a new approach. It filed an application for tax exempt organization status under Illinois Revised Code (“IRC”) section 501(c)(6). 26 U.S.C. § 501(c)(6). As exhibits to its application, the Commission attached the Service’s 1973 and 1975 rulings and the Illinois Attorney General’s opinion. The application contained the following two questions: “Are you now or do you plan to be connected in any way with any other organization?” “Are you under the supervisory jurisdiction of any public regulatory body, such as the Social Welfare Agency, Board of Regents, etc.?” The Commission responded to both questions in the negative. The Secretary now disputes the correctness of these responses, in light of the Commission’s relationship with the Illinois Supreme Court.

On January 29, 1976, the Service approved the Commission’s applications in a form letter containing the following provisos.

Based on the information supplied, and assuming you operations will be as stated in your application for recognition of exemption, we have determined that you are exempt from Federal income tax provisions ...
Unless specifically excepted you are liable for taxes under the Federal Insurance Contributions Act (social security taxes)____

In response to this ruling, the Commission arranged for payment of FICA and FUTA taxes for the prior periods of 1973, 1974 and 1975, with interest, but without penalty. On March 26, 1976 the Commission forwarded its payments for prior years to the Service. In May of 1976, the Service notified the Commission of the amount of interest due, and the Commission paid these amounts on June 15, 1976. The Commission continued to make payments of FICA and FUTA taxes quarterly as they became due.

As noted above, Auditor General Cronson unsuccessfully attempted to audit Commission funds beginning in 1976 and 1977. On July 12, 1979, Cronson contacted the Service, seeking information as to the Commission’s section 501(c)(6) status. Cronson asked the Service to explain the apparent reversal of its 1973 and 1975 rulings by assessing FICA and FUTA taxes. By letter dated July 31, 1979, the Service replied that no express reversal was on file. Cronson then requested that the Service review the Commission’s section 501(c)(6) status, noting the Commission’s status as an agency of the Illinois Supreme Court. On August 28, 1979, the Service denied Cronson’s request, pointing out that only the Commission could initiate a review of its section 501(c)(6) status.

The Service also referred Cronson’s request to its Chicago regional office for an investigation as to whether the Commission had inaccurately represented to the Service its relation to the Illinois Courts. Counsel for the Auditor General pursued the Commission’s status before the Service’s Chicago office. At this same point in time, the Commission’s sister agency, the State Board of Law Examiners, followed the Commission’s example, obtaining a favorable ruling from the Service as to its section 501(c)(6) status on December 10, 1979.

The administrative record does not reveal how the Secretary became aware of the correspondence between Cronson and the Service regarding the Commission’s FICA and FUTA tax payments. However, an interoffice memorandum dated January 24, 1980 asks that the Service be advised that it should cancel the Commission’s prior wage reports and discontinue further processing of wage reports. During late January and early February of 1980, the Secretary’s Chicago regional office investigated the status of both the Law Examiners and the Commission. On February 8, 1980, the Secretary’s Regional Commissioner notified both the Law Examiner and the Commission that the Service’s determination of their section 501(c)(6) status had no effect on their Social Security wage status and that the Service had been directed not to process further FICA and FUTA wage reports.

As to the Commission, the Secretary’s Chicago office further advised that all prior wage reports still subject to correction would be cancelled. The Regional Commissioner conceded that the “erroneous reporting [by the Commission] may have been made in reliance on a favorable ruling by the IRS under Section 501(c)(6).” Nonetheless, the Secretary cancelled all prior wage reports for periods after January 1, 1976 without further consideration of the effect of such action.

During March of 1980, the Commission met with Social Security representatives and submitted additional information in an attempt to convince the Secretary that Commission personnel should be provided with Social Security coverage. The Secretary’s Regional Commissioner denied the Commission’s request for reconsideration on July 10, 1980, advising the Commission that it had no formal appeal rights.

Discussion

The parties agree that the scope of this Court’s review is limited to a determination of whether the Secretary’s decision is supported by substantial evidence in the administrative record as a whole. See Whitney v. Schweiker, 695 F.2d 784, 786 (7th Cir.1982). Applying this standard to the administrative record, the Court must affirm the Secretary’s findings that: (i) the Service’s 1973 and 1975 rulings regarding FICA and FUTA taxes were not inconsistent with the Service’s 1976 ruling as to tax exempt status under IRC § 506(c)(6); (ii) Commission personnel would be eligible for social security coverage only under Illinois’ Section 218 agreement; and (iii) the Service should be advised not to process further wage reports filed by the Commission.

The 1974 opinion of the Illinois Attorney General (in accord with an opinion of Maryland’s Attorney General) as well as those of the Internal Revenue Service and the Illinois Public Employee Pension Laws Commission, provide substantial evidence upon which the Secretary could have based these decisions. This evidence indicates that the Commission is an agency of the Supreme Court of Illinois and not a separate entity. Therefore, Social Security coverage for Commission personnel must be obtained, if at all, through the Illinois Section 218 agreement. Whether Commission personnel qualify under the terms of that agreement, and if so, whether as employees of a “political instrumentality” or of the State, is a matter of Illinois law not to be decided by the Secretary or this Court.

The Commission’s arguments to the contrary may be summarized as asserting the Commission’s autonomy from the Illinois Supreme Court. Typical of these arguments are the Commission’s contentions regarding payment of salaries to its personnel. The Commission contends that its personnel are employees of the Commission and not of the Illinois Supreme Court because they are paid from “the Commission’s funds,” rather than from the State Treasury, in accordance with a pay structure set by the Commission, rather than the Court. The evidence of record is inconsistent with this contention, as well as all other “autonomy” arguments advanced by the Commission. The Illinois Supreme Court did not sever all ties with the Commission immediately after its creation of that entity. While the Commission has been delegated control over its own day to day operations, including the setting of a pay structure, the Court retains control over the Commission. The Commission must account to the Court annually as to its activities, its receipts and its expenditures, including salaries paid. The fund which the Commission “collects and administers” is in no sense its own, but rather the Court’s. By contnding that the fund is its own, the Commission simply assumes the conclusion of its argument; that it is autonomous.

As the Secretary correctly points out, the Illinois Supreme Court has repeatedly held that the Commission acts only as its delegate to exercise the Court’s inherent powers “to discipline attorneys who have been admitted to practice before it.” In re Mitan, 75 Ill.2d 118, 25 Ill.Dec. 622, 387 N.E.2d 278, 280, cert, denied sub nom; Mitán v. Attorney Registration and Disciplinary Commission, 444 U.S. 916, 100 S.Ct. 231, 62 L.Ed.2d 171 (1979). See also Hoover v. Ronwin, — U.S.-,-, 104 S.Ct. 1989, 1998, 80 L.Ed.2d 590, 52 U.S. L.W. 4335, 4539 (May 15, 1984) (conduct of Arizona Committee on Examinations and Admissions is “in reality that of the Arizona Supreme Court,” therefore, immune from attack under the federal antitrust laws). Thus, the Secretary’s findings listed above are not only supported by substantial record evidence, but are supported by all of the record evidence.

Nonetheless, the Secretary’s February 8, 1980 decision included one additional finding which is totally unsupported by the record; the finding that all wage reports still subject to correction should be can-celled. The Secretary’s decision to apply her other findings retroactively rather than prospectively is distinct from her findings as to the Commission’s status. See Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). See also NLRB v. Lyon & Ryan Ford, Inc., 647 F.2d 745, 757 (7th Cir.), cert. denied, 454 U.S. 894, 102 S.Ct. 391, 70 L.Ed.2d 209 (1981) (applying Chevron Oil to a decision by an admin istrative agency). As such, it must be supported by consideration of the additional factors bearing on the issue of retroactive application, for example, the equities involved. “Normally, an agency rule would be arbitrary and capricious if the agency ... entirely failed to consider an important aspect of the problem.” Motor Vehicle v. State Farm Mutual Automobile Co., 463 U.S. 29, 103 S.Ct. 2856, 2867, 77 L.Ed.2d 443 (1983). Failure to give any consideration to the hardships that may be imposed on Commission personnel as a result of striking several years of wage reports renders the Secretary’s action arbitrary and capricious. International Ladies’ Garment Union v. Donovan, 722 F.2d 795, 812-18 (D.C.Cir.1983); People of the State of Illinois v. United States, 666 F.2d 1066, 1077 (7th Cir.1982) (failure to respond to an important argument raised before agency constitutes error requiring remand).

A comparison of the Secretary’s letter to the Commission with her letter to the Law Examiners illustrates the point. As of February 8, 1980, the Law Examiners had made no contributions for FICA or FUTA taxes, since they had only recently received their favorable section 506(c)(6) ruling from the Service. On the other hand, the Commission (and Commission personnel) had been making Social Security contributions for a period of seven years. Yet, without any additional inquiry into the impact of such a decision on Commission personnel, the Secretary extinguished this seven year contribution history.

The Secretary correctly points out that the Commission cannot sustain a claim of equitable estoppel against the government, see Portmann v. United States, 674 F.2d 1155 (7th Cir.1982), because it was informed on several occasions that the proper method of obtaining Social Security coverage was through the Illinois Section 218 agreement. However, the equities are quite different with regard to Commission personnel, who were in all likelihood told little beyond the fact that Social Security coverage had become available. It is possible that some reasonably relied upon the availability of Social Security coverage in remaining with or coming to work for the Commission. While striking the contribution records and refunding with interest contributions paid may be acceptable to some Commission personnel, others may suffer a hardship from such action. They may have depended upon these contribution periods to accumulate the minimum contribution history needed to qualify for Social Security benefits and may now be unable to reaccumulate a sufficient number of contribution periods to qualify for such benefits. See 42 U.S.C. § 414(a). The administrative record is barren of any consideration of these important aspects of the problem of retroactivity. Therefore, the Secretary’s decision to strike the wage reports of all Commission personnel must be vacated.

This action is remanded to the Secretary for further consideration of whether it is appropriate to retroactively strike the FICA wage reports of individual Commission personnel and refund their contributions with interest. Further, if refund be ordered, the date of such refunds and the amount due the Commission and the individuals should be determined. It is requested that the Secretary act within 180 days.

IT IS THEREFORE ORDERED that

(1) The Secretary’s decision that personnel of the Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois are not eligible for Social Security coverage, consistent with the 1973 and 1975 rulings of the Internal Revenue Service, is affirmed.

(2) The Secretary’s decision to instruct the Internal Revenue Service not to process further wage reports submitted by the Commission is affirmed.

(3) The Secretary’s decision to strike all wage reports previously filed by the Commission is vacated.

(4) This action is remanded to the Secretary for further consideration.

(5) The Commission’s claim for mandamus relief is dismissed as moot.

(6) The stay heretofore entered shall continue pending further action, subject to a motion to vacate should the matter be resolved by settlement.

      . The administrative record also contains an opinion of the Attorney General of the State of Maryland, concluding that a body similar to the Commission, created by the Maryland courts, is not an independent entity (in accord with the 1974 opinion of the Illinois Attorney General, described below).

      . The Chicago Bar Association appeared, as amicus curiae, and related the circumstances surrounding the Commission’s creation and important current role in the Illinois legal system.

      . This request was made through State Representative J. David Jones.

      . The Commission’s resistance has not been undertaken solely on its own initiative or merely to assure its continued control over its own budget. The organized bar supports the Commission, as does, apparently, the Illinois Supreme Court. The Auditor General maintains that the attorney registration fees are "public funds,” subject to audit by his office, while the Commission maintains that such an audit would violate the separation of powers provision of the Illinois Constitution.
      In a further effort to bring the Commission funds within his audit authority, Auditor General Cronson filed a petition before the Illinois Supreme Court seeking to mandamus the Commission’s Administrator. Cronson v. Attorney Registration and Disciplinary Commission, No. 57179, (IIl.Sup.Ct. filed Aug. 23, 1982). The Court denied Cronson’s petition on March 13, 1984.
      In Support of the Commission, the CBA has filed an action in the Circuit Court of Cook County, Illinois seeking a declaration that Commission funds are not subject to audit by Auditor General Cronson. CBA v. Cronson, 82 L 50131 (Cir.Ct. Cook filed July 28, 1982). That action is pending.
      This Court does not intend by this ruling to express any opinion concerning the merits of the Auditor’s right to audit Commission funds. That is a question of state law which will be resolved in the pending Circuit Court proceeding.

      . Section 501(c)(6) exempts from income tax "Business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues, not organized for profit____”

      . The Secretary's action was stayed by agreement of the parties to maintain the status quo during the pendency of this action.

      . The Court therefore applies this standard without examining whether the “substantial evidence” test or the less stringent "arbitrary and capricious” test applies. See 5 U.S.C. § 706(2)(A) & (E) and 28 U.S.C. § 408(g).

      . The Secretary has not argued, nor could she with any support, that after striking these contribution records the government could refuse a full refund with interest of contributions made by the Commission or Commission personnel.


author: FLANNERY, District Judge.

text:
    ATTORNEY GENERAL OF the UNITED STATES, Plaintiff, v. The IRISH PEOPLE, INC., Defendant.
    Civ. A. No. 76-1518.
    United States District Court, District of Columbia.
    July 6, 1984.

      Charles S. Sims, American Civil Liberties Union, New York City, Helene M. Freeman, Parcher & Herbert, New York City, Mark H. Lynch, Susan W. Shaffer, American Civil Liberties Union Project on National Security and Civil Liberties, Washington, D.C., for defendant.
    Brian K. Ahearn, Dept, of Justice — Criminal Division, Washington, D.C., for plaintiff.
   MEMORANDUM

FLANNERY, District Judge.

This matter comes before the court on cross-motions for summary judgment. The government brought this action to require the defendant, a New York corporation that publishes The Irish People, a weekly newspaper, to register as the agent of a foreign principal under the Foreign Agents Registration Act of 1938, as amended, (“FARA”), 22 U.S.C. 611, et seq. The government claims that The Irish People is an agent of the Irish Northern Aid Committee, (“INAC”), which in turn, is the registered agent of the Irish Republican Army. See Attorney General v. INAC, 530 F.Supp. 241 (S.D.N.Y.1981), aff'd 668 F.2d 159 (2d Cir.1982).

DISCUSSION

I. Statutory Requirements.

FARA requires that all persons acting as agents of foreign principals must file a registration statement with the Attorney General. 22 U.S.C. § 612(a). The key section of the Act, for the purposes of this court’s determination of the motions at bar, is the definition of the term “agent of a foreign principal.” Id. at § 611(c). That term includes:

any person who acts as an agent, representative, employee, or servant, or any person who acts in any other capacity at the order, request, or under the direction or control, of a foreign principal or of a person any of whose activities are directly or indirectly supervised, directed, controlled, financed, or subsidized in whole or in major part by a foreign principal, and who directly or through any other person—
(i) engages within the United States in political activities for or in the interests of such foreign principal;
(ii) acts within the United States as a public relations counsel, publicity agent, information-service employee or political consultant for or in the interests of such foreign principal;
(iii) within the United States solicits, collects, disburses, or dispenses contributions, loans, money, or other things of value for or in the interest of such foreign principal.

Id. The requirements of the Act relevant to defendant can be divided into three categories. Initially, the government must prove that defendant acted at the order, request, or under the direction or control of an entity. Secondly, that entity must be a foreign principal. Finally, defendant must engage in the alleged political activity for, or in the interests of the foreign principal. The second requirement is not in dispute in the present case. INAC is a registered agent of the IRA. The court will consider the remaining requirements in turn, but first it must address the standard to be applied to the evaluation of the motions at bar.

Plaintiff argues that because the application of FARA affects First Amendment rights, the government must make a compelling factual showing and establish its case by clear and convincing evidence. Although this argument might be appropriate in a discussion of proposed jury instructions, it has no place in the consideration of a motion for summary judgment. In fact, the government must meet the more exacting standard established by the Federal Rules of Civil Procedure. As stated in the rules, the moving party must establish that “there is no genuine issue as to any material fact.” Fed.R.Civ.P. 56(c). In the context of a motion for summary judgment the court must not resolve factual differences, but can only determine, giving every reasonable inference to the opponent of the motion, whether any factual differences exist. See, e.g., Exxon Corp. v. Federal Trade Commission, 668 F.2d 120 (D.C.Cir. 1980). The court must now examine the record in light of the above standard.

In order to meet the first requirement of proving that defendant is an agent of INAC some type of relationship between the two parties must be proved. Defendant argues that plaintiff must prove that INAC directed and controlled The Irish People. This, however, directly contradicts the plain language of the statute. The requirements of the statute are stated in the disjunctive. As the United States Court of Appeals for the Second Circuit held in examining the same statute, the relationship required by the Act need not meet the Restatement standard. Attorney General v. INAC, supra, 668 F.2d at 161. The Restatement focuses on control, but that is only one of the possible connections that the government need prove between INAC and The Irish People. The Second Circuit announced a more lenient standard in the above-cited case. Id. The court stated that the real test was whether the action in question was undertaken at the “request” of the foreign principal. Id.

The court now turns to an examination of the record in this case to determine the relationship, if any, between INAC and The Irish People.

II. The Government’s Evidence.

The government has attempted to prove the requisite relationship primarily by establishing an identity in the managing personnel and resources of INAC and The Irish People. The evidence submitted by the government in support of its motion falls into three basic categories. The first is defendant’s answers to interrogatories. The second is the affidavit submitted by Brian K. Ahearn, an attorney with the Registration Unit, Internal Security Section, Criminal Division of the Department of Justice. The third is documents that were obtained through a search of INAC’s files. There is no dispute that the evidence in the first category is admissible. Defendant claims that Ahearn has no personal knowledge of the information contained in his affidavit and, therefore, that it is inadmissible. It is beyond dispute, however, that Ahearn has been deeply involved with INAC’s compliance with FARA since 1971. The majority of the relevant material in Ahearn’s affidavit was ascertained from his personal review of INAC’s registration statements. It was on this basis that the district court in Attorney General v. INAC, supra, admitted Ahearn’s affidavit. 530 F.Supp. at 252. This court has not considered the information in Ahearn’s affidavit that could not have been obtained from a review of the registration statements and other undisputably admissible evidence. This court finds, however, that to the extent it is based on this undisputably admissible evidence, it can be considered. Because this court finds that the information contained in the first two categories of evidence is sufficient to support the government’s motion for summary judgment, it will reserve until later in this memorandum a discussion of the admissibility of the third category of evidence.

Plaintiff’s answers to interrogatories establishes the identity of several of the managing persons or officers of The Irish People. Michael Flannery, Jack McCarthy, Robert McCann, and Matthew Higgins, until his death, have, or have had, signature power over the defendant’s bank accounts. Furthermore, McCann and Martin Galvin are, and have been editors of The Irish People. McCann signed the lease for the defendant’s present quarters as Secretary of that organization.

The answers to interrogatories also establish that INAC and the defendant shared the same office and other facilities. Specifically, between February 23, 1975 and March 1, 1976, the defendant’s office was located at the headquarters of INAC. Defendant paid no rent to INAC for this office. During this time period defendant used the same telephone number as INAC. It is difficult, therefore, to separate the defendant from INAC during this period. They shared officers, offices, and telephone numbers. In addition, defendant received a significant amount of financial support from INAC. Between January, 1975 and January, 1976, the defendant received in the area of $45,000 from INAC. This support did not end in 1976. From 1977 through 1982 the defendant received in excess of $130,000.00 from INAC.

Defendant does not deny most of the facts recited above. With regard to the coincidence of officers in the two organizations, defendant maintains that people who are involved in ethnic politics ordinarily volunteer for more than one organization. This does not refute, however, plaintiff’s contention that the officers, or people who run INAC exert some degree of control over The Irish People. Defendant has also stressed that most or all of the people who work at The Irish People are volunteers. There is no distinction made by FARA, however, between paid and unpaid agents. There is no question of fact, therefore, that the leaders of INAC in the United States also make substantial contributions to and have substantial control over The Irish People. This without more might be enough to satisfy the first prong of the statutory definition of a foreign agent. As noted above, however, this is far from the only fact that the government offers in support of its motion for summary judgment. Defendant does not deny, and offers no explanation for the facilities of INAC that were offered gratuitously to defendant.

Defendant has two responses to plaintiff’s argument that it received substantial subsidies from INAC. Initially, it argues that the money received from INAC was approximately equal to the value of the advertisements provided by defendant to INAC. Defendant also argues that Woodward & Lothrop might be a substantial advertiser in the Washington Post, but that does not mean that the Post is an agent of Woodward & Lothrop’s. Defendant’s logic is impeccable, as far as it goes. If, in addition to being a substantial advertiser in the Post, however, Woodward & Lothrop had the same Board of Directors as the Post, and provided the Post with offices and telephone facilities free of charge, then the Post might well be found to be the agent of Woodward & Lothrop.

This is the substance of the government’s case. Defendant argues, in rebuttal, that the government’s proof is stale. It asserts that the majority of the government’s evidence is at least eight years old. Although plaintiff’s evidence is not as up to date as would be desirable, this is not a fatal flaw in the government’s case. Defendant argues that the term “officials” has no significance under FARA, however, it does not deny that the people listed as officials by the government are still integrally involved in INAC. It does not deny that these people, whether they are volunteers or not, exert a controlling influence over INAC. It does not rebut the government’s proof that Flannery, McCarthy and McCann have signature power over defendant’s bank accounts. This alone proves that these people exerted a certain degree of control over defendant. Furthermore, the payments that defendant received from INAC were much more recent than eight years. There is sufficient undisputed evidence, therefore, that defendant is currently acting at the request of INAC to satisfy the requirements of FARA.

The second prong of the government’s case is that defendant engaged in political activities for or in the interests of INAC. This issue is clearly not totally independent of the issue of control. It is unlikely that the people who control The Irish People as well as the INAC, would allow more than isolated instances where the actions of the newspaper were contrary to the interests of INAC. A brief review of the product of The Irish People confirms this conclusion. Although the mere coincidence of editorial views would not be sufficient to satisfy the requirements of FARA, it sheds light on the question of whether the alleged agent was acting on behalf of the principal. In the present case it is clear that The Irish People has been published on behalf of INAC and the IRA.

III. Additional Exhibits

A. Contents

The government has submitted a group of documents obtained from the files of INAC. These documents leave no doubt that The Irish People is controlled by and operated on behalf of INAC. A letter on INAC stationary, signed by McCarthy, McGowan, and Flannery, dated May 31, 1974, refers to The Irish People as “our weekly paper.” A 1976, handwritten letter from Higgins to McCarthy concludes:

We can’t let the paper collapse without notice to our people at home (as they are paying for it) and I therefore have drawn check # 2401 which I will have at the “People” office this (Sunday) evening.

(emphasis added). Perhaps the most revealing document is a letter dated December 1, 1977, from McCarthy, Flannery, and Higgins to The Trustees of the Boston Unit of the IN AC. That letter states, while detailing the expenses of their office, “The only major expense is carried out at the direct command of our sponsors in Ireland, namely, helping to keep the ‘Irish People’ newspaper going.”

Defendant does not deny the veracity of the contents of these documents. Instead it argues that the documents are inadmissible hearsay, and unauthenticated. It is to these arguments that this court now turns.

B. Admissibility

Defendant is correct in asserting that these documents are hearsay. Plaintiff argues that the documents represent admissions and are admissible under Rule 801(d)(2)(A). There is, however, one crucial requirement missing before these documents can be classified as admissions: they must originate from a party. INAC is not a party to this suit. Evidence dealing with that organization is probative to the ultimate issue before the court, but nonetheless, it is not a party, and is incapable of making a party admission. Nor are these documents admissible as business records. See Fed.R.Evid. 803(6). There was no business duty to generate these letters. Furthermore, it is not clear that the other necessary foundations have been laid for admission under the business records exception to the hearsay rule.

This court believes that these documents are admissible under the catch-all exception to the rule against hearsay. Fed. R.Evid. 803(24). These letters are similar to business records in that they were produced in a business setting, and the authors had no reason to falsify their contents. To the contrary, these letters carry with them an aura of credibility similar to that of business records since these are, for the most part, internal letters. This court cannot imagine a motive that the author would have to fill such letters with untruths. The other elements of the exception are also met. The letters help to prove the agency relationship which is clearly a material issue in this case. The letters are more probative than any other evidence that the government could obtain. At least one of the authors of these letters, Higgins, is unavailable. Furthermore, these letters are very straightforward and the court does not believe that the testimony of the authors would necessarily be more probative on the issues contained in them than are the letters themselves. Finally, the court believes that the interests of justice would be thwarted by the exclusion of this extremely probative evidence. Defendant has been given sufficient notice of the government’s intention to rely, in part, on these letters, and has had adequate opportunity to respond to them. All of the prerequisites of the Rule have, therefore, been satisfied and the documents contained in the government’s Exhibit 1 as listed above are admissible. It should be noted once again, however, that the government would have sufficient undisputed evidence to prove its case even if these documents were not admitted.

IV. Affirmative Defenses

A. Constitutionality of FARA

Defendant alleges that the application of FARA to it violates the First and Fourth Amendments. With regard to the First Amendment argument, defendant alleges that the requirement of a “pejorative” label on the newspaper violates its freedom of speech. The United States Court of Appeals for the District of Columbia Circuit was unanimous in stating that FARA is constitutional. Attorney General v. Irish People, 684 F.2d 928, 956, cert. denied, 459 U.S. 1172, 103 S.Ct. 817, 74 L.Ed.2d 1015 (1982). Judge Wald spoke for the court when she stated that:

FARA evenhandedly applied, has survived constitutional objections, and in fact serves first amendment values by supplementing the information that might otherwise be available to the public.

Id. This theory was explained by Justice Black writing in dissent in Viereck v. United States, 318 U.S. 236, 251, 63 S.Ct. 561, 568, 87 L.Ed. 734 (1943):

Resting on the fundamental constitutional principle that our people, adequately informed, may be trusted to distinguish between the true and the false, the bill is intended to label information of foreign origin so that hearers and readers may not be deceived by the belief that the information comes from a disinterested source. Such legislation implements rather than detracts from the prized freedoms guaranteed by the First Amendment.

Id. This court need not rehash the constitutional arguments that these courts considered and rejected. Indeed, defendant seems to concede that if there is substantial proof that The Irish People acts at the direction of INAC, then the First Amendment is satisfied, because there is a compelling government interest in the conduct of its foreign affairs. If this agency relationship is proved, then even defendant must agree that Congress has the power to force it to register under FARA. That relationship is proven in the case at bar by a wealth of undisputed evidence. The First Amendment is served through the notification of the public of the effect of this evidence.

Defendant also argues that its Fourth Amendment rights are violated by FARA because the act subjects it to searches without the requisite probable cause. To the extent that defendant’s argument has any merit it is premature. There has been no search of its files conducted pursuant to FARA. This court will not examine defendant’s constitutional argument in a factual vacuum. Defendant has, at most, presented a potential violation of constitutional rights. This court will not anticipate such a violation. See Communist Party v. Subversive Activities Control Board, 367 U.S. 1, 71-72, 81 S.Ct. 1357, 1397, 6 L.Ed.2d 625 (1961).

B. Selective Prosecution

Defendant has asserted that FARA would violate the First Amendment because the action was instituted to harass and suppress its rights. This selective prosecution defense was explicitly reserved by defendant, and the court does not now pass on it. As defendant noted, this court must first make representative findings of fact with regard to the privileged documents before defendant can properly brief this issue. This court has withheld those findings until it disposed of the motions before it.

This court finds, therefore, that plaintiff is entitled to summary judgment in this case on all issues but the selective prosecution defense.

      . See Restatement (Second) of Agency § 1 (1958).

      . The court limited the scope of the term “request” when it stated that:
      We caution that this word is not to be understood in its most precatory sense. Such an interpretation would sweep within the statute’s scope many forms of conduct that Congress did not intend to regulate. The exact perimeters of a "request” under the Act are difficult to locate, falling somewhere between a command and a plea. Despite this uncertainty, the surrounding circumstances will normally provide sufficient indication as to whether a "request” by a "foreign principal” requires the recipient to register as an "agent.”
      668 F.2d at 161. The circumstances surrounding INAC and The Irish People are examined, in detail, below.

      . This document is attached to the Government's motion in Exhibit 2.

      . Defendant does not dispute these facts in its Statement of Genuine Issues, although Galvin states that the offices of the two organizations are, in fact, separate. Galvin Affidavit at ¶ 15. Initially, Galvin does not state that The Irish People, as opposed to the INAC, pays the rent. Furthermore, he does not deny that at one time the organizations shared offices.

      . Accepting defendant's assertion as true, it only tells half of the story. INAC does not pay The Irish People in accordance with the advertising that it places in the newspaper. Defendant admits that INAC pays for The Irish People's operational deficit. See Galvin Affidavit at ¶ 12. This has the effect of keeping the newspaper solvent regardless of the advertisements placed in it by INAC, and the coincidence that the value of the advertisements are approximately equivalent to the money paid by INAC to The Irish People does not alter this effect. This arrangement is much different from the situations to which defendant analogizes.

      . Defendant’s argument that subsidies alone are not sufficient to prove the necessary relationship under FARA, H.R.Rep. No. 1470, reprinted in 1966 U.S.Code Cong. & Ad.News 2397, 2401, suffers from the same flaw. It is a valid statement, but it has limited applicability to this case. It ignores a combination of other facts that the government has proved and defendant has not disputed, that point to the conclusion that an agency relationship exists.

      . The government also argues that there is a coincidence of editorial views between INAC and The Irish People. This is not determinative of the agency issue, although it may be relevant to a determination of whether defendant acted on behalf of INAC, an issue discussed below. Cf. Viereck v. United States, 318 U.S. 236, 240-41, 63 S.Ct. 561, 563, 87 L.Ed. 734 (1943).

      . The situation at bar is identical to that in Attorney General v. INAC, in which the court stated:
      Although ... many of the exhibits before this Court are not very recent, defendant presents neither legally persuasive arguments nor any "concrete particulars” of fact to raise a genuine issue as to defendant’s continuing agency relationship with the IRA.
      530 F.Supp. at 259. The affidavits submitted by the defendant by their workers who state that neither they nor the newspaper are the agents of the INAC lack the particularity required to refute the concrete proof submitted by the government. Instead they represent legal conclusions that do not raise a factual issue.

      . Defendant raised a host of affirmative defenses and counterclaims in its answer to plaintiffs complaint. It appears, however, that defendant has abandoned all but the arguments noted below.

      . Judge Wilkey was more expansive in his dis-cussion of FARA’s constitutionality. Id. at 943.


author: GESELL, District Judge.

text:
    SOUTHEAST TRAINING CORP., Plaintiff, v. Raymond J. DONOVAN, Secretary of Labor, Defendant; Management and Training Corporation, Intervening Defendant.
    Civ. A. No. 84-1686.
    United States District Court, District of Columbia.
    July 9, 1984.

      Charles G. Preston, Jonathan H. Wax-man, Washington, D.C., for plaintiff.
    Richard A. Stanley, Asst. U.S. Atty., Washington, D.C., for defendant.
    Carl L. Vacketta, Irving Jaffe, Washington, D.C., for intervening defendant.
   MEMORANDUM

GESELL, District Judge.

Plaintiff Southeast Training Corporation (STC), is a disappointed bidder in a negotiated procurement for operation of a Job Corps Center located at Kittrell, North Carolina. Numerous improprieties in the bid selection process are alleged. Management and Training Corporation (MTC), the successful bidder who took over operation of the Center under contract with the Secretary of Labor when the previous contract held by STC was completed, has intervened as a defendant. STC seeks by its complaint to have MTC’s contract set aside.

MTC’s contract was awarded on April 27, 1984. Performance began on June 1, 1984. On the day of the award STC filed a bid protest with the General Accounting Office (GAO), still pending, which raises many of the same issues presented here. The present lawsuit, however, was not filed until May 31, 1984, the day before the new contract was scheduled to go into effect. At a hearing held that day the Court entered a Temporary Restraining Order preventing the Secretary from implementing the MTC contract, upon posting of a bond by plaintiff in the amount of $50,000. The bond was never posted, and MTC commenced performance of the contract on June 1 and has been operating the Center ever since. A hearing on plaintiff’s motion for preliminary injunction was held on June 8, 1984. At this hearing plaintiff no longer attempted to establish the alleged improprieties which prompted the Temporary Restraining Order but instead raised entirely different claims.

At the June 8th hearing on plaintiff’s motion the Court indicated that it might consolidate that hearing with a trial on the merits pursuant to F.R.Civ.P. 65(a)(2). At plaintiff’s request, it was granted until June 15 to file additional papers, and defendants were given until June 22 to address the new issues raised by plaintiff. For the reasons given below the Court has concluded that consolidation is appropriate and, inasmuch as plaintiff has failed to produce evidence entitling it to an injunction from the Court, plaintiff’s claim for preliminary relief must be denied and the complaint dismissed.

A disappointed bidder such as STC seeking injunctive relief “bear[s] a heavy burden of showing either that (1) the procurement official’s decision on matters committed primarily to his own discretion had no rational basis, or (2) the procurement procedure involved a clear and prejudicial violation of applicable statutes or regulations.” Kentron Hawaii Limited v. Warner, 480 F.2d 1166, 1169 (D.C.Cir.1973). Plaintiff has failed to meet this heavy burden.

Plaintiff’s principal claims reduce to three basic contentions. The first is that plaintiff was unfairly prejudiced because the contracting officer failed to alert it to “concerns” expressed by the members of the panel which reviewed the technical aspects of the competing proposals, so that STC did not have an opportunity to address those concerns in an effort to increase its technical rating. The second claim is that the contracting officer failed to evaluate the reasonableness of MTC’s cost proposal, which STC argues was “not credible.” Third, plaintiff alleges that assignment of certain members to the reviewing panel was improper.

Plaintiff’s contention that the award to MTC was improper because the technical review panel “team chief” and the contracting officer failed to inform STC of “concerns” raised by that panel with respect to its proposal fails to meet the standard enunciated in Kentron, for three separate reasons.

First, plaintiff’s factual showing in support of its allegations is very weak. One witness, Robert Jones, a member of the technical review panel, testified that a single concern he had about both proposals was not to his knowledge communicated to either bidder, and that he believed other members of the panel also had concerns which were not addressed. The government presented evidence, however, which indicated that Mr. Jones’ concern could be resolved by information already in the hands of the contracting officer. The contracting officer was not bound by the recommendations of the evaluation panel and was the final decisionmaker. The Court concludes that the evidence does not support plaintiff’s assertion that significant concerns raised by panel members were not transmitted to STC.

Second, plaintiff has failed to identify a single statute or regulation which requires transmittal of all concerns raised by panel members to the contracting officer. Two specific regulatory provisions were cited which require the contracting officer to “advise the offeror of deficiencies in its proposal so that the offeror is given an opportunity to satisfy the Government’s requirements.” These regulations, however, do not require the contracting officer to communicate “concerns” of panel members unedited, but instead would appear only to require the contracting officer to transmit what he reasonably concluded were “deficiencies.” Nothing in the record points to any “deficiencies” in STC’s proposal which should have been communicated to it. Thus no “clear” violation of applicable regulations has been shown.

Finally, there is no evidence whatsoever to suggest that STC was prejudiced in any way by any failure to communicate to it any concerns voiced by the panel members. As noted above, none of these concerns appear to have been significant. No evidence suggests the two offerors were treated differently in this regard. And plaintiff offers little, if any, support for the proposition that if these concerns had been passed through it would have caused STC to change its proposal, the panel members their scores or the contracting officer his decision to award the contract to MTC. Plaintiff has thus failed to show either a clear departure from applicable regulations or any prejudice to its interests.

Plaintiffs second principal point is that the contracting officer failed to evaluate the reasonableness of MTC’s cost proposal. Here its burden is especially heavy. As our Circuit noted:

Since decisions on cost realism and feasibility are squarely within the area of the contracting officer’s expertise, this court cannot second-guess such a determination unless it is not supported by any reasonable basis. Conversely, in order to prevail on this ground, [the disappointed bidder] would have to demonstrate that the contracting officer could only reasonably have concluded that [the winning bidder’s] proposal was not feasible.

Kentron, 480 F.2d at 1172 [footnote omitted; emphasis in original].

Plaintiff presented evidence that the contract specialist, Mr. Chamblers, suggested that the MTC proposal was not cost reasonable, but that the contracting officer did not discuss this recommendation with him. The contracting officer, of course, was not in any way bound by this recommendation. No evidence, other than the opinion of Mr. Chamblers, was introduced to show that MTC’s bid was unreasonably low. No underlying data or specific expert testimony was presented. Mr. Chamblers did not offer an adequate explanation as to how his conclusion was reached. The government presented evidence that the concerns raised by Mr. Chamblers were in fact considered by the contracting officer, and evidence presented by MTC justified the amount bid. The Court concludes that plaintiff has utterly failed to show that the contracting officer could only conclude that MTC’s bid was unreasonable.

Plaintiff’s third contention is that two individuals were improperly assigned to the review panels, namely Mr. Bill Eudy and Mr. James Blackburn.

Mr. Eudy was assigned as team chief of the technical review panel. Plaintiff alleges that at the time of his assignment he was Project Manager of the Kittrell Center, and argues that this violated internal agency policy, pointing to Exhibit B, an internal investigative report, which states that “Job Corps policy prohibits project manager who is assigned to a center to participate [sic] as panel chairman in the contract procurement for that center.” 113. That report also states, however, that “the assignment of Mr. Eudy was in accordance with the Atlanta Regional Office procedures____ The procedures followed are in accordance with Job Corps Policy ETO 3-82.” ¶ 2.

Defendant asserts that Mr. Eudy was assigned only briefly as project manager at Kittrell, and that he left this position before becoming panel team chief on the procurement. Neither party offers any proof which would allow the Court to resolve these conflicting factual assertions. Neither party has brought to the Court’s attention “Job Corps Policy ETO 3-82” or any other policy statement relating to assignment of team chiefs. Based on Def.Ex. B, it is impossible to tell if any internal agency policy has been violated by Mr. Eudy’s assignment. Although it is not clear that a violation of internal policy will support an injunction, even if this were so, therefore, plaintiff has failed to demonstrate any violation of internal policy.

As to Mr. Blackburn, plaintiff has submitted an affidavit by Mr. Curtis Hunter, which states in full:

I Curtis Hunter being duly sworn, state as follows: I had lunch with Mr. Blackburn during the early stages of the Kittrell procurement on or about January 5, 1984. During a conversation Mr. Blackburn stated that he .did not like Southeastern Training Corporation and he didn’t like Erskine Hawkins. I hope they lose this contract because I don’t think they should ever have had the contract. This negative statement made by Mr. Blackburn was communicated to a National Job Corps official in the Washington Office. It was my feeling that inasmuch as Mr. Blackburn was a panel member for the Kittrell procurement, it was important that this communication be shared with someone other than myself.

The government has submitted an affidavit by Mr. Blackburn in which he flatly denies the statements attributed to him. Neither Mr. Hunter nor Mr. Blackburn appeared as a witness at the hearing, and their affidavits did not come to light until post-hearing briefs were filed.

On its face the Hunter affidavit does not show to whom in the Washington office of Job Corps his comments were transmitted to, or whether that official had any responsibility to relay this information to those who chose Mr. Blackburn for the panel. No other evidence was introduced which showed that Mr. Blackburn might be biased against STC. Based on such scanty and conflicting evidence the Court simply cannot conclude that Mr. Blackburn was biased against STC or that the agency violated any regulatory or statutory provision in appointing him to the review panel. Certainly no “clear” violation of such a provision has been shown. Accordingly, on this point as well the Court concludes that plaintiff has failed to meet the standards set forth in Kentron.

Plaintiff, who initially made allegations of gross disregard of procurement regulations and basic standards of fair dealing in its application for a TRO, has simply failed to provide factual evidence which would support a grant of injunctive relief. This Court can intervene only upon a showing of a “clear and prejudicial” violation of applicable statutes or regulations. Plaintiff has been given an opportunity to make such a showing and has failed to do so, and it is clear that no such violation has taken place. Further proceedings, which would involve the Court in a contract already awarded and in the midst of performance, are not warranted. Accordingly, for the reasons stated above plaintiff’s claim for injunction must be denied and the complaint dismissed. An appropriate Order is filed herewith.

      . The Temporary Restraining Order was vacated on June 8, 1984, upon motion of MTC.

      . Note report of Mr. Donald A. Buchanan on issues raised by plaintiff in its administrative complaint, Def.Ex. 2, ¶ 6.

      . 48 C.F.R. § 15.610(c)(2). See also 41 C.F.R. § 29-3805-51-54.

      . Plaintiff points to language in an internal agency “Review Guide” which states that a letter to be sent to offerors whose proposals are competitive "also contains a list of all concerns raised by the reviewers.” Plf.Ex. 9, at p. IV-137. This language, however, refers to concerns raised with respect to cost reasonableness, and there is no evidence that concerns raised by those on the cost panel, as opposed to those of the technical panel, were not transmitted to the offerors. Additionally, it is questionable whether this language is binding in any way. Compare Georgia Gazette Publishing Co. v. U.S. Dept. of Defense, 562 F.Supp. 1004 (S.D.Ga.1983), with Robert E. Derecktor for Rhode Island, Inc. v. Boston Shipyard Corp., Comp.Gen.Dec. B-211922.2, 84 C.P.D. ¶ 140 (1984).

      . See Def.Ex. I.

      . See footnote 4, supra.

      . Plaintiff’s remaining claims are clearly groundless and need not be discussed.

      . This result does not, of course, necessarily preclude plaintiff from pursuing its rights before the GAO or in the Court of Claims.


author: ARCENEAUX, District Judge.

text:
    AMUSEMENT EQUIPMENT, INC. v. Carl Heinz MORDELT and Heinz Mordelt GMbH and Co. K.G. “Heimo”.
    Civ. A. No. 83-5660.
    United States District Court, E.D. Louisiana.
    July 25, 1984.

      Jones, Walker, Waechter, Poitevent, Carrere & Denegre, Herschel L. Abbott, Jr., Elizabeth J. Futrell, Carl D. Rosenblum, Trial Atty., New Orleans, La., for plaintiffs.
    Arthur L. Ballin and Frank C. Dudenhefer, Jr., New Orleans, La., for defendants.
   MEMORANDUM OPINION

ARCENEAUX, District Judge.

This matter arises out of an action for breach of contract brought by Amusement Equipment, Inc., a Florida corporation, against Heinz Mordelt GMbH and Co. K.G. (“Heimo”), a West German corporation, and Carl Mordelt, the corporation’s general manager and a resident of West Germany. During September of 1983, the owner of Amusement Equipment, John Bond, visited Heimo’s factory in West Germany and purchased certain remote controlled boats for exhibition at an amusement industry trade show to be held in Jacksonville, Florida. Bond also discussed with representatives of Heimo the possibility of acquiring certain of Heimo’s products for exhibition at the Sixty-Fifth Annual Convention and Trade Show of the International Association of Amusement Parks and Attractions, to be held in New Orleans from November 17 through 20, 1983.

Bond was satisfied with the Heimo equipment exhibited at the Florida trade show. Consequently, on October 25, 1983, Bond contacted Mr. Mordelt by telephone to procure additional products for exhibition at the New Orleans trade show. Amusement Equipment agreed to purchase one animated display elephant, four remote controlled automobiles and certain accessory equipment from Heimo for a price of DM 37,130 which, at the time, equalled U.S. $14,295.00. Heimo understood that Amusement Equipment intended to display the products at the New Orleans trade show scheduled to begin on November 17, 1983. Amusement Equipment needed the products delivered to Miami in sufficient time before the trade show so that they could be transported by its truck to New Orleans. Accordingly, Bond demanded that the products be delivered to Miami by November 12, 1983. Heimo required prepayment before it would ship the merchandise overseas.

On November 3, 1983, Amusement Equipment sent Heimo a telex stating that payment had been made by wire transfer on November 2, 1983, but that such payment was conditioned upon delivery of the products in Miami by November 12, 1983. If delivery of the goods could not be accomplished by that time, Amusement Equipment directed that its order be cancelled and that the funds be returned. On November 4, 1983, Heimo telexed Amusement Equipment that if the funds were received by its bank by November 7, 1983, Heimo could “guarantee [compliance with Amusement Equipment’s] delivery requirements.” On November 7, 1983, Heimo learned from its bank that the payment of Amusement Equipment had been received. Heimo then arranged for the shipment of the merchandise through a German freight forwarder, Max Grunht, an independent contractor. Grunht received the merchandise at the Stuttgart Airport on November 9, 1983. Heimo directed that the goods be shipped to London on November 10, 1983 for immediate transfer to a Miami bound flight departing later the same day. Heimo telexed the shipping information to Amusement Equipment the same day. Also on November 9, 1983, Heimo sent Amusement Equipment an order confirmation, which provided that the merchandise was shipped C.I.F. “C.I.F.” is the same as “F.O.B.,” which means that title and the risk of loss passed to the purchaser upon delivery of the merchandise to the freight forwarder.

On November 12, 1983, Amusement Equipment telephoned Heimo that the merchandise had not yet arrived in Miami. Upon investigating the matter, Heimo learned that the airline departing London had refused to accept the shipment, since an earlier flight had been cancelled and freight from that flight had been given priority. The airline allowed the merchandise to remain in London without informing the freight forwarders, Heimo or Amusement Equipment. Later on the 12th of November, Amusement Equipment telexed Heimo that the contract was cancelled and requested return of the funds. Heimo refused to return the funds.

Heimo is a member of the International Association of Amusement Parks and Attractions, the sponsor of the New Orleans show. Consequently, on November 20, 1983, Mordelt arrived in New Orleans to attend the trade show. Amusement Equipment alleges that Mordelt attended the show as representative of Heimo. Thus, on November 11, 1983, Mordelt was personally served in New Orleans for himself and for his employer, Heimo.

Mordelt and Heimo now move to dismiss for lack of personal jurisdiction. This motion raises the issue of whether this Court may, consistent with the due process clause, exercise personal jurisdiction over the defendants. Amusement Equipment alleges that the Court may exercise personal jurisdiction over defendants for the following reasons: (1) process was served on Mordelt, an agent of Heimo, while he was in Louisiana; (2) defendants transacted business in Louisiana, since they sold their merchandise to Amusement Equipment knowing that the products would be exhibited and possibly sold in Louisiana, and because Mordelt attended the New Orleans trade show; (3) defendants anticipated being haled into court in Louisiana, because they knew that the merchandise was to be exhibited in Louisiana.

LAW

“[T]he power of a federal court entertaining a suit based on diversity of citizenship to exercise jurisdiction over the persons of non-resident defendants turns on two independent considerations. The law of the state in which the court sits must confer jurisdiction over the persons of the defendant, and if it does, the exercise of jurisdiction under state law must comport with basic due process requirements of the United States Constitution.” Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 700 F.2d 1026, 1028 (5th Cir.1983) (quoting Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 489 (5th Cir.1974).

Amusement Equipment argues that Louisiana law confers personal jurisdiction over Heimo because Mordelt, its agent, was personally served while present in Louisiana, see La.Code Civ.Proc. art. 6(1) (West 1960 and 1984 suppl.) , and because, though it is a nonresident, Heimo may be forced to appear under the Louisiana Long-Arm Statute, La.Rev.Stat.Ann. § 13:3201 (West 1968 and 1984 suppl.). Let us assume, for the sake of argument, that Heimo was properly served both under Codal article 6 and under section 3201 of the Revised Statutes. The due process clause limits the state’s jurisdictional reach with respect to both. Thus, it is unnecessary to analyze the propriety of the assertion of personal jurisdiction under Codal article 6 separately from the assertion of personal jurisdiction under section 3201. The analysis is the same under both.

The exercise of personal jurisdiction over a nonresident defendant comports with constitutional due process requirements if (1) the nonresident defendant has some minimum contacts with the state resulting from an affirmative act or acts on its part, and (2) it is not unfair or unreasonable to require the defendant to defend the suit in the forum. Hydrokinetics, supra at 1028 (quoting Southwest Offset, Inc. v. Hudco Publishing Co., Inc., 622 F.2d 149, 152 (5th Cir.1980)). The constitutional test has two prongs: an “affirmative act” prong and a “fairness” prong. One prong cannot compensate for or overcome the other. Talbot Tractor Co. v. Hinomoto Tractor Sales, USA, 703 F.2d 143, 147 (5th Cir.1983).

The affirmative act prong requires that “there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958). “Considerations such as the quality, nature, and extent of the activity in the forum, the foreseeability of consequences within the forum from activities outside it, and the relationship between the cause of action and the contacts, relate to .whether it can be said that the defendant’s actions constitute ‘purposeful availment.’ ” Prejean v. Sonatrach, Inc., 652 F.2d 1260, 1268 (5th Cir.1981). The defendant’s conduct and connection with the forum state must be such that he should reasonably anticipate being haled into court in the forum state. World-Wide Volkswagen Corp., v. Woodson, 444 U.S. 286, 298, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980).

The fairness prong requires the Court to consider, among other things, “the relative convenience of the parties, the benefits and protection of the laws of the forum state afforded the respective parties, whether the state has any special interest in providing a forum for the suit, and the basic equities of the situation.” Growden v. Ed Bowlin and Associates, Inc., 733 F.2d 1149, 1150-51 (5th Cir.1984).

ANALYSIS

1. Affirmative Act Prong

Here Heimo engaged in the following affirmative acts which arguably connect it to Louisiana: it entered into a contract for the sale of amusement merchandise which it knew was to be exhibited in New Orleans; it maintained a membership in the association which sponsored the New Orleans Trade Show; and its general manager, Carl Mordelt, attended the New Orleans trade show.

The contract of sale, the transaction out of which this cause of action arose, had remarkably little connection with Louisiana. The parties initiated discussion of the deal in a face-to-face meeting at Heimo’s factory in West Germany. The terms of the contract were negotiated by telephone and telex between Florida and West Germany. Payment was made through a Florida bank and directed to a West German bank. The merchandise was to be delivered in Florida. True, Amusement Equipment intended immediately to transport the merchandise to New Orleans. However, this is a contact of Amusement Equipment, and not of Heimo, with Louisiana.

On the other hand, Heimo realized that Amusement Equipment intended to exhibit the merchandise at the New Orleans trade show. Thus, Heimo could have foreseen that failure to timely deliver the merchandise could have tangible consequences in Louisiana. However, it is not clear that this fact would have led Heimo to reasonably anticipate being haled into court in Louisiana. “[T]he foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into Court there.” World Wide Volkswagen Corp., supra, 444 U.S. at 298, 100 S.Ct. at 567 (citations omitted). Heimo did not deliver a defective product which caused injury in Louisiana. This is not a tort action, but one for breach of contract. Presumably, the aggrieved party to a breach of contract action would bring suit in its home state which is, in this case, Florida and not Louisiana. Thus the foreseeable consequences stemming from the breach of the contract of sale tended to gravitate toward Florida, and not Louisiana.

The other alleged contacts of Heimo with Louisiana seem to be unrelated to the cause of action. There is no evidence that Heimo’s membership in the International Association of Amusement Parks and Attractions, a sponsor of the New Orleans trade show, at all pertained to the contract of sale. Nor is there any evidence that the presence of Mr. Mordelt at the trade show was related to the contract of sale. Indeed, by the date of the trade show, November 17, 1983, the contract had already been negotiated, executed, and (allegedly) breached. Certainly, the contract of sale pertained to the New Orleans trade show, in that Amusement Equipment intended to display there the merchandise purchased from Heimo. Also, Mr. Mordelt’s presence in New Orleans was related to the trade show — he came to New Orleans in order to attend the show. However, there is nothing linking Mr. Mordelt’s presence in New Orleans to the contract of sale. Thus, this case does not satisfy the affirmative act prong of the minimum contacts test.

2. Fairness prong

The fairness prong requires the Court to consider the unfairness or unreasonableness of requiring the defendant to defend suit in the forum. The relative convenience of the parties hardly favors Louisiana. Heimo is not a Louisiana corporation, maintains no place of business and conducts no business here. Amusement Equipment is a Florida corporation, and while it is licensed to do business in Louisiana, it appears to have brought suit here simply because it was able to personally serve Mordelt in New Orleans.

Moreover, Louisiana afforded the parties neither the benefits nor the protections of its laws, and has no special interest in providing a forum for this suit. Amusement Equipment is a Florida corporation; consequently, Florida, and not Louisiana, has an interest in seeing that its aggrieved resident obtains redress.

Finally, the basic equities of the situation do not favor a Louisiana forum. Amusement Equipment saw fit to travel to West Germany to inspect Heimo’s merchandise. The contract of sale was negotiated and executed by telephone and telex between Florida and West Germany. Heimo did not reach out to Amusement Equipment in Louisiana. Thus, it would be unfair to require Heimo to answer for the alleged breach of contract in Louisiana. This case does not satisfy the fairness prong.

Carl Mordelt is a defendant to this suit because he allegedly acted outside the scope of his official capacity in negotiating the contract of sale. Mordelt had the same, and certainly no closer contacts with Louisiana than did Heimo. Thus, what has been said about Heimo applies equally to Mordelt. Mordelt also lacks contacts with Louisiana sufficient to justify the assertion of personal jurisdiction over him.

Accordingly, the motion of defendants Heimo and Carl Mordelt to dismiss the complaint for lack of personal jurisdiction is hereby GRANTED. Judgment will be entered accordingly.

      . Article 6 provides, in pertinent part:
      Jurisdiction over the person is the legal power and authority of a court to render a personal judgment against a party to an action or proceeding. This jurisdiction must be based upon:
      (1) The service of process on the defendant, or on his agent for the service of process.

      . Section 3201 provides:
      A court may exercise personal jurisdiction over a nonresident, who acts directly or by an agent, as to a cause of action arising from the nonresident’s
      (a) transacting any business in this state;
      (b) contracting to supply services or things in this state;
      (c) causing injury or damage by an offense or quasi offense committed through an act or omission in this state;
      (d) causing injury or damage in this state by an offense or quasi offense committed through an act or omission outside of this state if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state; or
      (e) having an interest in, using, or possessing a real right or immovable property in this state.

      . The due process clause limits the state’s jurisdictional reach with respect to both means of obtaining in personam jurisdiction over nonresident defendants — under Codal article 6 and under Revised Statute section 3201.
      a. Article 6 and the doctrine of transient jurisdiction

      Article 6 provides that personal jurisdiction may be based upon "the service of process on the defendant, or on his agent for service of process.” Here, there is no dispute that Mordelt, agent of Heimo, was personally served while in New Orleans. However, Mordelt was in New Orleans simply to attend the trade show, which lasted only a few days. Therefore, his presence in Louisiana was only transitory.
      At one time, when the foundation of personal jurisdiction was “physical power”, a court gained personal jurisdiction over any defendant who had been served with process within its territorial bounds at the beginning of the suit. See Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1877); McDonald v. Mabee, 243 U.S. 90, 37 S.Ct. 343, 61 L.Ed. 608 (1917). As a result of the Pennoyer decision, it became clear that even if the defendant's presence within the state was transitory, perhaps only long enough to allow him to be served with process, the court could properly assert in personam jurisdiction over him. 4 Wright and Miller, Federal Practice and Procedure § 1064 at 209 (West 1969 and 1984 suppl.).
      However, the Supreme Court’s decision in Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977), adopting the minimum contacts test for in rem and quasi in rem jurisdiction, casts considerable doubt on the continued vitality of the transient jurisdiction doctrine. 4 Wright and Miller § 1064, suppl. at 37; Bernstine, Shaffer v. Heitner: A Death Warrant for the Transient Rule of In Personam Jurisdiction, 25 Vill.L.Rev. 38 (1979). In Shaffer, the Court examined the evolution of the doctrinal foundations of personal jurisdiction from Pennoyer to International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and observed that “the theory that territorial power is both essential to and sufficient for [personal] jurisdiction has been undermined ...” 97 S.Ct. at 2583. The Court further observed that after International Shoe, "the relationship among the defendants, the forum and the litigation rather than the mutually exclusive sovereignty of the States on which the rules of Pennoyer rest, became the central concern of the inquiry into personal jurisdiction.” 97 S.Ct. at 2580. The Shaffer Court concluded that "all assertions of state court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny." 97 S.Ct. at 2784 (emphasis added). To the extent that prior decisions such as Pennoyer were inconsistent with the International Shoe standards, they were overruled. 97 S.Ct. at 2784 n. 39.
      Consequently, whenever a state seeks to exercise personal jurisdiction over a nonresident defendant, the critical question is whether the defendant has "certain minimum contacts with [the state] such that maintenance of the suit does not offend traditional notions of fair play and substantial justice.” International Shoe, supra, 326 U.S. at 317, 66 S.Ct. at 158. Mere service of process on a nonresident defendant only transiently within the state no longer vests the state with personal jurisdiction over the defendant. 4 Wright and Miller, supra, § 1102 at 388-89; Reese and Rosenberg, Cases and Materials on Conflict of Laws 49 (7th ed. 1978); Cranton, Currie and Kay, Conflict of Laws 575 (2d ed. 1975); contra Donald Manter Co., Inc. v. Davis, 543 F.2d 419 (1st Cir.1976); Opert v. Schmid, 535 F.Supp. 591, 593 (S.D.N.Y.1982).
      Insofar as the transient jurisdiction doctrine runs afoul of the minimum contacts test for personal jurisdiction framed by International Shoe, the doctrine, and its obsolete theoretical underpinnings, must give way. Therefore, whether this Court may assert personal jurisdiction over Heimo on the basis of Codal article 6(1) must be judged by the standards of International Shoe and its progeny. Mere personal service upon Carl Mordelt is not, as Amusement Equipment argues, sufficient to justify the assertion of personal jurisdiction over defendants,
      b. Section 3201 — the Long Arm Statute

      Section 3201 of the Revised Statutes allows a Louisiana court to exercise personal jurisdiction over a nonresident defendant “who acts directly or by an agent, as to cause a cause of action arising from the nonresident’s ... transacting any business in this state, [or by] contracting to supply ... things in this state ...” The Louisiana Long-Arm Statute permits exercise of in personam jurisdiction to the full limits of due process under the fourteenth amendment in cases where the suit arises from the nonresident’s contact with the forum. Quasha v. Shale Development Corp., 667 F.2d 483, 486 (5th Cir. 1982). As mentioned above, the minimum contacts test of International Shoe governs the propriety of a state’s assertion of personal jurisdiction over a nonresident defendant under a long-arm statute. Thus, whether this Court may assert personal jurisdiction over Heimo on the basis of Revised Statutes section 3201 must also be judged by the standards of International Shoe and its progeny.

      . By attempting to link these two occurrences simply because of their connection to the New Orleans convention, Amusement Equipment commits the logical fallacy of the "undistributed middle." See I. Copi, Introduction to Logic 200 (4th ed. 1972). Consider the following syllogism which, like the argument of Amusement Equipment, contains the fallacy of the undistributed middle:
      All dogs are mammals.

        All cats are mammals.

      Therefore, all cats are dogs.
      It is easy to see why this syllogism is invalid. Both dogs and cats are members of the larger class of mammals. This does not mean, however, that the class of dogs is identical to, or even overlaps with, the class of cats.
      Yet the argument of Amusement Equipment takes precisely the same form. Amusement Equipment argues that:
      The contract related to the trade show.

        Mordelt’s visit related to the trade show.

      Therefore, the contract related to Mordelt’s visit.

        The syllogism is invalid. That both the contract and Mordelt’s visit pertained to the trade show does not mean that the two were connected to each other. The contract related to the trade show in respects that Mordelt’s visit did not. This is apparent from the fact that Mordelt visited New Orleans after the contract had been negotiated, executed, and allegedly breached.