author: McLAUGHLIN, District Judge.

text:
    INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, Plaintiff, v. PAN AMERICAN WORLD AIRWAYS, INC., Defendant.
    No. 85 CV 1239.
    United States District Court, E.D. New York.
    April 24, 1985.

      Herbert K. Lippman, New York City, Roland P. Wilder, Jr., and Wilma B. Lieb-man, Washington, D.C., for plaintiff.
    Ernest L. Garb and Richard Schoolman, Pan American World Airways, Inc., New York City, Morgan, Lewis & Bockius, Washington, D.C. by Bradford W. Coupe, Washington, D.C., for defendant.
   MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

This is an action under the Railway Labor Act (“RLA”), 45 U.S.C. § 151 et seq. Plaintiff union seeks a preliminary injunction ordering Pan American World Airways, Inc. (“Pan Am”) to observe certain recall, furlough and seniority rules and practices in the course of recalling employees who previously were on strike.

Findings of Fact

The International Brotherhood of Teamsters (“IBT”) represents some 6,200 clerical and related employees, supply clerks and nurses employed by Pan Am, of which some 5,800 were actively employed on February 27, 1985. Pan Am and the IBT have entered into successive collective bargaining agreements since 1969. The most recent collective bargaining agreement was, by its terms, in effect from January 1,1978 through December 31, 1981. That agreement, as amended, has been extended by the parties, most recently by a supplemental agreement expiring on December 31, 1984.

In the fall of 1984, the parties exchanged notices pursuant to Section 6 of the RLA, indicating their desire to renegotiate certain terms of the Agreement. The parties have not yet exhausted the mandatory procedures of the RLA regarding their respective proposals. Consequently, the terms of the basic agreement remain in effect pursuant to the section 6 “status quo” requirement.

Although Pan Am and the IBT have not exhausted the statutory procedures regarding their contract dispute, Pan Am did exhaust those procedures in its dispute with the Transport Worker’s Union (“TWU”). Accordingly, on February 28, 1985, the TWU-represented employees went on strike. The TWU picket lines were honored by the IBT-represented employees.

To avoid potential claims for pay by those IBT members who might not support the sympathy strike and who would be willing to work, Pan Am immediately invoked Article 14 of the agreement. Pursuant to the terms of Article 14, Pan Am informed all IBT members that because of the strike no work existed and they were not to report to work until further notice.

The Airline Pilots Association, International (“ALPA”) and the Flight Engineers’ International Association (“FEIA”), whose members initially honored the TWU picket lines, subsequently entered temporary “back to work” agreements with Pan Am. These agreements provided that the employees would return to work, on á limited operations schedule, with no reprisals or recriminations by Pan Am. The IBT, however, continued to honor the TWU strike.

Around March 10, 1985, Pan Am began to increase flight service. Accordingly, some IBT members were notified to return to work. Most of the notified employees, however, refused to return to work, and continued to honor the TWU picket lines.

Pan Am then sent mailgrams to IBT members whose jobs had not been re-activated, notifying them that work was available, and requesting that they express their desire to fill certain open positions for the duration of the strike.

On March 23, 1985, a tentative agreement was reached by Pan Am and the TWU, thus, settling their dispute. Accordingly, Pan Am began taking steps to expand its operations. Because Pan Am realized that its return to normal operations would take time, it negotiated a gradual return-to-work agreement with the TWU. Pan Am also attempted, without success, to negotiate a return-to-work agreement with the IBT that would provide for the orderly return of Teamster employees as work became available. The union’s position, essentially, was that Pan Am’s proposed agreement constituted an abrogation of seniority rights since it would permit Pan Am to leapfrog senior employees for extended periods while calling back junior employees.

On March 27, 1985, the TWU employees ratified their contract. Subsequently, the IBT members who had been on strike attempted to return to work en masse. At that point, Pan Am was operating at approximately 50% of its capacity. Pan Am gave assignments to those workers for whom work was available, but again invoked Article 14 as to the remainder of the IBT-represented employees for whom there was no work. Pan Am has to date recalled approximately 3,900 IBT members.

The union now sues to enjoin Pan Am to follow the seniority, furlough and recall procedures contained in the Agreement. The Agreement establishes seniority classifications on both the district and system-wide levels. The Agreement details the procedures the Company must follow if there is a reduction in force. Essentially, the Agreement allows senior employees who are to be laid-off to exercise displacement rights as to positions held by more junior employees. This so-called “bid and bump” procedure applies at both the district and system wide levels.

Finally, the Agreement establishes a procedure for the recall of employees to active service when forces are increased. This procedure also accounts for seniority preferences by allowing senior employees to “bid” for posted positions.

Discussion

The union contends that Pan Am’s recall of employees without regard to the above-mentioned procedures (a) constitutes a unilateral attempt to change the agreement, i.e., is a major dispute, giving rise to a § 6 status quo violation, and (b) is a discriminatory and unlawful attempt to coerce employees in the exercise of their rights and to , undermine the union’s representative status, in violation of § 152, Third and Fourth of the RLA. The Company contends, not surprisingly, that the dispute between the'parties is minor, and that its actions were in no way motivated by anti-union animus.

MAJOR/MINOR DISPUTE

The distinction between major and minor disputes under the RLA has been summarized by the Second Circuit as follows:

“Major disputes” are those involving the formation of collective bargaining agreements or changes in the terms of existing agreements. They relate to “the acquisition of rights for the future, not to assertion of rights claimed to have vested in the past.” “Minor disputes” involve the application of particular provisions of an agreement that are not the subject of a proposal for change. They relate to rights already accrued rather than to proposals for future rights. The procedures for resolving major disputes involve a long, drawn out process involving negotiation and mediation by the National Mediation Board during which parties to the dispute are obligated to maintain the status quo. “Minor disputes” in the airline industry, by contrast, are resolved by mandatory grievance arbitration procedures before the System Board of Adjustment.

Air Cargo, Inc. v. Local Union 851, International Brotherhood of Teamsters, 733 F.2d 241, 245 (2d Cir.1984) (citations omitted).

Thus, in essence, major disputes involve questions of contract formation, whereas minor disputes involve questions of contract interpretation.

The Second Circuit has indicated that to resolve the major/minor dispute controversy the court should look first “to the collective bargaining agreement to determine whether a plausible interpretation would justify the carrier’s action. A dispute is major if the carrier’s contractual justification for its actions is ‘obviously insubstantial.’ On the other hand, a dispute is minor if the contract is ‘reasonably susceptible’ to the carrier’s interpretation.” Air Line Pilots Association v. TWA, 713 F.2d 940, 948 (2d Cir.1983), rev’d in part on other grounds, — U.S. -, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985), quoting Local 553, Transport Workers Union v. Eastern Air Lines, Inc., 695 F.2d 668, 673 (2d Cir.1982).

Pan Am argues that Article 14 of its Agreement with the IBT provides a plausible contractual justification for its action. Article 14(a) states that “any employee called to work or permitted to come to work when there is temporarily no work because of ... work stoppages and strikes, shall receive a minimum of six (6) hours’ pay ... unless notified that there will be no work....” The union argues that Article 14(a) is irrelevant and that the seniority recall procedures of Articles 7 and 23 apply-

Article 23 provides, in pertinent part, that “when forces are increased or a vacancy occurs, the positions must be filled in accordance with Article 7.” Article 7 provides that a vacancy is to be offered, first, to the senior qualified employees in the immediate work unit; then, to senior qualified employees in related units; and, finally, to those senior qualified employees in the seniority district who have been laid-off.

The relationship among these three articles of the same contract does not emerge with dramatic clarity. Certainly, Article 14 authorized Pan Am to take the IBT-employees off the payroll temporarily, without the formal lay-off procedures which require prior notice and the invocation of seniority displacement rights. Significantly, however, Article 14 is silent as to the procedures to be employed in calling employees back to work.

The union urges that the seniority recall procedures of Articles 7 and 23 should be applied. Pan Am contends, however, that the seniority recall procedures, which eon-eededly apply in the normal layoff and recall settings, do not apply in the special circumstances of a start-up following a strike.

Essentially, Pan Am’s position is that Articles 7 and 23 are triggered only when the lay-offs were caused by economic factors as distinct from closing down the operation because of a strike. Pan Am emphasizes that IBT-employees were never formally removed from the positions they held before the strike, nor were these positions abolished. Thus, Pan Am contends that it is not obligated to recall the IBT-employees under the procedures applicable in normal lay-off situations. Rather, in Pan Am’s view, Article 14 permits an orderly return, as work becomes available, to pre-strike positions by workers who held those positions when the strike commenced,

Pan Am bolsters its contractual argument by noting that, since both Article 14 and Article 23 are silent as to the procedures to be used in recalling employees in a post-strike setting, the company is entitled to rely upon the management clause contained in Article 39. Article 39 states that:

The management of the Company and the direction of its employees, including ... the laying off and calling to work of employees in connection with any reduction or increase in working forces, are the exclusive functions of management to the extent that any of such matters are not otherwise covered or provided in this Agreement; and provided that, in the exercise of such functions, the management shall not violate any provisions of the Agreement.

Pan Am concedes that its creative interpretation of Article 14 applies only during the post-strike build-up period when work is temporarily unavailable. Thus, if a position becomes permanently unavailable, as would happen if a final decision were made to eliminate positions performed before the strike, Pan Am agrees that the seniority-displacement procedures and reduction in force obligations of the Agreement would clearly apply.

However improbable Pan Am’s, contractual justification may be, it is nonetheless “plausible.” In short, I face a classic case of contract interpretation involving the question whether the silence in Article 14 regarding recall of employees implies that the seniority-displacement procedures are to be implemented in effecting a recall, or whether silence supports Pan Am’s position that as work becomes available, employees are to be returned to the positions they held prior to the strike. As such, this question lies within the exclusive jurisdiction of the Adjustment Board. Local 553, Transport Workers Union v. Eastern Air Lines, Inc., 695 F.2d 668, 675 (2d Cir.1982).

To blunt Pan Am’s contractual argument the union asserts that the sheer number of employees affected in this case renders this a “major” dispute. The Second Circuit has noted that “in close cases, ... [the Court may look to] the pragmatic effects of the carrier’s action on working conditions to see whether the magnitude of the disruption caused by the carrier is “major” in a literal sense.” Airline Pilots, 713 F.2d at 948.

While the number of employees affected by Pan Am’s actions would make the ultimate resolution of grievances an arduous and, perhaps, prolonged task, it should be remembered that such grievances are.nonetheless capable of being resolved through the normal procedures. Moreover, it is significant that the injunctive relief sought would not, and could not, provide for the immediate recall of all IBT-employees. Given the economic plight of the airline industry, it is clear that Pan Am’s post-strike operations, and thus, the work availability for employees, must be restored gradually. An injunction from this Court would affect the identity, not the number, of employees returned to work.

Finally, the Court is mindful of Pan Am’s representation, discussed in the next section, that the company will shortly make a final decision regarding those positions to be eliminated, and thus, will be in a position to implement the seniority-displacement procedures prescribed by the Agreement. While bearing primarily on the issue of irreparable harm, this factor would likewise appear to be relevant in assessing the magnitude of the dispute.

Accordingly, I find that this is a minor dispute lying within the exclusive jurisdiction of the adjustment board.

Availability of Injunctive Relief

Having determined that the parties’ dispute is “minor,” this Court is empowered to issue injunctive relief only in those narrow instances where such relief is necessary to prevent “injury so irreparable that a decision of the Board in the unions’ favor would be but an empty victory.” Local 553, 695 F.2d at 675 (quoting Brotherhood of Locomotive Engineers v. Missouri-Kansas-Texas Railroad Co., 363 U.S. 528, 534, 80 S.Ct. 1326, 1330, 4 L.Ed.2d 1379 (1960)). In the instant case, an adjustment board decision for the union could be effectuated by the normal grievance and dispute resolution procedures, with the senior employees who have not been returned to work being compensated in money damages. While the availability of monetary relief at a later date must surely be of little comfort to those out of work employees faced with immediate financial hardship, the law is clear in this Circuit that lost wages do not constitute irreparable harm where the financial injury falls on an easily ascertainable group of employees capable of ultimately being redressed. Local 553, 695 F.2d at 678.

Moreover, any concern that the length of time necessary for the Adjustment Board to reach a decision may, indeed, lead to irreparable harm is alleviated by Pan Am’s representation that shortly after April 26, 1985, it will be in a position to determine, a final work roster, and to begin instituting normal seniority-displacement procedures.

Accordingly, because injunctive relief is not necessary to preserve the jurisdiction of the Adjustment Board, the union’s motion is denied.

The Coercion/Discrimination Claims

The union has also based its request for injunctive relief on the ground that Pan Am has violated Sections 152, Third and Fourth of the RLA by (a) retaining in active employment employees who had crossed the TWU picket lines, instead of recalling employees with greater seniority who honored the TWU strike, and (b) failing to institute or delaying the institution of established seniority, furlough and recall procedures for the purpose of punishing employees who engaged in activity protected by the Act or for the purpose of disparaging the employees’ representative. The union points to certain hostile comments allegedly made by Pan Am officials, as well as to alleged incidents of harassment of employees and their representatives.

It is clear, however, that the primary acts complained of, i.e., the retention or recall of certain employees to the exclusion of other, more senior, employees, lie at the very heart of the contractual interpretation dispute to be referred to the Adjustment Board. It is therefore, doubtful that this Court has the jurisdiction to issue the relief requested. See International Association of Machinists v. Northwest Airlines, Inc., 673 F.2d 700, 712 (3d Cir.1982); Local Union 808, International Brotherhood of Teamsters v. P & W Railroad Company, 576 F.Supp. 693, 703 (D.Conn.1983). In any event, while Pan Am’s attitude might be characterized as callous, and perhaps shortsighted, a benighted conception of labor relations does not rise to the level of discrimination or coercion that would justify judicial intervention. See Local Union 808, 576 F.Supp. at 703.

Accordingly, the union’s request for in-junctive relief is denied. SO ORDERED.

      . The fact that the parties have served § 6 notices is not dispositive. As the Second Circuit has pointed out: "If one party has served a section 6 notice indicating a desire to change a collective bargaining agreement, it is still for the district court to determine whether the dispute in question is actually over a proposed change in rates of pay, rules or working conditions, and is therefore major." Air Cargo, 733 F.2d at 247 n. 6. It is true that Pan Am’s section 6 notice contained a proposal to alter seniority classifications. Nonetheless, the instant dispute involves the validity of the company’s actions taken to restore operations following a sympathy strike that did not exist and could not be anticipated at the time the § 6 notices were served. Accordingly, the service of § 6 notices is of little relevance to this case.

      . Indeed, to this extent, Pan Am’s position is supported by a previous adjustment board decision construing language identical to Article 14. See Pan American World Airways, Inc. v. International Brotherhood of Teamsters, System Board of Adjustment Opinion dated June 29, 1961. That decision, however, did not address the question of recalling workers after a strike.

      . Section 152, Third, of the RLA provides that "no carrier shall, by interference, influence, or coercion seek in any manner to prevent the designation by its employees as their representatives who or which are not employees of the carrier.” Section 152, Fourth states, in pertinent part, that "it shall be unlawful for any carrier to interfere in any way in the organization of its employees ... or to influence or coerce employees in an effect to induce them to join or remain or not to join or remain members of any labor organization.”

      . Moreover, the union’s claim of obstruction of union representatives is grounded in Article 41 of the Agreement, which defines the rights of those representatives, and thus, again, presents a minor dispute appropriate for the Adjustment Board.

      . It is not without significance that the "anti-union animus” doctrine has limited application outside the context of representational disputes. See International Association of Machinists, 673 F.2d at 707. Moreover, as previously discussed, the union has not established the level of irreparable harm that would support a grant of in-junctive relief. Jack Kahn Music Co. v. Baldwin Piano & Organ Co., 604 F.2d 755, 758 (2d Cir.1979).


source: Caselaw Access Project

author: LIMBAUGH, District Judge.

license: Public Domain

text:
    Lawrence LEWIS, Plaintiff, v. CITY OF ST. LOUIS, et al., Defendants.
    No. 82-1121 C(5).
    United States District Court, E.D. Missouri, E.D.
    April 25, 1985.

      Murry A. Marks, St. Louis, Mo., for plaintiff.
    Joseph R. Niemann, City Counselor, John Morton, Asst., St. Louis, Mo., for defendants.
   MEMORANDUM AND ORDER

LIMBAUGH, District Judge.

On December 1, 1983, by agreement of the parties, all issues raised by the pleadings, except for damages, were ordered to be submitted by summary judgment proceedings. After analysis of these proceedings, the Court determined on March 30, 1984, that there were material issues of fact that needed to be submitted in an evidentiary hearing, and summary judgment was denied. A full hearing was had and the case is now before the Court on the merits both as to the facts and the law.

Pursuant to § 123, St. Louis City Ordinance No. 58032, the city condemned and demolished a building owned by plaintiff. In this suit, plaintiff challenges the constitutionality of the ordinance as being viola-tive of the Fifth and Fourteenth Amendments. Plaintiff also maintains the ordinance does not comply with the standards required by 42 U.S.C. § 1983.

The thrust of plaintiffs complaint is that St. Louis City Ordinance No. 58032, § 123, violates due process of law as it does not afford adequate notice and opportunity to be heard before condemnation of private property and subsequent demolition. Although there is testimony that the notice requirements may not have been implemented properly, the complaint does not contain any request that plaintiff should prevail because defendant failed to send adequate notice of the condemnation process to plaintiff. Rather, plaintiff maintains only that the ordinance did not provide for adequate notice and was thereby defective. Nevertheless, the Court will address the issue of the alleged defective ordinance, as well as whether plaintiff received due process whether or not the ordinance may be constitutionally unsound.

Section 123.2.1 of the ordinance provides that if a building has certain defects, in violation of the Building Code, then the Building Commissioner shall notify the building’s owner of the defects and shall order the owner to demolish or repair the building within seven days. Section 123.2.2 .provides that if the owner fails to comply with the Commissioner’s order, the Commissioner shall proceed to do the work specified in the order. Section 123.4 provides that the order shall be served in any one of several ways: by delivery to the owner, by posting, by mailing or by publication. If mailing is chosen, notice of the order shall be mailed to the owner’s “place of business or residence in the City or elsewhere,, said notice to be deemed served twenty-four (24) hours after the mailing of said notice, in case it is directed to the business or residence address of the owner in the City.” Section 123.8 provides that the owner may appeal the Building Commissioner’s, order within seven days after service to the Board of Building Appeals, in which case the Board will hear the matter. The appeal stays enforcement of the order by the Commissioner. § 126.6.

Plaintiff sets forth several arguments why § 123 does not provide for adequate notice and opportunity to be heard. They include the following: only one notice need be mailed; service is deemed complete after 24 hours even if the notice is returned; notice of impending demolition is not required; and only seven days is allowed for appeal, which does not give enough time if mail is delayed or notice is not received.

Under the Fourteenth Amendment, a person may not be deprived of life, liberty or property without due process of law. Ordinarily, due process requires notice and an opportunity to be heard prior to the deprivation of any of the three protected interests. Board of Regents v. Roth, 408 U.S. 564, 570 n. 7, 92 S.Ct. 2701, 2705 n. 7, 33 L.Ed.2d 548 (1972). Plaintiff alleges that defendant demolished his building depriving him of his property, a protected interest and that the ordinance is violative of the constitution as it does not provide that he receive adequate notice and an opportunity to be heard before the building is raised.

Both parties rely on the case of Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950). In Mullane, the Supreme Court held that notice by publication of an action to settle the accounts of a common trust fund was not sufficient to inform beneficiaries of the trust whose names and addresses were known. Subsequently, the Court has held that notice of condemnation proceedings published in a local newspaper was inadequate to inform a landowner of the proceedings when the name was known to the condemning officials. Walker v. City of Hutchinson, 352 U.S. 112, 77 S.Ct. 200, 1 L.Ed.2d 178 (1956).

The Supreme Court has also held that posting summons or notices is also an inadequate means of providing notice of a proceeding. Greene v. Lindsey, 456 U.S. 444, 102 S.Ct. 1874, 72 L.Ed.2d 249 (1982); Schroeder v. City of New York, 371 U.S. 208, 83 S.Ct. 279, 9 L.Ed.2d 255 (1962). A recent decision has applied the inadequacy of posting notice as applicable to a mortgagee at a tax sale. Mennonite Board of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983).

In proceedings involving life, liberty or property actual notice or something designed to ensure actual notice is required. Personal service constitutes actual notice and notice by mail is designed to ensure actual notice and thereby satisfies minimal requirements of due process. Mennonite, supra, 103 S.Ct. at 2712; Schroeder v. City of New York, supra, 371 U.S. at 214, 83 S.Ct. at 283.

Section 123.4 of St. Louis City Ordinance No. 58032 providing for notice to property owners in condemnation cases is apparently defective insofar as posting or publication of the notice is determined to be actual notice. This decision need not be made, however, as the Court finds that plaintiff had an opportunity to be heard before demolition of his property, and thereby was accorded due process. As he received due process he does not have standing to attack the constitutionality of the ordinance. Hagen v. Traill County, 708 F.2d 347 (8th Cir.1983).

The plaintiff, Lawrence Lewis, owned a vacant apartment building and lot at 5951-55 DeGiverville, St. Louis, and it is this building which was demolished by defendant in 1982. At all relevant times, he resided at 4209 Shreve, St. Louis. Neither address was listed for Lewis in the telephone directory for the relevant years; however, his DeGiverville address is listed as his residence on the warranty deed of October 12, 1978, when he acquired the property. His place of business was a service station he operated at 1511 North Grand, St. Louis.

In the Spring of 1981, the Division of Building and Inspection inspected the De-Giverville building and found it to be in a very poor and unsafe condition. The Building Commissioner accordingly mailed a “Notice of Condemnation” to plaintiff on June 4, 1981. This “Notice” was issued under § 123 of the ordinance. The “Notice” listed the defects; ordered Lewis to have the building repaired or removed; set forth the appeals process under § 123.8; and further stated that if Lewis did not appeal within seven days or obey the order, the Commissioner would have the unsafe “conditions abated by demolition work and/or whatever work deemed necessary to secure public health, safety and welfare. ..”. The “Notice” was mailed to the DeGiverville address and was returned because no one lived in the building. The “Notice” was not mailed to the Shreve address despite the fact that the address was contained in records of the Division of Building and Inspection. The DeGiverville address was used because that was shown as Lewis’ address on the City Real Estate Register. A copy of the “Notice” was also posted on the DeGiverville building.

The Building Division applied to the Division of Heritage and Urban Design in the Department of Public Safety for permission to demolish the DeGiverville building. On July 17, 1981, the Division of Heritage and Urban Design sent Lewis a letter addressed to the DeGiverville address. The form letter stated that a meeting of the Heritage and Urban Design Commission would be held July 23 and that Lewis’ project had been referred to the Commission. Nothing was said about condemnation or demolition. This letter also was returned by the post office. At the July 23 meeting, the Commission denied the Building Commissioner’s application. At least one member of the Commission voted against demolition because he was not satisfied that Lewis had been given adequate notice. This, and other actions of the Commission, were not taken under Ordinance No. 58032, § 123, but instead were done under Ordinance No. 57986, which required approval of demolition by the Commission. The plaintiff does not challenge the constitutionality of No. 57986, which governs proceedings of the Commission.'

The Skinker-DeBaliviere Community Council (hereinafter Community Council), a corporation attempting to redevelop the area in which the DeGiverville building was located, appealed the Commission’s decision because of complaints from nearby residents, about the deplorable condition of plaintiffs building and the deleterious effect it was having on their properties. The appeal was to the Commission, so it was in effect a request for reconsideration. The Commission took up the matter at its September 24, 1981 meeting.

In April and August, 1980, Richmond Coburn, Executive Director of the Community Council, wrote plaintiff at his Shreve address complaining about the threat his property is to the neighborhood. During the condemnation proceedings, Coburn called Lewis’ Shreve residence and talked with the person who answered about Lewis’ plans for the building. A week or more before the September 24, 1981 meeting, Coburn sent Lewis a registered letter addressed to the Shreve residence notifying him of the hearing before the Commission. The post office returned the letter because plaintiff refused acceptance. The letter stated that an application to demolish the DeGiverville building was set for a hearing on September 24, 1981. Coburn told the Commission of these facts at the September 24th meeting, in the absence of plain-: tiff who did not appear.

At the meeting, the Commission voted to approve demolition. On September 24, notice of the decision was sent to Lewis at the DeGiverville address. This letter also was returned as undeliverable. The notice stated that demolition had been approved and that any aggrieved person could appeal the decision to the Commission within thirty days. Demolition was to be delayed until after the thirty-day period in order to allow opportunity for appeal. Lewis did not appeal and the building was demolished in July, 1982.

In the Spring of 1981, when the plaintiff’s building was inspected, it was in a severe state of disrepair. The building was unoccupied except for an occasional overnight derelict. Most of the windows and doors were out except for some, which were boarded up. Previous fires had ravaged the interior and some portions were gutted. On one occasion the inspector did not venture past the ground floor because of his concern as to the safety of the upper floors which were only partially intact. Timbers were hanging loose and there was substantial burning and charring throughout the interior.

If there- is no constitutional defect in the application to the plaintiff of the ordinance complained of, plaintiff has no standing to rely on the suggested defect. Hagen v. Traill County, supra, 708 F.2d at 348; County Court of Ulster County v. Allen, 442 U.S. 140, 155, 99 S.Ct. 2213, 2223, 60 L.Ed.2d 777 (1979).

The Court finds no denial of due process to plaintiff. In the 1981 condemnation proceedings, plaintiff had four opportunities to be heard. The first was the chance to appeal the Commissioner’s decision in the June 4th Notice of Condemnation. This was mailed to plaintiff’s DeGiverville address which was listed on plaintiff’s deed as his residence address. That address was listed as plaintiff’s address in the St. Louis real estate register, although his apparent actual residence was at the Shreve address. Plaintiff must be held accountable for the listing as the real estate register is made up from the residence address listings on deeds of conveyance. As no residence address was listed for plaintiff in the telephone directory during the years in question, the commission had no obligation to investigate an address different from the one listed in the register. The June 4th Notice was also posted on the front of the premises and plaintiff himself testified he visited the building at least one time per month.

The second opportunity for notice was that of the Heritage Commission’s meeting of July 23, 1981. This, too, was sent to the DeGiverville address by mail.

The third notice was that sent by mail to plaintiff at his Shreve address. The notice stated that an application to demolish the DeGiverville building was set for a hearing on September 24, 1981.

The final notice was that of a right of appeal of the Commission’s order of condemnation, mailed to plaintiff on September 25th at the DeGiverville address.

Plaintiff did not receive any of the notices; however, this is not attributable to any denial of due process by defendant. The first, second and fourth notices were sent to plaintiff at his residence address listed in his deed of conveyance. The third notice was sent to plaintiff at his Shreve address but it was returned as plaintiff refused acceptance. The first notice was also posted at the building involved and plaintiff visited that structure at least monthly.

Although these facts are not a substitute for actual notice to plaintiff, they are sufficient to provide minimum requirements of due process.

Plaintiff, in asserting he has not received due process from defendant, is not without some obligation. In 1978, plaintiff bought the building for $20,000.00. In early 1981, the structure was severely damaged by-fire. As a result of the fire, plaintiff collected from his insurance carrier a sum for fire damage in excess of the purchase price. The remaining building became a nuisance and safety hazard about which concerned neighbors complained. The only attempt made to bring the structure to building code requirements was to board some of the destroyed windows and doors. In a period beginning June 4, 1981, with the condemnation notice, through October 24, 1981, the last time for appealing the demolition order, plaintiff made no effort to protect his own interests much less to carry out his building code obligations. Although he visited the building at least monthly, he did not see the posted notice of condemnation. Mail delivered to the residence address listed on his deed was not claimed by plaintiff. Notification of the condemnation hearing, sent to his Shreve address was returned unclaimed by plaintiff.

Obviously, when the first and second notices were mailed to plaintiff at his DeGiv-erville address and were returned, the defendants were apprised that actual notice was not being obtained. The third notice sent by the Community Council was mailed to plaintiff at the Shreve address. It, too, was returned as undeliverable. The failure to obtain notice at the Shreve address was reported to defendant, who then returned to the DeGiverville address for the final notice. Defendants can do little more than to use the only two residence addresses known and when mail deliveries are unsuccessful at both addresses, it must appear plaintiff is unavailable for actual notice. Considering the ravaged condition of plaintiff’s building and his failure to cause it to conform to building code requirements and the unavailability of plaintiff for mail notification at two residence addresses, it can be concluded that plaintiff has abandoned his property, as well. In such event, defendants’ attempts to notify plaintiff of the condemnation proceedings constitute an adequate furnishing of due process. Mullane v. Central Hanover Bank and Trust Co., 70 S.Ct., supra at 658.

As to plaintiff’s claim under 42 U.S.C. § 1983, it is well settled that the State of Missouri and its subdivisions and municipalities provide adequate mechanisms for compensating property owners whose property is either taken for public use or demolished because of failure to conform to building code requirements. The availability of these mechanisms precludes plaintiff from asserting a claim under 42 U.S.C. § 1983. Barron Collier v. City of Springdale, 733 F.2d 1311, 1317 (8th Cir.1984).

The foregoing constitutes findings of fact and conclusions of law as required by Rule 52 of the Federal Rules of Civil Procedure.

Judgment will be entered for defendants.


author: BECHTLE, District Judge.

text:
    Robert TADDONIO v. Margaret M. HECKLER, Secretary of Health and Human Services.
    Civ. A. No. 83-5600.
    United States District Court, E.D. Pennsylvania.
    April 25, 1985.

      Mark Kaufman, Delaware County Legal Assistance, Chester, Pa., for plaintiff.
    Edward S.G. Dennis, Jr., U.S. Atty., Edith Ho, Asst. U.S. Atty., Philadelphia, Pa., for defendant.
   MEMORANDUM AND ORDER

BECHTLE, District Judge.

Presently before the court are: (1) the Secretary’s motion to dismiss; (2) plaintiff’s motion for class certification; and (3) cross-motions for summary judgment. Having already granted plaintiff’s motion for reconsideration, the court will consider here the several issues raised in the motions and in the briefs for reconsideration which the court must resolve before reaching the merits. As the court has requested additional briefs with respect to key issues penultimate to the decision on the merits, the court will at this time resolve only the motion to dismiss and the motion for class certification and not the cross-motions for summary judgment. For the reasons herein, both the motion to dismiss and the motion for class certification will be denied.

The court adopts its recitation of the facts from its prior Opinion of February 28, 1985. 603 F.Supp. 1008 (D.C.Pa.). DISCUSSION

The Secretary moves to dismiss plaintiff’s complaint on the grounds that: (1) this court has no jurisdiction, Fed.R.Civ.P. 12(b)(1); and (2) the ALJ’s decision reinstating plaintiff’s benefits rendered this case moot.

1. The first issue is whether the court has subject matter jurisdiction. This is the second time the court has considered this issue. See Taddonio v. Heckler, No. 83-5600 (E.D.Pa. April 9, 1984) (Bechtle, J.). The court held then that it had jurisdiction. Nevertheless, the Secretary raised this issue again on reconsideration. The court has carefully considered the Secretary’s renewed arguments and determines that its April 9, 1984 Opinion is correct. The non-waivable jurisdictional element of the final decision element of 42 U.S.C. § 405(g) is satisfied because “section 405(g) permits class actions on behalf of Supplemental Security Income recipients whose benefits have been reduced or terminated.” Kuehner v. Schweiker, 717 F.2d 813, 817 (3d Cir.1983), citing Liberty Alliance of the Blind v. Califano, 568 F.2d 333 (3d Cir.1977). The exhaustion element of the final decision requirement is also satisfied here since “no § 405(g) exhaustion requirement [exists] for constitutional issues.” Kuehner v. Schweiker, 717 F.2d at 817. Plaintiff has dropped his statutory claim and sets forth now only his constitutional one.

2. The court turns to the mootness issue. The Secretary argues that this case is moot because of two events: (1) plaintiff’s benefits never lapsed because there was an agreement between the parties which provided that plaintiff’s benefits would continue through the ALJ’s decision; and (2) because the ALJ’s decision reinstated plaintiff’s benefits, plaintiff received all the relief to which he is entitled under the Social Security Act and no longer has any personal stake or interest in this action or its outcome. In response to the Secretary’s argument, plaintiff avers that this action is not moot because it falls within the well accepted “capable of repetition, yet evading review” exception to the mootness doctrine. See Weinstein v. Bradford, 423 U.S. 147, 96 S.Ct. 347, 46 L.Ed.2d 350 (1975).

The court turns first to the “capable of repetition” element. Under the Secretary’s review procedures, plaintiff’s benefits, like those of all Supplemental Security Income recipients, are subject to periodic review. 20 C.F.R. § 416.204. It is not improbable that plaintiff’s SSI status could be altered or terminated at any time because plaintiff is found to have demonstrated that he was capable of performing SGA or to be ineligible for other non-medical reasons. Accordingly, the court concludes that the Secretary’s challenged action is capable of repetition.

Second, the court considers the evading review element. Plaintiff asserts that this element is met because over half of the termination cases are resolved at the ALJ level. The court determines that plaintiffs averment is inconclusive and imprecise. Nevertheless, the court finds that in situations, such as the situation of plaintiff, where the recipient challenges (in the appropriate district court) the constitutionality of the Secretary’s decision at the reconsideration stage, and simultaneously appeals the reconsideration decision for a hearing on the remaining questions before an AU, the AU will almost invariably render its decision before the district court rules on the difficult constitutional issues, such as the ones before the court in this case. In that event, the outcome of the AU’s decision would effect the justifiability of the constitutional challenge in the district court. If the AU affirms the Secretary’s reduction or termination of the recipient’s SSI benefits on the non-constitutional grounds, this court cannot perceive that the recipient would have an actual injury because the AU has merely determined that plaintiff’s benefits had been rightfully terminated below. Under these circumstances, plaintiff would have no standing to continue his lawsuit in the district court. See Schlesinger v. Reservists to Stop the War, 418 U.S. 208, 94 S.Ct. 2925, 41 L.Ed.2d 706 (1974). On the other hand, if the AU’s decision reinstated plaintiff's benefits and the court concluded that the AU’s decision to reinstate plaintiff’s benefits made his constitutional challenge moot, the constitutional issue would continually evade review. As a result, the court holds that plaintiff’s challenge is within the “capable of repetition, yet evading review” exception, and the decision of the ALp favorable to plaintiff, did not render plaintiff’s claim moot.

3. Next, the court turns to plaintiff’s motion for class certification. The class which plaintiff seeks to represent consists of

the SSI beneficiaries whose benefits have been reduced or terminated based on non-medical eligibility factors and who, within 10 days of the reconsideration decision requested a hearing before an Administrative Law Judge.

This is the second time the court considers plaintiff’s motion. On April 9, 1984, the court denied plaintiff’s motion, but granted plaintiff leave to refile for class certification after discovery on the issue of numer-osity. Shortly thereafter, plaintiff filed interrogatories on this issue, and the Secretary responded to them with what the court believes were her best efforts.

Fed.R.Civ.P. 23 sets forth the requirements to certify a class action. The court will certify a class if plaintiff meets his burden of showing each of the four Rule 23(a) prerequisites to a class action and one of the Rule 23(b) prerequisites. Wetzel v. Liberty Mutual Ins. Co., 508 F.2d 239 (3d Cir.), cert. denied, 421 U.S. 1011, 95 S.Ct. 2415, 44 L.Ed.2d 679 (1975); Paskel v. Heckler, 563 F.Supp. 1095 (E.D.Pa.1983) (Bechtle, J.).

Rule 23(a)(1) requires that the number of members of the proposed class be so numerous that joinder of all members is impracticable. With respect to this requirement, the parties have stipulated to the following facts:

(1) In 1982, 173,900 individuals were terminated for non-medical reasons excluding SGA. ■

(2) In 1983, 148,300 individuals were terminated for non-medical reasons excluding SGA.

(3) In 1982, 400 individuals were terminated dtxe to SGA.

(4) In 1983, 200 individuals were terminated due to SGA.

The numerosity element requires the court to consider carefully the number of members of the proposed class in light of the circumstances. There is no clear-cut minimum member figure. See Demarco v. Edens, 390 F.2d 836 (2d Cir.1968). The benefits of SSI recipients here are based in part on need. It is likely that many of these recipients would not have the financial and legal wherewithal to challenge the constitutionality of the prehearing termination of benefits. Since hundreds of SSI recipients are effected by the Secretary’s practice, certification of a proper class of SSI recipients represented by a proper plaintiff, and not joinder of those recipients, is the proper mechanism by which this litigation should be pursued. Matthies v. Seymour Manufacturing Co., 270 F.2d 365 (2d Cir.1959), cert. denied, 361 U.S. 962, 80 S.Ct. 591, 4 L.Ed.2d 544 (1960).

The Secretary argues that plaintiff’s proposed class is overbroad because it includes potential claimants who have not presented a claim to the Secretary or who have not sought timely judicial review. The court holds that the exhaustion requirement is satisfied here by the limitation of plaintiff’s proposed class that each member must have requested a hearing within 10 days of the reconsideration decision. See Liberty Alliance of the Blind, supra.

Rule 23(a)(2) provides that there must be questions of law or fact common to the class. Plaintiff avers that the common issue of law is whether the Secretary’s regulations and practice of terminating or reducing benefits to SSI recipients for non-medical reasons prior to a hearing before an Administrative Law Judge violates the class members’ rights under the due process clause of the Fifth Amendment. The Secretary counters that because the exhaustion requirement has not been satisfied by all members of the proposed class there is no common issue of law or fact. The court, however, following Liberty Alliance of the Blind, supra, held that the exhaustion requirement was satisfied.

The court, however, finds that the plaintiff’s proffered common issue of law is not common for other reasons and that plaintiff’s claims differ from those of other class members. See Fed.R.Civ.P. 23(a)(3). Due process analysis requires the court to weigh a variety of considerations. One such consideration, which can in fact be controlling, is the hardship on the recipient erroneously terminated prior to a hearing. See Mathews v. Eldridge, 424 U.S. 319, 342, 96 S.Ct. 893, 906, 47 L.Ed.2d 18 (1976); Goldberg v. Kelly, 397 U.S. 254, at 265-266, 90 S.Ct. 1011, 1018-1019, 25 L.Ed.2d 287 (1970). Here, the hardship resulting from the prehearing termination may vary considerably among the members of the plaintiff’s proposed class. Some members of the proposed class may still meet the eligibility requirements of other federal, state, and local governmental programs such as a state’s general assistance program, Medicaid, food stamps, and veterans benefits. In addition, some members may meet the eligibility requirements for continued SSI benefits of special SSI status under 42 U.S.C. § 1382(h). Other members may meet none of the eligibility requirements of these other programs. Still other members may be eligible for some but not all of the other programs. Since plaintiff may be eligible for some of these programs but not all of them, plaintiff’s situation may be less fortunate than that of some members of the proposed class and more fortunate than that of others. If the proposed class were certified, the plaintiff represented the members of the class, and the court, reaching the merits, determined whether the Secretary’s procedures violated the due process clause, at best, some members of the class may get more process than that which is due them, and, at worst, some may get less than that which is due them. Simply put, plaintiff’s situation differs from that of other members of the proposed class, and plaintiff is not a proper representative.

CONCLUSION

Accordingly, the Secretary’s motion to dismiss will be denied, and plaintiff’s motion to certify a class will be denied.

An appropriate Order will be entered.

      . "SGA” is the acronym used in the Social Security field to denote "Substantial Gainful Activity.”

      . The reconsideration decision is deemed to be the Secretary’s "final decision" on constitutional issues. See Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976).


author: LEE R. WEST, District Judge.

text:
    MESA PARTNERS II, Plaintiff, v. UNOCAL CORPORATION, a corporation, Hamp Baker, Norma Eagleton and James Townsend, the duly elected members of the Oklahoma Corporation Commission; and Michael C. Turpen, Attorney General of the State of Oklahoma, Defendants.
    No. CIV-85-398-W.
    United States District Court, W.D. Oklahoma.
    April 26, 1985.
    Burck Bailey, Warren F. Bickford, IV, Fellers, Snider, Blankenship, Bailey & Tip-pens, Oklahoma City, Okl., for plaintiff.
    Harry A. Woods, Jr., John J. Griffin Jr., James U. White, Candace M. Williams, Mark S. Grossman, Crowe & Dunlevy, C. Raymond Patton, Jr., Adm’r of the Okl. Dept, of Sec., George R. Barr, Jr., John D. Rothman, Asst. Attys. Gen., Michael C. Turpén, Atty. Gen. of Okl., G. Gail Stricklin & Gretchen P. Hoover, Okl. Corp. Com’n., Oklahoma City, Okl., for defendants.
   ORDER

LEE R. WEST, District Judge.

Plaintiff, Mesa Partners II, filed a complaint on February 14, 1985, in this Court seeking a declaratory judgment pursuant to 28 U.S.C. § 2201, declaring the provisions of Oklahoma’s “Energy Resources Conservation Act” (the Oklahoma Act) 1985 Okla.Laws, Ch. 2, to be codified as 52 O.S. § 601 et seq. (1985), and any rules and regulations promulgated thereunder, invalid and unconstitutional, insofar as they might be applied to plaintiff in connection with past or future acquisitions of common stock of defendant Unocal. Plaintiff joined as defendants Hamp Baker, Norma Eagle-ton, and James Townsend, duly elected members of the Oklahoma Corporation Commission, and Michael C. Turpén, Attorney General of the State of Oklahoma. The latter officials are the state authorities with power to enforce the provisions of the Oklahoma Act. Plaintiff sought a temporary restraining order, pending a hearing on application for preliminary injunction; upon hearing, a preliminary injunction; and upon trial of the case, a permanent injunction restraining enforcement of the Oklahoma Act insofar as it relates to any stock acquisition by plaintiff in defendant Unocal.

On February 19, 1985, all defendants entered into stipulations with plaintiff that they would not seek to enforce the provisions of the Oklahoma Act in any way until giving three business days notice to plaintiff; in exchange, plaintiff agreed to hold in abeyance its application for a temporary restraining order. On March 29, the Corporation Commission gave notice to plaintiff that it would proceed under the provisions of the Oklahoma Act. All parties appeared before this Court on April 8, 1985, at which time a temporary restraining order was refused; the matter was set for evidentiary hearing on the motion for preliminary injunction on April 11, 1985. At that hearing, this Court granted plaintiffs motion for preliminary injunction, with the understanding that a full articulation of the basis for the Court’s ruling would be forthcoming.

At the hearing on plaintiff’s application for preliminary injunction, plaintiff presented Mr. Michael Brown, manager of the West Coast Mergers & Acquisitions Department of Drexel Burnham Lambert Incorporated, the dealer-manager of plaintiff’s tender offer for shares of Unocal Corporation. His testimony concerned the harm and injury which would be sustained by a tender offeror if the offer were to be subjected to delay or uncertainty in its timing beyond the deadlines imposed under the Williams Act amendments to the Securities Exchange Act of 1934. He also discussed the advantages to be gained by the target company in a tender offer situation from any available delaying tactics.

Defendants presented the testimony of Dr. Alexander Holmes, Professor of Economics at the University of Oklahoma, who testified as to the state’s need to regulate its energy and hydrocarbon assets and the waste that could be caused by improvident extraction of these assets.

A number of exhibits pertaining to the tender offer, and to proceedings initiated by the Corporation Commission were introduced into evidence. Legal arguments were presented on behalf of plaintiff, Unocal Corporation and the Attorney General.

Plaintiff seeks preliminary injunctive relief, first on the grounds that the Energy Resources Conservation Act is unconstitutional under the Supremacy Clause of the United States Constitution, because it is preempted by the provisions of the Williams Act and regulations thereunder, and second, on the grounds that the operation of the Energy Resources Conservation Act would constitute an impermissible burden upon interstate commerce under the provisions of the United States Constitution. Defendants argue that the state law under attack is presumptively constitutional, that its effects on interstate commerce are only incidental, that it fairly regulates to effectuate a legitimate local public interest, and that said law therefore does not unconstitutionally burden interstate commerce.. Defendants also argue that plaintiff is threatened with no irreparable injury if the injunction is not granted, and that plaintiff has failed to establish a reasonable probability for plaintiff’s ultimate success on the merits in this litigation. Plaintiff replies that the possibility of delay imposed on the tender offer is itself a sufficient showing that plaintiff is subjected to irreparable injury, citing Edgar v. MITE Corp., 457 U.S. 624, 102 S.Ct. 2629, 73 L.Ed.2d 269 (1982), and Mesa Petroleum Co. v. Cities Service Co., 715 F.2d 1425 (10th Cir.1983).

The delicate balance between state regulation of interstate commerce, either by direct or indirect methods, has been much before the courts in the context of corporate take-overs. Edgar v. MITE Corp., 457 U.S. 624, 102 S.Ct. 2629, 73 L.Ed.2d 269 (1982); Mesa Petroleum Co. v. Cities Service Co., 715 F.2d 1425 (10th Cir.1983). The United States Supreme Court in MITE closely examined the potential conflict between state regulation and the Commerce Clause. In examining the state-federal relationship with regard to commerce, the Supreme Court stated:

Not every exercise of state power with some impact on interstate commerce is invalid. A state statute must be upheld if it ‘regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are incidental ... unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.’ Pike v. Bruce Church, Inc., 397 U.S. 137, 142 [90 S.Ct. 844, 847, 25 L.Ed.2d 174] (1970), citing Huron Cement Co. v. Detroit, 362 U.S. 440, 443 [80 S.Ct. 813, 815, 4 L.Ed.2d 852] (1960).... The Illinois Act violates these principles for two reasons.... Second, the burden the Act imposes on interstate commerce is excessive in light of the local interests the Act purports to further.

Edgar v. MITE, 457 U.S. at 640, 102 S.Ct. at 2640.

THE OKLAHOMA ACT

In examining the interference with interstate commerce which is indirectly caused by' the Oklahoma Act, the salient features and history of the Oklahoma Act should be considered. The Act was introduced in the Oklahoma Senate on February 6, 1985, passed by the House of Representatives on February 13, 1985, and signed by the Governor on February 13, 1985, to be immediately effective due to the presence of the Emergency Clause. The Act is one in a series of legislative enactments which have as, their primary or incidental purpose the regulation of national, interstate securities transactions, even though such transactions are being conducted in compliance with all applicable federal securities laws and regulations. Earlier efforts include Oklahoma Take-Over Bid Act, 71 O.S. §§ 431-450 (1981), held unconstitutional by the United States Court of Appeals in Mesa Petroleum Co. v. Cities Services, Co., 715 F.2d 1425 (10th Cir.1983); the Oklahoma Multinational Corporation Take-Over Bid Act, 71 O.S.Supp.1980 §§ 414-421, held unconstitutional by this Court in Seagram & Sons, Inc. v. Marley, et al., [1981 Transfer Binder] Fed.Sec.L.Rptr. ¶ 98,246 (W.D. Okla.1981).

The present Act differs from those held unconstitutional in other proceedings. Pri- or acts sought to grant authority to the state Securities Commission to prohibit or delay interstate tender offers. The focus of these acts was the protection of shareholders through adequate disclosure. See Mesa, and Seagram, supra. The Oklahoma Act herein involved has as its purpose the protection of energy resource assets from transfers that may retard the timely and efficient development of such assets, the prevention of waste of energy resources and the protection of sources of tax revenue derived from energy resource assets, section 602. To accomplish these purposes, the Act provides that the Corporation Commission of the State of Oklahoma shall either approve, disapprove, or conditionally approve all transfers relating to energy resource assets which are not specifically exempted by the Act, section 606(H). The exemptions include, inter alia, transactions involving less than $75 million in energy assets, or acquisition of ownership interests in persons other than natural persons in which a beneficial interest in excess of 10% would be owned by the transferee subsequent-to the transfer, assuming that the transferor owned energy resource assets of $75 million, section 605.

Upon the making of an offer, solicitation of an offer, or agreement to effect a transfer, an application is to be filed with the Commission for approval, and the transfer- or is to be notified, section 606(B). The application is to contain detailed information as to the transferor and transferee, including future plans for development of energy resource assets and plans for future disposition, section 606(C). A transfer is to be approved by the Commission only if specific findings are made as to the impact of the transfer on development of resources, future resource management, conservation, and tax revenue, section 606(D). If the Commission determines that there are “no substantial issues requiring an application and hearing,” the requirements may be waived insofar as application and hearing are concerned and the matter may be decided on the basis of affidavit, section 606(E). In all other cases, a hearing will be held within ten calendar days of the filing date; a final adjudication is to be made within twenty days from the filing date, with the opportunity for appeal to the Oklahoma Supreme Court under the general provision for appeal of order of the Corporation Commission, section 606(E)(3). The Commission is given power to issue cease and desist orders pending adjudication, section 606(G); to adjudicate that the transfer does not meet statutory standards; to grant conditional approval, or to approve transfers, section 606(H). The Act provides for criminal sanctions, including fines and imprisonment, section 610. It also provides that the Commission has the authority to appoint a receiver to affect rescission of a transfer made in violation of the Act, section 609(2). A three year statute of limitations is provided for actions challenging the validity or effectiveness of any transfers, section 613.

THE COMMERCE CLAUSE CHALLENGE

The test for a valid state regulation with an incidental affect on interstate commerce enunciated by the United States Supreme Court in Pike v. Bruce Church is that the state statute “regulates evenhandedly to effectuate a legitimate public interest, and its effects on interstate commerce are incidental.” It cannot be denied that the State of Oklahoma has a valid and legitimate public interest in its natural energy resources. However, this Court must balance the “evenhanded state regulation” called for by Pike v. Bruce Church with the effects on interstate commerce. In looking at evenhanded regulation, this Court cannot ignore the fact that there are eight classes of exemptions granted from the operation of the Oklahoma Act, section 605. .(See footnote 1). These include all transfers in the ordinary course of business, including assignment of lease or leases to explore or produce energy resource assets by or to a person engaged in the business of buying and selling such leases. Also exempted are all transactions relating to granting or assignment of mortgages, security interests, or other contractual liens relating to energy resource assets. The last exemption includes “any other exemptions as may be granted pursuant to the regulations and orders of the Commission reasonably prescribed in the furtherance of this act.” These exemptions contain no dollar amount limitation.

Since all “ordinary course of business” transfers and all secured interest transfers are exempted, and all transfers involving less than $75 million in energy resource assets, or transfers resulting in less than 10% ownership in an entity holding at least $75 million in resource assets are likewise exempted, what is it that is being evenhandedly regulated by the state? Only the direct transfer of $75 million in energy resource assets to a non-industry transferee, or the change of ownership in an entity owning or controlling $75 million in energy resource assets in which the transferee emerges with a beneficial interest of 10% or more of such entity. This narrow range of transactions subject to scrutiny does not seem to be evenhanded conservation regulation, as the defendants would contend. Any true conservation legislation so riddled with exemptions, exceptions, and limitations does not realistically seem to be structured with conservation as its main goal. It is significant that all time periods are carefully tailored to coincide with the time, limitations established by the Williams Act. Section 606(F) sets a time limit of twenty calendar days after filing of the application for making of final adjudications. Thus, it is clear that one of the main effects of the Oklahoma Act is to subject to scrutiny those interstate tender offers for corporate stock of entities holding natural energy resource assets in the state of Oklahoma.

And what is the effect on the interstate stock transaction • which falls within the purview of the Act? The Act subjects the parties to the requirement of filing an application (section 606(B) and (C)), or the filing of affidavits in lieu thereof (section 606(E)); a filing fee of $5,000, together with any additional costs actually incurred (section 607(A) and (B)); the possibility of a hearing (section 606(E)(2)); the possibility of criminal fines and imprisonment for failure to comply (section 610); the uncertain effect of a negative adjudication (section 606(H)); the possibility of an appeal to the Oklahoma Supreme Court (section 606(E)3); the possibility of the appointment of a receiver to affect a rescission of a transfer made in violation of the Act (section 609(2)); all actions challenging the validity of a transfer under the Act can be commenced for a period of three years after the effective date of the transfer (section 613).

In considering all aspects of this legislation, this Court finds that the burden on interstate commerce outweighs any evenhanded regulation of energy resource assets consistent with a local public interest. The laws of the state of Oklahoma provide a number of provisions relating to conservation. The Corporation Commission may establish drilling and spacing units for the production of oil and gas, 52 O.S. § 87.1 (1984); and may establish production allowables to prevent waste, 52 O.S. § 87.1 (1984); § 274 (1981). Fieldwide unitization of common sources of supply may be ordered. 52 O.S. §§ 287.1 through 287.15 (1981). Such regulations can and do effectively prevent the too-rapid wasteful production that the Act under consideration purports to have as a primary concern. None of the many statutory authorizations for conservation are riddled with the numerous exceptions found in the provisions of the Oklahoma Act herein considered, nor do they impose such a heavy burden on interstate commerce.

This Court is not insensitive to the importance to the state of Oklahoma of proper regulations concerning natural energy resource assets. Nor is the Court unmindful of the need to keep a proper balance in the realm of federal-state interaction. The Court is also aware that the issue of preemption and the effect of the Supremacy Clause of the United States Constitution were not deemed controlling by a majority of the United States Supreme Court in MITE. The Court also acknowledges that the Oklahoma Act herein involved does not purport to deal directly with the realm of disclosure or approval of securities offerings as did the offending legislation in MITE, Mesa, and Seagram. However, the Court cannot ignore the fact that the timing of the decisions under the Oklahoma Act has been closely tailored so as not to conflict with the timing of decisions under the Williams Act. This leads the Court to believe that the real target of the Act is not only the protection of energy resource assets, but also the potential slowdown and chilling effect on take-over bids in a way which unconstitutionally impinges on the power of the Congress acting under the Commerce Clause.

In dealing with the assets of corporations subject to take-over bids, the Court can easily imagine a scenario in which any number of states could assert substantial interest in regulating the assets subject to ownership by the transferor corporation. Oklahoma is not the only state with energy resource assets. Texas, California, Louisiana, Wyoming, Utah, New Mexico, Arkansas, and other come rapidly to mind. If a corporation, operating in a proper manner under all laws of the United States Congress which have Commerce Clause authority to regulate interstate transactions, were to be made subject to laws of uncertain effect in each state having a local interest, interstate tender offers for shares of corporate stock could grind to a whining halt. As the United States Supreme Court said in MITE,

“The effects of allowing [blocking of] a nationwide tender offer are substantial. Shareholders are deprived of the opportunity to sell their shares at a premium. The reallocation of economic resources to their highest valued use, a process which can improve efficiency and competition, is hindered. The incentive the tender offer mechanism provides incumbent management to perform well so that stock prices remain high is reduced.”

457 U.S. at 643, 102 S.Ct. at 2642.

All of the advantages of a proper interstate tender offer alluded to by the Supreme Court could be nullified by state laws which impinge indirectly in a burdensome manner on the Commerce Clause. The Oklahoma Act is such a state law.

When balancing the burden on interstate commerce with the conservation implications of the Oklahoma Act, this Court finds that the Act must fail, since the burdens on the buying and selling of securities could delay and frustrate the nationwide tender offers, in contravention to the principles enunciated by MITE and Mesa.

PROPRIETY OF PRELIMINARY INJUNCTION

Defendants have raised several challenges with respect to the propriety of granting a preliminary injunction prohibiting the enforcement of the Oklahoma Act against Mesa Partners II. They argue that Mesa failed to make a showing of the irreparable harm which is the basis for granting a preliminary injunction. Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 95 S.Ct. 2069, 45 L.Ed.2d 12 (1975). At the time of the hearing, plaintiff had acquired an interest in excess of 10% of Unocal stock by purchases in the open market. Plaintiff had also announced a tender offer for 64,-000,000 shares of Unocal stock. Plaintiff had been served with an application for an order from the Oklahoma Corporation Commission to appear and show cause for its non-compliance with the provisions of the Oklahoma Act. As the Court of Appeals for the Tenth Circuit pointed out in Mesa, fatal delays might have resulted from the Commission’s actions if the transferees had been forced to comply with the Act. The Court of Appeals further stated:

“Since the Supreme Court implicitly has recognized that potential prosecution for failure to comply with a state take-over statute is the sort of threatened harm that warrants injunctive relief,, and since Mesa certainly had a substantial likelihood of success on the merits, we cannot say that the district court abused its discretion in granting the preliminary injunction in favor of Mesa. Lundgrin v. Claytor, 619 F.2d 61, 63 (10th Cir. (1980)), Continental Oil Co. v. Frontier Refining Co., 338 F.2d 780, 781 (10th Cir.1964) (per curiam).”

The threatened prosecution under this Act is no less real than that in the take-over statute under consideration in Mesa. Thus, plaintiff has made the requisite showing of irreparable harm which justified the granting of a preliminary injunction.

DEFENDANTS’ MOTION TO MODIFY

Subsequent to the hearing and granting of preliminary injunction in this case, the defendants filed a Motion to Modify, or in the Alternative, to Partially Stay Effect of Preliminary Injunction Pending Appeal. In that motion, defendants requested that the effect of the preliminary injunction be limited to the enforcement of section 6(A), 6(G), and the first section of section 6(H), and all of sections 8, 9, 10, and 11 of the Oklahoma Act. Plaintiff has responded in opposition to such motion.

In ruling on defendants’ motion, the Court has carefully considered the opinion of the Court of Appeals in Cardiff Acquisitions, Inc., et al. v. Hatch, 751 F.2d 906 (8th Cir.1984). In that case, state legislation which required disclosure under the security laws for protection of state investors was found not to unduly burden interstate commerce within the MITE doctrine. The legislation in that case had been carefully drafted to limit its effect on interstate commerce. The Act, and its application, was limited to the filing of factual disclosure statements to aid shareholders in making up their minds-as to the tender offer under scrutiny. The Court of Appeals held that any acts of the Commissioner which called for evaluative statements to be filed, as distinguished - from factual disclosure, were unauthorized under the Minnesota act.

If defendants’ motion were granted, the following aspects of the Oklahoma Act would be left in place: the few transactions not exempted from operation of the act would be required to proceed with the application (or alternate affidavit) procedure outlined by section 606(B) through (F); could be required to amend the provisions relating to the transfer under section 606(H); would be liable for costs and filing fees under section 607 and 606(1); and would agree to submit to the jurisdiction of the Oklahoma Corporation Commission and the courts of the state under section 612. The legislature has provided that the provisions of the Act are severable, and that if any part be held void, the holding shall not affect or impair the remaining provisions of the Act. (Section 15, 1985 Okla.Laws, Ch. 2.) The presence of a severability clause gives rise to a presumption that the legislature would have adopted the Act with the unconstitutional provisions omitted. Engelbrecht v. Day, 201 Okl. 585, 208 P.2d 538 (1949).

The problem facing this Court in applying the severability clause to the Oklahoma Act is that the concepts of approval and disapproval are linguistically woven into the various sections of the Act. Section 606(B), which defendants request be left in effect, calls for the filing of “an application for approval ”; section 606(C) defines the contents of the “application for approval”, section 606(E)(2) requires the holding of a hearing and (3) allows an appeal by “any person aggrieved” to the Supreme Court of Oklahoma. Section 606(F) calls for “final adjudications ”, and section 606(H) allows the Commission to require amendments to the transfer in certain respects, “including personnel qualifications and policies and practices affecting the exploration, development and production of energy resource assets.” If all of the above portions of the Act remain intact, there is sufficient language to infer the power in the Commission to adjudicate some issue as to the propriety of the transfer, and to require amendments to the transfer materials. This is not the incidental burden on interstate commerce which the Court of Appeals found present in the disclosure requirements of Cardiff Section 606 of the Act creates a sufficient uncertainty as to the requirements placed on an interstate tender offer to offend the ruling in Mesa and MITE. Defendants’ motions are therefore DENIED.

      . The following transfers are exempted from the provisions of this act:
      1. Transfers in the ordinary course of business. For the purposes of this act, transfers in the ordinary course of business shall include but not be limited to:
      a. the granting of a lease to explore and produce an energy resource asset,
      b. the assignment of a lease or leases to explore and produce an energy resource asset by or to a person engaged in the business of buying and selling such leases,
      c. the sale by a natural person of fee mineral rights,
      d. the transfer by conveyance or decree pursuant to a private trust, gift, will, or intestate succession,
      e. any transfer pursuant to a compulsory pooling order of the Commission,
      f. any transfer of hydrocarbons pursuant to a contract for the purchase, sale, or delivery of such hydrocarbons at or beyond the wellhead or other point of production,
      g. the transfer, sale condemnation or conveyance of surface use rights for the purposes of ingress, egress, easement and right-of-ways, and,
      h. sales in the ordinary course of business of pipeline equipment, oil and gas equipment and mineral equipment as defined in Section 371 of Title 52 of the Oklahoma Statutes;
      2.The granting or assignment of a mortgage, security interest or other contractual lien in an energy resource asset as security for an indebtedness or the foreclosure, enforcement or realization thereof;
      3. The granting or assignment of a royalty interest, overriding royalty interest, production payment, or other nonworking interest form of right to receive hydrocarbon production, or proceeds therefrom;
      4. A transfer, as defined in subparagraph b of paragraph 4 of Section 3 of this act, where, after giving effect to the proposed transfer, the transferee would beneficially own less than ten percent (10%) of the ownership interest in the transferor;
      5. A transfer, as defined in subparagraph a of paragraph 4 of Section 3 of this act, where the value of the energy resource assets at date of transfer is less than Seventy-five Million Dollars ($75,000,000.00);
      6. A transfer, as defined in subparagraph b of paragraph 4 of Section 3 of this act, where the value at date of transfer of the energy resource assets owned by the transferor is less than Seventy-five Million Dollars ($75,000,-000.00);
      7. A transfer of a "domestic public utility” or an ownership interest in a "domestic public utility”, as defined in Section 191.1 of Title 17 of the Oklahoma Statutes; and
      8. Any other exemptions as “may be granted pursuant to the rules, regulations and orders of the Commission reasonably prescribed in the furtherance of this act.” 1985 Okla.Laws, Ch. 2, section 5, to be codified as 52 O.S. § 605 (1985).

      . With regard to the dollar cost to be imposed on the parties under the provisions of the Oklahoma Act, section 606(1) contains the following provision:
      "I. For the purposes of complying with and performing its responsibilities within the time limits prescribed by this act, the Commission may contract for such professional and technical services as are necessary to complete the hearing and determination process in accord-anee with the provisions of the act. In contracting for such necessary services the Commission shall be exempt from the competitive bidding requirements of Section 85.7 of Title 74 of the Oklahoma Statutes.”
      This openended grant of contracting power to the Commission could result in substantial costs being imposed upon the parties to the interstate transaction.


author: BALDOCK, District Judge.

text:
    Stephen WOJCIECHOWSKI, Plaintiff, v. Richard HARRIMAN, et al., Defendants.
    No. Civ. 84-948 BB.
    United States District Court, D. New Mexico.
    April 26, 1985.

      Cathrine Gordon, Duhigg & Cronin, David Duhigg, William L. Lutz, Jan Elizabeth Mitchell, Asst. U.S. Atty., Albuquerque, N.M., for Applicant in Intervention Intervenor.
    Tryon, Pompei & Baker, P.A., Jeffrey L. Baker, Albuquerque, N.M., for Simon # 3; Montoya #4; T or C Police Dept. # 7; City of T or C # 9; Cox # 10; Gurule # 11; Tremko # 13; Jukich # 16; Sierra County Sheriffs Dept. #17; County of Sierra # 18; and Sawyer # 19; E.A. Scott # 12.
   MEMORANDUM OPINION

BALDOCK, District Judge.

THIS MATTER comes on for consideration of pending motions to dismiss plaintiffs law enforcement negligence claims brought pursuant to the New Mexico Tort Claims Act, N.M.Stat.Ann. §§ 41-4-1 to 41-4-29 (1982 Repl.Pamp. and 1984 Supp.). The court, having considered any accompanying memoranda submitted by the parties, the relevant law, and otherwise being advised fully in the premises, finds that the motions are not well taken and should be denied.

This is a civil rights action brought pursuant to 42 U.S.C. § 1983 against the City of Truth or Consequences, its police department, Sierra County, its sheriffs department and various law enforcement officers employed by these entities. In addition, the complaint contains claims against these defendants brought pursuant to the New Mexico Tort Claims Act. The narrow issue before the court is whether the exclusive grant of original jurisdiction to the state district courts over tort claims brought against counties, municipalities and their officers prevents a federal district court from hearing such claims pursuant to its pendent jurisdiction. I hold that section 41-4-18, N.M.Stat.Ann. (1982 Repl. Pamp.), which purports to confine exclusive original jurisdiction for any claim under the Tort Claims Act to the district courts of New Mexico, is unconstitutional to the extent it acts to limit pendent jurisdiction of a federal district court over tort claims against counties, municipalities, and their officers.

Section 41-4-18 provides in pertinent part:

A. Exclusive original jurisdiction for any claim under the Tort Claims Act shall be in the district courts of New Mexico. •

The statute may validly limit jurisdiction on tort claims against the State of New Mexico solely because of the protections of the eleventh amendment. The statute is unconstitutional, however, when it is applied to counties and municipalities because such political subdivisions are not afforded the protections of the eleventh amendment.

The eleventh amendment of the United States Constitution bars a suit in federal court against an unconsenting state. Pennhurst State School and Hospital v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 908, 79 L.Ed.2d 67 (1984). This bar extends to suits against the state itself as well as against one of the state’s agencies or departments, absent a state waiver of sovereign immunity. Florida Department of State v. Treasurer Salvors, Inc., 458 U.S. 670, 684, 102 S.Ct. 3304, 3314, 73 L.Ed.2d 1057 (1982). The eleventh amendment bars a suit for damages in federal court when the action is in essence one for recovery of money from the state and the state is the real, substantial party in interest, notwithstanding that individual officials are nominal defendants. Ford Motor Co. v. Department of Treasury, 323 U.S. 459, 464, 65 S.Ct. 347, 350, 89 L.Ed. 389 (1945). A narrow exception to the bar of eleventh amendment immunity occurs when a state official is sued for non-monetary injunctive relief from constitutional violations in his individual capacity. Pennhurst, 104 S.Ct. 900, 908.

A state may waive its eleventh amendment immunity and consent to be sued in federal court. Clark v. Barnard, 108 U.S. 436, 447, 2 S.Ct. 878, 882, 27 L.Ed. 780 (1883). A waiver of a state’s eleventh amendment immunity will be found only where stated by the most express language or by the overwhelming implications of such language where there is no room for any other reasonable construction. Edelman v. Jordan, 415 U.S. 651, 693, 94 S.Ct. 1347, 1369, 39 L.Ed.2d 662. Providing for a limited waiver of its sovereign immunity, the State of New Mexico has expressly reserved its immunity from suit in federal court under the eleventh amendment. N.M.Stat.Ann. § 41-4-4F (1982 Repl. Pamp.). Thus, any tort claims suit against the State would lie in the district courts of New Mexico in accordance with section 41-4-18. Essentially, the State has consented to be sued in its own courts without waiving its immunity in the federal courts. Whether counties and municipalities may also be sued in state court while claiming immunity in federal court pursuant to section 41-4-18 is another matter, however.

When an action is brought against a political subdivision of the state, the application of the eleventh amendment turns on whether it can be characterized as an arm or alter ego of the state. Mount Healthy City School District Board of Education v. Doyle, 429 U.S. 274, 280, 97 S.Ct. 568, 572, 50 L.Ed.2d 471 (1977). Unified School District No. 480 v. Epperson, 583 F.2d 1118 (10th Cir.1978). “But the Court has consistently refused to construe the amendment to afford protection to political subdivisions such as counties and municipalities, even though such entities exercise a ‘slice of state power.’ ” Lake County Estates v. Tahoe Planning Agency, 440 U.S. 391, 401, 99 S.Ct. 1171, 1177, 59 L.Ed.2d 401 (1979). The -eleventh amendment, therefore, does not extend to counties and municipalities, or their agents, and will not bar a suit against them in federal court.

Because the eleventh amendment does not bar state law tort claims against counties and municipalities in federal court, a federal court may have diversity or pendent jurisdiction to hear such claims. The legislative grant of authority over diversity cases, 28 U.S.C. § 1332, is derived from the Constitution and tracks the wording in article III. Although the states have the power to prevent a federal court from granting relief in a diversity case by denying the substantive right of action asserted, they have no power directly to enlarge or contract federal jurisdiction. Markham v. City of Newport News, 292 F.2d 711, 713 (4th Cir.1961); Railway Co. v. Whittons, 13 Wall. 270, 286, 80 U.S. 270, 286, 20 L.Ed. 571 (1871). A federal district court’s diversity jurisdiction is a creature of federal law under article III and 28 U.S.C. § 1332, and state law may not control or limit federal jurisdiction. Thus, if the state waives sovereign immunity for counties and municipalities in state courts, those counties and municipalities may be sued in federal court if the court has diversity jurisdiction.

Just as a state may not limit actions against counties and municipalities to its own courts when a federal court has diversity jurisdiction, it is also prohibited from restricting a federal court’s pendent jurisdiction. The Court, in United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966), held that when a federal court obtains jurisdiction over a federal claim, it may adjudicate other related claims over which the court otherwise would not have jurisdiction. Although a judge-made doctrine, pendent jurisdiction is inferred from the general language of article III. Id. at 725, 86 S.Ct. at 1138. See also Osborne v. Bank of the United States, 9 Wheat. 738, 22 U.S. 738, 6 L.Ed. 204 (1824); Hagans v. Lavine, 415 U.S. 528, 545, 94 S.Ct. 1372, 1383, 39 L.Ed.2d 577 (1974).

Once the state legislature waives sovereign immunity for counties and municipalities and provides for the enforcement of rights and remedies in the state courts, it may not prevent the adjudication of these rights and remedies in a federal district court if that court has jurisdiction under the Constitution and laws of the United States. It is axiomatic that, pursuant to the supremacy clause, article III preempts any contrary state law. Section 41-4-18, therefore, is unconstitutional to the extent that it attempts to confine suits against New Mexico counties, municipalities, or county and municipal officers to New Mexico state district courts and will not have the effect of limiting the jurisdiction of the courts of the United States.

The elements of pendent jurisdiction are satisfied in this case. Both the state and federal claims “derive from a common nucleus of operative fact.” United Mine Workers v. Gibbs, 383 U.S. at 725, 86 S.Ct. at 1138. Although the plaintiff could “first file suit in state court under the Tort Claims Act, obtain a favorable judgment, and then proceed to federal court under section 1983,” Wells v. County of Valencia, 98 N.M. 3, 7, 644 P.2d 517 (1982), in the interest of judicial economy, it is reasonable to consider all of plaintiff’s claims in a single proceeding. The exercise of pendent jurisdiction is appropriate in this case because it will be convenient and fair to the litigants and will not raise difficult questions of state law or unduly complicate the trial to the jury. Pendent jurisdiction over the plaintiff’s state law claims, therefore, will be exercised by this court.

An order will be entered accordingly.