author: DEVINE, Chief Judge.

text:
    Linda GILMAN, on her own behalf and on behalf of her two minor children, and Cathleen English, on her own behalf and on behalf of her two minor children, and all other similarly situated persons, and Victoria Perez, on her own behalf and on behalf of her two minor children and on behalf of all other persons similarly situated v. Edgar HELMS, Jr., in his official capacity as Commissioner of New Hampshire Department of Health and Welfare, and Richard A. Chevrefils, in his official capacity as Director of the New Hampshire Division of Welfare.
    Civ. No. 83-535-D.
    United States District Court, D. New Hampshire.
    April 18, 1985.

      Ronald B. Eskin, N.H. Legal Assistance, Manchester, N.H., for plaintiffs.
    Marc R. Scheer, Asst. Atty. Gen., Concord, N.H., for defendants.
   OPINION

DEVINE, Chief Judge.

This is a class action wherein plaintiffs, recipients of public assistance benefits, challenge the administration of the Aid to Families with Dependent Children (“AFDC”), food stamps, and Medicaid programs by defendants, officials of the New Hampshire Department of Health and Welfare. Plaintiffs, representing persons whose food stamps or Medicaid benefits are terminated as a result of an alleged failure to comply with AFDC monthly reporting requirements, challenge New Hampshire’s public assistance program as violative of controlling federal statutes as well as the Due Process Clause of the Fourteenth Amendment to the United States Constitution. The parties have filed cross motions for partial summary judgment on the statutory issues alone: first, does the Federal Food Stamp Act, 7 U.S.C. §§ 2011, et seq. (“Food Stamp Act”), prohibit New Hampshire’s policy of terminating food stamp benefits prior to a requested fair hearing where a recipient has allegedly failed to comply with AFDC/food stamp monthly reporting requirements?; and, second, does the federal Medicaid statute, 42 U.S.C. § 1396a, prohibit New Hampshire’s policy of refusing to automatically redetermine the Medicaid eligibility of a recipient under the medically needy Medicaid program where that person is to be terminated from Medicaid benefits under the categorical assistance (AFDC) program for failure to comply with AFDC monthly reporting requirements?

Before proceeding on the merits, the Court considers an important jurisdictional issue. Plaintiffs have founded jurisdiction upon both 28 U.S.C. § 1331, the federal question jurisdiction statute, and § 1343(3), the Civil Rights Act (42 U.S.C. § 1983) jurisdiction statute. However, section 1343(3) grants federal court jurisdiction over an action to redress the deprivation, under color of state law, of rights secured by the United States Constitution or by a federal statute providing for equal rights. The jurisdictional grant of section 1343(3) does not encompass a claim that a state welfare action is invalid because it conflicts with federal statutory entitlement programs, such as the Social Security Act. Chapman v. Houston Welfare Rights Organization, 441 U.S. 600, 602-03, 99 S.Ct. 1905, 1908, 60 L.Ed.2d 508 (1979). As the parties address only the federal statute consistency issue, the Court need only proceed to a determination that jurisdiction is properly founded upon 28 U.S.C. § 1331, and does not address the issue of whether jurisdiction may also be premised properly upon 42 U.S.C. § 1343(3).

For the reasons stated below, the Court finds that plaintiffs’ motion for summary judgment must be granted because the State of New Hampshire’s policies concerning payment of interim food stamp benefits pending a fair hearing and concerning redetermination of Medicaid eligibility prior to Medicaid benefits termination are inconsistent with federal statutory requirements. In ruling on the motion, the Court finds that there are no genuine issues of material fact requiring trial and that plaintiffs are entitled to judgment as a matter of law. Rule 56, Fed.R.Civ.P.

The State of New Hampshire participates in the food stamp, AFDC, and Medicaid programs, which are federal-state cooperative public assistance programs. The food stamp program is designed to supplement low-income household food purchasing power in order to assure adequate levels of • nutrition. 7 U.S.C. § 2011; Dupler v. City of Portland, 421 F.Supp. 1314, 1318 (D.Me.1976). The AFDC program provides financial assistance to needy dependent children and the relatives who live with them. 42 U.S.C. § 601; Heckler v. Turner, — U.S. -, -, 105 S.Ct. 1138, 1141-42, 84 L.Ed.2d 138 (U.S.1985); Shea v. Vialpando, 416 U.S. 251, 254, 94 S.Ct. 1746, 1750, 40 L.Ed.2d 120 (1974). The Medicaid program is designed to provide certain medical treatment costs to needy persons, including recipients of AFDC benefits. 42 U.S.C. § 1396; Schweiker v. Hogan, 457 U.S. 569, 571, 102 S.Ct. 2597, 2600, 73 L.Ed.2d 227 (1982). As a participating state, New Hampshire must comply with all requirements imposed by the Food Stamp and Social Security Acts and implementing regulations. 7 U.S.C. § 2014(b); 42 U.S.C. §§ 602 and 1396a. Schweiker v. Gray Panthers, 453 U.S. 34, 37, 101 S.Ct. 2633, 2636, 69 L.Ed.2d 460 (1981); Shea v. Vialpando, supra, 416 U.S. at 253, 94 S.Ct. at 1750; Massachusetts Association of Older Americans v. Sharp, 700 F.2d 749, 750 (1st Cir.1983); Dupler v. City of Portland, supra, 421 F.Supp. at 1318.

Federal law requires that state food stamp and AFDC program plans include monthly reporting requirements for most households receiving these benefits. See 7 U.S.C. § 2015(c)(1) and 42 U.S.C. § 602(a)(14). In 1982 Congress amended the Food Stamp Act, 7 U.S.C. § 2015(c), to permit the Secretary of Agriculture to waive the § 2015(c) food stamp monthly reporting requirements for state plans to permit states to create a combined reporting program for households receiving both food stamps and AFDC benefits. Omnibus Budget Reconciliation Act of 1982, section 156, P.L. No. 97-253, 96 Stat. 763 (“OBRA1982”). 7 U.S.C. § 2015(c) provides:

(5) The Secretary is authorized, upon the request of a State agency, to waive any provision of this subsection — to the extent necessary to permit the State agency to establish periodic reporting requirements for the purposes of this chapter which are similar to the periodic reporting requirements established under the State plan approved under part A of title IV of the Social Security Act (42 U.S.C. § 601, et seq.) in that State.

The legislative history accompanying OBRA-1982 indicates only that this waiver provision was designed to streamline redundant state assistance program reporting requirements.

Reporting requirements
Section 111 would amend section 6(c) of the Act to allow the Secretary to waive, upon request from the State agency, provisions of the Act concerning periodic reporting by households. Waivers would be granted as necessary to permit the State agency to establish periodic reporting requirements for purposes of the Act that are similar to the periodic reporting requirements established under the State plan under title IV-A of the Social Security Act for aid to families with dependent children. However, the Secretary would not be permitted to waive the provisions which exempt certain households from the requirement to submit periodic reports. These exempt households include migrant households and households with no earned income in which all members are elderly or disabled.

SernRep. No. 504, 97th Cong., 2d Sess., U.S.Code Cong. & Admin.News 1982, pp. 1641, 1728. New Hampshire applied for and received a waiver from the Secretary of Agriculture permitting New Hampshire “to follow the AFDC procedure for response to the monthly report and termination of the case for non-reporting”. In implementing this waiver, New Hampshire enacted the following five-step procedure for reporting by food stamp and AFDC benefit recipients and for hearings on disputes arising thereunder:

1. On or about the 30th of each month, the Division of Welfare mails a monthly report form to the recipient, which report advises “If your report is received incomplete or late you may not receive next monthly benefits____ If you do not report, you will not receive assistance next month and your case will be closed.” Public Assistance Manual (“PAM”) § 3414.6; Exhibit B, Defendants’ September 4, 1984, Memorandum in Support of Defendants’ Cross-Motion for Partial Summary Judgment (hereinafter “Defendants’ Sept. 4 Memo”).

2. If the recipient returns a completed form within ten days (approximately 10th of month), the recipient continues to receive uninterrupted benefits providing the form information indicates recipient remains eligible. PAM §§ 3414.7(a) and 3414.8(b).

3. If the reporting form is timely returned but is incomplete, the State returns the form to the recipient with a “Notice of Case Closing” advising him that unless a complete form is returned by the due date or the extended due date (approximately 20th of month), recipient’s AFDC financial and medical assistance and food stamp benefits will be terminated as of the next month. The Notice further advises the recipient that he may request a fair hearing to contest the State’s determination, but that such hearing request must be made within ten days, accompanied by a completed monthly report form in order that recipient’s benefits may be continued pending hearing. (If recipient contests the State’s determination concerning lack of good cause for late reporting, recipient need only submit a hearing request.) PAM § 3414.-8(c) and (f); § 4600.24-.25; Exhibit C, Defendants’ Sept. 4 Memo.

4. If a completed form is not received by the State by the extended due date (20th of month), the recipient’s benefits are terminated immediately (absent waiver for good cause). A notice of decision and appeal rights are sent to the recipient. The recipient may request a fair hearing after the extended due date (20th of month), but will not receive benefits pending the fair hearing. In special cases the State in its discretion may continue benefits for a recipient claiming good cause for late submission (sickness, emergency, mail delay) after the end of the month. PAM §§ 3414.8(f); 3414.13; 3414.14; 4600.24-.25.

5. A recipient whose benefits have been terminated for failure to submit a complete monthly report is automatically sent a report form for the next reporting period, and if recipient timely files a complete report for that month his benefits are automatically redetermined without additional application. PAM § 3414.8(f).

It is the hearing and termination elements of this reporting procedure which give rise to the instant litigation. The first class of plaintiffs challenge the New Hampshire policy of refusing to pay interim food stamp benefits to those recipients who allegedly have failed to submit a complete monthly report, pending a requested fair hearing to contest the termination. The second class of plaintiffs challenge the New Hampshire policy of terminating Medicaid benefits to recipients who have failed to submit a monthly report without redetermining that recipient’s eligibility for Medicaid benefits under the medically needy criteria of the Medicaid program.

I. Food Stamp Benefits Pending Hearing.

Plaintiffs contend that 7 U.S.C. § 2020(e)(10) of the Food Stamp Act requires the New Hampshire food stamp program to continue payment of food stamp benefits to any recipient pending a fair hearing request, whether or not that recipient has submitted a complete report by the extended filing date (20th day of the month). Defendants respond that 7 U.S.C. § 2015(c)(5) permits the Secretary to waive any portion of the Food Stamp Act reporting requirements, including the provisions of 7 U.S.C. § 2020(e)(10), and that the Secretary did waive the interim benefits requirement of § 2020(e)(10) when granting food stamp reporting waivers to New Hampshire. The Court finds that the Secretarial waiver granted to New Hampshire does not contain any waiver of the § 2020(e)(10) interim food stamp benefits provision, and that the Secretary is not authorized to grant such a waiver in any event.

Initially, the Court notes that termination of food stamp benefits by the New Hampshire Division of Welfare solely because of monthly reporting violations is an uncommon event. The Division reports that 93% of monthly report cases are filed in complete form by the extended due date and another 4% of the cases are late filed and accepted for good cause by the end of the month. The remaining 3% of monthly report cases which are closed for nonreporting include recipients who never file at all, as well as those who file after being closed but who are not eligible for the payment month in any event. Thus, the instant problem affects less than 3% of the reporting population. Defendants’ Sept. 4 Memo of Law, pp. 15-16. Common sense dictates that many, if not most, of cases involving mail delays, misdeliveries, or administrative error could be cured by the State’s second notice and a resubmission of the report by the recipient before the extended deadline. However, in the rare case where there has been no resubmission (for whatever reason), but recipient claims to have filed a complete report, recipient is entitled to a fair hearing on the submission issue as well as interim benefits.

A. Secretarial Waiver Document

Defendants contend that the Secretary of Agriculture expressly waived the interim benefits requirement of 7 U.S.C. § 2020(e)(10) when the Secretary authorized New Hampshire to combine AFDC and food stamp monthly reporting procedures. However, the Court finds defendants’ argument to be meritless, as the waiver document merely authorized New Hampshire “to follow the AFDC procedure for response to the monthly report and termination of the case for non-reporting”. Exhibit I, Defendants’ Responses to Plaintiffs’ Second Set of Interrogatories. The “waiver document” explained further:

It is our understanding that the procedure will work as follows:
The actual monthly report would contain the intent to close language. If the household does not respond, a second notice (reminder notice) would be issued approximately the tenth day of the process month and tell the household that its case will be closed in ten days (the end of the extended filing period). If the monthly report is not received then the household will receive a termination notice.
This waiver request is not prohibited by the regulations and the procedure described above is approved.

The waiver document contains no reference to disputed cases wherein recipients claimed to have complied with reporting requirements and certainly contains no reference to an override of fair hearing and interim benefits rights under § 2020(e)(10).

B. Statutory Construction

The Food Stamp Act and implementing regulations require that a recipient receive benefits pending a requested hearing if the recipient is contesting the merits of the State’s decision to terminate food stamp benefits for failure to submit a monthly report. Section 2020(e) provides in relevant part:

The State plan of operation ... shall provide, among such other things as may be required by regulation—
(10) for the granting of a fair hearing and a prompt determination thereafter to any household aggrieved by the action of the State agency under any provision of its plan of operation as it affects the participation of such household in the food stamp program...: Provided, That any household which timely request such a fair hearing after receiving individual notice of agency action reducing or terminating its benefits within the household’s certification period shall continue to participate and receive benefits on the basis authorized immediately prior to the notice of adverse action until such time as the fair hearing is completed and an adverse decision rendered or until such time as the household’s certification period terminates, whichever occurs earlier, except that in any case in which the State agency receives from the household a written statement containing information that clearly requires a reduction or termination of the household’s benefits, the State agency may act immediately to reduce or terminate the household’s benefits and may provide notice of its action to the household as late as the date on which the action becomes effective.

The plain language of section 2020(e)(10) requires that a recipient timely requesting a fair hearing shall receive benefits pending a hearing on the factual issue of whether the recipient complied with monthly reporting requirements. However, it is clear that no hearing is required where the recipient admits he did not submit a monthly report, thereby admitting ineligibility under § 2015(c)(4), but simply contests the proposed termination solely on the basis of questions of law or policy. See 7 U.S.C. § 2015(c)(4); 7 C.F.R. § 273.21(p)(2)(i); Ohio State Consumer Education Association v. Schweiker, 541 F.Supp. 915, 920-21 (S.D.Ohio 1982). Cf. Goldberg v. Kelly, 397 U.S. 254, 264, 90 S.Ct. 1011, 1018, 25 L.Ed.2d 287 (1970) (ruling pretermination hearing required where an eligible recipient may be deprived of benefits pending resolution of controversy over eligibility); Foggs v. Block, 722 F.2d 933, 937-39 (1st Cir.1983), cert. granted sub nom. Atkins v. Parker, — U.S. -, 104 S.Ct. 3532, 82 L.Ed.2d 838 (1984) (applying due process analysis to notice of recalculation of benefits following statutorily mandated reduction in food stamp benefits given substantial risk of calculation error).

The final regulations promulgated by the Secretary of Agriculture to implement the Monthly Reporting and Retrospective Budgeting (“MRRB”) amendments to the Food Stamp Act clearly provide that state food stamp programs must afford fair hearings and interim food stamp benefits in those circumstances where the recipient claims to have submitted a complete and timely report. 7 C.F.R. §§ 273.12(f)(2) and (5); 273.15(a) and 273.21(p) (1984); 48 Fed.R. 54951 (Dec. 8, 1983). However, the Secretary’s regulations also clearly provide that no interim benefits should be paid to a recipient who admits that he failed to submit a complete and timely report. 7 C.F.R. § 273.21(p)(2)(i) (1984). Title 7 C.F.R. § 273.12(f)(2) provides in relevant part:

(ii) State agencies may, with prior FNS approval, combine the use of a joint PA [Public Assistance]/food stamp change reporting form with a PA reporting system that demands the regular submission of reports, such as a monthly reporting system. The State agency shall insure that the following requirements are met: (A) Households shall not have their eligibility or allotment changed merely because they fail to submit one or more of the system’s regular reports. If a household’s PA benefits are terminated due to the household’s failure to submit a report, the State agency shall follow the procedures in paragraph (f)(5) of this section.

Title 7 C.F.R. § 273.12(f)(5) provides:

(5) Whenever a change results in the termination of a household’s PA benefits within its food stamp certification period, and the State agency does not have sufficient information to determine how the change affects the household’s food stamp eligibility and benefit level ..., the State agency shall not terminate the household’s food stamp benefits but shall instead take the following action:
(i) Where a PA notice of adverse action has been sent, the State agency shall wait until the household’s notice of adverse action period expires or until the household requests a fair hearing, whichever occurs first. If the household requests a fair hearing and the PA benefits are continued pending the appeal, the household’s food stamp benefits shall be continued at the same basis.
(ii) If a PA notice of adverse action is not required, or the household decides not to request a fair hearing and continuation of its PA benefits, the State agency shall send the household a notice of expiration which informs the household that its certification period will expire at the end of the month following the month the notice of expiration is sent and that it must reapply if it wishes to continue to participate____

Title 7 C.F.R. § 273.21(p) provides:

(p) Fair hearings — (1) Entitlement. All households participating in a MRRB system shall be entitled to fair hearings in accordance with § 273.15.
(2) Continuation of benefits, (i) Any household which requests a fair hearing and does not waive continuation of benefits, and is otherwise eligible for continuation of benefits, shall have its benefits continued until the end of the certification period or the resolution of the fair hearing, whichever is first. However, if the State agency did not receive a monthly report from the household by the extended filing date and the household admits that it did not submit such a monthly report, the household shall not have its benefits continued.
(ii) The State agency shall provide continued benefits no later than five working days from the day it receives the household’s request.
(iii) A household whose benefits have been continued shall file monthly reports until the end of the certification period. If the fair hearing is with regard to termination for nonreceipt of the monthly report by the State agency, then a new, complete monthly report for the month in question shall be submitted by the household before benefits are continued.

Thus, these provisions in effect offer a limited grace period beyond the 20th day of the month — section 273.21(p)(2)(i — ii) requires payment of continued benefits pending a fair hearing on recipient’s claims concerning submission of a monthly report, such benefits payable within five working days of the hearing request, however, section 273.21(p)(2)(iii) requires that a recipient must submit a complete report for the disputed month before benefits may be continued in successive reporting months. The Court finds that the Secretary’s interpretation of the MRRB amendments to the Food Stamp Act, as set forth in the implementing regulations, 7 C.F.R. §§ 273.12(f)(2) and (5); 273.15(a) and 273.21(p) (1984), is consistent with the plain meaning of the Act ■and is therefore entitled to considerable deference by this Court. Bureau of Alcohol, Tobacco, and Firearms v. Federal Labor Relations Authority, 464 U.S. 89, 104 S.Ct. 439, 444, 78 L.Ed.2d 195 (1983); United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981).

The Court notes that the Secretary had initially taken a contrary view of the interim benefits issue. Although the interim regulations, 49 Fed.Reg. 22684 (May 25, 1982), implementing the MRRB provisions of the Food Stamp Act did not address the question of fair hearings and continued benefits in monthly reporting violation cases, the Secretary subsequently published Policy Memorandum No. 82-18, June 18, 1982 (Plaintiffs’ Memo, Appendix C). The memorandum instructed state agencies that a household which failed to submit a monthly report is not entitled to monthly benefits and that where a household claimed to have submitted the monthly report, the state agency should consider issuing continued benefits on a case-by-case basis. See 48 Fed.Reg. 54968. However, upon publication of final regulations to implement MRRB, the Secretary expressly rescinded the Policy Memorandum and added 7 C.F.R. § 273.21(p)(2)(i) requiring payment of interim benefits pending hearing where the household claims to have submitted a complete report. The Secretary explained the change in administrative policy:

One commenter pointed out that under this policy [Policy Memorandum 82-18], a State agency might deny continued benefits to a household which in fact submitted a monthly report, but the report was lost in the mail or in the local office. While such losses would be unusual, they represent a real possibility. The Department agrees with the commenter who suggested that it would be inequitable to deny continued benefits in such cases. In addition, such a denial would conflict with Section 6(c)(2)(D) of the Food Stamp Act, which provides that the household shall ‘ * * * be afforded prompt notice of failure to file any report timely or completely * * * and to exercise its rights under section ll(e)(10) of this Act.’ Section ll(e)(10) establishes the household’s right to both fair hearing and the continuation of benefits.
For these reasons, Policy Memorandum No. 82-18 has been rescinded. Households which make a timely request for a fair hearing and claim to have submitted the monthly report by the final due date shall receive continued benefits until the fair hearing is completed and an adverse decision rendered or until the household’s certification period expires, whichever comes first. Such continued benefits will only be provided if the household submits a new complete monthly report for the month in question and for the subsequent months of the certification period. During such continuation of benefits, the household is required to continue submitting monthly reports. However, if the household admits that it failed to submit the monthly reporting by the final due date or the household has been determined ineligible on other information, and the household does not dispute that determination, continued benefits shall not be provided. The Department emphasizes that if benefits have been continued and the termination for failure to report is upheld by the fair hearing decision, a claim against the household must be established for the overissued benefits. (See 7 CFR 273.-21(p)(2)(i).

48 Fed.Reg. 54963 (Dec. 8, 1983). Thus, it is clear that New Hampshire’s policy is inconsistent with the Secretary’s final regulations.

Defendants do not directly challenge the Secretary’s regulatory interpretation of 7 U.S.C. §§ 2015 and 2020, but instead adopt an approach combining creative and selective reading of the applicable statute and regulations to argue that these provisions permit immediate termination of food stamp benefits where the agency contends that recipients failed to file a report. Defendants argue that § 2015(c)(5) authorizes Secretarial waiver of the § 2020(e)(10) interim benefits requirements. Defendants emphasize the following portion of § 2015(c)(2):

(2) Any Household required to file a periodic report ... shall, (A) if it is eligible to participate and has filed a timely and complete report, receive its allotment, ... (C) have a reasonable period of time after the close of the month in which to file their reports on forms approved by the Secretary, and (D) be afforded prompt notice of failure to file any report timely or completely, and given a reasonable opportunity to cure that failure (with any applicable time requirements extended accordingly) and to exercise its rights under section 2020(e)(10) of this title.

(Emphasis added.) Defendants contend that since § 2020(e)(10) is referenced with § 2015(c)(2), then it must follow that § 2015(c)(5), which authorizes Secretarial waiver of § 2015(c)(l)-(4), necessarily authorizes waiver of § 2020(e)(10) interim benefits as well.

The Court refuses to expand the plain meaning of §§ 2015(c)(5) to “read in” an implied waiver of § 2020(e)(10). The plain meaning of § 2015(c)(5) is that the Secretary may waive the reporting requirements of § 2015(c)(l)-(4). Nowhere in § 2015(c)(5) is there an indication that the Secretary has authority to create exceptions to the “rights” of fair hearing and interim benefits afforded to food stamp recipients by § 2020(e)(10). See generally Russello v. United States, 464 U.S. 16, 104 S.Ct. 296, 299, 78 L.Ed.2d 17 (1983) (if statutory language is unambiguous, that language must ordinarily be regarded as conclusive, barring some clearly expressed legislative intent to the contrary). Section 2015(c)(2) does not include fair hearings and interim benefits as a reporting requirement, but rather refers to the § 2020(e)(10) rights only in order to establish that the state reporting schedule must allow a reasonable time period for a recipient to exercise his fair hearing “rights”. There .being nothing in the plain language of § 2015(c)(5) indicating an override of § 2020(e)(10), this Court will not distort the statutory language in order to adopt the tortured statutory construction advocated by defendants.

A construction of the Food Stamp Act which avoids creating an exception to the fair hearing and interim benefits requirements of § 2020(e)(10) is consistent with both the Act’s purpose — to assure adequate nutrition to low-income households — and with prior rulings of the First Circuit Court of Appeals on related Food Stamp Act issues. Defendants attempt to minimize the harsh effects of their construction by arguing New Hampshire merely “suspends” a recipient’s benefits for one month as sanction for late and incomplete reporting, emphasizing that the recipient may automatically requalify for food stamps by submitting a report in the next monthly reporting cycle. However, defendants’ argument is a distinction without a difference to a needy household claiming to have complied with reporting requirements, but denied the food stamp assistance it requires to maintain adequate levels of nutrition. See Goldberg v. Kelly, supra, 397 U.S. at 264, 90 S.Ct. at 1018; Philadelphia Welfare Rights Organization v. O’Bannon, 525 F.Supp. 1055, 1058-59 (E.D.Pa.1981). In at least implicit recognition of the essential nature of food stamp benefits, the First Circuit Court of Appeals has ruled that 7 U.S.C. § 2020(e)(10) requires meaningful advance notice to recipients prior to benefits termination or reduction in even a “mass change” context (a statutorily mandated reduction in benefits) so as to assure an opportunity for recipients to challenge government error. Foggs v. Block, supra, 722 F.2d at 938-40. Consistent reasoning would require the conclusion that § 2020(e)(10) would require a similar opportunity for recipients in the individual, as opposed to the mass, change context.

II. Medicaid Claims

The second class of plaintiffs contends that the federal Medicaid statute, 42 U.S.C. § 1396a, prohibits New Hampshire’s policy of refusing to redetermine the Medicaid eligibility of a recipient under the medically needy Medicaid program prior to termination under the AFDC categorical assistance program for failure to comply with AFDC reporting requirements. The Court finds that this issue previously has been resolved in plaintiffs’ favor by the First Circuit Court of Appeals in Massachusetts Association of Older Americans v. Sharp, 700 F.2d 749 (1st Cir.1983) {“Sharp ”), and therefore plaintiffs’ motion for summary judgment must be granted on this issue as well.

The federal Medicaid program originated in 1965 as Title XIX of the Social Security Act (“SSA”) establishing a cooperative federal/state partnership to provide “federal financial assistance to States that choose to reimburse certain costs of medical treatment for needy persons”. Act of July 30, 1965, Pub.L. No. 89-97, Title I, § 121(a), 79 Stat. 373; Schweiker v. Hogan, supra, 457 U.S. at 571, 102 S.Ct. at 2600. Although states are not required to participate, once a participant a state must comply with all requirements imposed by the SSA and regulations. 42 U.S.C. § 1396; Sharp, supra, 700 F.2d at 750. New Hampshire participates in the Medicaid program (RSA 167:1-6), having developed a medical assistance program which conforms with the requirements of 42 U.S.C. § 1396a. 42 U.S.C. § 1396a(b).

As a participating state, New Hampshire must provide assistance to the “categorically needy”, and may choose to provide assistance to the “medically needy”. 42 U.S.C. § 1396a(a)(10); 42 C.F.R. §§ 435.-100-435.340 (1981). Categorically needy individuals are those receiving federal cash assistance through other programs such as AFDC or Supplemental Security Income for the Aged, Blind and Disabled (“SSI”). 42 U.S.C. § 1396a(a)(10); Schweiker v. Gray Panthers, supra, 453 U.S. at 37-39, 101 S.Ct. at 2636-38. Medically needy individuals are those lacking the ability to pay for medical expenses, but with incomes too large to qualify for categorical assistance. Schweiker v. Hogan, supra, 457 U.S. at 572-73, 102 S.Ct. at 2601; Schweiker v. Gray Panthers, supra, 453 U.S. at 37, 101 S.Ct. at 2636; Sharp, supra, 700 F.2d at 750.

In Sharp, the First Circuit Court ruled that a State must redetermine a recipient’s Medicaid eligibility under the medically needy program prior to terminating that recipient from the categorical assistance Medicaid program concurrent with a termination of AFDC benefits. Defendants urge this Court to read Sharp narrowly, as applying only to cases where an AFDC recipient is being terminated for reasons which are specifically excluded as a Medicaid eligibility criterion. Defendants argue that Sharp, narrowly construed, does not apply to the instant case where AFDC Medicaid recipients are terminated for failure to comply with monthly reporting, an item which is not specifically excluded as a Medicaid eligibility criterion.

However, there is nothing in the Sharp decision to support such a narrow construction. The court ruled that the Medicaid statute, 42 U.S.C. § 1396a(a)(10)(B)(ii), and implementing regulations, 42 C.F.R. §§ 435.916(c)(1) and 435.930 (1981, 1984) required a redetermination of Medicaid eligibility prior to termination, and there is nothing in these provisions pertaining to defendants’ attempted eligibility distinction. Chapter 42 U.S.C. § 1396a(a)(10)(B)(ii) provides that assistance to the mandatorily covered categorical assistance recipients cannot be less in “amount, duration, or scope” than assistance provided to other needy persons. The Sharp court ruled that this provision reflected congressional preference for the categorically needy and therefore any procedural protections ensuring continuity of benefits should be accorded to the categorically needy. Similarly, the court found that 42 C.F.R. § 435.916, requiring that the responsible state agency redetermine Medicaid eligibility promptly when it receives information about a change in recipient’s circumstances affecting his eligibility, and 42 C.F.R. § 435.930, requiring that the responsible state agency continue to furnish Medicaid to all eligible individuals until they are found ineligible, required redetermination of benefits under the medically needy program prior to termination of categorical assistance Medicaid benefits. These statutory and regulatory provisions apply to the facts of the instant case as well. There being no distinction in the controlling statutory and regulatory language, the reasoning of the Sharp decision is directly applicable in the instant case. See Jackson v. Guissinger, 589 F.Supp. 1288, 1301 (W.D.La.1984); Stenson v. Blum, 476 F.Supp. 1331 (S.D.N.Y.1979), aff'd without opinion, 628 F.2d 1345 (2d Cir.), cert. denied, 449 U.S. 885, 101 S.Ct. 239, 66 L.Ed.2d 111 (1980). Therefore, the Court finds that New Hampshire’s refusal to redetermine eligibility under the medically needy program prior to termination of a recipient’s Medicaid benefits under the categorical assistance (AFDC) program is inconsistent with applicable federal law.

For the foregoing reasons, plaintiffs’ motion for summary judgment is granted on both the food stamp and the Medicaid claims.

SO ORDERED.

      . Cf. Hagans v. Lavine, 415 U.S. 528, 94 S.Ct. 1372, 39 L.Ed.2d 577 (1974) (section 1343[e] jurisdiction does exist over a "substantial constitutional claim”, which in turn permits exercise of pendent jurisdiction over related federal statutory claims arising out of same facts); Jackson v. Guissinger, 589 F.Supp. 1288, 1293-95 (W.D.La.1984) (finding substantial constitutional claim sufficient to support pendent jurisdiction over federal statutory AFDC challenges).

      . The Federal Food Stamp Act, 7 U.S.C. §§ 2011, et seq.

      . Social Security Act of 1935, subch. IV, pt. A, as amended, 42 U.S.C. §§ 601, et seq.

        . Title XIX of the Social Security Act of 1935, as amended, 42 U.S.C. §§ 1396, et seq.

      . Certain food stamp recipients are exempted from this monthly reporting requirement, but such exemptions are not relevant to this case,

      . Both parties refer to the November 29, 1982, letter from John Ghiorzi, Regional Director, Family Nutrition Programs, Northeast Region, U.S. Department of Agriculture, to defendant Richard Chevrefils as the “waiver document". See Defendants’ Responses to Plaintiffs’ Second Set of Interrogatories, Question 8 and Exhibit I.

      . Policy Memorandum 82-18 relied upon 7 U.S.C. § 2015(c)(4) as amended by section 108(b)(3) of the Omnibus Budget Reconciliation Act of 1981, P.L. 97-35, 95 Stat. 361 (August 13, 1981) (‘'OBRA-1981”), in suggesting a case-by-case approach to payment of interim benefits. Section 2015(c)(4) provides that any household that fails to submit periodic reports shall not receive an allotment until the report is submitted. The memo reasons that OBRA-1981 amendments to § 2015(c)(4) post date and therefore impliedly repeal § 2020(e)(10). However, the Secretary's final regulations expressly rescind this § 2015(c)(4) "implied repeal" policy memo, and defendants have not raised this particular implied repeal argument in any event.

      . Although neither party addresses the issue, the Court notes that there is some legislative history underlying OBRA-1981 to suggest that fair hearings and interim benefits should not be afforded even where a recipient claims that a report was actually submitted, reasoning that such a hearing is pointless since the household can simply resubmit its lost or delayed monthly report. See Report of Committee on Agriculture, Nutrition and Forestry, reprinted in 1981 U.S.Code Cong. & Ad.News 450-51. However, the Court finds that this one item in a committee report, now narrowly construed by the administrative agency to apply only in cases where the household concedes the report has not been submitted, does not rise to the level of "a clearly expressed legislative intent to the contrary” sufficient to overturn the plain meaning of the statute. See General Motors Corp. v. Ruckelshaus, 742 F.2d 1561, 1570-71 (D.C.Cir.1984); Monteray Coal Company v. Federal Mine Safety and Health Review Commission, 743 F.2d 589, 595 (7th Cir.1984); see generally In re Smith and Wesson, 757 F.2d 431, 433-434 (1st Cir.1985) (rejecting plain meaning of statute only where both House and Senate legislative history clearly expressed opposite intent).


source: Caselaw Access Project

author: CAFFREY, Chief Judge.

license: Public Domain

text:
    Adalberto FONTES, Plaintiff, v. HARRIS CORPORATION, Defendant and Third-Party Plaintiff, v. SOUTH SHORE PUBLISHING CO., INC., Third-Party Defendant.
    Civ. A. No. 84-3402-C.
    United States District Court, D. Massachusetts.
    April 18, 1985.
    Brian J. Mone, Mone & Mathers, Brock-ton, Mass., for plaintiff.
    Thomas J. Giffin, Jr., Paul E. Nemser, Goodwin, Procter & Hoar, Boston, Mass., for defendant and third-party plaintiff.
    Michael J. Stone, Mary Ann E. Rousseau, James L. Bryant, Fine & Ambrogne, Boston, Mass., for South Shore Pub. Co., Inc.
   MEMORANDUM

CAFFREY, Chief Judge.

This is a diversity case in which plaintiff Adalberto Fontes seeks recovery for personal injury allegedly incurred while operating a printing press at his place of employment. He initiated the litigation against Harris Corporation (“Harris”), the manufacturer of the press, by means of a complaint which purports to state claims for negligence and breach of warranty. Defendant Harris then filed a third-party action against South Shore Publishing Co., Inc., (“South Shore”), Fontes’ employer. The third-party complaint claims indemnity from South Shore on two theories: (1) that South Shore expressly agreed to indemnify Harris from liability; and (2) that on the basis of the terms of the sales contract, supplemented by the understandings of the parties, “South Shore promised, and undertook the responsibility, to provide for and insure the safety of its employees who used or operated the press.” Harris avers that count II amounts to an implied contract by South Shore to indemnify Harris. The matter .is now before the court on South Shore’s motion to dismiss the second theory, implied indemnity, for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6).

Both Harris and South Shore agree that the relevant portion of the contract reads as follows:

“Purchaser agrees to indemnify seller against all claims, arising out of or resulting from the erection, operation or use of the equipment, whether on account of negligence or otherwise, except those asserted by seller’s employees.”

South Shore contends that the claim set forth in Count II is barred by the Massachusetts Workman’s Compensation Act (“Act”). M.G.L. c. 152. Pursuant to § 23 of the Act, the general rule is that an employer is not liable to indemnify a third person for damages for injury to the employer’s employee. E.g. Correia v. Firestone Tire & Rubber Co., 388 Mass. 342, 446 N.E.2d 1033 (1983); Liberty Mutual Ins. Co. v. Westerlind, 374 Mass. 524, 373 N.E.2d 957 (1978). There is a Massachusetts exception to this rule where the employer has made an express agreement to indemnify the third person. Whittle v. Pagani Bros. Const. Co., 383 Mass. 796, 422 N.E.2d 779 (1981). The Massachusetts Supreme Judicial Court has yet to speak definitively on the question of whether or not a right to indemnification based on implied contract to indemnify affords a basis of recovery in Massachusetts. The Court of Appeals for the First Circuit, however, has intimated that there may be circumstances in which a contractual right to indemnity will be implied, i.e. when there are “unique special factors” demonstrating that the parties intended that the putative indemnitor bear the ultimate liability. Araujo v. Woods Hole, Martha’s Vineyard, Nantucket S.S. Auth., 693 F.2d 1 (1st Cir.1982).

I rule that the motion to dismiss the claim for indemnity based on the implied agreement to indemnify should be denied at this time as being premature, said denial to be without prejudice to the renewal of the motion when the record has been more fully developed upon the completion of pretrial discovery.

Order accordingly.


author: LASKER, District Judge.

text:
    Onna Lil Camenschic SALERNO, Plaintiff, v. PAN AMERICAN WORLD AIRWAYS, INC., Defendant.
    No. 82 Civ. 5316(MEL).
    United States District Court, S.D. New York.
    April 19, 1985.
    Herbert Lebovici, New York City, for plaintiff; Edward Cherney, New York City, of counsel.
    Quirk and Bakalor, P.C., New York City, for defendant; Stephen K. Blunda, New York City, of counsel.
   LASKER, District Judge.

Defendant Pan American World Airways, Inc. (“Pan Am”) moves pursuant to Federal Rule of Civil Procedure 50(b) for an order setting aside a jury verdict and directing that judgment be entered in its favor. The issue presented is whether a bomb threat, the knowledge of which the jury found to have injured the plaintiff, constitutes an “accident” under Article 17 of the Warsaw Convention (“the treaty”).

Late in the evening of August 24, 1981 through the early morning hours of August 25,1981 plaintiff Onna Lil Camenschic Salerno, (who was pregnant at the time), and her two children were passengers on Pan Am Flight 441 from Miami, Florida to Montevideo, Uraguay. Some time after the aircraft's departure Pan Am's ground personnel notified the cockpit crew that a telephone call had been received indicating a bomb had been placed on board the aircraft. The pilot subsequently radioed for permission to land in the Bahamas. However, since the runway was undergoing repair permission to land was denied and the craft returned to Miami International Airport, the point of its departure. While the plane was making its return flight, the passengers were notified of the change in itinerary. Further, as the evidence established and the jury must have found, in the commotion that followed at least some of the passengers, including Salerno, became aware of the fact that the flight attendants were searching the plane for a bomb. Soon after she acquired this knowledge Salerno began exhibiting the symptoms which led to her miscarriage approximately twenty four hours later.

The case was tried over four days to a jury. Two questions were put to the jury: (1) “Do you find that the plaintiff Onna Lil Salerno has proven by a preponderance of the evidence that the events aboard Pan Am Flight # 441 on August 24, 1981 and at the Miami Airport on August 25 proximately caused her miscarriage and/or emotional injury and distress? ” and (2) (if the answer to the first question is yes) “What is the amount of damages which you find Onna Lil Salerno is entitled to?” The jury answered yes to question number one and awarded Salerno $62,500.00 in damages. Thereafter Pan Am filed the instant motion.

While the motion was sub judice the Supreme Court granted certiorari in Air France v. Saks, — U.S. -, 105 S.Ct. 773, 83 L.Ed.2d 769 (1985) granting cert. to 724 F.2d 1383 (9th Cir.1984) “to resolve a conflict among the Courts of Appeals as to the proper definition of the word ‘accident’ as used in this international air carriage treaty.” Air France v. Saks, — U.S. -, 105 S.Ct. 1338, 1340, 84 L.Ed.2d 289 (1985). On March 4, 1985 the Court decided the issue holding that “... liability under Article 17 of the Warsaw Convention arises only if a passenger’s injury is caused by an unexpected or unusual event or happening that is external to the passenger.”

Id. at 1345.

Both parties to this case have subsequently submitted letter-briefs as to their views of the effect of the Air France decision on this case. Salerno argues that her case falls clearly within the parameters of Air France. Apparently conceding that the events of August 1981 are encompassed within the Court's definition of an “accident”, Pan Am argues only that “strong policy considerations”, i.e., encouraging airlines to treat telephoned bomb threats seriously, distinguish this case from the recent Supreme Court decision.

We hold that Salerno’s injuries were caused by an “accident” within the meaning of the Warsaw Convention because we conclude a bomb threat, which of course is “external to the passenger,” is “an unexpected and unusual event”, Id., which is outside of the “usual, normal, and expected operation of the aircraft. Id. at 1346. Further, even if it were to be considered proper to create a public policy exception to the treaty, which we do not, the facts of this case do not provide justification for doing so. Pan Am’s public policy argument is premised upon a belief that its reaction to the bomb threat was responsible, which implicitly raises the defense of due care. This issue was specifically raised and rejected in the ratification of the treaty. See Lowenfeld and Mendelsohn, The United States and the Warsaw Convention, 80 HARV.L.REV. 497 (1967); Air France v. Saks, — U.S. at-, 105 S.Ct. at 1346 (“... an airline cannot defend a claim on the ground that it took all necessary measures to avoid the injury.”) Further, contrary to the defendant’s reasoning, it is arguable with reason that the exposure to liability for injuries caused during the response to a bomb threat, is more likely to promote the development of higher safety standards than to discourage it.

The motion is denied and judgment will be entered on the verdict.

Submit judgment on notice.

      . Convention for the Unification of Certain Rules Relating to International Transportation by Air, Oct. 12, 1929, 49 Stat. 3000, T.S. No. 876 (1934), note following 49 U.S.C.A. § 1502.


author: WEBER, District Judge.

text:
    Evaline WALDRON, Plaintiff, v. MOTOR COILS MANUFACTURING COMPANY, a corporation, and International Union of Electronic, Electrical, Technical, Salaried and Machine Workers, AFL-CIO, a labor organization.
    Civ. A. No. 84-2278.
    United States District Court, W.D. Pennsylvania.
    April 19, 1985.
    James M. Perich, Pittsburgh, Pa., for plaintiff.
    Theodore Goldberg, Sidney Zonn, Pittsburgh, Pa., for defendants.
   OPINION

WEBER, District Judge.

Plaintiff’s complaint alleges that she was discharged by Defendant employer contrary to a collective bargaining agreement on March 23, 1984. She also alleges that she requested of her union that a grievance be filed on her behalf on the same date under the collective bargaining agreement. The union refused to act. Plaintiff’s present complaint alleging a breach of the collective bargaining agreement by the employer and a breach of the union’s fiduciary duty was filed with the clerk on September 21, 1984. In accordance with Fed.R.Civ.P. 4(c)(2)(C)(ii), a copy of the complaint and summons were mailed to defendant employer on October 4, 1984 by registered mail, and were received on October 9, 1984.

A copy of the complaint and summons was mailed to Defendant Union at its Washington D.C. headquarters on September 27, 1984, and was acknowledged as received by an Associate General Counsel on October 4, 1984.

Both defendants have moved for summary judgment with supporting evidentiary materials admissible under Fed.R.Civ.P. 56 to establish the above facts. In addition there has been presented by plaintiff a copy of the collective bargaining agreement showing that an employee-grievant and/or his Steward must file a grievance within five (5) days of the occurrence or five days after the alleged grievance is brought to the attention of the union. A grievance entered after these limits (5 days) will be considered closed.

Defendants rely upon the decision in Del Costello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983), which held that the statute of limitations to be applied to actions under Section 301 of the LMRA, against both an employer and' a union for breach of a collective bargaining agreement and the union’s breach of its duty of fair representation, must be brought against both employer and union within six months after the cause of action accrues.

It has been held in a number of cases since Del Costello that the requirement of both filing and service within six months applies. Simon v. Kroger, 743 F.2d 1544, reh. den. 749 F.2d 733, 117 LRRM 2700 (11th Cir.1984); Howard v. Lockheed-Georgia Co., 742 F.2d 612; 101 L.C. 11, 196 (11th Cir.1984); Hoffman v. United Markets, Inc., 117 LRRM 3229 (N.D.Cal.1984).

It is established without contest that the layoff occurred March 23, 1984. She filed her complaint on September 21, 1984, which would have been timely except that process was not served at that time. Time for service of process would expire on September 23, 1984, but the union defendant was not served until October 4, 1984 and the employer-defendant until October 9, 1984.

Even if we allow the five day extension for the filing of a grievance given by the collective bargaining agreement, this would only enlarge the time until September 24, 1984, and neither party was served by this date.

Plaintiff does not contest any of these facts. She alleges that she did not receive the Motion for Summary Judgment until March 14, 1984 and the court had ordered its filing by March 11, 1984; it was therefore untimely. We note that the motion was filed with the Clerk on March 8, 1984 which was within the time ordered by the court.

Plaintiff’s brief argues that she made personal service of the complaint on each Defendant on September 24, 1984 and subsequently by certified mail. This is a pure allegation of a brief. It is not evidence that we may consider in a summary judgment motion. There is no record of such service in the file. The uncontested evidence in the record shows that the only proper legal service of the complaint in this action was by certified mail.

Finding no genuine issue of material fact we find that the action is barred by the applicable statute of limitations. An order will be entered granting summary judgment on Defendant’s Motion.


author: REYNOLDS, Chief Judge.

text:
    Barbara Jean CUMMINGS, a minor, by her Guardian ad litem, Willard P. TECHMEIER; and Laverne H. Cummings, Special Administratrix of the Estate of Dennis G. Cummings, Plaintiffs, v. BRIGGS & STRATTON RETIREMENT PLAN, the First Wisconsin Trust Company, plan trustee, Briggs & Stratton Retirement Committee, plan administrator, and Frank J. Sprtel, Defendants.
    Civ. A. No. 83-C-722.
    United States District Court, E.D. Wisconsin.
    April 19, 1985.

      Willard P. Techmeier, Stanley J. Lowe, Techmeier, Sheedy & Associates, Milwaukee, Wis., for plaintiffs.
    David R. Cross and Peter W. Bunde, Quarles & Brady, Milwaukee, Wis., for defendants.
   DECISION AND ORDER

REYNOLDS, Chief Judge.

This is an action for benefits and statutory penalties under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. Federal jurisdiction is based on 28 U.S.C. § 1331.

The complaint contains two counts. First, plaintiffs contend that benefits are payable and owing to Barbara Jean Cummings by virtue of her status as beneficiary of the Briggs & Stratton Retirement Plan. Second, plaintiffs contend that the defendants failed to comply with a request for information, in violation of 29 U.S.C. §§ 1025(a) and 1132(c). Presently before the Court are (1) plaintiffs’ motion to compel discovery; (2) defendants’ motion to dismiss defendant Frank J. Sprtel; (3) plaintiffs’ oral motion for summary judgment, which was made at the close of a hearing on August 16, 1984; (4) defendants’ motion to dismiss defendant First Wisconsin Trust Company; (5) defendants’ motion for summary judgment; and (6) defendants’ unopposed motion to strike plaintiffs’ jury demand. The motions are treated seriatim. In substance, I conclude that the plaintiffs are entitled to judgment with respect to their claim for benefits on the basis of the present record, and therefore, their motion for summary judgment will be granted in part. I further conclude that the amount of benefits to be awarded cannot be determined on the basis of the present record, and therefore, the parties will be directed to submit information on this point. I further conclude that the defendants are entitled to summary judgment on the claim for statutory penalties.

The following facts are not in dispute. Plaintiff Barbara Jean Cummings is a minor resident of Milwaukee, Wisconsin, and is the surviving child of Dennis G. Cummings. Plaintiff LaVerne H. Cummings is the special administratrix of the estate of Dennis G. Cummings and was formerly Dennis G. Cummings’s spouse. Defendant Briggs & Stratton Retirement Committee Plan (“the Plan”) is an employee benefit plan within the meaning of 29 U.S.C. § 1132(d). The terms and conditions of the Plan are bargained for between management and labor of the Briggs & Stratton Corporation, and are incorporated into a collective bargaining agreement. Defendant The First Wisconsin Trust Company is a Wisconsin trust company bank and the' trustee of the Plan. Defendant Briggs & Stratton Retirement Committee (“the Retirement Committee”) is the administrator of the Plan. Defendant Frank J. Sprtel is a member of the Retirement Committee.

Dennis G. Cummings, now deceased, was an employee of the Briggs & Stratton Corporation and a participant in the Plan. He was hired by the Briggs & Stratton Corporation in 1952. He had a high school education and lacked sophistication in the area of employee benefits.

The Plan does not contain an automatic survivorship feature, that is, it does not provide that benefits payable to a Plan participant go to the participant’s survivor if the participant dies while employed. If the survivor of such a Plan participant is to receive benefits, the participant must have affirmatively elected a payment option that would include payment to a surviving spouse or beneficiary. Among the options payment to a surviving spouse or beneficiary. Among the options available under the Plan is a “Ten Year Certain and Life Option.” This option is set forth in Article VI, § 6.4(a) of the Plan. It provides that a Plan participant may elect to receive a reduced pension payable until death, and if the Plan participant’s death occurs before the pension has been paid for ten years, payment of the pension will be made in the reduced amount to a beneficiary designated by the Plan participant for the balance of the ten-year period. This option differs from the other options in that it contemplates payment of benefits to a designated beneficiary other than the Plan participant’s spouse.

On May 15, 1972, Dennis Cummings and his spouse were divorced in Milwaukee County Circuit Court. The decree of divorce provided, inter alia,

9. That all of the rights of the defendant in his pension program at Briggs & Stratton Corporation is awarded to him and the plaintiff is divested of all right, title and interest therein providing, however, that the defendant shall change the beneficiary therein to the name of the minor children of the parties and each child shall be divested of such right when he or she reach the age of eighteen (18) years.

Under the terms of the Plan, Mr. Cummings could not have designated his daughter as a beneficiary at the time the decree was entered. None of the defendants in the present action were parties to the divorce proceeding. However, Briggs & Stratton Corporation’s records include information that Mr. Cummings was divorced.

In 1978, when Mr. Cummings approached his sixtieth birthday, the Retirement Committee mailed to him information about the Fifty Percent Joint and Survivor Pension Option available under §§ 6.1 and 6.2 of the Plan. This option provides for payment of a monthly annuity to a Plan participant’s spouse if the participant dies before retiring. Cummings replied that he would not elect the option, stating: “I am single and not eligible for this retirement plan.”

On December 4, 1981, when Mr. Cummings approached his thirtieth year of service, the Retirement Committee mailed to him a packet of information explaining the preretirement options available to him under the Plan. He did not respond to this mailing.

In May 1982, Mr. Cummings was diagnosed as having lung cancer. Shortly thereafter, it was determined that his condition was terminal. He was hospitalized but returned home in late June 1982. He gradually became confused and disoriented.

On June 29, 1982, the Retirement Committee sent Mr. Cummings the same information that had been sent to him the previous December. Both times he was told that if he did not elect a survivorship option, no one would receive any pension benefits if he died while still employed. However, Mr. Cummings never returned an application form for a survivorship option.

Mr. Cummings died on August 1, 1982. He never designated his minor children as pension beneficiaries as the divorce decree required.

On or about August 11, 1982, Barbara Jean Cummings, through a legal representative, wrote to the Retirement Committee requesting a statement of the amount of benefits due her. The Retirement Committee, through Frank J. Sprtel, replied on or about August 13, 1982, stating that no benefits were due and that the matter would be referred to legal counsel. A second letter, dated August 23, 1982, confirmed that no benefits would be paid. Barbara Jean Cummings made a second request on or about March 30, 1983. On April 6, 1983, counsel for the Retirement Committee wrote to her, again informing her that no benefits would be paid. This action was filed soon thereafter.

1. The plaintiffs’ motion to compel discovery is denied. The issues with respect to which plaintiffs seek evidence are whether the Retirement Committee had actual or constructive knowledge of the terms of Dennis Cummings’s divorce decree, whether the Retirement Committee knew Dennis Cummings was unaware of or misunderstood the terms of the divorce decree, and whether the Retirement Committee or its agents misled him with respect to the options available under the Plan. Resolution of these issues is unnecessary to a determination of these motions. Moreover, plaintiffs’ request for discovery was untimely.

2. The defendants’ motion to dismiss defendant Frank J. Sprtel is granted. The proffered statutory basis for Mr. Sprtel’s liability is 29 U.S.C. § 1132(c) which provides:

Administrator’s refusal to supply requested information. Any administrator who fails or refuses to comply with a request for any information which such administrator is required by this title to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within 30 days after such request may in the court’s discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper.

However, the Retirement Committee is the administrator of the Plan for the purpose of this subsection, not Mr. Sprtel. Because the relief plaintiffs seek cannot be granted against Mr. Sprtel in his individual capacity, the claim against him will be dismissed with prejudice.

3. Turning next to the substance of the first claim for relief, I observe that the undisputed facts raise a question respecting Dennis Cummings’s intentions. It is not clear why he did not designate Barbara Jean Cummings as a beneficiary, as the divorce decree required. A reading of the Plan's description leads to the conclusion that Mr. Cummings’s pension payments would have been larger if he did not designate a surviving beneficiary. Thus, there may have been a calculated choice on his part not to elect the survivorship option. However, the documents relevant to his insurance benefits, which have been submitted to the court, disclose that he intended that his children be provided for if he were injured. This suggests that he would have wanted Barbara Jean Cummings to receive pension benefits, if possible. His lack of understanding of the options available to him, as evidenced by his response to the 1978 mailing, supports the conclusion that he did not know this was possible. Mr. Cummings therefore may have committed a mistake when he did not designate Barbara Jean Cummings as a beneficiary, or his omission may have been fraudulent and contumacious. There is evidence to support either conclusion.

However I need not determine whether Mr. Cummings’s omission was deliberate, because equity provides a remedy that would be available to plaintiffs in either instance. The result derives from the equitable doctrine of constructive trusts.

In actions under ERISA, federal courts have the full panoply of equitable powers to fashion appropriate relief. See, e.g., Hillis v. Waukesha Title Co., 576 F.Supp. 1103 (E.D.Wis.1983); Freund v. Marshall & Ilsley Bank, 485 F.Supp. 629 (W.D.Wis.1979). There exists a federal common law of trusts, see, e.g., Free v. Bland, 369 U.S. 663, 82 S.Ct. 1089, 8 L.Ed.2d 180 (1962), and this body of law is fully applicable to actions for benefits under ERISA.

Under traditional notions of equity, a Court may impose a constructive trust where a party unfairly holds property that justly belongs to another. The primary purpose of this device is to prevent unjust enrichment of the party unfairly holding the constructive trust res. The rights and duties of the parties are to be the same as if the party holding the property had been, from the beginning of his inequitable holding, an express trustee for the other. The Court must find that the party holding the property has been under an equitable duty to give to the other the benefit of the property ever since he began to hold unjustly. The property must have been acquired by some means that equity may regard as unconscionable, unjust, or unfair. However, it is not necessary that the property has been acquired by fraud, insofar as that term denotes intentional misrepresentation and scienter. See G. Bogert, Trusts & Trustees § 471 (rev. 2d ed. 1978).

Courts in other jurisdictions have imposed constructive trusts in cases where a party designates another party as beneficiary under an insurance agreement, notwithstanding a final divorce decree requiring that a third party be so designated. See, e.g., Hudspeth v. Stoker, 644 S.W.2d 92 (Tex.App.1982); Noll v. Brende, 318 N.W.2d 319 (S.D.1982); Richards v. Richards, 58 Wis.2d 290, 206 N.W.2d 134 (1973). See also Simonds v. Simonds, 408 N.Y.S.2d 359, 45 N.Y.2d 233, 380 N.E.2d 189 (1978) (requirement in separation agreement). The facts of these cases support a conclusion that the divorce decree created an equitable right to the benefits, and that the designation of a beneficiary other than the one contemplated by the divorce decree caused unjust enrichment.

In the present case, the Retirement Committee has been essentially passive with respect to the benefits in question. If there has been any wrongdoing, it is attributable to Dennis Cummings. Yet the mere fact that the defendants may have received the proceeds innocently is itself no bar to the imposition of a constructive trust.

“Where a person holding property transfers it to another in violation of his duty to a third person, the third person can reach the property in the hands of the transferee [by means of a constructive trust] unless the transferee is a bona fide purchaser.”

Richards v. Richards, 58 Wis.2d at 298, 206 N.W.2d at 138 (1973), quoting 5 Scott, Trusts § 470 (3d ed. 1967).

Likewise, the possibility that Dennis Cummings’s omission to designate Barbara Jean Cummings as a beneficiary was the result of mistake or inadvertence rather than fraud does not preclude imposition of a constructive trust. As discussed earlier, fraud is not the sine qua non of unjust enrichment, and a unilateral mistake may form the basis for a constructive trust in appropriate cases. Richards v. Richards, 58 Wis.2d at 297, 206 N.W.2d at 137 (1973); Maryland National Bank v. Tower, 374 F.2d 381, 382-83 (4th Cir.1967) (applying Maryland law); G. Bogert, Trusts & Trustees, § 474 (rev. 2d ed. 1978).

The undisputed facts lead me to conclude that a constructive trust should be imposed on proceeds within the defendants’ control. Dennis Cummings had an equitable duty to designate Barbara Jean Cummings as the beneficiary under the Plan, and thus he became the constructive trustee. Under the Plan, the defendants (other than Mr. Sprtel) are his successors. The proceeds that Barbara Jean Cummings would have received had her father discharged his duty are the trust res, and Barbara Jean Cummings is the constructive cestui que trust. The defendants have been under a duty to convey the trust res to Barbara Jean Cummings since the time of her father’s death, and to allow the res to remain within the defendants’ control would unjustly enrich them.

The defendants argue that awarding relief to the plaintiffs would be tantamount to rewriting the collective bargaining agreement to provide for an automatic survivorship option. They urge that ERISA does not provide an avenue for judicial modification of contracts between labor and management.

The relief awarded here is not a general restructuring of the collective bargaining agreement. It merely remedies an inequitable situation created by unusual circumstances. Any party seeking similar relief from the operation of the terms of the Plan would have to prove the existence of the unusual circumstances present here.

Finding that the defendants hold a sum in constructive trust for the plaintiffs, the next issue involves the precise amount plaintiffs are to be awarded. Because this amount cannot be determined on the basis of the present record, only partial summary judgment can be granted for the plaintiffs. I think the remaining question can now be resolved privately. However, because the parties may dispute the amount plaintiffs are due, the plaintiffs are directed to submit within ten days of the filing date of this order an affidavit and any appropriate supporting documents showing the amount that Barbara Jean Cummings is entitled to as the constructive cestui que trust, that is, the amount she would have received had Dennis Cummings complied with the divorce decree. The defendants will then be allowed an opportunity to comment on the plaintiffs’ submission, and the Court will then determine the amount to be awarded, if necessary.

4. It follows from the foregoing that the motion to dismiss The First Wisconsin Trust Company must be denied. While this defendant played no role in the decision to deny benefits to Barbara Jean Cummings, and could play no such role by the terms of the Plan, it is in actual possession of the proceeds forming the constructive trust res. In view of the relief awarded to plaintiffs as against the Plan and the Retirement Committee, it would be anomalous to dismiss the claim for benefits against this defendant. The motion is denied.

5. The second claim for relief is based on 29 U.S.C. § 1025(a), which provides:

Statement furnished by administrator to participants and beneficiaries. Each administrator of an employee pension benefit plan shall furnish to any plan participant or beneficiary who so requests in writing, a statement indicating, on the basis of the latest available information—
(1) the total benefits accrued, and
(2) the nonforfeitable pension benefits, if any, which have accrued, or the earliest date on which benefits will become nonforfeitable [,]

and 1132(c), quoted earlier. The claim arises out of the series of correspondence between Barbara Jean Cummings and the Retirement Committee following Dennis Cummings’s death, in which benefits were requested and denied.

The damages available under § 1132(c) are punitive in nature and are awarded in the Court’s discretion. In this case, the plaintiffs allege that the Retirement Committee informed them that Barbara Jean Cummings was entitled to no benefits whatever, and the Retirement Committee’s letters, which have been submitted to the court as exhibits, provide the Retirement Committee’s reason for its decision. Although the Court has reached a contrary conclusion, the Retirement Committee’s conduct cannot be regarded as so egregious as to prompt the imposition of a penalty. It did not deliberately withhold information; it simply stated the conclusion that no benefits were due and the reasons supporting that conclusion. This is not the sort of obstinate or reckless conduct that § 1132(c) was designed to redress. Alternatively, I hold that plaintiffs have not adequately prosecuted this claim for relief. Summary judgment for the defendants with respect thereto is appropriate on either ground.

6. There remains the unopposed motion of defendants to strike the plaintiffs’ jury-demand. The motion is granted.

In summation, the motion to compel discovery is denied; the motion to dismiss Frank J. Sprtel from the action is granted; partial summary judgment for the plaintiffs is granted on plaintiffs’ claim for benefits; the motion to dismiss The First Wisconsin Trust Company is denied; summary judgment for the defendants is granted on plaintiffs’ claim for statutory penalties; and the motion to strike the jury demand is granted. The parties will submit to the Court documents directed to the issue of the amount of benefits to be awarded as set forth in this order, unless they can settle this issue.

IT IS THEREFORE ORDERED that the plaintiffs’ motion to compel discovery is denied.

IT IS FURTHER ORDERED that the defendants’ motion to dismiss defendant Frank J. Sprtel is granted."

IT IS FURTHER ORDERED that the plaintiffs’ motion for partial summary judgment is granted with respect to their first claim for relief.

IT IS FURTHER ORDERED that the defendants’ motion to dismiss defendant The First Wisconsin Trust Company is denied.

IT IS FURTHER ORDERED that defendants’ motion for summary judgment is denied with respect to plaintiffs’ first claim for relief, and is granted with respect to plaintiffs’ second claim for relief.

IT IS FURTHER ORDERED that defendants’ motion to strike plaintiffs’ jury demand is granted.

IT IS FURTHER ORDERED that unless the parties agree on the amount to be awarded to plaintiffs, plaintiffs shall within ten days of the filing date of this order serve and file an affidavit and any necessary supporting exhibits showing the amount Barbara Jean Cummings would have received had she been designated as a beneficiary under Dennis Cummings’s and LaVerne Cummings’s decree of divorce. The defendants shall have ten days thereafter to serve and file and pleadings or documents in opposition thereto.


author: WEIGEL, Senior District Judge.

text:
    PATEL AND PATEL, a general partnership, Plaintiff, v. CITY OF SOUTH SAN FRANCISCO, a municipal organization, et al., Defendants.
    No. C-84-7056 SAW.
    United States District Court, N.D. California.
    April 19, 1985.

      Douglas Gillies, Swaner, Leslie, Flenniken & Gillies, San Francisco, Cal., for plaintiff.
    Frank T. Sabaitis, Ropers, Majeski, Kohn, Bentley & Wagner, San Francisco, Cal., for defendants.
   MEMORANDUM AND ORDER

WEIGEL, Senior District Judge.

FINDINGS OF FACT

Plaintiff Patel and Patel is a general partnership which at all relevant times owned the E.B. Motel, 1201 Airport Boulevard in South San Francisco. The guest rooms are equipped with television sets. Since 1978, one of the thirteen available channels included non-obscene, sexually explicit programs. The motel does not advertise nor in any way indicate the availability of the channel.

In 1982, the city Council of South San Francisco enacted Chapter 20.38 of the city’s Municipal Code, an “Adult Entertainment Ordinance” (“Ordinance”). The declared purpose of this amendment to the city's zoning ordinance, “is to insure that adverse effects of adult entertainment uses will not contribute to the blighting or downgrading of zones in which they are permitted or of surrounding neighborhoods; will not adversely affect minors; and will not offend those citizens of the City who do not wish to be exposed to sexually oriented material.”

South San Francisco’s Adult Entertainment Ordinance provides that “Adult entertainment businesses are permitted only in areas with a C-3 zoning classification.” In addition, no adult entertainment business may be within: 500 feet from a residential district, 1000 feet from any church, 1000 feet from any playground or 500 feet from any other adult entertainment use.

“Adult Entertainment Businesses” include “adult motels”, which are defined as follows:

3. “Adult motel” — a motel or similar establishment offering public accomodations, for any form of consideration, which provides patrons with closed-circuit television transmissions, films, motion pictures, video cassettes, slides or other photographic reproductions which are characterized by an emphasis upon the depiction or description of “specified sexual activities” or “specified anatomical areas”;

Municipal Code § 20.38.030(3).

Plaintiff concedes that the programs shown on the “adult” channel “include material that is defined as ‘adult’ in Chapter 20.38 of the South San Francisco Municipal Code”.

The E.B. Motel is located in a district designated “C-2" in the city’s General Plan. Thus the motel is considered a nonconforming use in violation of the city’s zoning ordinance. Section 9.3 of City Ordinance No. 353 of the City of South San Francisco directs the City Attorney to commence an action to enjoin the violation of zoning ordinances.

On February 16, 1984, the city’s Director of Community Development notified plaintiff that “Pursuant to Chapter 20.38 of the South San Francisco Municipal Code, the adult entertainment business presently being conducted at 1201 Airport Boulevard in the City of South San Francisco shall be terminated on or before March 5, 1984.” Plaintiff appealed from the Director’s determination, which the Planning Commission affirmed on April 26, 1984.

At their regular meeting on July 13, 1984, the City Council determined that the E.B. Motel continued to be in violation of the zoning ordinance. On October 4, 1984, Robert K. Rogers, the City Attorney wrote to the partners of Patel & Patel: “unless you discontinue the adult entertainment portion of the business known as the E.B. Motel ... I will seek preliminary and injunctive relief against you in the Superior Court of the State of California.”

On November 8, 1984, plaintiff filed a complaint seeking, inter alia, a declaration that “those provisions of the City of South San Francisco Zoning Ordinance, Chapter 20.38, which purport to regulate adult motels [are] unconstitutional on their face and as applied to plaintiff.” Plaintiff also seeks an injunction restraining the city from enforcing against plaintiff any of the provisions of its zoning ordinance relating to the location and operation of adult entertainment businesses.

The City filed a counterclaim on February 15, 1985, seeking a declaration that the adult entertainment ordinance is a constitutional land-use regulation and moving for a preliminary injunction to prohibit Patel & Patel “from operating an adult entertainment business”, “including but not limited to the showing of closed circuit adult entertainment television programs in motel rooms____”

CONCLUSIONS OF LAW

1. Procedural Considerations

It is well established that a federal court may grant injunctive and declaratory relief against enforcement of an ordinance alleged to violate rights of free speech, so long as there are no state proceedings underway. See Doran v. Salem Inn, Inc., 422 U.S. 922, 95 S.Ct. 2561, 45 L.Ed.2d 648 (1975); see also Mortal v. Judiciary Comm’n of Louisiana, 565 F.2d 295, 298 (5th Cir.1977), cert. denied, 435 U.S. 1013, 98 S.Ct. 1887, 56 L.Ed.2d 395 (1978) (“[C]hallenges to laws burdening first amendment rights are among the essential bulwarks of a system of free expression.”). Plaintiffs complaint alleges that plaintiff is being threatened with enforcement of an invalid ordinance in violation of its free speech rights. Thus it states a claim for affirmative relief under 42 U.S.C. § 1983, and for declaratory relief under 28 U.S.C. § 2201. Jurisdiction is proper under 28 U.S.C. § 1343.

It is not disputed that the city will enforce the Ordinance against plaintiff unless this Court prevents it. In fact, defendants seek to enforce the Ordinance in their counterclaim in this very action. Thus, plaintiffs claim is ripe for adjudication. See Doran, supra.

Defendants, on the other hand, fail to state a federal claim. In seeking a declaration that Chapter 20.38 is constitutional and an injunction enforcing that Ordinance, defendants merely anticipate that plaintiff would raise a constitutional defense if defendants sued to enforce the Ordinance. Under the well-pleaded complaint rule, defendants’ claim does not arise under federal law. Cf. Louisville & Nashville R.R. v. Mottely, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908).

Nonetheless, defendants’ claim for declaratory relief is within this Court’s ancillary jurisdiction. This claim is the mirror-image of plaintiff’s and thus arises from the same “transaction or occurrence.” See L & E Co. v. United States ex rel. Kaiser Gypsum Co., 351 F.2d 880, 882 (9th Cir.1965).

Arguably, defendants’ claim for injunctive relief is also within the ambit of the Court’s ancillary jurisdiction. However, in light of its disposition on the merits, this Court need not decide the issue.

2. The Merits

A. Applicable Principles

In general, any regulation of communication based in whole or part upon the content of that communication is invalid under the First Amendment. See Consolidated Edison Co. v. Public Service Comm’n, 447 U.S. 530, 537, 100 S.Ct. 2326, 2333, 65 L.Ed.2d 319 (1980). One exception to this rule is the zoning of businesses distributing sexually explicit materials.

In Young v. American Mini Theatres, 427 U.S. 50, 96 S.Ct. 2440, 49 L.Ed.2d 310 (1976), the Supreme Court ruled that the city of Detroit could legitimately zone “adult” movie theaters differently from other movie theaters, a distinction that rests on the content of the films displayed. The “anti-skid row” zoning ordinance upheld in Young was held to be justified by the city’s interest in preserving the character of its neighborhoods. The Court noted that there was a factual basis for the city’s determination that a concentration of adult entertainment uses would downgrade the city’s neighborhoods. Id. at 71, 96 S.Ct. at 2452. Four Justices reasoned that the content-based regulation was justifiable because sexually explicit materials are entitled to a lesser degree of First Amendment protection than other kinds of expression. Id. at 70, 96 S.Ct. at 2452. A fifth Justice concluded that the ordinance in question was narrowly tailored to further a legitimate government purpose and thus satisfied the general requirements for regulations that incidentally effect speech. Id. at 79-82, 96 S.Ct. at 2456-2458 (Powell, J., concurring) (citing United States v. O’Brien, 391 U.S. 367, 88 S.Ct. 1673, 20 L.Ed.2d 672 (1968)).

In Schad v. Borough of Mount Ephraim, 452 U.S. 61, 101 S.Ct. 2176, 68 L.Ed.2d 671 (1981), the Court clarified the degree of protection afforded non-obscene, sexually explicit materials. The Court overturned a zoning ordinance, which was aimed at nude dancing, that prohibited all live entertainment in commercial establishments in the community. The Court held that the ordinance was too broad in its coverage; that the municipality had failed to establish any factual basis for its imposition of a zoning (ie. land-use planning) restriction on live entertainment in general or nude dancing in particular; and that that ordinance was defective because it totally suppressed nude dancing. The decision in Schad underlined the fact that the Detroit anti-skid row ordinance upheld in Young did not “impose a limit on the total number of adult theaters which may operate in the city....” Young, 427 U.S. at 62, 96 S.Ct. at 2448; see Schad, 452 U.S. at 71, 101 S.Ct. at 2184.

Under Young and Schad, a zoning ordinance which regulates speech is subject to strict constitutional scrutiny: “[W]hen a zoning law infringes upon a protected liberty, it must be narrowly drawn and must further a sufficiently substantial government interest.” Schad, 452 U.S. at 68, 101 S.Ct. at 2182. While neighborhood preservation is a sufficiently substantial government interest to justify regulation of “adult” businesses on the basis of speech content, any such regulation must be supported by appropriate factual findings and must be narrowly drawn.

B. Validity Of the Challenged Ordinance

Relying on Schad and a number of subsequent decisions by lower federal courts, plaintiff contends that South San Francisco’s “Adult Entertainment Ordinance” unduly restricts the possible locations of adult entertainment businesses and thus is unconstitutional. Plaintiff points to the relatively small geographic area of the city of South San Francisco, the limitation of adult entertainment businesses to areas zoned C-3, and the distance requirements of the ordinance. The combination of these three factors, plaintiff claims, greatly limits the possible locations of adult entertainment businesses and improperly burdens access to adult materials. Both parties dedicate a considerable portion of their briefs to establishing or refuting the restrictive effects of the zoning ordinance.

However, the Court need not determine whether the Ordinance as a whole improperly burdens Free Speech. There are narrower grounds for decision. The provisions of the Ordinance relating to “adult motels” are unsupported by any factual finding that such motels — as defined in Chapter 20.38 — contribute to the deterioration of neighborhoods. Moreover, it is doubtful in the extreme that any justification could be found for a distinction in zoning between an establishment such as the E.B. Motel and a motel that does not feature closed-circuit “adult” television programming. In this respect the South San Francisco Adult Entertainment Ordinance sweeps too broadly and impermissibly regulates speech protected by the First Amendment.

Defendants concede that “extensive studies were not conducted by the South San Francisco City Council prior to the enactment of Chapter 20.38.” But they contend that the entire ordinance is adequately supported by generalized findings regarding the impact of adult entertainment uses on neighborhood deterioration.

In part, defendants claim to have relied on a publication of the Planning Advisory Service of the American Society of Planning Officials, Report No. 327, “Regulating Sex Businesses” by William Toner. This document, however, appears to be little more than a “how to” guide for cities considering enactment of zoning legislation to regulate adult entertainment. It does not include any studies or abstracts of studies dealing with the deleterious impact of adult entertainment businesses on their surrounding neighborhoods. Nor is there any mention whatever of the type of motel involved in this case.

Defendants also point to the Public Hearing and City Council meeting held on January 20, 1982, at which Chapter 20.38 was considered and enacted. The transcripts of that meeting show that the Chief of Police of the city of South San Francisco, a concerned citizen, and several local merchants spoke in generalities about the undesirability of “adult” entertainment businesses. Although the city’s Director of Community Development stated that the E.B. Motel would be a non-conforming use under Chapter 20.38, there was no discussion of any land-use problem associated with that or any other motel.

Finally, defendants claim they are entitled to rely on the findings of fact of other legislative bodies in enacting legislation. They cite Genusa v. City of Peoria, 619 F.2d 1203, 1211 (7th Cir.1980):

A legislative body is entitled to rely on the experience and findings of other legislative bodies as a basis for action. There is no reason to believe that the effect of congregated adult uses in Peoria is likely to be different than the effect of such congregations in Detroit.

Whatever validity defendants’ argument may have with regard to Chapter 20.38 as a whole, the argument cannot support the inclusion of “adult motel”, as defined, in that Ordinance. Defendants have not pointed to a single instance in which a municipality has made a finding of fact — or other reference — having to do with such an establishment.

In short, the city has failed to offer any justification for including “adult motel” among the “adult entertainment businesses” it seeks to regulate. Regardless of whether the “adult” programs available on one channel of E.B. Motel’s televisions are entitled to the same degree of protection as other speech, the city may not constitutionally regulate such speech without some finding that its Ordinance will serve its purported purposes. This Court cannot sustain the constitutionality of a land-use planning ordinance which indisputably trenches on protected First Amendment liberties and yet is unsupported by any factual finding whatever.

Moreover, it is extremely doubtful that a justification could be provided for a definition of “adult entertainment businesses” that included an establishment such as the E.B. Motel. That “adult” programming is available within the private rooms of the motel does not, without more, distinguish the E.B. Motel from any other motel for zoning purposes. There simply is no rational relationship between legal activities that take place entirely within the walls of a motel and a city’s interest in land-use planning.

ORDER

The parties having stipulated that, pursuant to Rule 65(a) of the Federal Rules of Civil Procedure, the Court should consolidate the hearing for preliminary injunction with trial on the merits,

IT IS HEREBY ORDERED, ADJUDGED AND DECREED that:

(1) Those portions of the City of South San Francisco Municipal Code Chapter 20.-38 which purport to regulate the location, existence and conduct of an “adult motel” are unconstitutional on their face and as applied to plaintiff.

(2) Defendants and each of them, their agents, employees, representatives and all persons acting by, through or in concert with them or under their supervision, direction or control, are permanently enjoined from doing or permitting to be done directly or indirectly, any of the following acts:

(a) Prohibiting plaintiff from operating a motel at 1201 Airport Boulevard in the City of South San Francisco;
(b) Enforcing the provisions of South San Francisco City Municipal Code Chapter 20.38 to prevent plaintiff from offer-" ing adult videotapes or television transmissions to motel guests in their private rooms at 1201 Airport Boulevard in the City of South San Francisco.

(3) No person who has notice of this injunction shall fail to comply with its letter and spirit nor shall any person subvert its letter and spirit by any sham, indirection, or other artifice.

      . Defendants acknowledge that "[t]he economic viability of the motel business [would] not be jeopardized by removing the closed circuit adult t.v. programming from the motel rooms."

      . Section 20.38.030(10)(B) states:
      For the purposes of this chapter, "specified sexual activities” shall include the following:
      1. Human genitals in a state of sexual stimulation or arousal;
      2. Acts of human masturbation, sexual intercourse or sodomy;
      3. Fondling or other erotic touching of human genitals, pubic region, buttock or female breast.
      Section 20.38.030(10)0. states:
      For the purpose of this chapter, "specified anatomical areas” shall include the following: Less than completely and opaquely covered (1) human genitals or public region; (2) buttock, and (3) female breast below a point immediately above the top of the areola.

      . Another exception to the rule against regulation based on content involves obscene materials, which lack the protection of the First Amendment. See Roth v. United States, 354 U.S. 476, 485, 77 S.Ct. 1304, 1309, 1 L.Ed.2d 1498 (1957). This exception is not relevant in this case, as neither party contends that the “adult” closed-circuit television programs at the E.B. Motel are obscene.

      . But cf. Young, 427 U.S. at 71, n. 34, 96 S.Ct. at 2453, n. 34 (noting that municipality’s interest in protecting citizens from speech that is "offensive” to them cannot justify regulation of protected speech) (citing Erznoznik v. City of Jacksonville, 422 U.S. 205, 95 S.Ct. 2268, 45 L.Ed.2d 125 (1975)).

      . Like many other such ordinances, the Ordinance in the case at bar is modeled on the Detroit ordinance upheld in Young. See generally Note, Developments in the Law — Zoning, 91 Harv.L.Rev. 1427, 1557 (1978). However, "merely mimicking the ordinance upheld in American Mini Theaters is not enough." Basiardanes v. City of Galveston, 682 F.2d 1203, 1213 (5th Cir.1982).

      . A number of federal decisions have struck down ordinances modeled on the Detroit ordinance where the circumstances indicated that these ordinances would suppress altogether or greatly reduce access to activities protected by the First Amendment. See, e.g., Basiardanes, supra; Avalon Cinema Corp. v. Thompson, 667 F.2d 659 (8th Cir.1981); Keego Harbor Co. v. City of Keego Harbor, 657 F.2d 94 (6th Cir.1981); Alexander v. City of Minneapolis, 531 F.Supp. 1162 (D.Minn.1982), aff'd, 698 F.2d 936 (8th Cir.1983); CLR Corp. v. Henline, 520 F.Supp. 760 (W.D.Mich.1981), aff’d, 702 F.2d 637 (6th Cir.1983); Purple Onion, Inc. v. Jackson, 511 F.Supp. 1207 (N.D.Georgia 1981); Bayside Enterprises v. Carson, 450 F.Supp. 696 (M.D.Fla.1978); E & B Enterprises v. City of University Park, 449 F.Supp. 695 (N.D.Tex.1977).

      . A further possible infirmity in the South San Francisco Ordinance, as applied to plaintiff, is the absence of any kind of "grandfather" clause to protect existing uses. As a general rule, zoning ordinances are prospective in their application. Plaintiff has offered the adult television channel since it acquired the E.B. Motel in 1978. Chapter 20.38 was enacted in 1982. The Court need not decide whether the failure to "grandfather in” this pre-existing use makes the ordinance unconstitutionally restrictive, in light of its conclusion that the statute is overbroad. See generally Purple Onion, Inc. v. Jackson, 511 F.Supp. 1207, 1224 (N.D.Ga.1981).

      . Indeed, this appears to be a case of first impression.

      . Although it is not supported by affidavit or other proper evidence, plaintiffs argument is well-taken that the E.B. Motel's practice of transmitting adult television programming is shared by a number of the nation's finest hotels (none of which could reasonably be deemed to blight or downgrade their surrounding neighborhoods). Plaintiff writes:
      The Hyatt on Union Square, San Francisco, the Sainte Claire Hilton, San Jose, the Vista International Hotel, New York City, the Hyatt Regency, Hilton Head, South Carolina, and the E.B. Motel, South San Francisco, have several things in common: ****** 4. They provide patrons with one channel of “closed circuit television transmissions ... which are characterized by an emphasis upon the depiction or description of ‘specified sexual activities’ or ‘specified anatomical areas’
      Whether or not plaintiff is correct in its description of these hotels, a federal court has found that “some of Atlanta's finest hotels” provide such adult programming. Purple Oniort, Inc. v. Jackson, 511 F.Supp. 1207, 1220 (N.D.Ga.1981) (striking down ordinance which would have included those Atlanta hotels as “adult theaters"). Indeed, unlike the Atlanta hotels described in Purple Onion, the E.B. Motel does not charge its patrons a special fee to view adult programming.