text:
    CHEMICAL MANUFACTURERS ASSOCIATION, Plaintiff, v. CONSUMER PRODUCT SAFETY COMMISSION, Defendant.
    Civ. A. No. 84-1852.
    United States District Court, District of Columbia.
    Dec. 24, 1984.

      Robert M. Sussman, John F. Seymour, Covington & Burling, Washington, D.C., for plaintiff.
    Daniel Bensing, Sp. Asst. U.S. Atty., Washington, D.C., for defendant.
   MEMORANDUM

OBERDORFER, District Judge.

Chemical Manufacturers Association (“CMA”) sues under the Freedom of Information Act for an order compelling the Consumer Product Safety Commission (the “Commission”) to make available certain documents generated in connection with a study of di-2-ethylhexyl phthalate (“DEHP”), a chemical used, inter alia, in the manufacture of certain toys for children. The study is being conducted for the Commission by the Inhalation Toxicology Research Institute (“ITRI”) of the Department of Energy pursuant to a contract. The study is in two phases. Task I, now completed, developed a process to extract and measure the quantity of elements of DEHP in various consumer products. Task I also involved designing and conducting laboratory experiments to determine the manner and extent to which DEHP passed from the products containing it to the consumers coming in contact with the products or inhaling fumes from their incineration. Task II investigated further the effect of human saliva on such products and the effects of DEHP in such specific products as pacifiers, teethers, and other soft plastic toys which small children put in their mouths. As a result of these studies, and despite objections by CMA, the Commission convened a Chronic Hazard Advisory Panel (“CHAP”) to evaluate the studies and to advise whether regulatory action is indicated. 48 Fed.Reg. 56,628 (December 22, 1983).

Meanwhile, CMA established its own Phthalate Esters Panel. CMA and its Panel have persistently sought the documents generated by ITRI, reviewed them and “raised questions concerning the reliability and reproducibility of the data contained in the documents.” Memorandum in Support of Plaintiff’s Cross-Motion for Summary Judgment and in Opposition to Defendant’s Motion for Summary Judgment at 6 [hereinafter referred to as Plaintiff’s Memorandum]. Over time the Commission granted some, but not all, of these requests and indeed has released some materials since this suit was filed. According to Plaintiff’s Memorandum at 9, the following categories of documents, all generated after July 12, 1983 in connection with Task II, remain undisclosed.

1. Draft copies of the Task II report, “Phthalate Ester Migration from Polyvinyl Chloride Consumer Products,” dated July 31, 1984;

2. ITRI monthly progress reports for certain months in 1983 and 1984;

3. A draft protocol of an experiment designed to explore the variability of the migration data; and

4. One page of data dated April 4, 1984.

FOIA exemption (b)(5) provides that an agency need not disclose “inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.” 5 U.S.C. § 552(b)(5). CMA acknowledges that exemption (b)(5) protects deliberative materials that describe the manner in which policy or legal interpretations are formulated. See, e.g., EPA v. Mink, 410 U.S. 73, 87, 93 S.Ct. 827, 836, 35 L.Ed.2d 119 (1973). CMA’s argument centers on the notion that scientific reports are not exempt under (b)(5) because they are not documents that reveal the process by which an agency formulates law and policy.

CMA argues that the Courts have consistently held that documents are part of the pre-decisional process exempt from disclosure under (b)(5) only if they make recommendations or express opinions about legal or policy matters. See, e.g., Jordan v. United States Department of Justice, 591 F.2d 753, 772-74 (D.C.Cir.1978) (en banc). As the Court of Appeals stated in Vaughn v. Rosen, 523 F.2d 1136 (D.C.Cir.1975):

[I]t is not enough to assert, in the context of Exemption 5, that a document is used by a decisionmaker in the determination of policy. Unevaluated factual reports or summaries of past administrative determinations are frequently used by decisionmakers in coming to a determination, and yet it is beyond dispute that such documents would not be exempt from disclosure. Rather, to come within the privilege and thus within Exemption 5, the document must be a direct part of the deliberative process in that it makes recommendations or expresses opinions on legal or policy matters. Put another way, pre-decisional materials are not exempt merely because they are predecisional; they must also be a part of the agency give-and-take — of the deliberative process — by which the decision itself is made.

Id. at 1143-44 (footnotes omitted). CMA then argues that the courts have flatly refused to characterize scientific and technical reports as deliberative documents.

Our Court of Appeals has observed, in dicta, that exemption (b)(5)

encourages the free exchange of ideas among government policy makers, but it does not authorize an agency to throw a protective blanket over all information by casting it in the form of an internal memorandum. Purely factual reports and scientific studies cannot be cloaked in secrecy by an exemption designed to protect only “those internal working papers in which opinions are expressed and policies formulated and recommended.”

Bristol-Myers Company v. FTC, 424 F.2d 935, 939 (D.C.Cir.1970) (quoting Ackerly v. Ley, 420 F.2d 1336, 1341 (D.C.Cir.1969)), cert. denied, 400 U.S. 824, 91 S.Ct. 46, 27 L.Ed.2d 52 (1970). Other courts have reached the same conclusion. See, e.g., Parke, Davis & Co. v. Califano, 623 F.2d 1, 6 (6th Cir.1980) (“The documents in dispute here do contain opinions of medically and scientifically trained persons. However, unless the opinion of an expert somehow reflects the deliberative process of decision or policy making, the opinion as such does not come within the exemption.”); Ethyl Corporation v. Environmental Protection Agency, 478 F.2d 47, 50 (4th Cir.1973).

CMA thus rests its argument that the (b)(5) exemption does not apply to the documents that it seeks primarily upon a distinction between legal or policymaking documents reflecting “advisory opinions, recommendations or deliberations comprising part of the process by which policies or legal issues are formulated,” all of which CMA acknowledges to be exempt, and scientific reports which, CMA claims, are not exempt. Plaintiffs Memorandum at 14. According to CMA, disclosure of the documents here sought “will improve the deliberative process by ensuring that factual, raw materials used for decision-making by the Commission have been subjected to public scrutiny.” Plaintiff’s Memorandum at 25-26.

As a first fallback position, CMA contends that even if the documents are deliberative, they have lost any exemption to which they might otherwise be entitled because the Commission has already published most of the documents it originally sought to withhold. In addition, CMA argues that the Commission has already acted on the information in August 1983. The Commission’s staff published a so-called “briefing package” which tentatively concluded that “use of DEHP in children’s products may result in a substantial exposure of children to a substance that is known to cause cancer in animals.” Memorandum from Sandra Eberle to the Commission, dated August 31, 1983, at 1 (Plaintiff’s Exhibit C). After publication of this staff briefing package, the Commission referred the underlying material to CHAP for assessment of the health risks associated with exposure to DEHP. According to CMA, this reference to CHAP for further study is agency action which dissolves any pre-decisional privilege deriving from exemption (b)(5). Finally, CMA urges that even if some portions of the documents are exempt from disclosure as deliberative, the factual material should be disclosed after redaction of the privileged elements.

The Commission opposes disclosure of the disputed documents on the theory that they “reflect the deliberative process by which the Commission and ITRI scientists are working toward a final report of the Phase II DEHP study.” Defendant’s Statement of Material Facts as to Which There Is No Dispute at ¶ 11. As authority, the Commission invokes the Supreme Court’s statement that the purpose of exemption (b)(5) is to “prevent injury to the quality of agency decisions.” N.L.R.B. v. Sears Roebuck & Co., 421 U.S. 132, 151, 95 S.Ct. 1504, 1516, 44 L.Ed.2d 29 (1975). The Commission also refers to Judge Wilkey’s statement of the objectives of exemption (b)(5), which include the protection of “the integrity of the decision-making process itself by confirming that ‘officials should be judged by what they decided[,] not for matters they considered before making up their minds.’ ” Jordan v. U.S. Dept. of Justice, supra at 773 (quoting Grumman Aircraft Eng. Corp. v. Renegotiation Board, 482 F.2d 710, 718 (D.C.Cir.1973), rev’d on other grounds, 421 U.S. 168, 95 S.Ct. 1491, 44 L.Ed.2d 57 (1975)).

The Commission emphasizes that the documents involve “candid scientific discussions over the interpretation of preliminary test results and suggestions and opinions which may or may not be reflected in the final report.” Memorandum of Points and Authorities in Support of Defendant’s Motion for Summary Judgment at 12. Moreover, the Commission argues, CMA may try to use these data before CHAP and the Commission have finished considering them in order “to lobby the Commission to affect the ultimate contents of the [Task II] report.” Id. Finally, the Commission represents that it anticipates completing and publishing the Task II study by the end of the year and “disclosing much of the material currently being withheld at that time.” Id. at 13 n. 12.

The Commission cites no direct authority (and the Court has discovered none) to support its claim that pre-decisional scientific exchanges are made privileged by exemption (b)(5). On the other hand, none of the cases cited by plaintiff to distinguish exemption policy and legal documents from disclosable scientific and factual papers require disclosure while the deliberative process is in mid-stream. It may be that criticism of the underlying data could improve the decisionmaking process, in the way that any peer review could sharpen the work product. But there is time enough for adversary testing when the Task II report is published. It is also immediately apparent how an organization like CMA could delay and disrupt any process that might culminate in costly regulation of a profitable product, if it were provided with predecisional documents like those that the CMA seeks for its Panel. Experts do, after all, disagree. Where a government regulatory body is moving rapidly to reach a decision about whether products used by children cause cancer, agency scientists may, for example, discuss hypotheses which have not matured, and can be effectively shared only with peers in regular and confidential communication. For example, disclosure of an internal hypothesis or the data related to its formation followed by a demeaning attack on that hypothesis before the author has finally formed a conclusion would have an obvious chilling effect on the persons still in the process of forming the opinion, and those who follow in the same process. The scientist whose work was assailed would not be able to make a defense by pointing to a finished product, but would be forced to endure the embarrassment of premature criticism. Just as factual information contained in witness’ statements may be withheld when disclosure would hamper the government’s deliberative processes “by making it difficult for the government to obtain essential information,” Deering Milliken, Inc. v. Irving, 548 F.2d 1131, 1188 n. 9 (4th Cir.1977), so scientists should be able to withhold nascent thoughts where disclosure would discourage the intellectual risk-taking so essential to technical progress. Moreover, the plaintiff in this case need delay its parallel process for only a few weeks more, after which, the Commission indicates, the documents sought will be forthcoming.

Courts are being reminded more and more about the deference that they owe to administrative agencies in regard to the way these agencies conduct their business. See generally Allen v. Wright, — U.S. -, 104 S.Ct. 3315, 3329-30, 82 L.Ed.2d 556 (1984); Women’s Equity Action League v. Bell, 743 F.2d 42, 43 (D.C.Cir.1984). There should be considerable deference to the Commission’s judgment as to what constitutes, as our Court of Appeals has put it, “part of the agency give- and-take — of the deliberative process — by which the decision itself is made.” See Vaughn v. Rosen, supra, 523 F.2d at 1144. The Commission is better situated than either CMA or this Court to know what confidentiality is needed “to prevent injury to the quality of agency decisions,” N.L. R.B. v. Sears Roebuck & Co., supra, 421 U.S. at 151, 95 S.Ct. at 1516, while the decisionmaking process is in progress. Closer scrutiny and fuller disclosure after the Commission has published its study will be less likely to cause such injury. Because the documents in this case are intimately involved in an ongoing policy making process, nondisclosure is, at the moment, essential. The documents are therefore protected under the deliberative process privilege and are exempt from disclosure under (b)(5).

There is an instructive parallel in Rule 26(b)(4) of the Federal Rules of Civil Procedure. Rule 26(b)(4) sets forth the circumstances under which a litigant may discover the work of an expert who has been retained by an opponent “in anticipation of litigation.” An agency like CMA, which is taking steps toward product regulation, proceeds with the prospect of litigation in mind. According to the Commission, proposals for regulation of products like DEHP are almost invariably litigated. Defendant’s Supplemental Memorandum at 3. The work of the Commission and the ITRI’s scientific staff is thus somewhat analagous to that of an expert preparing for trial. Rule 26(b)(4) precludes discovery of experts who, like the CMA’s staff, will not be called to testify at trial, except “upon a showing of exceptional circumstances under which it is impractical for the party seeking discovery to obtain facts or opinions by other means.” Indeed, material prepared in anticipation of litigation by an expert not expected to testify at trial is exempt from disclosure under (b)(5). See Hoover v. United States Department of the Interior, 611 F.2d 1132 (5th Cir.1980); Deering Milliken, Inc., supra, at 1138. Moreover, Rule 26(b)(4) reflects a concern for the timing of the discovery that it does permit. See Rule 26(b)(4) (“facts known or opinions held by experts”) (emphasis added); Rule 26(b)(4) Advisory committee comments (“discovery [of experts] is limited to trial witnesses, and may be obtained only at a time when the parties know who their experts will be”). At this point, the plaintiff can obtain the information by waiting until the Commission releases it following publication of the final Task II report. This short delay will prevent the plaintiff from taking unfair advantage of the Commission’s expertise, compare Pearl Brewing Co. v. Joseph Schlitz Brewing Co., 415 F.Supp. 1122, 1138 (S.D.Tex.1976), and from interfering with the Commission’s experts before their opinions are fully and finally formed. If the Commission delays the release of the documents at issue, there will come a time when such delay might constitute an “exceptional circumstance” making it “impracticable” for the CMA to obtain the' scientific information at issue by the simple expedient of being patient. At that point, the (b)(5) exemption developed here by analogy to Rule 26(b)(4) might no longer be applicable. But that time has not yet arrived.

In reaching this decision, the Court has considered plaintiff’s contention that the Commission’s reference to CHAP was the culmination of a deliberative process so that defendant is in fact seeking post-decision disclosure. This contention is inconsistent with the factual context; the reference to the CHAP was obviously an interim step in a deliberative process that will not apparently culminate until publication of the Task II report a few weeks hence.

Nor does the Commission regulation equating drafts with final copy require disclosure before the agency action contemplated by the deliberations now in progress. If, after the Task II study is published, or has been unreasonably delayed, see Telecommunications Research and Action Center v. FCC, 750 F.2d 70 (D.C.Cir.1984), the Commission continues to withhold the documents at issue here, the Court could reconsider any exemption then claimed for them, and, if necessary, conduct an in camera review to redact only the privileged portion and require disclosure of the balance.

In view of the foregoing, an accompanying order grants defendant’s motion for summary judgment and denies plaintiff’s cross-motion.

ORDER

For the reasons set forth in the accompanying memorandum, it is this 21st day of December, 1984, hereby

ORDERED: that the plaintiff’s cross motion for summary judgment be, and is hereby, DENIED; and it is further

ORDERED: that the defendant’s motion for summary judgment be, and is hereby, GRANTED; and it is further

ORDERED: that plaintiff’s complaint be, and is hereby, DISMISSED.

      . CMA argued that appointment of a CHAP was premature. Letter of Geraldine Cox, Ph.D., to Dr. Peter Preuss, dated November 7, 1983 (Plaintiff's Exhibit A).

      . However, each case primarily relied upon by CMA involved disclosure of scientific materials after a decision based on these materials had already been made. These disclosures included drafts of such documents as well as those in final form. See page 117 infra.

      . CMA also argues that Commission drafts are disclosable because of a Commission regulation which treats drafts "no differently from other documents requested under the FOIA.” 45 Fed. Reg. 22,022 (April 3, 1980).

      . See pages 115-116 supra.

      . As Dr. Charles Hobbs, Assistant Director of ITRI, noted in his declaration:
      [B]oth the monthly reports and draft final reports are iterative documents. The premature release of these monthly reports and draft reports could result in the release of incompletely interpreted information. Premature release of monthly reports could also inhibit open and timely communications between the ITRI investigators and the agency sponsoring the research.
      Hobbs Declaration at ¶ 17.


source: Caselaw Access Project

author: ARONOVITZ, District Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff, v. Francisco ARMENDARIS, Defendant.
    No. 81-0046-Civ.
    United States District Court, S.D. Florida.
    Dec. 27, 1984.

      Robert A. Rosenberg, Asst. U.S. Atty., Miami, Fla., for plaintiff.
    Frank H. Alvarez, Miami, Fla., for defendant.
   MEMORANDUM OPINION INCLUDING FINDINGS OF FACTS AND CONCLUSIONS OF LAW

ARONOVITZ, District Judge.

THIS CAUSE came on for trial before the Court without a jury on Plaintiff UNITED STATES OF AMERICA’S Complaint (Docket No. 1) based on Defendant FRANCISCO ARMENDARIS’ alleged non-payment of a fine imposed pursuant to 8 U.S.C. § 1323. The Court heard and received into evidence, live testimony and numerous exhibits, and has had the benefit of closing argument by counsel. The Court has carefully considered the foregoing as well as the pertinent portions of the record, including the prior rulings in the instant case, particularly the opinion of this Court denying the Government’s Motion for Summary Judgment (entered August 26, 1981), 520 F.Supp. 1038, which denial was affirmed by the Eleventh Circuit, and being otherwise fully advised in the premises, the Court makes the following findings of fact and conclusions of law:

FINDINGS OF FACT

1. The case sub judice arises out of the unique setting of the Mariel Boatlift wherein thousands of Cuban Nationals were carried by boat from Mariel Harbor, Cuba, to Southern Florida. For a proper presentation of the general conditions and circumstances that prevailed during the Mariel Boatlift, the Court adopts and incorporates as though fully set forth herein, those general findings of fact entered by this Court under date of January 24, 1984, in the decision of Pollgreen v. Morris, 579 F.Supp. 711, 714 (S.D.Fla.1984), from which an appeal is presently pending in the Eleventh Circuit. The Court adopts those findings of fact in Pollgreen insofar as they relate to the general historical context of the Mariel Boatlift during the spring of 1980. Some of the dates of the occurrences set forth in the testimony in the instant case are more accurately established in that earlier related opinion.

2. On or about April 19, 1980, small clusters of boats began to leave the docks of Key West, Florida, on voyages to Mariel Harbor, Cuba, (hereinafter “Mariel”) to pick up refugees.

3. On April 21, 1980, the first boatloads returned from Mariel foreshadowing the massive migration that was about to follow. Soon thereafter, nearly 1800 boats carrying approximately 114,000 refugees arrived on our shores in Key West and other parts of Southern Florida.

4. Within the context of that occurrence in April of 1980, in one of the first ventures to Mariel during the early phases of the boatlift, Defendant FRANCISCO ARMEN-DARIS, with his brother-in-law, Nelson Aguilar, purchased a vessel called “The Drumstick” to travel to Cuba. The mission of this voyage was to attempt to bring out Defendant’s family members who were not otherwise allowed to leave Cuba through normal channels of international travel.

5. Defendant’s first effort was essentially a failure. It succeeded only insofar as Defendant was able to give to the Cuban authorities a list of the relatives that he sought to bring back.

6. On that first trip, Defendant had occasion to view the oppressive military presence of Cuban authorities in Mariel Harbor. The harbor was teeming with patrol boats and its docks were filled with armed troops. Nevertheless, Defendant and his brother-in-law were permitted to depart freely. No effort was made to prevent either Cuban American from leaving Mariel Harbor. Accordingly, the two men left Mariel and returned to Key West sometime near the end of April.

7. Thereafter, on May 5, 1980, President Jimmy Carter made a public statement which was widely disseminated. The subject of the presidential statement was the massive influx of Cuban nationals into the United States from the Mariel boatlift. In that speech, the President stated, “We’ll continue to provide an open heart and open arms to refugees seeking freedom from Communist domination and from the economic deprivation brought about primarily by Fidel Castro and his Government.” (Government’s Exhibit 2).

8. On May 14, 1980, after further reflection on the subject of the boatlift, the President overrode his “Open Heart and Open Arms” speech of May 5th and took affirmative steps to end the freedom flotilla by imposing a blockade on outgoing vessels and ordering the return of United States vessels already at Mariel Harbor. That action was taken pursuant to the overwhelming problems which became apparent as more and more refugees streamed into the United States and in particular into Southern Florida from Mariel.

9. Despite this apparent reversal of policy, the Court must examine the instant case in the context of the conditions which existed and prevailed on or about May 11, 1980, when Defendant FRANCISCO ARMENDARIS and his brother-in-law Nelson Aguilar departed Key West for a second voyage to Mariel. On the one hand, the President of the United States had publicly embraced the opportunity to receive the refugees from Cuba. The Court does not criticize the President’s policy, but merely comments on the same and notes that at the same point in time, the evidence indicates that officials of the various agencies of the United States Government, while not necessarily directly implicating themselves in any effort or procedure to cause boats to leave Key West to travel to Cuba and bring refugees back, did nevertheless, adopt an attitude which could easily have been, and in fact was, construed by the public as one which was favorably receptive to the boat-lift.

10. The mass migration of Cuban immigrants to our shores which has come to be known as “The Mariel Boatlift”, was an event unique in modern history. The only incident which this Court can recall as being even remotely comparable was the evacuation of Dunkerque on the French Coast during World War II. Yet even that could not compare with what happened between Key West and Mariel during the months of April and May in 1980. Indeed, in order to fully understand the extreme excitement, the overwhelming emotion, and the human elements that were brought into play, one had to witness the events firsthand in Key West, in those boats, and in Mariel. The frantic and emotional nature of these events emerges when eyewitnesses relive, through their courtroom testimony, the unfolding drama of Mariel.

11. This Court had heard and considered such testimony in the case of Pollgreen v. Morris, 579 F.Supp. 711 (S.D.Fla.1984). Once again, in the instant case, this Court has heard and considered the testimony of those who experienced the boatlift firsthand.

12. Moreover, other Judges sitting in this District have heard and considered the eye-witness testimony attesting to the absolute panic and consternation that prevailed in Mariel Harbor when armed Cuban patrol boats policed the vast harbor and its entrance. Soldiers armed with rifles and machine guns randomly prevented entrance to and exit from the harbor, controlled the docks, boarded and searched vessels, and ordered that vessels take aboard certain individuals. No opportunity was provided for anyone on the vessels to reject these additional “passengers”.

13. This is the testimony that was reiterated in the instant case. When “The Drumstick” arrived in Mariel for the second time, Defendant ARMENDARIS furnished to the Cuban authorities a letter, which purported to demonstrate that his four relatives had been authorized to leave Cuba in 1962. (Defendant’s Exhibit 1). Additionally, Defendant ARMENDARIS gave the Cuban authorities the names of six other relatives who had no papers of any kind which would authorize them to leave Cuba.

14. The testimony indicates quite clearly that Defendant ARMENDARIS went to Mariel a second time with the sole intent to bring his ten relatives, and no others, out of that country and into the United States. It is equally clear that Defendant ARMEN-DARIS was not permitted to bring out any of his relatives unless he brought out other Cuban nationals foisted upon him forcibly by the Castro regime. The authorities threatened that if Defendant ARMEN-DARIS did not take these other Cuban nationals on board his boat, then no one would be allowed out of the harbor.

15. The Court is convinced and satisfied that this was the prevailing attitude of the Cuban authorities as it was evidenced toward hundreds upon hundreds of boats that were, in effect, prisoners in Mariel Harbor. The sum and substance of these circumstances resulted in, and indeed constituted, force, duress and coercion exerted upon those individuals who sought to return refugees from Cuba. The force, duress and coercion was asserted directly by the Castro regime upon hundreds of persons like and including Defendant ARMENDARIS.

16. On May 14,1980, the date that President Carter took the first affirmative steps to halt the Freedom Flotilla by imposing a blockade on outgoing vessels and ordering the return of U.S. vessels at Mariel Harbor, “The Drumstick” was already at Mariel. Therefore, Defendant ARMENDARIS could not at that point avoid travelling to Cuba and thereby comply with the President’s May 14th orders. Rather, at that time, “The Drumstick” was already at the mercy of the Castro regime and could not leave the harbor without those other refugees whom the authorities packed into the vessel.

17. Finally, the evidence demonstrates that on May 11, 1980, when Defendant FRANCISCO ARMENDARIS and his brother-in-law Nelson Aguilar departed from Key West in “The Drumstick”, they believed with good reason that they could lawfully travel to Cuba and bring their relatives back to Florida. Indeed, they had every reason to believe that they could make this second voyage to Cuba based on the public representations of the President of the United States and the Government of this country.

CONCLUSIONS OF LAW

1. This is a civil action brought by the United States of America pursuant to 8 U.S.C. §§ 1329 and 1330, and 28 U.S.C. § 1345 for non-payment of a fine assessed because Defendant transported into the United States fourteen (14) Cuban Nationals who did not have valid unexpired visas as required by law. (Docket No. 1).

2. Defendant filed a Counterclaim to the Government’s case in chief for the damages he allegedly suffered as a result of the Government’s seizure of his vessel. (Docket No. 4).

3. The Court hereby adopts and incorporates as though fully set forth herein, those conclusions of law entered by this Court in Pollgreen v. Morris, 496 F.Supp. 1042 (S.D.Fla.1980), wherein a preliminary injunction issued against the Government which had seized vessels used to bring Cuban refugees to the United States. In that opinion, this Court held that due process required the owners and operators of the seized vessels be accorded postseizure hearings wherein such seizures, as well as the imposition of fines, could be contested. The decision also highlighted the significance of the defense of duress which is crucial to the instant cause.

4. The Court further adopts and incorporates as though fully set forth herein, those conclusions of law entered by this Court in the second published opinion of Pollgreen v. Morris, 579 F.Supp. 711 (S.D.Fla.1984). That recent decision considered the boatowners claims of due process deprivations due to the seizures and related fines. Moreover, in that opinion, this Court noted:

There seems little doubt but that parties who participated in the Mariel boatlift had every reason to believe that at least until May 14, 1980, that no violation of United States policy or law was occurring by bringing the Cuban nationals into the United States. See, United States v. Frade, 709 F.2d 1387 (11th Cir.1983), at P. 1394-95:
“... Congressman Long testified that the priests ‘wanted general information about making sure what the United States policy was, to do it in accordance with the policy of the United States.’ He stated that, at that time he ‘was of the impression from the President’s [May 5] statement ... that the United States was encouraging and welcoming’ the boatlift.”

579 F.Supp. at 717. Regarding the President’s statement of May 5th, this Court further observed:

As can be observed from the foregoing, the President’s “open heart and open arms” statement was widely publicized and broadly interpreted as Government approval of the boatlift. The Eleventh Circuit further observed:
“... But the import of the specific provision in subparagraphs (a) through (f) [of the President’s Statement on the Administration Policy Toward the Refugees of May 14, 1980], seen against the background of Mariel, as we understand it, is that the Administration would continue to welcome legitimate Cuban refugees, but would take firm coordinated action to prevent the two dangers which had emerged from the boatlift: death and injury at sea resulting from passage in unsafe vessels, and entry into the United States of Cuban undesirables forced onto the boats by the Castro regime.”
Frade, supra, at page 1396.

579 F.Supp. at 717.

5. As these conclusions of law already reflect, the Court would be remiss to omit specific reference to the seminal Eleventh Circuit opinion on the subject presently pending, namely, United States v. Frade, 709 F.2d 1387 (11th Cir.1983). That case involved an appeal from a conviction rendered in this District arising out of the transport of Cuban refugees in the Mariel boatlift. The Eleventh Circuit Court of Appeals reversed the conviction finding that there was insufficient notice to the defendant/appellants that their conduct in transporting refugees was violative of the law. See, United States v. Fernandez-Pertierra, 523 F.Supp. 1135 (S.D.Fla.1981); United States v. Anaya, 509 F.Supp. 289 (S.D.Fla.1980).

6. The Court also refers to the criminal case of United States v. Zayas-Morales, 685 F.2d 1272 (11th Cir.1982), wherein the Eleventh Circuit affirmed the dismissal of eighty-four (84) indictments, charging three hundred and thirty-six (336) defendants with substantive violations of 8 U.S.C. 1324(a)(1) and with conspiracy to violate that statute. The Court stated in that opinion:

We therefore affirm the dismissal based on the Government’s inability to prove the defendants possessed a general criminal intent under the stipulated facts.

685 F.2d at 1273. The Court is mindful that the Zayas-Morales decision is a true criminal case and that the instant case is a civil action brought by the Government for non-payment of a fine. Still, the statute under which the fine was imposed is quasi-criminal in nature given the type and amount of the penalties assessed and the severity of the penalties imposed. It is therefore, not entirely illogical to argue or claim that to some extent the intent of the parties should be considered in the instant matter. To this end, the Court finds the analysis and holding in Zayas-Morales extremely persuasive.

7. On the primary claim asserted by the Government against Defendant for the non-payment of the fine, the Court finds that the Government cannot prevail and that Defendant does prevail by reason of the extreme duress and coercion that have been found to have existed at Mariel during the time that Defendant travelled to Cuba in April and May of 1980.

8. Alternatively and separately, the Court finds that Defendant did bring fourteen (14) undocumented aliens into the United States. As to two of those fourteen aliens, there is colorable documentation, (Defendant’s Exhibit 1). However, in a technical sense, there was a violation of 8 U.S.C. § 1323. Assuming this to be the case and assuming that the statute is applicable, the penalty of $1,000 per undocumented alien should nevertheless be mitigated and/or remitted in full by reason of the duress and coercion exerted upon Defendant at Mariel. Any act or conduct complained of by the Government was a direct result of the exertion of duress upon Defendant FRANCISCO ARMENDARIS and his brother-in-law Nelson Aguilar.

9. Additionally, it would be unconscionable for this Court to be called upon to uphold and impose the fines involved in this action in view of the occurrences which took place at Mariel as established by the unrebutted testimony. No Court, sitting as a Court of Equity, or even clothed with the powers of equity, would refuse to mitigate or remit the fines imposed in the instant case.

10. It would also be unconscionable for this Court to allow the imposition of fines when many of the refugees who were the basis of the fines are now, according to published statements, about to be granted status as resident aliens. Some 116,000 to 125,000 refugees from the Mariel boatlift are on the verge of being deemed resident aliens, yet the persons responsible for bringing them to this country are being penalized and subjected to stiff fines as well as forfeitures of their vessels. The Court does not fault the Government for granting the Mariel immigrants refugee status. Rather, the Court notes that it would be unconscionable, on the one hand, to permit that group of persons to receive the benefits of living in the United States, while, on the other hand, to simultaneously penalize those who transported the refugees here. Justice requires that the Court consider this apparent paradox when rendering its decision of the instant cause.

11. With regard to Defendant’s Counterclaim in the instant suit, the evidence does not establish a basis for relief. The defendant-counterclaimant has not carried his burden of proof and has not established any factual basis that would entitle him to receive the benefits of recompense from the United States. Therefore, the Court concludes as a matter of law, that the counterclaim has not been proven and that due to the lack of foundation in law and fact, all requests for relief therefrom are denied.

12. A Final Judgment denying the Government’s claim for relief and further, denying the Defendant’s counterclaim will be entered in accordance herewith.

13. The costs of the action are to be borne by the respective parties.


author: LUONGO, Chief Judge.

text:
    Robert C. CARVER v. CONSOLIDATED RAIL CORPORATION.
    Civ. A. No. 83-2309.
    United States District Court, E.D. Pennsylvania.
    Dec. 27, 1984.
    Stephen M. Karp, Paoli, Pa., for plaintiff.
    Stuart A. Schwartz, Philadelphia, Pa., for defendant.
   OPINION

LUONGO, Chief Judge.

Plaintiff brought this action pursuant to the Federal Employers’ Liability Act (FELA), 45 U.S.C. § 51 et seq. At trial, liability was conceded and the jury awarded plaintiff damages amounting to $8,660.00. Plaintiff now moves under Pa.R.Civ.P. 238 for prejudgment interest in the amount of $902.00. Because I conclude that Rule 238 should not apply in an FELA suit, I will deny the motion.

The availability of interest in an action arising under a federal statute is governed by federal law, not the law of the forum state. See Norfolk & Western Railway Co. v. Liepelt, 444 U.S. 490, 493, 100 S.Ct. 755, 757, 62 L.Ed.2d 689 (1980) (“questions concerning the measure of damages in an FELA action are federal in character”); Faulkenberry v. Louisiana & Arkansas Railway Co., 551 F.2d 650 (5th Cir.1977). Title 28 U.S.C. § 1961 provides for postjudgment interest on money damages recovered in federal court. Neither this section nor the FELA itself, however, contains any provision concerning the availability of prejudgment interest as part of a plaintiffs compensation. A number of courts have concluded on the basis of Congress’ silence that state laws authorizing prejudgment interest cannot be invoked in an FELA action. E.g., Faulkenberry, 551 F.2d at 651; Kozar v. Chesapeake & Ohio Railway Co., 449 F.2d 1238, 1244 (6th Cir.1971); Louisiana & Arkansas Railway Co. v. Pratt, 142 F.2d 847, 849 (5th Cir.1944) (Congress’ silence concerning prejudgment interest is “indicative of a considered purpose that no interest should be allowed in [FELA] actions prior to verdict;” state statutes are therefore superseded); Wicks v. Central Railroad Company of New Jersey, 129 N.J.Super. 145, 322 A.2d 488, cert. denied, 66 N.J. 317, 331 A.2d 17 (1974).

Despite the authority cited above, I am not persuaded that the FELA’s silence alone forecloses further consideration of whether prejudgment interest should be awarded. The U.S. Supreme Court has held that a federal statute’s failure to provide for prejudgment interest does not automatically prevent a federal court from awarding such interest in an action brought under the statute. Rodgers v. United States, 332 U.S. 371, 373, 68 S.Ct. 5, 6, 92 L.Ed. 3 (1947). Absent an express statutory prohibition, the decision whether to grant prejudgment interest should depend upon Congress’ purpose in enacting the statute under which the case arises and upon general equitable principles. Id.

On the basis of the factors described in Rodgers, I conclude that Pennsylvania’s prejudgment interest rule should not be applied in an FELA action. The Third Circuit, in holding that federal courts must apply Pennsylvania’s Rule 238 in diversity cases, determined that the availability of prejudgment interest has a substantive impact on the rights of litigants. Jarvis v. Johnson, 668 F.2d 740, 746 (3d Cir.1982). Accord Renner v. Lichtenwalner, 513 F.Supp. 271, 273 (E.D.Pa.1981). One of Congress’ major purposes in enacting the FELA was to create nationwide uniformity with respect to compensation for injured railroad employees. Norfolk & Western Railway Co. v. Liepelt, 444 U.S. 490, 493 n. 5, 100 S.Ct. 755, 757 n. 5, 62 L.Ed.2d 689 (1980). This goal would be undermined if federal courts were to modify judgments in FELA cases on the basis of state substantive laws concerning damages. Application of Pennsylvania’s prejudgment interest rule would also be inconsistent with the FELA's more specific purposes. The district court for the Middle District of Pennsylvania described the nature and significance of these purposes as follows:

FELA reflects the dissatisfaction of Congress with the common law duty of master to his servant. This statute supplants that duty with the far more drastic duty of paying damages for injury or death at work due in whole or in part to the employer’s negligence. The general congressional intent was to provide liberal recovery for the injured worker____ FELA seeks to adjudge the cost of human injury and the inescapable expense of railroading, equitably between the worker and the carrier____ FELA enlarges the rights of railroad employees to recover for injuries by stripping the employer of his common law defenses and for all practical purposes the inquiry is limited to the question of whether negligence of the employer played any part, however small, in the injury which is the subject of the suit____ [I]t is evident that Congress, by enacting FELA, has adjusted the equities between the railroad employer and the injured employee. To grant prejudgment interest would undermine the equities that have been balanced by the Act itself. This court does not believe that prejudgment interest should apply in FELA cases.

Camplese v. Consolidated Rail Corp., 594 F.Supp. 44, 47-48 (M.D.Pa.1984) (citations omitted) (emphasis original).

I recognize that the Pennsylvania Superi- or Court came to a contrary conclusion in Humphries v. Pittsburgh & Lake Erie Railroad Co., 328 Pa.Super. 119, 476 A.2d 919 (1984). Although state and federal courts have concurrent jurisdiction over FELA actions, federal courts retain the ultimate responsibility for interpreting and applying federal law. See Conover v. Montemuro, 477 F.2d 1073, 1081 (3d Cir.1973); Dugas v. Kansas City Southern Railway Lines, 473 F.2d 821, 826-27 (5th Cir.), cert. denied, 414 U.S. 823, 94 S.Ct. 124, 38 L.Ed.2d 56 (1973); Thomas v. Hempt Brothers, 371 Pa. 383, 392, 89 A.2d 776, 780 (1952), rev’d on different grounds, 345 U.S. 19, 73 S.Ct. 568, 97 L.Ed. 751 (1953). In any case, I find Judge Rambo’s reasoning in Camplese to be persuasive. The Humphries court’s reasoning consists primarily of a demonstration that the FELA and 28 U.S.C. § 1961 do not prohibit prejudgment interest. Although I accept this proposition, I cannot accept the superior court’s conclusion that courts are therefore free to apply Pennsylvania’s Rule 238 in an FELA action. Because the application of state law concerning prejudgment interest would undermine the policies of the FELA, I will deny plaintiff’s motion.

      . Rule 238 provides in relevant part:
      (a) Except as provided in subdivision (e), in an action seeking monetary relief for bodily injury, death or property damage, or any combination thereof, the court or the arbitrators ... shall
      (1) add to the amount of compensatory damages in the ... verdict of a jury ... damages for delay at ten (10) percent per annum, not compounded, which shall become part of the award, verdict or decision;
      (2) compute the damages for delay from the date the plaintiff filed the initial complaint in the action or from a date one year after the accrual of the cause of action, whichever is later, up to the date of the award, verdict or decision.
      ....
      (e) If a defendant at any time prior to trial makes a written offer of settlement in a specified sum with prompt cash payment to the plaintiff, and continues that offer in effect until commencement of trial, but the offer is not accepted and the plaintiff does not recover by award, verdict or decision, exclusive of damages for delay, more than 125 percent of the offer, the court or the arbitrators shall not award damages for delay for the period after the date the offer was made.

        . The recent legislative history of 28 U.S.C. § 1961 indicates that Congress is satisfied with this approach. The section was recently amended to provide for uniform interest rates. Included in the proposed amendment was a provision authorizing an award of prejudgment interest where necessary to compensate a plaintiff. See S.Rep. No. 275, 97th Cong., 2d Sess. 11-12, reprinted in 1982 U.S.Code Cong. & Ad.News 11, 21-22. The amendment as adopted, however, contains no mention of prejudgment interest. Arguably, Congress preferred that federal courts continue to evaluate the propriety of prejudgment interest in the context of specific cases and statutes.

      . I decide only that a federal court need not apply Rule 238 in an FELA action. I note, however, that although a state court may apply its own procedural rules in an FELA action, it may not apply state rules which would defeat the statute’s underlying policies. See Arnold v. Panhandle & Santa Fe Ry. Co., 353 U.S. 360, 361, 77 S.Ct. 840, 841, 1 L.Ed.2d 889 (1957).

      . The Humphries court relied upon Olsen v. Shell Oil Co., 708 F.2d 976 (5th Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 715, 79 L.Ed.2d 178 (1984); in which the Fifth Circuit applied a state prejudgment interest rule in a suit brought under the federal Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. §§ 1331-56. This holding was based, however, on the fact that the OCSLA specifically incorporates state law concerning both liability and damages. Id. at 980-81. Where a federal remedy is based on “surrogate state law," application of the state’s prejudgment interest rule is justified. Id. at 984. The same result is not justified under the FELA, which was designed to replace rather than incorporate state law. Norfolk & Western Ry. Co. v. Liepelt, 444 U.S. 490, 100 S.Ct. 755, 62 L.Ed.2d 689 (1980).


author: GENE CARTER, District Judge.

text:
    UNITED STATES of America v. John D. RULE, et al.
    Crim. No. 84-00016 P.
    United States District Court, D. Maine.
    Dec. 27, 1984.
    See also, 594 F.Supp. 1223.

      Margaret McGaughey, Asst. U.S. Atty., Portland, Me., for plaintiff.
    Samuel Harris Dawson, Gallop, Dawson, Kimelman & dayman, New York City, for John D. Rule.
    E. Paul Eggert, Mittel & Hefferan, Portland, Me., for Dennis A. Beckwith.
    Stephen W. Devine, Portland, Me., for Nancy Beckwith.
    Guy L. Heinemann, New York City, for Thomas Alexander Browning.
    Judy Potter, The University of Maine School of Law, Portland, Me., for Robert M. Cushner.
    Thomas O’Rourke, New York City, for Michael Leto.
    Julian Sweet, Berman, Simmons, Laskoff & Goldberg, Lewiston, Me., for Thomas McHugh.
    Graydon Stevens, Kelly, Remmel & Zimmerman, Portland, Me., for Alan J. Mineart.
    David C. Pomeroy, Portland, Me., for Daniel J. Quinn.
    Peter J. DeTroy, Portland, Me., for Richard W. Robinson.
    Richard Berne, New York City, for Gerald Sher.
    John D. Patten, Patten & Ganun, New York City, for Craig James Sterner.
    Richard Emerson, Portland, Me., for Thomas Streifel.
    Peter K. Wilson, New York City, for Kyle Yanden Heuvel.
   MEMORANDUM OF DECISION AND ORDER ON GOVERNMENT’S MOTION TO SEVER DEFENDANT STERNER FOR TRIAL

GENE CARTER, District Judge.

The Government commenced this prosecution by means of a multicount Indictment charging all fourteen named defendants and a “John Doe” defendant. Count I of the Indictment charges all of the defendants with the offense of conspiracy to violate the provisions of 21 U.S.C. §§ 841(a)(1), 841(b)(6), and 846. The remaining fifteen counts charge various defendants, in differing combinations, with the offenses of possession of cocaine on various dates with intent to distribute in violation of 21 U.S.C. § 841(a)(1) and 18 U.S.C. § 2. After hearing, the Court previously severed Count I of the Indictment from the remaining counts and ordered that the trial of Count I shall proceed before trial on the other counts. On December 26, 1984, the Court ordered the severance for trial on Count I of three defendants, Rule, Quinn, and Streifel, due to the pendency of the Government’s appeal from a pretrial suppression order affecting only the interests of those three defendants. Various other defendants have sought severances and individual trial on Count I. Those motions were either denied or found not to require Court action on December 26, 1984. Two other defendants, the Beckwiths, have been severed for separate trial as a result of a pretrial suppression ruling affecting their interests.

Presently before the Court is the Government’s motion, filed on December 11, 1984, to sever trial of the Defendant Sterner and to proceed to trial on Count I in that case before trial of the, other defendants. The motion was heard by the Court on December 20, 1984.

The Government sets out in the motion its reasons for the requested severance:

In support of such motion, the Government states that it is in the interest of justice to try Defendant Sterner apart from the other defendants. Whereas trial of all defendants presently scheduled to begin on January 3, 1985 would require approximately fifty witnesses and several weeks time, trial of Sterner alone could be completed in two to three days. The results of a trial against Sterner would have a substantial impact on the need to try the remaining defendants and could substantially conserve the judicial resources required to resolve this case.

At oral argument the Government asserted that it intended, if permitted to do so, to try Defendant Sterner first and subsequently, regardless of the outcome of that trial, to grant him immunity under 21 U.S.C. § 884 and call him as a witness in the course of the Government’s case-in-chief against the remaining defendants at trial on Count I. Such a trial of Defendant Sterner, the Government further asserts, would take only three days. This procedure, the Government claims, holds forth the hope of shortening the trial of the remaining defendants and even of obviating the need for trial of some or all of them. The Government suggests that the imminence of Defendant Sterner’s testimony in the second trial could well induce an interest of one or more defendants in that trial in seeking to achieve successful plea bargains.

All defendants are treated here as objecting to the Government’s motion. Only counsel for Defendant Sterner spoke at hearing in response to the motion. It is clear that the other defendants consider their interest in securing the denial of the motion to be dependent upon, if not derivative from, whatever right and interest Defendant Sterner has to that end. It may be said, in any event, that they have no right, independent of Defendant Sterner’s, that would justify the Court, in the exercise of an informed discretion, in denying the motion. They, as individual defendants, have no right to be tried with Defendant Sterner, nor for that matter, with any other defendant. United States v. Bronson, 145 F.2d 939, 943 (2d Cir.1944). Further, the public interest, and in some respects, their interests, require that their trial be an effective search for the truth. The adducement of evidence reasonably calculated to achieve that result is in the service of those interests and is the proper duty of the Government. The Government could have secured that end by indicating these defendants separately, and it is not prohibited from doing so by seeking severance where it has elected to indict them jointly. United States v. Grullon, 482 F.Supp. 429 (E.D.Pa.1979); United States v. Lang, 527 F.2d 1264 (4th Cir.1975); Cephus v. United States, 324 F.2d 893, 898 n. 22 (D.C.Cir. 1963).

Thus, the Court is satisfied that here the Government has established sufficient prejudice to require relief from joinder under Fed.R.Crim.P. 14. Maintenance of the joinder will result in the Government being deprived of evidence likely to be available and admissible at the trial of the other defendants. No showing has been made on the part of those defendants that any violation of a legally cognizable interest possessed by any of them will occur if the requested severance is granted.

Finally, there will be no infringement of the right of other defendants to a prompt trial under the Speedy Trial Act, 18 U.S.C. §§ 3161, et seq. According to the Court’s calculation, no time has run on the Speedy Trial clock. The effect of Defendant Sterner’s severance on scheduling the other trial will be to impose a delay of no more than three or four days in its commencement.

With respect to Defendant Sterner, the showing of prejudice to the Government if the joinder is maintained is likewise made, on the basis of the same considerations. The question now becomes: Does Defendant Sterner have any legally cognizable interest that will be improperly affected by the severance of his case from that of the other defendants? His counsel at oral argument put forth, with commendable condor, those points that must be addressed in responding to this inquiry. It must first be acknowledged that Defendant Sterner has no legal right to frustrate the Government’s interest in proving the guilt of other defendants on this Indictment. Counsel suggests, however, that the Government’s proposed strategy will not work because Defendant Sterner may at some point successfully invoke his Fifth Amendment rights. That may well be, but that is no ground to deny the strategy a chance to be employed. The Government seeks an opportunity and not a guarantee. From the Court’s rather detailed knowledge of much of the evidence in this case, gained during extensive pretrial motion practice, the Court is satisfied that the Government may reasonably believe from Defendant Sterner’s known involvement in certain events that he can make a considerable contribution to the Government’s case with respect to the other defendants. To the extent that he can be required to do so without infringing his Fifth Amendment or other rights, the public interest in an effective and fair trial process militates strongly in favor of that being done.

If, in playing out that scenario, the Court shall determine that Defendant Sterner’s Fifth Amendment or other rights are improperly prejudiced, it can take effective action to protect them at that time and it may well be that, as a result, the Government’s strategy will fail. If so; so be it. That result will simply mean that the Government will have to proceed by other proof in that trial. It cannot now be said with any certainty, however, that such, will be the case. If that situation does not materialize, a proper purpose will be served and no harm will be done to Defendant Sterner’s legal interests.

Defendant Sterner, like the other defendants, cannot claim any right to be tried with the other defendants solely in order to serve his competing interests. See United States v. Bronson, supra. He cannot, any more than can any other defendant, claim as a right the ability to frustrate the Government’s proof of the guilt of other defendants with respect to this Indictment. He must show some conflict with his own rights. Here, he can be separately tried before the other defendants are tried without any risk of harm to the fairness of his trial resulting from the severance.

Further, there is some potential for that process to conserve the Court’s time and effort, in addition to fostering the search for the truth at the trial of the other defendants. Even though that consideration may be somewhat speculative and perhaps is not sufficient, by itself, to justify the severance, it surely is, nevertheless, a factor to which the Court may attach modest significance in the exercise of its discretion.

The Court is satisfied that the Government, all things being considered, should properly prevail on its motion. Accordingly, it is ORDERED that the Motion to Sever Trial of Craig Sterner, filed by the Government, be, and is hereby GRANTED; and the Government’s case against Defendant Sterner is hereby SEVERED for trial on Count I of the Indictment, that case to be tried separately from, and in advance of, the trial of any other defendant.

So ORDERED.


author: KATZ, District Judge.

text:
    Debora L. BUCCI v. APPLIED BUSINESS CONTROLS, INC. and David Robbins and Herbert Mace and the Borough of Norristown and Norristown Area School District.
    Civ. A. No. 84-1006.
    United States District Court, E.D. Pennsylvania.
    Dec. 28, 1984.

      George M. Painter, III, King of Prussia, Pa., for plaintiff.
    Philip R. Detwiler, Sol. Norristown Area School Dist., Blue Bell, Pa., for defendant Norristown Area School Dist.
    Carl D. Buchholz, III, Rawle & Henderson, Philadelphia, Pa., for defendants Applied Business Controls, Inc., David Robbins and Herbert Mace.
    John O’Rourke, Norristown, Pa., for defendant Borough of Norristown.
   MEMORANDUM AND ORDER

KATZ, District Judge.

This action for damages under 42 U.S.C. § 1983 challenges the constitutionality of procedures defendants used to collect taxes allegedly owed by the plaintiff under an earned income tax levied by the Norristown Area School District and the Borough of Norristown. On August 22, 1984, this Court denied defendants’ Motions to Dismiss finding the record at that time insufficient to resolve whether the action was barred by the Supreme Court’s decision in Fair Assessment in Real Estate, Inc. v. McNary, 454 U.S. 100, 102 S.Ct. 177, 70 L.Ed.2d 271 (1981). Following completion of discovery, defendants made Motions for Summary Judgment. At a hearing held on December 27, 1984, all parties agreed that there are no material issues of fact in dispute. I find that this Court must dismiss plaintiff’s claim under the dictates of the Fair Assessment case and the Tax Injunction Act.

The undisputed facts in this case show that defendants Borough of Norristown and Norristown Area School District adopted a one percent earned income tax on May 19, 1970. Thereafter the Borough and School District contracted with defendant, Applied Business Controls, Inc. to serve as their earned income tax collector. Defendants Herbert Mace and David Robbins are employees of Applied Business Controls, Inc. Following a dispute over the plaintiff’s tax liability, defendant Mace, on behalf of Applied Business Controls, issued a wage attachment against plaintiff’s wages pursuant to 53 P.S. § 6919. The amount of tax collected as a result of this attachment was $1,358.96. Challenging the collection procedures of the defendants as violative of the Fourth, Sixth and Fourteenth Amendments to the United States Constitution, plaintiff seeks compensatory and punitive damages, a declaratory judgment of her right to be free of the defendants’ acts, and an injunction against further wage attachments.

Plaintiff’s requests for an injunction and a declaratory judgment are barred by the Tax Injunction Act, unless she can show that she has no “plain, speedy, and efficient remedy” in the courts of the State of Pennsylvania. See California v. Grace Brethren Church, 457 U.S. 393, 102 S.Ct. 2498, 73 L.Ed.2d 93 (1982); Rosewell v. LaSalle National Bank, 450 U.S. 503, 101 S.Ct. 1221, 67 L.Ed.2d 464 (1981). Likewise, plaintiffs claim for damages is barred by Fair Assessment in Real Estate, Inc. v. McNary, 454 U.S. 100, 102 S.Ct. 177, 70 L.Ed.2d 271 (1981) unless plaintiff can show that State remedies are not “plain, adequate and complete.” 454 U.S. at 114, 102 S.Ct. at 185. See also Sipe v. Amerada Hess Corp., 689 F.2d 396 (3d Cir. 1982) (challenge to state unemployment withholding statute); Sappington v. Commonwealth of Pennsylvania, 535 F.Supp. 429 (E.D.Pa.1982) (challenge to state sales tax).

The inquiry into whether a state remedy is “plain, adequate, and complete” is governed by the same standards as the inquiry into whether the remedy is “plain, speedy, and efficient.” See Fair Assessment, 454 U.S. at 116, n. 8, 102 S.Ct. at 186. “[A] state-court remedy is ‘plain, speedy and efficient’ only if it ‘provides the taxpayer with a full hearing and judicial determination at which she may raise any and all constitutional objections to the tax.’ ” California v. Grace Brethren Church, 457 U.S. at 411, 102 S.Ct. at 2509.

There are several methods by which the plaintiff may challenge local taxing practices under Pennsylvania law. Under 72 P.S. § 5566b a taxpayer who has paid or been caused to pay her tax may file a claim for a refund. If the taxing authority refuses or fails to refund said taxes, the taxpayer may institute an action in assumpsit in the Court of Common Pleas. See 72 P.S. § 5566c. Similar state remedies have been found to meet the requirements of both the Fair Assessment case and the Tax Injunction Act. See California v. Grace Brethren Church, 457 U.S. 393, 102 S.Ct. 2498 (1982); Rosewell v. LaSalle National Bank, 450 U.S. 503, 101 S.Ct. 1221 (1981); Kimmey v. H.A. Berkheimer, Inc., 376 F.Supp. 49, 54-56 (E.D.Pa.1974), aff'd., 511 F.2d 1394 (3d Cir.1975). Furthermore, taxpayers challenging the constitutionality of state taxation practices may, in some circumstances, seek equitable relief in state courts. See Cedarbrook Realty, Inc. v. Nahill, 484 Pa. 441, 446, 399 A.2d 374 (1979); In re Blue Cross Appeal, 416 Pa. 574, 577-78, 209 A.2d 799 (1965).

Since plaintiff has raised no genuine issue of fact contesting that the state remedies are both “plain, speedy, and efficient” and “plain, adequate and complete,” plaintiff’s damages claim is barred by the Fair Assessment case and her plea for injunctive and declaratory relief is barred by the Tax Injunction Act. Therefore, plaintiff’s complaint is dismissed.

      . In addition this Court noted that the record was insufficient to resolve any issues of good faith or harrassment. Cf. Middlesex County Ethics Committee v. Garden State Bar Association, 457 U.S. 423, 102 S.Ct. 2515, 73 L.Ed.2d 116 (1983). Upon review of the record now before this Court, I find that plaintiff has failed to raise any genuine issue of fact as to good faith or harassment.

        . Title 28, Section 1341 of the United States Code provides as follows:
      "The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.”


author: DAVID V. O’BRIEN, District Judge.

text:
    FOREIGN COMMERCE, INC., Plaintiff/Appellee, v. Bernard TONN, Defendant/Appellant.
    Civ. No. 83/343.
    District Court, Virgin Islands, D. St. Croix.
    Dec. 28, 1984.
    G. Luz James, Christiansted, St. Croix, V.I., for plaintiff, appellee.
    Russell B. Johnson, Christiansted, St. Croix, V.I., for defendant, appellant.
   MEMORANDUM OPINION AND ORDER

DAVID V. O’BRIEN, District Judge.

This appeal from the Territorial Court presents the question of whether a one and one-half percent (D/2%) monthly service charge added to the outstanding balance on a consumer account is usurious in violation of 11 V.I.C. § 951 et seq. In the action for debt below, the Court awarded plaintiff-appellee Foreign Commerce, Inc. (Foreign Commerce) $2,676.27 plus costs and attorney’s fees. Defendant-appellant Bernard Tonn (“Tonn”) appeals the denial of his counter-claim wherein he claimed that the 1V2% monthly service charge was in actuality an 18% interest rate, and therefore usurious. For the reasons set forth herein, we will not disturb the trial court’s conclusions.

I. FACTS

On March 20, 1978 Tonn purchased sliding glass doors and windows from Foreign Commerce, a Florida Corporation. The total purchase price was $1,640.20. The terms were listed as “Net 10 days”. When Tonn failed to pay the balance within 30 days, Foreign Commerce added a 1V2% service charge per month. Tonn received monthly statements of his indebtedness and made sporadic payments.

At the time the law suit was commenced on March 28, 1982 there was an outstanding balance of $2,172.76. Tonn answered the complaint and counterclaimed that the service charge was in violation of the Virgin Islands’ usury laws.

The case went to trial before the Honorable Raymond L. Finch on May 10, 1983. The Court found that the basic debt was $1,640.20 and that Tonn made payments amounting to $800.00. The Court requested counsel for both parties to submit memoranda on the method of computing interest under the U.S. Rule and the actuarial method. Although both parties submitted memoranda, neither addressed this issue.

On September 30, 1983 the Court found that the usury defense was not available under the facts of this case. Judgment was entered in favor of Foreign Commerce on January 13, 1984, and Tonn now appeals.

II. DISCUSSION

Title 11 V.I.C. § 951 (1982) provides in pertinent part:

§ 951. Legal rate of interest
(a) The rate of interest shall be nine (9%) per centum per annum on—
(1) all monies which have become due;
(3) money due upon the settlement of matured accounts from the day the balance is ascertained; and
(4) money due or to become due where there is a contract and no rate is specified.

Usury is the extraction of a greater sum for the use of money than the highest rate of interest allowed by law. Evans v. National Bank, 251 U.S. 108, 40 S.Ct. 58, 64 L.Ed. 171 (1919); Zugelter v. Bank of America, 19 V.I. 561 (D.V.I.1983), aff’d, 728 F.2d 218 (3d Cir.1984); 11 V.I.C. § 952 (1982). If usurious interest is collected, the person paying it is entitled to double damages. 11 V.I.C. § 953 (1982).

Appellant Tonn claims that notwithstanding the label “service charge”, what was actually being collected on his outstanding indebtedness was interest Compounded on an annual basis the 1V2% monthly service charge would be the equivalent of 18% interest, and is therefore usurious. Tonn asserts that the trial court should be reversed and judgment entered in his favor in the amount of $759.80 together with costs and attorney’s fees.

Foreign Commerce does not supply any law to counter Tonn’s argument but states that “[s]uch action is well within the norm of customary business practices and is employed by banking institutions and other sales agencies here in the Virgin Islands ...” Brief of Appellee at 6. Although this may be true, tradition does not the law make.

It is, however, well established that a bona fide sale of consumer goods on credit does not constitute a loan within the meaning of the usury statute. Hogg v. Ruffner, 66 U.S. 115, 17 L.Ed. 38 (1861); Bartholomew v. Northampton Nat’l Bank of Easton, 584 F.2d 1288, 1295 (3d Cir.1978) (applying Pennsylvania law); Johnson v. Sears Roebuck & Co., 14 Ill.App.3d 838, 303 N.E.2d 627, 638 & n. 6 (Ill.1973); Annot., 143 A.L.R. 238 (1943); Annot., 48 A.L.R. 1442 (1927); 47 C.J.S. Interest and Usury § 293 (1982). This is true even when the finance charge, if considered as interest, would be in excess of the highest lawful interest rate allowed, provided of course that the transaction was what it purported to be and not in fact a loan. See e.g., Daniel v. First Nat’l Bank of Birmingham, 227 F.2d 353, 356 (5th Cir.1955); Commercial Credit Co. v. Tarwater, 110 So. 39 (Ala.1926), 48 ALR 1437 (1927); Credit Manual of Commercial Laws 1984 at 198 (R. Goodwin ed. 1984).

The finance or service charge is generally defined as a charge for the privilege of purchasing on credit, expressed as a time price differential. It is designed to compensate sellers for additional risks and loss of interest which would ordinarily accrue upon immediate cash payment. See Hogg v. Ruffner, supra; Johnson, supra, at 637; Zachary v. R.H. Macy & Co., 31 N.Y.2d 443, 340 N.Y.S.2d 908, 293 N.E.2d 80, 87-88 (N.Y.1972); Petersen v. Philco Finance Corp., 91 Idaho 644, 428 P.2d 961 (1967). It has been widely held that the time price differential is not subject to the usury laws. See, e.g., Matter of T.R. Axton, Sr. Corp., 533 F.2d 503 (9th Cir.1976) (applying California law); Daniel, supra; Smith v. Sears, Roebuck & Co., 95 Ill.App.3d 174, 50 Ill.Dec. 565, 419 N.E.2d 673 (Ill.1981); Grigg v. Robinson Furniture Co., 78 Mich. App. 712, 260 N.W.2d 898 (Mich.1978).

In this case there is no indication that the sale was anything but bona fide or that Foreign Commerce acted in bad faith or in an attempt to evade the Virgin Islands’ usury law. Tonn purchased the sliding glass doors and windows on March 20, 1978. He could have avoided all service charges by paying the balance within 30 days. Instead he received his first bill on April 30, 1978 complete with a 11/2% service charge. Each month thereafter Tonn was billed. On November 30, 1979 Foreign Commerce offered to wipe out all service charges if Tonn would remit the original balance minus payments made. Tonn did not take advantage of Foreign Commerce’s offer and never paid the entire balance.

The trial court was correct in finding that the defense of usury does not apply in this instance. Since no other issues have been raised by Tonn, we affirm the trial court’s decision in its entirety.


author: MEREDITH, District Judge.

text:
    Matter of JEFFERSON BARRACKS MARINE SERVICE, INC., charterer and owner pro hac vice of the M/V WALTER E. BLESSEY, and Richard Wilson and Walter E. Blessey, owners of the M/V Walter E. Blessey, in an action for exoneration from and/or limitation of liability, Plaintiffs.
    No. 84-0715A(C).
    United States District Court, E.D. Missouri, E.D.
    Dec. 28, 1984.
    Raymond L. Massey, Nicholas J. Lamb, Thompson & Mitchell, St. Louis, Mo., for plaintiffs.
    Mark E. Goodman, Rosenblum, Goldenhersh, Silverstein & Zafft, St. Louis, Mo., for Paul Luster.
    Jerome J. Schlichter, Carr, Korein, Kunin, Schlichter & Brennan, St. Louis, Mo., for Byington.
    Paul Hetterman, Gray & Ritter, St. Louis, Mo., for Rhonda Saal.
    Stolar, Heitzmann, Eder Seigel & Harris, Jay L. Levitch, S. Francis Baldwin, St. Louis, Mo., for claimants Thomas J. Casey, Jean L. Saal, Guardian of Richard F. Saal, Jean L. Saal.

      Mogab & Hughes, Richard L. Hughes, St. Louis, Mo., for other defendants.
   MEMORANDUM

MEREDITH, District Judge.

This matter is before the court on Claimants’ motion to dissolve an injunction which enjoined claimants from prosecution of any actions against plaintiffs or M/V WALTER E. BLESSEY (BLESSEY) arising out of a collision that occurred between the BLESSEY and the P/C Mo.5342AE. For the reasons set forth below, claimants’ motion will be denied.

The relevant facts are as follows. On or about October 2, 1983, a collision occurred on the navigable waters of the United States, in which Richard D. Saal and Harold Byington, Jr. died. Jean L. Saal, the wife of Richard D. Saal, and Richard F. Saal, the son of Richard D. Saal and Jean L. Saal, by and through his mother and duly appointed next friend Jean L. Saal, filed a wrongful death suit in the Circuit Court of St. Louis County against Jefferson Barracks Marine Service. Thereafter, Doris Buchert, Patricia Groller and Rhonda Jo Saal, the adult children of Richard D. Saal, sought leave to intervene. Jefferson Barracks Marine, Inc., the charterer and owner pro hac vice of the BLESSEY, and Richard Wilson and Walter E. Blessey, the BLESSEY’s owners, filed an action for exoneration and/or limitation of liability, and subsequently obtained the injunction in issue.

Claimants’ motion involves the obvious conflict between the purposes of the Limitation of Liability Act, 46 U.S.C. § 183, et seq., and the “saving to suitors” clause in 28 U.S.C. § 1333. In Universal Towing Company v. Barrale, 595 F.2d 414 (8th Cir.1979), the court stated that where the conflict exists claimants may choose their forum only when 1) the limitation fund exceeds the total of all claims, or 2) there is only one claim, regardless of the amount. Barrale, supra, at 418. In these two instances the district court must dissolve the injunction unless the owner can demonstrate that the right to limited liability would be prejudiced. Barrale, supra, at 420.

Plaintiffs argue that dissolution of the injunction would prejudice them by depriving them of their right to concursus. The Limitation of Liability Act is designed to determine liability and appropriately distribute funds where multiple claims arising from a maritime disaster exceed the value of the vessel. Claimants state that they will stipulate that their award must be limited to the value of the vessel minus the amount of the Byington settlement. By doing so, they contend that their claims would not exceed the value of the vessel; they also maintain that no other claimants remain to endanger exceeding that limit.

Claimants may be unable to guarantee that other litigants will not come forward in the state court. There may be claimants who have not filed suit. Jean Saal claims that she is the common-law wife of decedent Richard D. Saal. Prior to this relationship, Richard D. Saal had been married four times. Jean Saal denies that Rhonda Jo Saal is the daughter of Richard D. Saal; however, Rhonda Jo Saal claims she is the daughter of Richard D. Saal by one of his previous wives. Doris Buchert testified that she did not know whether Richard F. Saal was Richard D. Saal’s son, and Patricia Groller testified that he was not.

In deciding whether to dissolve a stay of proceedings, the district court exercises broad equitable discretion. Helena Marine Service, Inc. v. Sioux City, 564 F.2d 15, 17 (8th Cir.1977). A court should not merely consider claims that have been filed, even where the statute of limitations has already run. Helena Marine, supra, at 18-19. Due to the conflicting views as to the identities of Richard D. Saal’s wives and children, and consequently, the obvious uncertainty that exists as to future claimants, dissolution of the injunction would be improper. It would make plaintiffs amenable to additional claims in state court, consequently prejudicing their right to limit liability.

Accordingly, claimants’ motion to dissolve the injunction will be denied.


author: PENCE, District Judge.

text:
    Michael F. McCARTHY, et al., Plaintiffs, v. PACIFIC LOAN, INC., et al., Defendants. PACIFIC LOAN, INC., et al., Counterclaim Plaintiffs, v. Michael F. McCARTHY, et al., Counterclaim Defendants.
    Civ. No. 82-0292.
    United States District Court, D. Hawaii.
    Dec. 31, 1984.
    Hoddick, Reinwald, O’Connor & Marrack, Dennis E.W. O’Connor, Honolulu, Hawaii, for Michael F. McCarthy.
    Wayne M. Pitluck, Robert F. Miller, Richard J. Archer, Honolulu, Hawaii, for Pacific Loan, Inc.
    Blake T. Okimoto, Honolulu, Hawaii, for Nathan H. Suzuki.
    Boyce R. Brown and Mary Blaine Durant, Honolulu, Hawaii, for Norfolk Investment Co. and Bernhardt.
    Jerris & Raffetto, Laurie Y. Clement, Honolulu, Hawaii, for Thrift Guaranty Corp.
    Paul Mullin Ganley, Honolulu, Hawaii, for Thrift Guaranty Corp. of Hawaii.
   DECISION AND ORDER

PENCE, District Judge.

I. FACTS

In response to a 42 U.S.C. Section 1983 claim filed by counterclaim defendants Michael F. McCarthy (“McCarthy”) and American Resources, Limited, Inc. (“ARL”), Pacific Loan Inc. (“Pacific Loan”) and Thrift Guaranty Corporation of Hawaii (“Thrift Guaranty”) answered and counterclaimed against McCarthy and the other counterclaim defendants, charging violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. sections 1961-68 (“Count I”); the Securities Exchange Act, 15 U.S.C. section 78j and 17 C.F.R. section 240-10b-5, and the state securities law, section 485-25, Hawaii Revised Statutes (“Count II”); and various state and common law fraud claims (“Count III”).

The counterclaim arises out of a series of loans and advances which Pacific Loan made to the individual and corporate counterclaim defendants between 1978 and 1980. Pacific Loan alleges that the counterclaim defendants engaged in wire and mail fraud in the misappropriation and conversion of Pacific Loan funds. The loans involved were the subject of a set of workout agreements dated March 25, 1981. On June 22, 1981, the state bank examiner, through Thrift Guaranty, effected a transfer of all the common stock of Pacific Loan from one of the counterclaim defendants, Daniel R. Matsukage, the former president and at that time the majority shareholder of Pacific Loan, to Thrift Guaranty.

On October 21, 1981, Pacific Loan sued the individual and corporate counterclaim defendants in state court to recover the outstanding balances of the loans. Pacific Loan, Inc. v. Bernhardt, Civil No. 67851 (First Cir.Ct., Hawaii). After investigating the loans, the State Attorney General returned a criminal indictment on March 23, 1984 against counterclaim defendants Matsukage, Curtis Bernhardt, Carl Bernhardt, McCarthy, and Harold Okahara. State of Hawaii v. Matsukage, Criminal No. 60149 (First Cir.Ct., Hawaii).

In August, 1984, McCarthy moved this court for an order dismissing Count I of the counterclaim, the civil RICO claim, on the ground that the counterclaim plaintiffs had not pleaded or established that the civil RICO defendants had injured Pacific Loan or Thrift Guaranty in their business or property by violating section 1962. 18 U.S.C. section 1964(c). Based upon a review of the legislative history and purpose of the RICO statute and the decisional law, counterclaim defendant McCarthy’s motion to dismiss Count I (“Civil RICO”) of the counterclaim is granted.

II. APPLICABLE LAW

Title IX of the Organized Crime Control Act of 1970, Pub.Law 91-452, the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. sections 1961-68, was intended to help eradicate organized crime and eliminate its infiltration and involvement in the nation’s economy. During the first decade of the Organized Crime Control Act, most of the RICO litigation involved criminal actions brought by the federal government.

While other district courts and courts of appeals have attempted to reach a proper construction of the civil remedies provided for in section 1964, it is a matter of first impression in this district. This court has the advantage of drawing upon a substantial body of case law interpreting the civil RICO provisions, both within the Ninth Circuit and other circuits. Unfortunately, civil RICO has generated substantial conflict among the federal courts as to the meaning of section 1964. Even district courts in the Ninth Circuit have divided on the proper interpretation of civil RICO.

One of the earliest of these district court opinions illustrates the potentially broad reach of the civil RICO statute. Crocker National Bank v. Rockwell International Corp., 555 F.Supp. 47 (N.D.Cal.1982). In Crocker National Bank the civil RICO plaintiff had participated in the equipment financing of a bankrupt leasing company. The financing package was sold to Crocker Bank by Lehman Brothers Kuhn Loeb. Crocker Bank alleged a number of federal and state securities claims against the brokerage house and included a civil RICO action. The defendants moved to dismiss the RICO claim on the ground, inter alia, that Crocker Bank had failed to allege the required “nexus” of the civil RICO defendants to organized crime.

In denying the motion to dismiss, the district court concluded that while Congress intended RICO to combat, if not eliminate, organized crime, it did not limit the scope of RICO to persons connected with organized crime, or even to activities commonly thought of as racketeering. Rather, according to the court, Congress focused on a broader range of particular crime-connected activities and provided remedies against persons engaging in those activities. In allowing the RICO action to proceed, the court concluded that there was no indication in the statute that Congress intended RICO to be limited to persons or activities commonly associated with organized crime. Cf. Jensen v. E.F. Hutton & Company, Inc., [1983-84 Transfer Binder] Fed.Sec.L.Rep. (CCH) ¶ 99,674 (C.D.Cal. January 26, 1984) (no requirement that civil RICO plaintiff plead a connection between defendant and organized crime); Wilcox v. Ho-Wing Sit, 586 F.Supp. 561 [1984 Transfer Binder] Fed.Sec.L.Rep. (CCH) ¶ 91,510 (N.D.Cal. May 3, 1984) (no “organized crime” requirement for civil RICO claim).

The failure of some courts to read section 1964 in the context of its legislative purpose has led to a multiplicity of cases involving civil RICO defendants who were charged with traditional securities and common law fraud. To limit the expanding scope of civil RICO and the flood of litigation to which it has given rise, several courts have imposed pleading or standing requirements on civil RICO plaintiffs.

In Hokama v. E.F. Hutton & Co., Inc., 566 F.Supp. 636 (C.D.Cal.1983), the court dismissed the civil RICO claim on the ground that, insofar as the civil RICO action was predicated on a federal securities law violation, the plaintiff had to allege some link to organized crime, however that term was defined. See also, Aliberti v. E.F. Hutton & Co., Inc., 591 F.Supp. 632 [1984 Transfer Binder] Fed.Sec.L.Rep. (CCH) ¶ 91,661 (D.Mass. August 30, 1984).

As an alternative to requiring that a civil RICO plaintiff plead or allege a connection or “nexus” to organized crime, the district court in Lopez v. Dean Witter Reynolds, Inc., 591 F.Supp. 581 [1984 Transfer Binder] Fed.Sec.L.Rep. (CCH) ¶ 91,634 (N.D.Cal. July 31, 1984), required an allegation that the “racketeering” enterprise was “organized solely for criminal purposes.” The Lopez court recognized that there was “no evidence that Congress intended such a drastic alteration in the civil remedies available to victims of ‘garden variety fraud’ in enacting section 1964.” Id. at pp. 99,217-218.

The most recent, and in this court’s view most persuasive, formulation of the civil RICO pleading rules originated with the Second Circuit in Sedima, S.P.R.L. v. Imrex, Co., 741 F.2d 482 (2d Cir.1984) and Bankers Trust Company v. Rhoades, 741 F. 2d 511 (2d Cir.1984). It has since been followed in Terre Du Lac Association, Inc. v. Terre Du Lac, Inc., 601 F.Supp. 257 (E.D.Mo.1984) and The Southgate Bank v. Public Water Supply District No. 7 of Jefferson County Missouri, 601 F.Supp. 262 (E.D.Mo.1984).

In Sedima, the Second Circuit noted the “extraordinary, if not outrageous”, uses to which private civil RICO has been put by purported victims of “garden variety” fraud. Before beginning its lengthy review of Title IX, the Sedima court noted, “RICO presents a classic case of a statute whose ambiguous language needs to be construed in light of Congress’s purpose in enacting it.” 741 F.2d at 488. After finding the voluminous legislative history all but silent as to whether civil RICO applied to typical wire, mail, and securities fraud, the court continued:

We do strongly suggest ... that if Congress had intended to permit defendants in every “garden-variety” fraud or securities violation case to be stigmatized as “racketeers,” on the basis of a preponderance of the evidence, it would have said so in plainer language than it did. Before we impute to Congress the intention of federalizing a large portion of the common law which, since the time of the Constitution, has been left to the courts of the several states, and of providing treble damages and attorneys’ fees for violations of these laws, or of altogether replacing or eliminating much of the need for extensive bodies of federal law specifically directed at extensively considered evils, we will require more explicit language from Congress indicative of such intent. Id. at 503-504.

The Sedima panel concluded that section 1964(c), which provides for treble damages for any person injured in “his business or property” by reason of the violation of section 1962, required that the civil RICO plaintiff plead and establish that the RICO defendant had been criminally convicted of one of the “predicate” acts of “racketeering activity” defined in section 1961(1) or of criminal RICO, section 1983. This court concludes likewise and adopts the Second Circuit’s approach to civil RICO.

There are a number of reasons for requiring criminal convictions on the underlying predicate offenses forming the basis of a RICO claim before allowing a private civil RICO suit to be brought. The primary one, however, is the simple fact that RICO was passed with the aim of preventing organized crime from infiltrating and injuring legitimate business enterprises. Without criminal convictions, one has alleged nothing more than a tenuous link or “nexus” to organized crime, if even that. Congress did not intend such a use of the private RICO statute, and this court will not sanction such a use.

To limit the use of section 1964 to its appropriate and congressionally intended purpose, this court holds that a civil plaintiff seeking to recover under section 1964(c) must plead and establish that a defendant has either been criminally convicted of the “predicate” acts enumerated in 18 U.S.C. section 1961(1) (“racketeering activity”) or has been criminally convicted of the acts set forth in section 1962.

III. CONCLUSION

The counterclaim plaintiffs have alleged that the corporate and individual counterclaim defendants committed certain “racketeering” or “predicate” acts in violation of 18 U.S.C. section 1962, which would subject the counterclaim defendants to the treble damage recovery provisions of section 1964(c). However, the counterclaim plaintiffs have failed to plead or establish that any of the counterclaim defendants have been convicted of the securities, wire, and mail fraud set forth in count I of the More Definite Statement of Counterclaim, or that any have been convicted under 18 U.S.C. section 1962. As there is no claim or proof that any of the counterclaim defendants have been convicted of any of the acts enumerated in 18 U.S.C. section 1961(1) or section 1962, the counterclaim defendants’ motion to dismiss Count I must be granted and the claim based on 18 U.S.C. section 1964(c) is hereby dismissed.

IT IS SO ORDERED.

      . See generally, United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981). The predominantly criminal law nature of the early RICO actions is reflected in Footnote 1 of the Turkette court’s opinion, supra at 578, 101 S.Ct. at 2526. Not a single civil RICO case was cited. In this Circuit, see, e.g., United States v. Campanale, 518 F.2d 352 (9th Cir.1975).

      . In Harper v. New Japan Securities International, Inc., 545 F.Supp. 1002 (C.D.Cal. 1982), it was held that civil RICO complaints which allege injury only by reason of "predicate” violations, such as "garden variety" securities fraud, without more, do not allege the required injury “by reason of” a RICO racketeering violation to give the plaintiff standing in a civil RICO action. See also Johnsen v. Rogers, 551 F.Supp. 281 (C.D.Cal.1982).

      . It is obvious that the Central and Northern District Courts of California are still floundering on this issue. The District Court of Hawaii, on the other hand, stands united. The Chief Judge and the other Senior Judge both recently approved this judge's interpretation of the civil RICO statute as requiring a criminal conviction before a civil RICO suit may go forward.

      . One reason noted by the Lopez court supra, at 99,217, concerns the danger that plaintiffs may abuse the civil RICO statute when prosecutorial discretion is not present to scrutinize claims to insure that they are within the class Congress intended to authorize. A criminal federal prosecutor can file a criminal RICO indictment only after a careful review of the evidence. As the Sedima and Lopez courts observed, the prosecutor has a duty to screen charges of racketeering which have no basis in fact or law. A criminal RICO defendant, is protected to this extent against being unfairly or indiscriminately labeled a racketeer.
      A civil RICO defendant, however, does not have these minimum protections afforded to criminal RICO defendants. There is no corresponding restraint on a civil RICO plaintiff against irresponsibly pleading violations of section 1962. Many of the reported cases indicate that civil RICO plaintiffs are automatically alleging securities, wire, or mail fraud, without any factual support, and proceeding to prosecute a civil RICO action based on little or no substance. The civil RICO defendant is then subject to the negative publicity of being labeled a "racketeer,” with all of the connotations that the term conveys to the general public.
      A civil RICO defendant can also be held liable for treble damages based on a preponderance of the evidence. A criminal RICO defendant can only be found guilty of the allegations if the government establishes its case beyond a reasonable doubt.