author: STOTLER, District Judge.

text:
    WALT DISNEY PRODUCTIONS, a corporation, Plaintiff, v. FILMATION ASSOCIATES, a corporation, Group W Cable, Inc., a corporation, Westinghouse Broadcasting and Cable, Inc., a corporation, and Westinghouse Electric Corporation, a corporation, Defendants.
    No. CV852377AHS.
    United States District Court, C.D. California.
    Feb. 20, 1986.

      Gang, Tyre & Brown, Inc. and Sidley & Austin, Los Angeles, Cal., for plaintiff.
    Cooper, Epstein & Hurewitz, Beverly Hills, Cal., for defendants.
   ORDER DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

STOTLER, District Judge.

INTRODUCTION

In this action, plaintiff Walt Disney Productions (“Disney”) asserts claims for violation of its copyright, trademark, and state-created rights in certain animated character depictions, full-length animated films, and industry marks.

Defendants Filmation Associates, Group W Cable, Inc., Westinghouse Broadcasting and Cable, Inc., and Westinghouse Electric Corporation (collectively, “Filmation”) have moved for summary judgment on all counts of the First Amended Complaint, arguing in response to plaintiff’s claims of copyright infringement: first, that materials created in the production of their motion picture cannot themselves be the subject of an action for copyright infringement; and, second, that no substantial similarity exists between any Filmation works and any of Disney’s copyrighted works. In response to plaintiff’s claims under the Lanham Act and the California law of unfair competition, defendants argue that defendants’ advertisements are dissimilar as a matter of law to plaintiff’s marks and that the claims must be dismissed for Disney’s failure to show actual diversion of sales.

By this Order, the Court denies defendants’ motion, concluding: (1) the preliminary works created in production of defendants’ motion picture can constitute infringing copies within the meaning of the 1976 Copyright Act; (2) the issue of infringement of Disney’s copyrights remains a question for the trier of fact; (3) the Lanham Act and unfair competition claims include triable issues; and (4) Disney’s Lanham Act and unfair competition claims do not fail for a lack of evidence of actual diversion of sales.

FACTS AND PROCEDURAL HISTORY

Plaintiff Disney is a corporation that produces, among other things, animated films. Beginning in 1937, Disney produced a series of feature-length motion pictures, which it refers to as the “Disney Classics.” Included among these are pictures entitled “Pinocchio,” “Alice in Wonderland,” and “The Jungle Book.” The story of each of these pictures is based in part upon preexisting work, much of which is in the public domain.

Filmation is also in the business of producing animated films. In or prior to February, 1985, Filmation announced its intention to produce and distribute a series of fully animated feature-length films which it refers to as its “New Classics Collection.” Included among these are films entitled “The New Adventures of Pinocchio,” “Alice Returns to Wonderland,” and “The Continuing Adventures of the Jungle Book.” Filmation’s works are based in part upon the same preexisting sources as are Disney’s.

On April 10, 1985, Disney filed suit against Filmation, asserting eleven causes of action under the federal copyright and trademark laws, as well as California unfair competition laws. Defendants initially moved to dismiss every count in the Complaint for failure to state a claim upon which relief can be granted. By an Order dated July 16, 1985, the Court granted defendants’ motion with regard to all but Counts Three, Four, and Five.

On July 22, 1985, Disney filed a First Amended Complaint, setting forth, in amended form, its eleven causes of action against defendants. The gravamen of the First Amended Complaint is that Filmation has implemented plans to produce and distribute its New Classics Collection by: (a) creating various items of advertising that contain titles owned by Disney and contain depictions that infringe, copy, and/or unfairly compete with depictions of characters owned by Disney; (b) using these infringing materials to solicit purchases of films from prospective distributors and others; and (c) commencing production of “The New Adventures of Pinocchio.” See First Amended Complaint, ¶ 8.

On August 5, 1985, Disney moved for a preliminary injunction to restrain Filmation from advertising for its films with materials that purportedly infringed Disney’s copyrights. In conjunction with the motion, Disney submitted copies of Filmation’s challenged advertisements along with Disney’s depictions of the characters embodied in each. See Declaration of Donald S. Engel, filed July 8, 1985, Exhibits “la-1” through “llo.” The Court denied the motion, finding that Disney had failed to show a likelihood of success on the merits of its claims.

On October 10,1985, the Court heard and denied Filmation’s motion to dismiss the First Amended Complaint. After the Court’s decision, counsel for Filmation requested an opportunity to file further papers expanding its already-filed motion for summary judgment from Counts Three, Four, and Five of the Complaint to all counts in the First Amended Complaint. The amended version of this motion was filed November 8, 1985 and ultimately was scheduled for hearing on January 24, 1986. After hearing the arguments of counsel and viewing two videocassettes submitted by counsel at the time of hearing, the matter was submitted for decision.

DISCUSSION

A. COUNT SIX: COPYRIGHT INFRINGEMENT

In Count Six, Disney alleges that Filmation has infringed Disney’s exclusive right to reproduce its copyrighted works in copies. See 17 U.S.C. § 106a).

Disney owns the copyrights to a fully-animated feature-length motion picture entitled “Pinocchio” and to a series of original designs and drawings of certain characters — named Pinocchio, Gepetto, and Stromboli — portrayed therein. These copyrights are valid and duly registered. See First Amended Complaint, Exhibits A-H. Filmation has begun production of a fully-animated motion picture entitled “The New Adventures of Pinocchio,” which, contends Disney, utilizes a substantial amount of the aforesaid copyrighted materials. In the course of production, Filmation has produced a script, “story board,” “story reel,” models, and designs, which are said to be tangible and permanent reproductions of characters and scenes, “constituting copies of material” copyrighted by Disney. Id., 11 61.

It is undisputed that Filmation has generated a substantial body of work preliminary to a “finished film.” It is also undisputed, however, that it has not completed its film “The New Adventures of Pinocchio.” Filmation contends that Count Six is not actionable until it has completed work on its motion picture. Alternatively, Filmation asserts it is entitled to judgment because any articles so far produced are not substantially similar to Disney’s copyrighted expressions.

1. Actionable “Copies"

Filmation argues that the materials so far created are only transitory steps en route to a fixed product, and that until its film is completed and ready for distribution, there exists no article that could be said to infringe any of Disney’s copyrights.

Filmation’s argument is refuted by the provisions of the 1976 Copyright Act, 17 U.S.C. §§ 101-914 (the “Act”). Under the Act, “ ‘[c]opies’ are material objects ... in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” 17 U.S.C. § 101. The definition “includes the material object ... in which the work is first fixed.” Id. Further, a work is “ ‘fixed’ in a tangible medium of expression when its embodiment in a copy ... is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” Id. When the work is “prepared over a period of time, the portion of it that has been fixed at any particular time constitutes the work as of that time, and where the work has been prepared in different versions, each version constitutes a separate work.” Id. To constitute an actionable copy, therefore, an expression need only be a material object permanently case in some intelligible form. See 2 Nimmer on Copyrights, § 8.02(B), pp. 8-22 — 8-25 (1985).

The articles created by Filmation in the production of its film, including a script, story board, story reel, and promotional “trailer,” satisfy this definition, and thus can constitute copies for purposes of the Act. Because the right of reproduction affords a copyright owner protection against an infringer even if he does not also infringe the § 106(3) right of distribution, Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 474, 104 S.Ct. 774, 805, 78 L.Ed.2d 574 (1984) (Blackmun, J., dissenting); House Report No. 94-1476, 94th Cong., 2d Sess. (1976), p. 61, U.S.Code Cong. & Admin.News 1976, p. 5659, the fact that the articles may never be published or, indeed, may be prepared only for the use of Filmation’s animators, does not obviate the possibility of infringement. See Harper & Row v. Nation Enterprises, — U.S. -, -, 105 S.Ct. 2218, 2226, 85 L.Ed.2d 588, 602 (1985) (noting that the Act “eliminated publication ‘as a dividing line between common law and statutory protection,’ ... extending statutory protection to all works from the time of their creation”). As explained by Professor Nimmer, “subject to the privilege of fair use, and subject to certain other exemptions, copyright infringement occurs whenever an unauthorized copy ... is made, even if it is used solely for the private purposes of the reproducer.” 2 Nimmer, § 8.02(C), p. 8-26. It is thus irrelevant that Filmation has not concluded or “realized” what it considers to be a final motion picture: the Act prohibits the creation of copies, even if the creator considers those copies mere interim steps toward some final goal.

It is similarly no defense to copying that some of Filmation’s expressions may be embodied in a medium different from that of plaintiff’s. Berkic v. Crichton, 761 F.2d 1289, 1292 (9th Cir.1985) (“in comparing ... a film with a written work, the proper question ... is whether the ordinary, reasonable audience would recognize the defendant’s work as a ‘dramatization’ or ‘picturization’ of the plaintiff’s work”). See also Eden Toys, Inc. v. Floretee Undergarment Co., 697 F.2d 27 (2d Cir.1982) (copying from gift wrapping paper to clothing actionable). But see Sid & Marty Krofft Television v. McDonald’s Corp., 562 F.2d 1157, 1164 (9th Cir.1977) (observing, in dicta, that a painting of a nude would not infringe a statue of a nude). Thus, Filmation’s materials, including scripts and story outlines, can infringe Disney’s copyright on “Pinocchio” even though they are not rendered as a motion picture.

This had been the law in the Ninth Circuit even under the Copyright Act of 1909. In Walker v. University Books, Inc., 602 F.2d 859 (9th Cir.1979), plaintiff had copyrighted a set of fortune telling cards. She attempted unsuccessfully to strike a marketing deal with defendants, submitting to them a sample of her deck in the process. Afterward, she assigned her copyright to a third party. Plaintiff subsequently discovered that defendant planned to market a deck of cards similar to the ones she had supplied them in the course of negotiations. She received from defendants “certain blueprints,” which were produced before the date of the assignment (id., at 863), but could adduce no evidence of a completed deck of cards produced and sold during the period in which she owned the copyright.

On appeal from summary judgment in defendant’s favor, the court of appeals rejected defendant’s argument that the blueprints were not themselves copies:

The district court viewed the making of the blueprints as merely a preliminary step or process directed towards the manufacture of [defendants’] finished product, their set of [cards]____ However, the fact that an allegedly infringing copy of a protected work may itself be only an inchoate representation of some final product to be marketed commercially does not in itself negate the possibility of infringement.

Walker, 602 F.2d at 864. According to the Walker court, the operative question was not whether defendants considered the article a final product, but “whether they unauthorizedly utilized [plaintiff’s] work in the manufacture of their blueprints.” Id.

Finally, the absence of a completed motion picture does not preclude meaningful comparison of Disney’s character depictions and film with Filmation’s materials. Although Filmation contends that copyright infringement of a cartoon character cannot be based on a mere sketch that is not part of a story, there is no support for this proposition. It is true that courts generally have considered “not only the visual resemblances but also the totality of the characters’ attributes and traits,” 1 Nimmer § 2.12, p. 175, n. 16.2, and, thus, that the trier of fact would ordinarily evaluate a character in the context of a story. But where the work sued upon is not a “completed” story, but a series of depictions and other works, comparison of the expressions may be made in the form in which they are presented. Walt Disney Productions v. Air Pirates, 581 F.2d 751, 756 (9th Cir.1978) (comparison of graphic images of cartoon characters sufficient to allow action for copyright infringement).

2. Substantial Similarity

Filmation’s alternative argument — that its creations are not substantially similar as a matter of law — is unconvincing.

In order to establish copyright infringement, a plaintiff must prove ownership of the copyright and “copying” by the defendant. “Copying” is proved by evidence that the defendant had access to the copyrighted work and that his work bears a “substantial similarity” to plaintiff’s. Sid & Marty Krofft Television Productions, Inc. v. McDonald’s Corp., 562 F.2d 1157, 1162 (9th Cir.1977). In turn, the determination of similarity of expressions like the ones here in controversy involves two steps: first, whether there is substantial similarity in ideas (the “extrinsic test”); second, whether there is substantial similarity between the expressions (the “intrinsic test”). Krofft, 562 F.2d at 1162.

Disney and Filmation do not dispute the similarity of the underlying ideas: all of the disputed figures concededly were taken from specific literary characters within the public domain. Rather, the dispute centers on the similarity of the expressions themselves — whether the expression embodied in the first is substantially similar to that embodied in the second. Berkic v. Crichton, 761 F.2d 1289 (9th Cir.1985); International Luggage Registry v. Avery Products Corp., 541 F.2d 830, 831 (9th Cir.1976). In making this determination, the finder of fact does not analyze the works or examine external criteria, Krofft, 562 F.2d at 1164, but decides as an ordinary observer “whether the ‘total concept and feel’ of the two works is substantially similar,” Berkic, 761 F.2d at 1292. See also Twentieth Century-Fox Film Corp. v. Stonesifer, 140 F.2d 579, 582 (9th Cir.1944) (“The two works ... should be considered and tested, not hypercritically or with meticulous scrutiny, but by the observations and impressions of the average reasonable reader and spectator.”). This determination presents a question of fact not often appropriate for summary judgment, Litchfield v. Syielberg, 736 F.2d 1352, 1355 (9th Cir.1984), cert. denied, — U.S. -, 105 S.Ct. 1753, 84 L.Ed.2d 817 (1985), although judgment is proper if, after comparing plaintiff’s and defendant’s material, a court can say that no reasonable person could find the two items substantially similar. Berkic, 761 F.2d at 1292.

After a review of the exhibits now of record, the Court cannot say that no reasonable person could find substantial similarity between Disney’s copyrighted materials and the work of Filmation. Filmation has thus far been willing to produce little of its work in response to discovery requests by Disney, but what little has been adduced raises a triable issue of substantial similarity, at least with regard to Disney’s copyrighted depictions. Although it is less clear that any material so far submitted is substantially similar to Disney’s “Pinocchio,” any inadequacy in Disney’s evidentiary showing is largely the consequence of Filmation’s unwillingness to produce those articles in discovery. Summary judgment on this aspect of Count Six must also be denied. Rule 56(f), Fed.R.Civ.P.; Texas Partners v. Conrock Co., 685 F.2d 1116, 1119 (9th Cir.1982), cert. dismissed, 460 U.S. 1029, 103 S.Ct. 1281, 75 L.Ed.2d 501 (1983).

B. COUNTS THREE, FOUR, AND FIVE: COPYRIGHT INFRINGEMENT

In Counts Three, Four, and Five, Disney alleges that Filmation has infringed Disney copyrights through advertising and promotional materials distributed for several of its planned productions. Specifically, Count Three concerns Filmation advertisements for “The New Adventures of Pinocchio” and Disney depictions of the characters Pinocchio, Gepetto, and Stromboli (First Amended Complaint, ¶¶ 29, 30, 31); Count Four concerns advertisements for “The Continuing Adventures of the Jungle Book” and Disney depictions of the characters Mowgli and Baloo (id., ¶¶ 42, 43); and Count Five concerns advertisements for “Alice Returns to Wonderland” and the Disney depiction of the Cheshire Cat (id., 11 53). The Disney drawings of these characters are all protected by registered copyrights. See First Amended Complaint, Exhibits A-D, J, K, N.

1. Law of the Case

Filmation first argues that this Court’s August 5, 1985 denial of Disney’s motion for a preliminary injunction establishes “law of the case” that Filmation’s advertisements do not infringe Disney copyrights. This argument is without merit.

The decision of a trial court granting or denying a preliminary injunction “does not so establish the ‘law of the case’ as to estop either the parties or the court from proceeding with the case on its merits.” Sierra Club v. Morton, 348 F.Supp. 219, 220 (N.D.Cal.1972). See Sierra Club v. Hickel, 433 F.2d 24, 33-34 (9th Cir.1970) (“in appraising [the likelihood of success], ... our function is not ... to make a final decision on the merits”).

2. Substantial Similarity

Filmation further contends that there is no substantial similarity between their advertising materials and Disney’s copyrighted depictions. This contention, too, is without merit. None of the Filmation depictions involved is so different from the analogous Disney depiction that no reasonable viewer could find substantial similarity. See v. Durang, 711 F.2d 141, 143 (9th Cir.1983).

C. COUNTS ONE, TWO, SEVEN, AND EIGHT: LANHAM ACT

In Counts One, Two, Seven, and Eight, Disney alleges trademark infringement under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a).

In Count One, Disney alleges that Filmation has appropriated titles and character depictions belonging to Disney to advertise and solicit sales of its “New Classics Collection.” First Amended Complaint, H 13. In Count Two, Disney alleges that Filmation made such representations to mislead the public into believing that its films will “somehow be associated with, or represent sequels, continuations or remakes of the Disney Classics of the same or similar names.” Id. at ¶ 23. In Count Seven, Disney alleges that Filmation has appropriated Disney’s trademark “Pinocchio” for the advertising and solicitation of sales of its “New Classics Collection.” Id., ¶ 69. Count Eight sets forth similar allegations, adding only that the solicitations violated Disney’s trademark interests in the specific characters of Pinocchio, Gepetto, Stromboli, and others, and in certain scenes and artwork in the Disney film. Id., ¶75. All of these counts concern the same advertisements cited in Counts Three, Four, and Five.

Filmation argues that it is entitled to judgment on these claims because, as a matter of law, there is no likelihood of confusion as to the origin of the products advertised. Alternatively, it argues that Disney’s claims must fail for its failure to adduce any evidence of damage arising from these alleged infringements. Neither of these positions justifies judgment for Filmation on these counts.

1. Likelihood of Confusion

To establish a claim of mark infringement, a party must show that it has become identified with its mark, Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200, 203 n. 5 (2d Cir.1979), and that defendant’s use of the mark has created a likelihood of confusion as to the origin of defendant’s products, International Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912, 917 (9th Cir.1980). The Ninth Circuit has listed eight factors relevant to the showing of a likelihood of confusion: (1) strength of the plaintiff’s mark; (2) relatedness of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) likely degree of purchaser care; (7) defendant’s intent in selecting the mark; and (8) likelihood of expansion of the product lines. Toho Co., Ltd. v. Sears, Roebuck & Co., 645 F.2d 788, 790 (9th Cir.1981). This determination is a question of fact, and can seldom be resolved by summary judgment. Id.

Here, Filmation is not entitled to judgment on the question of confusion. Although the parties have not presented plenary evidence of all the relevant factors in this test, the evidence of some of the factors — including relatedness of the goods, marketing channels used, and the similarity of the marks — is sufficient to show that a consumer of Filmation’s goods could be confused by its advertisements.

2. Damages

Filmation, citing the deposition testimony of a Disney executive, asserts that Disney has not adduced any evidence of actual consumer confusion or diversion of sales of its motion pictures. See Deposition of R. Cook, at 141:7-141:21, and 160:7-11, 161:22. Lack of actual loss of sales, contends Filmation, is fatal to Disney’s Lanham Act claims. This argument is unavailing.

The Lanham Act provides a right of recovery against any person who falsely describes or represents his product by any person “who believes that he is or is likely to be damaged by the use of such false description or representation.” 15 U.S.C. § 1125(a). Proof of actual damages, including diversion of sales, is not required for a plaintiff to obtain relief under this section. Vidal Sassoon, Inc. v. Bristol-Myers Co., 661 F.2d 272, 278 (2d Cir.1981). Although plaintiff must provide more than his “mere subjective belief” that he will be injured, Eastern Air Lines, Inc. v. New York Air Lines, Inc., 559 F.Supp. 1270, 1278 (S.D.N.Y.1983), proof of a reasonable likelihood of injury is sufficient. Vidal Sassoon, 661 F.2d at 278; Coca-Cola Co. v. Tropicana Products, Inc., 690 F.2d 312 (2d Cir.1982).

D. COUNTS NINE, TEN, AND ELEVEN: STATE LAW UNFAIR COMPETITION

By consensus of the parties, Counts Nine, Ten, and Eleven are derivative state law claims incorporating the allegations of Counts One, Seven, and Eight. Filmation has not cited any separate justification for entering judgment on these claims. Defendants’ motion must therefore be denied on these counts as well.

CONCLUSION

Defendants’ motion for summary judgment is denied. Counsel shall appear at a status conference on March 24, 1986, at 1:30 p.m. for which they shall file a current Joint Status Report in accordance with Local Rule 6.4.2.

IT IS SO ORDERED.

      . Section 106 provides in part:
      Subject to sections 107 through 108, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:
      (1) to reproduce the copyrighted work in copies or phonorecords;
      17 U.S.C. § 106(1).

      . A "story reel" is a working model used to create the final animated product. To create a story reel, Filmation first records a reading of the script. It then creates a "story board” comprising sketches of the various scenes in the film set in the order in which they will be portrayed and "shoots” the sketches to synchronize with the recorded dialogue track and a rough music track. By viewing the reel, the director can get a "feel” for the story line and pacing of the anticipated picture and can begin allocating responsibility for its animation. See Deposition of Hal Sutherland, pp. 37-51; Declaration of Burny Mattinson.

      . The parties disagree as to the scope of Count Six both as pleaded and as litigated throughout the course this action. Filmation contends that the infringement alleged refers only to the Disney’s copyrighted character depictions, and not to the film "Pinocchio." Disney responds that it has consistently alleged violation of copyrights to its individual depictions and to its film.
      Disney’s broader construction is supported both by the count as pleaded in the First Amended Complaint and as characterized by Disney since the beginning of this action. The "copyrighted material” allegedly copied includes "a series of original designs and drawings of characters which would appear in Disney’s ... PINOCCHIO” (First Amended Complaint, ¶ 27), and "an original fully animated feature-length motion picture entitled PINOCCHIO” (First Amended Complaint, ¶ 33). Moreover, in conjunction with both motions to dismiss, Disney has argued that Filmation’s products copy the elements and "feel” of the original Disney motion picture.

      . But as the Air Pirates court explained later in its opinion, there is little authority on the question:
      [M]ost of the cases dealing with cartoon characters have considered the character’s personality and other traits in addition to its image____ In what appears to be the only two cases that viewed a character only as an image (King Features Syndicate v. Fleischer, 299 F. 533 (2d Cir.1924); Fleischer v. Freundlich, 73 F.2d 276 (2d Cir.1934)), the alleged copying was of a doll, which could have only an image and no conceptual character traits; therefore the issue of whether the comic character’s depiction included a personality was not raised.
      581 F.2d at 757, n. 14.

      . This includes plaintiffs film “Pinocchio," defendants’ three-minute promotional trailer of its planned film, and two published works of the story “Pinocchio." C. Collodi, Pinocchio (1982) (illustrated by Richard Floethe); C. Collodi, The New Adventures of Pinocchio, (1925, revised ed. 1969) (illustrated by Attilio Mussino). The Court has viewed or read all of this evidence.
      The two videocassettes submitted at the time of hearing were received solely as the arguments of counsel.

      . Noting that an adverse ruling in this case might prevent completion of the film “The New Adventures of Pinocchio," Filmation argues that this action portends an unlawful “prior restraint” of its speech. This argument is without merit. By distinguishing between copyrightable expression and uncopyrightable facts and ideas, the Copyright Act itself embodies a permissible balance between First Amendment protections and the protection of a copyright holder's rights. Harper & Row, Publishers, Inc. v. Nation Enterprises, — U.S. -, -, 105 S.Ct. 2218, 2228, 85 L.Ed.2d 588, 604 (1985); New York Times Co. v. United States, 403 U.S. 713, 726 n. *, 91 S.Ct. 2140, 2147 n. *, 29 L.Ed.2d 822 (1971) (Brennan, J., concurring). The injunctive relief afforded an aggrieved copyright holder under 17 U.S.C. § 502(a) thus does not "restrain" any protected speech. See Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562, 577 n. 13, 97 S.Ct. 2849, 2858 n. 13, 53 L.Ed.2d 965 (1977) ("Federal District Courts have rejected First Amendment challenges to the federal copyright law on the ground that ‘no restraint [has been] placed on the use of an idea or concept.’ ”); Walt Disney Productions v. Air Pirates, 345 F.Supp. 108, 115-116 (N.D.Cal.1972).

      . Disney argues that these counts address not only the promotions that have been before the Court, but also "defendants’ use of Disney’s characters and story elements in the motion picture ‘The Further Adventures of Pinocchio’ [sic] and other planned motion picture projects.” Memorandum in Opposition at 42, 11. 22-24. But this current construction of these claims is inconsistent with Disney’s construction throughout this litigation. While some of these claims do contain references to the specific Filmation films, the gravamen of each claim is the pattern of solicitation for those films. This latter interpretation of these claims is consistent with the Court’s rulings on Filmation’s two motions to dismiss. On the first motion, the Court dismissed Disney’s claims as unripe, on the understanding that the claims were directed to films that were not then “enterefd] into commerce.” Order of Dismissal, July 16, 1985. The second time the motion came on for ruling — this time on the First Amended Complaint — Disney argued and the Court agreed that the claims referred to Filmation’s "advertise[ment] and solicitation of] sales of its films in such a way as to confuse persons as to the origin of Filmation’s product." Minute Order, October 10, 1985.
      Even if these counts could be read as broadly as Disney urges, Filmation would be entitled to judgment on any asserted "misrepresentation” actually embodied within a motion picture. Because the mere solicitation of sales is sufficient “commerce” for an action under § 43(a), Nike, Inc. v. Rubber Manufacturers Association, Inc., 509 F.Supp. 919, 924 (S.D.N.Y.1981), the advertisements cited in these counts are actionable even before the products to which they it refer are in commerce. National Lampoon, Inc. v. American Broadcasting Cos., Inc., 376 F.Supp. 733 (S.D.N.Y.), aff'd, 497 F.2d 1343 (2d Cir.1974). See Matsushita Electric Corp. v. Solar Sound System, Inc., 381 F.Supp. 64, 69 (S.D.N.Y.1974) (noting that a contrary result would "leave the federal government powerless to prevent fraudulent interstate advertising"). But no representation embodied within a film itself can be actionable before the film is rendered in a form capable of being viewed by a consumer.

      . The declarations of witnesses Richard Cook and William Mechanic were not timely filed, Local Rule 7.6, and are ordered stricken from the record.


source: Caselaw Access Project

author: JACKSON, District Judge.

license: Public Domain

text:
    FEDERAL TRADE COMMISSION, Plaintiff, v. PPG INDUSTRIES, INC., and Swedlow, Inc., Defendants.
    Civ. A. No. 86-0022.
    United States District Court, District of Columbia.
    Feb. 21, 1986.

      Steven A. Newborn, F.T.C., Bureau of Competition, Washington, D.C., for plaintiff.
    Bertram M. Kantor (PPG), New York City, Carla A. Hills, Washington, D.C., for defendants.
   MEMORANDUM AND ORDER

JACKSON, District Judge.

This antitrust case is before the Court on the application of the Federal Trade Commission (“FTC” or “Commission”) for a preliminary injunction against the imminent acquisition by PPG Industries, Inc. (“PPG”) of Swedlow, Inc. (“Swedlow”) pursuant to an “Agreement and Plan of Merger” dated August 21, 1985, as amended January 9, 1986, pending completion of administrative proceedings (Docket No. 9204) before the Commission to prohibit the transaction permanently. PPG proposes to pay $41.8 million ($32.60 per share) for all outstanding shares of Swedlow. The agreement is terminable at will by either party if not consummated by March 15, 1986. The Commission, however, alleges that the effect of a PPG-Swedlow merger “may be substantially to lessen competition or to tend to create a monopoly” in the production of aircraft transparencies in violation of section 7 of the Clayton Act. 15 U.S.C. § 18. Anticipating such a finding by the FTC, it asks that the parties be enjoined from implementing the merger in the meantime. For the reasons set forth below, the Court will grant the injunction, subject to a condition subsequent, namely, the entry of an appropriate hold separate order containing certain provisions hereinafter specified.

I.

PPG and Swedlow are two of the leading manufacturers of aircraft “transparencies:” the windshields, canopies, and cockpit and cabin windows of both commercial and military aircraft. PPG is a large, publicly-owned diversified Pennsylvania corporation for which aircraft transparencies represent but a small percentage of its business. Nevertheless, it is the world’s largest manufacturer of glass transparencies and a significant supplier of acrylic and composite transparencies. Swedlow is a smaller, closely-held California corporation of so-called “garage shop” origin, with its controlling stock owned by its founder, David Swedlow, and close associates, who began the business shortly after the discovery of acrylics in the 1930’s. In the years since, Swedlow has become the largest manufacturer of acrylic transparencies in the world, although it has never undertaken to make transparencies from glass. PPG and Swedlow are nevertheless frequent competitors for contracts to supply transparencies to major U.S. airframe manufacturers. Thus, because PPG plans to acquire a direct competitor, as opposed to a customer or supplier, the proposed merger is ostensibly horizontal in effect.

The Commission contends that the resulting entity will be a single, market-dominant firm possessed of a near-monopoly on the most advanced technology for the fabrication of transparencies from both substances, and any combinations or permutations thereof, with the predictable result on commerce in the product. PPG and Swed-low respond that, despite their similarities in appearance and the efforts of many years to adapt them to the same purposes, glass and acrylic, as well as hybrids, remain fundamentally different products. Various dissimilar properties prevent their use interchangeably in all but a very few aircraft fenestrations. The merger is, therefore, they say, a “product extension” merger, the Commission having “gerrymandered” various possible product market definitions to make it appear as if they compete in the same market whereas, in fact, they do not.

While opposing the Commission on the merits, PPG and Swedlow also urge the Court to consider a “hold separate” order as an alternative to a “full-stop” injunction, i.e., “a form of preliminary relief which permits the challenged transaction to go forward, but requires the acquiring company to preserve the acquired company (or certain of the acquired assets) as a separate and independent entity during the course of antitrust proceedings.” FTC v. Weyerhaeuser Co., 665 F.2d 1072, 1075 n. 7 (D.C.Cir.1981). The two primary purposes of a hold separate order are to maintain, insofar as possible, competitive balance during the pendency of the litigation and to make feasible adequate permanent relief, including divestiture, should the Commission ultimately prevail. Id.

While the Court does not have to resolve finally whether or not the proposed merger violates section 7 of the Clayton Act, the likelihood of the Commission’s ultimate success on the merits is the principal element in an award of any form of interim relief, being expressly prescribed by the statute as a prerequisite to an injunction, 15 U.S.C. § 53(b), and by case law as antecedent to hold separate orders as well. Weyerhaeuser, 665 F.2d at 1085-87. Likelihood of ultimate success on the merits, in turn, depends upon a proper definition of the relevant product and geographic markets, their structure, and the anticompetitive effects if any, of the proposed acquisition.

At this preliminary stage of the contest, upon the evidence now before the Court, it appears that the relevant product market is one of aircraft transparencies requiring, for want of a better term, “high technology” to produce, without regard to the materials of which they are fabricated. The recent history of the industry indicates that, on most aircraft, advanced glass and/or acrylic (or composite) transparencies are now — or will soon become — functionally interchangeable in the sense that each can substantially meet the design specifications established by the airframe manufacturers. Glass and acrylic undoubtedly still do have advantages and disadvantages vis-a-vis one another, but producers of glass transparencies and manufacturers of acrylic transparencies consistently bid against one another for contracts to fill the same apertures, and the trend in their respective technological evolutions is clearly in the direction of an eventual coalescence.

The relevant geographic market within which to assess the effects of an acquisition must “correspond to the commercial realities of the industry and be economically significant.” Brown Shoe Co. v. United States, 370 U.S. 294, 336, 82 S.Ct. 1502, 1530, 8 L.Ed.2d 510 (1962). Here the evidence points to a United States market for aircraft transparencies. While a single foreign company, the British firm Triplex Safety Glass Co. Ltd. (“Triplex”), presently sells transparencies to U.S. airframe manufacturers and the military, and some U.S. transparency manufacturers, including both PPG and Swedlow, do sell abroad, the total dollar sales resulting from these transactions is relatively insignificant.

The current United States all-transparency market — the closest available approximation of a high-tech market shown by the evidence — by all familiar antitrust standards, is already highly concentrated. In 1984, the top four firms accounted, for over 80 percent of all sales, the top eight firms more than 90 percent, and the Herfindahl-Hirschmann Index (“HHI”) was 1,943. PPG was the largest manufacturer with a nearly 30 percent share of the market, and Swedlow a close second with about 23 percent. That market would become significantly more concentrated were PPG and Swedlow to merge. Not only would the new PPG/Swedlow entity have close to 53 percent of the market, two-and-a-half times as much as the nearest competitor, Sierracin Corp., (the only other firm both the Commission and defendants recognize as having comparable high-tech capabilities), but the HHI would rise over 1,300 points to 3,295. According to the Justice Department Guidelines, where the post-merger market would be in a highly-concentrated range (over 1,800), any acquisition which would result in an increase of 50 points in the HHI will raise serious antitrust concerns. Department of Justice Guidelines ¶3.1.

While there may be no fixed numerical threshhold at which an increase in market concentration resulting from a horizontal merger triggers the antitrust laws, see, e.g., United States v. Philadelphia National Bank, 374 U.S. 321, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963), this case does not at the moment appear to be borderline. Assuming the traditional rules of antitrust analysis will continue to apply, the FTC and the Court of Appeals may almost surely be expected to find that the change in market structure following a PPG-Swedlow merger will be sufficiently inimical to competition to forbid the acquisition altogether.

Moreover, largely due to the sophisticated technology which delimits the market initially, the emergence of new producers who could quickly redress anticompetitive conduct resulting from increased concentration in the market, is not foreseeable. Knowledgeable witnesses have estimated that it would take anywhere from two to six years, or more — not counting the cost— to acquire the technological expertise, assemble the trained personnel, and devise the tooling to enter the market as a credible competitor, thereby acknowledging that there are high market entry barriers to exacerbate and prolong the effects of concentration.

Should the PPG-Swedlow merger be allowed to go forward, the reduced competition and increased concentration in the relevant markets will afford a fertile medium for interdependent anticompetitive conduct; more likely, it will precipitate leading firm behavior. Either way, the effects to be anticipated from a PPG-Swedlow merger include a decline in vigorous inter-material research and development, an increase in the price of both glass and acrylic, and an erosion in quality of service. Experience teaches that without worthy rivals ready to exploit lapses in competitive intensity, incentives to develop better products, to keep prices at a minimum, and to provide efficient service over the long term are all diminished to the detriment of consumers.

II.

Because the Commission has made a persuasive showing of its likelihood of success on the merits, some form of interim relief is clearly in order, the question being whether a preliminary injunction or a hold separate order is the more appropriate. The apparent strength of the Com-mission’s case does not preclude the issuance of a hold separate order if the public interest might be better served thereby. FTC v. Weyerhaeuser Co., 665 F.2d 1072, 1083 (D.C.Cir.1981). Comparing the alternative interim remedies, the Court of Appeals has observed,

a hold separate order, in face of an FTC showing of a likelihood of success, should not issue absent careful review of the particular features of the proposed merger and a reasoned determination from the evidence that the milder restraint will operate as an adequate preservative (impeding interim harm, and safeguarding eventual divestiture)' and, in view of the equities entailed, genuinely serve the public interest. When such a determination is fairly made, however, the hold separate order can secure important benefits that a merger-blocking preliminary injunction would sacrifice.

665 F.2d at 1087. See also FTC v. Pepsi-Co., Inc., 477 F.2d 24, 30-31 (2d Cir.1973). In Weyerhaeuser, also a horizontal merger case, a divided court of appeals upheld the district court’s denial of a preliminary injunction in favor of a hold separate order, holding the lesser restraint to be “consistent with the Congressional design” of section 13(b), 665 F.2d at 1074, and a decision to award it in lieu of a preliminary injunction to reside within the discretion of the district court. Id. at 1087. In other words, three criteria determine when a hold separate order might be preferable to an unqualified arrest of the transaction: “(1) strong equities favor consummation of the transaction; (2) a hold separate order will check interim competitive harm; and (3) such an order will permit adequate ultimate relief.” Id.

In the instant case, despite the Commission’s misgivings, the Court is satisfied that a hold separate relationship — although one considerably more stringent than that profferred by defendants — can be structured to maintain PPG’s and Swed-low’s de facto independence for the duration of the FTC proceedings without compromising the objectives of preliminary relief. (Whether their interest in one another will also survive the necessary estrangement remains to be seen). The remaining issue is, therefore, whether they have shown an equitable entitlement to a temporary reprieve.

Swedlow is perhaps the world’s leader in acrylic technology, the primary beneficiary of which of late has been the U.S. military which accounts for some 70 percent of Swedlow’s aircraft transparency business. David Swedlow, the company’s founder and entrepreneurial muse, however, is nearly 75 years of age and in ill health. No longer able to manage the business himself and having no heir apparent in law or fact to succeed him, Mr. Swedlow wants to sell the business as a going concern to another with both motive to continue it in its present form and resources sufficient to perpetuate its stature in the industry. He would also, of course, like to receive full and fair value for his stock, and to know that others who have invested with him over the years will do likewise.

While several companies have reportedly made inquiries about Swedlow’s availability in the recent past (most notably Triplex, whose interest, coincidentally, peaked as it learned of the merger), none has mentioned terms as favorable as those offered by PPG, and other conditions, including financing, are imprecise. There is no assurance given by the evidence that, should the PPG-Swedlow merger fail, any firm, including Triplex, will definitely make an acceptable firm offer for Swedlow. Swedlow could remain, for a time, an attractive acquisition for someone, but for all of the reasons previously noted the number of ready, able, and willing buyers is limited. In short, Swedlow’s post-David Swedlow future without a merger with PPG is conjectural even if auspicious.

On the public side of the ledger, should the Court allow the PPG-Swedlow merger to take place subject to a hold separate arrangement (and the arrangement to work as intended), there are at least three significant public benefits to be reckoned: first, availing itself of PPG’s considerable financial resources, Swedlow (at the moment, capital-short) would be able to continue the research and development necessary to preserve its position as a leader in acrylic technology; second, Swedlow could continue for the present as a domestic source of high-tech military transparencies without giving cause for concern over foreign ownership of an important defense resource; and, third, an amalgam (appropriately circumscribed so as to prevent the “leakage” of knowledge the Commission fears) of the. technologies of PPG and Swedlow might lead to the development of yet more sophisticated materials and/or transparencies than either could produce alone.

The Commission urges that PPG and Swedlow, believing that they will eventually be one, will have small incentive to continue to compete against one another during the pendency of the FTC proceedings under any form of hold separate order. The Commission submits that the disincentive to compete under hold separate orders is particularly strong in high technology industries in which the large sums of money required for research and development are rarely committed if the parties suspect the results are likely to be duplicative, and only one of them, in any event, may be the successful bidder on any contract offered.

The record at this point, however, is hardly reassuring as to the inevitability of a unitary PPG-Swedlow enterprise. Given the odds at present that the merger ultimately will be permanently disallowed, the uncertainty as to how matters may stand at the conclusion of the case offers considerable inducement to both PPG and Swed-low to keep the latter as viable and attractive to potential third-party purchasers as possible in the event of divestment, if only for PPG to have some reasonable prospect of recouping its substantial investment in Swedlow (assuming, of course, it has not been allowed to spirit away Swedlow’s proprietary technology). And, because PPG will be the end beneficiary of Swedlow’s profitability in the interim, merger or no, PPG has at least some current incentive to see it thrive, even at PPG’s expense.

Nevertheless, to be approved by the Court, any hold separate relationship will necessarily entail, inter alia:

1. an express undertaking by PPG and Swedlow to continue to compete in the aircraft transparencies market, and any subdivisions thereof, in the exercise of their respective best business judgments and without regard to the merger agreement, as if they were in all respects separate and independent business entities, with a breach of such undertaking (as well as any other term of the order) to be punishable as a contempt of court;

2. a voting trust of Swedlow stock, with bare beneficial ownership in PPG, the trustee to be Court-appointed and altogether independent of, and unrelated to, any current or prospective participant in the aircraft transparency market here or abroad;

3. an express prohibition of joint commercial activity, or the transfer of any assets (including, but not limited to, non-public financial information and scientific knowledge and technology) between Swed-low and PPG, except in the exercise of the best business judgment of the transferor without regard to the merger agreement, and with the prior permission of the Court, with adequate notice and opportunity to be heard thereon to be given to the Commission; and

4. continued judicial supervision of the relationship.

The Court concludes that a hold separate order containing at least the foregoing conditions will enable Swedlow to remain a viable separate business entity during the pendency of the FTC proceedings which could later be sold if divestiture were ultimately ordered, and complete permanent relief could be implemented with relative ease.

It is, therefore, for the foregoing reasons, this 21st day of February, 1986,

ORDERED, that plaintiff’s motion for a preliminary injunction is granted; and it is

FURTHER ORDERED, that within fifteen (15) days the parties may present, jointly or independently, proposed forms of hold separate orders in accordance with the foregoing; and it is

FURTHER ORDERED, that, after hearing, upon entry of a hold separate order, PPG and Swedlow may be relieved of the injunction to the extent thereof, and may proceed to consummation of so much of the merger agreement as is consistent therewith, subject to any further order of Court.

ORDER

In accordance with the Memorandum and Order entered herein on February 21, 1986, it is, this 21st day of February, 1986,

ORDERED, that defendants PPG Industries, Inc., and Swedlow, Inc., their officers, agents, servants, employees, and attorneys, and all persons in active concert or participation with them, are hereby restrained and enjoined from any further performance of the “Agreement and Plan of Merger,” dated August 21, 1985, as amended January 9, 1986, pending conclusion of administrative proceedings known as Docket No. 9204 before the Federal Trade Commission or further order of this Court.

      . Jurisdiction is conferred by 15 U.S.C. § 53(b), and 28 U.S.C. §§ 1337 and 1345.

      . Section 13(b) of the Federal Trade Commission Act provides, "upon a proper showing that, weighing the equities and considering the Commission's likelihood of success, such action would be in the public interest ... a preliminary injunction may be granted____” 15 U.S.C. § 53(b).

      . Time being of the essence, and this Court’s jurisdiction in the matter at an end with the entry and enforcement of a preliminary injunction, it is unnecessary (and undesirable) for this Court to make detailed findings and conclusions upon issues which must ultimately be decided by the FTC and reviewed, if at all, by the Court of Appeals.

      . In defining a product market, the main consideration is cross-elasticity of demand, namely, "how far buyers will go to substitute one commodity for another." United States v. E.I. duPont de Nemours & Co., 351 U.S. 377, 393, 76 S.Ct. 994, 1006, 100 L.Ed. 1264 (1956).

      . Compelling evidence of a “high technology" aircraft transparency market, despite their protests that it is a device of the Commission’s imagination conjured in the absence of data, are PPG’s and Swedlow’s own internal documents which repeatedly refer to such a market and rarely draw distinctions between types of transparencies when making their own calculations of "market shares.” For example, in a 1984 document, PPG states that the result of adopting what it calls "the aggressive strategies,” which includes the acquisition of Swedlow, “would be the positioning of PPG as the dominant force in the free world market for high technology transparencies which could prevail for several decades.” Moreover, in its 1984 long range plan, PPG refers to Swedlow as one of "our two largest competitors.” Similarly, in a 1982 letter to employees, David Swedlow states, "[o]ur major competitor is [PPG].” Finally, in its 1982 long range plan, PPG notes that "the airframe manufacturer has a choice of glass, plastic or composite windows, offering him a variety of material options.”

      . See plaintiffs exhibit No. 147, Table B. The market shares, computed by the Commission largely from statistics provided by PPG, are concededly imprecise. Nevertheless, although PPG and Swedlow "may point to technical flaws in the compilation of these statistics, ... in cases of this type precision in detail is less important than the accuracy of the broad picture presented.” Brown Shoe, 370 U.S. at 342 n. 69, 82 S.Ct. at. 1533 n. 69.

      . The HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. The HHI takes into account the relative size and distribution of the firms in a market, increasing both as the number of firms in the market decreases and as the disparity in size among those firms increases. The Justice Department divides the spectrum of market concentration as measured by the HHI into three regions that can be broadly characterized as unconcentrated (HHI below 1,000), moderately concentrated (HHI between 1,000 and 1,800), and highly concentrated (HHI above 1,800). Department of Justice Guidelines ¶ 3.1 (1984).

      . PPG and Swedlow may contend before the Commission that current antitrust doctrine as applied to "commodity” markets is inapposite in the context of "customized" products developed primarily for the U.S. Defense Department for which the price to the consumer is the least important aspect of market competition.

      . Interdependent anticompetitive conduct is most likely to occur where a market is highly concentrated. The relative lack of competitors eases coordination of actions, explicitly or implicitly, among the remaining few to approximate the performance of a monopolist. Department of Justice Guidelines ¶ 1.
      A leading firm is one which by itself can exercise market power. Among the dangers to competition is that the leading firm will engage in predatory pricing, the practice whereby it lowers prices until all competitors are driven from the market and then increases prices without fear of being undersold.


author: MacLAUGHLIN, District Judge.

text:
    Charles PAULSON, d/b/a Chuck Paulson & Sons Construction, Plaintiff, v. GREYHOUND LINES, INC., Defendant.
    Civ. No. 4-85-1309.
    United States District Court, D. Minnesota, Fourth Division.
    Feb. 21, 1986.

      William Kirschner, A1 Baker, Kirschner & Baker Legal Clinic, Fargo, N.D., for plaintiff.
    Lynn G. Truesdell, Charles E. Lundberg, Bassford, Heckt, Lockhart & Mullin, P.A., Minneapolis, Minn., for defendant.
   MEMORANDUM AND ORDER

MacLAUGHLIN, District Judge.

This matter is before the Court on defendant’s motion for summary judgment. The Court will grant defendant’s motion.

FACTS

Plaintiff in this action, Charles Paulson d/b/a Chuck Paulson and Sons Construction, is a construction contractor in northwestern Minnesota. The defendant is Greyhound Lines, Inc., a California corporation with its principal place of business in Phoenix, Arizona.

In May of 1983, plaintiff intended to submit a bid on a contract proposal to the Minnesota Department of Transportation (DOT). See Paulson aff. ¶ 3. DOT, located in St. Paul, would consider only those bids which it received in its office by 9:25 a.m. on May 20, 1983. Id. at 114. Early in the afternoon of May 19, 1983, Gary Paulson, an employee of plaintiff, twice contacted the Greyhound terminal in Fargo, North Dakota. Both times Paulson asked whether defendant could guarantee delivering a construction bid to St. Paul by 8:30 a.m. on May 20, 1983. An employee of defendant, who Paulson later identified as James Houseman, told Paulson that defendant could make the delivery prior to 8:30 a.m. Id. at ¶ 2, 5-12, 25.

Paulson delivered the package containing the construction bid to the Fargo Greyhound terminal at approximately 4:15 p.m. on May 19, 1983. Paulson had written “URGENT: Deliver by 8:30 a.m. 5/20/83” on the outside of the package. Id. at II13-14, exh. 1. While at the terminal, Paulson reiterated that the package containing the construction bid must be delivered by 8:30 a.m., and Houseman assured Paulson that it would be delivered by that time. Id. at II17-18.

Defendant delivered the package to DOT at 11:30 a.m. on May 20, 1983. DOT refused to consider plaintiff’s bid because it was two hours and five minutes late. Id. at ¶ 27-30, exh. 1. The bid which DOT accepted was higher than the bid plaintiff submitted. Id. at ¶ 31. Plaintiff claims that defendant’s failure to deliver the package on time caused plaintiff to lose $67,000 in lost wages and profits which plaintiff would have earned on the DOT project.

Plaintiff commenced the present action in state district court (Clay County) on March 15, 1984. Defendant removed the action to federal court on April 2,1984, and the case was assigned to Judge Devitt. Defendant moved for summary judgment arguing that under the federal law governing interstate carriers, a contract for delivery of the package by a specific time could not exist. Defendant argued in the alternative that federal law limited plaintiff’s damages to the $100 set by the tariff. Judge Devitt denied the motion for summary judgment on January 24, 1985, reasoning that plaintiff could escape the $100 limit on liability if he could establish his allegations that defendant fraudulently induced him to enter into the shipping contract. Judge Devitt added that if plaintiff failed to establish actual fraud in the inducement, plaintiff could not enforce a contract for delivery by a specific time.

At the settlement conference, the parties requested Judge Devitt to clarify his January 24, 1985 order denying summary judgment. The parties resubmitted briefs on the issue of whether defendant’s alleged fraud vitiates the limits on defendant’s liability. Judge Devitt adhered to his earlier conclusion that fraud did provide such an exception. See August 13, 1985 order. The case was tried to a jury from September 3-5, 1985 only on the issue of liability. On September 5, 1985 the jury returned a verdict in favor of plaintiff by answering yes to the one interrogatory submitted to them. Specifically, the jury found that defendant made a false representation to plaintiff guaranteeing delivery of the package by a certain time, that plaintiff reasonably relied on the representation, and that the reliance proximately caused injury to plaintiff. Defendant moved for judgment notwithstanding the verdict, or in the alternative a new trial. On September 17,1985, Judge Devitt denied defendant’s JNOV motion, but granted defendant’s motion for a new trial, stating that he was “left with a definite and firm conviction that the jury erred.” September 17, 1985 order, at 2. Judge Devitt also disqualified himself from any further proceedings in the case. Defendant now, for the third time, seeks summary judgment.

DISCUSSION

Summary Judgment

A defendant is not entitled to summary judgment unless the defendant can show that no genuine issue exists as to any material fact. Fed.R.Civ.P. 56(c). Summary judgment is an extreme remedy that should not be granted unless the moving party has established a right to judgment with such clarity as to leave no room for doubt and unless the nonmoving party is not entitled to recover under any discernible circumstances. E.g., Vette Co. v. Aetna Casualty & Surety Co., 612 F.2d 1076, 1077 (8th Cir.1980). In considering a summary judgment motion, a court must view the facts most favorably to the nonmoving party and give that party the benefit of all reasonable inferences that can be drawn from the facts. E.g., Hartford Accident & Indemnity Co. v. Stauffer Chemical Co., 741 F.2d 1142, 1144-45 (8th Cir.1984). The non-moving party may not merely rest upon the allegations or denials of the party’s pleading, but must set forth specific facts, by affidavits or otherwise, showing that there is a genuine issue for trial. Salinas v. School District of Kansas City, 751 F.2d 288, 289 (8th Cir.1984).

Law of the Case

Plaintiff argues that this Court should deny defendant’s motion because Judge Devitt’s prior denials of summary judgment are the law of the case. “The doctrine of law of the case ‘merely expresses the practice of courts generally to refuse to reopen what has been decided, [it is] not a limit to their power.’ ” Erie Conduit Corp. v. Metropolitan Asphalt Paving Ass’n, 560 F.Supp. 305, 307 (E.D.N.Y.1983), quoting Messinger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 740, 56 L.Ed. 1152 (1912) (Holmes, J.); accord Kori Corp. v. Wilco Marsh Buggies & Draglines, Inc., 761 F.2d 649, 657 (Fed.Cir.), cert. denied, — U.S. —, 106 S.Ct. 230, 88 L.Ed.2d 229 (1985). The doctrine prevents repeated litigation of issues previously decided in a lawsuit. Liddell v. State of Missouri, 731 F.2d 1294, 1304 (8th Cir.) (en banc), cert. denied, — U.S. —, 105 S.Ct. 82, 83 L.Ed.2d 30 (1984). The United States Court of Appeals for the Eighth Circuit, for example, “will reconsider a previously decided issue only on a showing of clear error and manifest injustice[,]” Liddell, 731 F.2d at 1304, or if the evidence at a later trial is different from the evidence reviewed on the first appeal. E.g., Austin v. Loftsgaarden, 768 F.2d 949, 952 (8th Cir.), cert. granted; — U.S. —, 106 S.Ct. 379, 88 L.Ed.2d 333 (1985). Other courts of appeals add a change in controlling authority as another exception circumstance permitting reconsideration. E.g., Kori Corp., 761 F.2d at 657.

The doctrine of law of the case has less force at the trial court level, where it is essentially a management practice to allow a logical progression toward a final resolution. See 1B J. Moore, J. Lucas & T. Currier, Moore’s Federal Practice ¶ 0.404[1], at 118 (1984). Under Eighth Circuit law, a trial judge’s denial of a motion for judgment notwithstanding a verdict does not constitute law of the case precluding a subsequent judge from directing a verdict in a retrial. Day v. Amax, Inc., 701 F.2d 1258, 1263 (8th Cir.1983).

One judge denying a summary judgment motion does not preclude a successor judge from granting it. E.g., Dictograph Products Co. v. Sonotone Corp., 230 F.2d 131, 134-36 (2d Cir.) (L. Hand, J.), cert. dismissed, 352 U.S. 883, 77 S.Ct. 104, 1 L.Ed.2d 82 (1956); 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 4478, at 794 (1981). A successor judge has the same discretion to reconsider a ruling as the first judge would. Abshire v. Seacoast Products, Inc., 668 F.2d 832, 837-38 (5th Cir.1982); but see Hayman Cash Register Co. v. Sarokin, 669 F.2d 162, 165 (3d Cir.1982) (a subsequent judge should give deference to previous rulings). A panel of the Eighth Circuit relied, in part, on Hayman Cash Register Co. in holding that a successor judge can overrule prior opinions in the same case only for good cause. In re Exterior Siding & Aluminum Coil, 696 F.2d 613, 616 (8th Cir.1982). That panel decision, however, was negated by a divided en banc court. In re Exterior Siding & Aluminum Coil, 705 F.2d 980 (8th Cir.) (en banc) (per curiam), cert. denied, 464 U.S. 866, 104 S.Ct. 204, 78 L.Ed.2d 178 (1983). The Court, therefore, is not constrained from granting defendant’s motion for summary judgment if the Court concludes that such action is appropriate.

Merits

As an interstate carrier, defendant is governed by the Interstate Commerce Act, 49 U.S.C. §§ 10101-11917 (hereafter Act). Any claim plaintiff has against defendant arising from the shipment of the package must be asserted under the Act since it preempts state law. See, e.g., Missouri Pacific Railroad Co. v. Elmore & Stahl, 377 U.S. 134, 137, 84 S.Ct. 1142, 1144, 12 L.Ed.2d 194 (1964); Fulton v. Chicago, Rock Island & Pacific Railroad Co., 481 F.2d 326, 331-32 (8th Cir.), cert. denied, 414 U.S. 1040, 94 S.Ct. 540, 38 L.Ed.2d 330 (1973).

Under the Act, defendant can charge rates and supply services only in accordance with published tariffs. 49 U.S.C. § 10761. The tariff governing defendant provides that

Carriers do not agree to deliver Express Shipments in time for any particular market, occasion or event, or on any particular lines and do not guarantee to arrive at or depart from any particular point at a specified time. The time schedules published by the Carriers are the schedules that they endeavor to maintain, but same are not guaranteed.

National Bus Traffic Association, Inc., Agent; National Express Tariff, Section B, Rule 11(c) (hereafter Bus Tariff), on file with the Interstate Commerce Commission. As a tariff filed with the Interstate Commerce Commission, this tariff has the force of law, and defendant cannot deviate from it. E.g., Lowden v. Simonds-Shields-Lonsdale Grain Co., 306 U.S. 516, 520, 59 S.Ct. 612, 614, 83 L.Ed. 953 (1939). The terms of a properly published tariff are incorporated into all agreements between carriers and shippers. Aero Trucking, Inc. v. Regal Tube Co., 594 F.2d 619, 621 (7th Cir.1979) (Lay, J.). The shipper, as well as the carrier, is presumed to know the law, and thus to have understood the terms of the tariff. Pittsburgh, Cincinnati, Chicago & St. Louis Railroad Co. v. Fink, 250 U.S. 577, 581, 40 S.Ct. 27, 27-28, 63 L.Ed. 1151 (1919); F. Burkhart Mfg. Co. v. Fort Worth & D.C. Ry. Co., 149 F.2d 909, 910 (8th Cir.1945); Aero Trucking, Inc., 594 F.2d at 621.

A specific application of the rule that parties cannot make individual contracts at variance with the applicable tariff is that parties cannot make special contracts requiring the delivery of goods by a specific time. See, e.g., Davis v. Cornwell, 264 U.S. 560, 561-62, 44 S.Ct. 410, 410-11, 68 L.Ed. 848 (1924); Cooper v. Chicago, Rock Island & Pacific Railroad Co., 217 F.2d 683, 685 (8th Cir.1954). A carrier’s duty under a tariff such as the Bus Tariff is to transport goods with reasonable dispatch. New York, Philadelphia & Norfolk Railroad Co. v. Peninsula Produce Exchange, 240 U.S. 34, 38-39, 36 S.Ct. 230, 231-32, 60 L.Ed. 511 (1916); Turner’s Farms, Inc. v. Maine Central Railroad Co., 486 F.Supp. 694, 697 (D.Me.1980).

In the present action, defendant delivered the package within 20 hours of receiving it, and plaintiff is not claiming that this time period constituted other than reasonable dispatch. Instead, plaintiff claims that defendant fraudulently misrepresented, promised, guaranteed, and warranted that defendant could deliver the package by 8:30 a.m. of the following day. Complaint ¶¶ 15, 16. The Bus Tariff, however, explicitly states that defendant does not guarantee delivery by a specific time, and the law imputes to plaintiff knowledge of this published tariff. E.g., Fink, 250 U.S. at 581, 40 S.Ct. at 27; F. Burkhart Mfg. Co., 149 F.2d at 910; Aero Trucking, Inc., 594 F.2d at 621. Plaintiff, moreover, is in effect trying to establish that he and defendant had an agreement to deliver the package by a specific time, but such agreements are clearly prohibited under the Act. E.g., Davis, 264 U.S. at 561-62, 44 S.Ct. at 410-11; Cooper, 217 F.2d at 685.

Since defendant could not have been obligated to deliver the package by 8:30 a.m., plaintiff simply does not have a cause of action against defendant under the Act. Plaintiff tries to escape this result by arguing that defendant’s misrepresentation constituted fraud in the inducement. Citing Mitchell v. Union Pacific Railroad Co., 188 F.Supp. 869, 873-74 (S.D.Cal.1960). In Mitchell, the court concluded that a carrier’s fraud in the inducement would allow a plaintiff to recover beyond the liability limit established by the tariff. The Mitchell court, however, did not hold that allegations of fraud in the inducement can alter a carrier’s duty to a shipper as specified in a tariff. (If Mitchell so holds, it is unsound.)

The Seventh Circuit has concluded that allegations of fraud in the inducement do not give rise to an action against a carrier for misquoting a term of the shipping contract at variance from the term mandated by the tariff. Aero Trucking, Inc., 594 F.2d at 621-22; see also Consolidated Freightways v. Terry Tuck, Inc., 612 F.2d 465, 466 (9th Cir.) (per curiam) (shipper has no claim for relief based on carrier’s fraudulent misquotation of tariffs), cert. denied, 447 U.S. 907, 100 S.Ct. 2990, 64 L.Ed.2d 856 (1980). The Eighth Circuit, moreover, cited both of these cases with approval in Missouri Pacific Railroad Co. v. Rutledge Oil Co., 669 F.2d 557, 559 (8th Cir.1982) (per curiam). In Missouri Pacific Railroad Co., the shipper claimed that it should not have to pay certain fees because the carrier fraudulently concealed the existence of the charges. Even though the carrier might have committed fraud, the court concluded that the shipper could not escape the charges because to allow such an avoidance would constitute a rate preference in violation of the Act’s antidiscriminatory provision (49 U.S.C. § 10761). See Missouri Pacific Railroad Co., 669 F.2d at 558-59; see also F. Burkhart Mfg. Co., 149 F.2d at 910 (8th Cir.1945) (allegations of fraudulent rate quotation did not state a cause of action).

The four previously cited cases concluding that allegations of fraud do not provide a basis for varying from a term designated by a tariff all dealt with rates or charges. Their logic, however, applies equally to the present action since the express disclaimer of delivery by a specific time, just like a rate, is a term specified by a published tariff. As a matter of law, plaintiff is “conclusively presumed” to know the terms of the tariff, and therefore plaintiff cannot claim that he was deceived by false representations at variance with the tariff’s provisions. F. Burkhart Mfg. Co., 149 F.2d at 910 (8th Cir.1945); accord Aero Trucking, Inc., 594 F.2d at 622-23. Plaintiff’s allegations of fraud, therefore, do not alter the conclusion that plaintiff does not have a cause of action against defendant under the Act.

Based on the foregoing, IT IS ORDERED that defendant’s motion for summary judgment is granted.

LET JUDGMENT BE ENTERED ACCORDINGLY.

      . The following narrative, of course, is based on plaintiffs version of the facts.

      . Houseman denies making such guarantees and further states that he received no such phone calls. See Houseman aff. ¶ 4-5.

      . The Court should also note that defendant has now cited to some important cases, e.g., Aero Trucking, Inc. v. Regal Tube Co., 594 F.2d 619 (7th Cir.1979), which defendant did not bring to Judge Devitt’s attention.

      . This section, formerly codified at 49 U.S.C. § 6(7), is known as the antidiscriminatory provision. The purpose of this provision is to ensure the existence of one uniform rate. See Chicago, Burlington & Quincy Railroad Co. v. Ready Mixed Concrete Co., 487 F.2d 1263, 1266 (8th Cir.1973). Congress enacted this antidiscriminatory section to eliminate the secret discounts and preferential treatment carriers were giving to big shippers in the late 19th century. Louisville & Nashville Railroad Co. v. Mead Johnson & Co., 737 F.2d 683, 686 (7th Cir.), cert. denied, — U.S. —, 105 S.Ct. 386, 83 L.Ed.2d 320 (1984).

      . The Honorable Donald P. Lay, now Chief Judge for the United States Court of Appeals for the Eighth Circuit, sitting by designation.

      . The Carmack Amendment, 49 U.S.C. §§ 10730 and 11707 (formerly 49 U.S.C. § 20(11)), allows a carrier to limit its liability.


author: GADBOIS, District Judge.

text:
    CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE, Plaintiff, v. COAST FREIGHTWAYS, INC., a California corporation, Defendant. and Related Counter-Claim.
    No. CV 85-2943 RG(Gx).
    United States District Court, C.D. California.
    Feb. 21, 1986.
    Gary W. Wigand, Downey, Cal., for defendant/countericlaimant, Coast Freight-ways, Inc.
    Christopher Ashworth, of Garfield, Tepper & Ashworth, P. C., Los Angeles, Cal., for plaintiff and respondent Consol. Freightways Corp. of Delaware.
   AMENDED ORDER GRANTING PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIM

GADBOIS, District Judge.

The motion of plaintiff and respondent Consolidated Freightways Corporation of Delaware (hereinafter “CF”) to dismiss came on regularly for hearing before the undersigned on January 13, 1986. The Court has considered the briefs and evidentiary materials supplied by both parties. Being informed on the premises, the Court now rules as follows:

I

INTRODUCTION

CF filed its Complaint seeking to recover freight charges arising from services performed by it on behalf of defendant Coast Freightways, Inc. (hereinafter “Coast”). CF is a motor carrier operating in interstate commerce and the services for which it sought recompense were interstate movements of freight. Where, as here, a motor carrier operating in interstate commerce sues for its charges, its claim against a defendant arises under an Act of Congress regulating commerce, namely 49 U.S.C. § 10761(a). Coast filed its Answer denying the essential allegations of the Complaint. It also filed a counter-claim which alleges that “this claim arises from a common carrier’s charges for interstate transportation of property____” The counter-claim further alleges that Coast “is a freight forwarder common carrier authorized as such by the Interstate Commerce Commission ____” Lastly, Coast alleged as follows:

“From ... August 1, 1984, through February 15, 1985, [Coast] interlined through collect freight bills with [CF]. [Coast] interlined said freight bills on Bills of Lading with advanced charges collect. [CF] was to deliver said freight and collect the freight charges from various consignees and thereafter pay defendant [to Coast] its pro rata share of the total freight charges.”

CF sought the sum of $58,807.32 by its Complaint (later modified to $57,190.86) and Coast sought $32,174.05 by way of its counterclaim.

In due course, CF filed a motion for partial summary judgment pursuant to F.R.C.P. Rule 56 requesting that this Court declare that certain issues were without substantial controversy, i.e., that it was entitled, apart from any setoffs, to the sum of $57,190.86. The motion was unopposed. The Court granted that motion on August 29, 1985.

II

CF'S PENDING MOTION

On December 4, 1985, CF filed its motion to dismiss Coast’s counter-claim for want of subject matter jurisdiction pursuant to F.R.C.P. Rule 12. The principal thrust of CF’s motion is that Coast (a freight forwarder) may not lawfully interline traffic with CF (a motor common carrier). That being so, according to CF, Coast’s claims against it do not “arise under” an Act of Congress regulating commerce and thus this Court has no jurisdiction.

III

COAST’S RESPONSE

Coast admits in its response that it is seeking interline charges against CF. At page 3 of its Memorandum in Opposition to the motion, Coast’s counsel articulated its position as follows:

“It is very clear from the pleadings filed with this Court prior to this motion that [Coast] had and does have a viable compulsory counter-claim against plaintiff for interline freight charges____”

Coast then claims that its asserted portion of the interline freight charges should be before this Court because they constitute a compulsory counter-claim which would imbue this Court with jurisdiction under F.R. C.P. Rule 13(a).

IV

THE COURT’S DECISION

The relationship between CF (a motor common carrier) and Coast (a freight forwarder) is that of carrier and shipper. As the United States Supreme Court has noted, a freight forwarder may be both consignor and consignee, and though not the owner of the goods, it is for all legal purposes the shipper of the goods. Lehigh V.R. Co. v. United States, 243 U.S. 444, 37 S.Ct. 434, 61 L.Ed. 839 (1917). Coast asserts that it interlined traffic with CF at a common point of service and that it is entitled to a portion of the revenue on each of the freight bills upon which it has brought its counter-claim. Barring the possibility that its claims arise as a compulsory counter-claim under F.R.C.P. Rule 13(a), Coast’s claim against CF does not arise under an Act of Congress regulating commerce. We start our analysis with 49 U.S.C. § 10705 which declares, in material part as follows:

“(b)(1) The Interstate Commerce Commission may ... prescribe through routes, joint classifications, joint rates ... the division of joint rates, and the conditions under which those routes must be operated, for a motor common carrier of property [such as CF] providing transportation subject to the jurisdiction of the Commission____
(c) The Commission shall prescribe the division of joint rates to be received by a carrier providing transportation subject to its jurisdiction ... when it decides that a division of joint rates established by the participating carriers ... or under a decision of the Commission under subsection (a) or (b) of this section, does or will violate section 10701 of this title____
(h) Any motor common carrier of property who is a party to a through route and joint rate, whether established by such carrier ... or prescribed by the Commission under subsection (b) of this section, shall promptly pay divisions or make interline settlements, as the case may be, with other carriers which are parties to such through routes and joint rate. In the event of undue delinquency in the settlement of such divisions or interline settlements, such through routes and joint rates may be suspended or cancelled under rules prescribed by the Commission.”

The evidence adduced by the parties shows that there are no through routes and joint rates for any joint CF/Coast operations established either by the Interstate Commerce Commission nor by CF/Coast having filed any tariff with the Commission. In simple words, the joint routes and rates provisions of the Interstate Commerce Act are simply inapplicable to the relationship between Coast and CF. Moreover, subsection (b)(1) of § 10705 contemplates that these joint rates and routes will apply to common operations “with another such carrier” (another motor common carrier) “or with a water common carrier of property.” The federal statutory materials — the laissez passer required for federal court jurisdiction — simply do not apply to this relationship in that Coast is a freight forwarder, not a motor common carrier of property nor a water carrier. Indeed, at least one Interstate Commerce Commission decision forbids freight forwarders and motor carriers to establish joint rates and through routes. See “Joint Rates and Through Routes — Freight Forwarders” 355 I.C.C. 913 (1977).

The only remotely similar relationship which a freight forwarder may have with a motor carrier must arise in the limited context provided under former 49 U.S.C. § 1009 (now 49 U.S.C. § 10766). That Section declares in material part as follows:

“(b) A freight forwarder providing service subject to the jurisdiction of the Commission ... may contract with motor common carriers ... to provide transportation for the forwarder. A copy of that contract must be filed with the Commission____” [Emphasis added.]

The evidence shows that no such contract applicable to the transportation matters at hand is on file with the Commission. Thus, Coast’s claim not only does not “arise under” an Act of Congress, it is expressly forbidden by an Act of Congress. Standing alone, Coast’s claim does not confer jurisdiction upon this Court.

We turn now to Coast’s assertion that its counter-claim against CF is a “compulsory” counter-claim within the contemplation of F.R.C.P. Rule 13(a). Coast supports its position with the statement that “[CF’s] Complaint alleged transportation services for [Coast] during and/or about the same period of time [as that sought by the counter-claim] to wit, August 29, 1984, through January 14, 1985.” The evidence showed, however, that when the bills of lading and freight bills upon which CF premised its claim were compared with the bills of lading and freight bills upon which Coast premised its counter-claim, only three such bills “overlap.” More simply stated, only three of the bills on which Coast seeks recovery would fall within the sweep of the Rule 13(a) “compulsory” counter-claim rule. These bills aggregate less than $410.00. More to the point, Coast’s claims do not, as contemplated by F.R.C.P. Rule 13(a), “[arise] out of the transaction or occurrence that is the subject matter of the opposing party’s claim____” At best, Coast’s counter-claim is permissive. If a counter-claim is permissive it is well-settled that there is no federal jurisdiction with respect thereto unless the counter-claim rests on an independent jurisdictional ground. On the other hand, if a counter-claim is compulsory, then it is ancillary to the claim asserted in the complaint and no independent basis for federal jurisdiction is required. See Waltham Industries Corp. v. Thompson, 53 F.R.D. 93 (D.C.Conn.1971); Sangamo Weston, Inc. v. Fairchild Camera & Instrument Corp., 26 F.R.S.2d 895 (D.C.Cal.1978); Binnick v. Avco Financial Services, Inc., 435 F.Supp. 359 (D.C.Neb.1977); Kashulines v. Thermo Contracting Corp., 437 F.Supp. 195 (D.C.N.J.1976). Prior to the hearing on this motion, CF tendered to Coast the amount sought by the three “overlapping” freight bills. It would appear now that any arguable compulsory counter-claim on the part of Coast has been mooted.

V

CONCLUSION

The Court concludes from its review of the argument supplied by counsel and the evidentiary materials before it, that Coast’s counter-claim is not compulsory in nature and does not present an independent ground for federal jurisdiction. For those reasons, the motion of CF to dismiss Coast’s counter-claim for want of federal court jurisdiction should be, and hereby is, granted.

      . In view of the agreement of both parties that the amounts sought by Coast’s counter-claim in the nature of interline settlements, it is unnecessary to address the issues of either "allowances” or “advances” raised by both parties in their papers.

      . Discussed at some length, infra.

      . The matter at hand is CF’s motion to dismiss for want of subject matter jurisdiction. The Court does not reach the issue of whether or not it can recover so-called interline settlements in a state action in the face of forbidding statutory language. That determination, not being necessary to this motion, will not be made.


author: OWENS, Chief Judge.

text:
    Willie H. IRVIN, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    Civ. A. No. 83-112-1-MAC.
    United States District Court, M.D. Georgia, Macon Division.
    Feb. 21, 1986.

      Bruce K. Billman, Macon, Ga., for plaintiff.
    Frank L. Butler, III, Macon, Ga., for defendant.
   ORDER

OWENS, Chief Judge.

Plaintiff moves the court for an order awarding him costs and attorney’s fees pursuant to the Equal Access to Justice Act, 28 U.S.C.A. § 2412(d) (West Supp.1985) (hereinafter EAJA) following entry of judgment in his favor on June 26, 1985.

A district court may award attorney’s fees under EAJA if three factors are satisfied: (1) claimant must be the prevailing party; (2) the application for attorney’s fees must be timely filed; and (3) the court must find that the government’s position was not substantially justified. See id.; Taylor v. Heckler, 778 F.2d 674, 676 (11th Cir.1985). The first two enumerated factors are met in this case; but the third factor, whether or not the government’s position was substantially justified, is vigorously contested by the parties.

This court found that the Secretary disregarded the administrtive law judge’s (AU) credibility determinations and that this disregard was not supported by substantial evidence. See Order dated July 25, 1985. Additionally, the court found that plaintiff’s treating physician diagnosed plaintiff as totally disabled and that this diagnosis was substantiated by the record. Id. In its opinion the court concluded that, “The Appeals Council acted without any rational basis in doubting Dr. Cohn’s [plaintiff’s treating physician] credibility regarding the existence of these items [substantiating evidence not contained in the record].” Id. at 4. Further, the court found that the Appeals Council acted without reciting any factual basis regarding its rejection of plaintiff’s allegations of severe pain. In short, the court found that the Secretary rejected the opinion of the AU and that this rejection was not supported by substantial evidence while the “opinion of the AU is supported by substantial evidence on all issues.” Id. at 4. Accordingly, it is difficult to conclude that the government’s position had a reasonable basis in fact. Cornella v. Schweiker, 728 F.2d 978, 983 (8th Cir.1984) (where claimant is the prevailing party under EAJA, “the government has the burden to show that its cause has a reasonable basis both in law and fact.”)

The government sets forth in its brief the new standard to be applied in evaluating a claimant’s complaints of pain. This standard was promulgated as part of the Social Security Disability Reform Act of 1984 and provides in relevant part:

An individual’s statement as to pain or other symptoms shall not alone be conclusive evidence of disability as defined in this section; There must be medical signs and findings, established by medically acceptable clinical or laboratory diagnostic techniques, which show the existence of a medical impairment that results from anatomical, physiological, or psychological abnormalities, which could reasonably be expected to produce the pain or other symptoms alleged and which, when considered with all evidence required to be furnished under this paragraph (including statements of the individual or his physician as to the intensity and persistence of such pain or other symptoms which may reasonably be accepted as consistent with the medical signs and findings), would lead to a conclusion that the individual is under a disability. Objective medical evidence of pain or other symptoms established by medically acceptable clinical or laboratory techniques (for example, deteriorating nerve or muscle tissue) must be considered in reaching a conclusion as to whether an individual is under a disability-

42 U.S.C.A. § 423(d)(5)(A) (West Supp.1985) (emphasis added). As the government correctly noted, “plaintiffs subjective complaints cannot, by themselves, serve as conclusive evidence of disability” under this standard. Defendant’s Brief in Opposition to Plaintiff’s Application for Attorney’s Fees Pursuant to 28 U.S.C. § 2412(d) at 6. The Eleventh Circuit has stated that “the record must document by medically acceptable clinical or laboratory diagnostic techniques the existence of a medical impairment which would reasonably be expected to produce the symptoms of which claimant complains. There need not be objective evidence of the pain itself.” Hand v. Heckler, 761 F.2d 1545, 1548 (11th Cir.), reh’g en banc granted and opinion vacated, 774 F.2d 428 (11th Cir.1985).

As the court’s opinion of June 26, 1985, notes, there was objective evidence in the record that documented by medically acceptable diagnostic techniques the existence of a medical impairment which would reasonably be expected to produce pain. Plaintiff’s x-rays showed encroachment of the IV foramen at L4-5 and L5-S1 by posterior lipping of the L4-5 vertebral bodies. Additionally, Dr. Cohn, claimant’s treating physician, stated that in his opinion Mr. Irvin was presently totally disabled. Dr. Cohn consulted another physician who confirmed his diagnosis. The Appeals Council evidently chose to disregard Dr. Cohn’s conclusion because the consulting physician’s report was not part of the record. This decision by the Appeals Council is not reasonably based on the law. “Considerable weight must be given to the opinion of a treating physician.” Spencer on Behalf of Spencer v. Heckler, 765 F.2d 1090, 1093 (11th Cir.1985) (citations omitted). “Generally a treating doctor’s opinion is entitled to more weight than that of a consulting doctor’s.” Id. at 1093-1094 (quoting Wilson v. Heckler, 734 F.2d 513, 518 (11th Cir.1984)). Finally, only when there is good cause to the contrary, may the weight given to a claimant’s treating physician be rejected. See Broughton v. Heckler, 776 F.2d 960 (11th Cir.1985); Wiggins v. Schweiker, 679 F.2d 1387 (11th Cir.1982). Thus the Secretary’s decision to discount Dr. Cohn’s diagnosis is not reasonably básed on the law as there was not good cause to the contrary.

Nevertheless, the court’s inquiry into the propriety of attorney’s fees under EAJA does not stop here. This circuit had determined that the court must also take into account the salient factors listed in Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir.1974). See Watford v. Heckler, 765 F.2d 1562, 1565, n. 3 (11th Cir.1985); Florida Suncoast Villas, Inc. v. United States, 776 F.2d 974, 975 (11th Cir.1985). Accordingly, the court will review each of the factors listed in Johnson, supra, seriatem to determine whether plaintiff’s claim for attorney’s fees is appropriate on the facts of this case.

(1) The time and labor required. The government has not disputed the hours plaintiff has claimed in this case. The court finds the request for 27 hours, 50 minutes of work plus 1 hour, 15 minutes spent to prepare the motion for attorney’s fees, and 1 hour spent on the response to the Secretary’s memorandum in opposition to be reasonable.

(2) The novelty and difficulty of the questions. While this is not a case of first impression, Mr. Billman, plaintiff’s attorney of record, did expend time in researching and bringing to the court’s attention a recent Eleventh Circuit decision focusing on the relationship between attorney’s fees under EAJA and the attorney’s fees section of the Social Security Act, 42 U.S.C. § 406(b)(1). The court considers the time expended to be reasonable in view of the novelty and difficulty of the issues presented.

(3) The skill requisite to perform the legal services properly. As the briefs filed by plaintiff in this case amply demonstrate, Mr. Billman is unquestionably conversant with the complexities of the Social Security Act and case law in this circuit. The court finds that this factor is easily met.

(4) The preclusion of other employment by the attorney due to acceptance of the case. Obviously, the thirty odd hours spent on this case precluded Mr. Billman from working on another matter. The court finds this factor satisfied.

(5) The customary fee. Mr. Billman requested $71.18 an hour for the initial 27 hours, 50 minutes spent on the case, and $75.00 an hour for the time spent on the motion for attorney’s fees and response to the government’s brief in opposition. EAJA specifies a maximum rate of $75.00 per hour “unless the court determines that ... a special factor ... justifies a higher fee.” 28 U.S.C.A. § 2412(d)(2)(A) (West Supp.1985). The court concludes that the requested hourly rate is reasonable.

(6) Whether the fee is fixed or contingent. Mr. Billman has expressly affirmed to the court that in no event will there be a double recovery in this case, and that any EAJA award will be used to credit or reimburse plaintiff up to any amount awarded under 42 U.S.C. § 406(b)(1). The court is satisfied that counsel will live up to his avowed intention.

(7) The limitations imposed by the client or the circumstances. The court is without sufficient information to form a belief regarding this factor. However, the court does not believe this factor is dispositive in view of all the circumstances in this case.

(8) The amount involved and results obtained. Obviously, claimant was the prevailing party in this case. The decision in this case does not impact on a large class of people, although it is obviously of considerable import to Mr. Irvin. The court does not believe this is the type of case that would justify a fee above the statutory rate due to its effect on the law in general.

(9) The experience, reputation, and ability of the attorney. The court believes that Mr. Billman is generally recognized as a skilled advocate in the area of Social Security law. The requested fee is reasonable in light of this factor.

(10) The undesirability of the case. Although some attorneys would not care to specialize in Social Security law, the court does not believe that this is the kind of cause celebre that would justify a fee higher than the statutory rate.

(11) The nature and length of the professional relationship with the client. Mr. Billman apparently had no connection with Mr. Irvin before the case. However, the court believes that the requested fee is reasonable vis-a-vis this factor.

(12) Awards in similar cases. The fee requested in this case is commensurate with awards in other cases of this nature.

CONCLUSION

As the foregoing demonstrates, the court does not believe that the government’s position was substantially justified pursuant to EAJA, 28 U.S.C.A. § 2412(d) (West Supp.1985). Furthermore, the court finds that the requested fee is reasonable as specified in Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir.1975). Therefore, plaintiff’s motion for attorney’s fees is GRANTED. The government is directed to pay Mr. Billman the sum of two thousand one hundred and fifty dollars and no cents ($2,150.00).

      . The Equal Access to Justice Act, 28 U.S.C.A. § 2412(d)(1)(A), (B) (West Supp.1985) provides in relevant part:
      (d)(1)(A) Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a) incurred by that party in any civil action (other than cases sounding in tort) brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.
      (B) A party seeking an award of fees and other expenses shall, within thirty days of final judgment in the action, submit to the court an application for fees and other expenses which shows that the party is a prevailing party and is eligible to receive an award under this subsection, and the amount sought, including an itemized statement from any attorney or expert witness representing or appearing in behalf of the party stating the actual time expended and the rate at which fees and other expenses are computed. The party shall also allege that the position of the United States was not substantially justified.