author: VUKASIN, District Judge.

text:
    Lucy SCHMIDT, Plaintiff, v. CAPITOL LIFE INSURANCE COMPANY, a Colorado corporation; Continental Casualty Company, an Illinois corporation, and DOES 1 through 10, inclusive, Defendants.
    No. C-85-8048-JPV.
    United States District Court, N.D. California.
    Jan. 31, 1986.

      Jay S. Linderman, Hinton & Pashkowski, Walnut Creek, Cal., for plaintiff.
    Stephen C. Klein, Barger &, Wolen, Los Angeles, Cal., for defendant Capitol Life.
    James J. Brosnahan, James P. Bennett, Karl Olson, Morrison & Foerster, San Francisco, Cal., for defendant Continental Cas.
   MEMORANDUM ORDER DENYING PLAINTIFF’S MOTION TO REMAND AND FOR SANCTIONS

VUKASIN, District Judge.

INTRODUCTION

In August of 1976 plaintiff Schmidt suffered a slip and fall accident which left her permanently disabled. On February 1, 1977, she filed a claim for disability benefits under a group disability insurance policy issued by defendant Capitol Life Insurance Company [“Capitol Life”], under which she was covered through her employment. Capitol Life began paying disability benefits and continued to do so until February 1, 1983, when (allegedly at the behest of defendant Continental Casualty Company [“Continental”], Capitol Life’s reinsurer) the payments temporarily ceased.

Plaintiff instituted this action in Contra Costa Superior Court on January 27, 1984, pleading claims based on the benefits hiatus for “breach of duty of fair dealing and good faith,” breach of fiduciary duty, and breach of statutory duties under the California Insurance Code. She named as parties defendant Capitol Life and Does 1 through 10. The complaint was served on Capitol Life on June 27, 1984. It was subsequently amended, substituting Continental for “Doe 1,” and, so amended, was served on the newly-named defendant on February 25, 1985. It is undisputed that complete diversity exists between the named parties and that, absent the Does, jurisdiction would be conferred on this Court by 28 U.S.C. § 1332(a)(1); it was only the presence of the phantom defendants which, until recently, precluded removal to federal court.

On April 4, 1985, plaintiff filed an At-Issue Memorandum in the Contra Costa Superior Court proceedings, seeking to have the case placed on the Civil Active List. Despite the fact that the form At-Issue Memorandum contains language stating that “all essential parties have been served,” the filing of such a Memorandum does not, as a practical matter, result in automatic dismissal of the Does. See Goodman v. Travelers Ins., 561 F.Supp. 1111, 1113 (N.D.Cal.1983).

Plaintiff filed a first amended complaint on August 26, 1985, alleging a conspiracy between defendants, i.e., tortious breach of contract or “insurance bad faith.” By court order of September 20, 1985, the case was removed from. the Civil Active List. The most recent phase of this litigation commenced on October 4, 1985, when plaintiff filed a new At-Issue Memorandum; this was followed on October 8 by plaintiff’s “Motion to Advance Bench-Bar Settlement Program Hearing and Specially' Set for Trial.” It is this pleading, defendants contend, which first informed them that plaintiff' intended to abandon the Does, since “plaintiff’s motion to advance the case for a February trial ... was entirely inconsistent with any desire or intention to file an amended pleading naming new ‘Doe’ defendants____” Removal Petition, at 3:28-4:3. Believing, therefore, that the action had become removable within the meaning of 28 U.S.C. § 1446(b), defendants removed on November 4, 1985.

On December 10, 1985, plaintiff filed her motion for remand, asserting with some emphasis that the removal petition was in bad faith and wholly improvident, and seeking an award of $500 in attorney’s fees as sanction therefor. The matter came on regularly for hearing before the Court on January 16, 1986; at the conclusion of oral argument the matter was ordered submitted for further consideration. Now, having reviewed the arguments of counsel, both written and oral, the Court issues this Memorandum Order denying the motion to remand.

DISCUSSION

The Court finds itself in the shadowy area where diversity jurisdiction and Doe pleading intersect, a zone in which the plaintiff’s option of pleading his claims in a chosen forum and the statutory right of defendants to assert federal jurisdiction over the cause ineluctably clash. Plaintiff’s sole argument in support of remand is that defendants are disingenuous in their insistence that the October 8, 1985, “Motion to Advance” was their first notice of plaintiff’s intent to abandon the Does. Rather, she submits, a September 17, 1985, Memorandum filed by her in opposition to Continental’s state court Motion to Strike the [first] At-Issue Memorandum fully alerted defendants to her desire to retain the case on the Civil Active List and her hope for a February, 1986, trial date. She argues that this represents clear notification of her intent not to proceed against the unnamed and unserved Does; therefore, the argument concludes, the November 4, 1985, removal was untimely, since under Section 1446(b) defendants had thirty days from September 17 to file their removal petition.

To a certain extent plaintiff misconstrues the nature of her own September 17 pleading. In that document she admits that “the case is not technically at-issue at present,” defendants not having answered the first amended complaint, and that she was “prepared to move to advance the case as soon as it is at issue again.” Ex. 47 to Removal Petition, at 2:12 and 2:15-16. Further, her suggestion of a February, 1986 trial date was just that: merely a suggestion, and one upon which the Superi- or Court judge declined to rule at the hearing on Continental’s Motion to Strike. Continental’s Opp.Memo., Ex. A. In sum, the September 17 Opposition and the October 8 “Motion to Advance” were not, as plaintiff now asserts, “indistinguishable.” Pltf’s Memo., at 6:11. In the first pleading she merely expressed an intention; the second filing made that intention definite and certain.

A case may become removable after its original filing “if the plaintiff voluntarily dismisses, discontinues or in any way abandons, the action as to the resident joint defendant____” See Heniford v. 'American Motors Sales Corp., 471 F.Supp. 328, 334 (D.S.C.1979) (citation omitted). Ninth Circuit cases have long acknowledged that removability can arise upon the abandonment of claims against a resident joint defendant — named or fictitious. See e.g., Preaseau v. Prudential Ins. Co. of America, 591 F.2d 74, 77 (9th Cir.1979); Southern Pacific Co. v. Haight, 126 F.2d 900, 905 (9th Cir,1942).

Where the voluntary dismissal or abandonment of a resident defendant creates complete diversity between the parties to state proceedings, the nonresident defendant may remove the case to federal court within thirty days of the dismissal or abandonment. See 14a Wright, Miller & Cooper, Federal Practice & Procedure, § 3732. Section 1446(b) prescribes the time and manner for removing an action which becomes removable after its original filing:

If the case stated by the initial pleading is not removable, a petition for removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be asertained that the case is one which is or has become removable.

(28 U.S.C. § 1446(b)) (emphasis added).

Section 1446(b) thus permits removal within 30 days of the pleading or other action by which the plaintiff unequivocally effects an abandonment of any resident defendants and thereby creates diversity. It is clear that a defendant need not speculate on or anticipate an abandonment from the plaintiff’s mere expressions of intent or other equivocal action. Rather, the defendant is entitled to await affirmative and certain action by a plaintiff confirming such abandonment before exercising the right of removal.

In assessing the propriety of removal where the complaint contains Doe defendants, the courts are not rigid in their adherence to the general presumption against removal and in favor of remand. See Lib-hart v. Santa Monica Dairy, 592 F.2d 1062,1064 (9th Cir.1979); see generally 14a Wright, Miller & Cooper, supra, § 3739 (presumption). This is because the uncertainty as to the existence of federal jurisdiction where all named parties are diverse is largely created by plaintiff’s salting the complaint with phantom defendants; similarly, the ultimate fate of the Does is entirely within plaintiff’s control. See, e.g., Grigg v. Southern Pacific Co., 246 F.2d 613 (9th Cir.1957); Southern Pacific Co. v. Haight, supra. As the Court observed in George v. Al-Saud, 478 F.Supp. 773, 774 (N.D.Cal.1979):

A non-citizen defendant, sued along with Doe defendants of unstated citizenship, faces a dilemma. If he immediately seeks removal, the objection may be raised that the citizenship of the Does is not known, and that the removal is premature. If he waits until it is clear that there is diversity as to all remaining parties, he runs the risk of being told that he is too late, that he should have assumed that the Does were sham defendants, and that he should have removed within thirty days of original filing.

Id. (footnote and citation omitted). Therefore, courts have consistently suggested that where the plaintiff creates an uncertainty as to the appropriate time for removal by naming Does, that uncertainty should be resolved in the removing defendant’s favor. See, e.g., Wistos v. Safeco Life Ins. Co., 536 F.Supp. 536, 537-38 (E.D.Cal. 1982); Gottlieb v. Firestone Steel Products Co., 524 F.Supp. 1137, 1140 (E.D.Pa. 1981); George v. Al.-Saud, supra; cf. Preaseau, supra; Jong v. General Motors Corp., 359 F.Supp. 223, 226-27 (N.D.Cal. 1973). Defendants may therefore wait until plaintiff, by some clear and definite action, unequivocally expresses an intention not to proceed against the unnamed defendants. “Defendants should not be required to ‘guess’ when a case becomes removable.” Gottlieb, supra, 524 F.Supp. at 1140. It is up to the plaintiff, as creator of the jurisdictional uncertainty, to resolve it by specific action.

Here, plaintiff did nothing until the October 8th “Motion to Advance” other than articulate vague intentions and opaque desires for an early trial; she did not clearly and definitely state her position that the Does were to be abandoned. Indeed, at the time of the September 17th Opposition Memorandum which she now asserts provided defendants with all the jurisdictional information they needed, she acknowledged that the matter was not “at-issue.” At that point, defendants had not even answered the new complaint, nor tested its legal sufficiency by way of motion. The history of this case indicates that defendants were, warranted in their skepticism of plaintiff’s intentions respecting the Does, as the caption to the original complaint had already been amended once to substitute Continental Casualty for Doe 1. Additionally, the first amended complaint sets forth novel conspiracy allegations against the newly-named Does one through ten [Doe 1 having been replaced by Continental, leaving but nine fictitious defendants]. Compl., ¶ 14. Defendants therefore could not have been certain that the caption would not once more be amended to name, for example, officers or agents of either corporation as co-conspirators, in lieu of the several Does. This therefore presents a situation where plaintiff, while shrouding the complaint in jurisdictional uncertainty, simultaneously expects defendants to divine from her peripheral suggestions when, or if, the action has become removable. It does not appear that defendants were improvident in relying on the October 8, 1985, “Motion to Advance” as the § 1446(b) “other paper” from which they could first ascertain removability. The November 4, 1985, removal was thus timely, and the motion for remand is meritless.

This being so, plaintiff’s ancillary motion for attorney’s fees is moot.

ORDER

In view of the foregoing, and good cause appearing,

IT IS HEREBY ORDERED that plaintiff’s motion to remand and for sanctions is denied.

      . They were retroactively reinstated in 1985.

      . Plaintiff is a citizen of California. Capitol Life is a Colorado corporation with its principal place of business in Denver; Continental is an Illinois corporation with its principal place of business in Chicago.

      . This amendment followed the announcement of the recent decision of the California Court of Appeal in Sprague v. Equifax, Inc., 166 Cal. App.3d 1012, 213 Cal.Rptr. 69 (1985).


source: Caselaw Access Project

author: RAMBO, District Judge.

license: Public Domain

text:
    In re GRAND JURY SUBPOENA.
    Misc. No. 86-027.
    United States District Court, M.D. Pennsylvania.
    Jan. 31, 1986.

      Joseph F. Moore, Jr., Reed, Smith, Shaw & MeClay, Harrisburg, Pa., for plaintiff.
    James J. West, U.S. Atty., Harrisburg, Pa., for defendant.
   MEMORANDUM

RAMBO, District Judge.

This case presents what is apparently a question of first impression regarding the power of a federal grand jury to subpoena information from a duly constituted select committee of the state legislature. We are here called upon to decide whether members of the Pennsylvania House of Representatives who are not themselves the target of a federal criminal investigation may assert a privilege of non-disclosure, based on constitutional Speech or Debate considerations, against a federal grand jury subpoena.

The following facts are undisputed. The House of Representatives of the General Assembly of the Commonwealth of Pennsylvania (the House), through its Select Committee to Investigate Compliance With the Steel Products Procurement Act (the Committee) has for approximately a year been investigating, inter alia, alleged improprieties concerning the procurement of granite for the expansion of the state capitol in Harrisburg, Pennsylvania. Transcript at 3. More specifically, the claimed wrongdoing has occurred in connection with sole source no-bid contracts, including supply and fabrication agreements. Id. That investigation is ongoing, id., and includes fact-finding in the nature of calling witnesses to appear before the Committee as well as conducting interviews through investigators hired by the Committee. Id. at 4.

At the invitation of the Pennsylvania Department of General Services, the United States Attorney for the Middle District of Pennsylvania (hereinafter the United States Attorney or the United States) convened a grand jury to investigate the alleged improprieties. Affidavit of James J. West, Pars. 1 and 2. On January 15, 1986, the grand jury issued a subpoena directed to Nicholas Colafella, Representative of the 15th District, in his capacity as Chairperson of the Committee, or to the Records Custodian of the Committee, requesting the production of the following materials:

1. Memos, reports, summaries, interview notes, record review notes, correspondence and any other documents of an investigative nature compiled, adopted, prepared or sent and received by any committee investigator including, but not limited to, the listed individual and companies named on the attached list.
2. Agenda, minutes, summaries and all transcripts of public and private hearings, along with copies of all documents or exhibits referred to in said transcripts, summaries, agenda or minutes during the testimony or in comments by committee members or staff.

On January 17, 1986, Nicholas Colafella and several other persons filed the instant Motion to Quash that subpoena, contending that its enforcement would contravene the doctrine of legislative immunity mandated by the Speech or Debate Clause.

This court has the power to quash or modify a subpoena duces tecum under Rule 17(c) of the Federal Rules of Criminal Procedure. Courts have emphasized the importance of this power in view of the fact that “[although grand jury subpoenas are issued in the name of the district court, they are issued pro forma and in blank to anyone requesting them without prior court approval or control”. In re Grand Jury Matters, 751 F.2d 13, 16 (1st Cir. 1984). Thus, because these subpoenas are “in fact almost universally instrumentalities of the United States Attorney’s office or of some other investigative or prosecutorial department of the executive branch”, In re Grand Jury Proceedings (Schofield I), 486 F.2d 85, 90 (3d Cir.1973), practical responsibility for preventing abuse of the subpoena power and for “controlling grand jury excesses” lies with this court. In re Pantojas, 628 F.2d 701, 705 (1st Cir.1980); In re Grand Jury Matters, 751 F.2d at 16.

The Third Circuit has said that because “a presumption of regularity attaches to the grand jury’s proceedings, and hence to a grand jury subpoena____ The party objecting to enforcement has the burden of making some showing of irregularity”. Schofield I, 486 F.2d at 92. However, the United States must make a preliminary showing by affidavit, indicating that each item sought is “(1) relevant to an investigation, (2) properly within the grand jury’s jurisdiction, and (3) not sought primarily for another purpose”. In re Grand Jury Proceedings, (“Schofield II”), 507 F.2d 963, 966 (3d Cir.1975), cert. denied, 421 U.S. 1015, 95 S.Ct. 2424, 44 L.Ed.2d 685 (1975). The Schofield cases “soundly rejected any contention that the district court should ‘rubber stamp’ petitions for the enforcement of grand jury subpoenas”. Schofield II, 507 F.2d at 964.

The grand jury’s investigative powers are “necessarily broad ... [bjecause its task is to inquire into the existence of possible criminal conduct and to return only well-founded indictments”. Branzburg v. Hayes, 408 U.S. 665, 688, 92 S.Ct. 2646, 2660, 33 L.Ed.2d 626 (1972).

Hence, the grand jury’s authority to subpoena witnesses is not only historic, but essential to its task. Although the powers of the grand jury are not unlimited and are subject to the supervision of a judge, the longstanding principle that ‘the public ... has a right to every man’s evidence’, except for those persons protected! by a constitutional, common-law, or statutory privilege, is particularly applicable to grand jury proceedings.

Id. (Citations and footnote omitted.) Thus, the grand jury’s right to “every man’s evidence” is substantively limited only by express privileges, although under Federal Rule of Criminal Procedure 17(c) this court may also quash or modify a subpoena which appears to be unreasonable or oppressive in its demands. In re Grand Jury Matters, 751 F.2d at 17.

We proceed now to address the claim of privilege at issue in this case, which arises from the Speech or Debate clauses of the United States and Pennsylvania Constitutions. As a preliminary matter, although we note that the federal and state provisions are congruent, we decline to decide this case under the Pennsylvania Constitution, despite movants’ urging that we do so. See Movant’s Responsive Brief (hereinafter cited as Movant’s Brief) at 6-7. In United States v. Craig, 528 F.2d 773 (7th Cir.1976) (Craig I), cert. denied, 425 U.S. 973, 96 S.Ct. 2171, 48 L.Ed.2d 796 (1976), concurrence adopted as opinion of en banc court, 537 F.2d 957 (7th Cir.1976) (Craig II), cert. denied sub nom. Markert v. United States, 429 U.S. 999, 97 S.Ct. 526, 50 L.Ed.2d 609 (1976), the court established that the State Constitution was inapplicable to a state legislator’s claim of privilege in a federal criminal prosecution. This was so because the Federal Rules of Evidence and the Federal Rules of Criminal Procedure contemplated “that the admissibility of evidence in criminal cases in federal courts would be governed by Federal law and would not be dependent upon diverse state laws, including state constitutional provisions.”- Craig I, 528 F.2d at 776. See also Lake Country Estates v. Tahoe Planning Agency, 440 U.S. 391, 404, 99 S.Ct. 1171, 1178, 59 L.Ed.2d 401 (1979) (recognition of immunity for state legislators reflected the court’s interpretation of federal law; the decision “did not depend on the presence of a speech or debate clause in the constitution of any state”). Accordingly, we do not address the applicability of the Pennsylvania Constitution’s Speech or Debate provision.

Furthermore, the Federal Constitution’s Speech or Debate provision is not directly applicable to members of a state legislature. Lake Country Estates, 440 U.S. at 404, 99 S.Ct. at 1178. However, state legislators may in some circumstances invoke the protection of common law immunity under the federal clause. Id.; Star Distributors, Ltd. v. Marino, 613 F.2d 4, 6 (2d Cir.1980); Craig I, 528 F.2d at 782 (“The protection afforded state legislators from liability under federal law for acts done in their legislative roles ... is not based upon the speech or debate clause of the Federal Constitution ... a clause that applies only to Congress, but rather upon the common-law doctrine of official immunity”).

Thus, the precise question before this court is whether movants are here entitled to invoke common-law immunity from the effects of the federal grand jury subpoena. Federal Rule of Evidence 501 provides in full that:

Except as otherwise required by the Constitution of the United States or provided by Act of Congress or in rules prescribed by the Supreme Court pursuant to statutory authority, the privilege of a witness, person, government, state, or political subdivision thereof shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience. However, in civil actions and proceedings, with respect to an element of a claim or defense as to which state law supplies the rule of decision, the privilege of a witness, person, government, State, or political subdivision thereof shall be determined in accordance with State law.

F.R.E. 501 (emphasis supplied).

We turn now to an examination of the principles of the common law in the Speech or Debate clause area to determine whether, “in the light of reason and experience”, those principles should apply to this case.

The Supreme Court has traced the history and purpose of the Speech or Debate provision thus:

The privilege of legislators to be free from arrest or civil process for what they do or say in legislative proceedings has taproots in the Parliamentary struggles of the Sixteenth and Seventeenth Centuries. As Parliament achieved increasing independence from the Crown, its statement of the privilege grew stronger____
In 1689, the Bill of Rights declared in unequivocal language: ‘That the Freedom of Speech, and Debates or Proceedings in Parliament, ought not to be impeached or questioned in any Court or place out of Parliament’.
Freedom of speech and action in the legislature was taken as a matter of course by those who severed the Colonies from the Crown and founded our Nation____ The reason for the privilege is clear. It was well summarized by James Wilson, an influential member of the Committee of Detail which was responsible for the provision in the Federal Constitution. ‘In order to enable and encourage a representative of the public to discharge his public trust with firmness and success, it is indispensably necessary, that he should enjoy the fullest liberty of speech, and that he should be protected from the resentment of every one, however powerful, to whom the exercise of that liberty may occasion offense’____ The provision in the United States Constitution was a reflection of political principles already firmly established in the States.

Tenney v. Brandhove, 341 U.S. 367, 372-73, 71 S.Ct. 783, 786, 95 L.Ed. 1019 (1951). See also United States v. Helstoski, 442 U.S. 477, 491-92, 99 S.Ct. 2432, 2440-41, 61 L.Ed.2d 12 (1979); United States v. Johnson, 383 U.S. 169, 178, 86 S.Ct. 749, 754,15 L.Ed.2d 681 (1966).

In view of these important functions of the Clause, the cases establish that it is to be read broadly, “to include not only ‘words spoken in debate’, but anything ‘generally done in a session of the House by one of its members in relation to the business before it’ ”. Johnson, 383 U.S. at 179, 86 S.Ct. at 755 (citations omitted); United States v. Meyers, 432 F.Supp. 456, 458 (W.D.Pa.1977). While “the heart of the Clause is speech or debate”, it also includes other matters which are “an integral part of the deliberative and communicative processes by which Members participate in committee and House proceedings with respect to the consideration and passage or rejection of proposed legislation or with respect to other matters which the Constitution places within the jurisdiction of either House”. Gravel v. United States, 408 U,S. 606, 625, 92 S.Ct. 2614, 2627, 33 L.Ed.2d 583 (1972). The Clause “protects against inquiry into acts that occur in the regular course of the legislative process and into the motivation for those acts”, United States v. Brewster, 408 U.S. 501, 525, 92 S.Ct. 2531, 2544, 33 L.Ed.2d 507 (1972), and legislative fact-finding is such a protected act. Eastland v. United States Servicemen’s Fund, 421 U.S. 491, 95 S.Ct. 1813, 44 L.Ed.2d 324 (1974); McSurely v. McClellan, 553 F.2d 1277 (D.C.Cir.1976). In short, “[r]ather than giving the Clause a cramped construction”, the Supreme Court has “sought to implement its fundamental purpose of freeing the legislator from executive and judicial oversight that realistically threatens to control his conduct as a legislator”. Gravel, 408 U.S. at 618, 92 S.Ct. at 2623.

Of particular relevance to the decision at bar are those instances in which the federal courts have accorded this immunity to state legislators. In Star Distributors, Ltd. v. Marino, 613 F.2d 4, the Second Circuit affirmed the denial of a preliminary injunction which had sought to restrain enforcement of a subpoena issued by a state legislative committee. In so holding, the court stated that

under our system of federalism, the role of the state legislature is entitled to as much respect as that of Congress. Congress may legislate on matters of national concern, while state legislators act on vital matters of local importance. The need for a Congress which may act free of interference by the courts is neither more nor less than the need for unimpaired state legislatures.

613 F.2d at 9. Noting that “[t]he Supreme Court has stated in dictum that ‘the state legislative privilege ... [is] on a parity with the similar federal privilege’ under the Speech or Debate Clause, United States v. Johnson, 388 U.S. 169 [86 S.Ct. 749],” the Star Distributors court concluded that the “shared origins and justifications” of the federal Speech or Debate provision and the doctrine of common-law immunity of state legislators from suit rendered the two doctrines parallel, in the absence of “good reason” for a contrary conclusion. 613 F.2d at 8. Thus, because the Supreme Court had held that the federal Speech or Debate provision barred a suit for injunctive relief against enforcement of a subpoena issued by a Senate committee, East-land, 421 U.S. 491 [95 S.Ct. 1813], state legislators were to be accorded a similar immunity. Id.

A salient difference in the scope of the privilege accorded to state legislators and that provided to members of Congress appears to be that the common-law doctrine does not immunize state legislators from federal criminal prosecution in connection with their legislative acts. In United States v. Gillock, 445 U.S. 360, 100 S.Ct. 1185, 63 L.Ed.2d 454 (1980), the Supreme. Court expressly stated that it had granted certiorari “to resolve a conflict in the Circuits over whether the federal courts in a federal criminal prosecution should recognize a legislative privilege barring the introduction of evidence of the legislative acts of a state legislator” charged with crime. 445 U.S. at 361-62, 100 S.Ct. at 1187-88. Having so stated the issue, the court declined to recognize such a privilege, finding that neither of the “two interrelated rationales” which underlie the Speech or Debate clause would support the granting of immunity. First, the separation of powers doctrine did not mandate the privilege because, under the Supremacy Clause, Federal interference into state legislative process was “not on the same constitutional footing with the interference of one branch of the Federal Government in the affairs of a coequal branch”. 445 U.S. at 370, 100 S.Ct. at 1192. The second rationale, which was the need to insure legislative independence, similarly gave way to preeminent federal- criminal statutes. Id. at 371-72, 100 S.Ct. at 1192-93.

As this court reads Gillock, its holding was expressly confined to those situations in which a state legislator is charged with a federal crime or is the target of a federal criminal investigation. The court distinguished its decision on this basis from those of its precedents which had accorded immunity to state legislators in civil cases. 445 U.S. at 372, 100 S.Ct. at 1193. Thus, Gillock stands only for the proposition that “recognition of an evidentiary privilege for state legislators for their legislative acts would impair the legitimate interest of the Federal Government in enforcing its criminal statutes with only speculative benefit to the state legislative process”. Id. at 373, 100 S.Ct. at 1194 (emphasis added). See also United States v. Craig, 528 F.2d 773, 783 (7th Cir.1976) (Tome, J., concurring) (principles of common-law immunity, cognizable under F.R.E. 501, protected a state legislator in a civil case but not in a criminal prosecution, because “immunity from civil but not criminal liability has been regarded as sufficient to achieve the purpose of the doctrine of official immunity, which is to promote independence and fearless discharge of duty on the part of the protected officials”). But see United States v. Meyers, 432 F.Supp. 456 (D.C.Pa. 1977) (granting a state senator’s motion, to strike a portion of an indictment against him, because “the doctrine of legislative immunity is one of the fundamental principles of ordered Anglo-American liberty which is made binding on the States by virtue of the Fourteenth Amendment”, and the “reasons and public purpose upholding” such immunity were “equally applicable to State and federal legislators”).

Significantly, despite Gillock’s admonition that no immunity is recognized for state legislators under criminal investigation, the Third Circuit has recently extended such protection to a Virgin Islands legislator. In Government of the Virgin Islands v. Lee, 775 F.2d 514 (3d Cir.1985), the court held that the Virgin Island’s legislative immunity provision, contained in a statute found at 48 U.S.C. § 1572(d), • was “closely parallel” to the Speech or Debate Clause in terms of the purposes underlying the two provisions. Therefore, the territorial legislator was by statute accorded immunity from inquiry in federal court regarding his fact-finding and legislative activities, although the privilege did not bar inquiry into whether his activities were in fact legislative in nature. In so holding, the court reaffirmed that

Fact-finding, information gathering, and investigative activities are essential prerequisites to the drafting of bills and the enlightened debate over proposed legislation. As such, fact-finding occupies a position of sufficient importance in the legislative process to justify the protection afforded by legislative immunity. Legislators must feel uninhibited in their pursuit of information, for ‘[a] legislative body cannot legislate wisely or effectively in the absence of information respecting the conditions which the legislation is intended to affect or change ... ’ McGrain v. Daugherty, 273 U.S. 135, 175 [47 S.Ct. 319, 329, 71 L.Ed. 580] (1927).

Lee, 775 F.2d at 521t-22. Although the result in Lee was based on the existence of a specific federal statute which afforded immunity to Virgin Islands legislators, the court’s stress on the importance of immunity to the legislative fact-finding process is instructive, and its reasoning is directly apposite to our own inquiry.

Finally, we find a useful analogy in a line of cases in which state revenue officials have been accorded a qualified common-law privilege from disclosure of information sought by a federal grand jury investigating non-tax crime. In In re Hampers, 651 F.2d 19 (1st Cir.1981), the court held that the Massachusetts Commissioner of Revenue would not be required to comply with a federal grand jury subpoena because a state statute prohibited disclosure of tax return information except under specified circumstances. Rejecting, inter alia, the argument that deference was owed to the grand jury or that disclosure was mandated by virtue of its ‘mantle of confidentiality’, the court held that the nondisclosure statute created a privilege cognizable under F.R.E. 501 in a federal proceeding.

The Hampers court relied heavily on American Civil Liberties Union of Mississippi v. Finch, 638 F.2d 1336 (5th Cir. 1981), which mandated a balancing of the policies underlying the privilege against the policies favoring disclosure. Finch, 638 F.2d at 1343. Engaging in such a balancing process, the court noted that

honoring such a privilege in federal court will usually involve some cost to the federal interest in seeking the truth in Federal question cases. It makes a difference whether the federal interest in seeking full disclosure is a weak or a strong one____ Assisting federal grand juries in their criminal investigations is generally a strong interest. But where the information sought is only corroborative of what investigators have alleged on the basis of other information, is seemingly ascertainable from sources other than state tax returns, and addresses only one aspect of a non-tax related crime, the federal interest looms less.

Id., 651 F.2d at 22.

The court balanced the interests involved by asking, inter alia, whether “the injury that would inure to the relation by the disclosure of the communications [would be] greater than the benefit thereby gained for the correct disposal of litigation”. Id. at 23 (emphasis in original). Concluding that the state’s asserted privilege was “intrinsically meritorious in our independent judgment”, the court determined that the balance tipped in favor of the state’s interest in non-disclosure:

We can easily see that if a state tax return contained the only key to resolving a serious federal crime, the balance would tilt in favor of the federal government____ But if a return contained information that would be easily obtained elsewhere and at best would constitute only cumulative evidence impeaching one of several witnesses, we might have second or third thoughts.

Id.

Alluding to the “value in preserving ... the postures of comity and deference arising from federalism”, the court concluded thus:

We therefore hold that appellant in this case enjoys a qualified privilege under Rule 501 because of the state nondisclosure statute and that, in order to enforce a subpoena in a federal criminal investigation, a federal grand jury must proffer reasonable cause to believe that a federal crime has been committed, that the information sought will be probative of a matter at issue in the prosecution of that crime, and that the same information or equally probative information can not be obtained elsewhere through reasonable efforts.

Id. See also In re Cruz, 561 F.Supp. 1042 (D.Conn.1983); In re Grand Jury Empanelled January 21, 1981, 535 F.Supp. 537 (D..N.J.1982) (citing Hampers and reaching similar result); but see United States v. Blasi, 462 F.Supp. 373 (M.D.Ala.1979) (state non-disclosure statute deemed not to have any direct bearing on controversy regarding grand jury subpoena).

This court is persuaded that a similar common-law privilege should be recognized in the circumstances of this case. On the whole, we find that the policy underlying the asserted privilege outweighs that favoring disclosure. The legislative fact-finding in which the Committee is engaged falls squarely within the ambit of speech or debate protection, and therefore implicates fully the values of legislative independence which underlie the privilege. Furthermore, because none of the Committee members is a target of the investigation, to recognize the privilege will not directly thwart the federal interest in criminal prosecution. Accordingly, we find that the privilege asserted by the Committee is “intrinsically meritorious in our independent judgment”. Hampers, 651 F.2d at 22.

More specifically, we conclude on the basis of the record before us that the injury that would inure to the integrity of the state legislative process by our enforcement of this subpoena outweighs the benefit to be gained by the federal prosecutorial authorities.

The United States Attorney has stated that

it is the intent of the subpoena to require the production of documents in the form of memorandums, reports, summaries, interview notes and record review notes dealing with an investigation into the purchase of granite for use in the capítol addition project. Particularly statements dealing with interviews conducted of a list of witnesses that are attached to that subpoena or statements developed by the investigators or attorneys acting as investigators hired by the committee and, again, dealing only with the investigation insofar as it relates to the purchase of granite for use in the capítol project.
The second paragraph of the subpoena is aimed at transcripts of both public and private hearings that the committee has conducted along with copies of all documents or exhibits referred to in said transcripts of either the public or private hearings. That is the heart of the subpoena.

Transcript at 5. Such materials, we think, would convey the impressions and thought processes of the Committee members, and are thus central to the legislative fact-finding process. While the Committee may divulge this information voluntarily if it chooses to do so, and the United States concedes that it has, Transcript at 7-8, this court declines to require such disclosure by enforcing the subpoena. To compel the Committee to divulge this information would represent an impermissible intrusion into the legislative process and would render the status of the Committee little more than an investigative tool of the grand jury. In this regard, we note that

It is the responsibility of the court to preserve the grand jury’s historic role as a bulwark between the individual and the state. Hence, the federal courts have broad supervisory power to prevent grand jury abuse, including the granting of relief from unreasonable and oppressive grand jury process____ when federal district judges are confronted with appropriate motions to quash, limit or enforce grand jury subpoenas, they can and indeed should, exercise their responsibility to prevent grand jury abuse by insisting that the government invoke the subpoena power only when there is solid foundation for doing so.

In re Grand Jury Matter, Gronowicz, 764 F.2d 983, 991 (3d Cir.1985) (Becker, J., concurring) (citations omitted).

We are aware that our decision may prove detrimental to the grand jury’s investigation. Although the United States has conceded that the Federal Bureau of Investigation “certainly ... could conduct an investigation” of its own “in an attempt to develop what the Committee has developed and then could present it to the grand jury”, Transcript at 8, it is also probably true that

there can yet be no guarantee that a complex investigation involving multiple witnesses and numerous exhibits can be totally duplicated even by the best of investigative agencies, and the possibility is obvious that critical inculpatory evidence or exculpatory evidence obtained in interview reports, closed hearing testimony, or multiple exhibits

may be lost if the subpoena is not enforced. Brief for United States at 19. However, our balancing of this potential detriment against the clear and impermissible intrusion into the legislative sphere which the subpoena represents compels our conclusion that, with respect to most of the information sought, enforcement must be denied.

We will except from our holding certain information the procurement of which, we find, would not intrude unduly into the legislative process. The grand jury may obtain from the Committee information regarding the identity of witnesses interviewed. Furthermore, should the grand jury become aware, in the course of its own investigation, of documents or exhibits authored by a witness or by a third party other than the members of the Committee, which documents or exhibits are determined to be in the Committee’s possession and which cannot be obtained by any other means, then the subpoena power may be employed. With respect to all other matters, the Motion to Quash the subpoena will be granted.

ORDER

In accordance with the accompanying memorandum, IT IS HEREBY ORDERED THAT the Motion to Quash Subpoena is granted, EXCEPT with respect to the following materials:

1. The identities of all witnesses;
2. Any exhibits or documents of which the grand jury may become aware, in the course of its investigation, authored by witnesses or by third parties other than the Committee or its members, which are in the possession of the Committee and which cannot be obtained from any other source.

With respect to this information, the subpoena, as modified, shall be enforced.

      . On January 17, 1986, this court heard oral argument on the instant Motion to Quash Subpoena, following which we stayed enforcement of the subpoena for a period of ten days, later extending the stay through January 31, 1986. At oral argument the parties entered into stipulations of fact, disputing only the legal issues. References herein to the transcript of that proceeding shall be designated as "Transcript".

      . On January 10, 1986, Walter Baran, Secretary of the Department of General Services, wrote to the United States Attorneys for the Western and Middle Districts of Pennsylvania requesting that their offices and the Federal Bureau of Investigation "initiate an immediate criminal investigation in order to ascertain whether any conduct engaged in by or between the ... contractors or subcontractors (involved in the "purchasing, handling and finishing of the granite") are [sic] in violation of Federal or State Law”. Letter attached to Affidavit of James J. West, United States Attorney, submitted in opposition to Motion to Quash ("Schofield Affidavit").

      . The other movants are K. Leroy Irvis, Speaker of the House; James J. Manderino, Majority Leader of the House; Mathew J. Ryan, Minority Leader of the House; and the Bi-Partisan Committee for the Administration of the House.

      . Fed.R.Crim.P. 17(c) provides:
      A subpoena may ... command the person to whom it is directed to produce the books, papers, documents or other objects designated therein. The court on motion made promptly may quash or modify the subpoena if compliance would be unreasonable or excessive.

      . The United States Constitution, Art. I, § 6, cl. 1, provides that "for any Speech or Debate in either House, [the Members of Congress] shall not be questioned in any other place”. This language is virtually identical to the provision embodied in the Pennsylvania Constitution, Art. 2, § 15 which states, in reference to the Members of the General Assembly, that "for any speech or debate in either House they shall not be questioned in any other place”.

      . Because we interpret Gillock in this manner, we must reject the United States’ strenuous contention that that case is dispositive of the one before us. The United States Attorney contends that Gillock controls this case because the federal grand jury "has Constitutional and statutory authority to be investigating violation of federal criminal laws ... and ... since it has the power to act, it must prevail over the state legislatures’ claims of a speech and debate privilege”. Brief for United States at 7. We decline, however, to read Gillock so broadly. As we have noted, the Court therein expressly confined its holding to those cases in which the state legislator was the target of a criminal investigation. That situation implicated a much stronger federal interest than any that may be found in the case at bar, where the United States has stipulated that the Committee members are not themselves targets of the investigation. Transcript at 5-6. Accordingly, far from disposing of the present case, we find the Gillock holding to be inapposite.

      . The United States Attorney contends that Hampers is inapposite to this case for several reasons. While he concedes that Hampers and its progeny “based their holding on the finding of a qualified common-law privilege under Rule 501”, Brief for United States at 16, he nevertheless perseveres in his claim that, under Gillock, no such common-law privilege exists in the speech or debate area. However, we have already rejected this argument, supra n. 6, as in our view Gillock does not control this case.
      Secondly, the United States would distinguish the Hampers line of cases because they deal with "tax matters where both State and federal policy requir[e] confidentiality and the public in general ha[s] a legitimate expectation that their state and federal tax records would remain confidential”. Brief for United States at 16. We do not find this distinction persuasive because the policy of legislative integrity underlying the Speech or Debate Clause is no less important than the requirement of confidentiality in tax matters.
      In a related vein, the United States points out that Hampers involves the ‘required report’ privilege recognized "when a state law requires citizens to do something under a promise of confidentiality". Brief for United States at 16. The United States contends that the Third Circuit expressly rejected the required report privilege under Rule 501 in Matter of Grand Jury Impaneled January 21, 1975 {‘‘Freedman and Córtese"), 541 F.2d 373 (3d Cir.1976).
      We disagree, however, with the United States Attorney’s reading of Freedman and Córtese. Although the Third Circuit there held that a federal grand jury subpoena was enforceable against the Prothonotary’s Office of the Court of Common Pleas of Philadelphia, despite a confidentiality rule adopted by that court, it reached this conclusion by virtue of a balancing process very similar to that established in Hampers:

      The state’s interest in voluntary compliance (with the filing requirement) will not be seriously impaired by enforcing the instant grand jury subpoena____ On balance, we think that any incidental and speculative effect enforcement of the subpoena would have on voluntary compliance is outweighed by the grand jury’s need for this evidence in order effectively to conduct this investigation.
      541 F.2d at 382-83. Furthermore, the court expressly left open the possibility of a different outcome of this balancing:
      We ... have not decided that a federal court will never recognize a state required report privilege as a matter of federal common law in a federal grand jury investigation. Perhaps there may be instances that will present compelling justifications for denying a federal grand jury relevant information; such justifications were not presented here.

        Id. at 383. Thus, Freedman and Córtese supports the proposition that a grand jury subpoena may be quashed or modified if the state body to which the subpoena is directed presents sufficiently compelling reasons for this result.

      . Moreover, we reject the United States’ contention that this immunity is merely a use privilege and does not shield legislative action from discovery by the grand jury. In support of this argument the United States Attorney relies on In re Grand Jury Investigation ("Eilberg”), 587 F.2d 589 (3d Cir.1978) which in turn cited Gravel v. United States, 408 U.S. 606, 92 S.Ct. 2614, 33 L.Ed.2d 583. We think the United States’ reliance on these cases is misplaced.
      In Eilberg, the Third Circuit affirmed the district court’s refusal to quash a federal grand jury subpoena which sought to obtain the telephone records of a Member of Congress who was himself a target of the investigation. The court stated that "the Speech or Debate Privilege is at its core a use privilege”, 587 F.2d at 596, but continued that ”[t]o be sure, the Speech or Debate Clause has also been construed to permit a legislator to refrain from testifying about certain legislative acts”. Id. To that effect, the court cited the Supreme Court’s statement in Gravel that "Senator Gravel may not be made to answer — either in terms of questions or in terms of defending himself from prosecution — for the events that occurred at the subcommittee meeting". Id. at 596, citing Gravel, 408 U.S. at 616, 92 S.Ct. at 2622 (emphasis supplied in Eilberg). The Third Circuit noted that Gravel had established that “a Senator, even a non-target, could not be compelled to testify before a grand jury about a legislative act", id., and that this privilege extended to legislative aides. It continued But to the extent that the Speech or Debate Clause creates a testimonial privilege as well as a use immunity, it does so only for the purpose of protecting the legislator and those intimately associated with him in the legislative process from the harassment of hostile questioning. It is not designed to encourage confidences by maintaining secrecy, for the legislative process in a democracy has only a limited toleration for secrecy____ As we have said ... the privilege when applied to records or third-party testimony is one of non-evidentiary use, not of non-disclosure.

        Id. at 597 (citations omitted) (emphasis in original).
      In this court’s view, Eilberg is inapplicable to the present case because here the subpoena is directed to the legislator himself, rather than to a third party. Therefore, testimonial rather than use immunity applies. As we understand the Committee’s argument, it is not attempting to assert the privilege on behalf of others, but rather is claiming that immunity is necessary to protect its own legislative process. Accordingly, the United States’ argument that the Committee is attempting to "benefit third parties” who are committing crimes by ”transfer[ing] legislative privilege” to them. Brief for United States at 15, n. 1, entirely misconstrues the thrust of the Committee’s claim. To reiterate: the Committee seeks to protect itself, not the targets of its investigation.

      . This conclusion is buttressed by the contentions of the Committee that much of the information sought is readily available from other sources. Although those sources are accessible to the FBI," they have apparently not been fully exploited. Affidavit of Reizdan Moore, Counsel to the Committee, annexed as Exhibit D to Movant’s Brief, Par. 3. Furthermore, the Committee has cooperated to a considerable extent with the federal investigation and has voluntarily provided substantial information, including the names of witnesses and the impressions of Committee Members regarding the investigation. Id. at Pars. 4, 5. Finally, the counsel for the Committee states that "all relevant and pertinent committee documents, which have not been made public, will be made public by February 6”. Id. at 10. Thus this court cannot see any pressing read for the enforcement of this subpoena.


author: ROBERT M. PARKER, District Judge.

text:
    Gloria TREVINO, et al. v. GENERAL DYNAMICS CORPORATION.
    Civ. A. No. B-83-573-CA.
    United States District Court, E.D. Texas, Beaumont Division.
    Feb. 3, 1986.

      Wayne Fisher, Charles M. Price and Michael J. Maloney, Fisher, Gallagher, Perrin & Lewis, Houston, Tex., for plaintiffs.
    Herbert L. Fenster, Lawrence M. Farrell and Raymond B. Biagini, McKenna, Conner & Cuneo, Washington, D.C., for defendant.
   MEMORANDUM OPINION CONTAINING FINDINGS OF FACT AND CONCLUSIONS OF LAW

ROBERT M. PARKER, District Judge.

This case was tried to the Court. It is a case arising under the Death On The High Seas Act, 46 U.S.C. Sec. 761 et seq. and Federal Admiralty Law, 28 U.S.C. Sec. 1333. The Court now enters the following findings of fact and conclusions of law based upon the evidence presented.

A. THE FACTS

On the night of January 16, 1982, five Navy divers lost their lives in an accident aboard a Navy submarine, the USS GRAY-BACK. The cause of death was vacuum induced bends. The accident occurred in the starboard hangar diving chamber of the GRAYBACK as the divers were preparing to exit the flooded chamber into the dry side of the hangar. To exit the chamber, it was necessary to drain the water from the wet side. This was to be accomplished by Plaintiff, Petty Officer Bloomer, who was stationed in the “control bubble,” a plexiglass enclosure from which he was to open the hangar and valve to allow air into the chamber as the water drained out. After reporting the valve open, Bloomer opened the drain valve to drain the water from the hangar.

The five Navy divers died when a vacuum condition occurred as the chamber was draining. The families of four of the five deceased Navy divers brought this lawsuit against General Dynamics Corporation and the United States alleging strict liability, negligence, and breach of warranty claims.

General Dynamics also filed suit against the United States claiming that, in the event it was found liable to the Plaintiffs, the United States would be liable to General Dynamics under a contractual indemnification clause. This Court, in its September 25, 1985 order, ruled that the indemnity clause of the contracts here involved are valid and enforceable and that, therefore, the United States must as a matter of contract law indemnify General Dynamics for any adjudged liability it may have to the Plaintiffs. Such liability, however, is contingent upon whether or not this Court finds General Dynamics has met the contractual prerequisites for the claimed indemnity.

On the eve of trial, the Court, upon the government’s motion, dismissed the Plaintiff’s direct complaint against the United States ruling that the United States was immune from such a suit under the Feres/Steneel doctrine. See Feres v. Unit ed States, 340 U.S. 135, 71 S.Ct. 153, 95 L.Ed. 152 (1950), Stencel Aero Engineering Corporation v. United States, 431 U.S. 666, 97 S.Ct. 2054, 52 L.Ed.2d 665 (1977).

The government, nonetheless, still contends that it cannot be liable to the Plaintiffs under any legal theory. However, although it may be true that the government is immune from liability in a direct suit by the Plaintiffs, the same cannot be said where the United States has knowingly and contractually waived its Feres/Stencel immunity with respect to the third party suit by the government contractor. See Order and Memorandum Opinion of May 29, 1985, discussing and disposing of this issue.

As will be discussed in more detail later, the deaths of these divers was caused chiefly by the negligence of General Dynamics in the work that it performed with respect to the design of the starboard hangar diving system aboard the GRAY-BACK during the conversion of the GRAY-BACK from a missile-carrying submarine to a personnel-carrying submarine during the 1960’s.

The United States Navy contracted with General Dynamics for performance of the design work with respect to the conversion of the diving system because of General Dynamics’ experience and expertise in the design of submarine systems. See Plaintiff’s Ex. 152, p. 43, 1. 3-17; p. 44, 1. 10-17; See also Plaintiff’s Ex. 156 p. 63, 1. 7-27.

To accomplish the conversion of the GRAYBACK, the United States entered into a series of contracts with General Dynamics. See Plaintiff’s Ex. 1 and 2. In Plaintiff’s exhibit 1, the scope of the work required of General Dynamics is set forth in section 2.7.2, as follows:

The scope of work required of the contractor for USS GRAYBACK is the furnishing of the engineering effort needed for the preparation of working drawings, including rip-out plans, planning department instruction sheets, test specifications and other documents necessary to effect conversion to APSS and SUB-SAVE. The specific areas in which the contractors shall render assistance are: (after which are listed 24 specific areas of the GRAYBACK conversion including numerous piping, trim and drain, flood vent, ventilation, and air systems).

The responsibilities of General Dynamics with respect to the work that General Dynamics was performing under the contracts is set forth in Section 2.1.4 of the contracts which state:

(1) The contractor shall assume full responsibility for all technical research necessary to accomplish the work specified herein.
(2) All work produced is to be reviewed by the contractor to assure that the conditions set forth in this circular are complied with.
(3) The contractor is responsible for all quality assurance actions pertaining to the design product, plans, etc., including inspection of the end product item before issue.

B. NEGLIGENCE

Following the accident, the United States Navy conducted an investigation, the report and attachments of which have been introduced into evidence as Plaintiffs’ Exhibits 27, 40, 41A, 41B, 41C, 42 and 43. The United States Navy found that there were four specific design deficiencies with respect to the starboard hangar diving system in the hangar diving system aboard the GRAYBACK which contributed to the accident. These four design deficiencies are stated as follows:

1. There is no safety interlock mechanism to prevent the opening of the hangar drain valve when the main vent valve is not fully opened.
2. The only valve position indicator on the main vent valve consists of a metal tab which is under water and cannot be seen when draining the hangar.
3. There was no remote position indicator which can be seen from the dry side of the hangar.
4. The general design of the hangar made proper maintenance - of the main vent valve extremely difficult, if not impossible. ■

The Court has no quarrel with the findings of the Navy report, and for the reasons outlined below, concludes that the effort put forth by the Navy and General Dynamics in converting the GRAYBACK constituted negligence which proximately caused the deaths of the divers.

Specifically, General Dynamics was negligent in failing to:

1. provide for a safety interlock device to prevent the opening of the hangar drain valve when the main vent valve is not fully opened;
2. provide for a valve position indicator that is visible when draining the hangar;
3. provide for a remote position indicator which can be seen from the dry side of the hangar;
4. design the hangar so that the main hangar valve could be properly maintained;
5. adhere to the Navy’s circular of requirements (COR) calling for the vent valve to be placed inside the control bubble rather than outside as was actually done;
6. warn the Navy about the dangers associated with the design’s potential to create a partial vacuum; and
7. warn or instruct the Navy concerning its failure to provide for basic safety features such as safety interlocks, vacuum guages, and vent valve open/close indicator lights in the Navy’s COR.

Specifically, the Navy was negligent in failing to:

1. provide for basic safety features in its COR which would prevent a partial vacuum from occurring;
2. perform sufficient operational testing;
3. conduct a formal design review of the system; and
4. properly lubricate and maintain the shaft to the main hangar vent valve.

The Court apportions the negligence as follows: 80 percent of the fault is attributable to General Dynamics, 20 percent of the fault is attributable to the Navy. Such a finding as to the Navy, however, is merely superfluous as the Court has already ruled that the United States is immune from the Plaintiff’s direct suit under the Feres/Stencel doctrine. The Court finds no contributory negligence on the part of the Navy divers.

Before the question of damages can be reached, this Court must address General Dynamics’ three contentions which, if accepted, would entitle General Dynamics to the same immunity that the Navy now possesses. The public policy question, the government contractor’s defense, and the borrowed servant doctrine are discussed in turn below.

C. THE PUBLIC POLICY CONSIDERATIONS

General Dynamics argues that as a matter of policy, the Court should exercise judicial restraint and defer to the Navy’s conclusions that the design of the hangar vent system was not defective but was adequate and safe for its intended purpose and that the direct, proximate cause of the accident was Plaintiff Bloomer’s failure to open the hangar vent valve. This Court does not agree.

In Bynum v. FMC Corporation, 770 F.2d 556 (5th Circuit 1985), the Fifth Circuit endorsed, in its entirety, the Supreme Court’s admonition of judicial restraint in reviewing military decisions relating to the armed forces. Tracing the historical underpinnings of the government contract defense, the Fifth Circuit noted that the Supreme Court’s emphasis “on judicial restraint in military matters is, of course, not suprising.” Id. at 562. The Court stated that:

It has long been recognized that interference by civilian courts with military authority inevitably raises both questions about judicial competency in this area and separation of powers concerns.

The Fifth Circuit found that the same policy considerations underlying the Feres/Stencel doctrine also are at issue “whether the named defendant happens to be the government or the military contractor.” Id. at 565. The most important policy consideration in either case is that “civilian courts would be compelled to second guess professional military judgment concerning, at least, the proper equipping of the armed services.” Id.

Public policy, however, does not require any judicial restraint in this case simply because this Court is not reviewing military decisions relating to the armed forces. The Plaintiffs are not challenging a military decision concerning military operations. The issue is a design decision concerning design defects in the diving hangar aboard the GRAYBACK made by General Dynamics designers. This was purely a non-military decision requiring no military expertise. Nor was there a conscious decision on the part of the military to accept a known hazard because of military considerations.

By example, if the Army had contracted for the design of a tank desiring speed and mobility in combat it might conclude that the tank must be designed with less armor to reduce weight so as to maximize speed and mobility. Less armor, of course, would offer more risk and less protection to the servicemen inside the tank, but this is clearly a conscious military decision on the part of the Army to accept a known hazard because of the Army’s desire for speed and mobility of its tank in combat. Such a decision would not be reviewable in this Court’s opinion. That is not the case here. No evidence has been presented to show that the Navy consciously decided on this specific diving system design for military reasons, e.g., to reduce noise under water so as to avoid detection by the enemy.

Furthermore, the Court has found no authority to the effect that the accident reports by the military are conclusive on liability. There are very few cases which even discuss whether military accident reports should be given conclusive weight. The general rule that reports by the military are not binding on the courts is stated by the Fifth Circuit in Mac Towing, Inc. v. American Commercial Lines, 670 F.2d 543, 547 (5th Cir.1982).

Finally, General Dynamics and the Navy contend that even if the Court does not defer to the Navy’s conclusions, considerations of public policy demand that mere approval by the government of a contractor’s design be sufficient to preclude recovery by the plaintiffs. As is discussed more fully later, this Court is not persuaded that mere approval from a public policy standpoint is sufficient to preclude recovery.

D. THE GOVERNMENT CONTRACTOR’S DEFENSE

General Dynamics contends that the government contractor’s defense shields General Dynamics from any liability to the Plaintiffs in negligence. This Court disagrees.

The Law

The burden of proof regarding the availability of the government contractor’s defense rests with General Dynamics. McKay v. Rockwell International Corp., 704 F.2d 444, 451 (9th Cir.1983), cert. denied, 464 U.S. 1043, 104 S.Ct. 711, 79 L.Ed.2d 175 (1984). General Dynamics must prove each element of the defense by preponderance of the evidence. Id. at 453.

In Bynum, the Fifth Circuit recognized the government contractor’s defense as a matter of federal common law. To establish the government contractor’s defense, a military contractor must:

1. First, demonstrate that the government is immune from liability under the Feres/Stencel Doctrine ...
2. Second, the military contractor must prove that the government established reasonably precise specifications for the allegedly defective military equipment
3. and that the equipment conformed to those specifications ...
4. Finally, it must be shown that the military contractor warned the government about errors in the government specifications or in dangers involved in the use of the equipment that were known to the contractor but not known to the government.

Id. at 574.

The Fifth Circuit’s four-prong test conforms to the trend in the law on the government contractor’s defense as represented by the Third Circuit’s decisions in Koutsoubos v. Boeing Vertol, 755 F.2d 352 (3rd Cir.1985), cert. denied, — U.S.-, 106 S.Ct. 72, 88 L.Ed.2d 59 (1985) and In Re Air Crash Disaster at Mannheim, Germany, 769 F.2d 115 (3rd Cir.1985); the Seventh Circuit’s holding in Tillett v. J.I. Case Co., 756 F.2d 591 (7th Cir.1985); the Ninth Circuit’s decision in McKay v. Rockwell International Corp., 704 F.2d 444 (9th Cir.1983), cert. denied, 464 U.S. 1043, 104 S.Ct. 711, 79 L.Ed.2d 175 (1984) and the Eleventh Circuit’s decision in Burgess v. Colorado Serum Co., 772 F.2d 844 (11th Cir.1985).

In the instant case, General Dynamics has failed to establish by a preponderance of the evidence that the government contractor’s defense applies. Although General Dynamics has demonstrated that the government is immune from suit under the Feres/Stencel doctrine, meeting the first prong, it cannot meet the second prong because it was General Dynamics and not the Navy, who ultimately “established reasonably precise specifications” for the diving system. Bynum, 770 F.2d at 574. Given this finding, the third prong of Bynum is not even implicated. As to the final prong, General Dynamics failed not only to warn of the danger of a partial vacuum but also failed to warn of design deficiencies in the Navy’s general requirements. Each prong is discussed in turn below.

The Law Applied

1. The first requirement of the government contractor’s defense is the presence of Feres/Stencel immunity on the part of the government. Feres/Stencel immunity requires that a Plaintiff’s complaint arise from an injury to a serviceman in the course of activity incident to military service. Stencel, 431 U.S. at 673, 97 S.Ct. at 2058; Feres, 340 U.S. at 146, 71 S.Ct. at 159. In this case, Plaintiff’s complaint arises from the death of servicemen caused by a partial vacuum in the submarine starboard hangar diving chamber which the servicemen were in incident to their service in the United States Navy. This case, thus, falls squarely within the protective shield created by Feres/Stencel doctrine. Accordingly, the government is immune from liability to the Plaintiffs.

2. The second element of the government contractor’s defense, as the Ninth Circuit formulated the defense in McKay, 704 F.2d at 451, is establishment or approval by the United States government of reasonably precise specifications for the allegedly defective product. . In this case, General Dynamics contends that the Navy established the specifications for the diving chamber by either preparing them itself or by reviewing in detail and approving those prepared by General Dynamics employees. For the reasons discussed below, this Court does not agree that the Navy established these specifications or approved them,

a. The Establishment Question

Under Bynum, it is clear that when the product is “manufactured in accordance with precise design specifications furnished by the ... government,” the second prong of the government contractor’s defense is satisfied. Id. at 574 n. 23. Bynum, however, did not address the “extent to which the government must participate in generating the design specifications of the military equipment before the government contractor’s defense would be applicable,” which is directly at issue in this case. Id.

The contracts involved here left design entirely to the discretion of General Dynamics. The Navy set only general performance standards leaving the details to General Dynamics. Specifically, the United States provided General Dynamics with mere skeletal guidelines embodied in the COR and schematic line drawings. See Plaintiff's Ex. 38 & 39. However, less than two pages of the COR refer to the conversion of the diving hangar while the line drawings consist of only a one page diagram of the flood and drain system. These general guidelines did not specify the precise location of the main hangar vent valve and were silent on the existence of vacuum gauges, indicator lights, or safety interlocks for the main hangar flood and drain system. The evidence shows that such determinations were left to the discretion and expertise of the General Dynamics designers assigned to prepare the working drawings.

The Court credits the testimony of Mr. Bill Milwee, the Plaintiffs expert, and is persuaded that General Dynamics’ designers had to use a great deal of expertise and discretion in converting the information provided by the Navy into working drawings. See Plaintiff’s Ex. 5-10. The Court is also persuaded by the testimony of Mr. Urbani and Mr. Reall, both General Dynamics employees, and finds that because the system diagrams were not very detailed, General Dynamics had to use their own specialized knowledge in converting the diagrams into working drawings. See Urbani depo. p. 18; Reall depo. p. 31, 1. 6-10.

With this sparse information, General Dynamics produced 71 pages of highly detailed working drawings for the starboard hangar diving system. Under such circumstances, where “only minimal or very general requirements are set for the contractor by the United States” it cannot be seriously maintained by General Dynamics that it was the government and not General Dynamics who “established reasonably precise specifications” McKay 704 F.2d at 450; cf. Price v. Tempo, Inc., 603 F.Supp. 1359, 1363 (E.D.Pa.1985). Simply concluding, however, that these plans were reasonably detailed specifications of General Dynamics does not dispose of the second prong of the government contractor’s defense since the trend in the law is to interpret the phrase “established by the government” as including the situation where the government, after having conducted a detailed review, approves drawings and specifications on which the contractor assisted.

b. The Approval Question

From a factual standpoint, the level of review here was not sufficient to constitute “approval”. Koutsoubous and Mannheim definitively analyzed this standard of proof. In Koutsoubous, a helicopter manufactured by Boeing Vertol crashed causing the deaths of several Navy pilots. In granting Boeing’s motion for summary judgment on the government contractor’s defense, the District Court concluded that the Navy had established the specifications by approving them after a substantial review and that Boeing had complied with the specifications. See Koutsoubous, Memorandum Decision p. 7A, note 4, Dec. 22, 1982.

In affirming the District Court, the Third Circuit concluded that “government approval of the specifications” means the process by which the government “examines and agrees to a detailed description of the workings of the system.” Koutsoubous 755 F.2d at 355. In Koutsoubous, the Third Circuit noted that the District Court found a “continous back and forth relationship between Boeing and the Navy with the Navy always, expectedly and properly, having the responsibility for and exercising responsibility for making final decisions as to the specifications.” Id.

Five months later, the Third Circuit in Mannheim reaffirmed Koutsoubous on the “approval” standard. In Mannheim, forty-six persons were killed when a helicopter manufactured by Boeing crashed. The Third Circuit, stated:

The government contractor defense is available to a contractor that participates in the design of the product, so long as the government’s approval consists of more than a mere rubber stamp. The defense is available so long as there is true government participation in the design.

769 F.2d at 122 (emphasis added). The Third Circuit then ordered the District Court to enter judgment for Boeing on the basis of the government contractor’s defense.

If approval of the design of military hardware by examining agreeing to a detailed description of the working drawings of the system is sufficient to satisfy the requirements of the government contractor’s defense, then there was no such “approval” under the facts of the case. Although the government’s review did involve some subjective evaluation of the contents of the plans, the level of examination did not equate to the amount of engineering expertise required by General Dynamics to prepare the plans. Therefore, this Court concludes that “true government participation in the design” necessary to constitute approval was lacking. Mannheim, 769 F.2d at 122.

Under Bynum’s balancing test, General Dynamics’ level of participation in the design so outweighed the government’s level of participation that it was General Dynamics, who was ultimately responsible for the “reasonably precise specifications” involved here. Id. at 574. In the real world, although the government and the contractor may jointly work together in producing specifications, the level of participation always varies. Sometimes the government’s participation is minimal at best. That is the very case here.

Given the disparity in the level of expertise between the Navy and General Dynamics and the “imbalance of knowledge” about the safety deficiencies in the design at the time General Dynamics’ specifications were approved, it cannot be seriously argued that the Navy engaged in any “substantial review of the specifications.” Mannheim, 769 F.2d at 123; See Also Shaw v. Grumman Aerospace Corp., 593 F.Supp. 1066, 1074 (S.D.Fla.1984).

The most telling evidence of the limited review which the work of General Dynamics’ designers and engineers received is Plaintiff’s Exhibit 28. This exhibit is a memo prepared by Paul Lawrence to his superiors at Mare Island Naval Shipyard which discusses the history of the GRAY-BACK design. Mr. Lawrence was the section leader of the group which prepared the hangar flood and drain system drawings. On page 4, paragraph (e), Mr. Lawrence stated, “Most of the GRAYBACK design work was accomplished by farmed-in contractor personnel and not checked by Mare Island experienced technical people.”

General Dynamics was hired for the expertise and the experience it possessed. The government neither possessed the qualifications nor the ability to engage in any substantial review of General Dynamics’ specifications. Moreover, the design decisions, material to the defects alleged, required no military expertise, therefore, there is no justification for insulating General Dynamics from liability where the government merely approves of the decision. “In any case, mere Navy approval of the detailed design specifications and drawings developed by General Dynamics does not make the government contractor’s defense available to it.” Shaw, 593 F.Supp. at 1074. If it did then under Koutsoubous and Mannheim, the government contractor’s defense would seem always to apply and contractors would never be liable for a defective product because the government would always be in the position to approve a contractor design. The government’s approval in this case is no different from the approval of any product or design prepared for the government. If that type of approval is sufficient to satisfy the second prong, then there would never be a recovery under any circumstances against defense contractors. Where the government has only given mere approval, Bynum does not contemplate no recovery under any circumstances against defense contractors. Id. at 574 N. 23.

3. The third element of the defense is compliance with the government’s specifications. This prong is not implicated in this case because it was General Dynamics and not the government who established “reasonably precise specifications” for the defective design. This Court notes, however, that the system as designed by General Dynamics did not even conform to the general requirements provided by the government. Specifically, the COR required that the main hangar vent valve be “controllable from the air bubble and the berthing space.” See Plaintiffs Ex. 28, p. 223, 1. 95. The design of the system by General Dynamics did not conform to this requirement. The working drawings of the system prepared by General Dynamics shows the main hangar vent valve located on the vent pipe at a 45 degree angle. See Plaintiffs Ex. 6. The testimony of the witnesses in this case forces the conclusion that the General Dynamics designer intended that the valve control handle be located outside the control bubble and berthing space, despite the government’s instructions to the contrary. This is where, in fact, the valve was located at the time of the accident.

4. Finally, to satisfy the fourth and final prong of the government contractor’s defense, General Dynamics has the burden to prove that it “warned the United States about patent errors in the government’s specifications or about dangers involved in the use of the equipment that were known to the contractor but not to the United States.” Bynum, 770 at 574. The fact that there was no warning is undisputed.

The Navy hired General Dynamics specifically because it had specialized knowledge of submarine design. General Dynamics assumed the responsibility of advising and warning the Navy on the safety aspects of the systems that General Dynamics was designing. See Plaintiff’s Ex. 30. Both the Navy and General Dynamics knew or should have known of the dangers associated with the system’s potential to create a partial vacuum absent basic safety features. The creation of a vacuum and its effect on humans is a fundamental engineering principle deserving no further comment. If éither General Dynamics or the Navy had paid sufficient attention to the COR or the working drawings or had engaged in any quality assurance or operational testing procedures, the problem of a partial vacuum would have been obvious. General Dynamics, however, failed to warn the Navy about patent errors in the government’s general requirements or their own working drawings.

Specifically, General Dynamics did not warn the Navy of its failure in the general requirements to provide for basic safety features such as: 1) safety interlocks, 2) vacuum guages, or 3) vent valve open/close indicator lights. In the final analysis, although the Navy’s failure to perform sufficient operational testing or to conduct a formal design review before putting the system into operation constitutes negligence as it would have discovered the system’s potential to create a partial vacuum, it does not dismiss the fact that the obligation to perform the technical research necessary for the design conversion of the GRAYBACK and to identify any hazards fell fully on the shoulders of General Dynamics. See Plaintiff’s Ex. 1-3. Thus, General Dynamics has failed to satisfy the fourth prong of the defense.

In summary, General Dynamics has only established the first prong of the four-part test. Thus, the government contractor’s defense does not apply. “Federal law provides no defense to the military contractor that mismanufactures military equipment or that it is itself ultimately responsible for the design defect.” Bynum, 770 F.2d at 574. In this case, General Dynamics, rather than the government, was ultimately responsible for the design defects in the driving hangar aboard the GRAYBACK which were the proximate cause of the accident in question. Thus, General Dynamics is not entitled to stand under the umbrella of sovereign immunity with the government and must be held accountable for its negligent acts and omissions.

E. THE BORROWED SERVANT DOCTRINE

General Dynamics next argues that even if the Court concludes that the government contractor’s defense does not apply, General Dynamics cannot be found liable to the Plaintiffs for the injuries they sustained as a matter of law because the employees involved in the GRAYBACK conversion were not acting as General Dynamics employees, but instead were borrowed servants of the government. This Court disagrees.

The Law

In the Fifth Circuit, the test of whether or not a person is a borrowed servant is factual. Alday v. Patterson Truck Line, Inc., 750 F.2d 375, 376 (5th Cir.1985); Ruiz v. Shell Oil Company, 413 F.2d 310, 312-13 (5th Cir.1969). “The central question involving servant cases is whether someone has the power and control to direct another person in the performance of his work”. Herbron v. Union Oil Company of California, 634 F.2d, 245, 247 (5th Cir.1981). The test to determine whether a borrowed servant relationship exists requires consideration of a variety of factors, none of which is conclusive or decisive. See Ruiz v. Shell Oil Company, 413 F.2d, 310 (5th Cir.1969).

The Law Applied

1. It is legally impermissible for the government to contract non-governmental employees who are merely to receive their assignments from government personnel because this is a violation of the Civil Service laws. See 5 U.S.C. § 3109. However, even though the master/servant relationship was proscribed, the Court may still find that such a relationship did, in fact, exist between Mare Island Naval shipyards and the General Dynamics employees. Under the facts of this case, however, the Court cannot do so.

2. The United States Navy hired General Dynamics specifically because its employees were experienced and would not need supervision. Although there was cooperation between the. Navy personnel and General Dynamics personnel, the Navy did not intend to control or supervise the particulars . or actual details of General Dynamics employees’ work. General Dynamics was hired without any competitive bidding specifically because General Dynamics had specialized knowledge in submarine piping design and would, therefore, not need close supervision in performing the discretionary design work. In determining whether an employee is a borrowed servant, cooperation between the employee and the alleged borrowing employer, as distinguished from subordination, is not enough to create an employment relationship. See Standard Oil Company v. Anderson, 212 U.S. 215, 226, 29 S.Ct. 252, 256, 53 L.Ed. 480 (1909).

3. The contracts themselves evidence the intention not to create a borrowed servant relationship. If the parties to the contracts had intended the General Dynamics designers and engineers to be borrowed servants of the Navy, and to work under government scrutiny with their tasks chosen at the whim of the Navy depending upon day-to-day needs, there would have been no need to define what work needed to be performed or to describe the scope of the work. However, in all three contracts the responsibilities of General Dynamics is set out with great specificity. See Plaintiff’s Ex. 1, Sec. 2.1.4 of Contract No. 0221, Plaintiff’s Ex. 2 of Contract No. 1212, and Plaintiff’s Ex. 3, Sec. 1.4 of Contract No. 1832; See Also Plaintiffs’ Ex. 1, Sec. 2.7.2. If the parties to these contracts had intended that General Dynamics’ designers would receive their instructions on a day-to-day basis from Mare Island supervisors, there would have been no need to describe General Dynamics’ specific areas of responsibility in the agreement.

4. General Dynamics maintained its employer/employee relationship and retained the obligation to pay General Dynamics employees. The General Dynamics employees assigned to the GRAYBACK conversion at Mare Island did not acquiesce to becoming government employees. The Court is persuaded by Mr. Reall’s testimony and concludes that he considered himself a General Dynamics’ employee at all times. See Reall depo. at p. 261, 1. 16-18. Nor did General Dynamics terminate its relationship with its employees. General Dynamics maintained an administrative structure which was headed by Mr. Conway Davis, the General Dynamics supervisor at Mare Island, whose second in command was Mr. Robert Urbani. The travel arrangements, housing, personnel problems and pay all were the concern of General Dynamics, not that of the Navy. Also, while at Mare Island, both Mr. Conway Davis and Mr. Robert Reall received their pay, from General Dynamics, not from the Navy.

Given these facts, the Court concludes that General Dynamics was an independent contractor given discretionary, independent decision-making authority and, therefore, its employees were not borrowed servants of the government.

F. THE PRECONDITION TO THE GOVERNMENT’S LIABILITY

The contracts between General Dynamics and the United States contain preconditions for indemnity set forth in Standard Clause 21, entitled Insurance Liability to Third Persons. This clause provides at (c) that the contractor shall be reimbursed “for liability to third persons ... for death or bodily injury,” which are “not compensated by insurance or otherwise ... provided such liability is represented by final judgments.” (Emphasis in original). Absent stipulation of the parties, this Court will conduct an evidentary hearing in order to make findings as to whether or not General Dynamics has met the contractual prerequisite for the claimed indemnity.

G. DAMAGES

The Court is persuaded that each party’s evaluation of damages incurred in this case is not significantly different. Therefore, the Court extends a period of 30 days to the parties to confer in order to reach a stipulation or to make a joint recommendation as to what the award of damages should be. The Court, of course, expects none of the parties to waive any of their possible defenses or rights by engaging in this process of negotiation.

H. A RECENT DECISION

One of the primary issues in this case is the application of the government contractor’s defense. Subsequent to the time this order was prepared but prior to filing, the Eleventh Circuit handed down it’s decision in Shaw v. Grumman, 778 F.2d 736 (11th Cir.1985) addressing this very issue. The threshold question before the Court, according to Judge Johnson, was whether the United States had actually made an informed decision to use a particular military product despite knowledge of the inherent risks. In affirming the District Court’s judgment for the Plaintiff, Judge Johnson concluded that “although the Navy did formally approve Grumman ... [Aerospace Corporation’s] specifications and design changes, that approval did not constitute the sort of informed military decision to accept the risk of dangerous product to which this Court must defer under separation of powers doctrine.” Id. at 747.

Although the Eleventh Circuit test is different from the test set forth in the Bynum decision, it is reasonably calculated to produce the same result: to place liability upon the party ultimately responsible for the defect. Nothing in the Judge Johnson decision is inconsistent with what has been done in this case. Here, no such informed decision was made by the United States Navy when.it employed the General Dynamics’ design of the hangar, flood, and drain system on board the USS GRAY-BACK. Liability has been fairly placed upon the party “ultimately responsible for the design defect.” Bynum, 770 F.2d at 574.


author: MATSCH, District Judge.

text:
    CACHE NATIONAL BANK, Plaintiff, v. Ronald Travis HINMAN, Defendant and Third-Party Plaintiff, v. R.T. ANDERS, Malcolm Anderson, George Goodell, Victor R. Nottingham, Will Rothman, E.I. Barvel, Jr., John Schupe, R.K. Schumann, Richard Monfort, John Nigh, Joel Rothman, Barney Flood, and Allan Lord, Third-Party Defendants.
    Civ. A. No. 85-M-483.
    United States District Court, D. Colorado.
    Feb. 3, 1986.

      Walter W. Garnsey, Kelly, Haglund, Garnsey & Kahn, Denver, Colo., for plaintiff.
    Glen B. Clark, Jr., Thomas J. Wolf, Neef, Swanson, Myer & Clark, Denver, Colo., for defendant and third-party plaintiff.
    Joseph E. Meyer, III, Ted D. Gardenswartz, Pendleton & Sabían, P.C., Denver, Colo., for third-party defendants.
   MEMORANDUM OPINION AND ORDER

MATSCH, District Judge.

The Cache National Bank of Greeley (“the bank”) brought this action against its former employee, Ronald Travis Hinman, for a violation of 12 U.S.C. § 84 (setting lending limits for national banking associations) and for negligence and breach of fiduciary duties in authorizing certain loans. During the relevant times, Mr. Hinman served as the bank’s executive vice president, president and chief executive officer. He was also a member of the bank’s board of directors and a member of the bank’s executive loan and discount committee. Jurisdiction is found in 28 U.S.C. §§ 1331 and 1332.

The claims arise from a series of loans and advances which the bank divides into two categories: the Richardson-related loans and the Envirojar-related loans. The Richardson transactions involve loans and approved overdrafts made to a Ronald Richardson and to eight entities for which Richardson served as officer, incorporator, director, and guarantor. The Richardson-related loans are in default totaling $1,620,-479.80 with unpaid accrued interest of $64,-466.57. The Envirojar-related transactions involve loans, now in default, totaling $225,149.64 to several businesses and persons the bank claims are related and which allegedly borrowed for mutual benefit.

The bank alleges that Mr. Hinman, as the bank’s loan officer with primary responsibility to authorize loans and overdrafts, recommended and voted for approval of the various loans when he knew or should have known the financial condition of the concerns. The first claim for relief is that the defendant violated 12 U.S.C. § 84 by not aggregating the amounts advanced to the Richardson-related entities and the Envirojar-related entities and in applying the bank’s lending limits. The bank claims that Mr. Hinman was negligent in approving loans without providing adequate security for repayment, and that he breached his fiduciary duties.

Mr. Hinman has filed a third-party complaint against other members of the bank’s board of directors and the loan and discount committee. He alleges that they are severally liable on the lending limit violation claim, and jointly and severally liable for any negligence or breach of fiduciary duty. Third-party defendants have moved to dismiss for failure to state a claim upon which relief can be granted. Mr. Hinman agrees that two third-party defendants, R.T. Anders and Victor R. Nottingham, should be dismissed from this action because they were not members of the board or any bank committee during the relevant time period. Mr. Hinman has also withdrawn a claim for indemnification. He seeks only contribution.

The law regulating national banking associations limits the total loans and extensions of credit such an association may make to any person, association, or corporation. 12 U.S.C. § 84(a)(1) & (2). The total obligation may not exceed 10% of the capital stock and 10% of the unimpaired surplus. (An October 15, 1982 amendment to section 84 has changed the measure of lending limits from 10% to 15% of the unimpaired capital stock and unimpaired surplus of the association.) If the directors knowingly violate this or other provisions of the law, each director who participates in or assents to a violation may be held personally and individually liable for all damages to the banking association and its shareholders. 12 U.S.C. § 93(a). The bank claims that outstanding advances to the Richardson-related entities and the Envirojar-related entities continuously exceeded the bank’s section 84 lending limits since August, 1978 and February, 1982.

The governing substantive law must provide a right of contribution as the basis for impleader of the third-party defendants. The third-party defendants assert that there is no statutory or contractual right to contribution in this case. The liability of directors under the banking statute has been held to be several and not joint. Chesbrough v. Woodworth, 195 F. 875, 880 (6th Cir.1912). A suit may be brought against one, all, or any number of the directors as the plaintiff chooses. Gamble v. Brown, 29 F.2d 366, 376 (4th Cir.1928), cert. denied, 279 U.S. 839, 49 S.Ct. 253, 73 L.Ed. 986 (1929). The third-party defendants argue that the bank’s choice to bring this action only against Mr. Hinman should be conclusive.

While the banking statute has no explicit provision for contribution, the right is implied because the statute creates a common liability. Section 93(a) provides that “every director who participated in or assented to” a violation of the banking statute shall be liable for all damages. Contribution is an equitable doctrine based upon the principle of justice among the parties. This court concludes that fairness requires that a right of contribution exist in these circumstances when the third-party plaintiff is asserting that other directors and members of committees have a common liability for the bank’s loss. To deny contribution and permit the bank to select which officers should be held liable would permit those with influence on the present board of directors to escape responsibility for their conduct.

The third-party defendants assert that neither Mr. Hinman nor the bank has alleged that any of the other directors knowingly violated § 84 of the statute. Section 93 holds liable “every director who participated in or assented to” the violation. Courts have construed the predecessor to the present statute to create liability when directors breach their duty to maintain a reasonable control over the affairs of the bank. Directors who fail to investigate excessive loans may be held responsible for the loss as having committed an intentional violation of the banking laws. Corsicana Nat’l Bank v. Johnson, 251 U.S. 68, 71-72, 40 S.Ct. 82, 84, 64 L.Ed. 141 (1919); see also Atherton v. Anderson, 99 F.2d 883, 887-90 (6th Cir.1938); Gamble v. Brown, 29 F.2d at 376. The scienter requirement of § 93 is only an awareness of facts that constitute a violation, not knowledge of the law itself. Del Junco v. Conover, 682 F.2d 1338, 1342 (9th Cir.1982), cert. denied, 459 U.S. 1146, 103 S.Ct. 786, 74 L.Ed.2d 993 (1983). Mr. Hinman has stated a claim for which relief can be granted by alleging that the other directors approved the excessive loans, and thus knowingly violated the banking statute.

Mr. Hinman also asserts a third-party claim for contribution for any liability under the state law claims. Although the Colorado courts have not yet applied the Colorado Uniform Contribution Among Tortfeasors Act, Colo.Rev.Stat. § 13-50.5-101-13-50.5-106 (1985 Supp.), to such a claim by one director against other directors, the statute has been applied in a negligence action. See National Farmers Union Property & Casualty Co. v. Frackelton, 662 P.2d 1056 (Colo.1983). The contribution statute does not apply, however, to Mr. Hinman’s third-party claim based upon a “breach of trust or of other fiduciary obligation.” Colo.Rev.Stat. § 13-50.5-102(7) (1985 Supp.). Thus, the third-party claim for contribution based upon breach of fiduciary duty should be dismissed.

The third-party defendants assert that even if Mr. Hinman and the third-party defendants share a common liability for the bank’s loss, no claim for contribution accrues to a joint tortfeasor until there has been a judgment or a settlement of the claim. Thus, they assert that Mr. Hinman’s claim is premature, relying on Coniaris v. Vail Associates, Inc., 196 Colo. 392, 586 P.2d 224 (1978). Coniaris must be read in its context — where the court was determining the applicability of the contribution statute to a claim which arose before the law was in effect. The case does not apply to the present circumstances.

The Colorado Supreme Court has given further guidance on this issue. In National Farmers Union Property & Casualty Co. v. Frackelton the court examined the language of the Colorado contribution statute. The statute expressly provides that “where two or more persons become jointly or severally liable in tort, ... there is a right of contribution among them even though judgment has not been recovered against all or any of them.” Colo.Rev.Stat. § 13-50.5-102(1) (1985 Supp.). The court determined that the statutory requirement that a person become “liable in tort” before the right to contribution could arise refers only to a person’s exposure to a civil action and not to the existence of a final judgment in tort. 662 P.2d at 1063. A ■ separate action may be brought to enforce a right of contribution “whether or not judgment has been entered in an action against two or more tort feasors.” Colo.Rev.Stat. § 13-50.5-104(1) (1985 Supp.).

At issue in the present case is the third-party defendants’ exposure to liability. No entry of judgment or settlement is necessary before Mr. Hinman may assert a right of contribution. Rule 14 allows a third-party claim against a person “who is or may be liable to him for all or part of plaintiff’s claim against them.” Fed.R. Civ.P. 14(a). Read together, the Colorado statute and the federal rule provide a right to assert a third-party claim for contribution under state law that is appropriate at this time.

Accordingly, it is

ORDERED that the third-party defendants’ motion to dismiss the third-party complaint is denied as to all claims other than the. claim for breach of fiduciary duty, which is dismissed, and it is

FURTHER ORDERED that third-party defendants R.T. Anders and Victor R. Nottingham are dismissed from this action.