author: LIMBAUGH, District Judge.

text:
    NATIONAL FOOTBALL LEAGUE and St. Louis Football Cardinals, Inc., Plaintiffs, v. COUSIN HUGO’S, INC.; McBee & Bruno’s, Inc.; Jerrald Guttmann; Michael Badalamenti; Frank & Frank, Inc.; Schmiezings, Inc.; and Taylayna’s of South St. Louis, Inc., Defendants.
    No. 84-2692C(5).
    United States District Court, E.D. Missouri.
    Dec. 7, 1984.
    Jim J. Shoemake, Mark H. Levison, Robert E. Wallace, Jr., St. Louis, Mo., John Vanderstar, Margaret Alexander, Washington, D.C., for plaintiffs.
    Brainerd W. LaTourette III, St. Louis, Mo., Barry S. Ginsburg, Clayton, Mo., John L. Sullivan, Dan J. Razanas, Francis M. Neviñs, St. Louis Univ. of Law, St. Louis, Mo., for defendants.
   ORDER AND PRELIMINARY INJUNCTION

LIMBAUGH, District Judge.

At the instance of the plaintiffs, on November 19, 1984, the Court entered a temporary restraining order and an order to show cause. The temporary restraining order restrained defendants and their agents from intercepting from satellite, or from any other means, a transmission of a live telecast of the professional football game scheduled to be played in St. Louis, Missouri, on November 25, 1984, between the Cardinals and the Philadelphia Eagles, the performance of which game was to be telecast on November 25, 1984, by CBS Sports, Inc.

The temporary restraining order also ordered the defendants to show cause on November 29, 1984, why a preliminary injunction should not be granted restraining the defendants as prayed for by the plaintiffs in their complaint.

Hearing on that order to show cause was held November 19, and November 20, 1984, and the parties were granted until December 5, 1984, to file post-trial memorandum concerning the issues raised by the order to show cause only.

On November 30,1984, before the taking of testimony the plaintiffs and defendant Cousin Hugo’s, Inc., filed a consent judgment which was by the Court approved. At the same time, the plaintiffs and defendant Schmeizings, Inc., also filed a consent judgment which was by the Court approved. The case then preceded to hearing as to all other defendants not entering into consent judgments. All such defendants appeared by counsel.

Certain facts were stipulated to by the parties in writing, which stipulation is a part of the record and other facts were elicited by witnesses and documentary exhibits. The Court finds that the National Football League, NFL, is composed of twenty-eight member clubs, including plaintiff St. Louis Football Cardinals, Inc. Each of the five defendants remaining in the case who have not entered into a consent judgment, own and operate a restaurant and bar in the City of St. Louis. Each restaurant and bar is equipped with a satellite dish antenna capable of receiving private satellite transmissions. These defendants are McBee and Bruno’s, Inc., known as Panama Red’s, Jerrald Guttmann known as Guttmann’s, Michael Badalamenti, known as Mr. B’s, Frank and Frank, Inc., known as Sandrina’s, and Talayna’s of South St. Louis, Inc., known as Talayna’s.

The NFL has the authority, under its constitution and bylaws to negotiate television contracts on behalf of the league and the member clubs and by contract, for several years has had football games broadcast live on television with the three major television networks. The NFL and its membership clubs receive from the networks substantial sums of money for' the exclusive right to make live game telecasts. The current contracts expire at the end of the 1986 football season. One of the prime reasons for the NFL’s ability to negotiate these contracts is the large number of fans who attend each game. If attendance at the NFL games dropped, the value of the television rights to the NFL would decline.

League television contracts provide that any home game which is sold out seventy-two hours in advance of kickoff will be televised in the home market. If the game is not sold out seventy-two hours in advance of kickoff, the game will not be televised live within a club’s home territory, consisting of a seventy-five mile radius of the stadium and these games may not be shown without the consent of the participating clubs. Each bar and restaurant of the five defendants involved is located within seventy-five miles of Busch Stadium where the Cardinals play their home football games in St. Louis City.

These limitations on live showing of the football games are necessary to promote the economic interests of the plaintiffs and the distribution of their sports entertainment product. Ordinarily, home game attendance suffers whenever games are televised in the local market. Ticket revenues generally suffer correspondingly.

The television process is initiated by network cameras and crews at the stadium capturing the video images and creating an audio commentary constituting the program. The combined signal so created is then transmitted to an earth station located in the vicinity of the stadium and from there to a satellite transponder. The satellite then transmits the signal to a network control point in New York City at which point there is an insertion of commercials and other network material. The resulting signal is then relayed to affiliated local broadcast stations at which time local commercials and station breaks are inserted. At that point, the telecast is then ready for and is broadcast to the public over the air. Although point to point transmissions are used on occasion, the general method of transmission is via satellite.

Signals from the satellite to the receiving earth station can be intercepted by a dish antenna in proper alignment with the satellite transponder. This signal, known as a downlink is transmitted in the C-band at a frequency of 3700 to 4200 megahertz. Although there was no authorization by plaintiffs to any defendant to show the game of November 4, 1984, between the Cardinals and the Los Angeles Rams, all five defendants through dish antenna, or other means, showed such game. Except for Guttmann’s, each of defendants’ establishments were open for business and were showing the Cardinal-Ram game to customers. That game was not a sell-out seventy-two hours prior to kickoff and had been blacked out in the St. Louis area by CBS, pursuant to the NFL contract with CBS. Gutman was not open for business, although there were a few employees with Gutman watching the game while Gutman was cleaning the bar. Three other people were upstairs in the residence over the restaurant who were also watching the game.

Sandrina’s has a twenty-four inch RCA television set in the bar and has improved reception with a roof antenna. Sandrina's is able to receive the signal from a CBS affiliate station in Cape Girardeau, Missouri 120 miles away, with the use of the roof antenna. Sandrina’s did, in fact, show the Cardinal-Ram game to its customers on November 4, 1984, but did so by intercepting the signal from the Cape Girardeau station as opposed to the interception of the satellite signal. The evidence is not clear as to whether the interception was made in the showing of the Rams game with the use of the dish or roof antenna.

The NFL has filed an application with the copyright office for registration of the October 21 and November 4, 1984 Cardinal games and on November 27, 1984, sent notice to defendants of potential infringement as to the remaining Cardinal home game to be played in St. Louis December 9, 1984.

Although there was no specific testimony adduced, the Court takes notice that there are two regular season games left to be played, one of which is to be played in St. Louis on December 9, 1984, in which the Cardinals will participate and the other of which is December 16, 1984, at which the Cardinals will be away from home. There are NFL playoff games after December 16, 1984, but the showing of these games is probably not in dispute. The next regular season of the NFL will not begin until August, 1985, with the televised showing of pre-season NFL games.

This Court has jurisdiction of this case pursuant to the provisions of 28 U.S.C. § 1331.

A preliminary injunction should not issue unless there is a probability that the moving party will succeed on the merits, and that there is a threat of irreparable harm to the moving party. In addition, the equities between the parties should be balanced and the public interest should be promoted before the injunction should issue. Dataphase Systems, Inc. v. C.L. Systems, Inc., 640 F.2d 109 (8th Cir.1981).

The Court finds that plaintiffs have a probability of succeeding on the merits of the case with respect to the concept of anticipatory infringement of copyright at least as to some of the defendants. The provision involved is 17 U.S.C. § 411(b) reading as follows:

“(b) In the case of a work consisting of sounds, images, or both, the first fixation of which is made simultaneously with its transmission, the copyright owner may, either before or after such fixation takes place, institute an action for infringement under section 501, fully subject to the remedies provided by sections 502 through 506 and sections 509 and 510, if, in accordance with requirements that the Register of Copyrights shall prescribe by regulation, the copyright owner—
(1) serves notice upon the infringer, not less than ten or more than thirty days before such fixation, identifying the work and the specific time and source of its first transmission, and declaring an intention to secure copyright in the work; and
(2) makes registration for the work within three months after its first transmission.”

The Court finds that notice of the potential infringement of the game of November 4, 1984 was sent within the proper time limits to the defendants and that proper notice was also sent of the potential infringement within the time limits as to the game of December 9, 1984. Although there is no evidence that actual registration for the copyright of the game of November 4, 1984, and the game of December 9,1984, has been made, the act provides for a three-month period for the potential registration after the first transmission and that time limit has not expired. Plaintiffs have indicated that they do intend to secure copyright of these two games.

Section 605, formerly Section 605 of the Federal Communications Act of 1934 protects television communications from unauthorized reception, interception or publication except where the signal is transmitted “for the use of the general public”. Although this point is not decided by this preliminary order, it appears that plaintiffs have a reasonable likelihood of prevailing. In making the foregoing findings, the Court reserves ruling on the effect of the interception of the signal by one or more of the parties from the CBS affiliated station in Cape Girardeau, Missouri located 120 miles from St. Louis. The finding that the plaintiffs may succeed on the merits has to do with the interception of the satellite signal by defendants.

Because of time constraints and the limited nature of the preliminary injunction, the Court does not detail the remaining items concerning the elements necessary to grant a preliminary injunction but does find that there is a threat of irreparable harm to plaintiffs if a preliminary injunction is not issued. In making these findings, the Court has balanced the equities between the parties and considered the promotion of the public interest.

Other cogent issues are raised in assertions made by all the parties and ruling on these points will be reserved for a final order on the merits.

IT IS THEREFORE ORDERED that defendants in the operation of their commercial establishments, the names of which are identified in this order, and any officer, agent, servant or employee thereof are hereby enjoined from intercepting from satellite, a transmission of the live telecast of the professional football game scheduled to be played between the Cardinals and the New York Giants, on December 9, 1984, the performance of which game is to be telecast on that day by CBS Sports, Inc. Although this order does not restrain defendants from intercepting said game transmission by means other than through satellite, should defendants elect to intercept by other means, the legality of such an interception may be ultimately determined when this case is decided on the merits.

IT IS FURTHER ORDERED that the motions to dismiss filed orally by defendants Jerrald Guttmann and Frank & Frank, Inc., will be decided with the case, on the merits.

IT IS FINALLY ORDERED that this case is set for trial on the merits on April 15, 1985.


source: Caselaw Access Project

author: HASTINGS, District Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff, v. All interests of Severo E. ESCOBAR and Evidaliny Escobar, in: Condominium Unit 1125 of Key Colony Condominium No. II, etc., Defendant.
    No. 84-0723-CIV-HASTINGS.
    United States District Court, S.D. Florida, Miami Division.
    Dec. 7, 1984.
    Robert A. Rosenberg, Miami, Fla., for plaintiff.
    S. Alan Stanley, Coral Gables, Fla., H. Hugh McConnell, Miami, Fla., for defendant.
   ORDER OF FINAL SUMMARY JUDGMENT

HASTINGS, District Judge.

This is a forfeiture action by the United States of America against all interests of Severo Escobar and Evidaliny Escobar, his wife, in a condominium unit located in Key Biscayne, Florida. Florida Federal is the owner and holder of a first mortgage encumbering the subject property dated September 1, 1983, which mortgage was recorded on September 6, 1983 in the Official Records Book 11898 at Page 1932 of the Public Records of Dade County, Florida. The Mortgage owned by Florida Federal is in default as the mortgagors have failed to make payments from November 1, 1983.

The principal unpaid balance due to Florida Federal on its mortgage as of the date of the seizure, March 22, 1984, is the sum of $131,952.23. The interest due to Florida Federal on its mortgage prior to March 22, 1984 is the sum of $6919.98. Late charges due to Florida Federal on its mortgage prior to March 22, 1984, is the sum of $251.40. The court costs expended by Florida Federal in connection with the foreclosure action instituted in the Circuit Court Case No. 84-17124 is the sum of $177.50. The United States does not contest Florida Federal’s right to the principal amount of its claim, plus pre-seizure interest. The United States opposes Florida Federal’s claim to post-seizure interest and attorney fees.

This court has reviewed the moving papers and the supporting memoranda of law. It is thereupon

ORDERED AND ADJUDGED that the Claimant/Intervenor’s motion for summary judgment is DENIED as to post-seizure interest, costs and attorney fees. The court finds that Florida Federal is an innocent party, however, here there is no authority for the conclusion that its interest, late charges, costs and attorneys’ fees survive the forfeiture action by the United States. The court finds General Electric Credit Corporation v. The Oil Screw Triton VI, 712 F.2d 991 (5th Cir.1983), inapposite because it involves The Ship Mortgage Act, Title 46, United States Code, Section 911 et seq. The court believes that United States v. One Piece of Real Estate, etc., 571 F.Supp. 723 (W.D.Tex.1983) is apposite and persuasive on the issue before this court. Consequently, the court hereby awards the lienholder claimant no more than the unpaid balance ($131,952.23), the interest due ($6,919.98), and late charges due ($251.40) as of the date of the seizure, March 22, 1984. The United States’ motion for summary judgment is GRANTED.


author: SPELLMAN, District Judge.

text:
    PREFAB PRODUCTS, INC., Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant.
    No. 83-1148-CIV-EPS.
    United States District Court, S.D. Florida, Miami Division.
    Dec. 10, 1984.

      Charles V. Peppier, Coral Gables, Fla., for plaintiff.
    Patricia D. Kenny, Asst. U.S. Atty., Miami, Fla., for defendant.
   MEMORANDUM OPINION AND ORDER

TRANSFERRING CAUSE TO THE COURT OF CLAIMS

SPELLMAN, District Judge.

This case arises out of an alleged contract between Prefab Products, Inc. (Prefab) and the United States Postal Service (USPS or the Postal Service). Prefab claims that the USPS breached this contract and that, as a result of this breach, Prefab suffered $328,522 in damages. The jurisdiction of this Court is invoked under 28 U.S.C. § 1339 which governs actions arising under an Act of Congress relating to the Postal Service, and under 39 U.S.C. § 409(a), the Postal Reorganization Act.

The Postal Service has moved to dismiss under Rule 12(b)(1), Fed.R.Civ.P., for lack of subject matter jurisdiction. It argues that exclusive jurisdiction, if any is available, is in the United States Court of Claims. For the reasons detailed below, the Court agrees with the Postal Service that this Court does not have subject matter jurisdiction. However, in lieu of dismissal, this Court will transfer this cause to the Court of Claims pursuant to 28 U.S.C. § 1406(c).

JURISDICTION UNDER 28 U.S.C. § 1339

Section 1339 of Title 28 of the United States Code grants district courts jurisdiction of “any civil action arising under any Act of Congress relating to the postal service.” From an examination of the complaint in this case, it is clear that no Act of Congress is involved. Rather, this is a breach of contract case involving the USPS. Although one court has held that Section 1339 conferred jurisdiction in the district court over a contract dispute with the USPS, Kennedy Electric Co. v. United States Postal Service, 367 F.Supp. 828, 832 (D.Colo.1973), aff'd, 508 F.2d 954 (10th Cir.1974), this Court is persuaded by Judge Tashima’s well-reasoned analysis of the issue in Consumers Solar Electric Corporation v. United States Postal Service, 530 F.Supp. 702 (C.D.Cal.1982), that Section 1339 does not grant this Court jurisdiction in a contract dispute.

Judge Tashima examined cases discussing the “arising under” requirement of 28 U.S.C. § 1331, a statute closely analogous to § 1339 and found that a civil action ‘arises under’ an Act of Congress, if the Act of Congress is “a direct and essential element of the claim.” 367 F.Supp. at 703 (quoting Gully v. First National Bank, 299 U.S. 109, 112, 57 S.Ct. 96, 97, 81 L.Ed. 70 (1936)). Because an Act of Congress does not form an essential element of the contract claim here, this Court does not have jurisdiction under Section 1339.

JURISDICTION UNDER 39 U.S.C. § 409

Whether or not this Court has jurisdiction under Section 409 presents a more difficult question. But again, this Court is persuaded by Judge Tashima’s reasoning in the Consumers Solar case where he found that the Contract Disputes Act of 1978, 41 U.S.C. § 601 et seq., pre-empts whatever jurisdiction federal district courts previously had under section 409 and confers exclusive jurisdiction of contract claims against the Postal Service in the United States Court of Claims. Judge Tashima reached this conclusion by examining the legislative history relating to the enactment of these statutes. Since Judge Tashima has already exhaustively reviewed that history, this Court will only briefly review it herein.

Congress reorganized the USPS in 1970 along the lines of a private business in an effort to increase its efficiency and self-sufficiency. This reorganization did not remove the Postal Service from the federal government, but made it an “independent establishment within the executive branch of the Government.” Consumers Solar, 530 F.Supp. at 704 (quoting H.R.Rep. No. 91-1104, 91st Cong., 2d Sess., reprinted in [1970] U.S.Code Cong. & Ad. News 3649, 3654). The Postal Reorganization Act included a waiver of sovereign immunity {see 39 U.S.C. § 401), and granted the district courts original jurisdiction— concurrent with the state courts — over cases involving the USPS {see 39 U.S.C. § 409. Even with this general jurisdictional grant to the district courts, the Court of Claims retained jurisdiction over contract claims involving the USPS. Consumers Solar, 530 F.Supp. at 704 (citing Butz Engineering Corp. v. United States, 499 F.2d 619, 625 (Ct.Cl.1974)).

The Contract Disputes Act, 41 U.S.C. § 601 et seq., was enacted in 1978 to provide a comprehensive system for adjudicating contract claims against the government. Instead of the previously uncoordinated regulations, statutes, and opinions concerning the resolution of contract disputes with the government, the Act established two routes of review. Under Section 606, a contractor can appeal a contracting officer’s decision to the Board of Contract Appeals. Alternatively, under Section 609, a contractor can seek relief directly in the Court of Claims. The Act was made applicable “to any express or implied contract ... entered into by an executive agency ...” 41 U.S.C. § 602. Not surprisingly, since even under the Postal Reorganization Act, the Postal Service is still part of the federal government, the Postal Service is explicitly included in the definition of “executive agency.” 41 U.S.C. § 601(a).

At the same time that the Contract Disputes Act was enacted — indeed in the same bill — Congress amended the jurisdictional statute that generally governs actions in which a government agency is a defendant, 28 U.S.C. § 1346(a)(2). That statute now reads in relevant part:

District courts shall not have jurisdiction of any civil action or claim against the United States founded upon any express or implied contract with the United States or for liquidated or unliquidated damages in cases not sounding in tort which are subject to Sections 8(g)(1) and 10(a)(1) of the Contract Disputes Act.

An examination of the legislative history surrounding this provision clearly indicates that, with very limited exceptions, Congress intended to completely remove district court jurisdiction from those claims subject to the Contract Disputes Act. Thus, the Senate Report states that “[t]he committees believe that there is no need to have two court jurisdictions, the Court of Claims and the U.S. district courts, in which to appeal agency board decisions. The Court of Claims can provide for the needs of all parties.” S.Rep. No. 95-1118, 95th Cong., 2d Sess., reprinted in [1978] U.S.Code Cong. & Ad.News 5235 at 5243. The Report also states that “U.S. district court jurisdiction is eliminated from government claims.” Id. at 5244.

Whatever exceptions to the Act Congress contemplated are clearly laid out. For example, contracts with the Tennessee Valley Authority are not within the Act’s coverage unless the contract specifically contains a disputes clause requiring it to be covered by the Act. 41 U.S.C. § 602(b). Although other exceptions are listed, see, e.g., 41 U.S.C. § 602(c) (contracts with foreign governments); 41 U.S.C. § 603 (certain maritime contracts), nowhere does the statute exclude contracts with the USPS from coverage.

In sum, although 39 U.S.C. § 409 grants jurisdiction generally to district courts of cases involving the USPS, both the plain language and the legislative history of the Contract Disputes Act strongly indicate that contract disputes with the USPS should be governed by that Act with jurisdiction in the United States Court of Claims.

This conclusion is reinforced by the fact that the Contract Disputes Act is more specific and more recent than 39 U.S.C. § 409. A precisely drawn and detailed statute will pre-empt more general remedies. See Brown v. General Services Administration, 425 U.S. 820, 834-35, 96 S.Ct. 1961, 1968-69, 48 L.Ed.2d 402 (1976).

Accordingly, this Court finds that the Contract Disputes Act pre-empts whatever jurisdiction this Court had in contract disputes with the Postal Service. Because the question of this Court’s jurisdiction presented a somewhat novel issue of law and Prefab may be barred from refiling this case by the statute of limitations, this Court finds that it is in the interest of justice to transfer this cause to the Court of Claims in lieu of dismissal. See 28 U.S.C. § 1406(c). This case is therefore transferred to the Court of Claims and shall proceed as if it had been filed in that court on the date that it was filed in the district court.


text:
    I.U.B.A.C. LOCAL UNION # 31, et al., Plaintiffs, v. ANASTASI BROTHERS CORP., a foreign corporation, et al., Defendants.
    No. 84-180-CIV-EPS.
    United States District Court, S.D. Florida, Miami Division.
    Dec. 11, 1984.

      Howard Susskind, Miami, Fla., for plaintiffs.
    Michael W. Casey, III, Miami, Fla., for defendants.
   MEMORANDUM OPINION AND ORDER DENYING PLAINTIFFS’ MOTION TO STRIKE AND MOTION TO DISMISS

SPELLMAN, District Judge.

This is an action by I.U.B.A.C. Local Union # 31 (Union) and the Trustees of the various I.U.B.A.C. Local # 31 Fringe Benefit Trust Funds (Funds) to confirm and enforce an award rendered by a grievance committee pursuant to the terms of a collective bargaining agreement between the Defendant Anastasi Brothers Corp. (ABC) and the Union. The award of the grievance committee required the Defendant, ABC, to pay to the Plaintiffs certain damages based upon the hours worked by the non-union employees of Anastasi Brothers Corp. of Florida (ABC of Florida), an alleged alter-ego of the Defendant ABC.

In their complaint to enforce the award, the Union and the Funds claim that the award of the grievance committee is final and binding on ABC. The Defendants, ABC and ABC of Florida, deny any liability. Although it is undisputed that they had notice of the hearing on the Union’s grievance before the grievance committee, neither ABC nor ABC of Florida attended the hearing. Nor did they file a motion to vacate the committee’s award. Instead, they responded to the complaint with numerous affirmative defenses and counterclaims. The gist of these defenses and counterclaims is that the provision of the collective bargaining agreement upon which the award is based is illegal and therefore unenforceable.

The Union and the Funds have filed a Motion to Dismiss and a Motion to Strike the Defendants’ affirmative defenses and counterclaims arguing that these claims are barred by the statute of limitations applicable to petitions to vacate arbitration awards. The Union and the Funds claim that if ABC and ABC of Florida were not satisfied with the decision of the grievance committee, they were required to move to vacate the arbitration award within the ninety (90) day period prescribed by the Florida statute governing arbitration. Section 682.13(2) Florida Statutes (1983). The failure of the Defendants to use the proper procedure to vacate the award, should, according to the Union and the Funds, bar the Defendants from later seeking the same relief in the form of an affirmative defense or a counterclaim in an enforcement action.

The question this Court must determine is whether the Defendants waived their illegality defense when they failed to timely move to vacate the arbitration award. For the following reasons, the Court finds that the Defendants have not waived their claim that the contract clause upon which the arbitration award is based is illegal. Accordingly, the Motions to Dismiss and to Strike are DENIED.

I.

The failure to timely file a motion to vacate an arbitration award generally bars a defendant in an enforcement action from later seeking the same relief in the form of a counterclaim. See, e.g., Chauffeurs, Teamsters, Warehousemen & Helpers, Local 135 v. Jefferson Trucking Co., 628 F.2d 1023 (7th Cir.1980), cert. denied, 449 U.S. 1125, 101 S.Ct. 942, 67 L.Ed.2d 111 (1981); Service Employees International Union, Local No. 36, AFL-CIO v. Office Centers Services Inc., 670 F.2d 404 (3d Cir.1982). These cases also support the proposition that the applicable statute of limitations is the state law governing arbitration awards as opposed to the Federal Arbitration Act.

Barring a party from seeking to invalidate an award that was not timely challenged comports with the strong federal policy favoring voluntary arbitration as the most expedient method of resolving labor disputes. See, e.g., United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960); Boys Markets, Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970). The short period of time prescribed by the federal and state arbitration statutes for moving courts to vacate an award ensures that an arbitration award becomes final in a timely fashion. As the Seventh Circuit found in Jefferson Trucking:

[T]his policy would seem to condemn the conduct of the defendant who ignored an award disfavorable to it, failed to move to vacate the award and then sought to be given its day in court when the plaintiff brought suit in frustration to have the arbitration award enforced. If the defendant’s defenses were of such vital importance to it, the defendant nevertheless had an opportunity to raise them in the manner contemplated by the statute.

628 F.2d at 1027.

While there are sound reasons for requiring parties to adhere to the procedures governing arbitration, it is also well-established that a court may not enforce a contract that is illegal or contrary to public policy. E.g., Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 102 S.Ct. 851, 70 L.Ed.2d 833 (1982); Hurd v. Hodge, 334 U.S. 24, 68 S.Ct. 847, 92 L.Ed. 1187 (1948).

In Kaiser Steel, a collective bargaining agreement between the United Mine Workers of America and the employer coal producers contained a clause requiring the employer to report his purchases of coal not under contract with the union and to make contributions to the union welfare fund on the basis of these purchases. Kaiser failed to make these reports or pay the contributions and the union brought suit in federal court to enforce the collective bargaining agreement. Kaiser admitted its failure to report and contribute, but defended the lawsuit on the grounds that the “purchased coal” clause of the contract violated the Sherman Anti-Trust Act and the National Labor Relations Act. The district court, on the union’s motion for summary judgment, disregarded the illegality defense, and did not review the legality of the “purchased coal” clause. The court of appeals affirmed, but the Supreme Court reversed.

The Supreme Court held that federal courts have a duty to determine whether a contract violates federal law and must reach the merits of an illegality defense before enforcing a contract. According to the Court:

It is ... well established ... that a federal court has a duty to determine whether a contract violates federal law before enforcing it. “The power of the federal courts to enforce the terms of private agreements is at all times exercised subject to the restrictions and limitations of public policy of the United States as manifested in ... federal statutes---Where the enforcement of private agreements would be violative of that policy, it is the obligation of the courts to refrain from such exertions of judicial power.” Hurd v. Hodge, 334 U.S. 24, 34-35 [68 S.Ct. 847, 852-853] (1948) (footnotes omitted).... [A] court must reach the merits of an illegality defense in order to determine whether the contract clause has any legal effect in the first place.

455 U.S. at 83-84, 102 S.Ct. at 859.

Thus, a party cannot waive the defense of illegality of the contract. The Court itself is bound to raise the issue sua sponte. Nyhus v. Travel Management Corp., 466 F.2d 440, 447 (D.C.Cir.1972); California Pacific Bank v. Small Business Admin., 557 F.2d 218, 223 (9th Cir.1977).

This Court therefore will not dismiss or strike the Defendants counterclaims and affirmative defenses because they failed to move to vacate the arbitration award within the statutory time limits. Although this Court does not approve of the Defendants’ failure to abide by the appropriate procedures to challenge the decision of the grievance committee, the legality of the contract clause at issue here must be determined before the arbitration award can be enforced.

II.

At a status conference, this Court indicated that it would treat the Defendants’ claims that the contract clause is illegal as a motion to dismiss for failure to state a claim upon which relief could be granted. Upon further reflection, the Court finds that it is unable to determine the legality of the provision in question based on the pleadings alone.

This Court recognizes that the Defendants’ illegality claim may have considerable merit. The clause in the contract that ABC allegedly violated binds the employer to the terms of the collective bargaining agreement even for his related non-union businesses. The former fifth circuit analyzed a very similar provision in Florida Marble Polishers v. Edwin M. Green, Inc., 653 F.2d 972 (5th Cir. Unit B 1981), cert. denied, 456 U.S. 973, 102 S.Ct. 2235, 72 L.Ed.2d 846 (1982), and found that, under the circumstances of that case, the clause was illegal. The Court’s decision rested on two grounds. First, the Court found that the clause usurped the rights of the nonunion company's employees to choose their own bargaining representatives pursuant to Section 7 of the National Labor Relations Act, 29 U.S.C. § 157. Second, the Court found that the clause usurped the authority of the National Labor Relations Board to determine the appropriate bargaining unit for those employees pursuant to Section 9(b) of the National Labor Relations Act, 29 U.S.C. § 159(b). 653 F.2d at 976-77. Thus, an arbitration award based on a violation of an identical clause may not be valid and enforceable.

This Court does not, however, read Florida Marble to hold that the contract clause at issue here is per se invalid. Florida Marble, just like this case, involved what is known as a “double-breasted” operation, i.e. a contractor who operates one company that is party to a labor agreement and a second company that is non-union. This situation permits the contractor to compete for both union and non-union work — the union company bids on projects requiring union contracts and the non-union bids on projects not requiring union labor.

Double-breasted operations are not inherently illegal. Nonetheless, unions frequently have resisted this practice by attempting to extend the labor agreement to the non-union employees. When the employer refuses, the unions bring unfair labor practice charges before the National Labor Relations Board (Board). The Board evaluates these claims by employing two interrelated doctrines, the “single employer” and the “alter ego.” See, e.g., NLRB v. Al Bryant, Inc., 711 F.2d 543 (3d Cir. 1983), cert. denied, — U.S. -, 104 S.Ct. 699, 79 L.Ed.2d 165 (1984).

Under the single employer doctrine, the Board treats two or more related enterprises as one within the meaning of section 2(2) of the NLRA, 29 U.S.C. § 152(2). To determine whether two entities are a single employer, the Board looks to such factors as (1) the interrelation of operations, (2) common management, (3) centralized control of labor relations, and (4) common ownership. Radio & Television Broadcast Technicians Local Union 1264 v. Broadcast Service of Mobile, Inc., 380 U.S. 255, 256, 85 S.Ct. 876, 877, 13 L.Ed.2d 789 (1965); NLRB v. Don Burgess Construction Corp., 596 F.2d 378, 384 (9th Cir.), cert. denied, 444 U.S. 940, 100 S.Ct. 293, 62 L.Ed.2d 306 (1979). If the Board finds that the two companies fit under the single employer doctrine, both companies will be bound by the labor agreement if the Board also finds that the employees constitute a single bargaining unit. Id. at 386.

Although similar factors are employed in determining whether the alter-ego doctrine applies, that doctrine operates differently. “[T]he focus of the alter-ego doctrine, unlike that of the single employer doctrine, is on the existence of a disguised continuance or an attempt to avoid the obligations of a collective bargaining agreement through a sham transaction or technical change in operations.” Carpenters Local Union No. 1846 v. Pratt-Farnsworth, Inc., 690 F.2d 489, 508 (5th Cir.1982), cert. denied, — U.S. -, 104 S.Ct. 335, 78 L.Ed.2d 305 (1983). If the alter-ego doctrine applies, a labor agreement will be enforced against the non-signatory company even without a determination regarding the appropriate bargaining unit. See J.M. Tanaka Construction, Inc. v. NLRB, 675 F.2d 1029, 1033-35 (9th Cir.1982).

The Court in Florida Marble utilized these same concepts in holding that the contract clause which bound the employer to the terms of the contract in his non-union business was invalid. The Court went to great pains to point that neither a “single employer” nor an “alter-ego” situation existed between the enterprises involved. Id. at 975-77. In other words, the double-breasted operations were entirely legitimate and there was no evidence that the non-union business was created to avoid any obligations the employer previously had with the union or to improperly limit the appropriate bargaining unit. The decision to start the non-union company in Florida Marble was “based solely on business factors and was totally devoid of any underlying manifestation of union animus.” 653 F.2d at 974. In fact, in that case, the non-union company had been formed several years before the contract had been negotiated with the union. Thus, the union was, in essence, trying to use the contract to get around the need for a representational election in the non-union business.

In the present case, the Plaintiffs contend that the contract provision underlying the arbitration award is valid and enforceable because ABC of Florida is an alter-ego of the union company, ABC. Although the grievance committee did not make an express finding on this issue, the findings it did make lend support to this contention. The committee found that there is considerable overlap between the two companies, that they use the same equipment, supervisory personnel, and that the employees were doing work in the same geographic area. Moreover, the committee found that ABC of Florida was not even licensed with the Broward Building Department — the only license holder was the project manager of the union company. However, from the pleadings alone the Court cannot make the necessary determination that the nonunion company is a sham that was created by the union company to avoid its contract obligations under the labor agreement. Because the Plaintiffs should be permitted to develop whatever facts that may exist to support this contention, the Court will not rule on the legality of the contract provision on the basis of the pleadings.

      . The contract provision at issue here reads as follows:
      For the purpose of determining the responsibility and liability of the Employer under the terms of this Agreement, the word “Employer” as used throughout this Agreement is hereby defined to mean the firm described below, whether a sole proprietorship, joint venture or corporation; in addition, the word “Employer” shall at all times be defined to include any and all other business entities doing business in whole or in part in the trade and territorial jurisdiction of the Union, including but not limited to a sole proprietorship, a partnership, a corporation, a joint venture, an assign, a successor, a subsidiary, a parent corporation, a merger, a lessee or a lessor, which are owned, controlled or operated by one or more of the members, stockholders or officers, of the firm described below; or, in which one or more members, stockholders or officers of such entity owns, controls or operates the firm described below. For the purpose of this definition, a person will be deemed to “control or operate" a business entity if he is its managing or principal officer or member, or if he is in charge of its labor relations in whole or in part.


author: PANNER, Chief Judge.

text:
    Herbert C. COLEMAN, Wil-Bert Farms, Inc., an Oregon corporation; Phil Olsen; Clarence Venell; Peter Dinsdale; and Fred Kaser; individually and on behalf of all similarly situated persons, Plaintiffs, v. FEDERAL INTERMEDIATE CREDIT BANK of Spokane, Washington; Donald Wilkinson; Larry Edwards; C.T. Frederickson; Frederick Medero; Kathleen Mullarkey; Gary Norton; William Hoffman; Everitt Foust; Ronald Bokma; Clarence W. Hollifield; Robert A. Hattrup; Eugene Davis; Frank Niessner; Harold Behler; Steven Hilts; Eldon Stoeher; Joel Krueger; and Does I through XXV, Defendants.
    No. CV 84-6251E-PA.
    United States District Court, D. Oregon.
    Dec. 12, 1984.

      William D. Brandt, Ferder, Ogdahl & Brandt, Salem, Or., Henry A. Carey, Henry A. Carey, P.C., Portland, Or., for plaintiffs.
    Clifford N. Carlsen, Jr., Richard A. Edwards, Mark A. Anderson, Miller, Nash, Wiener, Hager & Carlsen, Portland, Or., for defendants Federal Intermediate Credit Bank of Spokane, Washington, Everitt Foust, Ronald Bokma, Clarence W. Hollifield, Robert A. Hattrup, Eugene Davis, Frank Niessner, and Harold Behler.
    Charles H. Turner, U.S. Atty., Jack G. Collins, Asst. U.S. Atty., Portland, Or., Richard K. Willard, Sandra M. Schraibman, Maryann Clifford, U.S. Dept, of Justice, Civ. Div., Washington, D.C., for defendants Donald Wilkinson, Larry Edwards, C.T. Fredrickson, Frederick Medero, Kathleen Mullarkey, Gary Norton, William Hoffman, Steven Hilts, Eldon Stoeher, Joel Krueger, and Does I through XV.
   OPINION

PANNER, Chief Judge.

This action involves essentially the same parties as were before me in VanLeeuwen v. The Farm Credit Administration, CV 83-1413-PA. VanLeeuwen was dismissed after the parties signed and filed a Settlement Agreement on May 15, 1984. Plaintiffs Herbert C. Coleman and Fred Kaser were plaintiffs in VanLeeuwen. The Farm Credit Administration (FCA), the Federal Intermediate Credit Bank of Spokane, Washington (FICB), and Donald Wilkinson, defendants in the present action, were defendants in VanLeeuwen.

Plaintiffs in the present case attempt to bring their claims as a class action under Fed.R.Civ.P. 23.1 (FRCP 23.1). Plaintiffs allege: (1) tortious interference with a contractual relationship by defendants in declaring the Willamette Production Credit Association (WPCA) to be in default; (2) tortious interference with a contractual relationship by improperly cutting off plaintiffs’ loan funds; (3) tortious interference with a contractual relationship by freezing WPCA stock from August 10, 1983 through May 21, 1984; (4) breach of fiduciary duties by the FICB and its directors; (5) misrepresentation by Larry K. Butter-field in a letter to WPCA stockholders relating to the new audit, dissolution of WPCA, and formation of a new production credit association; (6) violation of Oregon securities law by the FICB in approving the allegedly inaccurate forty-ninth financial statement of the WPCA; (7) defamation by defendants Larry Edwards and Donald Wilkinson by publishing false information about the WPCA, its directors, and the quality of its loans; and (8) conspiracy to violate the Farm Credit Act by usurping control of production credit associations and centralizing this control in federal agencies.

The federal defendants and nonfederal defendants have each filed a motion to dismiss. Defendants move to dismiss the complaint on these grounds:

(1) Res judicata;

(2) The federal defendants are protected by absolute immunity, and, in some cases, prosecutorial immunity;

(3) Plaintiffs failed to comply with the requirements of FRCP 23.1;

(4) The John Doe defendants were not proper parties; and

(5) The court lacks personal jurisdiction over all federal defendants.

For the reasons stated below, I grant both defendants’ motions and dismiss this case with prejudice.

DISCUSSION

1. Res Judicata.

Oregon law determines whether res judicata bars plaintiffs’ action. Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Oregon requires a plaintiff to seek and exhaust all alternate grounds or theories for recovery in one action. Dean v. Exotic Veneers, Inc., 271 Or. 188, 531 P.2d 266 (1975). The plaintiff must combine in a single action all available legal theories arising from a single cause of action. The cause of action is an “aggregate of operative facts giving rise to a right or rights.” Id. at 196, 531 P.2d at 269. See also Fox v. Firestone Tire & Rubber Co., CV 83-6468-RE (D.Or. Sept. 27, 1984).

In VanLeeuwen plaintiffs contended that the FCA improperly devalued security on loans and charged off assets when performing a special audit of the association’s books. See VanLeeuwen, supra, at 2. They contended that FCA auditors acted arbitrarily in making many of the individual calculations underlying their decisions and that the FCA violated its own regulations in performing the special audit. Id.

Plaintiffs’ present claims of tortious interference with the contractual relationship by declaring WPCA in default, cutting off loan funds, and freezing stock are all claims which were previously brought before this court in the VanLeeuwen litigation. Claims of breach of fiduciary duty, misrepresentation, conspiracy, securities violations, and defamation are claims which arose from the same operative facts giving rise to the VanLeeuwen litigation. If they were not before the court, they should have been.

During oral argument on this motion, plaintiffs’ counsel conceded that at the time of the VanLeeuwen stipulation he could have asked for the same relief he asks for in the present case. The present action is barred by res judicata.

2. Immunity.

A. Absolute Immunity.

Plaintiffs have named defendants in the present case who were not named in the VanLeeuwen litigation. Their claims against these defendants are barred by immunity. Federal executive officials are absolutely immune for alleged violations of care arising out of ordinary tort law if the officials are acting within the scope of their offices. Barr v. Matteo, 360 U.S. 564, 79 S.Ct. 1335, 3 L.Ed.2d 1434 (1959). This absolute immunity is not altered by allegations of malice. Spalding v. Vilas, 161 U.S. 483, 16 S.Ct. 631, 40 L.Ed. 780 (1896).

When the alleged violation is one of state tort or statutory law, the immunity is absolute. Miller v. DeLaune, 602 F.2d 198 (9th Cir.1979). This absolute immunity applies only if the court finds that defendants were acting within the outer perimeter of their duties when they performed the complained of acts. Mir v. Fosburg, 646 F.2d 342 (9th Cir.1980) (federal defendants absolutely immune from claims of defamation and intentional infliction of emotional distress if actions were within outer perimeter of their duties). This immunity applies to discretionary actions. Barr at 523.

Each of the claims made against the federal defendants alleges a common law tort or a violation of a state statute. They are therefore absolutely immune from suit if their duties were discretionary and the complained of acts were within the outer perimeter of these duties.

Federal defendant Wilkinson is governor of the FCA. The governor of the FCA is responsible for the execution of all of the administrative functions and duties of the FCA. 12 U.S.C. § 2244 (1980); see also 12 C.F.R. § 600.3. The enumerated powers of the FCA include the power to:

(11) Regulate the borrowing, repayment, and transfer of funds and equities between institutions of the System.
(12) Coordinate and assist in providing services necessary for the convenient, efficient, and effective management of the institutions of the System.
....
(14) Prepare and disseminate information to the general public on use, organization, and functions of the System.
....
(16) Prescribe rules and regulations necessary or appropriate for carrying out the provisions of this chapter.
(17) Exercise such incidental powers as may be necessary or appropriate to fulfill its duties and carry out the purposes of this chapter.

12 U.S.C. § 2252 (1980).

I find that all of the tortious conduct alleged against Mr. Wilkinson would be within the outer perimeter of the duties of the FCA governor outlined in 12 U.S.C. §§ 2244 and 2252. The governor has broad discretion in carrying out these duties. Therefore, Mr. Wilkinson is absolutely immune from all of the charges alleged in plaintiffs’ complaint.

Title 12 U.S.C. § 2247 (1971) gives the governor the authority to appoint such other personnel as may be necessary to carry out the functions of the FCA. The other employees of the FCA are hired to assist the governor in performing his duties. See generally 12 C.F.R. § 600.4, et seq. The outer perimeters of their duties would be the same as those of the governor.

The claims against Mr. Frederickson as deputy governor; Mr. Edwards as deputy governor; Mr. Stoehr as deputy governor; Mr. Hoffman as associate deputy governor; Mr. Krueger as supervising officer; and Mr. Hilts as financial officer are the same as those against Mr. Wilkinson. Since the outer perimeters of their positions are the same as his, these defendants are also absolutely immune from all of these charges. Defendants Foust, Bokma, Hollifield, Hattrup, Davis, Niessner, and Behler are likewise absolutely immune from all these charges.

B. Prosecutorial Immunity.

Defendant Medero is general counsel of the FCA and defendants Mullarkey and Norton are attorneys in the FCA general counsel’s office. These defendants argue that they are entitled to absolute prosecutorial immunity.

In Butz v. Economou, 438 U.S. 478, 517, 98 S.Ct. 2894, 2916, 57 L.Ed.2d 895 (1978), the Court found that officials who are responsible for the initiation or continuation of agency adjudications and agency attorneys who conduct trials are entitled to absolute prosecutorial immunity. There is no substantial difference between the function of an agency attorney presenting evidence in an agency hearing and the function of the prosecutor who brings evidence before the court. Id. at 517, 98 S.Ct. at 2916. The challenged activity of the prosecuting attorney or agency attorney must be an “integral part of the judicial process” for there to be prosecutorial immunity. Jacobson v. Rose, 592 F.2d 515, 527 n. 17 (9th Cir.1978). Absolute immunity is appropriate where officials who participate in the process of adjudication are likely to become defendants in later suits brought by litigants unhappy about the outcome in the original forum. Butz v. Economu, supra, 438 U.S. at 512, 98 S.Ct. at 2913.

The Office of General Counsel provides legal services for the FCA Board, the governor and his staff and provides leadership to legal counsel for the FCA banks in interpreting the Farm Credit Act. 12 C.F.R. § 600.4 (1980). The allegations in the present ease against defendants Medero, Norton, and Mullarkey relate to actions taken by them during the time period of the VanLeeuwen litigation, solely in their role as attorneys. The authority given to the FCA to conduct examinations (12 C.F.R. § 601.130), to declare insolvency (12 C.F.R. § 611.1140), to order liquidation of a credit association (12 C.F.R. § 611.1130), and to defend these actions in court present' a situation analogous to that of a prosecutor who decides to initiate a suit and is later sued for that decision.

Counsel for the FCA serve a prosecuting role in presenting issues such as liquidation before the FCA. Their role is an “integral part of the adjudicatory process” in the agency much as the prosecuting attorney’s role is integral to the judicial process. For this reason, federal defendants Medero, Norton, and Mullarkey are protected from this suit by absolute prosecutorial immunity-

3. John Doe Defendants.

The Ninth Circuit has long held that the use of John Doe defendants is frowned upon. The proper method of adding new parties in the federal courts is in Fed.R.Civ.P. 15. Fifty Associates v. Prudential Insurance Co. of America, 446 F.2d 1187, 1191 (9th Cir.1970).

Plaintiffs conceded that this is the law in the Ninth Circuit. See Plaintiffs’ Memorandum in Opposition. The complaint is also dismissed as to the John Doe defendants.

Federal defendants’ and nonfederal defendants’ motions to dismiss plaintiffs’ complaint are granted.


author: DORSEY, District Judge.

text:
    Ruby STANFORD v. Richard S. SCHWEIKER.
    Civ. No. N-82-424 (PCD).
    United States District Court, D. Connecticut.
    Dec. 13, 1984.

      Whitney M. Lewendon, New Haven, Conn., for plaintiff.
    Thomas J. Riley, Asst. U.S. Atty., New Haven, Conn., Samuel C. Fish, Dept, of Health & Human Serv., Boston, Mass., for defendant.
   RULING ON MOTION FOR ATTORNEY’S FEES

DORSEY, District Judge.

Plaintiff moves for an award of attorney’s fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d)(1)(A), on grounds that the position of the Secretary of Health and Human Services in denying her application for benefits and contesting her appeal to this court was not “substantially justified.” This court agrees and awards fees in the amount of $3,712.50.

Facts

Plaintiff applied for disability benefits on October 27, 1980, claiming an inability to engage in substantial gainful activity due to arthritis, swelling of the joints and a nervous condition. Following a hearing, the Administrative Law Judge (AU) concluded that neither plaintiff’s physical condition (diagnosed as lumbosacral syndrome) nor her mental condition rendered her disabled within the meaning of Section 1614(a)(3)(A) of the Social Security Act, 42 U.S.C. § 1382c(a)(3)(A). After considering additional evidence, the Appeals Council approved the AU’s decision. Plaintiff then brought this action under 42 U.S.C. § 405(g). On May 14, 1984, this court granted plaintiff’s motion for summary judgment and denied defendant’s cross-motion, holding that — contrary to applicable law — the secretary erroneously rejected essentially uncontradicted opinions of treating and examining physicians that plaintiff was both physically and mentally disabled. Judgment entered on May 17, 1984, and this motion was timely filed thereafter.

Discussion

Under the EAJA, a court shall award to a prevailing party other than the United States fees and other expenses ... incurred by that party in any civil action ... brought by or against the United States ... unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

28 U.S.C. § 2412(d)(1)(A). While administrative proceedings under the Social Security Act are expressly excluded from coverage, the EAJA is applicable to civil actions seeking judicial review of the secretary’s social security determinations. H.R.Rep. No. 1418, 96th Cong., 2d Sess. 10, 12, reprinted in 1980 U.S.Code Cong. & Ad. News 4953, 4991 (House Report). See, e.g., McGill v. Secretary, 712 F.2d 28, 30 (2d Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 1420, 79 L.Ed.2d 745 (1984); Cunningham v. Heckler, 587 F.Supp. 43, 44-45 (D.Conn.1984); Davis v. Heckler, Civil No. H-83-746 (D.Conn. October 28, 1984); Ocasio v. Schweiker, 540 F.Supp. 1320, 1321-22 (S.D.N.Y.1982). Undisputedly plaintiff is the “prevailing party” and has incurred the fees requested. The issue is thus whether the government’s position was “substantially justified.”

According to the legislative history:

The test of whether or not a Government action is substantially justified is essentially one of reasonableness. Where the Government can show that its case had a reasonable basis both in fact and law, no award will be made.

House Report 1418 at 10, reprinted in 1980 U.S.Code Cong. & Ad.News at 4989.

A pertinent, significant, but unresolved issue involving the application of the EAJA to social security appeals is whether the government’s “position,” 28 U.S.C. § 2412(d)(1)(A), refers to its litigation position or its underlying administrative posture. In Boudin v. Thomas, 732 F.2d 1107, 1115-16 (2d Cir.), reh’g denied, 737 F.2d 261 (2d Cir.1984) (habeas proceeding challenging on constitutional grounds conditions of confinement), our Court of Appeals held that the position asserted by the government in court is what is relevant for EAJA purposes generally. However, the principal authority upon which Boudin relied as well as other reasoned opinions issued both prior and subsequent to Boudin view this distinction as irrelevant to the large class of cases, including social security appeals, in which “the litigation position of the United States ... [is simply] that its underlying action was legally justifiable,” Spencer v. NLRB, 712 F.2d 539, 551-52 nn. 45, 46 (D.C.Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 1908, 80 L.Ed.2d 457 (1984) (the distinction in such cases “is academic”). See, e.g., Tripodi v. Heckler, 100 F.R.D. 736, 739 (E.D.N.Y.1984) (the distinction is “not decisive” where the government’s position in court is that the agency’s denial was proper); Cornella v. Schweiker, 728 F.2d 978, 982-83 (8th Cir.1984) (the issue makes “no functional difference”); Grand Blvd. Improvement Co. v. City of Chicago, 553 F.Supp. 1154, 1162 (N.D.Ill.1982) (in many cases the issue makes a mountain our of a mole hill); Ceglia v. Schweiker, 566 F.Supp. 118, 123 (E.D.N.Y.1983); Cunningham, 587 F.Supp. at 45 (“the distinction ... need not be made”); Vereen v. Heckler, Civ. No. N-83-294 (D.Conn. Sept. 4, 1984) (awarding fees where government failed to show its agency or litigation posture was substantially justified). But see Davis (applying the Boudin rule in the social security appeal context).

Ordinarily “the governmental action that precipitates the controversy almost invariably is its litigating position.” Spencer, 712 F.2d at 551 (emphasis in original). To make what may be an arbitrary or artificial distinction between agency behavior and the government’s litigating posture runs the risk of torturing the EAJA’s plain definition of “substantially justified.” See, e.g., Guthrie v. Schweiker, 718 F.2d 104, 108 (4th Cir.1983) (holding that for purposes of the applicability of the EAJA to social security appeals the government’s position in the district court normally would be substantially justified if, as is usual, the United States Attorney does no more than rely on an “arguably defensible” administrative record). A prevailing social security appellant’s rights under the EAJA, and the concomitant government obligation, should not be decided on the basis of such a distinction, but, as noted in Cornella, 728 F.2d at 983, “we must examine the evidence and law surrounding the Secretary’s decision to deny ... disability benefits in order to decide whether the government’s defense of that denial was substantially justified.”

In granting plaintiff’s motion for summary judgment, the ALJ’s finding that her pain was not disabling was held to have improperly ignored the wholly uncontradicted evidence of both her treating physician and the secretary’s examining physician. This finding was based in part on the ALJ’s observation of plaintiff during the hearing — an observation which is entitled to limited and not determinative weight, Carroll v. Secretary, 705 F.2d 638, 643 (2d Cir.1983); Marcus v. Califano, 615 F.2d 23, 27 (2d Cir.1979) — and in part on an apparent misreading of the opinion of the examining physician that “at the present time, [the plaintiff] is unable to work, however, she would be in the future a candidate for a sedentary type of job.” (Transcript at 120). The ALJ misconstrued this report as a recommendation that plaintiff was presently a candidate for sedentary work, rather than “unable to work” because of pain as the report expressly stated. Thus, the ALJ’s decision was contrary to rules of law well settled in this circuit that deem controlling the uncontradicted reports of treating and examining physicians, see, e.g., Parker v. Harris, 626 F.2d 225, 231 (2d Cir.1980); Bastien v. Califano, 572 F.2d 908, 912 (2d Cir.1978); Hankerson v. Harris, 636 F.2d 893 (2d Cir.1980), and provide that subjective pain may establish disability even where the pain is unsupported by clinical or medical findings. Marcus, 615 F.2d at 27. This was not a case where the ALJ gave undue weight to insubstantial evidence conflicting with plaintiffs claims or where minds might differ on whether contrary evidence was substantial or insubstantial; he instead made an adverse finding on a record bereft of conflicting evidence. In such a case, the government’s position cannot be deemed “substantially justified.” As there was no basis in fact or law by which the secretary’s decision could be sustained, “the government’s defense of [the] denial [cannot be found to be] substantially justified.” Cornella, 728 F.2d at 983.

The court’s prior ruling that the secretary’s decision was not supported by substantial evidence is, of course, not determinative of this motion. Nonetheless, the fact that the ruling was based upon the secretary’s fundamental misconceptions of fact and well-settled governing law, see San Filippo v. Secretary, 564 F.Supp. 173, 175 (E.D.N.Y.1983) (granting attorney’s fees in a similar fact pattern), rather than less compelling grounds, see Davis, slip op. at 5 (denying fees where error principally ascribed to the government’s placing undue weight on questionable evidence in conflict with plaintiff's claims), warrants an award of fees.

As the government has not shown either that its position is substantially justified— i.e. that its position below or in this appeal had a reasonable basis in both fact and law — or that special circumstances make an award unjust, an award of attorney’s fees in the amount of $3,712.50 is in order as the product of 49.5 hours reasonably performed at the statutory maximum and herein reasonable rate of $75 per hour.

SO ORDERED.

      . Indeed, the legislation passed by Congress but recently vetoed by the President which could extend the EAJA to actions brought after October 1, 1984, addresses this issue. It has been reported that the veto was principally based on the Bill’s proposed redefinition of the term "position of the government” to authorize fee awards in any successful challenges to the underlying agency action which precipitated the litigation. Legal Times, at 2 (Nov. 19, 1984).


author: CAHILL, District Judge.

text:
    Ahmad Mansoor MIAN, Plaintiff, v. UNITED STATES IMMIGRATION AND NATURALIZATION SERVICE, Defendant.
    No. 83-1588C(4).
    United States District Court, E.D. Missouri.
    Dec. 19, 1984.
    Robert A. Cox, St. Louis, Mo., for plaintiff.

      Joseph Moore, Asst. U.S. Atty., St. Louis, Mo., for defendant.
   MEMORANDUM OPINION

CAHILL, District Judge.

This matter is before the Court on Ahmad Mansoor Mian’s petition- for writ of habeas corpus.

The Immigration and Naturalization Service (INS) found Mian deportable in a decision dated September 23, 1981. He instituted this proceeding in an effort to prevent his deportation.

A native and citizen of Pakistan, born June 15, 1954, Mian entered the United States on December 16,1972, as a nonimmigrant student, in order to attend the University of Missouri, at Rolla, but he dropped out in May, 1975.

He was located January 16, 1976, and was given the opportunity to voluntarily depart by March 16, 1976, but subsequently was reinstated to student status on April 29, 1976.

On November 13, 1978, he was again found to be not attending school. An Order to Show Cause why he should not be deported was issued, but plaintiff mailed evidence that he had departed the United States and was back in Pakistan.

However Mian was then located in the United States on November 13, 1980, when it was learned that he had never departed the United States.

Mian was accorded a hearing before the Immigration Judge on November 19, 1980, and on January 21, 1981. He filed for political asylum or suspension of deportation which the Immigration Judge denied on September 23, 1981, and granted voluntary departure until December 15, 1981. An appeal was taken to the Board of Immigration appeals which dismissed the appeal on June 25, 1982, and granted voluntary departure to July 25, 1982.

Mian married a United States citizen on July 23, 1982, and a relative visa petition was filed that date. That petition was denied on September 19, 1983, when the wife failed to appear for interview and INS could not locate her.

A stay of deportation was filed on April 22, 1983, which was denied on June 21, 1983.

Mian was ordered to appear for deportation on July 6, 1983, and this petition for habeas corpus followed.

Mian’s last authorized period of voluntary departure expired on July 25, 1982. A request to extend that was denied by the District Director on August 2, 1982. Also on August 26,1982, INS asked Australia to accept Mian’s request that he be deported to that country, but the offer was declined.

Mian filed a motion to reopen his deportation proceedings for reconsideration of his application for asylum and withholding of deportation, and request for suspension of deportation. That motion was denied by the Board of Immigration Appeals on December 13, 1983.

The alien has availed himself of every procedural safeguard, and it is obvious that he merely seeks to delay his deportation. He has failed to establish eligibility for the relief sought. INS v. Wang, 450 U.S. 139, 101 S.Ct. 1027, 67 L.Ed.2d 123 (1981).

Mian has sought every available discretionary relief offered by INS, including asylum under Section 208 of the Immigration and Naturalization Act; withholding of deportation under Section 243(h); and suspension of deportation under Section 244(a)(1).

After this action was filed the Board of Immigration Appeals denied two motions to reopen and a motion to reconsider.- Mian has never appealed the final order of deportation to the U.S. Court of Appeals, as provided by 8 U.S.C. 1105a. Fotl v. Immigration and Naturalization Service, 375 U.S. 217, 229, 84 S.Ct. 306, 313, 11 L.Ed.2d 281 (1963); Daneshvar v. Chauvin, 644 F.2d 1248 (8th Cir.1981).

After hearing the testimony and carefully reviewing the record, the Court is convinced that the decisions of the INS in denying relief were not made arbitrarily or capriciously. There is no evidence that the director abused his discretion. Thus, the writ of habeas corpus is denied. However, the Court will continue the preliminarily granted writ of habeas corpus for ten (10) days in order to allow the petitioner to seek a stay of deportation pending appeal, if he so desires.


author: OBERDORFER, District Judge.

text:
    Margaret M. FITZGERALD, Plaintiff, v. SHANNON & LUCHS CO., et al., Defendants.
    Civ. A. No. 84-1079.
    United States District Court, District of Columbia.
    Dec. 19, 1984.

      Mark Richardson, Clark R. Silcox, McLean, MacIntyre, Wilson & Richardson, P.C., Washington, D.C., for plaintiff.
    Michael C. Blackstone, Washington, D.C., for defendants.
   MEMORANDUM

OBERDORFER, District Judge.

Plaintiff is a real estate agent who was a party to an “Independent Contractor Agreement” with the defendant, Shannon & Luchs Company, a real estate brokerage firm. Plaintiff found a buyer for a house whose owner had offered a $5,000 “bonus” to any “selling agent” who successfully negotiated a sale of the house. Shannon & Luchs collected the $5,000 bonus promised by the seller. Treating the bonus as a standard commission fee, Shannon & Luchs retained a substantial portion of the $5,000 and gave the plaintiff her usual percentage. Plaintiff, however, claims that she is entitled to the full $5,000, and has brought this suit in an effort to enforce her claim. Jurisdiction is assertedly by diversity. However, the plaintiff meets the jurisdictional amount for diversity, if at all, only because she has asserted a claim for punitive damages of $75,000.

I.

At the pleadings stage, defendant moved to dismiss for lack of diversity jurisdiction on the ground that, as a matter of law, the plaintiff was not entitled to recover the punitive damages that she had claimed. In support of this motion, defendant cited Kahal v. J.W. Wilson & Associates, Inc., 673 F.2d 547 (D.C.Cir.1982), where the Court of Appeals of this Circuit affirmed the dismissal of a case on similar grounds. In Kahal, the plaintiff had had an opportunity to respond to the defendant’s interrogatories pertinent to the defendant’s contention that the plaintiff was using a punitive damages claim to “shoehorn essentially local actions into federal court through extravagant or invalid punitive damage claims.” Id. at 549. Here, by contrast, when defendant’s original motion to dismiss was at issue, there had been no discovery or other factual development of the complaint’s punitive damages allegations. Liberal pleading rules, accordingly, required denial of defendant’s motion to dismiss at that juncture.

Since the earlier ruling on the Motion to Dismiss, however, the issues and facts have been further developed in several pleadings — defendant’s Motion for Partial Summary Judgment or, in the Alternative, Judgment on the Pleadings and the accompanying Memorandum of Points and Authorities, plaintiff’s response thereto, pretrial briefs filed by both parties, and plaintiff’s Memorandum of Points and Authorities on Punitive Damage Claims — as well as in an extensive oral argument at which counsel for both parties argued the law and made significant factual representations and admissions. These developments now make possible the close scrutiny that Kahal indicates to be appropriate where, as here, “the availability of punitive damages is the sine qua non of federal jurisdiction,” id. See Bewley v. Sims, 438 F.Supp. 708, 709 (D.Md.1977). As explained in Part III of this Memorandum, that scrutiny establishes that the punitive damage claim here, like the parallel claim in Kahal, does not have the requisite “colorable basis in law and fact,” and that the complaint must be dismissed for want of jurisdiction. Kahal, supra at 549.

II.

The threshold choice of law question has been resolved at oral argument by the parties’ concession that all of the relevant contacts except defendant’s place of incorporation (Delaware) and main office (District of Columbia) are in Maryland. Accordingly, Maryland law applies.

Next, the memoranda on defendant’s summary judgment motion — which challenges Counts II and III of the complaint — raise several issues worth noting collaterally. Possibly to create an environment hospitable to the effort to assert a right to punitive damages, plaintiff claims in Count II of the complaint that the defendant broker had a fiduciary responsibility to plaintiff, a selling agent, with respect to the bonus. Plaintiff relies for this proposition upon Ann. Code of Maryland Art. 56, § 224(f) which precludes an individual selling agent from

[accepting a commission or valuable consideration as a real estate salesman for the performance of any of the acts specified in this subtitle from any person except the real estate broker named in his license.

Unaided by authority, plaintiff construes the statutory language — which requires that such payments be routed from sellers to agents through brokers — to create in brokers a fiduciary duty to hold the payments in trust and turn them over to the trust beneficiary, i.e., the agent, plaintiff here.

Plaintiff’s contention is without merit. The underlying Independent Contractor Agreement between the broker and the selling agent has none of the characteristics of a trust instrument. The agreement creates an arms-length relationship between the licensed broker as a principal and the selling agent as an independent contractor. Obviously, in light of the terms of the Independent Contractor Agreement and in the absence of Maryland authority, this Federal Court sitting in the District of Columbia could neither hold nor permit a jury to find that there was such a trust or fiduciary relationship.

Defendant’s motion for partial summary judgment also challenges plaintiff’s theory in Count III that defendant tortiously interfered with her bonus contract with the seller. Responding to that challenge, plaintiff has shifted ground, abandoning the contract interference claim in favor of a “conversion” claim. Treating the complaint as appropriately amended, the conversion claim is equally vulnerable. The very statute relied on by plaintiff for her trust theory makes it clear that an independent agent has no legal or possessory right to any bonus; the seller must pay it to the broker. Yet, a legal right to immediate possession of claimed property is a predicate to a suit for conversion. See McClung-Logan Equipment Company v. Thomas, 226 Md. 136, 172 A.2d 494, 498-99 (1961).

If subject matter jurisdiction over this action were present, therefore, the Court would dismiss Counts II and III of the complaint, leaving only Count I, which claims breach of contract, and Count IV, which claims fraudulent inducement (failure to tell plaintiff that she would not receive the full bonus). However, under Rule 12(h)(3) of the Federal Rules of Civil Procedure, a court may dismiss a matter for want of subject matter jurisdiction whenever that defect becomes apparent. The fuller factual exposition that has arisen as the case has developed now affords an adequate record for a ruling on the punitive damage claim, failure of which would reduce the amount in controversy to less than $10,000, oust the Court from diversity jurisdiction, and require dismissal of the entire action.

III.

Under Maryland law punitive damages are not recoverable at all in actions for breach of contract. H. & R. Block, Inc. v. Testerman, 275 Md. 36, 338 A.2d 48 (1975). Moreover, under Maryland law, in a tort action arising out of a contractual relationship such as that created here by the Independent Contractor Agreement, “actual or express malice” is a requisite to a punitive damage claim. See American Laundry Machinery Industries v. Horan, 45 Md.App. 97, 412 A.2d 407, 416 (1980); see also Saval v. BL LTD., 710 F.2d 1027, 1033-34 (4th Cir.1983). Such actual or express malice “has been characterized as the performance of an act without legal justification or excuse, but with an evil or rancorous motive influenced by hate, the purpose being to deliberately and willfully injure the plaintiff.” H. & R. Block, Inc. v. Testerman, supra, 338 A.2d at 52. The seminal Maryland opinion on the subject of tort actions arising out of contract relationships states that punitive damages might be awarded where, for example:

[T]here was evidence tending to show that the defendant had caused the contract to be broken for the sole purpose, and with the deliberate intention of wrongfully injuring the plaintiff ..., but when the object was merely to benefit itself, although the plaintiff would be thereby injured, there would be no more reason for allowing such damages than there would be in a suit by one party to a contract against the other for breach of it.

Knickerbocker Co. v. Gardiner Co., 107 Md. 556, 69 A. 405, 410 (1908), cited with approval in H. & R. Block, Inc. v. Testerman, 338 A.2d at 53 (emphasis added).

The allegations in the complaint and in plaintiffs pretrial briefs, as well as her counsel’s proffers at the argument, make it clear that she will not be able to adduce any facts from which a reasonable jury could find that defendant had no legal justification for sharing the bonus with plaintiff instead of paying all of it to her, or that defendant handled the bonus in the way that it did for the sole purpose and with the deliberate intention of wrongfully injuring plaintiff — as distinguished from an intention merely to benefit itself (albeit at plaintiff’s expense). The critical statute does not distinguish between commission and bonus; it requires all “valuable consideration” for selling services to go to the licensed broker. Ann.Code of Maryland Art. 56, § 224(f). Although the Independent Agency Agreement refers specifically to commissions and does not mention bonuses as such, defendant’s contention that in the circumstances here the bonus could well be regarded as a form of commission subject to division between broker and agent is a wholly plausible and defensible position to take. Plaintiff’s contentions that defendant misled her as to what would happen to the bonus, and as to the legal basis for splitting the bonus, fall far short of the kind of evidence of actual malice that would justify punitive damages.

The only contention that might in some circumstances arguably support a punitive damage claim sufficiently to get to the jury relates to statements allegedly made to plaintiff threatening her job if she persisted in her challenge to the splitting of the bonus. Yet plaintiff alleges only a threat: e.g., plaintiff fails to allege any acts to implement the alleged threat. Even if a mere threat is arguably evidence of ill will or unfair tactics, there is nothing in the proffer or its context that would permit a reasonable jury to infer that defendant engaged in the alleged threat not with the intention of asserting and maintaining a plausible legal position allowing it to advance its own commercial benefit, but rather with the sole and deliberate intention of injuring plaintiff. There is no basis in any of the allegations to conclude that defendant’s “alleged breach was accompanied by the kind of egregious conduct that would justify an award of punitive damages,” Kahal v. J.W. Wilson & Associates, Inc., supra at 549. Cf. Sellers v. O’Connell, 701 F.2d 575, 579 (6th Cir.1983).

Accordingly, plaintiff’s complaint has failed to satisfy the jurisdictional amount requirements for maintaining an action in federal court on diversity of citizenship grounds. The accompanying order will therefore dismiss the action for lack of jurisdiction.

ORDER

For reasons stated in an accompanying Memorandum, it is this 14th day of December, 1984, hereby

ORDERED: that the action should be, and is hereby, DISMISSED.


author: EDWARD C. REED, Jr., District Judge.

text:
    Jack Thomas VINCENT, Plaintiff, v. The DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., the Administration of the Department of Social Security, et al., the Office of the Social Security Administration, et al., Defendants.
    No. CV-R-83-388-ECR.
    United States District Court, D. Nevada.
    Dec. 20, 1984.

      Jack Thomas Vincent, in pro. per.
    Lamond R. Mills, U.S. Atty. by Shirley Smith, Asst. U.S. Atty., Reno, Nev., for defendants.
   EDWARD C. REED, Jr., District Judge.

Plaintiff, Jack Vincent, brings this action seeking declaratory relief and extensive damages. He challenges the delay of a lump sum payment of Supplemental Security Income benefits. Defendant, Secretary of the Department of Health and Human Services (HHS), moves this Court to dismiss this action. In support of its motion to dismiss, HHS argues: (1) that this Court lacks subject matter jurisdiction; (2) that Vincent fails to comply with the federal rules; and (3) that this complaint is frivolous and malicious.

This Court finds that the United States enjoys sovereign immunity in this case and the motion to dismiss is granted.

It is well settled that the United States is immune from suit except as it specifically consents to be sued and that the terms of such consent define the jurisdiction of any court in which such suit properly can be brought. United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 769, 85 L.Ed. 1058 (1941). Vincent relies upon several statutes as a basis for this Court’s jurisdiction. However, his reliance is misplaced. He first asserts 28 U.S.C. § 1343. 28 U.S.C. § 1343 does not constitute a waiver of the defense of sovereign immunity unless there is a claim for a violation of the Fourteenth Amendment. See e.g. Service Arms Co. v. U.S. Treasury Dept., Inc., 416 F.Supp. 2, 4 (W.D.Okl.1975). The Fourteenth Amendment protects an individual against state action not against wrongs done by individuals. United States v. Price, 383 U.S. 787, 86 S.Ct. 1152, 16 L.Ed.2d 267 (1966). Vincent fails to allege that defendants were acting pursuant to state law and thus fails to state a claim for a violation of the Fourteenth Amendment. Thus, jurisdiction does not lie under 28 U.S.C. § 1343. Vincent then relies on 42 U.S.C. § 1983. 42 U.S.C. § 1983 only applies to acts taken under color of state law and thus could not apply to acts of the federal government. See Adickes v. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Vincent also relies on 28 U.S.C. §§ 1915(d) and Fed. R.Civ.P. 81(d)(6). Section 1915(d) concerns proceedings in forma pauperis and is not a jurisdictional statute. There is no Fed.R. Civ.P. 81(d)(6). Thus, these statutes do not demonstrate a waiver of sovereign immunity. Vincent also asserts 42 U.S.C. §§ 1986 and 1988. Again, the United States did not waive her sovereign immunity in these sections. Neither of these sections provides a cause of action against a federal official or agency acting under color of federal law. See e.g., Stockheimer v. Underwood, 428 F.Supp. 192, 194 (W.D.Wis.1977).

Vincent also relies on 28 U.S.C. § 1346(b), the Federal Tort Claims Act (FTCA). However, an action shall not be instituted based upon the negligent or wrongful act or omission of the United States until a claim has been presented to the appropriated federal agency. 28 U.S.C. § 2675(a). This requirement is jurisdictional and cannot be waived. See Three-M Enterprises, Inc. v. United States, 548 F.2d 293, 294 (10th Cir.1977). Vincent has not filed the requisite administrative claim and thus cannot rely on the FTCA for jurisdiction.

Vincent’s complaint is based on an argument that in determining his eligibility for the benefits payment, HHS’s procedures violated Vincent’s constitutional rights. The HHS did make full payment. Vincent does not challenge the amount, but rather challenges the two-year delay in his receiving the payment. Thus, Vincent is arguably asserting a claim under the Social Security Act.

The right to sue the United States or one of its agencies is limited to the extent of the pertinent waiver of sovereign immunity. Sherwood, 312 U.S. at 586-587, 61 S.Ct. at 769-770. Congress has provided such a waiver over claims arising under Title II of the Social Security Act, 42 U.S.C. § 405(g). The subject matter jurisdiction of the district court may be invoked for judicial review of “final decisions” of the Secretary of Health and Human Services. Weinberger v. Salfi, 422 U.S. 749, 763, 95 S.Ct. 2457, 2466, 45 L.Ed.2d 522 (1975).

There is no doubt that a final decision was rendered by the administrative law judge in ordering payment of Vincent’s benefits. However, as Vincent has made perfectly clear, that is not the issue in this case. Rather the gravamen of Vincent’s complaint is the delay in his receipt of those benefits. The exclusive remedy for cases arising from the Social Security Act is 42 U.S.C. § 405(g). Heckler v. Ringer, — U.S. -, 104 S.Ct. 2013, 2028, 80 L.Ed.2d 622 (1984). The delay that Vincent complains of is not a cognizable right of action under the Social Security Act.

In addition to the million dollar claim for damages, Vincent also seems to seek declaratory relief. Vincent apparently wishes this Court to issue a declaration that HHS violated his constitutional rights, a preliminary and permanent injunction ordering the defendants to pay $3,500,000, and a preliminary and permanent injunction prohibiting the defendants and any successors in office from harassment or threats.

Although there are certain circumstances where this Court would have jurisdiction to provide declaratory relief, Vincent’s claim does not provide any basis for the relief he seeks.

Conclusion

Vincent sued HHS. HHS is an agency of the United States and can only be sued upon its consent, which it has not given in the instant case. See Land v. Dollar, 330 U.S. 731, 738, 67 S.Ct. 1009, 1012, 91 L.Ed. 1209 (1947); see e.g. Gray Moving & Storage, Inc. v. Fichback, 516 F.Supp. 1165, 1166 (D.Colo.1981).

IT IS, THEREFORE HEREBY ORDERED that the motion to dismiss the action is GRANTED.

      . Other defendants named by Vincent should be removed from this case and Margaret Heckler, the Secretary of HHS, substituted as defendant. Rule 25(d).

      . Accordingly this Court declines to discuss the other issues raised by HHS.


author: JOSÉ A. CABRANES, District Judge:

text:
    Betty L. MONTI v. Robert McKEON, D.D.S.
    Civ. No. H 79-423.
    United States District Court, D. Connecticut.
    Dec. 21, 1984.

      Betty L. Monti, pro se.
    Eugene A. Cooney, John T. Scully, Cooney, Scully & Dowling, Hartford, Conn., for defendant.
   RULING ON PLAINTIFF’S REQUEST TO PROCEED ON APPEAL IN FORMA PAUPERIS

JOSÉ A. CABRANES, District Judge:

In this dental malpractice action, a jury verdict was returned for the defendant on June 13, 1984. The plaintiff filed a Notice of Appeal on August 31, 1984 and now seeks to proceed on appeal in forma pauperis pursuant to 28 U.S.C. § 1915. The plaintiff also seeks to have the trial record transcribed at government expense. See Plaintiff’s Request to Proceed on Appeal In Forma Pauperis (filed Nov. 29, 1984). In ruling on this motion, the court has considered the attachments to the plaintiff’s motion, including her Affidavit in Support of Motion to Proceed In Forma Pauperis (“Affidavit”), and the memoranda subsequently filed by both parties.

The decision to grant or deny leave to proceed in forma pauperis is within the sound discretion of the court. United States v. Jeff-Lewis Savings & Loan Association, 530 F.Supp. 623, 628 (N.D.N.Y.1982); Venable v. Meyers, 500 F.2d 1215, 1216 (9th Cir.), cert. denied, 419 U.S. 1090, 95 S.Ct. 683, 42 L.Ed.2d 683 (1974). A motion to proceed on appeal pursuant to 28 U.S.C. § 1915 must be filed with the district court, Fed.R.App.P. 24(a), and accompanied by an affidavit demonstrating the movant’s inability “to pay fees and costs or to give security therefor.” Id.; 28 U.S.C. § 1915(a). The allegations contained in the affidavit concerning the movant’s financial status typically are accepted at face value. 10 C. Wright & A. Miller, Federal Practice and Procedure, § 2673, at 251-252 (2d ed. 1983). However, the court may inquire into such allegations and demand more specific information if necessary for a proper assessment of the movant’s financial status. Zaun v. Dobbin, 628 F.2d 990, 992-993 (7th Cir.1980).

Defendant contends that the Affidavit is insufficient proof of the plaintiff’s ability to pay or give security for costs. He argues that since the plaintiff testified at trial that she is supported by her spouse, the Affidavit should state her spouse’s income and holdings, if any. See Defendant’s Brief in Opposition to Motion to Proceed In Forma Pauperis and in Support of Dismissal (filed Nov. 29, 1984) at 3-4. Defendant correctly notes that in ruling on motions to proceed in forma pauperis, other courts have considered the income of interested persons, such as spouses and parents, in evaluating the funds available to the movant. See Williams v. Spencer, 455 F.Supp. 205, 209 (D.Md.1978) (“The question under 28 U.S.C. § 1915 is whether the litigant is unable to pay the costs, and the answer has consistently depended in part on a litigant’s actual ability to get funds from a spouse....”); Cross v. General Motors Corp., 721 F.2d 1152, 1159 (8th Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 2364, 80 L.Ed.2d 836 (1984).

The purpose of 28 U.S.C. § 1915 is to insure that litigants will not be deprived of access to the judicial system because of their financial circumstances. Harlem River Consumers Cooperative, Inc. v. Associated Grocers of Harlem, Inc., 71 F.R.D. 93, 96 (S.D.N.Y.1976). If the plaintiff is supported by her spouse, and her spouse is financially able to pay the costs of this appeal, it follows that the plaintiff’s own lack of funds will not prevent her from gaining access to the courts. Where funds to pursue an appeal are readily available to a plaintiff, she should not be permitted to maintain an appeal at the taxpayers’ expense.

In any event, the Affidavit is insufficient as a matter of law because of its internal inconsistencies. As previously noted, the Affidavit contains no reference to the income earned by the plaintiff’s spouse. It nevertheless includes among the plaintiff’s expenses several items that clearly were incurred by the plaintiff’s spouse. See Affidavit ¶ 6, at 2 (travel and living expenses of plaintiff’s spouse). It is noteworthy that the plaintiff’s spouse is not listed as a dependent of the plaintiff. See Affidavit 11 5, at 1. In any event, the plaintiff may not rely in the Affidavit on expenses incurred by her spouse while omitting his income.

For the reasons stated above, the plaintiff’s Request to Proceed on Appeal In Forma Pauperis (filed Nov. 29, 1984) is denied, without prejudice to reconsideration upon the filing of a motion accompanied by an affidavit consistent with this ruling.

It is so ordered.

      . By a motion filed November 29, 1984, defendant sought to have this court dismiss the plaintiffs appeal as frivolous in accordance with 28 U.S.C. § 1915(d). This motion was denied by endorsement. Section 1915(d) does not authorize a district court to dismiss as frivolous an appeal from its own ruling.