author: BELL, District Judge.

text:
    VAN DORN COMPANY, CENTRAL STATES CAN CO. DIVISION, Plaintiff, v. John D. HOWINGTON, et al., Defendants.
    No. C85-1327A.
    United States District Court, N.D. Ohio, E.D.
    Dec. 24, 1985.

      Leslie W. Jacobs, Thompson, Hiñe & Flory, Cleveland, Ohio, for plaintiff.
    Ralph E. Cascarilla, Thomas C. Schrader, Cleveland, Ohio, for defendants.
   ORDER

BELL, District Judge.

On May 6, 1985, the plaintiff Van Dorn Company, Central States Can Co. Division (hereinafter Central States) filed the above-entitled action against Texas Can, Inc. (hereinafter Texas Can) and three of its officers. The plaintiff alleged a cause of action based upon Title IX, § 901(a) of the Organized Crime Control Act of 1970, commonly known as the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 (hereinafter RICO). In addition, the complaint, as amended on July 14, 1985, asserted claims under Ohio law in which plaintiff contends defendants breach-' ed a contract between the parties, interfered with the plaintiffs business relations, breached a fiduciary duty, and misappropriated various trade secrets held by Central States.

Presently before the court is the defendants’ motion to dismiss the amended complaint pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, for want of subject matter jurisdiction, and pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, for failure to state a claim upon which relief can be granted. The defendants also seek an award of their expenses incurred in defending this action, including attorneys fees, as a sanction under Rule 11 of the Federal Rules of Civil Procedure for the filing of a complaint which defendants perceive as being one unwarranted in either fact or law.

When considering a motion to dismiss a claim pursuant to Rule 12(b) of the Federal Rules of Civil Procedure, the court is constrained to accept as true the allegations in the complaint. Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 525, 103 S.Ct. 897, 902, 74 L.Ed.2d 723 (1983). To dismiss the complaint against the defendants, the court must find as a matter of law that the plaintiff can prove no set of facts in support of its claim which would justify the relief sought. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). Therefore, a summary of the facts as set forth in the amended complaint follows.

The plaintiff is a corporation which manufacturers specialty easy-open metal cans in its plants located in Ohio, Canada and Puerto Rico. In 1981, Central States entered into discussions with the Ralston Purina Company for the purpose of evaluating and possibly purchasing Ralston Purina’s Van Camp can manufacturing operation. At that time the plaintiff sought to ascertain its future requirements for cans of the types and sizes then being produced by Central States, and further to determine if the acquisition of the Van Camp can operation would enhance plaintiff’s ability to supply certain other types of cans for resale to third parties. During these negotiations Central States was represented by its Senior Vice President of Sales and Marketing, defendant John D. Howington.

A portion of Central States’ business involves supplying two-piece cans to tuna packagers in Puerto Rico. In 1982 and 1983, Central States entered into contractual agreements with these tuna packagers to supply all of the customers’ can requirements, including can sizes not being manufactured by the plaintiff at that time. Mr. Howington was a participant in these contract negotiations on behalf of the plaintiff. In light of the contractual obligation to supply cans to the tuna packagers, Central States, in January, 1983, proposed a long-term agreement with Ralston Purina for the purchase of cans to be resold to the plaintiff’s customers.

Plaintiff contends that during the period of the negotiations between Central States and Ralston Purina, defendants John E. Koenig, John B. Wertz and Mr. Howington began the planning and preparation necessary to establish a company which would manufacture cans in direct competition with the plaintiff. Mr. Koenig had been an employee of Central States until his employment ended in May, 1983. Thereafter, Mr. Koenig acted as a consultant with the plaintiff until August, 1984. Mr. Wertz was not associated with the plaintiff in any manner.

In May, 1983, Howington, Koenig and Wertz incorporated Texas Can as a Delaware Corporation. Thereafter, Texas Can began to purchase cans from a direct competitor of Central States for re-sale to a seafood cannery in Texas. This operation was allegedly developed by Howington and Koenig while they were still employed at Central States, and was conducted by these same defendants without the plaintiff's knowledge or consent. Central States was not advised by any of the defendants of the possible business opportunity involving the selling of cans to the Texas cannery.

In June, 1983, for reasons not set forth in the complaint, Mr. Howington’s employment was terminated by Central States. Also at this time, plaintiff states, Mr. Howington advised one of his subordinates at Central States to accept a job offer in Texas with the seafood cannery that was doing business with Texas Can. Thereafter, this employee left the plaintiff to accept employment at that company.

Consistent with Koenig’s duties as consultant for Central States, he conducted several market studies at the plaintiff’s expense. One such study involved the market for cans to be sold to cheese dip manufacturers. This study, the plaintiff contends, is a valuable trade secret which the defendants have misappropriated. It is asserted by Central States that since the defendants acquired this “very valuable and highly confidential trade secret,” they have successfully outbid the plaintiff on major contracts.

Central States further alleges that, during the period of at least June, 1981 until the filing of this action, defendants have used interstate wires and mails to engage in a scheme to defraud, or to obtain by false pretense, property belonging to the plaintiff. The property in question includes Central States trade secrets, corporate opportunities, travel expenses and the working time of Mr. Koenig and other employees. These activities pursuant to the plaintiff’s allegations are actions indictable under 18 U.S.C. §§ 1341 and 1343 and constitute a pattern of racketeering under 18 U.S.C. § 1961(5).

It cannot be disputed that the subject matter jurisdiction of this court hinges on whether the plaintiff’s claim of a RICO violation can survive the defendants’ motion to dismiss. Absent this federal claim this court cannot exercise jurisdiction over the pendant state law claims set forth in the amended complaint since there is no independent jurisdiction over the state law claims. United Mine Workers v. Gibbs, 383 U.S. 715, 725-26, 86 S.Ct. 1130, 1138-39, 16 L.Ed.2d 218 (1966); Ohio Inns, Inc. v. Nye, 542 F.2d 673 (6th Cir.1976). Thus, the sole issue before this court concerns whether the allegations stated in the amended complaint are sufficient to state a federal cause of action under RICO.

I

In enacting RICO it was the expressed purpose of Congress “to seek the eradication of organized crime in the United States by strengthening the legal tools in the evidence-gathering process, by establishing new penal prohibitions, and by providing enhanced sanctions and new remedies to deal with the unlawful activities of those engaged in organized crime.” 84 Stat. 923. Also see United States v. Turkette, 452 U.S. 576, 589, 101 S.Ct. 2524, 2532, 69 L.Ed.2d 246 (1981). To help achieve this purpose, Congress created a private right or cause of action with treble damages and an award of attorney fees to any prevailing plaintiff “injured in his business or property by reason of a violation of section 1962 of this Chapter.” 18 U.S.C. § 1964(c).

In reviewing RICO claims, various courts have opined, and this court agrees, that a plaintiff must first allege that some racketeering activity has occurred. This pleading requirement is met by alleging that one or more of the subsections of 18 U.S.C. § 1962 were violated by the conduct of the defendants. Sedima SPRL v. Imrex Co., 473 U.S.-, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985); Alexander Grant & Co. v. Tiffany Industries, Inc., 770 F.2d 717 (8th Cir.1985); Seville Industrial Machinery v. Southmost Machinery, 742 F.2d 786 (3d Cir.1984); Alcorn County Miss. v. U.S. Interstate Supplies, 731 F.2d 1160 (5th Cir.1984) (quoting United States v. Phillips, 664 F.2d 971, 1011 (5th Cir. Unit B 1981), cert. denied, 457 U.S. 1136, 102 S.Ct. 2965, 73 L.Ed.2d 1354 (1982)); Moss v. Morgan Stanley, Inc., 719 F.2d 5 (2d Cir.1983), cert. denied sub. nom. Moss v. Newman, 465 U.S. 1025, 104 S.Ct. 1280, 79 L.Ed.2d 684 (1984); Schacht v. Brown, 711 F.2d 1343 (7th Cir.1983), cert. denied, 464 U.S. 1002, 104 S.Ct. 508, 78 L.Ed.2d 698 (1983); Cole v. Circle R. Convenience Stores, Inc., 602 F.Supp. 1108 (M.D.La.1985); Banowitz v. State Exchange Bank, 600 F.Supp. 1466 (N.D.Ill.1985).

The plaintiff must also allege that it has sustained, some injury to its business or property which injury was caused by the violation of the subsection of section 1962. However, the plaintiff need not plead or establish a racketeering injury distinct from the damages occurring as a result of racketeering activities of the defendants. Sedima, SPRL v. Imrex Co., 473 U.S. at-, 105 S.Ct. at 3285, 87 L.Ed.2d at 358; Alcorn County Miss. v. U.S. Interstate Supplies, supra 731 F.2d at 1167; Hirt v. UM Leasing Corp., 614 F.Supp. 1066 (D.C. Neb.1985); Wilcox v. Ho-Wing Sit, 586 F.Supp. 561 (D.C.Cal.1984); Clute v. Davenport Co., 584 F.Supp. 1562 (D.Conn.1984). In sum, to state a valid claim under RICO, a plaintiff must meet the pleading requirements of alleging a racketeering activity that injures the plaintiff in his business or property.

The plaintiff contends that the racketeering activity requirement has been set forth properly in its complaint inasmuch as the conduct of the defendants has allegedly violated subsection (a) and (c) of section 1962, the pertinent text of which follows:

(a) It shall be unlawful to any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt in which such person has participated as a principal within the meaning of section 2, title 18, United States Code, to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. A purchase of securities on the open market for purposes of investment, and without the intention of controlling or participating in the control of the issuer, or of assisting another to do so, shall not be unlawful under this subsection if the securities of the issuer held by the purchaser, the members of his immediate family, and his or their accomplices in any pattern or racketeering activity or the collection of an unlawful debt after such purchase do not amount in the aggregate to one percent of the outstanding securities of any one class, or do not confer, either in law or in fact, the power to elect one or more directors of the issuer.
(c) It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.

In order for the plaintiff to state a claim for a violation of subsections (a) and (c), the amended complaint in the instant cause must assert, (and Central States will eventually have to prove) that, to the detriment to its business or property, that (1) defendants have established an enterprise which affects interstate commerce, and (2) through their association with or employment by this enterprise each defendant has participated in a pattern of racketeering activity by committing at least two indictable acts as designated in 18 U.S.C. § 1961(1). Sedima, SPRL v. Imrex Co., 473 U.S. at—, 105 S.Ct. at 3285-86, 87 L.Ed.2d at 358-59. Therefore, this court must examine the amended complaint to determine if the plaintiff has properly alleged a sufficient factual basis which could sustain a cause of action under subsections (a) and (c) of section 1962.

In this regard, the defendants argue that the amended complaint is deficient in two areas and is therefore subject to dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure. First, defendants claim that the amended complaint fails to adequately plead the existence of an enterprise. In addition, the defendants assert that plaintiff has failed to adequately allege the requisite fraudulent predicate acts of racketeering.

II.

The first area of inquiry involves the question of whether Central States has alleged an “enterprise” within the meaning of RICO. An “enterprise” is defined by statute to include “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961. In this action, the defendants have argued that the enterprise requirement has not been adequately identified in the amended complaint, and alternatively, that any enterprise referred to is one of the named defendants, which is impermissible under RICO.

In its amended complaint, the plaintiff identifies Texas Can and John Howington dba J. Howington Enterprises, Inc. (hereinafter Enterprises) as enterprises as defined under RICO. Both of these entities are also named as defendants in this action. In addition, the plaintiff states in the amended complaint that “Howington, Koenig, Wertz, Texas Can and Enterprises are a group of persons associated in fact and thus constitute an enterprise as defined in 18 U.S.C. § 1961(4).”

Recently, several circuits have specifically held that an enterprise and a RICO defendant may not be a single entity. The basis for these holdings is that under section 1962(c) a “person” must be employed by or associated with an “enterprise.” See Bennett v. United States Trust Co. of New York, 770 F.2d 308 (2d Cir.1985); B.F. Hirsch v. Enright Refining Co., Inc., 751 F.2d 628 (3d Cir.1984); Haroco v. Am. Nat. B & T Co. of Chicago, 747 F.2d 384, 399-402 (7th Cir.1984), aff'd on other grounds, 473 U.S.-, 105 S.Ct. 3292, 87 L.Ed.2d 361 (1985); Rae v. Union Bank, 725 F.2d 478, 481 (9th Cir.1984); United States v. Computer Sciences Corp., 689 F.2d 1181, 1190-91 (4th Cir.1982) cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 953 (1983); Bennett v. Berg, 685 F.2d 1053, 1061-62 (8th Cir.1982), aff'd en banc, 710 F.2d 1361, cert. denied sub. nom., Pruden tial Insurance Co. v. Bennett, 464 U.S. 1008, 104 S.Ct. 527, 78 L.Ed.2d 710 (1983). Also see Griffin v. O’Neal, Jones & Feldman, Inc., 604 F.Supp. 717, 721 (S.D.Ohio 1985); McLendon v. Continental Group, Inc., 602 F.Supp. 1492, 1517 (D.N.J.1985); Umstead v. Durham Hosiery Mills, Inc., 592 F.Supp. 1269 (M.D.N.C.1984). The requirement of a distinction between the enterprise and the person conducting the affairs of that enterprise is supported by the plain language in section 1962(c), which “contemplates that the ‘person’ must be associated with a separate ‘enterprise’ before there can be RICO liability on the part of the ‘person’.” B.F. Hirsch v. Enright Refining Co., Inc., supra, 751 F.2d at 633. In addition, the distinction furthers the intent of Congress by placing liability on the entity or “person” which or who causes the violation and away from the instrument used in the pattern of racketeering. The Second Circuit stated this distinction as follows:

Moreover, requiring a distinction between the enterprise and the person comports with legislative intent and policy. Such a distinction focuses the section on the culpable party and recognizes that the enterprise itself is often a passive instrument or victim of the racketeering activity. See, e.g., B.F. Hirsch, 751 F.2d at 633-34; Haroco, 747 F.2d at 401. Thus, we follow the majority view and hold that under section 1962(c) a corporate entity may not be simultaneously the “enterprise” and the “person” who conducts the affairs of the enterprise through a pattern of racketeering activity-

Bennett v. United States Trust Co. of New York, supra, 770 F.2d at 315.

The allegations that Texas Can or Enterprises alone are the enterprises envisioned under section 1962 do not satisfy the requirements of a distinct enterprise and a person associated with the enterprise. A corporate entity must be associated with an enterprise that is not the same corporation. Haroco, Inc. v. American National Bank & Trust Co., supra 747 F.2d at 400. Thus, Texas Can or Enterprises could not simultaneously be the person committing the predicate acts and be the enterprise associated with themselves. However, Central States has also alleged the existence of an enterprise wherein Texas Can and Enterprises are both asserted to be persons associated in fact with Howington, Loenig and Wertz. This unnamed association of all the defendants could, construing the pleadings in a manner most favorable to the plaintiff, constitute an enterprise within the provisions of section 1962.

III.

The next area of inquiry presents the question of whether Central States has properly stated an allegation that the defendants have participated in a pattern of racketeering activity. In this regard, the defendants contend that the plaintiff has failed to allege the claimed fraudulent predicate acts of racketeering, thereby subjecting the amended complaint to a dismissal for failure to state a claim.

In a RICO action, racketeering activity is defined as “any act which is indictable under any of the following provisions of title 18, United States Code: ... section 1341 (relating to mail fraud), section 1343 (relating to wire fraud), ... [and] section 2314 and 2315 (relating to interstate transportation of stolen property) ____” 18 U.S.C. § 1961(1). A “pattern of racketeering activity is defined by statute as requiring “at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years ... after the commission of a prior act of racketeering activity.” 18 U.S.C. § 1961(5).

In this action, Central States asserts that it has alleged in the amended complaint all of the requisite elements of a pattern of racketeering activity. Specifically, the plaintiff claims that on at least two occasions the defendants have committed acts of mail fraud and wire fraud which would be indictable under 18 U.S.C. §§ 1341 and 1343. The plaintiff also claims that defendants have stolen and transported in interstate commerce property belonging to Central States, an activity which is an indictable offense under 18 U.S.C. §§ 2314 and 2315. Each of these claims will be examined to determine if the predicate acts of racketeering have been properly alleged.

Pursuant to Rule 9(b) of the Federal Rules of Civil Procedure “[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” Thus, a RICO claim predicated upon the alleged mail or wire fraud must be set forth with particularity to satisfy Rule 9(b). Bender v. Southland Corp., 749 F.2d 1205, 1216 (6th Cir.1984); Moss v. Morgan Stanley, Inc., supra, 719 F.2d at 17; Bennett v. Berg, supra, 685 F.2d at 1062 aff'd en banc, 710 F.2d 1361 (8th Cir.), cert. denied sub nom., Prudential Insurance Co. v. Bennett, 464 U.S. 1008, 104 S.Ct. 527, 78 L.Ed.2d 710 (1983); Lopez v. Dean Witter Reynonds, Inc., 591 F.Supp. 581, 585 (N.D. Cal.1984); Saine v. A.I.A, Inc., 582 F.Supp. 1299, 1303 (D.Colo.1984); County of Cook v. Midcon Corp., 574 F.Supp. 902, 920 (N.D.Ill.1983); Barker v. Underwriters at Lloyd’s, London, 564 F.Supp. 352, 356 (E.D.Mich.1983); Windsor Associates, Inc. v. Greenfeld, 564 F.Supp. 273, 279-80 (D.Md.1983); Eaby v. Richmond, 561 F.Supp. 131, 136 (E.D.Pa.1983).

The crime of mail fraud encompasses two well-defined elements. The defendants must first have devised a scheme or artifice to defraud and then used the mails for the purpose of executing the scheme. Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954); Bender v. Southland Corp., supra, 749 F.2d at 1215-16; United States v. Talbott, 590 F.2d 192, 195 (6th Cir.1978); United States v. Schilling, 561 F.2d 659, 661 (6th Cir.1977). The elements of the crime of wire fraud also encompasses a scheme to defraud; however, instead of the use of the mails, some use of the interstate telecommunications system must be utilized in the execution of the scheme. United States v. Barta, 635 F.2d 999 (2d Cir.1980). The courts have uniformly given the same construction to the language in both the mail and wire fraud statutes with the sole distinction between the crimes being the interstate communication device utilized by the alleged offender. See United States v. Computer Sciences Corp., supra, 689 F.2d at 1188; United States v. Louderman, 576 F.2d 1383, 1387 n. 3 (9th Cir.1978), cert. denied, 439 U.S. 896, 99 S.Ct. 257, 58 L.Ed.2d 243 (1978); Systems Research, Inc. v. Random, Inc., 614 F.Supp. 494, 498-99 (N.D.Ill.1985).

When alleging wire and mail fraud as predicate acts of racketeering, a claimant must, pursuant to Rule 9(b), describe with particularity the circumstances constituting the fraud. The Eighth Circuit described these circumstances in a RICO action to, at a minimum, “include such matters as the time, place and content of false representations, as well as the identity of the person making the misrepresentation and what was obtained or given up thereby.” Bennett v. Berg, supra 685 F.2d at 1063. Accord Harris Trust and Sav. Bank v. Ellis, 609 F.Supp. 1118, 1123 (N.D.Ill.1985); McLendon v. Continental Group Inc., 602 F.Supp. 1492, 1506, 1507 (D.N.J.1985); Dean Witter Reynolds, 591 F.Supp. 581, 585 (N.D.Cal.1984); Saine v. A.I.A., Inc., supra, 582 F.Supp. at 1303; County of Cook v. Midcon Corp., supra, 574 F.Supp. at 920.

Reviewing the amended complaint in this manner, it is clear that the plaintiff has failed to allege the time, place and content of any use of the mails or wire communication device. Instead, Central States has alleged in Count I of the amended complaint the following:

35. From at least June 1981 until the date of the filing of the original Complaint, Howington has on at least two occasions used interstate wires or interstate mails, or both, to engage in a scheme to defraud or to obtain by false pretenses property belonging to Central States. This property included valuable trade secrets of Central States. The property also included corporate opportunities, corporate facilities, cash, travel expenses and working time both of Howington and other Central States’ employees. These activities are actions indictable under 18 U.S.C. §§ 1341 and 1343 and thus constitute a pattern of racketeering activity under 18 U.S.C. § 1961(5).

Identical allegations are made against Mr. Koenig and Texas Can in Count III and IV respectively.

These allegations do not comply with the requirements of Rule 9(b) nor do they identify or describe the claimed mail or wire fraud as set forth in Bennett v. Berg, supra. Instead, the allegations are a mere conclusion that over a period of approximately four years, Mr. Howington or Mr. Koenig or Texas Can used either the interstate wires or mails on at least two occasions. Further, the allegations do not identify either the place or the content of the alleged false representation. A mere conclusory statement of mail and wire fraud is not sufficient to support a RICO claim. Harris Trust and Sav. Bank v. Ellis, supra, 609 F.Supp. at 1123; Bennett v. E.F. Hutton Co., Inc., 597 F.Supp. 1547, 1560 (N.D.Ohio 1984). Thus, this court must find that Central States’ wire fraud and mail fraud allegations are insufficient as presently pled and that any RICO claim based upon these predicate acts would not overcome a motion to dismiss.

The plaintiff argues that at this stage of the proceedings it does not have to allege in its pleadings the time, date and places of the various wire and mail fraud violations, since it has by alternative means, injected precision and some degree of substantiation into its allegations of mail and wire fraud. Specifically, Central States relies upon the following Third Circuit language:

Rule 9(b) requires plaintiffs to plead with particularity the “circumstances” of the alleged fraud in order to place the defendants on notice of the precise misconduct with which they are charged, and to safeguard defendants against spurious charges of immoral and fraudulent behavior. It is certainly true that allegations of “date, place or time” fulfill these functions, but nothing in the rule requires them. Plaintiffs are free to use alternative means of injecting precision and some measure of substantiation into their allegations of fraud. In the present case, Seville adequately satisfied the requirements of Rule 9(b) by incorporating into the complaint a list identifying with great specificity the pieces of machinery that were the subject of the alleged fraud. Moreover, Seville divided this list into five “exhibits” and identified which pieces of equipment were the subject of which alleged fraudulent transaction. The complaint sets forth the nature of the alleged misrepresentations, and while it does not describe the precise words used, each allegation of fraud adequately describes the nature and subject of the alleged misrepresentation. In sum, we conclude that Seville has alleged the fraud-based offenses with sufficient particularity to withstand a motion to dismiss under Rule 9(b).

(Footnote omitted.)

Seville Indus. Machinery v. Southmost Machinery, supra 742 F.2d at 791. However, even applying the above test to the plaintiff’s amended complaint, the pleading must fail. Unlike the pleadings in Seville, there is neither precision nor some measure of substantiation of the allegations of mail and wire fraud in the plaintiff’s amended complaint.

As discussed in Seville, Rule 9(b) requirements mandate that the plaintiff’s pleadings place the defendants on notice of the precise misconduct or fraudulent acts which are being claimed. In Seville, the plaintiff had alleged a RICO violation wherein the defendants fraudulently induced it into entering into a joint venture whereby the defendants would purchase on consignment from the plaintiff machinery for resale. Under the terms of this venture, the plaintiff was to be paid after the machinery was resold by the defendants, however, the defendants never intended to pay for the machinery. Instead, all proceeds for the sale of the machinery was converted to the defendants own use. In addition to these allegations, the plaintiff attached various schedules to its complaint which detailed the exact equipment shipped to the defendants which was the subject of each alleged fraudulent transaction. Thus, the defendants were placed on notice of the exact subject matter of the alleged fraud and the approximate time and place of the transactions.

In this action the alternative to the pleading requirements of Bennett v. Berg, supra, of injecting precision and some degree of substantiation into the plaintiffs allegations, is not present in the amended complaint. As previously stated, the amended complaint does not identify the time, place and content of the alleged false representations or the identity of the person or persons making the representations. Unlike Seville where the property at issue was clearly identified as to each fraudulent transaction, Central States has only identified the property which allegedly was appropriated as its “trade secrets” and other “corporate assets.” A mere allegation concerning the appropriation of these assets, absent some specificity as to the nature and the subject of the alleged misrepresentations and frauds, does not place the defendants on proper notice of the misconduct of the mail and wire fraud with which they are charged. Thus, the amended complaint as presently written does not comply with the requirements of Rule 9(c) as it relates to allegations of mail and wire fraud.

The plaintiff has also alleged that the defendants have, on two or more occasions, knowingly transported or received goods stolen in interstate commerce, acts indictable under 18 U.S.C. §§ 2314 and 2315. The elements of an act indictable under 18 U.S.C. §§ 2314 and 2315 are (1) the interstate transportation of stolen, converted or fraudulently taken goods of at least $5,000 value (2) with a fraudulent intent. United States v. Freeman, 619 F.2d 1112 (5th Cir.1980), cert. denied, 450 U.S. 910, 101 S.Ct. 1348, 67 L.Ed.2d 334 (1981); United States v. Mitchell, 588 F.2d 481 (5th Cir.1979), cert. denied, 442 U.S. 940, 99 S.Ct. 2881, 61 L.Ed.2d 310 (1979); United States v. Long Cove Seafood, Inc., 582 F.2d 159 (2d Cir.1978). Specifically, Central States contends that the defendants misappropriated valuable trade secrets, corporate opportunities and other corporate assets to establish and operate their racketeering enterprise.

Consistent with the pleading requirements for the RICO violations of wire fraud and mail fraud, the plaintiff must allege the fraudulent taking of its property with the specificity set forth in Fed.R.Civ.P. 9(b). Bender v. Southland Corp., supra 749 F.2d at 1216; Lopez v. Dean Witter Reynolds, Inc., supra 591 F.Supp. at 585. Hence, the amended complaint must be examined to determine if the fraudulent taking of property has been sufficiently pled with the detail necessary to give the defendants notice of the precise misconduct or fraudulent acts being claimed.

The property asserted to have been stolen or fraudulently taken by the defendants consists of trade secrets, corporate business opportunities and other corporate assets such as expenses paid by the plaintiff which benefited the defendants. In reviewing the pleadings pursuant to the Rule 9(c) criteria, the court is unable to find that the plaintiff has set forth sufficient facts to satisfy its pleading requirements.

The trade secrets referred to by the plaintiff concern the activities of Mr. Koenig when he conducted various market studies as a consultant for Central States. The court does not dispute the fact that a trade secret can be a valuable asset which if stolen or fraudulently obtained, could under the proper circumstances constitute a violation of 18 U.S.C. §§ 2314 and 2315. United States v. Greenwald, 479 F.2d 320 (6th Cir.1973), cert. denied, 414 U.S. 854, 94 S.Ct. 154, 38 L.Ed.2d 104 (1974); United States v. Seagraves, 265 F.2d 876 (3d Cir.1959). However, the statement of Central States in its amended complaint that the market studies are valuable and are a trade secret is a conclusion and not a factual allegation. Such a conclusion does not meet the pleading requirement necessary to satisfy the elements of a violation of 18 U.S.C. §§ 2314 and 2315, since there is no allegation which would indicate the value of the property. In addition, there is no allegation in the amended complaint that there has been an interstate transportation of the property or that the property was appropriated with the requisite fraudulent intent. It is not enough to merely state that a trade secret was appropriated in violation of the statutes. Instead, the plaintiff must identify in its pleadings the elements of a violation of §§ 2314 and 2315 with the particularity that would apprise and notify the defendants of the alleged misconduct.

Central States’ claim involving the appropriation of a corporate business opportunity is also deficient. This allegation centers on the activities of Mr. Howington in failing to apprise the plaintiff of the possibility of doing business with the seafood cannery in Texas and various other unidentified business opportunities. This assertion does not satisfy the elements of 18 U.S.C. §§ 2314 and 2315 in that the pleading does not set forth, in this setting, an actionable property right stolen or fraudulently obtained by the defendants. In addition, if the alleged corporate business opportunity constitutes a property right fraudulently obtained, the amended complaint does not state a value for that right nor does it allege that this “opportunity” was transported interstate.

The remaining property allegedly stolen or fraudulently obtained by the defendants involves the use by Mr. Howington and Mr. Koenig of corporate assets while still employed by Central States. These assets involve their receipt of wages and/or salaries for time that should have been expended on efforts which would have benefited the plaintiff. Again, however, these assertions do not set forth the requisite specificity of the elements of the crime which is needed to inform the defendants of the charges being brought against them. Therefore, the amended complaint does not presently set forth a claim of a RICO violation based upon the interstate transportation of stolen property. Since the amended complaint does not allege with the specificity required by Rule 9(c), the violation of at least two indictable acts as designated in 18 U.S.C. § 1961(1), the plaintiff has presently failed to state a RICO claim based on subsections (a) and (c) of 18 U.S.C. § 1962.

IV.

The plaintiff has further alleged that the racketeering activity requirement of a RICO claim has been pled since the conduct of the defendants has violated 18 U.S.C. § 1962(d). In order to state a RICO claim for a violation of subsection (d) the plaintiff must allege that the defendants conspired “to violate any of the provisions of subsections (a), (b), or (c) of this section.” 18 U.S.C. § 1962(d). The allegation of a conspiracy to violate one of the substantive offense provisions in the other subsections of section 1962 is a separate offense punishable under RICO. See United States v. Qaoud, 777 F.2d 1105 (6th Cir.1985). In this regard, Central States has alleged the following:

8. Howington and Koenig, individually and in concert with each of the other defendants, formulated a scheme designed to defraud Central States and to obtain its property by false pretenses, including the establishment and operation of a competing business. Howington, Koenig and each of the defendants engaged in acts in furtherance of that scheme. Those acts included efforts to acquire control of the Van Camp can manufacturing operations, to provide cans to Sun Harbor Industries, Inc., to purchase from and to sell cans for competitors of Central States, to establish business relations with suppliers and customers of Central States and to interfere with the loyalty of employees to Central States.

A RICO conspiracy allegation requires at least, the pleading of the existence of one overt act by a defendant in furtherance of the conspiracy and the assent of each defendant to the conspiracy. Seville Indus. Machinery v. Southmost Machinery, supra 742 F.2d at 792 n. 8; United States v. Riccobene, 709 F.2d 214 (3d Cir.1983), cert. denied, 464 U.S. 849, 104 S.Ct. 157, 78 L.Ed.2d 145 (1983); United States v. Sutherland, 656 F.2d 1181 (5th Cir.1981), cert. denied, 455 U.S. 949, 102 S.Ct. 1451, 71 L.Ed.2d 663 (1982); Saine v. A.I.A., Inc., supra 582 F.Supp. at 1307. The above allegations of the plaintiff do not set forth a proper claim of a conspiracy. Instead, the statement is a mere conclusion and does not permit the defendants to identify the conspiracy of which they are alleged to be a part.

For the reasons set forth herein, the court finds that the amended complaint is deficient in that it fails to comply with the requisite pleading requirements to sustain a claim under RICO. Therefore, the court, in its discretion, hereby grants Central States’ 30 days leave to amend the pleadings in order to properly file an action which will confirm to the requirements of Rule 9(b) of the Federal Rules of Civil Procedure.

V.

The final issue which must be addressed by the court involves the defendants’ motion for an award of attorney fees as a sanction against the plaintiff and counsel for the filing of this action. Rule 11 of the Federal Rules of Civil Procedure requires that every pleading, motion or other paper which is submitted to the court be signed by an attorney. In addition, the rule provides as follows:

The signature of an attorney ... constitutes a certification by him that he has read the pleading, motion, or other paper; that to the best of his knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of the litigation. (Emphasis added.)

Further, the rule states that any attorney who violates the provisions of this rule shall be subject to an appropriate sanction, “which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney’s fee.”

A motion for sanctions under Rule 11 should not be lightly made by a party ór granted by a court. This court is very much aware of the serious effect the granting of the sanction may have upon a lawyer’s professional record and reputation in the community. In determining the appropriateness of imposing any sanctions under Rule 11 in this action, the court has reviewed with care the Advisory Committee Notes to the rule which state in pertinent part:

The rule is not intended to chill an attorney’s enthusiasm or creativity in pursuing factual or legal theories. The court is expected to avoid using the wisdom of hindsight and should test the signer’s conduct by inquiring what was reasonable to believe at the time the pleading, motion, or other paper was submitted. Thus, what constitutes a reasonable inquiry may depend on such factors as how much time for investigation was available to the signer; whether he had to rely on a client for information as to the facts underlying the pleading, motion, or other paper; whether the pleading, motion, or other paper was based on a plausible view of the law; or whether he depended on forwarding counsel or another member of the bar.

Applying this criteria to the present action, an award of sanctions is clearly not warranted.

In recent years the number of filings of civil cases and the use of RICO has grown significantly and in a manner “quite different from the original conception of its enactors.” Sedima, SPRL v. Imrex Co., supra, 473 U.S. at-, 105 S.Ct. at 3287, 87 L.Ed.2d at 361. As a result of this increased utilization of civil RICO actions the courts and the bar have been confronted with numerous innovative legal theories and factual settings involving RICO. In this action, the pleadings reveal that all parties have vigorously attempted to litigate an action in an area of the law that is not well settled under an unusual factual setting. Under these circumstances, the awarding of a sanction is not justified and would only serve to chill the enthusiasm of counsel in prosecuting a civil RICO case under a factually novel theory.

Accordingly, the court finds that the amended complaint does not allege with the specificity required under Rule 9(c) a claim under civil RICO. Therefore, the plaintiff is hereby ordered to amend its pleadings within 30 days or the federal claims shall be dismissed for failure to state a claim upon which relief can be granted. The court further finds that sanctions under Rule 11 would be inappropriate.

IT IS SO ORDERED.


source: Caselaw Access Project

author: CARL O. BUE, Jr., District Judge.

license: Public Domain

text:
    Jack GIACONA v. MARUBENI OCEANO (PANAMA) CORP., Agri Industries.
    Civ. A. No. H-83-725.
    United States District Court, D. Texas, Houston Division.
    Dec. 27, 1985.

      Joseph D. Jamail, III, Jamail, Kolius & Mithoff, Houston, Tex., for plaintiff.
    Steven L. Roberts, Fulbright & Jaworski, Houston, Tex., for intervenor Home Ins. Co.
    James Blaine and E.D. Vickery, Royston, Rayzor, Vickery & Williams, Houston, Tex., for defendant Marubeni Océano (Panama) Corp.
    Steve Bryant, Houston, Tex., for defendant Agri Industries.
   MEMORANDUM AND ORDER

CARL O. BUE, Jr., District Judge.

Before the Court is defendant Marubeni Océano (Panama) Corp.’s (hereinafter “Marubeni”) Motion for Judgment as to the plaintiff’s claim as well as its Motion for Judgment on the cross claim asserted by defendant Agri for indemnity pursuant to its tariff. Plaintiff Jack Giacona filed suit pursuant to 33 U.S.C. § 905(b) of the Longshoremen’s & Harbor Workers’ Compensation Act (hereinafter “LHWCA”), invoking this Court’s maritime jurisdiction. At the conclusion of plaintiff’s case on September 19, 1985, which was presented to the Court without a jury, Marubeni moved for judgment on both issues. For the reasons stated hereinafter, this Court concludes that both of defendant’s motions must be granted.

I. Factual Background '

Plaintiff, Jack Giacona, a longshoreman, brought this action against Marubeni, the owner of the M/V Atlantic Pioneer, and Agri Industries, Inc. (hereinafter “Agri”), owner of a grain elevator and terminal. Plaintiff sustained personal injuries on July 15, 1982, while employed as a longshoreman by Shippers Stevedores, Inc. The vessel was docked at Agri’s terminal to load grain; plaintiff was on board the vessel on navigable waters in the Port of Houston when he slipped and fell while attempting to descend a gangplank.

Plaintiff filed suit pursuant to 33 U.S.C. § 905(b) contending, that defendants were jointly and severally negligent in the provision or maintenance of a defective gangway, or in failing to eliminate a dangerous condition on the gangplank caused by the excessive accumulation of grain dust.

II. Legal Background

The LHWCA allocates the costs of accidents through the enactment of a compromise between the rights of employers and employees which is typical of worker’s compensation schemes: an injured worker is entitled to receive “prompt and certain” compensation benefits from his employer even if the employer is not to blame for the accident. See Peters v. Speeflo Manu. Corp., 764 F.2d 306, 310 (5th Cir.1985). The employers’ quid pro quo for the imposition of strict liability is that employees frequently are entitled to recover less than could be recovered under traditional tort compensation systems. Furthermore, recovery under the Act constitutes the employers’ exclusive liability for employees’ injuries. Since injured longshoremen are often limited to a reduced recovery against their employers, section 33(a) of the LHWCA, 33 U.S.C. § 933(a), preserves the compensated workers’ right to recover traditional tort damages from parties other than employers, that is, third parties who are neither properly benefited nor limited by the “trade-offs” implemented by the Act.

This brief overview of the LHWCA’s compensation scheme places in context the rights and liabilities of the parties before the Court. Cases brought pursuant to the Act often involve workers who are longshoremen, employers who are stevedores, and third party vessel owners. In these circumstances, the LHWCA addresses the substantive rights of longshoremen against third party vessel owners, such as Marubeni, and limits them to a negligence cause of action against the vessel.

The longshoremen’s substantive rights of recovery against third parties are, of course, generally determined by law independent of the LHWCA. Plaintiff’s right to recover against Agri in this case is governed by the principles of negligence established by Texas tort law.

To this point, the law governing the respective rights and liabilities of the parties is well established. Consequently, the most problematic issue before this Court concerns the enforceability of a tariff issued by Agri which purports to exculpate Agri from liability for damages such as those sustained by plaintiff, even if proximately caused by Agri’s own negligence. If plaintiff can prove that Agri was negligent in the provision or maintenance of the gangplank at issue, the effect of the indemnity provisions would be to shift liability from Agri to Marubeni and by direct contract provision establish a remedy reminiscent of the entire jerry-built Sieracki-Ryan structure with its attendant circuitous litigation.

III. The Vessel Owner’s Duty to Longshoremen

In limiting longshoremen to a negligence cause of action against the vessel owner, the LHWCA abrogated the judicially created warranty of seaworthiness owed by vessel owners to longshoremen and, in exchange, the indemnity owed by stevedores to vessels for breach of the warranty of workmanlike performance. Thus, plaintiff’s right to recover against Marubeni is governed by the Supreme Court’s decision in Scindia Steam Navigation Co., Ltd. v. De Los Santos, 451 U.S. 156, 101 S.Ct. 1614, 68 L.Ed.2d 1 (1981) (hereinafter cited as “Scindia’) and its progeny, which delimit the duty owed by shipowners to longshoremen under relevant negligence standards.

A. The Rule of Scindia Bars Plaintiffs Claims Against the Vessel Owner

In Scindia, supra at 170-72, 101 S.Ct. at 1623-25 the Supreme Court defined the scope of the vessel owner’s duty to protect longshoremen from injury during stevedoring operations pursuant to 33 U.S.C. § 905(b). After concluding that the shipowner is entitled to rely on the stevedore to avoid exposing longshoremen to unreasonable hazards, the Court stated as follows:

The shipowner has no general duty by way of supervision or inspection to exercise reasonable care to discover dangerous conditions that develop within the confines of the cargo operations that are assigned to the stevedore. The necessary consequence is that the shipowner is not liable to the longshoremen for injuries caused by dangers unknown to the owner and about which he had no duty to inform himself ... The shipowner within limits is entitled to rely on the stevedore, and owes no duty to the longshoremen to inspect or supervise the cargo operations.

Scindia, supra, at 172, 101 S.Ct. at 1624.

Citing The Admiral Peoples, 295 U.S. 649, 55 S.Ct. 885, 79 L.Ed. 1633 (1935), plaintiff maintains that the gangway as the ship’s only means of access to land became a basic appurtenance of the vessel. Since the gangway was defective prior to the onset of cargo operations, plaintiff further argues that the rule stated in Scindia has no application to the case at bar.

First, this Court notes that the line of authority developed subsequent to Scindia, and discussed hereinafter, demonstrates that the scope of the vessel owner’s duty to longshoremen as outlined in Scindia is clearly relevant here. Second, and more significantly, this Court notes that the interpretation of Scindia which plaintiff urges the Court to accept is plainly inconsistent with “congressional intent to foreclose the faultless liability of the shipowner based on the theory of unseaworthiness or nondelegable duty.” Scindia, supra, 451 U.S. at 172, 101 S.Ct. at 1624.

Plaintiff’s reliance on Pluyer v. Mitsui O.S.K. Lines, Ltd., 664 F.2d 1243 (5th Cir.1982), and Sarauw v. Oceanic Navigation Corp., 655 F.2d 526 (3d Cir.1981) is similarly misplaced. Although both cases cited by plaintiff involved longshoremen who were provided with unsafe means of ingress and egress from ships, they are clearly distinguishable from the instant action. Vessel owners in Pluyer and Sarauw were held liable to longshoremen only after it was determined that the owners had failed to exercise reasonable care under the circumstances with respect to the provision or maintenance of the respective appurtenances.

Contrary to the assertions made by plaintiff, there is absolutely no evidence in the record which supports the conclusion that Marubeni was negligent in the provision or maintenance of the gangplank at issue. The record is simply devoid of proof even suggesting that Marubeni knew, or should have known, that the gangway was defective prior to the commencement of cargo loading operations. In fact, it is uncontested that the gangway was provided solely by Agri and that it was at all relevant times under the exclusive control of either Agri or plaintiffs employer.

B. The Rule of Helaire Bars Plaintiffs Claims Against the Vessel Owner

In analyzing the shipowner’s duty to longshoremen subsequent to the Supreme Court’s decision in Scindia, the Fifth Circuit Court of Appeals has set forth three circumstances under which a vessel owner’s duty of care to longshoremen might arise pursuant to § 905(b). In Helaire v. Mobil Oil Co., 709 F.2d 1031 (5th Cir.1983) (hereinafter cited as Helaire) the Fifth Circuit stated as follows:

First, before turning over the ship to the stevedore, the owner has a duty to warn the longshoremen of hidden defects that would be known to the shipowner in the exercise of reasonable care. He must also exercise care to deliver to the stevedore a safe ship with respect to gear, equipment, tools and work space. Second, the owner has a duty to avoid exposing the longshoremen to harm “from hazards under the act or control of the vessel.” Third, even though the owner is generally relieved of responsibilities for accidents which occur once the unloading process has begun, “if [the stevedore’s] judgment was so obviously improvident that [the owner], if it knew of the defect and that [the stevedore] was continuing to use it, should have realized the [defect] presented an unreasonable risk of harm to the longshoremen, ... in such circumstances [the owner] had a duty to intervene” and eliminate or neutralize the hazard.

Helaire, supra at 1036 (citations omitted).

In the case at bar, plaintiff’s injuries occurred several hours after the M/V Atlantic Pioneer was turned over to Shippers Stevedores for loading. At the time of the accident, the stevedore had control of the work space in which plaintiff was injured; Marubeni was not involved in supervising the cargo handling operations. The Fifth Circuit in Helaire described the limited duty of the vessel owner once the vessel has been turned over to the stevedore and cargo operations have begun, as follows:

Once loading operations have begun, the vessel owner can be held liable for injuries to employees of the stevedore resulting from open and obvious dangers only in the event of actual knowledge of the danger and actual knowledge that he cannot rely on the stevedore to remedy the situation. He is not held to a duty to discover the condition or to anticipate its danger.

Helaire, supra at 1038-39.

The Fifth Circuit’s dual-pronged test stated in Helaire has been reiterated and confirmed in Castorina v. Lykes Bros. S.S. Co., Inc., 758 F.2d 1025, 1033 (5th Cir.1985); Futo v. Dykes Bros. S.S. Co., Inc., 742 F.2d 209, 216 (5th Cir.1984), and Wild v. Lykes Bros. Steamship Co., Inc., 734 F.2d 1124, 1126 (5th Cir.1984). Furthermore, the Fifth Circuit has explicitly stated that in accordance with the Supreme Court’s opinion in Scindia, knowledge on the part of the owner required by the Helaire test must be actual knowledge and not merely constructive knowledge. See Helaire, supra, at 1038-39; Futo, supra at 218-20, and Wild, supra at 1127.

To the extent that there was an excessive accumulation of grain dust which constituted an unsafe condition on Agri’s gangway, Marubeni is not liable to the plaintiff under the rule announced in Helaire. Since the condition arose, if at all, after the commencement of cargo operations, Marubeni would have a duty to remedy the situation only if it had actual knowledge that an unsafe condition had developed. See Helaire, supra at 1031. There is no evidence in the record to support the conclusion that Marubeni had actual knowledge that an unsafe condition had developed as a consequence of excessive grain dust accumulation.

Defendant directs this Court’s attention to Thompson v. Cargill, Inc., 585 F.Supp. 1332 (E.D.La.1984) and Taylor v. Moram Agencies, 739 F.2d 1384 (9th Cir.1984). In Thompson, the court noted that “grain dust settling on the deck of a vessel is a natural, normal occurrence during grain loading operations” and that the vessel owner was entitled to “rely on [the stevedore] to perform its ... job properly, including the cleaning of the deck as part of the job, and the slippery footing posed only a limited and acceptable hazard.” Id. at 1334-35 (citing Stass v. American Commercial Lines, Inc., 720 F.2d 879, 884 (5th Cir.1983), reh’g en banc denied, 724 F.2d 976 (1984)).

The bipart Helaire test applies to cases in which the plaintiff’s claim arises in the context of vessel repairs, as well as to claims resulting from injuries sustained during routine longshoring operations. Thus, the rationale expressed in the recent “vessel repair” line of cases applies with equal force to the parties before this Court. For example, in Wild, supra at 1124, the Fifth Circuit affirmed judgment in favor of the vessel owner, holding that a repairman was not entitled to recover from the vessel owner when he failed to demonstrate that the owner had actual knowledge that a dangerous condition existed and actual knowledge that the repairman’s employer was not taking precautions to protect the plaintiff. Id. at 1127. The repairman was injured while descending an appurtenance of the vessel that could be positioned either as a guard rail or as a ladder. Id. at 1125. Although the Court found that the device was defective and unreasonably dangerous when used as a ladder, the Court also found that the plaintiff had failed to prove that the shipowner had affirmatively acted to furnish the appurtenance for use as a ladder by the repairmen, and that the shipowner had actual knowledge that the repairmen were using the device as a ladder. Id. at 1127.

In Stass, supra at 879, and Meserole v. M/V Fina Belgique, 736 F.2d 147 (5th Cir.1984), the Fifth Circuit affirmed judgments in favor of vessel owners. In both cases, plaintiff/repairmen had slipped and sustained injuries caused by substance accumulation aboard ship. The plaintiff in Stass slipped on sprouted soybeans scattered on the top of grain doors that his employer had been retained to repair; Meserole’s complaint concerned an oily film on the deck of an engine room. The Court refused to impose liability on the vessel owners, concluding that the accumulated substances did not pose unreasonable hazards, but instead involved risks inherent in carrying out the independent contractors’ employment. Similarly, in the instant action, slippery footing caused by settling grain dust may be properly considered a “risk inherent” in carrying out the stevedore’s contract. See Meserole, supra at 148-49. Even if there had been an excessive accumulation of grain dust, Marubeni had no duty to warn longshoremen concerning an open and obvious condition known only to the longshoremen, or to inspect or supervise the operations carried out by the stevedore. To the contrary, the vessel owner is generally entitled to rely on the stevedore to avoid exposing its employees to unreasonable hazards. See Stass, supra at 884.

Accordingly, under the principles established by the Supreme Court in Scindia, and affirmed by the Fifth Circuit in Helaire, there is absolutely no basis for the imposition of liability upon Marubeni pursuant to 33 U.S.C. § 905(b). Thus, Marubeni is entitled to judgment against the plaintiff as a matter of law on the facts of this case. To hold otherwise would be to resurrect and impose anew upon the shipowner a species of liability without fault (unseaworthiness) which was specifically addressed and prohibited by the 1972 amendments to the LHWCA.

IV. The Vessel Owner’s Liability Under The Indemnity Provisions

Defendants Agri and Marubeni have filed cross actions against each other premised upon a vigorous debate concerning the enforceability of the indemnity provisions contained in Tariff No. 1, issued by Agri Export Cooperative, effective December 5, 1980, as revised on February 15, 1982, which governs the Rates, Charges and Regulations of Agri’s grain elevator. Marubeni contends that the indemnity provisions are void as a matter of public policy; alternatively, Marubeni contends that the provisions are unenforceable because Marubeni was not a signatory of the berthing application which incorporates the tariff provisions by reference. Finally, Marubeni contends that the provisions are unenforceable as a matter of contract interpretation because they do not comport with the “clear and unequivocal test” set forth under both Texas common law and federal maritime law. For the reasons discussed hereinafter, this Court holds that Agri’s indemnity provisions are unenforceable as a matter of law insofar as they purport to exculpate Agri from liability for its own negligence and that judgment on the cross claim asserted by defendant Agri for indemnity must be granted in favor of Marubeni.

A. Marubeni’s Public Policy Agrument

Before the Court for interpretation are Items 222 and 226 of Agri Export Cooperative’s Tariff No. 1 governing Agri’s Houston Elevator. Marubeni contends that the indemnity provisions contained therein are invalid as a matter of law under the authority of Central National Corp. v. Nantucket Navigation, Inc. and T. Smith & Son (Texas), Inc. v. Port of Houston Authority (F.M.C. Docket No. 82-23, April 30, 1984), and West Gulf Maritime Ass ’n v. City of Galveston, 22 F.M.C. 101 (1979). These cases stand for the proposition that exculpatory clauses in tariffs, which purport to relieve a port of liability for damage or injury to cargo caused by the port’s own negligence, constitute an unjust and unreasonable regulation which violates Section 17 of the Shipping Act, 1916. 46 U.S.C. § 816. While Marubeni argues that these federal maritime cases control in the instant action, for the reasons stated hereinafter, this Court cannot agree.

First, this Court recognizes the distinction which exists between public and private ports. As Agri points out in its memorandum of law, the cases relied on by Marubeni concern exculpatory clauses in tariffs of public ports. The Commission’s intent that indemnity provisions are invalid only in public port tariffs is evidenced by the underlying rationale expressed in S. Charles Lucidi v. The Stockton Port District, 22 F.M.C. 19 (1979). In that case, the Commission stated as follows:

The provisions of Item 85 (the tariff indemnity provisions at issue in Lucidi) are against public policy insofar as such policy required businesses affected with public interest be precluded from taking unfair advantage of those who by necessity must use the facilities of such business.

Id. at 27. Public terminal operators were again singled out in United States Lines, Inc. v. Maryland Port Administration, F.M.C. Docket Nos. 78-15, 78-17, 78-18 and 78-19 (December 16, 1980), where the Commission stated, “[a] public operator ... is clearly in a position such that exculpatory clauses in its tariff create an unreasonable hardship upon those who would be consequently liable for the port’s own negligence.”

In developing this rationale, Agri argues that the Commission relied heavily on the Supreme Court’s holding in Bisso v. Inland Waterways Corp., 349 U.S. 85, 75 S.Ct. 629, 99 L.Ed. 911 (1955), which considered the question of whether a towboat could validly contract against all liability for its own negligent towage. Through analogies drawn from the public utility context, the Supreme Court held that such contracts were void as against public policy, and upheld the long-established rule that a common carrier cannot stipulate for immunity from its own negligence. See United States v. Atlantic Mut. Ins. Co., 343 U.S. 236, 72 S.Ct. 666, 96 L.Ed. 907 (1951); Boston Maine R. Co. v. Piper, 246 U.S. 439, 38 S.Ct. 354, 62 L.Ed. 820 (1918). The Court recognized the need to protect those in need of goods or services from being overreached by others who have the power to drive hard bargains. See, e.g., Bisso, supra at 91, 75 S.Ct. at 632. In contrast, Agri is a private port which was not in a superior bargaining position when dealing with Marubeni.

Second, although Agri has filed its tariff with the Federal Maritime Commission, Agri is not required to seek formal approval from the Commission under section 15 of the Shipping Act, 1916, 46 U.S.C. § 814. The types of agreements that must be approved by the Commission are set forth in the statute which, at all times relevant here, provided as follows: “Every common carrier by water, or other person subject to this chapter, shall file immediately with the Commission ... every agreement, with another such carrier or other person subject to this chapter ...”

Agri is neither a “common carrier by water” nor other person subject to section 15 of the Shipping Act. The term “other person subject to this chapter” is defined as any person not included in the term “common carrier by water” who carries on the business of forwarding or furnishing wharf, dock, warehouse or other terminal facilities in connection with a common carrier by water. 46 U.S.C. § 801. In fact, Agri’s tariff specifically states in Item 200 that Agri will not handle or service vessels defined as “common carriers by water” within the meaning of the Shipping Act.

Unlike the position urged by Marubeni, this Court concludes that where there is neither industry affected with the public interest nor an unequal bargaining position between the parties, public policy actually dictates the upholding of freedom of contract principles because it is generally economically efficient to allow private parties to allocate the costs and risks involved in doing business. As a long line of Texas land-based decisions indicate, there is no public policy which requires this Court to invalidate Agri’s indemnity provisions. See, e.g., Gulf Oil Corp. v. Burlington Northern Railroad, Inc., 751 F.2d 746 (5th Cir.1985) (and cases cited therein). The Fifth Circuit’s recent water-borne decisions inevitably lead to the same conclusion. See, e.g., Foreman v. Exxon Corp., 770 F.2d 490 (5th Cir.1985). Thus, this Court feels obligated to be guided by and adhere to the well-established principles found in both the Fifth Circuit and Texas court opinions.

B. Marubeni’s Unilateral Promulgation Argument

Marubeni contends that it cannot be held to the terms of Agri’s tariff because it was not a signatory to the berthing application, which incorporates the tariff by reference, and was signed on July 2, 1982 by a representative of Shinwa Kaisha Kaiun, the operator of the vessel. Marubeni cites no references in support of this proposition, and the argument may be summarily disposed of through resort to traditional principal-agency principles. See, e.g., Lubbock Feed Lots, Inc. v. Iowa Beef Processors, Inc., 630 F.2d 250, reh’g denied, 634 F.2d 1355 (5th Cir.1980); Sun Oil Co. v. Behring Properties, Inc., 480 F.2d 310 (5th Cir.), cert. denied, 414 U.S. 1039, 94 S.Ct. 539, 38 L.Ed.2d 329 (1973), reh’g denied, 414 U.S. 1138, 94 S.Ct. 886, 38 L.Ed.2d 764 (1974).

It is well-established that where one instrument refers to another instrument in specific terms which clearly shows an intent to make it part of the contract, both instruments are to be construed together. See Houston E. & W. T. Ry. Co. v. Trentem, 63 Tex. 442 (1885). Similarly, maritime contracts may validly incorporate by reference terms from other documents or agreements. See Sun Oil Co. v. Dalzell Towing Co., 55 F.2d 63 (2d Cir.), aff'd, 287 U.S. 291, 53 S.Ct. 135, 77 L.Ed. 311 (1932).

Agri relies upon Rorie v. City of Galveston, 471 S.W.2d 789 (Tex.1971) for the proposition that the mere filing of a tariff with the Federal Maritime Commission makes a tariff uniformly applicable to all persons dealing with a terminal operator. It is not necessary, Agri argues, that the tariff be formally approved by the Commission, nor does it matter that the tariff is unilaterally promulgated. See Rorie, supra, at 792-93.

This Court observes,, however, that the proposition stated in Rorie, and relied on by Agri here, is not without limitation. In Port of Tacoma v. Duval, 364 F.2d 615 (9th Cir.1966), for example, the Ninth Circuit held that the mere filing and publication of a tariff does not charge a vessel owner with constructive notice of provisions which are not required by law to be inserted therein. See id. at 617. Marubeni has not, however, raised the issue of notice, and cannot, as a consequence of the berthing application. Moreover, Agri asserts that it has provided Marubeni with a copy of the tariff. This Court therefore concludes that the provisions of Agri’s tariff, insofar as they are valid under other rules of law, are enforceable against Marubeni in this case even though the tariff was unilaterally promulgated.

C. Marubeni’s Interpretation of Contract Argument

To the extent that the result’ would be dissimilar under Texas law, Marubeni is undoubtedly correct in contending that federal maritime law governs the interpretation of Agri’s indemnity provisions. See, e.g., Lirette v. Popich Bros. Water Transport, Inc., 699 F.2d 725, 728 n.11 (5th Cir.1983). Since the Court sees no conflict between federal maritime law and Texas law concerning the issues raised in the case at bar, however, it relies on the language of the particular indemnity clauses and on established general principles of interpretation of both tariff and indemnity provisions to reach its holding in this case. Indeed, the determination to place liability upon Agri actually turns on basic contract law.

In reaching a decision, this Court has been guided by several principles of law. First, this Court observes that the interpretation of tariffs is no different from the construing of any other contract or document. See, e.g., Great N. Ry. v. Merchants Elevator Co., 259 U.S. 285, 291, 42 S.Ct. 477, 479, 66 L.Ed. 943 (1922); Western Transportation Co. v. Webster City Iron & Metal Co., Inc., 657 F.2d 116 (7th Cir.1981); Penn Central Co. v. General Mills, Inc., 439 F.2d 1338, 1340 (8th Cir.1971). Second, a tariff should be construed strictly against the drafter of the tariff, as a corollary to the rule that written instruments will be construed strictly against their drafters. See, e.g., United States v. Great N. Ry., 337 F.2d 243, 249 (8th Cir.1974); Nat’l Van Lines, Inc. v. United States, 355 F.2d 326, 333 (7th Cir.1966); Penn Central Co., supra, at 1341. Third, any ambiguity or doubt must be decided against the drafter of the tariff, but such a rule should not be followed where it is outweighed by other equally settled and applicable rules of construction. See id. Finally, in Weathersby v. Conoco Oil Co., 752 F.2d 953, 955 (5th Cir.1984), and Lirette v. Popich Bros. Water Transport, Inc., 699 F.2d 725, 728 (5th Cir.1983), this Court has been directed to interpret maritime contracts containing indemnity provisions consistently with their plain meaning unless the provisions are ambiguous. Thus, this Court “should construe [an] indemnity clause to cover all losses ‘which reasonably appear to have been within [the parties’] contemplation.’ ” Kemp v. Gulf Oil Corp., 745 F.2d 921, 924 (5th Cir.1984) (quoting Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 333 (5th Cir.1981) (applying federal maritime law).

Under both Texas law and federal maritime law there is a long-established general principle which requires that indemnification for an indemnitee’s own negligence must be clearly and unequivocally expressed. See United States v. Seckinger, 397 U.S. 203, 90 S.Ct. 880, 25 L.Ed.2d 224 (1970). “Standing alorie the indemnity clause has an established legal meaning. An indemnification of ‘any and all claims’ will not include the negligence of the indemnitee.” Seal Offshore, Inc. v. American Standard, Inc., 736 F.2d 1078 (5th Cir.1984) (citations omitted). Thus, indemnity “is an area in which to cover all does not include one of the parts.” BatsonCook Co. v. Industrial Steel Erectors, 257 F.2d 410, 414 (5th Cir.1958) (emphasis in original).

This Court perceives no distinction between the principles of federal maritime law and state law with regard to the determination of the issues presented here. Although the Texas rule has sometimes been considered an “express negligence rule,” Texas does not require that the word “negligence” actually be used, but does require “that the parties state in so many words, that they intend to save the indemnitee harmless from liability for his own negligence.” Fireman’s Fund Ins. Co. v. Commercial Standard Ins. Co., 490 S.W.2d 818, 822 (Tex.1972). In Corbitt, the Fifth Circuit addressed this same requirement for indemnity of one’s own negligence, and stated:

A contract to indemnify another for his own negligence imposes an extraordinary obligation. Thus an indemnitor is entitled to express notice that under his agreement, and through no fault of his own, he may be called upon to pay damages caused solely by the negligence of his indemnitee.

Id. at 333. The purpose of the “clear and unequivocal” rule is to give a contracting party “fair notice that under his agreement, and through no fault of his own, a large and ruinous award of damages may be assessed against him solely by reason of negligence attributable to the opposite contracting party.” Spence & Howe Construction Co. v. Gulf Oil Corp., 365 S.W.2d 631 (Tex.1963).

This Court is mindful of the Fifth Circuit’s recent opinion in Gulf Oil Corp. v. Burlington Northern Railroad, Inc., 751 F.2d 746 (5th Cir.1985). In that diversity suit, the court interpreted and applied Texas law. Id. at 748. Gulf Oil Corp. is particularly relevant here because if Agri’s indemnity provisions are to prevail, they must do so within the parameters of the standard set forth in that case. Since we find no repugnance between federal maritime law and the rule stated in Gulf Oil, we clearly find it instructive and will consider it here.

As the Fifth Circuit observed, the “specific premises or instrumentalities exception” is not an exception to the general rule of Texas law, but a specific application of the requirement that an indemnity of one’s own negligence be clearly expressed. See Gulf Oil, supra, at 748 (interpreting Eastman Kodak Co. v. Exxon Corp., 603 S.W.2d 208, 212 (Tex.1980). “For when indemnity is clearly expressed with reference to specific instrumentalities or premises, the indemnitor necessarily knows that he is assuming full responsibility for losses in connection with those particular premises or instrumentalities regardless of whose negligence may cause the losses.” Id.

At first blush, the hold harmless provisions at issue in the instant action appear to be governed by the rule stated in Gulf Oil. Agri thus would win this indemnity dispute with Marubeni. Closer analysis indicates, however, that any resemblance between the respective indemnity provisions is superficial and that the fair notice to the indemnitor objective has not been satisfied in this case in which the indemnitee operates a grain elevator and loading terminal and contracts pursuant to the disputed tariff.

The Fifth Circuit first considered the indemnity provisions at issue in Houston & Texas Central Railroad Co. v. Diamond Press Brick Co., 111 Tex. 18, 222 S.W. 204, modified on reh’g on other grounds, 111 Tex. 18, 226 S.W. 140 (1920), and then compared them with Burlington’s indemnity provision. See Gulf Oil, supra, at 748-49. The provisions at issue in the instant action pose a striking contrast to the indemnity provisions upheld in both Houston & Texas Central Railroad Co. and Gulf Oil. In those cases, the instrumentalities or operations and premises were narrowly and specifically defined, while the clauses identifying the covered sources or causes of injury were all-encompassing. The indemnity clause in Gulf Oil recited that the indemnitor would hold the indemnitee harmless for loss “in any manner caused by, resulting from or incident to storage of private cars on said track.” Id. at 747-48 (emphasis added). In a similar manner, the indemnitor in Houston & Texas Central Railroad Co. contracted to “save [the indemnitee] harmless from any and all claims for damages arising from any cause whatsoever growing out of the construction, maintenance and operation of a spur track.” (emphasis added). Thus, the indemnitors received the requisite fair notice of their extraordinary liability exposure including that for negligence of the indemnitee when premised upon incidents, involving the narrowly defined instrumentalities and operations related to the tracks in question.

In contrast to the provisions considered above, the indemnitors, designated as users under the relevant tariff provisions in the case at bar, were obligated to hold harmless the indemnitee Agri for damages “resulting from their operation at the elevator or use of the elevator facilities,” (Item 222) and those “incident to, arising out of or in connection with user’s entering upon the premises of the elevator operator, and custody, possession, use or operation of the elevator operator’s equipment, or failure of such equipment to operate.” (Item 226) (emphasis added). Thus, it is apparent that the hazy operational limits of the respective clauses now under scrutiny have little, if any, similarity to the more precise provisions validated in Gulf Oil. In sum, the operations and instrumentalities in this case are loosely defined and largely unspecified and do not afford fair notice to the indemnitor of his liability exposure under the tariff.

Without resorting to a strained or unreasonable interpretation, it is also entirely possible for the indemnitor to conclude from the language of the tariff that it has only promised to hold the indemnitee harmless for injuries arising from the user’s own activities and/or from those caused by equipment malfunctioning. This inherent ambiguity is compounded by Item 226, No. 2 of the Tariff which disclaims express and implied warranties but states that all equipment provided by the elevator “shall be presumed to be in good operating condition when turned over to user or when made use of by the user.”

Since this Court concludes that Marubeni could reasonably have interpreted the indemnity provisions to mean that Agri intended to protect itself only from claims of strict liability or claims which arise from the user’s own activity, it is compelled to construe the provisions against Agri, the drafter of the tariff. Furthermore, the “any and all claims” language of Agri’s Tariff provisions does not aid this Court in validating the hold harmless agreement. Such language, because it has a well defined legal meaning which traditionally excludes exculpation for the indemnitee’s own negligence, only serves to obscure even further the contemplated meaning of the provisions at issue. Inasmuch as this Court is not able to ascertain the intent of the parties with certainty, it follows that Agri’s indemnification provisions are unenforceable against Marubeni here.

This Court is aware of Circuit Judge John R. Brown’s sage admonition to “resist the temptation to take the ambiguity route as an easy and quicker way out” when interpreting tariff provisions. Louisville & Nashville Railroad Co. v. Knox Homes Corp., 343 F.2d 887, 891 (5th Cir.1965). It is also aware that courts have been charged on occasion with divining “some ambiguity” in a critical legal document in order to rationalize a given legal result. Thus, the Court has examined with considerable care the respective positions of the contracting parties and attempted to identify the contemplated meaning that can be extracted from the key language of the tariff. As a consequence, given the prevailing rules of construction applicable to indemnity provisions, the Court is unable to conclude that the provisions at issue are sufficiently clear and unequivocal to provide Marubeni with the requisite fair notice that it has assumed the extraordinary legal obligation to exculpate Agri from liability for its own negligence.

Accordingly, it is ORDERED, ADJUDGED and DECREED that Marubeni’s motions for judgment on the plaintiff’s claim and for judgment on the cross claim asserted by defendant Agri for indemnity must be, and the same are hereby, GRANTED.

      . For an excellent discussion of the continuing vitality of the Sieracki and Ryan doctrines, see Caudle, The Survival of Sieracki and Ryan, 24 So.Tx.LJ. 587 (1984). Even here, Marubeni seeks damages against Agri based upon the Ryan doctrine.

      . One of the underlying purposes of the 1972 Amendments of the LHWCA was to eliminate the longshoreman-vessel owner-stevedore triangle which allowed the longshoreman to sue the vessel owner under the warranty of seaworthiness, and the vessel owner to sue the stevedore under the warranty of workmanlike performance, and thereby eliminate the litigation nightmare which was clogging the federal court system. See S.Rep.No. 1125, 92d Cong., 2d Sess. at 9 (1972).

      . The longshoreman in Sarauw was injured when the gangway, which was wholly unsecured to the vessel, gave way as he was attempting to board. There was evidence that the shipowner had posted a gangway watch and that the gangway watch knew or should have known that the gangway was not secured to the vessel. See 622 F.2d 1168, 1171, 1173 (3d Cir.1980). In Pluyer, the vessel owner supplied the longshoreman with an unsafe ladder. The defective condition of the ladder was open and obvious, and the vessel owner turned over the ship to the stevedore in a defective condition. See 664 F.2d at 1247.

      . The relevant tariff provisions provide as follows:
      Item 222 All users of the elevator shall indemnify and save harmless the AGRI Export Cooperative from and against any and all claims, actions, damages, liability or expense, including court costs and attorney’s fees in connection with loss of life, bodily injury and damage to property, incident to or resulting from their operation at the elevator or use of the elevator facilities.
      Item 226 1. User assumes sole responsibility and liability for injury to or death of any person whomsoever, or damage to or destruction of property of user or any other such person incident to, arising out of or in connection with user’s entering upon the premises of the elevator operator, and custody, possession, use or operation of the elevator operator’s equipment, or failure of such equipment to operate; and user shall protect, indemnify and save harmless the elevator operator from and against any and all liability for or in respect of the same.
      2. All equipment of the elevator operator utilized by user in performing its work shall be presumed to be in good operating condition when turned over to user or when made use of by the user; but the elevator operator makes no warranty with respect to the mechanical condition of said equipment.
      3. By receiving possession thereof or utilizing said equipment, user agrees that upon termination of the period of use said equipment shall be returned to the elevator operator in the same condition as when received, ordinary wear and tear alone excepted.

      . The relevant tariff provision provides as follows:
      Item 200 Until further notice, the elevator will not handle or service liner vessels, that is, vessels defined as common carriers by water by the Shipping Act of 1916.
      Loading of vessels other than ocean-going bulk carriers will be undertaken only by special arrangement. Liner vessels will not be handled by special arrangement.

      . Adding to the confusion leading to this Court's conclusion that ambiguity exists is the precise language of Item 222 of the tariff. The indemnitors or contracting parties with Agri Export Cooperative (singular) are designated as all users (plural). Indemnificatin occurs when claims are filed for injuries or damages "incident to or resulting from their operation at the elevator or use of the elevator facilities.’’’ The . obvious grammatical reference back to "their operation" is "all users,” (plural); it cannot be Agri (singular). Again, this is evidence of ambiguity and of a lack of fair notice to the indemnitor of the scope of its legal contractual undertaking as contended for by Agri.