author: JAMES McGIRR KELLY, District Judge.

text:
    Reverend Joseph TURNER v. Mr. J.L.G. PARSONS, Medical Center Director.
    Civ. A. No. 84-1340.
    United States District Court, E.D. Pennsylvania.
    May 30, 1985.

      Albert J. Olizi, Jr., Philadelphia, Pa., for plaintiff.
    Joseph M. Masuik, Asst. U.S. Atty., Philadelphia, Pa., for defendant.
   MEMORANDUM AND ORDER

JAMES McGIRR KELLY, District Judge.

Presently before this court are cross motions for summary judgment filed by defendant J.L.G. Parsons, Medical Center Director, Veterans Administration Hospital, and plaintiff, Reverend Joseph Turner. Further, plaintiff has made a separate motion to amend his complaint.

Plaintiff, in his original complaint, alleges that he was denied employment by the Veterans Hospital, an agency of the executive department of the United States. Plaintiff has applied for a position as chaplain in the hospital. Plaintiff, a Catholic priest, had the endorsement of his superior within his particular religious society within the Catholic Church. However, plaintiff asserts that he was denied consideration because the Military Vicariate, a central agency of the Catholic Church, did not grant its endorsement. This endorsement is required by Veterans Administration regulations. Furthermore, plaintiff alleges that he was denied consideration because of his age, being 53 at the time of his application. Therefore, plaintiff’s claims are that he was denied employment because of his religious faith and his age.

Plaintiff claims that other candidates for a chaplaincy in other denominations are required only to secure the endorsement of their immediate superior, while the Catholic Church requires approval by the Military Vicariate. To remedy those alleged wrongs, plaintiff prays for relief in the form of an injunction against the Veterans Administration from discriminating between religious endorsements, to provide equal opportunity to Catholic chaplains, and to provide backpay to plaintiff.

Plaintiff now seeks to amend his complaint, bringing in new defendants. The new defendants would be Harry Walters, the Administrator of the Veterans Administration, the Military Vicariate, a religious corporation organized under the laws of the State of New York, and Archbishop Joseph Ryan, president of the Military Vi-cariate. The allegations in the proposed amended complaint, while generally the same as the original complaint, are framed to also shed light on purported wrongs committed by the Military Vicariate. Plaintiff contends that the Military Vicariate wrongfully interfered in the hiring practice of the United States Government.

Once a responsive pleading is served, a party must seek leave of court to amend his pleading; leave should be freely given. Fed.R.Civ.P. 15. However, leave need not be given where the amended pleading may be defeated by a motion to dismiss or a motion for summary judgment. Collyard v. Washington Capitals, 477 F.Supp. 1247, 1249 (D.Minn.1979); Bernstein v. National Liberty International Corp., 407 F.Supp. 709, 714-715 (E.D.Pa.1976). Because of this, I will first address defendant’s motion for summary judgment.

Defendant asserts that plaintiff was not eligible for consideration since he failed to meet the minimum qualifications required by the Veterans Administration for a chaplain’s position. The Manual of the Veterans Administration (Manual), M-2 Part II (February 23, 1966), defendant’s Exhibit A, sets forth the criteria for employment. Specifically, Section 1.06 of the Manual states in pertinent part:

1.06 SELECTION AND APPOINTMENT
a. To be eligible for appointment as a chaplain in the VA, a clergyman must meet certain basic minimum qualifications (see app. 17A DM & S Supp., MP-5, pt. I):
(1) Must be a citizen of the United States;
(2) Must be an ordained clergyman;
(3) Must have the bachelor of arts plus the bachelor of divinity degrees or bachelor of sacred theology (or their equivalents in terms of semester hours of undergraduate and graduate study), from an accredited college, university or theological institution;
(4) Must have had at least 3 years of experience after ordination, in which the principal duty was as a clergyman after completion of his professional preparation; and,
(5) Must have an ecclesiastical endorsement from the officially recognized endorsing body of his denomination. The endorsement, which the applicant must furnish the VA, is the written statement that the applicant’s denomination certifies to his good standing as a regularly ordained clergyman of the denomination for the 12-month period pri- or to the endorsement.
(6)It also certifies that the individual so endorsed is, in the judgment of the endorsing body, qualified to represent the denomination in this specialized ministry.

(emphasis added).

Furthermore, the defendant has submitted an affidavit of Simeon Kobrinetz, the Director of Chaplain Service, Veterans Administration Central office, who avers that for the appointment of Catholic priests the official endorsing agency is the Military Vicariate. It is further averred that Reverend Joseph J. Turner, plaintiff in this action, has been refused such endorsement from the Military Vicariate.

Defendant has submitted for my consideration, a document titled “Vademécum” which is published by the Military Vicariate. This document recites the authority within the Catholic Church, the Military Vicariate has over priests who desire to be or are chaplains. Specifically, it states in part, “[according to the decree of erection of the Military Vicariate of the United States of America, dated September 8, 1957, the following are subjects of the Military Vicar: ... 2) Priests who are chaplains of hospitals commonly called ‘Veterans administration Medical Centers and Domiciliaries.’ ” (Vademécum at 25).

Further, it is stated by the Military Vi-cariate:

1) to function as a chaplain in ... the Armed Forces or Veterans Administration, a priest must have the endorsement of the Military Vicar.... This means that for each of the following sets of circumstances, a priest must request endorsement by the Military Vicariate:
b. to enter upon ... V.A. or other duty, even though already endorsed for inactive duty.

Vademécum at 23.

Because plaintiff has failed to secure the endorsement of the Military Vicariate, he fails to meet the employment criteria set out by the Veterans Administration for a chaplaincy position. However, it is this very requirement of Military Vicariate approval which plaintiff asserts violates the Establishment Clause of the first amendment.

Plaintiff contends the government’s requirement of prior church approval of chaplaincy candidates permits excessive entanglement between church and state relations, thus in violation of the United States Supreme Court’s holding in Lemon v. Kurtzman, 403 U.S. 602, 91 S.Ct. 2105, 29 L.Ed.2d 745 (1971). Indeed, the Court in Lemon did hold that a statute, so as not to offend the Establishment Clause, must pass a three prong test which is: “First, the statute must have a secular legislative purpose; second, its principal or primary effect must be one that neither advances nor inhibits religion; finally, the statute must not foster ‘an excessive government entanglement with religion.’ ” Id. at 612613, 91 S.Ct. at 2111 (citation omitted).

The Court’s analysis in Lemon has been tempered by subsequent opinions of the Court. In Lynch v. Donnelly, 465 U.S. 668, 104 S.Ct. 1355, 79 L.Ed.2d 604 reh’g denied, — U.S. —, 104 S.Ct. 2376, 80 L.Ed.2d 848 (1984), the Court stated:

In every Establishment Clause case, we must reconcile the inescapable tension between the objective of preventing unnecessary intrusion of either the church or the state upon the other, and the reality that, as the Court has so often noted, total separation of the two is not possible.

Id. 104 S.Ct. at 1358-59.

In each case, the inquiry calls for line drawing; no fixed, per se rule can be framed. The Establishment Clause like the Due Process Clauses is not a precise, detailed provision in a legal code capable of ready application. The purpose of the Establishment Clause ‘was to state an objective, not to write a statute.’ Walz, supra, [v. Tax Commission, 397 U.S. 664] at 668, 25 L.Ed.2d 697, 90 S.Ct. 1409. The line between permissible relationships and those barred by the Clause can no more be straight and unwavering than due process can be defined in as single stroke or phrase or test. The Clause erects a ‘blurred, indistinct, and variable barrier depending on all the circumstances of a particular relationship.’ Lemon, supra, [403 U.S.] at 614, 29 L.Ed.2d 745, 91 S.Ct. 2105.
In the line-drawing process we have often found it useful to inquire whether the challenged law or conduct has a secular purpose, whether its principal or primary effect is to advance or inhibit religion, and whether it creates an excessive entanglement of government with religion. Lemon, supra. But, we have repeatedly emphasized our unwillingness to be confined to any single test or criterion in this sensitive area.

Id. 104 S.Ct. at 1361-62 (remaining citations omitted).

Plaintiff further asserts that the United States Supreme Court’s holding in Larkin v. Grendel’s Den, Inc., 459 U.S. 116, 103 S.Ct. 505, 74 L.Ed.2d 297 (1982) should be controlling in the instant matter. In Lar-kin the Court held invalid a Massachusetts statute which allowed inter alia a church to object to the granting of a liquor license to any establishment within 500 feet of the church. If the church objected, the license could not issue. The Court interpreted the statute as giving a veto over the issuance of a liquor license, and therefore an impermissible delegation of legislative power to religious organizations. Although the Court acknowledged certain permissible incidental entanglement between church and state, it found that there was a substantial breach between the separation of church and state. Id. at 123, 103 S.Ct. at 510.

I find the Larkin case distinguishable from the matter now before me. The armed forces provide chaplains to accommodate its members’ right to freedom of religion which is found in the first amendment Free Exercise Clause. A fortiori there are many instances where the Free Exercise Clause and the Establishment Clause will be in tension. Lynch v. Donnelly, supra. Therefore, the Free Exercise Clause and Establishment clause must be examined in tandem. The Second Circuit Court of Appeals recently held in Katcoff v. Marsh, 755 F.2d 223 (2d Cir.1985) that:

The second provision of the Constitution which plays a vital role in our interpretation of the Establishment Clause is the Free Exercise Clause of the same Amendment. It is readily apparent that this Clause, like the Establishment Clause, obligates Congress, upon creating an Army, to make religion available to soldiers who have been moved by the Army to areas of the world where religion of their own denominations is not available to them. Otherwise the effect of compulsory military service could be to violate their rights under both Religion Clauses of the First Amendment. Unless the Army provided a chaplaincy it would deprive the soldier of his rights under the Establishment Clause not to have religion inhibited and of his right under the Free Exercise Clause to practice his freely chosen religion.

Id. at 234.

I find the logic of the Second Circuit sound. However, the fact that the Armed Forces may have a duty to hire chaplains, does not give it the power to determine which individuals can or may represent the various religious denominations. It is this entanglement which the Court in Lemon, supra, sought to guard against. The Court in Larkin, supra, prohibited the church from having a veto over the issuance of liquor licenses. The issuance of a liquor license is secular. In the matter before me, there is a requirement that a church endorse a person who will represent the church to servicemen and servicewomen. These people who seek the endorsement of the church (in effect, church approval is a condition precedent to being qualified to take a position of a Catholic chaplain) will not provide a service which is secular in nature; rather their function is primarily religious, namely, occupying the position of chaplain.

Thus, the distinction between the matter now before me and the matter before the Larkin’s Court is that here the church seeks to control factors which control its religious destiny and those who may represent it, while in Larkin’s the Court refused to allow a church to control matters which are primarily secular.

For this court to decide who may or may not represent a certain religion would be for this court to go to the heart of religious organizations and their beliefs and imper-missibly interfere in their operations. I cannot conceive of any greater interference or entanglement a government could launch than to dictate who may or may not represent a religious faith to its flock. Moreover, if this were to be done, it would change or interfere with the expectations the followers of a certain religious faith may have, as the government would be the party which would determine who will lead the flock.

I turn to plaintiffs allegation that he was denied consideration for a chaplain’s position because of his age, which was 53 at the time of his application. Plaintiff’s allegation lacks substance because he has not met the criteria for employment by obtaining the endorsement of the Military Vicariate. Furthermore, plaintiff has not established or even alleged that the requirement of having the endorsement of the Military Vicariate is a pretext for impermissible age discrimination.

In conclusion, plaintiff has complained that the Veterans Administration has violated the Establishment Clause by requiring the Military Vicariate to endorse applicants for a position as a Catholic chaplain within the Veterans Administration. I hold, as a matter of law, that for the government to determine who is qualified from the various religious faiths to lead the flock of Catholicism would be for the government to impermissibly interfere or entangle itself in religion. The fact that the government must rely upon the various religious institutions for their consent or advice before hiring a person as a chaplain is one situation where absolute separation between church and state is not possible. Lynch v. Donnelly, 465 U.S. 668, 104 S.Ct. 1355, 1358-1359, 79 L.Ed.2d 604 (1984); Lemon v. Kurtzman, 403 U.S. 602, 614, 91 S.Ct. 2105, 2112, 29 L.Ed.2d 745 (1971).

Accordingly, plaintiffs motion for summary judgment will be denied and defendant’s motion for summary judgment will be granted. Plaintiff’s motion for leave to amend will be dismissed as moot.

      . The Veterans Administration, through its staff attorney has submitted a declaration under penalty of perjury that defendants' Exhibit A contains the Veterans Administration Chaplaincy Services Administration Programs.

      . Section 16C of chapter 138 of the Massachusetts General Laws defines a church as follows: "a church or synagogue building dedicated to divine worship and in regular use for that purpose, but not a chapel occupying a minor portion of a building primarily devoted to other uses.” Larkin v. Grendel’s Den, Inc., 459 U.S. 116, 117, n. 1, 103 S.Ct. 505, 507, n. 1, 74 L.Ed.2d 297 (1982).

      . The other provision the Second Circuit relied upon to uphold the constitutionality of the Army hiring chaplains is Congress’ war powers.


source: Caselaw Access Project

author: FORRESTER, District Judge.

license: Public Domain

text:
    COX COMMUNICATIONS, INC., Plaintiff, v. SUSQUEHANNA BROADCASTING CO., Defendant.
    Civ. A. No. C85-2986A.
    United States District Court, N.D. Georgia, Atlanta Division.
    June 25, 1985.
    R. Keegan Federal, Dow, Lohnes & Al-bertson, Atlanta, Ga., Arnold Lutzker, Carolyn Wimbly, Washington, D.C., for plaintiff.
    Jill J. Pennington, Cohn & Marks, Washington, D.C., Michael R. Levinson, Chicago, Ill., Kirkland & Ellis, Chicago, Ill., James J. Thomas, Long & Aldridge, Atlanta, Ga., for defendant.
   ORDER OF THE COURT

FORRESTER, District Judge.

This case came on for hearing before the court on a motion for a preliminary injunction after the court had earlier declined to issue a temporary restraining order. For the reasons set out below the court must once again deny Cox the relief that it seeks.

In order to be entitled to a preliminary injunction plaintiff has the burden of establishing four elements: (1) that there is a substantial likelihood that it ultimately will prevail on the merits; (2) that it will suffer irreparable injury unless the injunction issues; (3) that the threatened injury to plaintiff outweighs whatever damage the proposed injunction may cause defendant; and (4) that the public interest will not be harmed if the injunction should issue. Cate v. Oldham, 707 F.2d 1176, 1185 (11th Cir.1983). After consideration of the evidence adduced at the hearing, the court concludes that plaintiff has failed to carry its burden as to the first, second, and fourth elements and that the preliminary injunction should not issue.

I. LIKELIHOOD OF SUCCESS ON THE MERITS.

The plaintiff has entered this court in the vehicle of law of unfair competition and trademarks. It came here, it is supposed, out of a general faith in the courts of this country to solve all problems and right all wrongs. It appears, however, that Cox’s main problem is not with its adversary but with a market research firm named Arbitron. Twice a year Arbitron publishes a book which purports to tell broadcasters and advertisers alike who, in this metropolitan area, is listening to what radio stations. The information conveyed is put in terms of market shares as a function of sex, age, time of day, day of the week, and location of the radio. The equity that Cox is entitled to under ordinary norms of fair play is to have Arbitron report with the greatest precision possible on the market shares of its Atlanta station, WSB-FM. Cox fears that there are conditions in the local market which may, because of Arbitron’s historic procedures, cause an under-reporting of the market share attributed to WSB, and may result in an over-stating of the market share of Susquehanna’s local FM station, WRMM. If this occurs it seems to the court that in terms of everyday, common sense fairness, Cox is being harmed by Arbitron’s publishing of inaccurate data (if it turns out to be inaccurate). As Cox apparently has not been able to think of a common law writ which would protect it against inaccuracies by Arbitron, it comes here asking that Susquehanna be restrained from practices which Cox contends are creating a market measurement difficulty for Arbitron. Said another way, Cox is almost exclusively concerned with what Arbitron will report in a few months about the listening habits of Atlantans during the spring of 1985 and is very little concerned that its good will with its listeners is being devalued or that its customers are being misled into accepting the services of another on the belief that it is a service provided by WSB.

Hereafter the court sets out the facts which were established at the hearing and which seem pertinent to trademark analysis. In 1981 and immediately before, WSB-FM was considered a “beautiful music” station. Its programming consisted of the kind of music which, according to witnesses, is most often associated with elevators. It called itself “Beautiful FM 98.”

In 1981 new management came in and sought to boost the station’s market share. After some expenditure of funds the next ratings indicated that the market share declined, and so it was concluded that the programming should be changed. A programming consultant was hired and on her suggestion a new program director and new disc jockeys were hired and a whole new music list was selected. In an effort to disassociate itself with its old image the station dropped its call letters, WSB, from most of its station identification breaks and decided to abandon the number 98 as an identifier for the same reason. The station is assigned a frequency at 98.5. It considered using 97 as a part of its new identification but dismissed the idea when it was observed that that number was too distant from its assigned frequency. Instead, it settled on the next highest whole number, 99.

On March 15, 1982 Cox hosted a large reception for the advertising community and introduced “The New 99 FM.” Thereafter, for a period of years the station promoted itself only as 99 FM. It spent sums approaching a million dollars to promote itself on billboards and in television commercials using only the term 99 FM, and it used this identifier until about a year ago.

Those persons familiar either with the history of radio or with the development and growth of Atlanta will recognize that WSB was for generations a pioneer in the field of radio and a leading citizen of Atlanta. The station’s new management apparently first decided that, whatever good will those call letters once held, they now were a liability and so, as noted above, they were abandoned. In 1984 they re-thought the matter and decided that the initials for the “old gray lady of Peachtree Street” might after all carry a little good will, and so for the past year the station has been known in all of its promotions as “WSB 99 FM.”

During the early 1980’s Susquehanna operated a station in this market with the call letters WLTA and an assigned frequency of 99.7. The station had for several years located itself for listeners on the dial by promoting itself as “100 FM.” The Federal Communications Commission requires that each station either once or twice an hour identify itself by its call letters and its exact frequency, and so listeners to that station would hear both 99.7 and 100, just as WSB listeners would hear 98.5 and 99. The geographic descriptions of 99 and 100 did not cause any appreciable problems for listeners trying to find these stations as long as radio dials were not precisely calibrated, and as long as the best one could do in tuning in a favorite station was to approximate its position on the dial. In this area, however, as in virtually every other, technology did not allow for complacency. Electronics manufacturers produced and began to market radios with precise digital dialing so that finding one’s favorite station required the knowledge of the station’s exact frequency. In response to this development, Susquehanna’s Atlanta station, whose call letters had been changed to WRMM, began to identify itself regularly on its own promotions as 99.7, and in its billboard and other advertising the number 99.7 was prominently displayed.

Arbitron computes its market shares from diaries maintained by a random sample of listeners in the Atlanta area. There are two rating periods, one in the fall and one in the spring. Diary keepers are instructed to identify the station they are listening to either by call numbers, frequency response, or the name of the program. Additionally, if a broadcaster has a registered slogan such as “soft hits,” entries made identifying the station by its slogan will be attributed to that station. After WRMM began using its exact frequency, understandably, some listeners began to associate the number 99 with that station instead of WSB. For at least two years Susquehanna had been concerned about the fact that WSB was receiving credit for virtually all of the diary entries showing only 99. It sought advice from Arbitron and learned that unless it identified itself over the air as “99” or “99 FM,” it would not be entitled to any credit for diary entries identified only as 99 or 99 FM. Susquehanna inquired about phrases such as “Warm Between 99 and 100” but was told that such phrases were not sufficiently specific for WRMM to get credit for the “99” or “99 FM” entries. As the company felt that it was entitled to some share of the “99” entries, it began on April 26, 1985 to identify itself twice an hour as “WARM 99 FM.” This is the minimum usage that the station could make of the 99 FM term and obtain entitlement to a share of the diary keepers who identified the station to which they were listening only by the number. Otherwise, Susquehanna has done nothing to promote the station as 99 FM and continues its promotion of the station’s frequency as 99.7.

As it seems evident that the numerical identifiers are not at all fanciful but instead are in the first instance indications of location on a radio dial (like geographical identifiers), Cox undertook to introduce evidence that 99 or 99 FM had acquired secondary meaning. First, as noted above, it proved that it had spent a little under one million dollars promoting itself only as 99 FM (in the last year it has spent half a million dollars promoting itself as WSB FM 99). In response to the digital radio phenomena WSB radio now also promotes itself to some extent by reference to its exact frequency, 98.5 megahertz. It seems to the court quite well established that a fair number of the citizens of this area associate WSB with the number 99.

A review of a sample of the diary entries for the fall of 1984 rating period indicates that in fifteen percent of the entries credited to WSB the diary keeper associated the call letters WSB with the frequency 99. On that same computation, ten percent of the diary keepers who made entries utilizing the call letters of WRMM or its homonym WARM or its slogan “soft rock” associated it with 99 or 99.7, or else they remembered only its exact frequency. At Cox’s behest, a marketing research group here in Atlanta made 500 random calls in the area during the first of May asking for an association of a radio station with the numeral “99.” Twenty-one percent associated the number with WSB, while 8.6% associated the number with WRMM. Fourteen percent gave the response “99 FM.” That group was tested in an effort to learn whether on prompting they could select a station. If that fourteen percent is allocated based on the result of the call back sampling, WSB’s association with the number “99” would be 27%, whereas WRMM’s association level would be ten percent. As noted previously, Arbitron has begun to call back diary keepers who referred to their stations only by the numeral. To date, the results of the call back procedure show that 61% intended to identify WSB and 30% meant to identify WRMM.

In order to prevail on its trademark claim plaintiff must first establish that it has protectible rights in the number “99.” As noted above, the number “99” in this context is not fanciful or arbitrary but is instead descriptive of an approximate location on the FM dial. See Walt-West Enterprises, Inc. v. Gannett Co., Inc., 695 F.2d 1050 (7th Cir.1982); Covenant Radio Corp. v. Ten Eighty Corp., 35 Conn.Supp. 1, 390 A.2d 949 (1977). In order for a descriptive term to be entitled to trademark protection it must have acquired a secondary meaning. Walt-West Enterprises, supra, at 1056. The United States Supreme Court in Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 59 S.Ct. 109, 83 L.Ed. 73 (1938), stated that for a descriptive term to have secondary meaning the “primary significance of the term in the minds of the consuming public” must be the producer and not the product. The preponderance of the evidence here shows that what the listener is responding to is the product rather than the producer. To demonstrate producer allegiance in a broadcasting case would require a showing that the listener has come to select the station because over a period of time the listener has come to like that station’s artistic taste and journalistic style, reliability, and content and has chosen to listen to that station on the basis of opinions formed after a period of evaluation. Here, there is every reason to believe that instead of seeking out WSB as a venerated provider of agreeable programming, the listeners are making new judgments constantly based on the degree of pleasure the listener is obtaining from the product or service at the moment. This conclusion follows from two facts observed in the Arbitron reports for the past few years. When WSB changed its programming material from “beautiful music” to “soft hits,” which euphemistically describes generic soft rock, the demographics of its audience changed as well as its market share. The share increased and the listening audience became much younger. In the fall of 1984 the program director at WSB made a decision to include “oldies” in the music being broadcast. During that survey period the market share dropped to 3.5, down 1.3 points from the spring of 1984 rating period, and 2.4% from its ratings high water mark achieved in the fall of 1982. From the demographic shift observed with the first format change, the court concludes that to a large measure a different group of people is now listening to WSB than when it was a “beautiful music” station, and with the decline in market share based on the second format change, the court concludes that these new listeners by and large are not attracted to the institution that is providing the service but instead are very sensitive to the content of the service itself.

The second element which Cox must show to prevail on its trademark claim is confusion in the market place as to the source of the service.

In this circuit likelihood of confusion is determined by evaluating a variety of factors including the type of trademark at issue; similarity of design; similarity of product; identity of retail outlets and purchasers; identity of advertising media utilized; defendant’s intent; and actual confusion.

Roto-Rooter Corporation v. O’Neal, 513 F.2d 44, 45 (5th Cir.1975), citing Continental Motors Corp. v. Continental Aviation Corp., 375 F.2d 857 (5th Cir.1967); see also Safeway Stores, Inc. v. Safeway Discount Drugs, 675 F.2d 1160, 1164 (11th Cir.1982); Sun Banks of Florida v. Sun Federal Savings & Loan Association, 651 F.2d 311, 314 (5th Cir.1981). To state the test at all is to prove the difficulty of applying trademark concepts to the facts of this case. This is not a case where one party is palming off his products as those of a better known competitor in order to trade on the competitor’s good will. Neither plaintiff nor defendant markets a product which is purchased, in any ordinary sense of the word, in reliance upon a belief that the product comes from a particular producer. The “product” in this case is radio programming, and that product is freely distributed to any who choose to listen. Plaintiff does not contend that any significant number of listeners of WRMM choose that station out of a mistaken belief, caused by the use of the term “WARM 99 FM,” that they are listening to WSB. Thus, traditional trademark concepts, which were developed to prevent “palming off” of one’s goods as those of a competitor, seem to have little applicability.

To the extent that there is any actual confusion in the market place, the court concludes that the greatest source of such confusion is caused not by any similarity of trademarks but rather by the fact that both stations have nearly identical formats and play the same kind of music. Such confusion as this may create is further aggravated by the fact that the stations are in close physical proximity to each other on the FM dial and there is no station in between them. None of the confusion from these sources is caused by anything that Susquehanna has done. As is typical with most FM stations, the announcers intrude only briefly on the musical format, and the station promotions are not given so often as they are on a typical AM station. If a listener really cares about which of the two stations he is listening to, it is difficult to believe that his confusion will last past the first station break. WSB for more than one year has always identified itself with its call letters by statements such as the one currently posted in the announcing booth, which is, “You’re listening to WSB FM Atlanta. WSB 99 FM, 98.5 on a digital radio,” or, “WSB — 99 FM .. on a digital radio we are 98.5.” On the other hand, WRMM identifies itself by its call letters, WRMM, or by the homonym WARM, and these are used most often in conjunction with its exact frequency location, 99.7. Even when the contested 99 FM is used, it is used in connection with WARM. Beyond a minimal amount of confusion which is as much aborne of total inattention and disinterest as it is of anything that Susquehanna is doing, Cox was unable at the hearing to produce anything more than speculation that there would be confusion with listeners.

It seems to the court in the final analysis that a certain confusion is inevitable and is not the result of the use by Susquehanna of the nomenclature “99 FM.” Its address on the radio dial is 99.7. It must identify itself in that fashion and it has a total right to its own address. By choosing to use the most easily remembered portion of a sister station’s address, Cox and not Susquehanna has created this opportunity for confusion. The court understands that it was not unusual in the past for a station to round up or down to the nearest whole number and therefore means no criticism of WSB’s decision to use 99. What the court does mean to say is that any confusion that exists is in the first instance and the most immediate sense caused by that decision to use a numeral which another station is, in fairness, entitled to use.

Finally, even if plaintiff could establish that the number “99” has acquired a secondary meaning and that defendant’s use of the number created a likelihood of confusion, the court would nevertheless conclude that defendant is entitled to assert a “fair use” defense. As noted above, the number “99” describes an approximate address on the FM dial. WRMM has at least as much right to locate itself for its listeners by means of this address as WSB has. Even if plaintiff has acquired protectible rights in the number “99,” it cannot exclude WRMM from fairly and truthfully using the number to describe its location. Manufacturing Co. v. Trainer, 11 Otto 51, 101 U.S. 51, 54-55, 25 L.Ed. 993 (1879); cf. 15 USC § 1115(b)(4) (codifying common law).

Because the court concludes that plaintiff has failed to show secondary meaning or a likelihood of confusion as a result of defendant’s use of the term “WARM 99 FM,” and because the court concludes that defendant is entitled to assert a valid “fair use” defense, the court concludes that there is not a substantial likelihood that plaintiff will prevail on the merits. A preliminary injunction would, therefore, not be proper.

II. IRREPARABLE INJURY.

The court also concludes that plaintiff has failed to show that it will be irreparably injured if an injunction does not issue. As noted above, Arbitron’s call-back procedure is substantially curing any distortion of the survey results caused by rote application of its ascription process. To the extent that the call-backs do not cure the problem, the court believes that any irreparable injury would be caused not by defendant but rather by Arbitron publishing as accurate survey results it has reason to believe are distorted.

III. PUBLIC INTEREST.

Finally, the court believes that enjoining defendant’s use of the number 99 would be strongly adverse to the public interest. FM radio stations are assigned by the FCC a frequency somewhere between 88.1 and 107.9 Megahertz. 47 CFR § 73.201 (1981). Because of the manner in which frequencies are assigned, no station is assigned a whole number. Walt-West Enterprises, Inc. v. Gannett Co., Inc., 695 F.2d 1050, 1052, n. 1 (7th Cir.1982). However, for a variety of reasons stations have found it to be commercially advantageous to round up or down to a whole number. There are only twenty-one possible whole numbers on the FM spectrum (88-108), and in some congested markets there are several stations who could logically round up or down to the same whole number. It would be absolutely unconscionable to allow one station to appropriate for itself and exclude all others from using a whole number which truthfully describes an approximate geographical location on the FM dial. To allow that would be to give that station an unfair competitive advantage. Trademark law protects competitive advantages which are fairly acquired. It does not, however, allow one radio station to prevent another from locating itself for potential listeners.

IV. CONCLUSION.

In sum, the court concludes that plaintiff has failed to carry its burden of showing that there is a substantial likelihood it will ultimately prevail on the merits, that it will suffer irreparable injury, or that an injunction would not be adverse to the public interest. The court concludes, therefore, that plaintiffs motion for a preliminary injunction must be DENIED.

      . Where two or more stations employ the same identifier and a diary keeper identifies the station to which he or she is listening only by that identifier, then it is more difficult for Arbitron to determine which station the diary keeper intended to identify. Arbitron has developed a process by which it "ascribes" such entries among the stations employing that identifier according to the relative market shares of the stations in the previous survey. It is this ascription which so much concerns Cox. As it is no doubt true that the vast majority of the diary entries using only the numeral 99 or 99 FM refer to WSB, the ascription will cause a shift to Susquehanna which might amount to as much as seven- to eight-tenths of a percent share. No direct evidence was introduced on the economic value of a one percent market share, but the court understands that it is generally substantial. The converse of the problem is that somewhere between ten percent and thirty percent of the people in the market think of WRMM in terms of 99 and if no ascription is made then Susquehanna's market share will be understated. Arbitron is presently using a call back procedure in an effort to make its ascription more accurately reflect listening habits. The court is encouraged to believe that if the call back procedure is continued no great injustice will be done to either of the parties.

      . At the hearing defendant demonstrated on a portable radio that stations located at 98.5, 99.1, and 99.7 MHz could all be heard in Atlanta. It is theoretically possible, although unlikely, that other stations with frequencies of 98.7, 98.9, 99.3, or 99.5 could be licensed to broadcast into the Atlanta area,


author: EDWARD J. GARCIA, District Judge.

text:
    Victor SWIERKOWSKI and Larry Boucher, Plaintiffs, v. UNITED STATES of America, Defendant.
    Civ. No. S-85-0043-EJG.
    United States District Court, E.D. California.
    July 5, 1985.

      Donald B. Ayer, U.S. Atty., Yoshinori H.T. Himel, Asst. U.S. Atty., Sacramento, Cal., Charles A. Baer Trial Atty., Civil Trial Section, Central Region, Tax Div., Dept, of Justice, Washington, D.C., for defendant.
    Victor Swierkowski, and Larry Boucher, pro se.
   EDWARD J. GARCIA, District Judge.

Plaintiffs have filed this complaint seeking damages for the alleged improper disclosure of tax return information; for relief from instructions from the United States to plaintiffs’ employer that taxes should be withheld from plaintiffs’ wages; and for the return of taxes previously withheld. The United States has filed a Motion to Dismiss Or, In The Alternative, For Summary Judgment.

That motion came on for hearing before the undersigned United States District Judge on May 24, 1985. Plaintiffs, VICTOR SWIERKOWSKI and LARRY BOUCHER, appeared for themselves. Charles A. Baer, of the Department of Justice, and Yoshinori H.T. Himel, Assistant U.S. Attorney, appeared for defendant.

Upon consideration of the pleadings and exhibits filed in this matter, and oral argument at the hearing, the court has determined that there are no genuine issues of material fact and that the United States is entitled to judgment of dismissal as a matter of law.

Plaintiffs first claim that the Internal Revenue Service violated Internal Revenue Code Section 6103 (26 U.S.C.) by sending plaintiffs’ employer a letter concerning the withholding of taxes from plaintiffs’ wages. There is no basis in law or fact for plaintiffs’ claim. When the Internal Revenue Service contacted plaintiffs concerning their withholding exemption claims, plaintiffs replied with frivolous arguments similar to those in the complaint and in the other pleadings filed by plaintiffs in this action. It was plaintiffs’ lack of cooperation with the Internal Revenue Service that made the Internal Revenue Service communication necessary to ensure that withholding would properly proceed.

Internal Revenue Code Section 6103(k)(6) allows disclosure of return information in situations necessary for collection or investigation, as prescribed by regulation. In this case, the regulations allow disclosure of the nature here at issue to determine that the correct withholding rate is applied. See 26 C.F.R. Section 301.6103(k)(6)-l(b).

Further, Section 6103(a) prohibits the disclosure of confidential tax information except as authorized by the Internal Revenue Code. Internal Revenue Code Section 3402(m) and (n) explicitly authorize the promulgation of regulations relating to claims for withholding allowances and for exemptions from withholding. The regulations dealing with withholding prescribe what actions the IRS should take in cases such as this. Specifically, 26 C.F.R. Section 31.-3402(f)(2)-1(g)(5) instructs the IRS to furnish to an employer information of the type here at issue.

The disclosure of tax information by the IRS was authorized by the Internal Revenue Code. Therefore, the United States is entitled to an order dismissing the Section 6103 portion of plaintiffs’ complaint as a matter of law, and the United States will be granted summary judgment on this issue.

Plaintiffs next argue that their rights to due process were abridged by the actions of the IRS disclosing their tax status and requiring withholding without affording them an administrative hearing. Plaintiffs’ complaint shows that they were not denied due process. The IRS afforded plaintiffs notice that it considered their claims to be exempt from withholding to be incorrect, and gave them an opportunity to submit information to support their claims. Plaintiffs responded by sending the IRS some 200 pages of documents asserting that the income tax laws did not apply to them. The IRS did not deprive plaintiffs of an opportunity to be heard or of due process. Accordingly, the United States is entitled to summary judgment on this issue as well.

The United States argues that the remaining allegations of plaintiffs’ complaint should be dismissed for lack of jurisdiction over their subject matter. These arguments are well taken, and the court will dismiss the remainder of the complaint.

Plaintiffs seek a determination of their tax liability and allege that the IRS improperly determined that they were persons subject to taxation. Congress has provided two, and only two, procedures by which the legality of assessment and collection of a tax may be determined: a proceeding before the Tax Court; or payment of the disputed tax and institution of a refund suit in the District Court. As plaintiffs have failed to follow either of these routes, this Court has no jurisdiction over their claims. Thompson v. United States, 308 F.2d 628, 634 (9th Cir.1962).

Plaintiffs also allege the commission of common law torts by the United States. The Federal Tort Claims Act (28 U.S.C. §§ 2671 and 2680) is the exclusive remedy for recovery of damages caused by tortious conduct of an agency of the United States. Federal Deposit Insurance Corp. v. Citizens Bank and Trust Company, 592 F.2d 364, 370-372 (7th Cir.1979), cert. denied, 444 U.S. 829, 100 S.Ct. 56, 62 L.Ed.2d 37. The Federal Tort Claims Act excludes claims arising with respect to the assessment and collection of any tax or for liability for intentional torts, including libel and slander. 28 U.S.C. Section 2680(c) and (h). Thus, this court has no jurisdiction over such claims.

Plaintiffs seek an injunction against collection of further withholding taxes. The Anti-Injunction Act (Internal Revenue Code Section 7421) precludes this Court from exercising jurisdiction over such a claim. Accordingly, that allegation must also be dismissed.

The United States has requested an award of costs pursuant to Federal Rules of Civil Procedure Rule 54(d). An award of costs is appropriate in this case. The United States shall submit a bill of costs within 10 days of the entry of judgment hereon, pursuant to Local Rule 292.

The United States has also requested an award of attorneys’ fees pursuant to 28 U.S.C. Section 2412(b) and Fed.R.Civ.P. 11. Such an award is discretionary on the part of the Court. This case meets the threshold condition of frivolousness for an award of attorneys’ fees as set out in Rule 11 and Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-259, 95 S.Ct. 1612, 1622, 44 L.Ed.2d 141 (1975). However, this case is fresh and there has been only a small amount of litigation in it. The court will exercise its discretion not to grant attorneys’ fees in this case at this time.

Accordingly, it is hereby ORDERED as follows:

1. The United States’ motion for summary judgment dismissing plaintiffs’ claims in regard to the alleged improper disclosure of tax information and to the alleged denial of due process by the Internal Revenue Service is GRANTED.

2. The remainder of plaintiffs’ claims are dismissed for lack of jurisdiction.

3. The United States will be awarded its costs, upon submission of a proper bill of costs under Local Rule 292.

4. The Clerk shall enter judgment hereon.

      . Furthermore, a complaint seeking damages for improper disclosure of tax information must plead facts sufficient to establish bad faith. See Davidson v. Brady, 732 F.2d 552, 553 (6th Cir.1984).

      . As the actions by the IRS concerned the collection of taxes, and review of the withholding instructions would obstruct tax collection, it appears that the Anti-Injunction Act (Internal Revenue Code Section 7421) would bar review of the IRS determination by this Court, except in the context of a suit for refund.


author: ZAMPANO, Senior District Judge.

text:
    Frank McDONNELL, Plaintiff, v. DEAN WITTER REYNOLDS, INC., and James Reid, Defendants.
    Civ. A. No. N-82-179 (RCZ).
    United States District Court, D. Connecticut.
    July 8, 1985.

      Dennis N. Garvey, Barbara Cox, Garvey & Walsh, New Haven, Conn., for plaintiff.

      Sharon S. Tisher, Kim M. Cooke, Day, Berry & Howard, Hartford, Conn., for defendants.
   RULING ON MOTIONS TO COMPEL ARBITRATION, TO STAY PROCEEDINGS, AND TO AMEND ANSWER

ZAMPANO, Senior District Judge.

Plaintiff Frank McDonnell seeks damages against Dean Witter Reynolds, Inc. (“Dean Witter”) and James Reid, formerly a Dean Witter employee, for the alleged mismanagement of his securities account. Plaintiff asserts causes of action under the Securities Act of 1933, 15 U.S.C. § 77q(a), the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78o(c) and 78t(a), the Connecticut Uniform Securities Act, Conn.Gen. Stat. §§ 36-470 to 36-502, the Connecticut Unfair Trade Practices Act (“CUTPA”), Conn.Gen.Stat. §§ 42-110a to 42-110q, the rules of the New York Stock Exchange, as well as various causes of action arising under the common law.

Pending are Dean Witter’s motions to compel arbitration of the dispute and to stay these proceedings, and both defendants’ motion to amend their answer to allege arbitration as special defense.

I.

The complaint alleges that plaintiff opened a securities account with Dean Witter in November 1980 with a $129,000 investment portfolio that plaintiffs mother left to him when she died. Plaintiff assert-edly instructed Dean Witter and Reid, the account executive, merely to transfer the portfolio into plaintiff’s name. Instead, plaintiff contends defendants not only transferred the stock into plaintiff’s name, but they also sold most of the securities “without advising or consulting” him. The proceeds from the sales were, according to the plaintiff, used to buy “high risk and speculative over-the-counter securities” for plaintiff's account. The value of plaintiff’s account fell to less than $19,755 by August 1981.

Plaintiff does not dispute that when he opened his account in November 1980 he signed a standard “Customer’s Agreement.” Paragraph 16 of that agreement states that “[a]ny controversy between you and the undersigned arising out of or relating to this contract or the breach thereof, shall be settled by arbitration....”

Plaintiff filed this action on April 14, 1982, and defendants filed a motion to dismiss on May 14, 1982. The motion was based on several asserted pleading errors and ambiguities; the motion did not raise the arbitration defense. After several extensions of time requested by both sides, plaintiff filed an amended complaint. On January 11, 1983, Magistrate Thomas P. Smith denied the motion because most of defendants’ arguments in favor of their motion were moot. Further, on that date Magistrate Smith granted plaintiff leave to file a second amended complaint, which added a cause of action arising under CUT-PA.

On February 2, 1983, defendants filed a demand for jury trial and an answer with a series of special defenses. Inexplicably, they again failed to raise the defense of arbitration.

Thereafter for almost two years the parties engaged in lengthy discovery proceedings including interrogatories, depositions and production of documents. On several occasions, this Court’s intervention was necessary to resolve disputes which arose during the discovery process.

Finally, in an effort to dispose of the case, the Court ordered the parties to try this action in January 1985. However, the matter was continued to the February 1985 calendar call to allow counsel time to complete final discovery. In February, the parties again requested and received permission to take an additional deposition. During the next month, the Court was also required to rule on several motions to compel.

In the meantime, the Court ordered that the case proceed to trial on April 4, 1985. Three days before jury selection, Dean Witter for the first time sought, under 9 U.S.C. § 4, to compel arbitration of plaintiffs common law and state statutory law claims pursuant to paragraph 16 of the Customer’s Agreement. After plaintiff objected to the motion in a memorandum filed on April 4, Dean Witter amended its motion to request arbitration of plaintiff’s federal law claims as well. Again, due to these eleventh-hour maneuvers, the trial date was continued.

In a letter from chambers dated April 16, 1985, the Court set oral argument on Dean Witter’s motion for May 2, 1985. Further, the Court called to counsel’s attention the recent decision of the Court of Appeals in Sweater Bee by Banff, Ltd. v. Manhattan Industries, Inc., 754 F.2d 457 (2 Cir.1985).

On April 26, 1985, defendants moved for permission to file an amendment to their February 2, 1984 answer. Specifically, they seek to set forth as a “Sixth Affirmative Defense” that “[a]t or about the time that the plaintiff opened his securities account with the defendant Dean Witter Reynolds, Inc. [], the plaintiff and Dean Witter entered into a Customer’s Agreement which stipulated that any controversy between them arising out of or relating to the Customer’s Agreement or the breach thereof shall be resolved by arbitration. Therefore, the plaintiff is precluded from pursuing his Complaint before this Court.”

Counsel filed memoranda discussing Sweater Bee on April 30, and May 1, and oral argument was held on May 2. Following questioning by the Court as to whether Dean Witter merely sought to compel arbitration pursuant to 9 U.S.C. § 4, as set forth in the April 1, 1985 motion, or whether it also sought a stay of the instant action pursuant to 9 U.S.C. § 3, Dean Witter filed a “Clarified Motion to Compel Arbitration and for a Stay of Proceedings.” Supplemental memoranda addressing issues raised at oral argument have been submitted by both parties. The motions to compel arbitration and to stay have been thoroughly briefed, and all motions are ripe for decision.

II.

Although the parties have extensively briefed the issues regarding the Arbitration Act, the important question of whether the motion for leave to amend the answer should be granted has been virtually ignored. Defendants’ motion was unaccompanied by a memorandum of law, and plaintiff has submitted nothing in direct response to the motion. The issue is critical because, under Fed.R.Civ.P. 8(c), the affirmative defense of arbitration must appear in the answer, and “a party’s failure to plead an affirmative defense bars its invocation at later stages of the litigation.” Doubleday & Company, Inc. v. Curtis, 763 F.2d 495, 503 (2 Cir.1985) (citing Satchell v. Dilworth, 745 F.2d 781, 784 (2 Cir.1984)). Thus, absent a ruling granting the motion for leave to amend, Fed.R.Civ.P. 15(a), the motions to compel arbitration and to stay cannot be granted; if the defense is not set forth in the answer, Dean Witter “already waived the right to litigate the issue.” Doubleday, at 503.

Under Rule 15(a), “leave [to amend] shall be freely given when justice so requires,” and should be granted absent “some justification for refusal.” See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). However, the “proviso ‘when justice so requires’ necessarily implies justice to both parties.” Pollux Marine Agencies, Inc. v. Louis Dreyfus Corp., 455 F.Supp. 211, 215 (S.D.N.Y.1978). See also 6 C. Wright & A. Miller, Federal Practice and Procedure § 1485, at 420-21 (1971).

Three of the most important factors in determining whether to grant a motion to amend are (1) injustice to the party opposing the motion if the motion is granted; (2) injustice to the moving party if leave to amend is denied; and (3) delay, as well as the reason why the moving party did not include in its original pleading the material sought to be included in the amended pleading. Foman, 371 U.S. at 182, 83 S.Ct. at 227; 6 C. Wright & A. Miller, supra, § 1487, at 429. The factors of delay and injustice or prejudice to the opposing party if the motion is granted often are intertwined, as Judge Kaufman noted in Strauss v. Douglas Aircraft Co., 404 F.2d 1152 (2 Cir.1968): “it is manifest that risk of substantial prejudice increases in proportion to the length of the defendant’s delay in seeking the amendment.” Id. at 1155.

Applying these factors to the facts of the instant case, leave to amend should not be allowed. First, prejudice and injustice to plaintiff are apparent if the motion is granted. He has engaged in comprehensive and expensive discovery, motion practice, and other proceedings preparatory to a trial in this forum. Second, it is not unjust or prejudicial to defendants for their motion to be denied. They will have a forum in this Court to raise their defenses to plaintiff’s claims. Defendants have already expended substantial sums for discovery in this forum, so that the only additional expense to be incurred is the expense of trial. Finally, although “delay alone is not a sufficient reason for denying leave,” 6 C. Wright & A. Miller, supra, § 1488, at 438; see Hanson v. Hunt Oil Co., 398 F.2d 578, 582 (8 Cir.1968), in this case the delay is overwhelming and undue. Defendants have not proffered a persuasive reason for the blatantly tardy filing of the motion for leave to amend. The motion to amend was filed after this case was assigned for trial three times, and only three days before a jury was to be selected in this three-year-old case.

For these reasons, the Court finds that under the facts of this case it would be unfair and unjust to grant defendants’ motion for leave to amend.

III.

Even if the motion for leave to amend was granted, however, the Court would not grant Dean Witter’s motions to compel arbitration and for a stay.

A

The parties’ positions on the arbitration issue may be summarized briefly as follows. Dean Witter claims that under the Supreme Court’s decision in Dean Witter Reynolds, Inc. v. Byrd, — U.S. —, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985), the Court is required to grant its motions to compel and for a stay, despite the late date at which they were filed. Plaintiff, on the other hand, contends that Dean Witter has waived any right to arbitrate that it may have had, and, in any event, only the state law claims are arbitrable. Further, plaintiff asserts that the agreement to arbitrate should not be enforced because the Customer’s Agreement is an adhesion contract. Because the Court agrees with plaintiff on the waiver question, the latter two issues need not be considered.

The Arbitration Act, enacted in 1925, reflected Congressional concern with judicial hostility to arbitration agreements. “The preeminent concern of Congress in passing the Act was to enforce private agreements into which parties had entered.” Byrd, 105 S.Ct. at 1242. However, the right to arbitration, like any other contract right, may be waived. Ohio-Sealy Mattress Mfg. Co. v. Kaplan, 712 F.2d 270, 272-73 (7 Cir.), cert. denied, 464 U.S. 1002, 104 S.Ct. 509, 78 L.Ed.2d 698 (1983); Shinto Shipping Co. v. Fibrex & Shipping Co., 572 F.2d 1328, 1330 (9 Cir.1978); Demsey & Associates v. S.S. Sea Star, 461 F.2d 1009, 1017-18 (2 Cir.1972); cf. Reid Burton Construction, Inc. v. Carpenters District Council of Southern Colorado, 614 F.2d 698, 702 (10 Cir.), cert. denied, 449 U.S. 824, 101 S.Ct. 85, 66 L.Ed.2d 27 (1980). Nevertheless, “[i]n view of the ‘overriding federal policy favoring arbitration,’ waiver ‘is not to be highly inferred and mere delay in seeking a stay of the proceedings without some resultant prejudice to a party cannot carry the day.’ ” Sweater Bee, 754 F.2d at 461 (quoting Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2 Cir. 1968)). See also Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983) (arbitration strongly favored as matter of federal law).

B

As a threshold matter, Dean Witter contends that the question of waiver is one for the arbitrator, citing Trafalgar Shipping Co. v. International Milling Co., 401 F.2d 568, 571 (2 Cir.1968). In Trafalgar Shipping, the Second Circuit held that “all questions of delay which relate to issues which the parties have agreed to submit to arbitration [must] be resolved by the arbitrators, not the court.” Id. at 571 (emphasis added). Here, however, the question of delay is not one that the parties agreed to arbitrate because it is unrelated to the merits of the underlying dispute. Rather, the issue of delay is relevant solely to its effect upon the resolution of the motion to compel arbitration, and, as noted in Trafalgar Shipping, it is for the Court to consider “those questions of delay which relate to and affect issues which it is called upon to decide in connection with the motion under 9 U.S.C. § 4.” Id. at 572. Cf. Sweater Bee, 754 F.2d at 461-62.

C

As to the waiver issue itself, the first matter to be resolved is whether the Supreme Court in Byrd, 105 S.Ct. at 1238, impliedly rejected the application of the waiver doctrine as a defense to a motion to compel arbitration, as Dean Witter argues. It is true that the broad language in Byrd, taken out of context, lends support to the argument that the Supreme Court vitiated the waiver defense in arbitration cases: “agreements to arbitrate must be enforced, absent a ground for revocation of the contractual agreement.” Id. 105 S.Ct. at 1241.

Despite this language, the Court is satisfied that the defense of waiver is still a viable one in arbitration cases. In Byrd, as set forth infra, the central issue addressed was the “doctrine of intertwining.” Unlike the situation in the instant case, the defendant there moved promptly to compel arbitration after the complaint was filed. Thus, the question of waiver neither was presented to the Supreme Court nor even mentioned in the opinion.

Moreover, it is extremely unlikely that the reasoning in Byrd was intended to abolish sub silentio the well-settled principles of waiver which have been consistently applied by federal courts for over forty years. See, e.g., Demsey & Associates, 461 F.2d at 1017-18 (motion to compel arbitration denied when movant’s delay prejudiced opponent); Reconstruction Finance Corp. v. Harrisons & Crosfield, Ltd., 204 F.2d 366, 369-70 (2 Cir.) (“[f]or as a court, when asked to enter an order, under the federal Arbitration Act, requiring a party to arbitrate as he promised, sits ‘in equity,’ passing on a prayer for specific performance, it must take into account equity considerations”), cert. denied, 346 U.S. 854, 74 S.Ct. 69, 98 L.Ed. 368 (1953); Kulukundis Shipping Co., S/A v. Amtorg Trading Corp., 126 F.2d 978, 986 (2 Cir.1942) (specific performance of arbitration agreements subject to equitable defenses).

Significant also is that the Supreme Court in Moses M. Cone Memorial Hospital, 460 U.S. at 24-25, 103 S.Ct. at 941, noted the availability of waiver as a “defense to arbitrability.” There is no express indication that the Court’s recognition of the waiver defense in Moses M. Cone Memorial Hospital was inadvertent or was intended to be overruled by Byrd. Accordingly, the Court must reject the defendants’ argument that Byrd proscribes a consideration of the waiver doctrine in cases as the one sub judice.

On the merits of the waiver question, Dean Witter claims that it did not move to compel arbitration earlier because of the unsettled state of the law regarding the intertwining doctrine. The complaint in this action presents arbitrable state law claims, as well as what Dean Witter apparently believed when this motion was first filed were non-arbitrable federal law claims. Courts in the Fifth, Ninth, and Eleventh Circuits applied the intertwining doctrine, to hold that “when there are arbi-trable and nonarbitrable claims arising out of the same transaction, the district court should have discretion to evaluate the degree to which the claims are intertwined. If the district court determines that they are so intertwined that the purposes of the Arbitration Act and the protective intent of the federal securities laws would be frustrated by separating the claims, then it should refuse to separate them.” Byrd v. Dean Witter Reynolds, Inc., 726 F.2d 552, 554 (9 Cir.1984), rev’d, — U.S. —, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). Three circuits, the Sixth, Seventh, and Eighth, have rejected the intertwining doctrine. See, e.g., Dickinson v. Heinold Securities, Inc., 661 F.2d 638, 646 (7 Cir.1981).

On appeal in Byrd, the Supreme Court reversed the Ninth Circuit’s ruling, 105 S.Ct. at 1238, and in so doing rejected the doctrine of intertwining. The Court held that “the Arbitration Act requires district courts to compel arbitration of pendent ar-bitrable claims when one of the parties files a motion to compel, even when the result would be the highly inefficient maintenance of separate proceedings in different forums.” Id. 105 S.Ct. at 1241. Because of its “belief” that “arbitration would be precluded in this action by reason of the doctrine of intertwining,” Dean Witter argues that it would have been futile for it to file the instant motions until the Court in Byrd resolved the issue.

Dean Witter’s argument to explain its delay of almost three years is unpersuasive. The Second Circuit has not, to this Court’s knowledge, ever applied the intertwining doctrine. Furthermore, Dean Witter could have moved to compel arbitration of arbitrable claims and to stay the proceedings on non-arbitrable claims based on the analysis set forth in N.V. Maatschappij Voor Industriele Waarden v. A.O. Smith Corp., 532 F.2d 874 (2 Cir.1976). See also NPS Communications, Inc. v. The Continental Group, Inc., 760 F.2d 463, 464-465 (2 Cir.1985) (affirming district court application of A.O. Smith to motion to compel arbitration in case involving arbi-trable and non-arbitrable claims).

However, the Court recognizes that Dean Witter’s lengthy and inexcusable delay in itself does not constitute a waiver of whatever rights to arbitrate it may have had. Carcich, 389 F.2d at 696; see also Chatham Shipping Co. v. Fertex Steamship Corp., 352 F.2d 291, 293 (2 Cir.1965). Rather, only when delay prejudices the opposing party will delay be sufficient to constitute a waiver. Sweater Bee, 754 F.2d at 463. “Sufficient prejudice to infer waiver might be found, for example, if the party seeking the stay took advantage of judicial discovery procedures not available in arbitration.” Carcich, 389 F.2d at 696 n. 7.

A party may also waive arbitration by “the litigation of substantial issues going to the merits.” Sweater Bee, 754 F.2d at 461. See also Reid Burton Construction, Inc., 614 F.2d at 702 (waiver may be found when “litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit by the time an intention to arbitrate was communicated by the defendant to the plaintiff”).

Further, notice to the party opposing arbitration is an important factor in the Second Circuit cases in which a motion to compel arbitration is granted. See, e.g., Sweater Bee, 754 F.2d at 461-62 (arbitration raised in answer); Carcich, 389 F.2d at 694 (answer to cross-complaint alleged that dispute should be submitted to arbitration); Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402, 412-13 (2 Cir.1959) (no waiver where answer contained arbitration defense although motion for stay was filed nine months later), cert. dismissed, 364 U.S. 801, 81 S.Ct. 27, 5 L.Ed.2d 37 (1960). See also Chatham Shipping Co., 352 F.2d at 293 (“the earliest point at which such preclusion may be found is when the other party files an answer on the merits”).

Applying these principles to the facts of this case, it is clear that Dean Witter has waived its right to arbitrate. Plaintiff, without notice that Dean Witter might move to compel arbitration, embarked on lengthy and expensive discovery and will be greatly prejudiced and inconvenienced by the delay. For its part, Dean Witter has engaged in robust pretrial litigation over a period of nearly three years, and at no point raised the arbitration defense in an answer or other filing. In addition to moving for several extensions and attending chambers conferences, Dean Witter has engaged in discovery that would not have been available to it if it had gone to arbitration. The instant motion was filed only after this case was assigned and reassigned for trial. Under these circumstances not only has Dean Witter’s delay prejudiced plaintiff, but Dean Witter also has litigated “substantial issues going to the merits.” Sweater Bee, 754 F.2d at 461. Accordingly, under either of the standards set forth in Sweater Bee and Carcich, Dean Witter has waived its right to compel arbitration of this dispute.

As was noted in Cavac Compania Ano-nima Venezolana de Administracion y Comercio v. Board for Validation of German Bonds, 189 F.Supp. 205 (S.D.N.Y.1960), “in the course of litigation, there comes a time when it would be manifestly unfair to permit one side to resort to arbitration over the protest of the other.” Id. at 209. That point has been reached here.

IV.

For the reasons set forth above, Dean Witter’s motion for leave to file an amended answer to raise the arbitration defense is denied. In all other respects, the motion for leave to file an amended answer is granted, absent objection. However, even if the motion to amend to raise the arbitration defense should be granted, the Court concludes that plaintiff has met its heavy burden of demonstrating that Dean Witter has waived whatever arbitration rights it may once have had. Accordingly, Dean Witter’s motions for a stay of these proceedings and to compel arbitration are denied.

SO ORDERED.

      . Defendant Reid joined in Dean Witter's motion to compel arbitration and to stay these proceedings.

      . Paragraph 16 provides in full as follows:
      16. Any controversy between you and the undersigned arising out of or relating to this contract or the breach thereof, shall be settled by arbitration, in accordance with the rules, then obtaining, of either the Arbitration Committee of the Chamber of Commerce of the State of New York, or the American Arbitration Association, or the Board of Arbitration of the New York Stock Exchange as the undersigned may elect. If the undersigned does not make such election by registered mail addressed to you at your main office within five (5) days after receipt of notification from you requesting such election, then the undersigned authorizes you to make such election in behalf of the undersigned. Any arbitration hereunder shall be before at least three arbitrators and the award of the arbitrators, or of a majority of them, shall be final, and judgment upon the award rendered may be entered in any court, state or federal, having jurisdiction.

      . Defendants also seek to assert as a "Seventh Affirmative Defense” the failure of plaintiff’s cause of action for violation of the Rules of the New York Stock Exchange to state a claim on which relief may be granted. Plaintiff has not opposed that aspect of the motion. Accordingly, the motion for leave to amend should be granted to permit filing the proposed Seventh Affirmative Defense.

      . Strauss involved defense counsel’s belated attempt to raise the statute of limitations as a defense. If the defense had been raised earlier, the court noted, plaintiff might have chosen to drop the action and refile it in a forum with a longer statute of limitations. Id. at 1157-58. Accordingly, the court found that plaintiff was substantially prejudiced by the trial court’s granting defendant leave to file an amended answer, and reversed its ruling as an abuse of discretion.

      . Some discovery taken in this action could, of course, be used in a subsequent arbitration proceeding. However, given the relatively limited scope of arbitration proceedings, nearly all of the funds spent in discovery would be wasted if Dean Witter’s motions were granted.

      .Dean Witter did offer a reason for its delay in making the motion to compel arbitration and to stay this action, see infra pp. 157-158, but it has given no explanation of its failure to include the arbitration defense in an earlier answer. Clearly the defense was not raised at this late date because of information uncovered during the discovery process, which distinguishes this case from Tokyo Boeki (USA), Inc. v. SS Navarino, 324 F.Supp. 361, 367 (S.D.N.Y.1971) (motion for leave to amend to assert affirmative defense of arbitration granted when existence of agreement to arbitrate was unknown to defendant until after deposition of officer of plaintiff).


author: RENNER, District Judge.

text:
    GENERAL ELECTRIC CO., Plaintiff, v. UNITED STATES of America, Defendant.
    Civ. No. 3-85-118.
    United States District Court, D. Minnesota, Third Division.
    July 18, 1985.
    Howard J. Bergman, Faegre & Benson, Minneapolis, Minn., for plaintiff.
    Mary Carlson, Asst. U.S. Atty., Minneapolis, Minn., for defendant.
   MEMORANDUM AND ORDER

RENNER, District Judge.

This matter comes before the court on the motion of defendant to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(1), 12(b)(2), 12(b)(6) or in the alternative for an order granting summary judgment to the defendant pursuant to Fed.R.Civ.P. 56(b). Since matters outside the pleadings were considered, this court will treat this motion as a motion for summary judgment. Mary Carlson appears for defendant. Howard Bergman appears for plaintiff.

Stanley Green, a/k/a Stanley Greenberg, was employed by the U.S. Postal Service (USPS), Bulk Mail Center. He had been assigned to assist General Electric Co. with respect to its contract to perform maintenance and repair work on a high voltage electrical system which was owned and operated by USPS. On April 27, 1977 he sustained electrical burns while working on this equipment.

Green filed a claim for and received compensation pursuant to Federal Employees’ Compensation Act (FECA), 5 U.S.C. § 8101 et seq. He also brought an action against General Electric in state court. Defendant received notice of this action from Green-berg or his attorneys not later than October 1978. That case was tried to a jury in January and February 1980. The jury returned a verdict finding Green 9 percent at fault, General Electric 21 percent at fault and the Bulk Mail Center 70 percent at fault. The jury found damages in the amount of $475,000.00; the trial judge properly reduced the award to $432,250.00. General Electric appealed the verdict to the Minnesota Supreme Court which affirmed. On May 14, 1981, General Electric paid the entire judgment.

On April 6, 1984 General Electric filed a claim for contribution from the USPS under the Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 1346(b), 2671 et seq., 39 U.S.C. § 409. That claim was denied on December 11, 1984. General Electric commenced this lawsuit on January 15, 1985. The government then filed this motion.

The basis of the government’s motion is simple. Defendant asserts that presentment of a timely administrative claim is a jurisdictional prerequisite to suit under the Federal Tort Claims Act, 28 U.S.C. § 2671 et seq., and plaintiff failed to comply. 28 U.S.C. § 2401(b) provides:

A tort claim against the United States shall be forever barred unless it is presented in writing to the appropriate federal agency within two years after such claim accrues.

In an action against the United States for contribution, a claim accrues when the claimant pays the judgment upon which the cause of action for contribution is based. United States v. Yellow Cab Co., 340 U.S. 543, 71 S.Ct. 399, 95 L.Ed. 523 (1951).

In this case, plaintiff paid the judgment upon which its claim for contribution is based on May 14, 1981. Plaintiff had until May 14, 1983 to present a timely administrative claim to the Postal Service. Plaintiff attempted to present a claim on April 6, 1984, almost 3 years after the cause of action accrued and almost a year after the two year time limitation had expired. Thus, according to the defendant, plaintiffs claim for contribution is time barred.

In response to the government’s position, General Electric contends that its claim accrued on February 23, 1983. On that date the Supreme Court held that the exclusive provision of the FECA did not directly bar a third party indemnity action against the federal government brought under the FTCA. Lockheed Aircraft Corp. v. United States, 460 U.S. 190, 103 S.Ct. 1033, 74 L.Ed.2d 911 (1983). Prior to the Lockheed decision, General Electric had no reasonable probability of successfully prosecuting an FTCA claim for contribution against the United States. See Thomas v. Lockheed Aircraft Corp., 665 F.2d 1330 (D.C.Cir.1981), rev’d sub nom. Lockheed Aircraft Corp. v. United States, 460

U.S. 190, 103 S.Ct. 1033, 74 L.Ed.2d 911 (1983); Kudelka v. American Hoist & Derrick Co., 541 F.2d 651 (7th Cir.1976); Gali-mi v. Jeteo Inc., 514 F.2d 949 (2nd Cir. 1975); Travelers Insurance Co. v. United States, 493 F.2d 881 (3rd Cir.1974); Newport Air Park, Inc. v. United States, 419 F.2d 342 (1st Cir.1969); Wien Alaska Airlines, Inc. v. United States, 375 F.2d 736 (9th Cir.), cert, denied, 389 U.S. 940, 88 S.Ct. 288, 19 L.Ed.2d 291 (1967).

In decisions which pre-date Lockheed, the Eighth Circuit barred third party claims analogous to the claims barred in other jurisdictions by the FECA. Maddux v. Cox, 382 F.2d 119 (8th Cir.1967); Stencel Aero Engineering Corp. v. United States, 536 F.2d 765 (8th Cir.1976), affd, 431 U.S. 666, 97 S.Ct. 2054, 52 L.Ed.2d 665 (1977). Based on the reasoning and dicta in these two Eighth Circuit cases, the case law of other jurisdictions, and the government’s own position that the FECA bars claims for contribution, General Electric argues that prior to the Lockheed decision it would have been futile for it to file its administrative claim before the time it ultimately did.

As to the issue of when the claim accrued, General Electric relies on the case on United States v. LePatourel, 593 F.2d 827 (8th Cir.1979). In LePatourel, the ap-pellees were involved in an auto accident with a federal judge. They did not file a notice of their claim under the FTCA within two years as required by 28 U.S.C. §§ 2401(b), 2675. They did, however, file a lawsuit within the four year Nebraska statute of limitations. The Eighth Circuit panel which originally heard the appeal from that suit held that the FTCA applied to a federal judge performing an official, but non-judicial, function. It also held that Le-Patourel’s claim was barred for failure to file within the two year limit. Upon rehearing en banc, the Eighth Circuit remanded to the district court to determine why the LePatourels failed to process their claim within the prescribed period of time. Based upon the district court’s findings, the Eighth Circuit held that the LePatour-els could not have reasonably foreseen the Eighth Circuit’s decision that federal judges acting in their official, but non-judicial, function are subject to the provisions of the FTCA. “Since the LePatourels had no reasonable probability of successfully prosecuting the FTCA claim against Judge Denny prior to our decision their claim accrued when we clarified that right through our construction of the Act.” 593 F.2d at 830.

The court in LePatourel recognized that the issue of when a particular claim accrues within the meaning of the FTCA is a question of federal law. Id. The court relied on Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971) for guidance in determining when courts should refrain from the normal procedure of giving retroactive application to the principles of law established in a given case. The Court in Chevron Oil wrote,

In our cases dealing with the nonretroac-tivity question, we have generally considered three separate factors. First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second, it has been stressed that “we must ... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.” Finally, we [must weigh] the inequity imposed by retroactive application, for “[w]here a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the 'injustice or hardship’ by a holding of nonretroactivity.”

Chevron Oil, 404 U.S. at 106-07, 92 S.Ct. at 355 (citations omitted).

In this case, General Electric asserts that an analysis of the first factor listed in Chevron Oil favors it. General Electric had no reasonable probability of successfully prosecuting its FTCA claim prior to the Lockheed decision which effectively overruled past precedent. The second prong of Chevron Oil, whether prospective application will further the purposes of the interests protected by the Lockheed decision, is a much closer question. This case involves the issue of contribution; the Lockheed case dealt only with the issue of indemnity. Courts often have distinguished indemnification from contribution. Further, the Eighth Circuit has stated that the FTCA is for compensatory purposes and that Congress, in waiving the sovereign immunity of the United States, intended that tort victims be compensated for injuries caused by the negligence of government employees. United States v. LePatourel, 571 F.2d 405 at 407-08 (8th Cir.1978). That purpose has been met, the tort victim in this case, Green, has been compensated.

The final Chevron Oil consideration is whether retroactive application of the Lockheed decision would produce “substantial inequitable results.” General Electric contends that if Lockheed is not applied, unfairness will result because it has had to pay the entire judgment, even though the jury found the Postal Service 70 percent at fault. The government responds by noting that the finding of 70 percent fault has no bearing on this case, since the government has never defended itself in this matter. Moreover, the government argues that General Electric had ample time to join its claim for contribution either by impleading the United States in the state court proceedings or by filing an administrative claim and commencing an action for contribution under the FTCA within two years following the payment of the judgment. Moreover, the Lockheed decision was filed on February 23, 1983, several months before the two year statute of limitations for filing an administrative claim expired. General Electric had the opportunity to timely file its claim for contribution pursuant to the FTCA after the Lockheed decision was handed down. In conclusion, the court finds that retroactive application of the Lockheed decision would produce “substantial inequitable results” to the government, particularly since General Electric had the time to litigate the issue of contribution before the regular statute of limitations had run.

This court recognizes that summary judgment should be granted only if “the moving party has established his right to a judgment with such clarity as to leave no room for controversy and the non-moving party is not entitled to recover under any discernible circumstances.” Camfield Tires, Inc. v. Michelin Tire Corp., 719 F.2d 1361, 1364 (8th Cir.1983), quoting, Butler v. MFA Life Insurance Co., 591 F.2d 448, 451 (8th Cir.1979). In this case, the facts are not in dispute and the court has determined as a matter of law that plaintiffs cause of action is time barred. Summary judgment, therefore, is an appropriate remedy.

Based upon the foregoing, the record, file, memoranda, and oral arguments of counsel, IT IS HEREBY ORDERED that defendant’s motion for summary judgment be granted and plaintiffs complaint be dismissed with prejudice.

LET JUDGMENT BE ENTERED ACCORDINGLY.

      . The government also notes that the USPS is not a proper defendant to an action seeking contribution under the FTCA. The plaintiff does not dispute this. It amended its complaint, dropping the USPS as a defendant, and suing the United States instead.