author: ZIEGLER, District Judge.

text:
    Robert A. PAUL, as custodian and trustee for Laurence E. Paul, Stephen E. Paul and Karen R. Paul; Marshall L. Berkman, as custodian and trustee for Laura G. Berkman, Ellen F. Berkman and Martha L. Berkman; Donna B. Paul: the Louis Berkman Company; the Louis and Sandra Berkman Foundation; and the M & I Marshall and Ilsley Bank, as trustee for the Louis Berkman Company Pension Trust, Plaintiffs, v. Jack N. BERKMAN, Myles P. Berkman and Associated Communications Corporation, Defendants.
    Civ. A. No. 85-0326.
    United States District Court, W.D. Pennsylvania.
    Oct. 29, 1985.

      Martin Flumenbaum, New York City, Pamela A. McCallum, Pittsburgh, Pa., for plaintiffs.
    E.J. Strassburger, Pittsburgh, Pa., Bruce W. Kauffman, Philadelphia, Pa., William H. Mulligan, New York City, for defendants.
   OPINION

ZIEGLER, District Judge.

This court is called upon to resolve an intrafamily dispute arising from the sale of 1,018,540 shares of Associated Communications Corporation (ACC) stock. Plaintiffs, members of the Louis Berkman family, argue that defendants, members of the Jack Berkman family, induced the sale by making fraudulent representations and omissions in violation of state law and Section 10(b) of the Securities Exchange Act of 1934 and regulations thereunder. 15 U.S.C. § 78j. Defendants have moved for summary judgment. We find that there are genuine issues of material fact for resolution by a fact-finder and therefore defendants’ motion will be denied.

I. History of Case

We begin by noting that nearly every fact asserted by one party is disputed by the other. The record reveals a history of animosity between the two branches of the Berkman family. It is not surprising, therefore, that both parties have approached the instant dispute with fervor. For example, defendants’ “Statement of Undisputed Facts” contains the following: “This is nothing more than a case where plaintiffs, with the benefit of 20/20 hindsight, seek to ratify their mistaken business judgment and reap a windfall profit at the expense of defendants.” Defendants’ Reply Memorandum at 8. Similarly, plaintiffs display their zeal by informing the court of the following “fact”: “In this case, defendants used their controlling position in ACC vindictively, to punish plaintiffs for perceived slights and wounds of the past.” Plaintiffs’ Memorandum at 5. Some facts do emerge.

Prior to the sale of the stock in question, plaintiffs owned or held a total of 1,018,540 shares, equal to about 21 percent of ACC’s common shares. Before the sale, defendants, Jack and Myles Berkman, owned a total of 747,596 shares of Class A and Class B stock. Under a 1978 agreement, the Jack Berkman family was empowered to nominate two-thirds of ACC’s board of directors and the Louis Berkman family was empowered to nominate one-third. The board has consisted of two representatives of the Jack Berkman family, Jack and Myles, and one representative of the Louis Berkman family, Louis. Also under the 1978 agreement, the Jack Berkman family held a right to purchase any ACC stock that the Louis Berkman family desired to sell before any sale could be made to a third party. This right of purchase by the Jack Berkman family was subject to the corporation’s right of first refusal.

Plaintiffs allege that, in late 1983, they began to consider selling their stock. Plaintiffs then notified ACC and the Jack Berkman family of their intention to sell. To determine a fair purchase price, negotiations between the two families ensued. The parties disagree as to the terms and timing of preliminary offers and rejections, but it is clear that the parties signed a stock purchase agreement on June 5, 1984. The agreement provides for the sale of 1,018,540 shares of ACC stock at $10 per share. The complaint alleges that, pursuant to the agreement, ACC purchased from plaintiffs 72,000 shares on June 28, 1984, and 473,270 shares on December 12, 1984. The agreement also provides for the purchase of plaintiffs’ remaining 473,270 shares at $10 a share on June 26, 1985. It appears that plaintiffs have not tendered these remaining shares.

Sometime after December 12,1984, plaintiffs allege they discovered that defendants concealed the fact that ACC had been negotiating with a third party, KISS Limited Partnership (KISS), to sell most of ACC’s eleven radio stations at a substantial price. Discovery to date indicates that the KISS negotiations were serious and ongoing in May 1984, a month before the stock purchase agreement was signed. The parties hotly contest the date on which an agreement in principle was reached for the sale of the eight radio stations to KISS.

The sale of eight radio stations was publicly announced on August 3, 1984, defendants allege. The purchase price was $29.5 million in cash and notes. The market price at ACC stock rose dramatically after the sale of the stations was announced. On June 5, 1984, when plaintiffs agreed to sell their stock, the bid price was $9 a share. On the first day of trading after the sale was announced, the bid price rose to $13.37. At the time the complaint was filed, the bid price was approximately $20.50. By agreeing to sell their stock at $10 a share, plaintiffs allegedly lost nearly $18 million.

Seeking rescission of the stock purchase agreement, plus compensatory and punitive damages, plaintiffs filed a six-count complaint on February 12, 1985. Plaintiffs claim that defendants had a duty to disclose material facts relating to the negotiations for the sale of the radio stations. Plaintiffs also claim that a press release of June 5, 1984, issued by defendants, was false and misleading in that it failed to disclose that KISS had offered to buy substantially all of ACC’s radio stations at a high price. In addition, plaintiffs claim the statement falsely represented that increased bank borrowings would be necessary, when in fact defendants planned to use the proceeds of the sale of the radio stations to purchase plaintiffs’ stock and to pay off a large portion of ACC’s outstanding loans.

Defendants have asserted counterclaims for anticipatory breach of the stock purchase agreement and for declaratory relief. Defendants, Jack and Myles Berkman, also filed a third-party complaint against Louis and Marshall Berkman for contribution.

II. Summary Judgment Motion

After extensive discovery by both parties, defendants have moved for summary judgment. In support of their motion, defendants make two arguments. First, defendants had no obligation or duty to disclose to plaintiffs that ACC was engaged in preliminary negotiations to sell eight of its radio stations before plaintiffs agreed to sell their stock. Second, plaintiffs ratified the stock purchase agreement when they accepted $4,732,700 in cash for their stock more than four months after they first learned of defendants’ alleged fraud. Both arguments are directed against plaintiffs’ claims under Section 10(b) of the Securities Exchange Act of 1934 and Securities Exchange Commission Rule 10b-5. Defendants also contend that, if summary judgment is granted as to the federal claims, the state law claims should be dismissed for want of subject matter jurisdiction, citing United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966).

A motion for summary judgment may be granted only if there are no issues of material fact which, if believed by the trier of fact, would justify a finding for the party opposing the judgment. Wahl v. Rexnord, Inc., 624 F.2d 1169 (3d Cir.1980). AH evidence must be viewed in a light most favorable to the party opposing the motion, and every reasonable inference must be afforded to the opposing party. Sanford v. O’Neill, 616 F.2d 92 (3d Cir.1980). A mov-ant must make a “clear showing” that no genuine issue of any material fact remains for trial. Ely v. Hall’s Motor Transit Co., 590 F.2d 62, 66 (3d Cir.1978).

A. Duty To Disclose and Materiality

The issue presented by defendants’ first argument is whether defendants had a duty to disclose to plaintiffs inside information pertaining to the ACC-KISS negotiations before defendants agreed to purchase plaintiffs’ stock.

Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 prohibit the use, in connection with the purchase or sale of any security, of any manipulative or deceptive device with the intent to defraud or deceive. Rule 10b-5 provides:

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.

17 C.F.R. § 240.10b-5 (1983).

The rule imposes a duty on corporate insiders to disclose, prior to trading, material information. Chiarella v. United States, 445 U.S. 222, 230, 100 S.Ct. 1108, 1115, 63 L.Ed.2d 348 (1980). Material information consists of those facts that a reasonable investor might have considered as important in making a decision to buy or sell. Rochez Brothers, Inc. v. Rhoades, 491 F.2d 402, 410 (3d Cir.1974), cert. denied, 425 U.S. 933, 96 S.Ct. 2205, 48 L.Ed.2d 817 (1976); Affiliated Ute Citizens v. United States, 406 U.S. 128, 153-54, 92 S.Ct. 1456, 1472, 31 L.Ed.2d 741 (1972).

Section 10(b) and Rule 10b-5 were enacted and promulgated in response to the long-held policy of a free and open securities market, where no investor is free to capitalize on his/her position as a corporate insider by benefitting through the fraudulent use of material nonpublic information. Chiarella, supra, 445 U.S. at 230, 100 S.Ct. at 1115. Insiders are bound to disclose material nonpublic information or to abstain from trading. Dirks v. S.E.C., 463 U.S. 646, 653, 103 S.Ct. 3255, 3260, 77 L.Ed.2d 911 (1983).

Defendants argue that the undisclosed information dealt with preliminary negotiations for the sale of corporate assets and that such information is not “material” within the meaning of Section 10(b) and Rule 10b-5. In support of their contention that no duty arises to disclose preliminary negotiations, defendants rely on Greenfield v. Heublein, Inc., 742 F.2d 751 (3d Cir.1984), cert. denied, — U.S. -, 105 S.Ct. 1189, 84 L.Ed.2d 336 (1985), and Staffin v. Greenberg, 672 F.2d 1196 (3d Cir.1982).

In Greenfield, a class comprised of individual investors claimed that a target corporation and its takeover corporation violated Section 10(b) and Rule 10b-5 by withholding information concerning takeover discussions. The Court of Appeals, citing Staffin, supra, held that “where an agreement in principle to merge has been reached a duty to disclose does exist.” Greenfield, supra at 756. Applying that rule, the court held that a duty to disclose a merger agreement arises where there has been a “fundamental agreement on the price and structure of a merger.” Greenfield, supra at 756. (Emphasis in original). Defendants argue that a fundamental agreement on price and structure of the deal with KISS was not reached before July 26, 1984, and that the KISS negotiations were not material on the date of the stock purchase agreement as a matter of law.

Contrary to defendants’ repeated assertions, Greenfield is not dispositive. In the opinion, Chief Judge Aldisert twice limited the holding to merger discussions. 742 F.2d at 753, 755. Greenfield does not, even arguably, address when the duty to disclose arises in the context of negotiations for the sale of assets. Indeed, any comparison between Heublein, Inc. and ACC would be strained because Heublein was taken over by another corporation while ACC, by all indications, remains a strong and viable concern.

Moreover, we note that the policy considerations underlying the test adopted by the Court of Appeals in the merger context are not applicable in the sale of asset context. The policy considerations justifying nondisclosure, that is, until an agreement has been reached on the price and structure of a merger, were described in Staffin as follows:

A company intending to make a tender offer strives to keep its plans secret. If word of the impending offer becomes public, the price of the stock will rise towards the expected tender price. Thus, the primary inducement to stockholders — an offer to purchase their shares at an attractive price above the market — is lost, and the offeror may be forced to abandon its plans or to raise the offer to a still higher price.

672 F.2d at 1206. However, disclosure of negotiations to sell corporate assets would not itself thwart the transaction. The potential buyer would not be dissuaded in any way by a rise in the selling corporation’s stock value. The buyer is merely negotiating a fair price for the assets, not for the corporation itself.

Further, disclosure of a buyer’s lucrative offer to purchase some corporate assets would not harm the corporation or undermine Rule 10b-5’s goal of protecting “the basic integrity and fairness of the exchange markets.” Greenfield, supra at 756. Such a disclosure would harm only those having inside information and intending to participate in a sale or purchase of stock. The precise target of Rule 10b-5.

The Securities Exchange Act and regulations thereunder reflect a Congressional policy of full and fair disclosure of material information so that the investor may participate in a free and open market. The purpose of the 1934 Act and SEC regulations is “to substitute a philosophy of full disclosure for the philosophy of caveat emptor.” Sante Fe Industries, Inc. v. Green, 430 U.S. 462, 477, 97 S.Ct. 1292, 1302, 51 L.Ed.2d 480 (1977). Given these policies, we hold that Greenfield’s standard for limited disclosure is not controlling.

Having found that Greenfield and Staf-fin are inapplicable, we must determine whether the information was “material” under Section 10(b) and Rule 10b-5. The statute and regulation do not define “material.” The Supreme Court has defined the term in the context of SEC Rule 14a-9, governing the information that must be disclosed in proxy statements. In TSC Industries, Inc. v. Northway, Inc., the Court stated that:

[T]he general standard of materiality ... contemplate^] ... a showing of a substantial likelihood that, under all the circumstances, the omitted fact would have assumed actual significance in the deliberations of the reasonable shareholder. Put another way, there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.

426 U.S. 438, 449, 96 S.Ct. 2126, 2132, 48 L.Ed.2d 757 (1976).

The Supreme Court’s definition has been applied by the Court of Appeals in the recent case of Rothberg v. Rosenbloom, 771 F.2d 818 (3d Cir.1985) to a claim of fraudulent nondisclosure under Rule 10b-5. See also Staffin, supra at 1205. Also, information dealing with the sale of corporate assets has been held to be material in Kidwell ex rel. Penfold v. Meikle, 597 F.2d 1273 (9th Cir.1979), and Swanson v. American Consumer Industries, 415 F.2d 1326 (7th Cir.1969); see also Hazen, Law of Securities Regulation, § 13.5 (1985).

We decline to hold, as a matter of law, that the information known by defendants was not material within the meaning of Section 10(b) and Rule 10b-5. The evidence of record establishes that KISS had made substantial overtures to buy eight of ACC’s radio stations in May 1984, a month before plaintiffs signed the stock purchase agreement. Defendants’ Exhibit E. (Whether the KISS letter represents an “offer” in the legal sense is irrelevant in determining materiality because the letter indicates a severe underestimation by ACC of the value of assets.) If plaintiffs had known that the eight radio stations were worth more than $20 million on the open market, their willingness to sell ACC stock at $10 a share may have been affected. Rothberg, supra at 821.

Plaintiffs have alleged, and testified by deposition that knowledge of the KISS negotiations and the potential sale price of the stations would have affected their decision to sell ACC stock. Complaint at paragraph 53. Defendants have failed to make a “clear showing” that such information would not have been material to plaintiffs’ decision to sell. Ely, supra, 590 F.2d at 66. Because, as the Supreme Court held in TSC Industries, supra, 426 U.S. at 450, 96 S.Ct. at 2133, materiality under the securities laws is “peculiarly” a question “for the trier of fact,” we decline to grant judgment on the basis that the information regarding the sale of the radio stations was not material.

B. Waiver and Estoppel

Defendants next contend that plaintiffs are estopped from asserting a claim of fraud under Section 10(b) and Rule 10b-5 because plaintiffs “ratified” the stock purchase agreement when they accepted $4,732,700 in cash for 473,270 shares on December 7, 1984, four months after the sales were announced. According to defendants, “notwithstanding [plaintiffs’] knowledge of the very wrongdoing alleged in the complaint, which gave rise to a perception of unfairness, and without asking a single question of anyone concerning such alleged wrongdoing, ... plaintiffs chose to accept the multimillion dollar benefits of the transaction and ratified the Stock Purchase Agreement.” Defendants’ Reply Memorandum at 37.

Defendants are confusing the concepts of estoppel and the affirmative defense of due diligence. The motion now before this court is based on estoppel, that is, plaintiffs’ action in abiding by the stock purchase agreement with full knowledge of the material elements of the ACC-KISS transaction. The judgment motion and supporting arguments of defendants are not predicated on the affirmative defense of due diligence, that is, plaintiffs’ failure to take reasonable steps to learn and to understand the transaction in question. Straub v. Vaisman & Co., 540 F.2d 591, 598 (3d Cir.1976). We decline to determine whether plaintiffs have failed to exercise due diligence as a matter of law because the issue has not been raised or briefed by the parties.

Turning to the estoppel argument, we find that defendants have failed to make the required “clear showing” that plaintiffs had full and adequate knowledge of the material elements of the ACC-KISS transaction (especially the seriousness of the negotiations in May 1984) when they accepted cash for their stock in December 1984. Ely, supra at 66. As permitted by Rule 56(c), plaintiffs submitted opposing affidavits, that they were unaware of the extent of the negotiations between KISS and ACC prior to December 12, 1984, the date that plaintiffs sold their stock on the terms contained in the agreement of June 5, 1984. Whether these statements, made under oath, are probative on the issue of plaintiffs’ lack of due diligence, we decline to decide. They are, however, uncontra-dicted by defendants and dispositive of the issue of estoppel.

III. Summary

Because we find that genuine issues of material fact exist as to whether defendants’ nondisclosure of the particulars of the ACC-KISS negotiations was a “material” misrepresentation under Section 10(b) and Rule 10b-5, and because genuine issues of material fact exist as to whether plaintiffs’ acceptance of cash for their stock in December 1984 was with full knowledge of the alleged fraud in June 1984, defendants’ motion for summary judgment will be denied.

A written order will follow denying the motion of defendants for summary judgment.


source: Caselaw Access Project

author: ROBERT D. POTTER, Chief Judge.

license: Public Domain

text:
    Robert M. THOMPSON, Jr., Plaintiff, v. NATIONAL GRANGE MUTUAL INSURANCE COMPANY, Defendant.
    No. C-C-85-0144-P.
    United States District Court, W.D. North Carolina, Charlotte Division.
    Oct. 29, 1985.
    Mark A. Michael, Bagder, Johnson, Chapman & Michael, Charlotte, N.C., for plaintiff.
    John H. Small, Greensboro, N.C., for defendant.
   ORDER

ROBERT D. POTTER, Chief Judge.

THIS MATTER is before the Court on the Plaintiff’s Motion to Compel Answer to Interrogatory 7 of Plaintiff’s Interrogatories dated June 27, 1985. Also before the ’ Court is the Defendant’s Motion to Dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) and, alternatively, for improper venue pursuant to Fed.R.Civ.P. 12(b)(3). A hearing was held on these motions before this Court on September 9, 1985 at Charlotte, North Carolina.

This action was brought pursuant to the Age Discrimination in Employment Act after the Defendant discharged the Plaintiff, a Virginia resident at the time, from his position as Assistant Regional Claims Manager in the Defendant’s Richmond, Virginia office. None of the events giving rise to this suit has any connection with North Carolina. Moreover, the Defendant has not done business in North Carolina since August 1981. At all relevant times, the Defendant maintained no office, employees, telephone listings, or bank accounts in North Carolina; nor did it solicit any business in North Carolina. By its motion to compel, however, the Plaintiff seeks to establish that the Defendant entered into contracts in North Carolina between 1983 and 1985 with independent adjusters to conduct investigations with respect to accidents that may have occurred in North Carolina or claimants who reside there.

In its Order of September 10, 1985, the Court questioned the relevance to this lawsuit of such contacts by a defendant insurance company, not otherwise doing business in North Carolina, with independent adjusters in North Carolina. Accordingly, before ruling on the Plaintiff’s Motion to Compel and the Defendant’s Motion to Dismiss, the Court has allowed the Plaintiff to file a brief and the Defendant to file its response on the following questions: (1) whether such contacts by the Defendant with independent adjusters would warrant in personam jurisdiction in this District in an action not related to those contacts; and (2) whether or not the Western District of North Carolina is the proper venue for this action.

Having reviewed the parties’ briefs and the relevant case law, the Court is of the opinion that such contacts by the Defendant with independent adjusters in North Carolina are

not purposeful, systematic or significant enough to warrant the exercise of [in personam ] jurisdiction in light of due process guarantees and [the Fourth Circuit’s] standard that the contacts with the forum state be ‘fairly extensive’ when the cause of action arises outside that state.

Wolf v. Richmond County Hospital Authority, 745 F.2d 904, 905 (4th Cir.1984). Since the present action arises out of an employment dispute in Virginia, “the sufficiency of contacts threshhold is elevated,” O’Neal v. Hicks Brokerage Co., 537 F.2d 1266, 1268 (4th Cir.1976), and a “more stringent standard is applied” in determining whether the required minimum contacts between the nonresident Defendant and the forum state exist. Wolf, supra, at 909. In Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, -, 104 S.Ct. 1868, 1874, 80 L.Ed.2d 404 (1984), the United States Supreme Court held that

mere purchases, even if occurring at regular intervals, are not enough to warrant a State’s assertion of in personam jurisdiction over a nonresident corporation in a cause of action not related to those purchase transactions.

Accordingly, this Court does not believe that further discovery into the purchase of investigation services from independent adjusters in North Carolina is necessary, since those services are unrelated to the cause of action and are therefore insufficient to form a basis for personal jurisdiction.

Having determined that the Plaintiff’s Motion to Compel should be denied, the Court may now address the Defendant’s Motion to Dismiss. As- the Defendant has noted, the Plaintiff must prove that the Defendant was “engaged in substantial activity” in North Carolina “when service of process [was] made upon such party” for this Court to have personal jurisdiction over the Defendant. N.C.Gen.Stat. § 1-75.4(l)(d). Service of process was made on the Defendant in late March 1985. As the Court has determined that any contacts the Defendant may have had with independent adjusters in North Carolina are insufficient to form a basis for personal jurisdiction over the Defendant, and as the Plaintiff has failed to show any other substantial activity by the Defendant in North Carolina as of March 1985, the Court is of the opinion that the Defendant’s Motion to Dismiss for lack of personal jurisdiction should be granted.

Since the Court has decided to grant the Defendant’s Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(2), it is unnecessary for the Court to address the Defendant’s alternative Motion to Dismiss for improper venue pursuant to Fed.R.Civ.P. 12(b)(3).

NOW, THEREFORE, IT IS ORDERED that:

(1) The Plaintiff’s Motion to Compel is DENIED;
(2) The Defendant’s Motion to Dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) is GRANTED; and
(3) The Court need not rule on the Defendant’s Motion to Dismiss for improper venue pursuant to Fed.R. Civ.P. 12(b)(3).


author: SACHS, District Judge.

text:
    Luther Kevin CUNNINGHAM, Plaintiff, v. SUBARU OF AMERICA, INC., et al., Defendants.
    No. 85-0824-CV-W-6.
    United States District Court, W.D. Missouri, W.D.
    Oct. 30, 1985.
    Gary C. Robb, Anita Porte Robb, Robb & Robb, Kansas City, Mo., for plaintiff.
    Joseph R. Colantuono, Joel A. Poole, Pol-sinelli, White & Vardeman, Kansas City, Mo., for defendants.
   MEMORANDUM AND ORDER

SACHS, District Judge.

Defendant Subaru of America (Subaru) has filed a motion to quash service of process and motion to dismiss plaintiff’s complaint. The relevant facts will be briefly stated.

Subaru is a New Jersey corporation which imports vehicles into the United States from Japan, and apparently sells to regional distributors, which in turn sell to retailers throughout the continental United States. Subaru is not licensed to do business in Missouri, nor does it have a registered agent here. Plaintiff, a Kansas resident, was allegedly injured while riding in a Subaru “Brat” vehicle in Kansas City, Kansas. Although it is not clear from the filings, plaintiff’s counsel conceded in a pretrial conference that the vehicle in question was not purchased in Missouri. No claim of a Missouri sale is made. Service of process was attempted on Subaru pursuant to the Missouri longarm statute, Mo. Rev.Stat. § 506.500 (Supp.1984).

Courts have often noted that challenges to longarm jurisdiction require a bifurcated analysis. First, service must be authorized by the longarm statute and, second, the assertion of personal jurisdiction must be consistent with constitutional notions of due process.

Under the Missouri longarm statute, nonresidents are subject to service of process if they do certain specified acts in Missouri, Mo.Rev.Stat. § 506.500.1, provided the cause of action is one “arising from” those contacts. Mo.Rev.Stat. § 506.500.3. Plaintiff contends, however, that Missouri case law has abrogated the statutory “arising from” language and that Missouri lon-garm analysis and constitutional due process analysis are now coextensive. After review of the relevant authorities, I am convinced that plaintiffs view takes undue liberties with the Missouri statute.

Plaintiff relies primarily on State ex rel. Newport v. Wiesman, 627 S.W.2d 874 (Mo. banc 1982), where jurisdiction was upheld when a Beech aircraft was sold in Illinois and crashed in Georgia. The Newport court concluded that Beech was “transacting business” in Missouri because it established two franchised dealers here for sales and service of aircraft. Newport, 627 S.W.2d at 877. The opinion itself is rather difficult to parse and does not indicate how, if at all, the cause of action arose out of or was related to the Missouri franchises. The failure cannot be deemed mere oversight, however, as the court was clearly aware of the “arising from” requirement. Id. This court might be inclined to agree with plaintiff if Newport were the sole authority on the Missouri longarm statute. Prior to Newport, however, Judge Clark of this court ruled in Wooldridge v. Beech Aircraft Corp., 479 F.Supp. 1041 (W.D.Mo.1979), that the Missouri longarm statute contains “unambiguous language” making it inapplicable where the cause of action does not arise out of the Missouri contacts. Id. at 1054. Newport does not disapprove of Wooldridge and a number of subsequent decisions indicate that Wooldridge remains a correct statement of Missouri law despite Newport.

Although the majority opinion in State ex rel. v. Clem Trans., Inc., v. Gaertner, 688 S.W.2d 367 (Mo. banc 1985), has no bearing on the present issue, the dissenters, in statements not inconsistent with the majority, explain that the Missouri service and sales facilities in Newport did indeed constitute “a substantial Missouri element in the sale.” Id. at 369. They further stated that Missouri “longarm jurisdiction is strictly limited to claims arising out of the enumerated acts.” Id. This language in the dissent is particularly important because Judge Welliver, the author of Newport, was among the dissenters, and any expansive reading of Newport therefore appears unjustified.

The Eighth Circuit has addressed the “arising from” requirement of the Missouri statute at least three times since Newport. In Precision Construction Co. v. J.A. Slattery Co., 765 F.2d 114, 119 (8th Cir.1985), it noted that the cause of action arising “from the very transaction on which jurisdiction is based” is a “requirement” of the Missouri longarm statute, as well as a primary consideration of due process issues. Similarly, the Eighth Circuit held in Scullin Steel Co. v. National Railway Utilization Corp., 676 F.2d 309, 312 (8th Cir.1982), that the Missouri statute requires “that the nonresident defendant’s activities within the state give rise to the cause of action asserted in the litigation,” and, while urging liberal construction, reiterated the same point in Sales Service Inc. v. Daewoo Int’l (America) Corp., 719 F.2d 971, 972 (8th Cir.1983). Also on point is Nollman v. Armstrong World Indus., 603 F.Supp. 1168, 1171 (E.D.Mo.1985), wherein Chief Judge Nangle held that although the defendant may have conducted business in Missouri it was not subject to jurisdiction under the “transacting business” clause of the longarm statute because the cause of action did not arise from that business.

Although the present plaintiff has alleged that Subaru has transacted business in Missouri, he has not alleged that the cause of action arises from that business. Neither has he alleged that Subaru committed a tort in Missouri, or even that injury resulted in Missouri from a tort corn-mitted elsewhere. In short, plaintiff has demonstrated no factual connection between the litigation and the forum sufficient to sustain longarm jurisdiction over defendant Subaru of America. The court therefore concludes that Subaru’s challenge to personal jurisdiction is valid because service was not authorized by the Missouri longarm statute. Consideration of the constitutional due process issue is therefore unnecessary.

Finally, plaintiff urges that if the court sustains defendant’s jurisdictional challenge, the proper remedy is a transfer to the District of Kansas pursuant to 28 U.S.C. § 1404(a) rather than a dismissal. The considerations relevant to such a ruling are the convenience of the parties and witnesses and the interest of justice.

In the present case, there appears to be no significant difference in convenience between a Kansas and a Missouri forum. The interest of justice, however, does warrant a transfer. In particular, plaintiff asserts that if his cause were dismissed it might be barred by the statute of limitations. Justice would therefore be substantially advanced by a transfer to the District of Kansas, Aguacate Consolidated Mines, Inc. v. Deeprock, Inc., 566 F.2d 523, 524-25 (5th Cir.1978) (Godbold, J.); Gipromer v. SS Tempo, 487 F.Supp. 631, 633 (S.D.N.Y.1980); see also Burnett v. New York Central Railroad Co., 380 U.S. 424, 430, 85 S.Ct. 1050, 1055, 13 L.Ed.2d 941 (1965) (section 1406), and such transfer will be granted. Consistent with Eighth Circuit practice, however, the order transferring this cause will be stayed to allow an opportunity for recourse to the court of appeals prior to transfer. In re Nine Mile Ltd., 673 F.2d 242, 243 (8th Cir.1982); Technitrol, Inc. v. McManus, 405 F.2d 84, 86 (8th Cir.1968), cert. denied, 394 U.S. 997, 89 S.Ct. 1591, 22 L.Ed.2d 775 (1969). The decision to transfer removes from this court’s consideration plaintiff’s motion to strike defendant Automotive Import, Inc.’s affirmative defenses. Accordingly, it is hereby

ORDERED that this cause of action is transferred to the United States District Court for the District of Kansas, effective thirty (30) days from the date of this order. Such transfer shall be stayed if relief is sought in the court of appeals prior to that time.

      . This section appeared as § 506.500.2 prior to the 1984 amendments.

      . The federal decisions are of course subordinate to state court interpretation of a Missouri statute, but it seems significant that none of the federal cases give Newport the reading urged by plaintiff.

      . The court notes that a lack of personal jurisdiction over Subaru does not preclude such a transfer. Stevens Yachts of Annapolis, Inc. v. American Yacht Charters, Inc., 571 F.Supp. 467, 468 (E.D.Pa.1983); Wooldridge, 479 F.Supp. at 1057 (citing authorities).


author: SHADUR, District Judge.

text:
    NATIONAL LABOR RELATIONS BOARD, Plaintiff, v. BROWN TRANSPORT CORPORATION, Defendant.
    No. 85 C 7383.
    United States District Court, N.D. Illinois, E.D.
    Oct. 30, 1985.

      Sheryl Sternberg, Chicago, Ill., for plaintiff.
    Jack Osswald, Chicago, Ill., for defendant.
   MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

National Labor Relations Board (“Board” or, when cited in ease names, “NLRB”) has applied under National Labor Relations Act (“Act”) § 11(2), 29 U.S.C. § 161(2), for an order requiring Brown Transport Corporation (“Brown”) to comply with Board’s subpoena duces tecum (the “Subpoena”). For the reasons stated in this memorandum opinion and order, Board’s application is granted.

Facts

Brown is a large motor carrier (with over 3,000 employees, and with over 25 terminals located around the country) engaged in the interstate (indeed nationwide) transportation of freight. In July 1984 it established a new terminal in Bedford Park, Illinois. It treated its existing collective bargaining agreement with Drivers Mutual Association, Inc. (“Association”) as covering its Bedford Park employees as well.

Between November 23, 1984 and March 15, 1985 five unfair labor practice charges were filed against Brown (Ex. 1). Two of those charges were filed by individual employees Deborah King (“King”) and Odell Neals (“Neals”), while competing union Local 710, International Brotherhood of Teamsters (“Local 710”) filed the remaining three charges.

On February 1,1985 Board issued a complaint (“Complaint I,” Ex. 2) consolidating King’s charge with those brought by Local 710. Complaint I charged Brown had:

1. interrogated employees about their union activities, in violation of Section 158(a)(1) (Complaint I ¶ V);
2. threatened to discharge employees who supported a union other than Association, in violation of Section 158(a)(1) (Complaint I ¶1 V);
3. threatened to close the Bedford Park terminal if the employees there chose a union other than Association, in violation of Section 158(a)(1) (Complaint I UV);
4. recognized Association as the bargaining representative of its Bedford Park employees before that union represented an uncoerced majority of those employees, in violation of Sections 158(a)(1) and (2) (Complaint I H VI); and
5. discharged George Witzel (“Wit-zel”) because he supported Local 710, in violation of Section 158(a)(1) and (3) (Complaint I 11VII).

On April 25, 1985 Board issued a complaint (Complaint II, Ex. 3) based on Neals’ charge. Complaint II contained allegations against Brown similar to those included in Complaint I. On May 6,1985 Board consolidated Complaints I and II (Ex. 4).

On June 28, 1985 Board issued the Subpoena (Ex. 7) to Brown, directing production of certain documents at a Board hearing. On July 3,1985 Brown filed a petition to quash the Subpoena (Ex. 9). During the July 15, 1985 hearing, Administrative Law Judge Alprin (“AU Alprin” or simply the “AU”) granted the petition to quash as to portions of the Subpoena but refused to revoke the Subpoena entirely. Brown continues to refuse to comply with the surviving portions of the Subpoena.

Brown’s Contentions

Brown counters Board’s application for enforcement of the Subpoena in three ways:

1. This Court lacks jurisdiction to enforce a subpoena already limited by the AU.
2. Documents called for by the Subpoena are irrelevant to Board’s unfair labor practice case.
3. Because the Subpoena is insufficiently particular, it is overly burdensome and hence unenforceable.

This opinion will consider each of those wholly unpersuasive arguments in turn.

1. Jurisdiction To Enforce the Subpoena

Board’s power to issue subpoenas derives from Section 161(1), which also enables Board to revoke a subpoena after its issuance:

The Board, or its duly authorized agents or agencies, shall at all reasonable times have access to, for the purpose of examination, and the right to copy any evidence of any person being investigated or proceeded against that relates to any matter under investigation or in question. The Board, or any member thereof, shall upon application of any party to such proceedings, forthwith issue to such party subpenas requiring the attendance and testimony of witnesses or the production of any evidence in such proceeding or investigation requested in such application. Within five days after the service of a subpena on any person requiring the production of any evidence in his possession or under his control, such person may petition the Board to revoke, and the Board shall revoke, such subpena if in its opinion the evidence whose production is required does not relate to any matter under investigation, or any matter in question in such proceedings or if in its opinion such subpena does not describe with sufficient particularity the evidence whose production is required. Any member of the Board, or any agent or agency designated by the Board for such purposes, may administer oaths and affirmations, examine witnesses, and receive evidence. Such attendance of witnesses and the production of such evidence may be required from any place in the United States or any Territory or possession thereof, at any designated place of hearing.

Section 161(2) expressly confers jurisdiction on district courts to enforce Board subpoenas:

In case of contumacy or refusal to obey a subpena issued to any person, any district court of the United States or the United States courts of any Territory or possession, within the jurisdiction of which the inquiry is carried on or within the jurisdiction of which said person guilty of contumacy or refusal to obey is found or resides or transacts business, upon application by the Board shall have jurisdiction to issue to such person an order requiring such person to appear before the Board, its member, agent, or agency, there to produce evidence if so ordered, or there to give testimony touching the matter under investigation or in question; and any failure to obey such order of the court may be punished by said court as a contempt thereof.

Brown asserts Board cannot limit the scope of an already-issued subpoena but must — if the subpoena is flawed at all — revoke it in its entirety. Brown claims the AU’s rejection of parts of the Subpoena operated to revoke the entire Subpoena. From that premise Brown reasons this Court has no jurisdiction to consider Board’s application, because Brown has not refused to obey an “issued” subpoena.

Brown’s contention is so lacking in merit as to be frivolous. Nothing in the statutory language even suggests, and not surprisingly Brown’s counsel has adduced no authority that even hints, the partial invalidity of the Subpoena infects the remainder. Any such conclusion would require Board to issue a new subpoena every time an AU concludes any part of a subpoena is invalid as to any document or documents, opening up endless opportunities for a party to contest Board’s subpoenas and thus to delay Board proceedings. Such an exaltation of form over substance would be both wasteful and — even more to the point — pointless. Absent a clear statutory mandate to that effect (and there is none), this Court will not embrace such a bizarre concept of its jurisdiction.

2. Relevancy

This Court has an extremely narrow scope of review of Board subpoenas in a proceeding such as this. NLRB v. Williams, 396 F.2d 247, 249 (7th Cir.1968) (citations omitted) teaches:

Duly issued subpoenas are to be enforced if the agency is seeking information “not plainly incompetent or irrelevant to any lawsuit purpose”.... And, the essential requirement for both the issuance and enforcement of a National Labor Relations Board subpoena is that the production of the evidence or the giving of the testimony called for by the subpoena must relate to a “matter under investigation or question.” The evidence or testimony sought must touch upon the matter under investigation or in question.

Brown urges it is called on to produce documents irrelevant to Board’s unfair labor practice case by Subpoena ¶ 7:

Any and all documents and records showing the names of all employees of Brown Transport Corp., a subsidiary of Brown Transport Co., Inc. who were terminated during their probationary period during the period from June 1, 1984 through March 1, 1985, including all written or oral warnings, reprimands, suspensions or terminations received by such employee during that same period.

Contrary to Brown's assertion, those documents relate directly to the allegations in Complaint I 11VII, which charges Brown discharged Witzel because he supported Local 710. Brown counters that charge by arguing Witzel was simply a probationary employee (Ex. 10(x)). Brown’s procedures for terminating probationary employees such as Witzel thus become relevant to the inquiry whether Brown in fact terminated Witzel pursuant to those practices rather than for his activities on behalf of Local 710. Brown’s other disciplinary activities may be relevant to a determination whether Witzel’s termination was or was not for the prohibited retaliatory reason.

Brown also argues its termination procedures at facilities other than Bedford Park do not relate to the controversy surrounding Witzel’s discharge. But similarities and differences between Brown’s procedures at Bedford Park and at other terminals might shed light on the bona fides of Brown’s justification for firing Witzel, especially because the records at Bedford Park — a newly opened terminal — would almost certainly be too scanty to substantiate Brown’s procedures. AU Alprin noted (Ex. 10(h)) Brown had failed to offer any specific evidence showing why personnel practices at different terminals did not relate to the issue of Witzel’s discharge. Brown’s “bare assertion” of irrelevancy will not defeat enforcement of Board’s subpoena. NLRB v. Dutch Boy, Inc., 606 F.2d 929, 932 (10th Cir.1979).

3. Burdensomeness

Under the principles announced in Dow Chemical Co. v. Allen, 672 F.2d 1262, 1267 (7th Cir.1982) (citations omitted, but quoting FTC v. Texaco, Inc., 555 F.2d 862, 882 (D.C.Cir.1977)) this Court may restrict the Subpoena:

where it would impose an unreasonable or undue burden on the party from whom production is sought.... The burdensomeness test finds its genesis in the Fourth Amendment, which prescribes that disclosure shall not be unreasonable .... “The burden of showing that the request is unreasonable is on the subpoenaed party ... [and] is not easily met where ... the agency inquiry is pursuant to a lawful purpose and the requested documents are relevant to that purpose.”

Brown argues it has met that burden of showing the subpoena is unduly burdensome, advancing three arguments toward that end:

1. To require Brown to respond to the Subpoena as modified by ALJ Alprin would put an unreasonable burden on Brown to determine the extent of the ALJ’s revocation of the Subpoena.
2. Subpoena ¶¶ 3, 4, 5, 6, 11 and 13 fail to describe the evidence sought with sufficient particularity.
3. Compliance with the Subpoena “would require the production of thousands of documents and an army of personnel to locate” those documents.

None of those reasons withstands close scrutiny.

First, even a quick perusal of the transcript of the July 15, 1985 hearing reveals ALJ Alprin plainly dealt with Brown’s petition to quash the Subpoena in this way:

1. He granted the motion to quash Subpoena ¶¶ 8, 9 and 10 (Ex. 10(i)), ¶¶ 12 and 14 (Ex. 10(j)) and ¶!¶ 15, 16 and 17 (Ex. 10(m)).
2. He granted the motion to quash Subpoena ¶ 3 except as that request relates to Association (Ex. 10(d)).
3. He ruled documents called for in Subpoena Wf 4, 5 and 6 had to be produced only as to alleged supervisory employees Pollard, Sailliez, Hausner and Sobie-ski (Ex. 10(f)-(g)).
4. He limited Subpoena 1111 to require production of documents as to the effect of the opening of the Bedford Park terminal “upon driver personnel” (Ex. 10(i)).
5. He granted the motion to quash Subpoena II13 except as it required production of documents concerning staffing needs, job descriptions, transfer of personnel and recognition of Association (Ex. 10(j)-(k)).
6. He denied Brown’s motion to quash Subpoena ¶¶ 1 and 2 (Ex. 10(b)) and II7 (Ex. 10(h)).

Brown’s counsel appeared at and participated in the hearing before ALJ Alprin. Brown cannot plausibly claim ignorance of the Subpoena requirements Board seeks to enforce.

Second, the language of the Subpoena is clearly not overly broad, given the nature of the underlying unfair labor practice charges. Board contends Brown’s Bedford Park facility constitutes a separate appropriate collective bargaining unit, so Brown violated Sections 158(a)(1) and (2) by applying its existing collective bargaining agreement with Association to its Bed-ford Park employees. To determine whether Bedford Park constitutes an appropriate bargaining unit, Board must look to (Towne Ford Sales and Town Imports, 270 N.L.R.B. 311, 315 (1984)):

bargaining history; the functional integration of operations; the differences in the types of work and the skills of employees; the extent of centralization of management and supervision, particularly in regard to labor relations, hiring, discipline, and control of day-to-day operations; and the extent of interchange and contact between the groups of employees.

Those inquiries necessarily involve an examination of Brown’s structural organization.

NLRB v. G.H.R. Energy Corp., 707 F.2d 110, 133-14 (5th Cir.1982) upheld a similar Board subpoena:

Although on a first reading some of the language in the subpoenas does seem fairly broad, we think that the problem lies not so much with “particularity” as with the nature of the underlying claims. In order to make these determinations, the Board must necessarily undertake a fairly wide-ranging investigation into the day-to-day affairs of the two companies.

Although Board’s requests typically begin “Any and all documents ...,” Board invariably continues (as it did here) by specifically itemizing the types of documents it seeks. Our Court of Appeals’ rejection of a “particularity” claim in NLRB v. Northern Trust Co., 148 F.2d 24, 29 (7th Cir.), cert. denied, 326 U.S. 731, 66 S.Ct. 38, 90 L.Ed. 435 (1945) is equally applicable here:

The terms of the subpoenas were not unlimited, and the records were particularized to such records as would show certain specific information. Hence they did not amount to a fishing expedition; rather, they specified with as much precision as was fair and feasible the records to be examined and the information to be obtained from such records.

Brown’s particularity argument (like its others) must fail.

Brown’s final contention focuses on the claimed burden of producing the subpoenaed documents. EEOC v. A.E. Staley Manufacturing Co., 711 F.2d 780, 788 (7th Cir.1983) (quotation adapted to this case) states the applicable rule:

The test this Circuit applies to determine whether a subpoena is too burdensome to be enforced is whether “... compliance would threaten the normal operation of [Brown’s] business.”

On that score, at the hearing Brown’s counsel simply stated (Ex. 10(y)):

I am advised that it will take two people, two weeks to review the files to come up with that, at a cost to Brown in the area of $5,000.

Such an assertion is insufficient to establish burdensomeness. NLRB v. United Aircraft Corp., 200 F.Supp. 48, 51 (D.Conn.1961), aff'd mem., 300 F.2d 442 (2d Cir.1962) rejected a similar argument:

The mere size of Respondent’s operation is no excuse for its refusal to give information relative to unfair labor practices. It is presumed, by the very fact that Respondent has such a large number of employees, that it is sufficiently equipped to handle the records of its employees.

Brown offered no evidence showing compliance would threaten the normal operation of its business. Nor did Brown offer any affidavits to support its conclusory assertion to that effect. Cf. EEOC v. Bay Shipbuilding Corp., 668 F.2d 304, 313 (7th Cir.1981).

In sum, Brown has not come close to sustaining its own burden on the issue of burdensomeness. Its final position has also proved unsustainable.

Conclusion

Brown has resisted Board’s reasonable subpoena requests without reasonable justification. In the language of Section 161(2), it has been “guilty of contumacy [as well as] refusal to obey....” It is ordered to obey the Subpoena by:

1. appearing before AU Alprin at such time and place as he may designate;
2. there producing the records described in the Subpoena as modified by the AU’s prior order; and
3. giving testimony and answering any and all questions relevant and material to the matters under investigation and in question in any of the Board proceedings referred to in this opinion.

      . All further citations to the Act will simply take the form "Section — ,” referring to the Title 29 numbering rather than to the Act’s internal numbering. Regulations drawn from 29 C.F.R. will be cited "Reg. § —.”

      . Brown raises purely legal rather than factual challenges to Board’s application. None of the facts stated in the text is in dispute.

      . Each citation to "Ex. — ” refers to an exhibit attached to Board’s application for enforcement of the Subpoena filed with this Court.

      . Local 710 had also filed unfair labor practice charges against Association. Board’s Complaint I ¶¶ VIII and IX, which stem from those charges, allege Association violated Sections 158(a)(3), (b)(1)(A) and (b)(2). Because the present enforcement proceeding addresses only the subpoena issued to Brown, this opinion will not discuss the charges leveled against Association.

      .Board has delegated its power to revoke subpoenas to its administrative law judges under Reg. § 102.31:
      Such petition to revoke, if made prior to the hearing, shall be filed with the regional director and the regional director shall refer the petition to the administrative law judge or the Board for ruling.... The administrative law judge or the Board, as the case may be, shall revoke the subpena if in its opinion the evidence whose production is required does not relate to any matter under investigation or in question in the proceedings or the subpena does not describe with sufficient particularity the evidence whose production is required, or if for any other reason sufficient in law the subpena is otherwise invalid.

        NLRB v. Duval Jewelry Co. of Miami, 357 U.S. 1, 78 S.Ct. 1024, 2 L.Ed.2d 1097 (1958) has upheld that delegation.

      . Subpoena ¶ 7 requests documents "from June 1, 1984 to March 1, 1985.” Complaint I was issued February 1, 1985. Brown therefore contends Board’s subpoena requests information that does not relate "to any matter under investigation or in question” under Section 161(1). Brown’s treatment of probationary status employees during the short period following the issuance of Complaint I, however, might illuminate the nature of Brown’s procedures during the time actually under investigation. Accordingly the post-Complaint I information sought is "not plainly incompetent or irrelevant to any lawful purpose.” Williams, 396 F.2d at 249, quoting Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 509, 63 S.Ct. 339, 343, 87 L.Ed. 424 (1943).


author: JOSEPH H. YOUNG, District Judge.

text:
    Nancy A. WHITE, et al. v. UNITED MINE WORKERS OF AMERICA, et al.
    Civ. No. Y-84-3063.
    United States District Court, D. Maryland.
    Oct. 30, 1985.

      George E. Meng, James M. Greenan, and Oleo P. Braver, Landover, Md., for plaintiffs.
    James H. Hulme, Russell M. Blau, Rock-ville, Md., William F. Hanrahan, and Catherine H. Mitchell, Washington, D.C., for defendants.
   MEMORANDUM

JOSEPH H. YOUNG, District Judge.

The plaintiffs are the mother and sister of Katherine Craven, employed for many years by the United Mine Workers of America Health and Retirement Funds, and also her beneficiaries under the retirement plan provided by the defendants. Plaintiffs claim that they are entitled to $78,528 under the pension plan rather than the $7,997 offered by the defendants. They allege the award of the lower sum is a breach of contract, and, in the alternative, they allege a failure of the defendants to properly apprise Katherine Craven of her rights and obligations under the pension plan.

The facts, undisputed, are as follows. Katherine Craven began working for the UMW on January 18, 1951. Her deteriorating health forced her to stop working on December 26, 1979, but she was kept on the payroll by virtue of her accumulated disability leave, sick leave, and vacation leave. On June 1, 1980, she qualified for Social Security disability benefits, and by so qualifying became eligible for disability retirement under the UMWA Pension Plan.

On January 3, 1981, having been apprised of the various options open to her under the terms of the Pension Plan, she chose the retirement benefit known as the “life benefit with 120 payments guaranteed” (excerpt 3 below). On January 5th, her accumulated leave time expired and her employment with the defendant was terminated. On this date, she received severance pay equal to 20 weeks salary, and the 20 week “severance pay period” began (see excerpt 2 below).

Katherine Craven died in April of 1981. Her pension benefits (a monthly payment of $654.00) were scheduled to begin on May 29, 1981, the end of the 20 week severance pay period. The sole point at issue is whether the plaintiffs, as beneficiaries of Katherine Craven are entitled to $7,997 (12 monthly payments) or $78,528 (120 monthly payments).

With regard to the question of breach of contract, defendants and plaintiffs both rely on the following passages which are excerpted from § 4 (Benefits) of UMWA 1974 Pension Trust Employee’s Pension Plan (joint exhibit A).

Excerpt 1; § 4.1 (Retirement benefits) C (Disability retirement)
A person who ... qualifies for a disability pension under the Social Security Act ... shall be entitled to receive a disability retirement pension for life. The amount of the monthly benefit shall be ... based on the Participant’s Period of Service at his termination of employment. ..
The disability retirement pension shall begin on the first day of the first month coincident with or following the date as of which he first becomes entitled (whether prospectively or retroactively) to his Social Security disability pension, (p. 4-6).
Excerpt 2; § 4.1, H (Commencement of benefits)
Benefits under the Plan shall be distributed as otherwise stated herein, except that:
(i) If a Participant separates from service and is eligible for a severance allowance, benefits hereunder shall not commence until the expiration of a period of time following his separation from service equal to the number of weeks of salary taken into account in calculating the Participant’s severance allowance (the “severance pay period”) ... (p. 4-11, 12).
Excerpt 3; § 4.2 (Forms of benefits)
B (Optional forms of benefits)
ii (Life benefit with 120 payments guaranteed)
This form of benefit is payable monthly to the Participant for life and, in the event the Participant dies before receiving 120 monthly payments, the Participant’s beneficiary shall receive monthly payments until the total of the monthly payments to the Participant and the beneficiary is 120. (p. 4-14).
Excerpt fa § 4.2, B
... The election by a Participant of any option permitted under Section 4.2(B) shall be null and void if either the Participant or his designated beneficiary dies before benefits commence ... (p. 4-14).
Excerpt 5; § 4.3 (Benefits in the event of death prior to commencement of retirement benefits)
B (Lump sum benefit)
In the event a Participant dies prior to commencement of the receipt of the retirement benefits, his designated beneficiary shall receive an amount equal to the sum of 12 monthly retirement payments ... (p. 4-18).

Defendants’ argument is straightforward. Excerpt 1 sets the date Katherine Craven was eligible for disability retirement. Excerpt 2 shows that payments would have begun at the end of the severance pay period if she had lived until then. Excerpt 3 describes the type of benefit chosen by her, but excerpt 4 shows that that choice is inoperative because she died before payments began. Excerpt 5 describes the lump sum payment (in this case $7,997) which is made in the event the participant dies before benefit payments begin. This, of course, is what happened here.

Plaintiffs argue that they are entitled to $78,528 (120 months times $654.40) based on the language found in excerpt 3. They claim that the provision quoted in excerpt 4 does not apply because at the time of death, benefits had in fact begun, even though no payments had been made. This argument is based on the language found in the second paragraph of excerpt 1, which says that payments begin the month after eligibility is established for the Social Security pension.

Plaintiffs are simply in error. If one looked only at the wording of the second paragraph of excerpt 1, their position would make some sense — that payments should have begun in July of 1980. But the language of excerpt 2 spells out a very clear cut exception to the provision in excerpt 1, namely that when the participant is eligible for severance pay (as here) the retirement payments do not begin until the end of the severance pay period.

Even the language in excerpt 1 works against the plaintiffs. The first paragraph of excerpt 1 provides that the monthly benefit is based on the length of service at the termination of employment. But when Craven became eligible for the pension, she was still an employee. Plaintiffs’ argument would require the defendants to pay retirement benefits to someone who has not retired.

Plaintiffs try to salvage their case with the following quote from the Pension Plan, §4.1 (Retirement benefits), part D (Deferred retirement):

... The deferred retirement pension shall begin on the first day of the first month following the Employee’s actual retirement, (p. 4-7).

The plaintiffs argue that this same language could have been used in the section on disability retirement, changing the word “deferred” to “disability.” This would have been done, say the plaintiffs, if the authors of the Plan had truly wanted the disability pension to begin only after the actual termination of employment. But the fact is that the provision in excerpt 2 already ensures that benefits won’t begin until after employment ends. The above quoted sentence is necessary, however, in the section on deferred retirement. This is because those eligible for deferred retirement are not eligible for severance pay (exhibit C, p. 35). Thus, without the above quoted sentence, employees choosing deferred retirement would be able to receive retirement benefits while still on the payroll. In short, the plaintiffs are making an issue over a commendable lack of redundancy.

Thus, with respect to the claim of breach of contract, the plain language of the Plan, as well as the clear intent of its authors, compels granting summary judgment for the defendants.

The Court likewise finds no merit in the contention that Katherine Craven was not properly informed on the provisions in the Plan. In September of 1980, and again in November, defendants provided her with a Summary Plan Description (SPD) (Exhibit B). The only question is whether or not the SPD “reasonably” apprised her of her rights and obligations under the Plan. Having read the SPD, the Court concludes that it is as clear as one could reasonably expect such a document to be.

Accordingly, summary judgment will be entered for the defendants. The findings of fact and conclusions of law stated herein are in accordance with the requirements of Rule 52, F.R.Civ.P. whether or not specifically stated.


author: ALLEN SHARP, Chief Judge.

text:
    STOUTCO, INC., Plaintiff, v. AMMA, INC.; Monarch Distributing; Consumers Buying Service; Monarch American Marketing; American Marketing, Inc.; and John Pinciaro, Defendants.
    No. S 83-284.
    United States District Court, N.D. Indiana, South Bend Division.
    Oct. 30, 1985.

      Paul E. Becher, Richard M. Treckelo, Elkhart, Ind., for plaintiff.
    James M. Miller, South Bend, Ind., for defendants.
   MEMORANDUM AND ORDER

ALLEN SHARP, Chief Judge.

This case was tried by the court, without the intervention of a jury, on September 11, 1985. The parties were given until September 23, 1985 to file post-trial briefs, which they did. On October 7, 1985, the court entered a Memorandum and Order requiring the plaintiff to elect which theory of recovery it wished to pursue, whether on the account or on the dishonored check, or provide the court with authority as to why it should not be required to make such election. On or about October 16,1985, the plaintiff, by counsel elected to proceed on the Counts relevant to the dishonored check being Counts II and III of plaintiffs complaint. The defendants, John Pinciaro and AMMA, Inc. maintain that plaintiff has failed to prove that it is entitled to relief under Counts II and III of its complaint. Further, defendant John Pinciaro maintains that this court cannot exercise personal jurisdiction over him because he lacks sufficient minimum contacts with the State of Indiana. This memorandum and order is intended to comply with Rule 52 of the Federal Rules of Civil Procedure.

The first issue to be determined by the court is whether the defendant, John Pinciaro, has waived the defense of lack of personal jurisdiction in this case. Rule 12(h)(1) of the Federal Rules of Civil Procedure provides in pertinent part as follows:

A defense of lack of jurisdiction over the person, ... is waived (A) if omitted from a motion in the circumstances described in subdivision (g), or (B) if it is neither made by motion under the rule nor included in a responsive pleading ...

Fed.R.Civ.Proc. 12(h)(1). Subdivision (g) of Rule 12 provides in pertinent part as follows:

A party who makes a motion under this rule may join with it any other motions herein provided for and then available to him. If a party makes a motion under this rule but omits therefrom any defense or objection then available to him which this rule permits to be raised by motion, he shall not thereafter make a motion based on the defense or objection so omitted, ...

Fed.R.Civ.Proc. 12(g). The record in this case reveals that all of the defendants in this case, including John Pinciaro, filed a motion to dismiss in this case on the ground of lack of personal jurisdiction on July 11, 1983. The memorandum submitted contemporaneously with said motion was entitled “Memorandum in Support of Defendant AMMA, Inc.’s Motion for Dismissal” and the arguments contained therein were specifically addressed to the issue of whether the court could exercise personal jurisdiction over defendant AMMA, Inc. On September 6, 1983, the defendants filed a supplemental memorandum in support of the motion to dismiss, which again only addressed the propriety of this court exercising personal jurisdiction over defendant AMMA, Inc. Further, on March 28, 1984, defendant John Pinciaro filed a Motion to Dismiss on the ground that plaintiff’s complaint failed to state a claim against him. There is no mention in said motion of lack of personal jurisdiction. Accordingly, based on the record as described above, thfs court finds that the defendant, John Pinciaro, has waived his defense of lack of personal jurisdiction in this case.

A. FINDINGS OF FACT

American Marketing, Inc. and AMMA, Inc. are one and the same entity. In March 1983, American Marketing, Inc. placed an order with the plaintiff for product in the total amount of $38,072.88. Said product was delivered to and retained by defend; ants and plaintiff’s Invoice No. 34283, dated March 8, 1983 was issued to defendants. Defendants paid the sum of $333.34 on said invoice and the principal sum of $37,739.46 remains unpaid.

On March 2, 1983, check number 2691, drawn on AMMA, Inc.’s account in Connecticut and signed by defendant John Pin-ciaro as President of AMMA, Inc. was issued, payable to plaintiff in the sum of $37,000.00. Said check was sent to plaintiff and arrived at Stouteo on March 4, 1983. From March 11 through March 13, 1983, a trade show was held in Baltimore, Maryland. Defendant John Pinciaro, together. with another representative of AMMA, Inc., Andrew Tournas, attended said trade show. Representatives of Stout-eo, Inc., namely, Richard Ouding and David Rabias also attended the trade show in Baltimore. During the trade show, Richard Ouding informed Mr. Pinciaro and Mr. Tournas that Stouteo, Inc. had decided that it was not going to renew the letter of agreement with AMMA, Inc. and told Mr. Tournas that a letter advising AMMA, Inc. of the decision not to renew the agreement would be forthcoming. Accordingly, Mr. Pinciaro and Mr. Tournas began contacting manufacturers at the trade show who could offer a substitute of the line of products being purchased from Stoutco, Inc.

During the trip back to Connecticut following the Baltimore trade show, Mr. Pinci-aro and Mr. Tournas discussed the ramifications of Stoutco, Inc.’s decision not to renew the distributorship. The ramifications discussed included the loss of a significant percentage of AMMA, Inc.’s gross sales without a substitute line of product; the difficulty to be encountered in finding a substitute in time for the approaching sales season; the truckload of merchandise recently received which would suffer the loss of the manufacturer’s support and credibility; and the apparent unwarranted termination of the distributorship agreement.

On March 14, Mr. Pinciaro inquired of AMMA, Inc.’s bank whether the March 2, 1983 check to Stoutco, Inc. had cleared. Upon learning that it had not, he caused a stop payment order to be placed on the check. The check in question was presented for payment on March 23, 1983 and was not honored in the usual course of business. Defendants were notified of the dishonor and demand for payment was made on May 5, 1983. None of the defendants have paid said check.

By letter dated March 25, 1983, Stoutco, Inc. informed AMMA, Inc. that it was not going to renew the letter of agreement of April 27, 1982. The letter of March 25, 1983 also contained the following paragraph: “Though we do expect you to see through the unexpired warranty periods of Foxfire products and to handle reasonable warranty claims if any, you may be assured that we will handle them in the same manner with you as has been done in the past.” At all relevant times, there were sufficient funds in AMMA, Inc.’s account to cover check No. 2691.

B. CONCLUSIONS OF LAW

Count II of plaintiff’s complaint seeks recovery of the face amount of check number 2691, issued by AMMA, Inc. to Stoutco, Inc. dated March 2, 1983, plus interest, court costs and reasonable attorney’s fees pursuant to I.C. § 28-2-8-1. That statute has been amended twice since this case was filed but those amendments are not retroactive and thus not applicable to this case. Accordingly, the pertinent part of I.C. § 28-2-8-1 as applicable to this case provided as follows:

A person who, having executed and delivered to another person a check ... without valid legal cause shown stops payment on the check ... is, if found liable under applicable law to the holder on the check or draft in a court action, liable also for: (1) interest ...; (2) court costs ...; and (3) all other costs of collection, including reasonable attorney’s fees....

The only disputed issues with respect to this Count are (1) whether the defendants stopped payment on the check “without valid legal cause shown”; and (2) whether defendant John Pinciaro may be held individually liable under the statute.

The term “valid legal cause” is not defined in the statute nor has that term been defined by the courts in Indiana in the context of that statute nor in a similar context. Accordingly, the court must construe or interpret the statute giving the words and phrases their ordinary or usual meaning. See I.C. § 1-1-4-1. Both parties have quoted definitions of the three terms contained in the phrase “valid legal cause” from two different dictionaries. Although the definitions vary a little, the end result is basically the same. The parties differ only as to whether the term should be given an objective or subjective meaning. The defendants maintain that the term should be given a subjective meaning thus requiring a defendant to prove something less than an unbeatable cause of action in favor of the party stopping payment of the check in order to defeat a plaintiff’s recovery under I.C. § 28-2-8-1. In support of their argument, the defendants emphasize that the underlying transaction in this case was a commercial one and that it is difficult for one to know at the time the stop-payment decision is being contemplated whether a cause of action exists and that it will prevail on that cause of action. Accordingly, the defendants argue that a court should focus on the knowledge and circumstances apparent to the person considering stop-payment at the time of such consideration. The plaintiff, on the other hand, maintains that a defendant must show that it had a legal right to stop payment on a check in order to avoid liability under I.C. § 28-2-8-1. Giving the words their ordinary and usual meaning and considering the term “valid legal cause” in light of the underlying purposes of the statute, this court finds that a determination of “valid legal cause” in the context of this statute must be done on an objective basis. Thus, in order to avoid liability under I.C. § 28-2-8-1, the defendants must show that they had a legal right to stop payment on the check. The defendants have failed to do so in this case. Their “valid legal cause” was an alleged cause of action against plaintiff for wrongful termination of the distributorship agreement between the parties. The defendants filed a counterclaim on that ground. However, the court found that the nonrenewal did not breach the distributorship agreement and dismissed the counterclaim on July 13, 1985. Accordingly, the defendants stopped payment without valid legal cause.

The other issue to be decided with respect to Count II is whether John Pincia-ro can be held individually liable under I.C. § 28-2-8-1 since he was the individual that actually placed the stop-payment order. The plaintiff argues that the rule and analysis used in eases involving criminal liability for check deception should be applied in this ease. That rule basically provides that a corporate officer who issues a worthless check in a corporate name may be held personally liable under a criminal check deception statute. See, e.g., Walker v. State, 467 N.E.2d 1248, 1250 (Ind.App.1984); Cooper v. State, 181 Ind.App. 275, 391 N.E.2d 841 (1979). The rationale underlying that rule is that there is no doctrine of agency in criminal law so that the individual who makes or draws a check in a representative capacity, knowing it will not be honored, i.e. with fraudulent intent, cannot be shielded from criminal responsibility for that act. Walker v. State, 467 N.E.2d at 1250-51. Although those cases involve a check that is dishonored and so does this case, there are differences between cases of criminal check deception and cases under I.C. § 28-2-8-1 that indicate that a different approach to personal liability should be applied.

One major difference is that the statutes involved in Cooper v. State and Walker v. State were criminal statutes and I.C. § 28-2-8-1 provides for civil remedies. An important element in the check deception cases is the fraudulent intent of the maker or drawer of the check. Under I.C. § 28-2-8-1 the intent or knowledge of the maker or drawer of the check is not a critical factor. In this case, the stop-payment order was issued because John Pinciaro believed that the plaintiff had breached an agreement with AMMA, Inc. and that the stop-payment order was therefore warranted. There is no evidence that the stop-payment order was placed on check 2691 to obtain money or property with fraudulent intent.

In Indiana, the law is also clear that a corporate officer or shareholder is not shielded from liability on the basis of his representative capacity when he participates in a tort because an agent is liable for his own torts. See, American Independent Management Systems v. McDaniel, 443 N.E.2d 98, 103 (Ind.App.1982). However, an officer or director of a corporation will not be held independently personally liable for inducing the corporation’s breach of a contract if the officer or director is acting within the scope of his official duties on behalf of the corporation. See, e.g., Martin v. Platt, 179 Ind.App. 688, 386 N.E.2d 1026, 1027 (1979). The difficulty in applying the law in this case is with characterizing the actions of John Pinciaro. It would appear that his actions in placing a stop payment on AMMA, Inc.’s check was more analogous to inducing a breach of contract than a tort. However, the court need not decide that issue as the language of I.C. § 28-2-8-1 provides guidance on determining this issue.

The specific language of I.C. § 28-2-8-1 provides that a person “if found liable under applicable law to the holder on the check or draft in a court action” is then also liable for the remedies provided in the section. The court must therefore determine whether John Pinciaro is liable to the plaintiff on the check in question. AMMA, Inc.’s check number 2691 issued to Stoutco, Inc. was signed by John Pinciaro as president of AMMA, Inc. The name of the corporation and its address appeared in the upper left-hand corner of the check. The signature line in the lower right-hand corner of the check contains the signature of John Pinciaro, Pres. Thus, his representative capacity is clearly designated as is the name of the corporation. The Uniform Commercial Code as adopted in Indiana contains a specific provision with respect to the individual liability of an authorized representative signing an instrument in a representative capacity. See I.C. § 26-1-3-403. Under that statute, it is clear that John Pinciaro cannot be held individually liable on the check in question. Accordingly, John Pinciaro cannot be held individually liable on Count II of plaintiff’s complaint.

Count III of plaintiff’s complaint seeks damages under I.C. § 34-4-30-1 which provides as follows:

If a person suffers a pecuniary loss as a result of a violation of IC 35-43, he may bring a civil action against the person who caused the loss for:
(1) an amount equal to three (3) times
his actual damages;
(2) the costs of the action; and
(3) a reasonable attorney’s fee.

In this case, the violation forming the basis for the claim under this section is found at I.C. § 35-43-5-5 which provides in pertinent part as follows:

A person who knowingly or intentionally issues or delivers a check .... knowing that it will not be paid or honored by the credit institution upon presentment in the usual course of business, commits check deception, a Class A misdemeanor.

This language clearly indicates that the focus must be on the knowledge or intent of the person issuing or delivering the check at the time of issuance or delivery. Subsection (c) of I.C. § 35-43-5-5 provides certain presumptions constituting prima fa-cie evidence with respect to knowledge on the part of the party issuing the check. Those presumptions, however, can be overcome by evidence that the defendant had no such knowledge or intent at the time of issuance or delivery. The facts in this case indicate that AMMA, Inc. had sufficient funds in its account at the time the check was issued and delivered to plaintiff, the day the stop-payment order was issued and the day the check was actually presented for payment. Furthermore, the decision by AMMA, Inc.’s representatives to issue the stop-payment order was not made until 12 days after the check had been written and mailed, and then only after receiving oral notice from plaintiff that the distributorship agreement would not be renewed. Accordingly, the plaintiff has failed to establish that it is entitled to any relief under Count III of its complaint.

For the foregoing reasons, judgment is hereby entered in favor of plaintiff, Stout-co, Inc., and against defendant, AMMA, Inc., on Count II of plaintiff’s complaint in the principal sum of Thirty-seven Thousand Dollars ($37,000.00), plus interest at the rate of eighteen percent (18%) per annum from March 2, 1983 until payment is made in full together with court costs and other costs of collection including reasonable attorney’s fees. SO ORDERED.


author: STANTON, District Judge.

text:
    Jacqueline LANTZ, by her Next Friend, Lucille LANTZ, Plaintiff, v. Gordon M. AMBACH, individually and as Commissioner of the New York State Department of Education; and Martin C. Barell, Chancellor of the New York State Board of Regents, R. Carlos Carballada, Vice Chancellor of the Board of Regents, Willard A. Genrich, Chancellor Emeritus of the Board of Regents, Jorge L. Batista, Shirley C. Brown, Kenneth B. Clark, Laura Bradley Chodos, Thomas H. Frey, Norma Gluck, Emlyn I. Griffith, Mimi Lieber, Floyd S. Linton, Louise P. Matteoni, James W. McCabe, J. Edward Meyer, Salvatore J. Sclafani, individually and as members of the New York State Board of Regents; and the Board of Education of Yonkers, New York; and the New York State Public High School Athletic Association, Defendants.
    No. 85 Civ. 7735 (LLS).
    United States District Court, S.D. New York.
    Oct. 30, 1985.

      New York Civil Liberties Union, White Plains, N.Y., for plaintiff; Virginia Kna-plund, of counsel.
    Robert Abrams, Atty. Gen. of the State of N.Y., New York City, for defendants Gordon Ambach, Com’r of the N.Y. State Dept, of Educ. and N.Y. State Bd. of Regents; Stanley A. Camhi, Randolph Volkell, Asst. Attys. Gen., of counsel.
    Anderson, Banks, Moore, Curran & Hollis, Yonkers, N.Y., for The Bd. of Educ. of Yonkers, N.Y.; Maurice F. Curran, Lawrence W. Thomas, of counsel.
    McGivern, Shaw & O’Connor, Scotia, N.Y., for the N.Y. State Public High School Athletic Ass’n, Inc.; Ronald R. Shaw, of counsel.
   STANTON, District Judge.

Plaintiff Jacqueline Lantz, a 16-year-old healthy female student in her junior year at Lincoln High School, Yonkers, New York wants to play football. Lincoln High School has no girls’ football team, so she attempted to try out for the junior varsity football squad. Her attempts were blocked by a regulation promulgated by the defendant Commissioner of the New York State Department of Education under the authority of the defendant members of the New York State Board of Regents, and applied by defendants The Board of Education of Yonkers, New York and The New York State Public High School Athletic Association. The regulation, 8 N.Y.C.R.R. § 135.-4(c)(7)(ii)(c)(2) states:

“There shall be no mixed competition in the following sports: basketball, boxing, football, ice hockey, rugby and wrestling.”

Suing under the Civil Rights Act, 42 U.S.C. § 1983, plaintiff claims the regulation violates Title IX of the Educational Amendments of 1972, 20 U.S.C. § 1681 et seq., and her right to equal protection of the laws as guaranteed by the Fourteenth Amendment to the United States Constitution. She seeks a declaratory judgment that the regulation as written violates that statute and that clause of the Fourteenth Amendment, and an injunction requiring the defendants to delete the regulation and permit her to try out for the junior varsity squad, and an award of attorney’s fees. Under Fed.R.Civ.P. 65(a)(2) the trial of the action on the merits has been advanced and consolidated with the hearing of the application for a preliminary injunction.

It is not clear that Title IX applies to this ease. To violate Title IX the sex discrimination must occur in the specific program which receives federal financial assistance. See Grove City College v. Bell, 465 U.S. 555, 104 S.Ct. 1211, 1220-22, 79 L.Ed.2d 516 (1984). Plaintiff merely alleges on information and belief that the Lincoln High School Athletic Department receives funds under Title IX (Complaint ¶ 26), and no proof supports that allegation. If Title IX does apply, it helps neither side. Its regulations, which require opportunity for female students to try out for male teams (or vice versa) where there is no team for their own sex, do not apply to contact sports such as football. 34 C.P.R. 106.41(b). Title IX is simply neutral as to mixed competition in football. See Force v. Pierce City R-VI School District, 570 F.Supp. 1020, 1024-25 (W.D.Mo.1983). Accordingly, the request for an injunction or a judgment declaring that the regulation violates Title IX is denied.

The Supreme Court has stated that discrimination among applicants on the basis of their gender is subject to scrutiny under the Equal Protection clause of the Fourteenth Amendment, and will be upheld only where there is “exceedingly persuasive justification” showing at least that the classification serves “important governmental objectives and that the discriminatory means employed are substantially related to the achievement of those objectives.” See Mississippi University for Women v. Hogan, 458 U.S. 718, 723-25, 102 S.Ct. 3331, 3335-36, 73 L.Ed.2d 1090 (1982) (quoting Kirchberg v. Feenstra, 450 U.S. 455, 461, 101 S.Ct. 1195, 1199, 67 L.Ed.2d 428 (1981), and Wengler v. Druggists Mutual Ins. Co., 446 U.S. 142, 150, 100 S.Ct. 1540, 1545, 64 L.Ed.2d 107 (1980)). Here the governmental objective is to protect the health and safety of female students, and there is no quarrel with the importance of that objective. To demonstrate that the regulation is substantially related to that objective, the Commissioner and the Board of Regents have offered data establishing that “as a general rule, senior high school students (age 15 through 18) are more physically developed, stronger, more agile, faster and have greater muscular endurance than their female counterparts” (Atty Genl’s brief at 6-18), medical opposition to girls’ participation on boys’ teams in such contact sports as football (which Dr. Falls described as a “collision” sport) because of the risk of injury in such participation, and the testimony of Dr. Willie to the effect, among other points, that the present regulation enhances safety by permitting simple and uniform administration across the state.

But these data, however refined, inevitably reflect averages and generalities. The Commissioner and the Regents say (Atty Genl’s brief at 19), “It makes no difference that there might be a few girls who wish to play football who are more physically fit than some of the boys on the team.” Yet it does make a difference, because the regulation excludes all girls. No girl — and simply because she is a girl — has the chance to show that she is as fit, or more, to be on the squad as the weakest of its male members. Where such cases exist, the regulation has no reasonable relation to the achievement of the governmental objective. In such a case, the effect of the regulation is to exclude qualified members of one gender “because they are presumed to suffer from an inherent handicap or to be innately inferior.” See Mississippi University for Women v. Hogan, 458 U.S. 718, 725, 102 S.Ct. 3331, 3336, 73 L.Ed.2d 1090 (1982). Thus the regulation’s operation is too broad, and must give way to the facts in particular cases.

Applying the language of Force v. Pierce City R-VI School District, 570 F.Supp. 1020, 1031 (W.D.Mo.1983), to this case, Jacqueline Lantz “obviously has no legal entitlement to a starting position” on the Lincoln High School Junior Varsity football squad, “since the extent to which she plays must be governed solely by her abilities, as judged by those who coach her. But she seeks no such entitlement here.

“Instead she seeks simply a chance, like her counterparts, to display those abilities. She asks, in short, only the right to try.”

To the extent that the challenged regulation deprives her of the opportunity to try out for the junior varsity football squad, it operates to abridge her right under Section 1 of the Fourteenth Amendment to the Constitution of the United States, and the defendants will be enjoined from complying with it or enforcing it.

The foregoing comprises the Court’s findings of fact and conclusions of law, and the reasons for the issuance of the injunction. It appears that every court which has considered questions like the one facing the court in this case has reached the same result. See, e.g., Leffel v. Wisconsin Interscholastic Athletic Ass’n, 444 F.Supp. 1117 (E.D.Wis.1978); Clinton v. Nagy, 411 F.Supp. 1396 (N.D.Ohio 1974); Hoover v. Meiklejohn, 430 F.Supp. 164 (D.Colo.1977); Force v. Pierce City R-VI School District, 570 F.Supp. 1020 (W.D.Mo.1983); Reed v. Nebraska School Activities Ass’n, 341 F.Supp. 258 (D.Neb.1972); Morris v. Michigan State Bd. of Education, 472 F.2d 1207 (6th Cir.1973); Haas v. South Bend Community School Corp., 259 Ind. 515, 289 N.E.2d 495 (1972); Commonwealth v. Pennsylvania Interscholastic Athletic Ass’n, 18 Pa.Cmwlth. 45, 334 A.2d 839 (1975) (applying Penn.Equal Rights Amendment); Darrin v. Gould, 85 Wash.2d 859, 540 P.2d 882 (1975) (en banc); Attorney General v. Massachusetts Interscholastic Athletic Ass’n, Inc., 378 Mass. 342, 393 N.E.2d 284 (1979) (applying Mass.Equal Rights Amendment).

It is, accordingly

ORDERED that the trial of this action on the merits shall be and is hereby consolidated with the hearing on plaintiffs motion for a preliminary injunction, pursuant to Fed.R.Civ.P. 65(a)(2); and it is further

ORDERED that defendant Gordon M. Ambach as Commissioner of the New York State Department of Education and defendants Martin C. Bareli, Chancellor of the New York State Board of Regents, R. Carlos Carballada, Vice Chancellor of the Board of Regents, Willard A. Genrich, Chancellor Emeritus of the Board of Regents, Jorge L. Batista, Shirley C. Brown, Kenneth B. Clark, Laura Bradley Chodos, Thomas H. Frey, Norma Gluck, Emlyn I. Griffith, Mimi Lieber, Floyd S. Linton, Louise P. Matteoni, James W. McCabe, J. Edward Meyer, and Salvatore J. Sclafani, as members of the New York State Board of Regents and each of them shall be and are hereby permanently restrained and enjoined from refusing to allow Jacqueline Lantz to compete for membership on the Lincoln High School Junior Varsity football squad on the same basis that males are allowed to compete, during the time that her enrollment makes her eligible to compete for Junior Varsity membership; and it is further

ORDERED that the defendant Board of Education, its agents and employees arrange for a prompt determination whether plaintiff Jacqueline Lantz is eligible for junior varsity football pursuant to the same standards that are applied to male candidates and, if she is found eligible, direct that she be permitted to try out for the squad; and it is further

ORDERED that the New York State Public High School Athletic Association shall be and is hereby permanently restrained and enjoined from imposing any sanctions against any plaintiff or any defendant because of their compliance herewith, and from taking any other action which interferes with the ability of Jacqueline Lantz to compete for a place on or play for the Lincoln High School Junior Varsity football squad during the time that her enrollment makes her eligible to compete for Junior Varsity membership; and it is further

ORDERED that plaintiffs claim for an award of costs, including prevailing attorney’s fees, shall be and is hereby severed and shall be heard and disposed of at a future time to be set by order of the court upon plaintiff’s application therefor, and that the judgment and injunctive orders set forth in the preceding paragraphs hereof shall be and are hereby designated as final for purposes of appeal, and shall be entered as such, all pursuant to Fed.R.Civ.P. 54(b), it being the court’s determination that there is no just reason to delay the entry and finality of the same.

To permit an immediate appeal this order and judgment are stayed until Midnight, October 29, 1985.

So ordered.