author: SWEET, District Judge.

text:
    Elfriede MAYER, Plaintiff, v. OIL FIELD SYSTEMS CORP., Integrated Energy, Inc., Burton Joel Ahrens and “John Doe”, fictitious, the true name or names of such defendants being presently unknown to the plaintiff, Defendants.
    No. 82 Civ. 3757 (RWS).
    United States District Court, S.D. New York.
    June 11, 1985.

      Stull, Stull & Brody, New York City, for plaintiff; Richard J. Stull, Jules Brody, New York City, of counsel.
    Christy & Viener, New York City, for defendants Oil Field Systems Corp. and Burton Joel Ahrens; Franklin B. Velie, Janis G. White, New York City, of counsel.
    Kronish, Lieb, Shainswit, Weiner & Hellman, New York City, for defendant Integrated Energy, Inc., Brian J. Gallagher, Richard Wynne, New York City, of counsel.
   SWEET, District Judge.

Defendants Oil Field Systems Corp. (“OFS”) and Integrated Energy Inc. (“Integrated”) have moved for summary judgment pursuant to Fed.R.Civ.P. 56. Plaintiff Elfriede Mayer (“Mayer”) has cross-moved for summary judgment on the issue of liability against (“OFS”) and has also moved pursuant to Fed.R.Civ.P. 23 for certification of this action as a class action. The motion by defendants OFS and Integrated is granted, and the case is dismissed.

Prior Proceedings

In an opinion of January 13, 1983, I granted OFS’s and Integrated’s motion to dismiss, holding that Mayer lacked standing to bring this securities and common law fraud action. The Second Circuit reversed and remanded, 721 F.2d 59 (2nd Cir.1983), holding that Mayer, under the theory enunciated in Vine v. Beneficial Finance Co., 374 F.2d 627 (2d Cir.), cert. denied, 389 U.S. 970, 88 S.Ct. 463, 19 L.Ed.2d 460 (1967) had the requisite standing. The parties have had substantial discovery, and these crossing motions for summary judgment have resulted.

The Complaint

Mayer’s amended complaint alleges that OFS, as general partner of the Mark Energy Partnerships (“MEP”), misallocated Integrated stock received by the Mark Energy Partnerships as a result of an exchange offer. OFS allegedly distributed the stock of MEP among the general and limited partners and breached the partnership agreement by valuing the Integrated stock at the arbitrary $10 exchange rate rather than the substantially lower market price, thereby establishing a fictional “payout” of the limited partners and permitting the general partners of OFS to share improperly in the Integrated stock. The amended complaint also alleges that Integrated failed to disclose OFS’ improper intentions and conspired with OFS to defraud Mayer through the concealed misallocation of the Integrated stock.

Specifically, Mayer claims that:

1) OFS and Integrated failed to disclose that they valued the Integrated stock at $10/share knowing that the stock did not have this value;

2) OFS and Integrated failed to disclose that they valued Integrated stock at $10/share to permit an accelerated payout and the consequent misallocation of shares to the general partners;

3) OFS and Integrated failed to disclose that the $10 per share price, and not the market value, was used to compute when payout had been reached;

4) OFS made a materially false and misleading statement in correspondence to the limited partners when it said that Bache Halsey Stuart Shields (“Bache”) was underwriting the Exchange Offer; and

5) OFS made a false and misleading statement in correspondence to the limited partners when it stated that the shares’ market value might drop initially but would then “zestily rebound.”

Mayer alleges that OFS’s and Integrated’s deceptions constitute violations of 15 U.S.C. § 78j(b); 15 U.S.C. §§ 77k and 1, and OFS’s and Integrated’s common law fiduciary obligations.

Facts

Facts sufficient to resolve the motions for summary judgment are undisputed. Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438 (2d Cir.1980).

Mayer is a citizen and resident of New York. OFS is a New York corporation which owns interests in oil and gas properties and has been a general partner in a number of oil partnerships. Mayer was a limited partner in two MEP partnerships— the Mark Energy 1979 partnership and Mark Energy 1980 partnership — of which OFS was the general partner. Integrated is a Delaware corporation formed in 1979 to acquire oil and gas properties.

The limited partnership agreements of both of the Mark Energy Partnerships state that the general partner has complete and exclusive authority to manage and control the partnerships. Section 12.1(a) of the Mark Energy 1979 Partnership limited partnership agreement provides in pertinent part:

Subject to the limitations set forth in this Agreement, the General Partner shall have full, exclusive and complete discretion in the management and control of the affairs of the Partnership for the purposes herein contemplated, and shall' make all decisions affecting Partnership affairs.

Section 11.1 provides in pertinent part:

No Limited Partner shall take part in the management of the Partnership’s business or affairs or transact any business for the Partnership ...

See also Sections 11.1(a) and 10.1 of the Mark Energy 1980 ’ Partnership limited partnership agreement.

Mayer testified at her deposition that she .is sure she read the limited partnership agreements for each of the Mark Energy Partnerships before investing in them and understood that the limited partners had no control over management.

The limited partnership agreements describe the procedure for compensation of the general partners. Section 5.2(a)(ii) of the Mark Energy 1979 Partnership limited partnership agreement provides in pertinent part:

the General Partner shall receive a 1% Partnership interest, increasing to a 25% Partnership interest after Payout, in all items of Partnership income, losses, deductions and credits.

“Payout” is defined in section 2.1(n):

The time at which Partnership Net Revenues distributed or distributable to the Limited Partners equals the aggregate amount contributed by the Limited Partners to the capital of the Partnership under their Subscription Agreements.

Similarly, Section 5.1(c) of the Mark Energy 1980 Limited Partnership agreement provides:

The General Partner shall cause the Partnership to assign, after First Payout, the following Working Interests in Partnership Leases: General Partner — 1%; Mark Energy Corporation (“Mark Energy”) [the partnership’s financial consultant and structuring agent ] — 10%; participating sales agents and offeree representatives — 5% in the aggregate.

“First Payout” is defined in section 2.1(g):

The time at which Partnership Net Revenues distributed or distributable to the Limited Partners equals the aggregate amount contributed by the Limited Partners to the capital of the Partnership under their Subscription Agreements.

On March 24, 1981, Integrated distributed a prospectus (the “Prospectus”) in which it offered to exchange shares of its common stock for certain interests in oil and gas properties (the “Exchange Offer”).

As disclosed in the Prospectus, Bache agreed to act as Dealer Manager for the Exchange Offer. The Prospectus disclosed the procedure by which Integrated proposed to determine the number of shares to be distributed for each interest tendered as follows:

The number of shares of Common Stock issuable for tendered interests will be determined by dividing the exchange values (the “Exchange Values”) of such interests by $10, an arbitrary figure which has been established for the purpose of making the Exchange Offer. The Exchange Values of Interests tendered will be determined based upon available engineering estimates and other information.

Risks involved in the Exchange Offer were disclosed as follows:

No market for the Company’s Common Stock currently exists. However, the Company expects that a market will develop and intends to apply for listing of the Common Stock on the American Stock Exchange after consummation of the Exchange Offer. No assurance can be given that the Common Stock will be listed, since the ability of the Company to meet the Exchange’s financial requirements cannot be determined until completion of the Exchange Offer. The prices at which the Common Stock may trade following the consummation of the Exchange Offer may be more or less than the $10 used to determine the number of shares issuable for Interests, and may bear no relationship to the Exchange Values or the fair market values of the tendered Interests.

Prospectus at 2.

On or about May 7, 1981, OFS sent a copy of the Integrated Prospectus with copies of articles from Fortune Magazine, The New York Times, and Legal Times of Washington to each of the limited partners of the Mark Energy Partnerships, including Mayer. The cover letters to the limited partners stated:

We have not determined whether to accept the Integrated proposal or not, but feel we should proceed with the Sipes’ evaluation of your wells. Once the reservoir report is completed, we will make a decision based on the results.
In the event we accept the exchange, it is our intention to distribute the shares to the partners.
The market risk should be somewhat ameliorated by the fact that Bache is simultaneously underwriting Integrated’s shares at $10 per share and would have strong incentive to protect the market. The conventional wisdom as set forth in the Fortune article is that the stocks initially go down while people who exchanged liquidate their interest, and then zestily rebound.

(emphasis in original).

Mayer testified that she received and read the Prospectus.

During the spring and summer of 1981, Integrated and OFS entered into negotiations to include some of the properties managed by OFS in the Exchange Offer, including the interests of the MEP Partnerships. OFS obtained an independent appraisal of the properties operated by each of the Mark Energy Partnerships from Sipes, Williamson & Associates (“Sipes”).

Integrated accepted the appraisal values of the Mark Energy Partnerships determined by Sipes, although MEP is alleged by Mayer to have protested that Sipes’ appraisals were too low, and provided a final Prospectus and Letters of Acceptance to OFS. Pursuant to the terms of the Prospectus, and according to the Sipes’ appraisals, the exchange value for the Mark Energy 1979 Partnership was set at $4,073,050 and the exchange value for the Mark Energy 1980 Partnership was set at $2,132,800. Prospectus Supplement at 23.

Based on the dollar value of the properties of the Mark Energy Partnerships, as determined by the Sipes appraisals and accepted by Integrated for the purposes of the exchange and the distribution of stock at $10/share, OFS determined that partnership net revenues distributable to the limited partners equaled the amounts contributed by the limited partners to the capital of the partnerships under their subscription agreements and that payout had been reached.

On August 3, 1981, OFS executed the Letters of Acceptance, indicating its intent to have the Mark Energy Partnerships participate in the Exchange Offer. Integrated issued a Prospectus Supplement on September 11, 1981, which set forth the results of the Exchange Offer and certain information regarding the oil and gas property and partnership interests tendered.

The Prospectus Supplement disclosed that Bache was acting as Dealer Manager for the Exchange Offer and that the figure of $10 per share for the common stock of Integrated was an arbitrary figure:

The number of shares of Common Stock issuable for the Interests has been determined by dividing the Exchange Values of such Interests by $10.00, an arbitrary figure which has been established for the purpose of making the Exchange Offer.

The Prospectus Supplement further disclosed the risks involved in the Exchange Offer as follows:

The prices at which the Common Stock may trade following the consummation of the Exchange Offer may be significantly less than the $10 used to determine the number of shares issuable for Interests, and may bear no relationship to the Exchange Values or the fair market values of the tendered Interests.

OFS sent a copy of the Prospectus Supplement to each of the limited partners of the Mark Energy Partnerships, including Mayer, on or about September 15, 1981. The cover letter to the limited partners of the Mark Energy 1979 Partnership stated that:

[Yjour Program will receive $4,073,050 in exchange value of Integrated stock (valued at $10 per share) less all income received from the wells since February 28, 1981.
Pursuant to the Partnership Agreement the Limited Partners as a group are entitled to 99% of the Integrated shares until the Program reaches Payout and 75% of the remaining Integrated shares after the Program reaches Payout.

The cover letter to the limited partners of the Mark Energy 1980 partnership explained that:

[Yjour Program will receive $2,132,800 in exchange value of Integrated stock (valued at $10 per share) less all income received from the wells since February 28, 1981.
Pursuant to the Partnership Agreement the Limited Partners as a group are entitled to 99% of the Integrated shares until the Program reaches First Payout (100% of contributed capital), 80% after First Payout, and 70% after Second Payout (120% of contributed capital).

Mayer testified that she received and read the Prospectus Supplement.

On or about October 6, 1981, OFS sent a letter to each of the limited partners of MEP, including Mayer. OFS informed the limited partners that the Exchange Offer had a projected closing date of October 15, 1981 and that the shares of Integrated common stock would be sent directly to the limited partners. In addition, each letter contained a space in which the number of shares to be received by that limited partner was inserted. The letter also explained:

For the purpose of both determining the number of shares to be issued by Integrated as well as determining when pay-out is reached the $10.00 exchange price has been applied.

On October 12, 1981, Mayer’s son, acting as her investment adviser, called OFS from Mayer’s home to discuss the Integrated Exchange Offer. Mayer testified that her son was told that the $10 per share price of the Integrated common stock was chosen arbitrarily, that the stock could trade at a higher or lower price, and that the $10 figure was used to determine when the Mark Energy Partnerships reached payout.

Neither the Prospectus nor the Prospectus Supplement, which were issued by Integrated to the owners of all oil and gas properties participating in the Exchange, explained the basis for determining when payout was reached in the MEP partnerships.

Following receipt of the October 6, 1981 letter and the October 12, 1981 telephone conversation, Mayer felt that payout should be determined not by comparison of the limited partners’ contributions to the appraisal value of the MEP properties, or by comparison of the limited partners’ contributions to the value of the shares MEP was to receive (the number of shares multiplied by the $10/share artificial value), but should, instead, be based on the post-issuance, market-value of the shares MEP received.

Integrated common stock began trading on the American Stock Exchange on November 12, 1981. The stock opened at a price of $4-7/8 per share.

Discussion

Mayer’s claims survive only if she can demonstrate deception with respect to a material fact relevant to an investment decision. A prerequisite to maintaining an action under 15 U.S.C. 78j(b) and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, is the existence of a misrepresentation, deception, or non-disclosure of material fact. A breach of fiduciary duty alone is insufficient. Santa Fe Industries, Inc. v. Green, 430 U.S. 462, 476, 97 S.Ct. 1292, 1302, 51 L.Ed.2d 480 (1977); Madison Consultants v. Federal Deposit Ins. Corp., 710 F.2d 57, 61 (2d Cir.1983).

In its remand, the Circuit Court set forth theories of recovery discernible in the complaint. Each of these, as required by Sante Fe, assumed a deception of Mayer. Under the first theory, the Circuit hypothesized that an exchange of shares worth only $50,000 for a limited partnership interest worth $100,000 would constitute a 10b-5 action if the limited partners were deceived about the value of the shares. Similarly, the Circuit held that determining “payout” based on an arbitrary stock value and not oh the market value of shares distributed would establish fraud if the limited partner were deceived about the basis for determining payout. Finally, the Circuit held that a limited partner, even though unable to exercise management control, could invoke state court remedies to prevent consummation of a fraudulent transaction. If through deception, however, the limited partner were denied knowledge of the facts necessary to invoke state remedies, then the limited partner could subsequently bring a federal 10b-5 action. 721 F.2d at 66-68.

The undisputed facts establish that by October 12, 1981, three days prior to the consummation of the transaction, Mayer had knowledge of each of the facts which the complaint alleges to have been concealed. The arbitrariness of the $10.00 valuation for the stock shares was stated plainly in the Prospectus and the Prospectus Supplement, and the fact that the shares might open at a significantly lower market value was revealed and known by Mayer. Moreover, the Prospectus and Prospectus Supplement explained that the $10 figure was an arbitrary divisor whose impact was primarily to determine the number of shares distributed, not the exchange value of the properties involved. The prospectus and supplement disclose that the arbitrary choice of $10/share affected only the number of shares distributed received by the limited partners.

The nature of the relationship among the appraised value of the MEP properties exchanged, the value and number of shares distributed to MEP limited partners, and the determination that “payout” had been reached was also revealed and understood by Mayer. Mayer believed that the determination that payout had been reached was improperly based on the appraisal value of MEP properties — or the necessarily equivalent number of shares distributed multiplied by the arbitrary value of $10 per share — and that a finding of payout should have been based only on the post-issuance market value of the shares distributed. Her self-confessed knowledge of the disparity in these methods of calculation before the deal was closed, knowledge based on OFS’s disclosures, bars an action under rule 10b-5.

Similarly, although an OFS letter of May 7 did improperly characterize Bache’s role as that of an underwriter, the Prospectus, the Prospectus Supplement, and all other written materials, properly characterized Bache’s role as that of a dealer-manager. Mayer acknowledges reading the Prospectus, Prospectus Supplement and understanding the difference between an underwriter and a dealer-manager. Because the Prospectus and the subsequent Prospectus Supplement, both admittedly read and understood by Mayer, correct the error, no foundation for a 10b-5 action exists. See Morgan v. Prudential Group Inc., 81 F.R.D. 418, 427-28 (S.D.N.Y.1978).

Mayer also asserts deception based upon the statement in the May 7 letter that stocks equivalent to those being issued by Integrated initially drop in price but then “zestily rebound.” In order for a prediction to be the basis of a 10b-5 action, the prediction must have been made with an intent to defraud. Jones Memorial Trust v. TSAI Investment, 367 F.Supp. 491 (S.D.N.Y.1973). Although the prediction might be found misleading, there is no credible evidence of an intent to defraud with respect to the future performance of the stock price. Specifically, the Prospectus, the Prospectus Supplement, and subsequent correspondence from OFS to Mayer, all admittedly read by Mayer, stressed that the $10 price was arbitrary and there might be no relationship between the $10 figure and the ultimate market value of the shares. In the absence of any credible evidence showing an effort to distort Mayer’s knowledge of the likely ultimate value of the shares, a 10b-5 action cannot rest on the letter alone.

In the absence of deception, Mayer’s 10b-5 claims must fall. Sante Fe, supra. Finally, because Mayer was not deceived and because Mayer had actual knowledge of each of the facts alleged to have been withheld, no cause of action can be maintained under 15 U.S.C. §§ 77k and l.

United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966) counsels that in the absence of a federal cause of action, accompanying state claims must be dismissed. The holding that there is an absence of federal jurisdiction clearly does not affect the plaintiff’s likelihood of success in another forum on claims alleging the violation of the partnership contract and the general partners’ fiduciary duty. Without deciding the issue, I do observe that determining payout by use of the appraisal value of MEP properties, and not by use of the market value of Integrated stock obtained by the limited partners in the exchange, appears to violate the partnership contract and the fiduciary duty owed by the general partners to the limited partners.

Conclusion

In the absence of a deception with respect to the transactions involved in this action, Mayer’s claims must be dismissed. Undisputed facts show that Mayer had knowledge, as a result of OFS’s and Integrated’s disclosures, of the facts allegedly withheld. The clerk is directed to enter judgment dismissing the case.

IT IS SO ORDERED.

      . There is no allegation in this case of a "manipulation," as that term is defined in Sante Fe.


source: Caselaw Access Project

author: PROPST, District Judge.

license: Public Domain

text:
    Linda Lorie SPANIER, Plaintiff, v. MORRISON’S MANAGEMENT SERVICES, a corporation, et al, Defendants.
    Civ. A. No. CV84-PT-1144-S.
    United States District Court, N.D. Alabama, S.D.
    June 12, 1985.
    Holly Wiseman and James Vann, Mark-stein, Morris & Liles, Birmingham, Ala., for plaintiff.
    Eldridge Lacy, Bradley, Arant, Rose & White, Birmingham, Ala., Cornelius Heusel, Kullman, Inman, Bee & Downing, New Orleans, La., for defendants.
   MEMORANDUM OPINION

PROPST, District Judge.

This cause comes on to be heard on the motion of the Morrison defendants for JNOV or for new trial as to the finding of age discrimination.

There is no chore this court has which is more difficult than determining when an ADEA case is appropriate for jury resolution. By comparison, the resolution of race and sex discrimination cases is easy because if the issue of whether a case which survives a Rule 41(b) motion has been made out is difficult, the determination of the ultimate fact and conclusion moots the 41(b) issue.

The difficulty of deciding whether a directed verdict should be granted in ADEA cases is only exacerbated by a reading of the cases. One only has to compare Pace v. Southern Railway System, 701 F.2d 1383 (11th Cir.1983); Simmons v. McGuffey Nursing Home, Inc., 619 F.2d 369 (5th Cir.1980); and similar cases with Buckley v. Hospital Corp. of America, Inc., 758 F.2d 1525 and Goldstein v. Manhattan Industries, Inc., 758 F.2d 1435 (11th Cir.1985) to decide that the issue involves a continuum of subjective assessments. The subjective assessment of a jury is subjectively reviewed by the trial court whose assessment is further subjectively reviewed by the appellate courts. One person’s reasonable inference may be another person’s speculation.

This case is a perfect example of the difficulty. Here we have an employer who says that the employment decisions were based on complaints against the plaintiff of rudeness, insensitivity and improper food preparation. There is substantial evidence to support this position.

On the other hand, the plaintiff argues that the bulk- of defendants’ arguments involve questions of credibility. Plaintiff points to the fact that she was replaced in various positions by younger managers and was ultimately discharged while defendants retained younger managers. Plaintiff calls attention to her uniform good or excellent performance evaluations. Plaintiff also calls to attention the statistical data and the magical “direct evidence” of discrimination which this court is of the opinion is overweighted by the Eleventh Circuit. Defendants complain of the court’s charge with reference to direct evidence. Defendants argue that it is inconsistent with the requirements of Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981). The court agrees with the defendants in principle but is bound by the Eleventh Circuit holdings in this regard. See Bell v. B’ham Linen, 715 F.2d 1552 (11th Cir.1983), cert. denied, — U.S.-, 104 S.Ct. 2385, 81 L.Ed.2d 344 (1984). The court will not take the approach criticized by the Eleventh Circuit in Jaffree v. Wallace, 705 F.2d 1526 (11th Cir.1983) but respectfully submits the following with regard to the issue.

In Lee v. Russell County Board of Education, 684 F.2d 769 (11th Cir.1982) and its progeny, the Eleventh Circuit has held that a trial court’s finding that a statement evidencing a bias was made, is tantamount to “proof” that bias was a substantial motivating factor in the making of a particular employment decision. In Bell supra, the court apparently concluded that if the evidence consists of direct testimony that the defendant made a sexually biased statement, and the trier of the fact accepts the testimony, the ultimate issue of discrimination is proved. 715 F.2d at 1557. Apparently credible evidence of a sexual bias is tantamount to proof of “acting” with a discriminatory motive and the element of causation is eliminated. Apparently, the appellate court makes the leap from a discriminatory statement being made to proving an illegal motive was “a significant or substantial factor in an employment decision.” This court has always assumed that direct evidence of bias can be weighed in determining whether a plaintiff has met his or her burden of proving either a prima facie case or pretext. This position was apparently supported by the following language in Burdine.

The plaintiff retains the burden of persuasion. She now must have the opportunity to demonstrate that the proffered reason was not the true reason for the employment decision. This burden now merges with the ultimate burden of persuading the court that she has been the victim of intentional discrimination. She may succeed in this either directly by persuading the court that a discriminatory reason more likely motivated the employer or indirectly by showing that the employer’s proffered explanation is unworthy of credence. See McDonnell-Douglas [v. Green], 411 U.S. [792], at 804-805 [93 S.Ct. 1817, 1825-26, 36 L.Ed.2d 668 (1973)]. (emphasis added).

Also: “The ultimate burden of persuading the trier of the fact that the defendant intentionally discriminated against the plaintiff remains at all times with the plaintiff.” 450 U.S. at 252, 101 S.Ct. at 1093. See also §§ 50.60 and 50.73(c) Larson, Employment Discrimination, Matthew Bender (1983). See also Pace v. Southern Ry. System, 701 F.2d 1383, 1388 (11th Cir.1983) where the court, in discussing the McDonnell-Douglas standard of proof, stated: “likewise, if there is direct evidence of discriminatory intent a prima facie case will be established.” See also Loeb v. Textron, Inc., 600 F.2d 1003, 1017 (1st Cir.1979). See also Ramirez v. Sloss, 615 F.2d 163, 168-169 (5th Cir.1980), where the court held that direct evidence of discrimination established a prima facie case. Ramirez was decided after Mt. Healthy. Although Ramirez was decided before the United States Supreme Court decided Bur-dine, which held that the defendant need not rebut by proving a valid nondiscriminatory reason, there has been no Supreme Court case which has held that a proof of an age, sexually or racially biased statement shifts the burden of persuasion. Apparently the appellate court held that evidence of such a statement is tantamount to a finding that the illegal motive “is proved to have been a substantial or significant factor in the employment decision.” This court can see no substantial distinction between a finding of intentional discrimination as contemplated by McDonnell-Douglas and a finding of substantial and significant factor as contemplated by Mt. Healthy. In Dickerson v. Metropolitan Dade County, 659 F.2d 574, 580, (5th Cir. Unit B, 1981), the court states: “In a Title VII disparate treatment suit, the plaintiff always retains the burden of proving discrimination by the employer.” In this court’s opinion, the logic espoused in Bibbs v. Block, 749 F.2d 508 (8th Cir.1984) is compelling.

This court’s general criticism is that the attempt to synthesize the standards enunciated in Mt. Healthy with Title VII standards enunciated in McDonnel-Douglas v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 S.Ct. 668 (1973) and its progeny is incongruous. It appears to be totally illogical to suggest that a court can find that the plaintiff was the victim of intentional discrimination which connotes a causal finding and, at the same time, find that the defendant would have taken the same action in the absence of discrimination. The approach appears to be an illogical way to shift the burden of persuasion, presumably definitively allocated in Burdine, supra. What appears to be eliminated is the causal factor in connection with direct evidence as it relates to the plaintiff’s burden of persuasion. The Eleventh Circuit appears to make the leap, in Title VII cases, that all credible “direct evidence” of discrimination is proof of a substantial motivating factor.

The difficulty created by the Mt. Healthy approach is made vivid by this case. On the one hand, the jury is instructed that the burden of persuasion or proof is on the plaintiff. On the other hand, they are instructed that, when there is direct evidence, the burden shifts to the defendant. Thus direct evidence is given inordinate weight and the jury cannot help but be confused. These gratuitious and somewhat churlish comments are offered for whatever questionable value they may have.

The fact that there was present, in this case, “direct evidence” of discrimination which shifted the burden of persuasion to defendants coupled with proof of a prima facie case would appear to require this court to deny defendants’ motion. Plaintiff appears to have satisfied all four prongs of a prima facie case. She was obviously a member of the protected group. She was discharged, and prior to her discharge, she was not placed in available manager positions; she was arguably replaced by, or defendants filled positions she was qualified for, with persons outside the protected group; and she was certainly minimally or facially qualified for the positions. She offered proof of good evaluation reports as a food manager. Apparently Pace, supra, requires other evidence creating a reasonable inference only when the usual prima facie case is not made out under McDonnell-Douglas standards.

The motion will be denied as to the finding of age discrimination. See Boeing Company v. Shipman, 411 F.2d 365 (5th Cir.1969).

Liquidated Damages

This cause also comes on to be heard by the court for further consideration of whether liquidated damages should be added to the jury verdict. Defendants’ motion for JNOV is also addressed to that issue.

I am a tool user, not a tool maker. Congress and the Supreme Court in their wisdom have apparently determined that the transposed provisions of 29 U.S.C. § 216(b) are reasonably applicable to age discrimination cases. I respectfully disagree. Wage and hour cases are subject to reasonably objective standards, consideration, and determination. All except extreme and obvious age discrimination cases involve only amorphous standards, invoke an inate sympathy and because of their jury appeal have become the most recent cynosure of the bar. They can have an obvious chilling effect on business decisions which impact on any person within a wide range age group. Usually, a subtle or overt appeal is made to the jury’s sense of “fairness.” Only the most discerning jury can distinguish between a lack of “fairness” and discrimination. All jurors are either old or expect to be old. Most are employees.

To the possible wounds of injustices which can result from largely subjective assessments is added the salt of liquidated damages. This can, in a totally illogical manner, be affected by how long it takes a case to reach trial; a matter which defendants often have no control over. A plaintiff who makes $20,000.00 per year may receive a bonus of $10,000.00 if his case is tried within six months; an $80,000.00 bonus if his case is tried in four years. No reasonable standards have been provided by Congress or the appellate court by which trial courts may adjust for such an inanity.

The standard by which trial courts are to determine when to consider assessing liquidated damages is basically senseless. The Supreme Court’s “clarification” in Trans World Airlines, Inc. v. Thurston, — U.S. _, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985) is of little help if it is to be interpreted as plaintiff suggests. Under what circumstances can an act of “intentional” discrimination be other than the product of willfulness? It is only another example of how trial courts are expected to rationally apply what appear to be irrational standards. I would hold the liquidated damages provisions, as applied to age discrimination cases, to be unconstitutional as denying due process because of vagueness and indefiniteness. The trend is to interpret vague and indefinite provisions “liberally” because of their “remedial” purpose. Judges who question the issue are subject to being accused of insensitivity. I have frankly discussed the issue so that all will be fully informed of my concerns. I am of the opinion that I would be derelict if I did not express my concerns about the feasibility of determining whether liquidated damages should be added. If the tools I am required to use are defective, I have a duty to call attention to the defect. No clear objective standards have been provided to distinguish between instances when liquidated damages should be added and when they should not. The adding of such damages is consistent with the “casino” air which pervades our courts in the area of punitive damages, mental anguish, treble damages, etc.

Assuming that the provision is constitutional, the intent of Congress can only be that liquidated damages are not recoverable except when some aggravated circumstances, in addition to basic evidence of intentional discrimination, are present. I hold that if the only evidence in support of the claim of willfulness is that which is necessary to support the underlying claim of age discrimination, liquidated damages are not recoverable. It is ridiculous to make the issue turn on whether the jury determines that the defendant had knowledge of the provisions of the ADEA.

Surely the Supreme Court must mean that willfulness means more than just whether the defendant knew that there was an ADEA and that it precluded age discrimination and that thereafter the defendant was guilty of discrimination. If this were the case, the determining factor would be whether the defendant knew of the existence of the ADEA. That would be an asinine criterion. Undoubtedly the Supreme Court meant that the test is whether the defendant knew that its very conduct made the basis of the claim in this case was in violation of the ADEA or that it acted in reckless disregard of the ADEA. In this case, there was no evidence, other than the evidence which may support the claim of discrimination, that would support a finding of such knowledge or reckless disregard. Undoubtedly some evidence in addition to a bare bones discrimination case is necessary. See Berndt v. Kaiser Aluminum & Chemical Sales, Inc., 604 F.Supp. 962 (E.D.Pa.1985). I construe “willful” to require some evidence of a defiant attitude, not present in this case. An employer who has been clearly informed that certain employees are entitled to time and a half for overtime and proceeds to pay straight time may clearly act willfully. An employer who must continuously make business judgments with regard to employee performance has no such totally objective basis for making a decision.

The issue is further muddled by the holding in Hedrick v. Hercules, Inc., 658 F.2d 1088 (5th Cir., Unit B 1981). In Hedrick, a jury found the defendant guilty of age discrimination. It is not clear in Hedrick whether the jury, or the judge, made the finding of a willful violation. Hedrick further muddles the issue by creating the anomalous situation wherein not only may an intentional act of discrimination be or not be a willful violation, but also wherein an intentional act of discrimination, which is a willful violation, may be or may not be done in good faith. Hedrick holds that a good faith effort to comply with the ADEA through the establishment of guidelines can cause a reduction in or elimination of liquidated damages.

While this court will grant JNOV as to the liquidated damages claim, it will also conduct a hearing as to the “good faith” issue so that all matters related to liquidated damages may be considered and decided.

      . An employer can be damned if it does and damned if it doesn’t. If it doesn’t give good performance evaluations, it can be claimed that its failure to do so was discriminatory. See Nord v. United States Steel Corp., 758 F.2d 1462 (11th Cir.1985). If it does, the plaintiff usually argues, in spite, of intervening events, that the cause must have been discriminatory because “I got good reports.”

      . See, however, United States Postal Service Board of Governors v. Aikens, 460 U.S. 711, 103 S.Ct. 1478, 75 L.Ed.2d 403 (1983). Eleventh Circuit has synthesized the usual Title VII standards (and presumably ADEA standards) with the standards enunciated in Mt. Healthy City School District v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977).

      . Rehearing en banc is pending in that case. That court stated:
      In Mt. Healthy, the court adopted a rule of causation, sometimes called the "same decision” test, for cases involving employment decisions based on protected conduct. In such cases, when the plaintiff has shown his protected activity was a "substantial” or “motivating" factor, unlike Burdine, the burden shifts and the employer must show by a preponderance of evidence “that it would have reached the same decision * * * even in the absence of the protected conduct.” Id. 429 U.S. at 287, 97 S.Ct. at 576.
      749 F.2d at 511. Further that:
      As stated in Personnel Administrator v. Feeney, 442 U.S. 256, 277, 99 S.Ct. 2282, 2295, 60 L.Ed.2d 870 (1979): “Discriminatory intent is simply not amenable to calibration. It either is a factor that has influenced the legislative choice or it is not.”
      We find it inherently inconsistent to say that race was a discernible factor in the decision, but the same decision would have been made absent racial considerations. Thus, we think that once race is shown to be a causative factor in the employment decision, it is clearly erroneous to find that racial considerations did not affect the outcome of the decision. The analysis could be reversed to say that once it is shown that the same decision would have been made absent racial considerations, then it is clearly erroneous to find that race was a causative factor in the employment decision. 749 F.2d at 512.

      . This court has repeatedly charged juries that the law makes no distinction between the weight to be given direct and circumstantial evidence. See Eleventh Circuit Pattern Criminal Charge 4.2. See Fifth Circuit Pattern Criminal Charge 5.

      . There is a real question as to whether the “direct evidence" of discrimination in this case was strong evidence. See Lee, supra.

      . When all a plaintiff substantiantially has to prove is that he is within the protected age group, that there has been an adverse employment decision, that he has been replaced by a person outside the protected age group and that he was minimally qualified for the position, the possibility for sympathy verdicts is significant. See Goldstein v. Manhattan Industries, Inc., 758 F.2d 1435 (11th Cir.1985). Denials by plaintiff of the defendant’s articulated reasons are usually sufficient to defeat a motion for JNOV if a prima facie case has been proved.

      . This case is an example. It is unlikely that anyone can reasonably determine, other than by at least a partially subjective analysis, whether the defendant(s) made a reasonable business decision or discriminated because of age. The application of such standards that this court has been provided, however, has led to the conclusion that a jury issue was created. There is a myth in the law that once an issue is decided via the application of available standards, it has been decided absolutely correctly. There seems to be little support for the reasonable argument that if the liability issue is incapable of reasonably certain resolution, the remedy should not be beyond what is necessary to reasonably compensate.

      . The court was not blind to the entourage of companions which gathered behind plaintiff to demonstrate support for her cause and who allegedly exchanged pleasantries with jurors. Those seeking fairness in decisions by employers are not always totally fair in seeking decisions in employment discrimination cases. See attached article in June 1985 issue of TRIAL which mentions that the plaintiff "has a good chance to gain sympathy from a jury.” The article also encourages arguments about the "unfairness” of firing someone "who has devoted years to a company.”

      . "[A] violation is 'willful' if employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the ADEA.” (emphasis ^dded). Id. at 625. Plaintiff argues that this simply means that the defendant be aware that the ADEA prohibits age discrimination. How can anyone say that they did not know that intentional age discrimination is prohibited by the ADEA?

      . The mere fact that Congress assumed that the same standard applicable to wage and hour cases, which involve no issue of discrimination, is automatically applicable to age discrimination cases makes the provision highly suspect with regard to ADEA cases. Congress has apparently successfully mixed "apples and oranges."

      . Cf. Bourque v. Powell Electric Mfg. Co., 617 F.2d 61, 66 (5th Cir.1980); Pittman v. Hattiesburg Municipal Separate School District, 644 F.2d 1071 (5th Cir.1981). Lincoln v. Board of Regents of Univ. System of Ga., 697 F.2d 928 (11th Cir.1983).

      . A defendant who said he had no such knowledge would likely be subject to an argument that his lack of knowledge caused him to violate the Act. On the other hand that if he knew of the Act, his actions were “willful",


text:
    Marshall RATTNER, Marshall Rattner, Inc., and National Limousine Service, Inc., Plaintiffs, v. BOARD OF TRUSTEES OF the VILLAGE OF PLEASANTVILLE, Richard Kersten, Paul Lohner, Syd Huckvale, and M. Gail Grimaldi, individually and as Trustees of the Village of Pleasantville, the Planning Commission of the Village of Pleasantville, Toba Weiss, Chairwoman, Richard W. Murphy, Edward H. Principe, Charles W. Cook, Stan S. Mroczkowski, John Brentano, Peter R. Beaven, individually and as members of the Planning Commission of the Village of Pleasantville, Roy McCutcheon, individually and as Building Inspector of the Village of Pleasantville, John St. Leger, individually and as Village Administrator and Zoning Enforcement Officer of the Village of Pleasantville, Calvin Manning, individually and as Chief of Police of the Village of Pleasantville, Patrick Costello, individually and as a Police Officer of the Village of Pleasantville, John B. Farrington, individually and as Mayor of the Village of Pleasantville, John A. Horn, individually and as former Mayor of the Village of Pleasantville and the Incorporated Village of Pleasantville, Defendants.
    No. 84 Civ. 8137 (RWS).
    United States District Court, S.D. New York.
    June 12, 1985.
    Cadwalader, Wickersham & Taft, P.C., New York City, for plaintiffs; John J. Walsh, David R. Kittay, Kevin W. Goering, New York City, of counsel.
    Golenbock and Bareli, New York City, for defendants; Arthur M. Handler, Robert S. Goodman, Michael M. Meadvin, David J. Abeshouse, New York City, of counsel.
   OPINION

SWEET, District Judge.

Marshall Rattner, Marshall Rattner, Inc., and National Limousine Service, Inc. (“Rattner”) have brought this action against the Board of Trustees of the Village of Pleasantville, the Planning Commission of the Village of Pleasantville, and various persons, in their individual and official capacities, (collectively “Pleasantville”) alleging the intentional denial of Rattner’s constitutionally protected civil rights. Pleasantville has moved to dismiss or stay this action. The motion to stay is granted.

Facts

The facts as alleged by Rattner will be accepted for the purposes of this motion. In this action, based on 42 U.S.C. § 1983, Rattner seeks $2.5 million in compensatory damages, $3 million in punitive damages, and attorneys’ fees, for violation of his Fourteenth Amendment rights to due process of law and equal protection of the laws; his Fifth and Fourteenth Amendment right to just compensation for property taken by government, and for violation of various provisions of the New York Constitution. Rattner alleges that beginning in the fall of 1982 and continuing to the present, Pleasantville, using the authority of elective and appointive office, has engaged in conspiracies to deny Rattner his civil rights. Rattner alleges that Pleasant-ville:

(a) in 1983 and 1984, singled out Rattner’s employees for selective enforcement of Pleasantville’s parking ordinance after using unusual, improper and surreptitious methods to ascertain which cars belonged to Rattner’s employees;

(b) singled out Rattner for selective enforcement of the Pleasantville zoning law and State Building Code by issuing groundless violations against Rattner;

(c) singled out Rattner for selective enforcement of the Pleasantville tax law by virtually doubling Rattner’s property tax assessment in January of 1983;

(d) singled out Rattner for selective application of the Pleasantville police powers by failing to investigate meaningfully shootings at Rattner’s offices and vehicles and attempting to cover up information relevant to the firebombing of Rattner’s home on April 25, 1984;

(e) under false pretenses and without legal authority, harassed Rattner employees and threatened to jail an independent contractor hired by Rattner;

(f) commenced, in bad faith, frivolous administrative and court proceedings against Rattner, solely to harass and intimidate Rattner;

(g) pandered to improper political influence in completely ignoring proper planning procedures in arbitrarily obstructing Rattner’s legitimate attempts to conduct their limousine business; and

(h) singled out Rattner for harassment under Pleasantville’s vague zoning ordinance, which Pleasantville knew did not prohibit Rattner’s activities.

Rattner alleges that on January 5, 1982 he purchased the premises at 409 Manville Road, Pleasantville, New York, in order to house the offices of his business ventures. Thereafter, Rattner started to operate a limousine service. 409 Manville Road and the neighboring property, 423 Manville Road, are located in an “RO-2” medium density “office district” as defined in Article III of the Zoning Law of The Village of Pleasantville.

By April 20, 1982, National Limousine Service, Inc. was operating four limousines out of its office at 409 Manville Road. On April 20, 1982, the then building inspector of Pleasantville, Frank C. Hope, issued a Certificate of Occupancy for the premises at 409 Manville Road which certified that the then existing uses of 409 Manville Road conformed with all applicable state and local building codes.

On September 1, 1982, Rattner contracted to purchase the adjoining 423 Manville Road property. A plan was presented to the Pleasantville Planning Commission showing a single common parking facility servicing the adjacent properties at 409 and 423 Manville Road, and on September 20, 1982, a revised plan was forwarded to the Building Inspector for consideration by the Planning Commission. On or about October 4,1982, Rattner’s counsel took part in a conference telephone call during which both Building Inspector Hope and Village Attorney Martineau allegedly agreed that the site plan application for a parking facility was valid and legal under the Pleasant-ville zoning law. Despite the certification of the Building Inspector, on December 1, 1982 the Planning Commission adopted a resolution denying Rattner’s site plan application for reasons, according to Rattner, that were based on politics, not the merits of the application.

On December 4, 1982, Rattner removed certain trees from 423 Manville Road, an action Building Inspector Hope allegedly stated was legal. Although Rattner had obtained the Building Inspector’s approval before cutting down the trees, a police officer of the Village of Pleasantville was sent to investigate. On December 5, 1982, unknown persons fired shots through a building window and door at 409 Manville Road and through the windows of an automobile parked there. Foreign substances were placed in the gas tanks of Rattner’s vehicles, causing significant damage. Rattner immediately complained to the Pleasantville Police Department, but the Pleasantville police failed to undertake a meaningful investigation of these incidents. Rattner claims that the failure to investigate these shootings was purposeful and part of the Pleasantville officials overall effort to curry favor with certain residents and intimidate Rattner in the exercise of his civil rights.

On December 14, 1982, Rattner commenced an Article 78 proceeding (the “First Article 78 Proceeding”) in New York state Supreme Court against the Planning Commission.

On or after December 16, 1982, Rattner was informed that the Assessor had increased the assessment of 409 Manville Road from $297,150 to $567,000. On March 18 and May 20, 1983 Pleasantville issued five notices of violations to Rattner regarding alleged parking and building code violations and improper tree removal at 409 and 423 Manville Road. All five of these notices were allegedly issued to harass Rattner and constituted selective enforcement against Rattner.

On April 25, 1983 New York Supreme Court Justice Anthony J. Cerrato granted Rattner’s petition in the First Article 78 Proceeding and annulled the Planning Commission’s refusal to determine the proposed site plan, remanding the matter to the Planning Commission to determine the site plan application. The First Article 78 proceeding is no longer pending.

On June 1, 1983 the Planning Commission resolved to appeal to Pleasantville’s Zoning Board of Appeals for a review of the Building Inspector’s determination, made the year before, that Rattner’s proposed use of 423 Manville Road was conforming. Both of Pleasantville’s contemplated appeals to the Zoning Board of Appeals were allegedly without legal foundation, as was known to Pleasantville at all relevant times.

On June 30, 1983, Rattner instituted an Article 78 Proceeding (the “Second Article 78 Proceeding”) against the Planning Commission for the purpose of compelling the Planning Commission to pass upon the site plan. Shortly after the filing of the second Article 78 Proceeding, Pleasantville commenced discussions with Rattner regarding outstanding issues between them. Rattner and defendant St. Leger, the Village Administrator and Zoning Enforcement Officer, agreed to propose to the Board of Trustees, and a plurality of the Planning Commission recommended passage of, a zoning amendment that would have specifically permitted Rattner’s use. The Board of Trustees, however, rejected the 'proposed amendment. Rattner alleges that the Board of Trustees’ manipulation of the amendment process was another incidence of bad faith and abuse of Pleasantville’s powers for improper purposes.

On October 22, 1983 Rattner hired a contractor to commence paving of the rear area of 423 Manville Road. Town Officials instructed St. Leger to stop the paving. St. Leger immediately ordered Police Officer Costello to accompany him in a police car to 423 Manville Road, and, after identifying himself as the “Inspector” of Pleasantville, demanded that paving cease because no building permit had been obtained. Although the Pleasantville zoning law did not require a building permit for the paving work Rattner was trying to do, St. Leger threatened one of Rattner’s employees and the contractor with arrest and imprisonment if paving were continued.

Shortly thereafter, the Board of Trustees commenced a declaratory judgment action (the “Declaratory Judgment action”) against Rattner and applied for a preliminary injunction to prevent Rattner from parking and maintaining limousines at 409 Manville Road, and to prevent the Planning Commission from approving Rattner’s previously submitted site plan for 423 Manville Road.

In an amended answer in the Declaratory Judgment Action, Rattner alleged as a Tenth Affirmative Defense the selective enforcement of the law, denial of equal protection of the laws, and denial of due process rights. The text of the affirmative defense states:

The within action is no more than a culmination by the plaintiffs herein of a course of conduct by the plaintiffs and defendant Planning Commission of the Village of Pleasantville to selectively enforce the zoning laws to the detriment of the defendants, Marshall Rattner, Marshall Rattner, Inc., and National Limousine Service, Inc. and by virtue of same, the plaintiffs and defendant Planning Commission have acted and are acting in concert to deny the Rattner defendants the equal protection of the law and their due process rights. By virtue of the conduct of the plaintiffs and defendant Planning Commission and all the proceedings had heretofore, the within action should be dismissed by this Court.

■ The amended answer was served as a result of a motion by Rattner specifically to amend the original answer in order to add the Tenth affirmative Defense. The alleged deprivations perpetrated by Pleasant-ville, upon which the Tenth Affirmative Defense is based, according to Rattner’s answers to interrogatories, include:

Authorizing the defense of the First Article 78 Proceeding against the Planning Commission with full knowledge of the impropriety of the Planning Commission’s action.
Threatening the defendants with code violations for failure to compromise defendants’ legal rights as against the Village.
Causing the filing of a total of six notices of violation against the defendants’ businesses and premises, with full knowledge of the impropriety of same.
Authorizing sham appeals to the Zoning Board of Appeals with full knowledge of the untimeliness of such appeals.
Engaging in bad faith in settlement discussions and thereafter reneging on such settlements, based solely upon political and/or personal reasons.
Threatening to arrest persons hired by the defendants to pave a portion of defendants’ property at 423 Manville Road and thereby causing a cessation of work and a loss of valuable materials.
The refusal by the Planning Commission members to accept the certification by the Building Inspector as to the legality of the uses of the Rattner defendants during site plan application proceedings.
A refusal by the Planning Commission members to accept the confirmation of the Building Inspector’s opinion by the Village Attorney via a written opinion.
A usurpation by the Planning Commission of the powers of the Building Inspector and Zoning Board of Appeals by denying defendants’ site plan application strictly on the basis of the Planning Commission’s interpretation of the Zoning Law.
A refusal by the Planning Commission members to adhere to the requirements of the decision of the Hon. Anthony J. Cerrato by refusing to consider properly defendants’ site plan application.
The authorizing by the Planning Commission of a sham appeal to the Zoning Board of Appeals by resolution dated June 1, 1983 with full knowledge that said appeal was untimely.

The Declaratory Judgment action is still pending.

At or about the time of the paving incident, a defendant town official allegedly surreptitiously entered on Rattner’s property and made lists of license plate numbers of cars parked on Rattner’s property and then supplied the Pleasantville police department with the lists of license plate numbers and directed Police Chief Manning to obtain the names of the owners of the photographed and listed vehicles. Thereafter, police department employees selectively ticketed Rattner’s employees cars, when parked on the street, for “violations” that were not issued to other cars similarly parked.

On April 11, 1984, Justice Stolarik of the Supreme Court of the State of New York issued a decision and order denying Pleasantville’s motion for a preliminary injunction in the Declaratory Judgment Action. Following Justice Stolarik’s decision, unknown persons allegedly firebombed Rattner’s home in Chappaqua on April 25, 1984. On the day following the alleged arson, Rattner informed defendant officials that he had reason to believe that certain neighborhood residents had knowledge of the arson. Rattner alleges that defendants have knowledge regarding the arson that they are refusing to disclose to Rattner or the New Castle Police Department. This cover-up is alleged to be part of Pleasant-ville’s efforts to intimidate Rattner.

On June 22, 1984 Rattner commenced an Article 78 proceeding challenging the Town’s appeal to the Zoning Board of Appeals (the “Third Article 78 Proceeding”). On January 11, 1985, Justice Angelo J. Ingrassia of the Supreme Court of the State of New York denied the respondent Village’s motion to dismiss the Third Article 78 Proceeding. This action is still pending.

On or about December 2, 1984 Mr. Vinberg, the tenant-resident of 423 Manville Road, died. Pursuant to the agreement between the Vinbergs and Rattner, the tenancy automatically terminated on or about February 7, 1985, ending the residential use of the property. On March 1, 1985, Rattner applied for a demolition permit in order to take down the existing structure at 423 Manville Road. On March 6, 1985 defendant Martineau wrote to Rattner informing him of Pleasantville’s requirements for demolition and stated Pleasant-ville’s position that Rattner would be required to submit a new site plan respecting any proposed use of the premises after demolition.

On March 8, 1985 the amended complaint was filed in this action.

The relationship among the claims asserted in the various pending cases — this federal case, the second and third Article 78 cases, and the declaratory judgment case — are set out below:

Allegations New York State Court Pleadings Amended Federal Complaint
1. Rattner’s purchase of 409 Manville Road; issuance of certificate of occupancy; commencement of limousine business and purchase of 423 Manville Road. ¶ Second, Fourth of '2nd Article 78 Petition. ¶ Seventh-Tenth of 3rd Article 78 Petition. ¶ 13-15
2. Rattner’s submission of site plan to Planning Commission on September 8, 1982 and subsequent proceedings leading to denial of site plan approval on 12/1/82; allegations that such denial was improper. ¶ Fifth-Fourteenth of 2nd Article 78 Petition. ¶¶ Eleventh-Twenty-first of 3rd Article 78 Petition. Tenth Affirmative Defense in declaratory judgment action as supplemented by answer to interrogatory 24. ¶ 15-17
Allegations Amended New York State Federal Court Pleadings Complaint
3. Police investigation of tree cutting at 423 Manville Road and failure to investigate alleged shooting. ¶ 18 Tenth affirmative Defense as supplemented by answer to interrogatory 7.
4. Commencement of first Article 78 Proceeding alleging Planning Commission had usurped authority of Zoning Board of Appeals. ¶ 19 ¶ Fourteenth of 2nd Article 78 Petition. Twenty-first of 3rd Article 78 Petition.
5. Alleged threats by defendants to harass plaintiffs with building code violations, increasing assessment, and ticketing. ¶ 20-21, ¶ Tenth Affirmative Defense as sup-25, 31 plemented by answer to interrogatory 7.
6. Issuance of violations to Rattner concerning 408 and 423 Manville Road. ¶ 23 Tenth Affirmative Defense as supplemented by answer to interrogatory 7.
7. Proceedings before Planning Commission on remand and resolutions of Planning Commission and Board of Trustees to place matter before the Zoning Board of Appeals; allegations of impropriety thereof. ¶ 26 ¶ Sixteenth-Thirty-fourth of 2nd Article 78 Petition. ¶ Twenty-third-Twenty-fifth of 3rd Article 78 Petition. Tenth Affirmative Defense supplemented by answer to interrogatory 24.
8. Alleged threats of arrest of persons hired by defendants to pave property at 423 Manville Road. ¶ 29 Tenth Affirmative Defense as supplemented by answer to interrogatory 7.
9. Board of Trustees’ failure to approve results of certain settlement discussions. ¶ 28 Tenth Affirmative Defense as supplemented by answer to interrogatory 7.
10. Commencement of declaratory judgment action by Board of Trustees and request for preliminary injunction. ¶ 30 Twenty-eighty of 3rd Article 78 Petition.
11. Alleged arson of Rattner’s house and failure to investigate and coverup. ¶ 33-36 No equivalent.
12. Filing of appeal to Zoning Board of Appeals by Board of Trustees and Planning Commission. ¶ 36 ¶ Thirty-third of 3rd Article 78 Petition.
13. Commencement of 3rd Article 78 Proceeding to nullify the appeals to the Zoning Board of Appeals. ¶ 37 3rd Article 78 Notice of Petition and Petition.
14. Ticketing of vehicles belonging to plaintiffs and their employees. . ¶ 31 Tenth Affirmative Defense as supplemented by answers to interrogatory.
15. Allegations of denial of civil rights to plaintiffs. ¶ 4-5, Tenth Affirmative Defense as supple-41-55 mented by answers to interrogatories 7 and 24. Notice of Claim dated November 8, 1983.

All of the allegations in the federal complaint, other than that of a failure to investigate fully the alleged arson, are also pleaded as causes of action in the on-going state cases.

Discussion

Pleasantville has moved to dismiss or stay this action in view of the parallel state actions. A court has the inherent power to stay an action based on considerations of “[w]ise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.” Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183, 72 S.Ct. 219, 221, 96 L.Ed. 200 (1952), quoted in Moses H. Cone Hospital v. Mercury Constr. Corp., 460 U.S. 1, 15, 103 S.Ct. 927, 936, 74 L.Ed.2d 765 (1983). Because the circumstances under which a court should refuse to exercise its jurisdiction are few, a showing of exceptional circumstances is necessary, Colorado River Water Cons. Dist. v. U.S., 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483. There are, however, no hard-and-fast rules which provide resolution of this discretionary decision. Moses Cone, supra, 460 U.S. at 15, 103 S.Ct. at 936. The decision requires a balancing of various factors, including the desirability of avoiding piecemeal litigation, the order in which jurisdiction was obtained by the state and federal forums, and the degree to which the cases necessitate duplication of discovery or issue resolution. See Moses Cone, supra; Colorado River, supra; American Motorists Insurance Co. v. Philip Carey Corp., 482 F.Supp. 711 (S.D.N.Y.1980); Universal Gypsum of Ga. Inc. v. American Cyanamid Co., 390 F.Supp. 824 (S.D.N.Y.1975); Bethlehem Steel Corp. v. Tishman Rlty & Const., 72 F.R.D. 33 (S.D.N.Y.1976).

The facts as pleaded by Rattner establish that the federal case is inextricably intertwined with the state cases. Only the allegations of a failure to investigate the arson charge distinguishes the federal and state actions. Proof of the arson charges as well, however, will still necessarily involve facts identical to those substantiating the state charges. This distinction between the state and federal actions consequently is not sufficient to merit proceedings in federal court on the arson charges. Otherwise, the same events and improprieties on the part of Pleasantville are at issue in the various cases, and liability in the federal action will depend upon the legality of the governmental acts which are at the root of the state cases. Indeed, Rattner, by specifically amending his answer in the declaratory judgment action to include the tenth affirmative defense, presented to the state court the identical issues now before this court.

The pending state court actions, which precede this action, have already produced extensive discovery, and the discovery in this ease has covered nearly identical subjects of inquiry, producing needless duplication. Furthermore, although the complaint is cast in terms of constitutional deprivations, and I do not reach the issue of the sufficiency of the pleadings, the alleged deprivations involve matters of town law, the interpretation of which is perhaps better suited to a state court more familiar with the subject matter involved. The state courts are also fully competent to handle the constitutional issues raised by Rattner.

These factors compel me to conclude that the intercession of a federal court at this stage in the litigation will have an ill-effect upon the swift, efficient, and unified resolution of the issues underlying the various lawsuits. I therefore find that a stay of the federal action, until determination by the state courts of the mutual issues currently pending in those cases, is the proper course. Aware that the staying of a federal action because of a parallel state action is rarely justified, I nonetheless exercise my discretion to order such a stay in this case. Upon resolution of the state actions, either party may move to terminate the stay in this action.

IT IS SO ORDERED.