source: Caselaw Access Project

author: CARROLL, District Judge.

license: Public Domain

text:
    U-HAUL INTERNATIONAL, INC., an Oregon corporation, Plaintiff, v. JARTRAN, INC., a Florida corporation; Jar Corporation, a Florida corporation; James A. Ryder, an individual; and Sandra C. Tinsley, Inc., Defendants.
    No. CIV 80-454 PHX-EHC.
    United States District Court, D. Arizona.
    Nov. 26, 1984.

      Dan M. Durrant, Streich, Lang, Weeks & Cardón, Phoenix, Ariz., for plaintiff.
   MEMORANDUM AND ORDER

CARROLL, District Judge.

This action was filed by U-Haul International, Inc. (U-Haul), June 16,1980, seeking to enjoin continued publication of certain advertisements by Jartran, Inc. (Jartran) as well as recovery of damages claimed to result from that advertising program.

The application for preliminary injunction was heard in December, 1980 and January, 1981. The Court’s Order, entered February 17, 1981, granting a preliminary injunction is reported in U-Haul Intern., Inc. v. Jartran, Inc., 522 F.Supp. 1238 (D.Ariz. 1981).

Jartran appealed the February 17, 1981 order, attacking the Court’s findings that the ads at issue in the preliminary injunction proceeding were false and deceptive as well as challenging the Court’s ruling that the Lanham Act, Section 43(a), 15 U.S.C. § 1125(a), was not limited in its application to “palming off” one’s goods or services as the product of another. The Court of Appeals for the Ninth Circuit affirmed, U-Haul Int’l, Inc. v. Jartran, 681 F.2d 1159 (1982):

... It would not support the goals of the Act to hold the kind of deception Jartran practiced in its advertising not actionable * under section 43(a). Id. 681

F.2d at 1162.

The matter came on for trial on February 24, 1983. The parties waived a jury on the day of trial. The trial extended for nineteen days, with more than three thousand two hundred pages of testimony. Seventy persons testified personally or by way of deposition. Over two hundred exhibits were admitted, consisting of countless thousands of pages.

Pursuant to Fed.R.Civ.R. 65(a)(2), evidence received during the extensive preliminary injunction hearing, which was admissible upon the trial of the merits, is a part of the trial record.

Post-trial briefs, together with proposed findings of fact and conclusions of law, were filed with the Court. The matter has been under advisement since mid-June, 1983.

Preliminary Discussion:

The February 17, 1981 Memorandum Opinion, granting the preliminary injunction outlines the nature of the proceedings, the status of the parties, and gives a general background of how the controversy developed. The opinion also sets forth the Court’s findings with respect to a series of Jartran ads comparing its equipment, either directly or by explicit inference, with that of U-Haul.

Trial issues also involved a series of price comparison ads with U-Haul which Jartran had run prior to the equipment comparison ads. As noted in the preliminary injunction order, the character of these ads was reserved until time of trial.

The third trial issue, and the most troublesome to the Court, concerned the extent of damages which U-Haul sustained if Jartran’s advertising programs were found violative of the Lanham Act or common law claims of unfair competition and disparagement.

For the reasons noted later in this Order, the findings and conclusions set forth in the Memorandum Opinion of February 17, 1981, and incorporated as a part of this Order. I reach similar findings and conclusions regarding the price comparison ads, and conclude that U-Haul was substantially damaged by those advertising activities.

My ultimate findings and conclusions may be summarized as follows:

In 1978, James A. Ryder terminated his relationship with Ryder System, an entity he founded and controlled for many years. In the mid-1970s, Ryder System brought in new management and Ryder was largely being ignored. In 1978, although he was then 60+ , he terminated his relationship with Ryder System, and concluded to start another company which would be competitive with some of the services provided by Ryder System. This new entity was first called Jarpool and later evolved into Jartran and JAR Corporation. The JAR in these various corporate titles was to identify and establish the presence of James A. Ryder.

Jartran’s first activities involved leasing large truck and trailer units to commercial enterprises. Growth was limited and Ryder determined to expand the company into the self-move rental business. Jartran’s new scope of operations would bring it into direct competition with U-Haul, the longtime leader — or sole occupant — of that industry.

Jartran at the time of incorporation, had limited financing, minimal corporate organization, and little equipment. Through Ryder’s efforts, Jartran survived its premature birth and was able to arrange the acquisition of trucks and then trailers, through creative deficit financing. It obtained its equipment, most of it located in Detroit, Michigan, from Dodge and Ford (trucks) and Fruehauf (trailers). These manufacturers not only provided equipment for Jartran, but did so with a “financing package of 110 percent, sometimes 115”, i.e., equipment plus cash or credit to Jartran.

Jartran was faced with an immediate practical and financial problem — how to get these prospective rental units from Detroit to dealers or rental centers throughout the United States. At the same time, Jartran was also making arrangements for a dealer-distribution network. This effort largely consisted of hiring former Ryder System and U-Haul executives to head up the dealer-distribution program.

It was estimated to cost about $8,000,-000.00 to move these units from Detroit to rental outlets. Someone in the Jartran organization proposed that this distribution effort could be incorporated in an advertising campaign, such that persons would rent the equipment at Detroit and move it throughout the United States. Such an advertising program had several beneficial aspects:

It would get the equipment out of Detroit, and to ultimate market areas;
It would place Jartran before the self-move public as an immediate and full-born competitor of U-Haul;
It would enable Jartran to dramatically and repetitively image itself on a nationwide basis as a new — other—provider of self-movement equipment, safer and more attractive, and substantially less expensive to rent than U-Haul;
It would provide immediate cash flow to Jartran necessary to its financial survival. Jartran had monthly equipment payments totaling $3,500,000.

Was this effort successful? Consider the early record of Jartran’s consumer rental division:

Within a period of weeks, Jartran ads appeared on a national basis. Over 2,000 ads were published between mid-1979 and the end of 1980;
Equipment was rented in Detroit and driven or towed to market areas throughout the United States;
Gross revenues (rounded) rose from $3,000,000 in 1979, to $58,000,000 in 1980, and $95,000,000 in 1981;
Advertising expenses in 1980 totaled approximately $6,000,000;
Mr. Ryder publicly announced that the campaign “knocked the competition [U-Haul] on their ass.”
Jartran and its agency sought and was awarded national recognition by the advertising industry for the “overall marketing effectiveness of [its] campaign.”
An advertising campaign — of the type utilized by Jartran — has a life-beyond-publication. Its message remains in the public mind and can influence consumer decisions long after the newspaper is consigned to the trash bin.

What was the effect of all this on U-Haul?

In 1979, U-Haul had almost all of the self-move, household goods trailer rental business nationwide and about 60% of the same type of truck rental business. The Company had experienced the entry of competition over the years in both facets of its business without any measurable loss of revenues. Its largest competition in 1979 was Ryder System.

U-Haul had a steady and measurable annual growth in revenues prior to 1980. The self-move rental business is not adversely affected by general business recessions. Rentals increase during a recessionary period as families relocate to seek new job opportunities. Businesses rent rather than purchase new equipment for local moves during times of economic downturns.

In the mid-1970s U-Haul’s equipment distribution procedures started to change. The availability of independent dealers was impacted by a number of factors, including closing of independent gas stations or conversion to company operated outlets. U-Haul increased its utilization of centralized equipment facilities, called self-moving centers, with some increase in its operating costs.

Equipment safety, rental cost and convenience of equipment availability are important considerations to a renter of self-move equipment.

U-Haul’s record of gross revenue growth decreased substantially as Jartran became an active competitor and media advertiser. In fiscal 1981 U-Haul experienced its first downturn in gross revenues over those of a prior fiscal year.

U-Haul’s gross revenue for fiscal year 1981 was approximately $49,000,000 less than it forecasted for that prior to the time it knew Jartran was to be a competitor.

Pre-Jartran, U-Haul had done little print media advertising. Its principal advertising efforts had utilized the yellow pages in telephone directories. U-Haul expended approximately $13,600,000 in print media advertising costs in 1981 and 1982 in an effort to counteract Jartran’s advertising which is at issue in this proceeding.

In 1979-80, U-Haul had been in the self-move industry for more than thirty years. It had experienced the entry of a new competitor on a number of occasions. U-Haul’s gross revenues had not been adversely affected by this added competition. While U-Haul had less market share over a period of time, its revenues and number of transactions continued to increase as competitors such as E-Z Haul and Ryder System entered the market.

The situation with Jartran was markedly different. In a period of months Jartran secured more than a 10% share of the market for both trucks and trailers.

It is impossible to sepárate the effect of Jartran’s entry into the market from the effects of its advertising program. Suffice it to say that Jartran, without the character of its ad program directed at U-Haul, would not have attained the market shares for trucks and trailers within the period of time that it did.

Before being called to task through this proceeding, Jartran executives boasted that “Newspaper advertising has made us the fastest growing company in America” and that “In less than two years time, Jartran has shaken up the truck rental industry with overnight identity, moving to No. 3 in the nation in rentals.”

Jartran’s claim that no damages should be awarded to U-Haul falls on deaf ears. To embrace this position would be to reward a commercial privateer and encourage further predatory advertising practices in the business world.

The judgment in this case will, advise Jartran as to the practical cost for the advertising program directed against U-Haul. To that extent, Jartran, James A. Ryder, and others similarly motivated, will know that financial expediency or the desire for instant substantial market share affords no immunity for violations of the Lanham Act or common law. claims of disparagement and unfair competition.

The damage award of $20,000,000, while a substantial dollar amount, is minimal under the evidence. Professor Jack Winders, a credible expert economist, testified that minimal lost revenues for fiscal 1981 totaled $30,000,000 for one-way rentals. Allowing 25% for incremental costs related to these added revenues provides a net damage figure of $22,500,000 for this one class of services.

I would arrive at the same damage award by allowing U-Haul its advertising costs of $13,600,000, and awarding it the $6,000,000 expended by Jartran to carry out the offending ad campaign.

With the foregoing general discussion in mind, the Court enters further findings of fact and conclusions of law as follows:

FINDINGS OF FACT

1. Plaintiff U-Haul International, Inc. (U-Haul) is an Oregon corporation with its principal place of business in Phoenix, Arizona. U-Haul performs accounting, clearinghouse and other functions for entities and individuals that have common interests in marketing and renting trucks, trailers and related equipment, on both a local and one-way basis, to consumers for household moving. These entities and individuals, together with U-Haul, will be referred to as the U-Haul System. One-way rentals constitute the largest segment of the self-move consumer rental business.

2. The trademark “U-Haul” is registered with the United States Patent and Trademark Office.

3. AMERCO, a Nevada corporation, wholly owns and is the parent corporation of U-Haul and of each of various separately incorporated rental companies, which do business under the name and style “U-Haul” (U-Haul Rental Companies).

4. Trucks and trailers are owned by fleet owners (U-Haul Fleet Owners). The U-Haul Fleet Owners enter into contracts with U-Haul, which contracts obligate U-Haul to provide for the rental of the fleet owners’ equipment. U-Haul, in turn, contractually authorizes the rental companies to provide for the rental of trucks and trailers to the public.

5. The U-Haul Rental Companies enter into “U-Haul Dealership Contracts” with independent dealer-agents (U-Haul Rental Dealers). Operating under these contracts, U-Haul Rental Dealers display and rent trucks and trailers to the public on both a one-way and local basis. Some of the U-Haul rental companies operate U-Haul moving centers, which also, among other things, rent trucks and trailers to the public on both a local and one-way basis.

6. The U-Haul System has been offering trailers to consumers for local and one-way rentals since approximately 1945. U-Haul System has been offering trucks for consumer rental for household moving purposes since approximately 1959.

7. On a national basis, immediately pri- or to 1979, the U-Haul System provided close to 100 percent of the trailers rented in one-way consumer trailer rental transactions. On a national basis, immediately prior to 1979, U-Haul System provided at least 60 percent of the trucks rented in one-way truck rental transactions.

8. Defendant Jartran, Inc. (Jartran) is a Florida corporation and at relevant times had its principal place of business in Florida.

9. Defendant James A. Ryder (Ryder) is a resident and citizen of the State of Florida who, with others, incorporated Jartran in late 1978. From its incorporation through at least the end of 1980, Ryder owned, either directly or indirectly, at least 85 percent of the outstanding stock of Jartran.

10. Jartran was significantly undercapitalized at the time of incorporation and remained so during relevant time periods to this action. The Company was dependent upon Ryder’s credit and his making funds available to the Company. Ryder was required by sellers of equipment and lenders to personally guarantee obligations of the Company.

11. Ryder, either directly or indirectly through other corporations he controlled, managed and controlled Jartran for his own personal benefit and advantage.

12. In mid-1979, beginning primarily in the Detroit area where a substantial portion of its rental truck fleet was acquired, Jartran began actively competing in the local and one-way consumer truck rental business. By some time in early 1980, its operations for trucks and trailers became nationwide.

13. Jartran offers its products and services in interstate commerce, throughout the continental United States, including the District of Arizona, and is in competition with the U-Haul System.

14. In the summer of 1979, Jartran initiated a program of national advertising. Jartran employed an advertising agency, Sandra C. Tinsley, Inc. (Tinsley) to assist it in this program. Advertisements placed by Tinsley on behalf of Jartran numbered over 2,000 and were published throughout the United States. These ads appeared over a period of 16 months.

15. Jartran started its advertising program with ads comparing one-way rental rates charged by U-Haul and Jartran. Most of these advertisements stated “U-Haul It to (City) ... Jartran It to (City) ...” with rates for U-Haul and Jartran stated after the name of the city. The advertising program began in the Detroit area in late June 1979, with Jartran’s entry into the self-move equipment rental business. In November 1979, the area of Jartran’s price comparison ad campaign was greatly expanded. Between November 1979 and May 1980, Jartran published over 900 comparative price ads in approximately 160 cities across the nation. This expanded campaign was characterized by ads which contained not only the earlier headline (“U-Haul It To ...”), but also representations that a rental customer could obtain the same substantial savings (as indicated in the headlined prices to the advertised destination) if he chose to rent to another destination. These later ads constitute the majority of the price comparison ads.

16. Jartran’s advertised price to the advertised destination was a special promotional price which was not identified as such. This price was intended to convey and was in fact perceived by the relevant market as the price Jartran would normally charge and thus as representative of Jartran’s overall pricing policy.

17. Jartran arrived at the advertised price for its equipment by selecting a promotional rate that would have consumer impact. This price, which was not disclosed as a promotional rate, was compared in ads with a U-Haul price. In numerous ads the U-Haul price used included a basic rate and a distribution fee. The ads did not disclose the fact that the U-Haul . price included a distribution fee.

18. The self-move equipment rental industry imposes distribution fees as a temporary device to regulate rentals to areas in which there is a build-up of equipment.

19. The distribution fee is regularly quoted separately from the one-way rate in order to emphasize its temporary nature and so that the consumer will know it may not apply should he decide to delay his move.

20. Jartran knew that the Jartran and U-Haul policies of quoting a distribution fee separately from the one-way rate were identical.

2Í. Distribution fees apply to less than 5% of U-Haul’s one-way transactions per year.

22. Jartran’s advertised prices were lower than rates reflected on Jartran’s standard one-way rate sheet for the same type of rental transaction to the same destination.

23. In a majority of Jartran transactions surveyed, rates charged exceeded the advertised rates.

24. The comparative claim “save big money ... to almost any city” was intended to convey that the rental customer would realize a similar savings, as illustrated by the differential between the two headlined prices, to generally every city. The relevant rental market perceived this intended message of substantial savings.

25. During this period of price comparison advertisements, Jartran’s company policy was to price above its competition; its rate structure was the same or slightly higher than that of U-Haul.

26. Jartran knew that U-Haul’s prices as well as its own were subject to change at any time.

27. Jartran, through its corporate management who supervised the ad campaign and who were responsible for selecting the advertised prices was aware that U-Haul had a meeting-competition pricing policy.

28. Jartran’s method of surveying rates being charged by U-Haul was haphazard and poorly structured.

29. Jartran had Tinsley publish an ad showing a Jartran truck and a U-Haul truck with the comparative sizes of the vehicles adjusted to make the U-Haul truck appear smaller and less attractive.

30. U-Haul and Jartran prices in the price comparison ads were false, deceptive, misleading and incomplete. Jartran’s comparative claim, that Jartran could save the consumer big money to almost any city on truck and trailer rentals was false, deceptive and misleading.

31. The findings in the Memorandum and Order of February 17, 1981, regarding equipment comparative ads, are incorporated and made a part of this final order.

32. The false and deceptive statements in the Jartran ads actually deceived a substantial segment of renters of self-move equipment who relied upon the advertisements.

33. The consumer study conducted by Response Analysis Corporation (RAC) as well as consumer studies undertaken by Field Research Corporation (FRC) and by Behavior Research Corporation (BRC) were each performed in accordance with advertising industry standards and were objective, reliable and probative of the beliefs engendered by the Jartran ads in the minds of the relevant public.

34. The false and deceptive statements contained in the Jartran ads were material in influencing rental decisions of a substantial segment of the public interested in renting self-move equipment.

35. Jartran ads in late 1980, which did not directly name U-Haul, were designed to and were in fact perceived by a substantial segment of the buying public as constituting comparative claims to U-Haul.

36. Jartran advertisements had substantial carryover effect in the mind of the interested public after the date of publication.

37. In September 1979, U-Haul prepared a financial forecast of fiscal 1981 gross rental revenues, equipment and support rental items, distribution fees and self-move insurance premiums which was in the amount of $412,000,000 for the United States.

38. Actual operations of the U-Haul System during fiscal year 1981 for the United States resulted in gross rental revenues of $363,045,000.

39. There is a demonstrated relationship between Jartran’s advertising and U-Haul’s failure to realize its forecasted gross revenues for fiscal year 1981. Jartran’s false advertising was a material cause of U-HauPs injury.

40. The difference between U-Haul’s forecasted gross revenues for fiscal year 1981 and the revenues actually realized is not attributable to:

(a) changes in the number or location of its rental dealers;
(b) inventory of its equipment stationed in any area;
(c) Ryder System promotional advertising campaign;
(d) economic conditions.

41. It is impossible to separate the effect of Jartran’s entry into the self-move market as a competitor from the effects of its advertising program.

42. Historically, U-Haul’s gross revenues did not decline as a new competitor entered the self-move market. Additional competitors had the effect of expanding the market. The mere entry of Jartran as a new competitor did not account for U-Haul’s revenue shortfall in fiscal 1981.

43. U-Haul sustained damages for lost profits for fiscal year 1981 in an amount not less than $20,000,000.

44. U-Haul continued to sustain damages for lost profits for periods after fiscal year 1981.

45. U-Haul expended approximately $13,600,000 for media advertising designed to offset or counter the adverse effects of Jartran advertisements directed at U-Haul.

46. Jartran’s 1979-1980 advertising campaign cost was approximately $6,000,-000.

CONCLUSIONS OF LAW

1. This Court has subject matter jurisdiction. 15 U.S.C. § 1121 and 28 U.S.C. § 1338(a). See U-Haul International, Inc. v. Jartran, Inc., 681 F.2d 1159 (9th Cir. 1982). The Court has jurisdiction over plaintiff’s pendent claims. 28 U.S.C. § 1338(b); 28 U.S.C. § 1331.

2. Plaintiff U-Haul International, Inc. is a real party in interest and has standing to sue for damages sustained by itself and other entities comprising the U-Haul System.

3. Under the Lanham Act, a false representation of fact may be an actual false statement; an affirmatively misleading statement; a partially correct statement; a statement which is untrue as a result of a failure to disclose information; or a statement which is literally true but conveys a false impression through innuendo, indirect intimation or ambiguous suggestion which has a tendency to mislead or deceive the consumer.

4. A false representation must be about Jartran’s equipment, either standing alone or in comparison to U-Haul’s equipment. The advertisement need not directly or explicitly compare U-Haul and Jartran to be a comparative advertisement. It is sufficient that a substantial segment of the buying public understands that the ad compares the equipment of the two competitors.

5. Consumer reliance as an element of a claim for damages under Section 43(a) of the Lanham Act, can be shown by direct evidence such as testimony from individual members of the buying public, or by circumstantial evidence, such as surveys of the buying public.

6. In this case the buying public for purposes of the actual deception/reliance requirement of the Lanham Act consists of those persons who have been in the market to move or who are planning to move in the near future.

7. To prove actual deception of the buying public, plaintiff in this case need only show by competent surveys that the number of members of the buying public who are deceived, is not insignificant.

8. The target market respondents in the FRC and BRC reports (all adults) and in the RAC report (those who had moved over the last three years or who were planning to move over the next 12 months) demonstrate significant levels of actual consumer deception and reliance on the Jartran advertisements at issue. The FRC and BRC reports and the RAC consumer perception surveys are probative of both the issues of likelihood of deception of the buying public for purposes of permanent injunctive relief as well as actual deception of the buying public for purposes of plaintiff’s claim for damages.

9. The number of consumers in the prospective market group who were influenced by each of the claims in issue made in the disputed advertisements was sufficiently substantial to conclude that the claims were material for purposes of plaintiff's Section 43(a) and common law claims.

10. Publication of deliberately false comparative claims gives rise to a presumption of actual deception and reliance. Defendants have not rebutted this presumption.

11. Jartran is liable to plaintiff under Section 43(a) of the Lanham Act because the advertisements at issue (1) contain false, misleading, deceptive and incomplete statements of fact; (2) which statements are likely to deceive and actually did deceive a substantial segment of the buying public; (3) and which are material in that they are likely to and did influence the customer’s choice of a self-move company; (4) because Jartran’s goods and services travel in interstate commerce; and (5) the disputed advertisements actually injured U-Haul.

12. The tort of unfair competition encompasses false, deceptive and misleading advertising. It is not limited to conduct involving “palming off” or “passing off.”

13. The same facts which lead to liability under Section 43(a) of the Lanham Act will support a claim under the tort of unfair competition.

14. Jartran is liable to plaintiff for unfair competition.

15. Conduct which constitutes disparagement js actionable as unfair competition.

16. The elements of a disparagement claim as set forth in Restatement (Second) of Torts §§ 623A, 626 and 629 (1976) are followed by Arizona courts.

17. The causation element of a disparagement claim is met where the evidence establishes that the disparaging statements were a substantial factor in causing pecuniary loss. Plaintiff need not prove loss of specific customers.

18. The First Amendment does not protect commercial speech which exceeds the bounds of truthful advertising.

19. Plaintiff is not required to prove actual malice with convincing clarity.

20. Jartran’s disparaging statements are not privileged. The statements constitute false assertions of specific unfavorable facts regarding U-Haul’s prices and equipment.

21. Jartran is liable to plaintiff for disparagement:

(a) The statements referred to the plaintiff by name or the public knew that the statements referred to the plaintiff, and the
(b) statements disparaged the plaintiff or its product.

22. Jartran’s false advertising was a material cause of U-Haul’s loss of gross revenues, and consequent loss of profits, in fiscal year 1981.

23. Plaintiff is not required, in order to sustain a damage claim under the facts of this proceeding, to segregate the effects of Jartran’s entry into the market from the effects of its false and misleading advertisements.

24. In Lanham Act and similar common law cases, as well as antitrust cases, the plaintiff is not required to prove the amount of damages with mathematical certainty.

25. In determining lost profits from lost revenues, taxes on the income U-Haul would have realized are not deducted.

26. Under the Lanham Act claim, a Court may award additional damages, up to three times the amount awarded for actual damages “according to the circumstances of the case.” 15 U.S.C. § 1117. The circumstances of this case make such an award proper. U-Haul has sustained damages above and beyond those actually awarded. Additional damages are appropriate in the amount of $20,000,000.

27. With respect to the claim for punitive damages based on U-Haul’s common law claims, and with respect to the Lanham Act claim for additional damages pursuant to 15 U.S.C. § 1117, Jartran’s conduct in relation to its advertising was willful, malicious or in reckless disregard of the rights of plaintiff. Punitive damages equal to the amount awarded under 15 U.S.C. § 1117 are appropriate. This award is alternative to the award under 15 U.S.C. § 1117.

28. Plaintiff’s alter ego claim against Ryder is governed by Florida law.

29. The determination that a corporation is the alter ego of its shareholder does not require a showing of actual fraud on the part of the shareholder.

30. It is fair and equitable that Ryder be found personally responsible for damages sustained by U-Haul as a result of Jartran’s actions. There is no requirement that plaintiff prove that Ryder dominated Jartran’s actions with respect to the claimed false and deceptive advertising; that Ryder organized Jartran in order to commit a wrongful or fraudulent purpose; or that Ryder’s domination of Jartran was the proximate cause of plaintiff’s injury.

31. U-Haul did not unreasonably delay instituting and prosecuting this action. U-Haul’s activities in response to actions by Jartran do not preclude equitable relief.

32. The Tinsley settlement agreement and actions in accordance with the agreement do not constitute a waiver of U-Haul’s claims against Jartran and James A. Ryder, the other defendants in this action. The agreement expressly reserved those rights to U-Haul.

33. Jartran and Ryder’s liabilities to U-Haul are not dependent on the liability of Tinsley.

34. The buying public has been and will continue to be deceived as to the prices and relative characteristics of U-Haul and Jartran equipment and that this deception has injured, is injuring, and will continue to injure, U-Haul’s reputation and goodwill among consumers. U-Haul is entitled to a permanent injunction restraining Jartran, its agents, servants, officers and all those in privity with it from publishing the price comparison, equipment performance, or miles-per-gallon advertisements found to be false and deceptive in this proceeding.

35. This is an “exceptional case”, within the provision of 15 U.S.C. § 1117, and Plaintiff is awarded reasonable attorney fees.

In the event any of the findings of fact or conclusions of law should more appropriately be considered as the other, they shall be so considered.

Accordingly,

IT IS ORDERED that the Clerk is directed to enter Judgment in favor of Plaintiff and against Defendants Jartran, Inc. and James A. Ryder, jointly and severally, in the amount of $40,000,000.

IT IS FURTHER ORDERED that Plaintiff recover reasonable attorney fees in an amount to be determined by the Court. Plaintiff shall file an application for reasonable attorney fees within ten days of the date of this Order. The application shall be verified and shall specify the services performed, the time involved for each service, the individual performing the service, and the hourly rate claimed for each individual. A response and reply shall be filed in accordance with Rule 11, Local Rules of Practice. An evidentiary hearing will be set if requested by Defendants.

IT IS FURTHER ORDERED that a permanent injunction shall issue forthwith in accordance with the foregoing Opinion.

       Additional defendants included Jar Corporation (JAR), James A. Ryder (Ryder) and Sandra C. Tinsley, Inc., (Tinsley), Jartran’s Advertising Agency.

       Jartran’s Chapter 11 bankruptcy proceedings filed in the Northern District of Illinois in December, 1981 did not materially delay pretrial preparation, since the automatic stay as to this case was lifted effective April 30, 1982.


author: James McGirr KELLY, District Judge.

text:
    Teresa HOOTEN, O.D. and John Kozempel, her spouse v. PENNSYLVANIA COLLEGE OF OPTOMETRY.
    Civ. A. No. 84-4129.
    United States District Court, E.D. Pennsylvania.
    Nov. 30, 1984.

      Francis X. Nolan, Philadelphia, Pa., for plaintiffs.
    Howard R. Flaxman, Philadelphia, Pa., for defendant.
   MEMORANDUM AND ORDER

James McGirr KELLY, District Judge.

Teresa Hooten has brought an action against Pennsylvania College of Optometry (PCO) for (1) violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq.) (2) intentional infliction of emotional distress; (3) wrongful discharge from her employment. Her husband has filed a pendent claim for loss of consortium. PCO has moved for the court to strike the request for compensatory and punitive damages and to dismiss all tort claims for failure to state a cause of action upon which relief can be granted.

When presented with a motion to dismiss, the court must view the pleadings in the light most favorable to the non-moving party. Mahone v. Waddle, 564 F.2d 1018 (3d Cir.1977), cert. denied, 438 U.S. 904, 98 S.Ct. 3122, 57 L.Ed.2d 1147 (1978) and the complaint should never be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts to support a claim which would afford her relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957).

I. FACTS

Plaintiff Teresa Hooten, a former employee of PCO has alleged that she was discriminated against on the basis of her sex in contravention of Title VII of the Civil Rights Act of 1964. The complaint states that PCO management made a continuum of disparaging remarks about both her marital status and her role as a mother. The harassment also took the form of purposely overloading her work schedule forcing her to commit errors which caused professional embarrassment. As a result of this activity, plaintiff collapsed at work and was ignored by her supervisors who refused to come to her aid. Plaintiff was eventually terminated from her employment with PCO and has characterised that action as the result of the cumulative effects of defendants’ discrimination toward her. Her husband claims a loss of consortium due to PCO’s actions. This memorandum will address, in order, defendant’s motion to strike damage claims from Count I of the complaint (TITLE VII) and defendant’s motion to dismiss Counts II, III and IV for failure to state a claim.

DISCUSSION

I. Does 42 U.S.C. § 2000e-5(g) Provide for Compensatory and Punitive Damages?

Hooten’s request for relief for the violations of Title VII include reinstatement of her position with back pay along with compensatory damages for pain and suffering and punitive damages. Defendant objects to any relief being granted in the nature of compensatory or punitive damages since Title VII does not provide such remedies if discrimination is found to have happened.

It is well settled within this Circuit that punitive damages may not be recovered under a Title VII action. Richerson v. Jones, 551 F.2d 918, 926-28 (3d Cir.1977). 42 U.S.C. 2000e-5(g) directs the court as to its permissive range of responses once it finds that the defendant has engaged in unlawful conduct.

That section reads in part, “[the court may] order such affirmative actions as may be appropriate, which may include, but is not limited to, reinstatement ... with or without backpay ... or any other equitable relief as the court deems appropriate.” The court in Richerson interpreted the phrase “any other equitable relief” to foreclose any punitive damage claims since punitive damages are a traditional form of relief offered in courts of law and not courts of equity. Richerson, 927. In arriving at this conclusion, the court examined the legislative history of the provision and found no evidence of a congressional intent to authorize punitive damage awards under Title VII. Id. at 927.

While our Circuit has addressed the issue of punitive damages, it has not yet decided whether the § 2000e-5(g) provide for compensatory damage award beyond back pay. The district courts within our circuit have reached contradictory results on this issue. Compare Bradley v. Corson, 501 F.Supp. 75 (E.D.Pa.1980) and Presseisen v. Swarthmore College, 71 F.R.D. 34, aff'd mem., 582 F.2d 1275 (3d Cir.1978) (compensatory damages unavailable) with Ahmad v. Independent Order of Foresters, 81 F.R.D. 722 (E.D.Pa.1979) (compensatory damages available).

We believe that the better view is expressed in the Bradley and Presseisen decisions which draw much of their legal reasoning from Van Hoomissen v. Xerox Corp., 368 F.Supp. 829 (N.D.Ca.1973). In the Van Hoomissen decision, after a thorough examination of the lengthy legislative history surrounding Title VII, that court held that Congress intended to provide a “wide panorama of equitable tools” that courts might use but did not intend that courts should punish defendants by imposing upon them large money awards in the form of compensatory or punitive damages. The debate on the legislation is devoid of any reference to money damages outside of the specific provisions written into the statute providing back pay.

This court believes that the issue then is not one of whether the claim for relief is characterized as compensatory or punitive in nature, but rather is the plaintiff requesting the court to fashion a legal or equitable remedy. Richerson, 926, n. 13.

Damages for pain and suffering are legal remedies not equitable ones and therefore defendant’s motion to strike these damages will be granted.

II. Count II of the complaint fails to allege the extreme and outrageous behavior to state a claim for intentional infliction of emotional distress.

Defendant advances the legal proposition that even assuming, arguendo, the allegations of her mistreatment are true, the conduct of PCO falls short of constituting the tort of intentional infliction of emotional distress.

Section 46 of the Restatement (Second) of Torts characterizes this tort as the actions of “one who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress ____” There are four elements necessary to state a cause of action under § 46: (1) the conduct must be extreme and outrageous; (2) it must be intentional or reckless; (3) it must cause emotional distress; and (4) that distress must, be severe. Chuy v. Philadelphia Eagles Football Club, 595 F.2d 1265, 1273 (3d Cir.1979).

Extreme and outrageous conduct is that which goes beyond all bounds of decency such that the action would be characterized as atrocious and utterly intolerable in a civilized society. D'Ambrosio v. Pa. Nat. Mut. Cas. Ins. Co., 494 Pa. 501, 431 A.2d 966, 972-73, n. 8.

In our search for a precedent to guide us in evaluating plaintiff’s claim, we have found no discrimination cases which are similar to the facts at bar. District courts within this circuit have addressed this tort within the context of sex discrimination brought about by sexual advances and physical harassment. See Shaffer v. National Can Corp., 565 F.Supp. 909 (E.D. Pa.1983); Vegh v. General Electric Co., et al., 34 F.E.P. Cases 135 (E.D.Pa.1983). These cases involved actions by the defendant which included direct sexual advances made to female employees, threats of retribution if they refused to comply, unconsented physical contact, and sexual references about them made to other co-workers. These type of actions were found to be outrageous enough to withstand defendants’ motions to dismiss for failure to state a claim.

While in no way do we wish to mitigate any of the pain and humiliation plaintiff may have suffered, the court does not believe that the alleged conduct can be analogized to the sexual harassment cited in the cases above.

Another line of cases dealing with employment terminations but not sexual discrimination seems to be more instructive. In Wells v. Thomas, 569 F.Supp. 426 (E.D. Pa.1983) that court held that the plaintiff failed to state a cause of action for the intentional infliction of emotional distress based on these allegations: plaintiff was transferred from her position into a newly created undefined management slot; her private office as well as her secretary were taken away from her; one of her phone lines was removed without first consulting with her and she was the only manager at work who, when not present at her desk, would have phone calls go unanswered. The plaintiff asserted that the purpose of these actions was to place such emotional strain and distress upon her that she would be forced to quit. Citing comment (d) to the Restatement (Second) of Torts, that court held no cause of action was stated. Id. at 433.

It is not enough, like in the Wells case, to state or to show that one has suffered emotional distress because of an intentional tortious act. Rather, the plaintiff must show that the conduct complained of crossed the threshold of decency into a realm of atrocity that could only be regarded as utterly intolerable in a civilized society-

The court, accepting the pleadings in the light most favorable to the plaintiff, finds that although she may have suffered emotionally from PCO’s actions, their conduct did not rise to the level that was so outrageous that it went beyond all bounds of decency.

The complaint does not state what comments were made to Hooten about her role as wife and mother and we have no way of determining if such comments would make a prima facie tort for intentional infliction of emotional distress. Nor do we believe that scheduling an employee with inordinate amount of work is tantamount to conduct which is outrageous in its very essence. While creating an environment which is oppressive to function within is likely to cause distress it is not the type of action to arouse resentment, by the average member of the community, against the actor. The type of conduct plaintiff has alleged pales in comparison to the actions Pennsylvania courts have found to constitute the tort of intentional infliction of emotional distress. Cf. Chuy (team doctor told reporter that member of football team suffered from fatal blood disorder though knowing it to be false); Papieves v. Lawrence, 437 Pa. 373, 263 A.2d 118 (1970) (hit and run driver removed young boy’s body from scene of accident and buried it in a field); Shaffer (claim based on a continual pattern of sexual advances and retaliation for refusing those advances).

Defendant’s motion to dismiss Count II will be granted for failure to state a claim upon which relief can be granted.

III. Plaintiff Kozempel’s Claim for Loss of Consortium Should be Dismissed.

Kozempel has filed a pendent claim (Count III) for loss of consortium. Under Pennsylvania law the husband may not recover damages in the absences of his wife’s right to recover. Little v. Jarvis, 219 Pa.Super. 156, 280 A.2d 617 (1971). Since the husband’s right of action is derivative of his wife’s, Count III of the complaint will be dismissed.

IV. Did PCO Breach a Covenant to Deal in Good Faith by Wrongfully Discharging Plaintiff?

In Count IV, plaintiff asserts that she was wrongfully discharged in that her termination violated a covenant of good faith and fair dealing contained within her contract.

Pennsylvania Courts have recognized a cause of action for wrongful discharge where the employment termination abridges a significant and recognized public policy. Geary v. United States Steel Corp., 456 Pa. 171, 319 A.2d 174 (1974). Geary was dismissed from his salesman’s position after having a disagreement with his supervisors over the safety of their products. Geary held that one who is employed at will may bring an action for wrongful discharge if he can show that a significant mandate of public policy would be violated by his dismissal.

Unlike the situation in Geary where plaintiff had only one avenue of relief available to him, plaintiff in the instant case is provided with a statutory remedy if a violation is found. The issue this Court is presented with is whether a cause of action for wrongful discharge may be maintained if the state provides other forms of relief for the wrong committed. In Wolk v. Saks Fifth Ave., Inc., 728 F.2d 221 (1984) the Third Circuit underscored the limited authority a federal court possesses in applying the law of the state stating that it is beyond the authority of a federal court in these circumstances to create an entirely new cause of action. The court noted that when one loses their employment due to discrimination, the Pennsylvania legislature has created a cause of action and a forum for the person to be heard by way of the Pennsylvania Human Relations Act, Pa. Stat.Ann., 43 §§ 951 et seq. (PHRA). The court held a common law cause of action could not be maintained.

The Pennsylvania Human Relations Commission was established for the very purpose of investigating and ferreting out the very abuses Hooten complains about. PHRA is an exclusive remedy and was forfeited when plaintiff filed this action. The Wolk court noted that no Pennsylvania court has spoken directly on the issue of whether a cause of action may be maintained in spite of the availability of other remedies under state law. They held that, in the absence of a state court holding in the affirmative, the federal courts would not expand the law to provide for a common law cause of action in addition to the state proceedings available to plaintiff. Wolk, 234.

Since PHRA provides that a filing of action estops the party from asserting its claim before the commission, our holding dismissing this count may seem unduly harsh. Nevertheless, it is consistent with the court’s ruling in Wolk and Count IV of plaintiff’s complaint will also be dismissed for failure to state a claim upon which relief can be granted. An appropriate order follows.

ORDER

AND NOW, this 30th day of November, 1984, for the reasons set forth in the foregoing Memorandum, it is ORDERED that:

1. Plaintiff Teresa Hooten’s damage claims shall be limited to back pay, reinstatement of her position and any other form of equitable relief allowed under 42 U.S.C. § 2000e-5(g).

2. Defendant’s motion to dismiss Counts II, III, and IV of plaintiffs’ complaint is GRANTED.

      . Section 46 of the Restatement (Second) of Torts, comment (d) states in part:
      It has not been enough that the defendant has acted with an intent which is tortious or even criminal, or that he has intended to inflict emotional distress, or even that his conduct has been characterized by "malice”, or a degree of aggravation which would entitle the plaintiff to punitive damages for another tort. Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.

      . Kozempel is unable to recover damages for his cause of action under Title VII since a recovery for loss of consortium is a legal remedy and not an equitable one.

      . The court is unable to determine from the pleadings if the contract was one "at will” or is "written contract for a fixed duration.” Generally the use of terminology "cause of action for wrongful discharge” alludes to employment contracts that are at will. Geary v. United States Steel Corporation, 456 Pa. 171, 319 A.2d 174 (1974).

      . 43 § 962(b).


author: ASPEN, District Judge:

text:
    Joseph GIBSON, II, Plaintiff, v. Robert H. BABCOX, Jed Stone, Dr. Guzman, Larry Lesser, Charles Reed, Paul Arogony, Langston, and Officer Ward, Defendants.
    No. 83 C 7723.
    United States District Court, N.D. Illinois, E.D.
    Dec. 3, 1984.

      Joseph Gibson II, pro se.
    Gary A. Grasso, Hinshaw, Culbertson, Moelmann, Hoban & Fuller; Steve Ford, Keisler & Berman; Anthony J. Kiselis, Jacobs, Williams & Montgomery, Chicago, 111., Gail Tuler Friedman, Asst. State’s Atty., Waukegan, 111., for defendants.
   MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

Joseph Gibson II brings this pro se action pursuant to 42 U.S.C. § 1983 seeking damages for alleged constitutional violations visited upon him while he was confined as a pretrial detainee at the Lake County Jail (“the jail”) in Waukegan, Illinois. Two defendants were dismissed from the case by prior court order. The defendants who remain are Nestor Guzman, the jail’s physician; Larry Lesza, Superintendent of the jail; Charles Reed, the Assistant Superintendant; Larry Langston, Commander of the second shift at the jail; Raul Aragon, a jail guard; and Anthony Ward, the jail’s medical screening officer. Defendants Lesza, Ward, and Langston move for summary judgment and defendants Guzman, Reed, and Aragon move to dismiss the complaint for failure to state a claim upon which relief may be granted.

Gibson entered the jail on January 31, 1982. Shortly after Gibson’s arrival at the jail, Ward interviewed him to obtain his medical history. Gibson alleges that at the time of the intake interview he informed Ward of several existing ailments including boils and a previous history of muscle spasms. Twelve days later, Gibson saw Dr. Guzman. Gibson alleges he tried to show Guzman his boils and explained that he was suffering from “hyprotetic nervousness,” alcohol dependance, and muscle spasms. Guzman purportedly informed Gibson that he could not help him.

On September 3, 1982, Gibson appeared before a state court judge and related his difficulties in obtaining medical care to the court. The judge allegedly ordered Gibson released on a $20,000 recognizance bond in order to seek medical treatment at an outside hospital. When Gibson returned to the jail, Lesza allegedly refused to release him and told Gibson that only Guzman would treat him.

On September 26, 1983, four inmates housed on the same tier as Gibson assaulted him and beat him with a telephone receiver for ten minutes in the presence of a jail guard. Following the assault, Langston took Gibson to the hospital where he received treatment for a scalp laceration. On September 29, the hospital released Gibson back to the jail. After his return, Gibson alleges he received no further medical attention for his injuries. Gibson asserts that although he coughed up blood on one occasion, Langston refused to take him to the hospital. He further alleges that unknown drugs administered to him throughout his confinement caused him to suffer various adverse physical reactions.

Based on these allegations, Gibson contends that defendants “violated his rights under the Fifth, Eighth, and Fourteenth Amendments by their disregard of plaintiff’s right to be free from violence and by their indifference to his right for constitutionally adequate medical care.” Because the Eighth Amendment’s proscription against cruel and unusual punishment does not apply to pretrial detainees, Gibson’s claims will be analyzed in terms of the due process guarantees founded on the Fourteenth Amendment. See Bell v. Wolfish, 441 U.S. 520, 535 n. 16, 99 S.Ct. 1861, 1872 n. 16, 60 L.Ed.2d 447 (1979).

I. MOTIONS TO DISMISS

Defendants Guzman, Reed, and Aragon move to dismiss the complaint for failure to state a claim for relief as against them. A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure cannot be granted unless “it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). In applying this standard, the court must assume that all allegations in the complaint are true. Estelle v. Gamble, 429 U.S. 97, 99, 97 S.Ct. 285, 288, 50 L.Ed.2d 251 (1976). Moreover, in recognition of plaintiff’s status as a pro se litigant, the complaint must be construed liberally to ensure that plaintiff’s claims are given fair and meaningful consideration. See Hughes v. Rowe, 449 U.S. 5, 9, 101 S.Ct. 173, 175, 66 L.Ed.2d 163 (1980).

A. GUZMAN

Guzman contends that the allegations of the complaint do not show any deliberate indifference on his part to any serious medical need of Gibson. Although a pretrial detainee need not allege facts demonstrating deliberate indifference in order to state a claim for denial of medical care under the Due Process Clause of the Fourteenth Amendment, see Matzker v. Herr, 748 F.2d 1142 at 1146 (7th Cir.1984), the facts alleged in the complaint are sufficient even under this more rigorous standard. Gibson alleges Guzman denied him treatment for various medical ailments compelling him to seek a court order to obtain release so he could get needed medical attention at a facility outside the jail. He further asserts that after his release from the hospital, Guzman failed to provide any follow-up care for the injuries Gibson sustained when the inmates assaulted him. Accepted as true, these allegations give rise to an actionable claim for relief against Guzman. See Estelle, 429 U.S. at 104-05, 97 S.Ct. at 291-92; Maclin v. Paulson, 627 F.2d 83, 86 (7th Cir.1980).

B. ARAGON AND REED

Aragon and Reed seek dismissal from the action on the grounds that the complaint wholly fails to allege any facts relating to them. Gibson concedes the point as to Aragon and agrees to his dismissal. But he does not assent to dismissal of Reed.

Gibson’s claim against Reed relates only to the alleged failure to provide adequate security from attack by other inmates, a claim completely ignored by Reed and the other defendants. The only specific reference to Reed in the complaint is that Reed moved the inmate who instigated the attack onto Gibson’s tier, a medium security tier for non-aggressive inmates. Gibson also alleges that the four inmates who beat him had a history of violence, including an attack on another inmate on his tier shortly before the assault on him. Gibson further asserts that a pattern of violence existed at the jail throughout the period of his confinement there. He makes it clear in his responsive brief that he seeks to hold Reed liable in his capacity as Assistant Superintendent contending that Reed knew of the pattern of violence and, through his acts and omissions, condoned, if not encouraged, the pattern of violence that resulted in the assault upon him.

In Matzker, supra, the Seventh Circuit recently outlined what was needed for a pretrial detainee to allege a claim for relief based on a failure to protect from inmate assault. The court in Matzker held:

[A] pretrial detainee who sufficiently alleges in his complaint that supervisory officials who knew or should have known of the need for protective measures for those in custody but fail to institute such protective measures, has alleged a violation of the pretrial detainee’s due process rights.

Id. at 1149. Applying this standard to the allegations of the complaint, Gibson states a claim against Reed for his failure to adequately supervise.

Matzker also held that:

[T]he Due Process Clause protects pretrial detainees both from deliberate exposure to violence and from failure to protect when prison officials learn of a strong likelihood that a prisoner will be assaulted.

Id. at 1150. Thus, Gibson also states a claim to the extent he alleges Reed deliberately exposed him to a known risk of violence when he moved the inmate who planned the assault onto a tier for non-aggressive inmates even though that inmate had a history of violence including attacks in concert with other inmates housed on the tier.

II. MOTION FOR SUMMARY JUDGMENT

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate only if the record shows that no genuine issue exists as to any material fact and that the moving party is entitled to judgment as a matter of law. The burden is on the moving party to show that there is no issue of material of fact in dispute and all doubts as to the existence of an issue of material fact must be resolved against the movant. Big O Tire Dealers, Inc. v. Big O Warehouse, 741 F.2d 160, 163 (7th Cir.1984). With these standards in mind, the Court turns to consideration of the motion for summary judgment brought on behalf of Lesza, Langston, and Ward.

A. LESZA

By affidavit, Lesza states that he never observed any medical condition that would require outside medical treatment for Gibson and that whenever he was made aware of any medical complaint by Gibson, he immediately referred him to Guzman. Relying on this affidavit, Lesza maintains he is entitled to summary judgment on Gibson’s claim for denial of medical care.

Gibson’s medical claim against Lesza is that he refused to abide by a court order directing Gibson’s release on bond in order to seek treatment at a hospital outside the jail. “A pretrial detainee’s due process right to be free from punishment is violated when a jailer fails to promptly and reasonably procure competent medical aid for a pretrial detainee who suffers a serious illness or injury while confined.” Matzker, supra, at 1147. Given the allegations of the complaint, Lesza’s factual assertion that he referred all medical complaints to Guzman is immaterial. According to Gibson, Guzman either was unable or refused to provide the medical attention he needed. Thus, if as the complaint alleges, Lesza referred Gibson to Guzman rather than complying with the court’s order to release him, the question persists whether Lesza failed to reasonably procure competent medical aid for Gibson. Accordingly, summary judgment for Lesza on this issue cannot be granted.

Lesza’s motion does not address Gibson’s claim that Lesza failed to provide him adequate protection. Although Lesza’s affidavit disavows any knowledge of threats to Gibson prior to the assault of September 26, 1982, such unawareness does not defeat Gibson’s claim. To be held liable, a supervisory official need not have prior knowledge of a specific risk of harm to a particular detainee. It is enough to show that the assault resulted from a supervisory official’s failure to take steps to reasonably safeguard detainees in his custody in response to violence within the jail so pandemic that he knew or should have known of the need for protective measures. Matzker, supra, at 1147.

B. LANGSTON

Gibson alleges that, sometime after September 29, 1982, Langston refused to take Gibson to the hospital when Gibson informed him he was coughing up blood. Langston swears by affidavit that Gibson never told him he was coughing up blood, that he never saw Gibson cough up blood, and that he never refused to give Gibson any medical treatment requested during the time relevant to Gibson’s claim. In response, Gibson refers back to the sworn allegations of the complaint. Because a dispute exists as to whether Langston failed to promptly procure medical aid for Gibson despite knowledge of a symptom evidencing a potentially serious malady, summary judgment must be denied as to Langston.

C. WARD

From the record it appears that Ward was the officer in charge of booking and processing newly admitted detainees when Gibson entered the jail on July 31, 1982. As part of the admitting process Ward asked Gibson questions about his medical history and completed a two-page “Receiving Screening Form.” Gibson alleges that during the intake interview he informed Ward of previous ailments and the immediate medical problem of severe boils. Ward avers that at the time of booking he did not observe any outward signs of injury or other ailments requiring emergency medical care. Gibson does not controvert Ward’s averment. Gibson saw a doctor twelve days after the interview with Ward. He contends that Ward’s failure to deviate from the routine procedure then in effect in order to provide him with immediate medical attention violated his constitutional rights.

The undisputed facts cannot support a finding that Ward subjected Gibson to punishment in violation of the Fourteenth Amendment. Ward’s primary duty was simply to obtain medical information from inmates and screen out for emergency treatment those who were in need of immediate medical care. Although Gibson told Ward of serious conditions in his medical history, the only current problem of which he complained was boils. Routine procedure at the jail included a doctor’s examination within a short time after admission. In light of the somewhat minor nature of the only medical problem Gibson related to Ward, the Court concludes Ward did not deny Gibson medical care in violation of the Fourteenth Amendment. See Matzker, supra, at 1147 n. 3.

III. CONCLUSION

In conclusion, the motion to dismiss of Aragon and the motion for summary judgment of Ward are granted and the motions to dismiss of Guzman and Reed and the motion for summary judgment on behalf of Lesza and Langston are denied.

It is so ordered.

      . Larry Lesza and Raul Aragon are identified in the complaint incorrectly as Larry Lesser and Paul Arogony.

      . In his reply brief, Guzman disputes Gibson’s version of the facts. A motion to dismiss, however, is not the proper means by which to challenge the accuracy of the facts alleged in the complaint. That is the function of a summary judgment motion. Although Rule 12(b) of the Federal Rules of Civil Procedure gives the court authority to treat a motion to dismiss supported by matters outside the pleading as one for summary judgment, it does not authorize consideration of unauthenticated, and therefore inadmissible, documents such as those attached to Guzman’s reply brief.

      . As there is nothing in the record to prove otherwise, the Court assumes that Gibson’s ailments were serious since they allegedly required hospitalization.


author: JAMES McGIRR KELLY, District Judge.

text:
    UNITED STATES of America v. Joseph G. DiBONA, et al.
    Civ. A. No. 83-1311.
    United States District Court, E.D. Pennsylvania.
    Dec. 7, 1984.

      Dennis C. Egan, U.S. Dept, of Justice, Washington, D.C., for plaintiff.
    Bernard L. Shapiro, Philadelphia, Pa., for defendants.
   MEMORANDUM AND ORDER

JAMES McGIRR KELLY, District Judge.

This matter comes before the Court on defendants’ motion to appeal the Report and Recommendation of August 29, 1984 by Magistrate Naythons in which the Magistrate found that an FBI report that was in the possession of the government was (1) not comprised of grand jury materials in violation of Fed.R.Crim.P. 6(e) and (2) was not the type of material sought to be protected from disclosure by Rule 6(e).

The defendants seek to suppress any evidence that the government presented to the grand jury which indicted the defendants in an antecedent criminal matter.

Factual Background

Defendants DiBona and Rights have already entered guilty pleas in an antecedent criminal matter for, inter alia, filing false statements with the United States government. As part of the arrangement for their guilty pleas, the charges against RDL, Inc. were withdrawn. The government also instituted a civil action against all three defendants for filing false claims for payment on defense contract work that was not performed.

The defendants, in the course of conducting discovery, filed a motion to compel discovery of various reports in the possession of the government’s attorney, believing that this information was derived from the grand jury proceedings in contravention of Federal Rules of Criminal Procedure 6(e). It is their contention that this civil complaint is based on illegal grand jury material.

The materials in question were contained within an FBI report which summarized the investigation. The government objected to producing this information claiming that it was privileged as the work product of an attorney prepared in anticipation of trial and that it contained information from confidential sources.

The FBI agent who prepared the report was deposed and stated that the information was compiled while the grand jury investigation was still in progress. He further stated that his report may have included materials derived from information received by the grand jury. The Magistrate directed the government to produce the report for an in camera inspection to determine if it contained “grand jury material.”

Rule 6(e) prohibits the use of grand jury materials in subsequent litigation except in limited circumstances. Rule 6(e)(3)(C)(i) provides that the government may disclose grand jury material in its possession when directed to do so through a court order. It is not disputed that the United States Attorneys did not apply for a court order directing release of this evidence.

The Magistrate’s review of the lengthy FBI report found three references to matters that may have involved grand jury materials. The first reference was to a summary of RDL, Inc.’s stock allocations. These records were produced as the result of a subpoena issued by the grand jury. The Magistrate, citing the holding of Unit ed States v. Interstate Dress Carriers, Inc., 280 F.2d 52 (2d Cir.1960) found that financial records of RDL, Inc. were created for purposes independent of the grand jury process and were not “grand jury materials” under Rule 6(e).

The second and third references were to statements given by witnesses who were interviewed by the FBI. These witnesses may have also testified before the grand jury but the information within the FBI report did not reveal with certainty if that occurred. The Magistrate found that, in any event, these statements by the witnesses were derived from an independent FBI investigation and not from information received by the grand jury.

The defendants ask this court to examine the Magistrate’s review and recommendation in light of the Supreme Court’s decision in United States v. Sells Engineering, Inc., 463 U.S. 418, 103 S.Ct. 3133, 77 L.Ed.2d 743 (1983).

DISCUSSION

The plaintiff in this action is the United States government and its interests are represented by attorneys in the Civil Division of the Justice Department. In the recent Supreme Court decision of United States v. Sells Engineering, Inc., the Supreme Court held that attorneys in the Civil Division of the Justice Department may not have automatic access to and disclosure of grand jury materials in the possession of the prosecutors but must instead seek a court order for access to this evidence. Sells at 3147.

The Court’s decision was based upon three main considerations all flowing from the historical policy of preserving grand jury secrecy. First, the court believed that if grand jury matters and information were disclosed to persons other than the prosecutor involved in the criminal proceeding it would diminish the willingness of witnesses to come forward and testify fully with candor. If a witness believes he may have to continuously appear before a myriad of judicial bodies investigating the subject he has information about, it may inhibit the citizen’s desire to come forward and testify. Sells at 3142.

Second, because of the active role taken by the government’s attorneys during a grand jury investigation, automatic disclosure may invite abuses of the process through manipulation of the grand jury to ferret out additional evidence useful in a civil suit. The grand jury has investigative powers not available to a civil attorney through normal discovery procedures. The use of a grand jury to elicit this information in a civil action is per se improper. United States v. Proctor and Gamble, 356 U.S. 677, 683-684, 78 S.Ct. 983, 986-87, 2 L.Ed.2d 1077 (1958).

And lastly, as a corollary to the previous point, if the government was allowed unlimited access to grand jury material, it would circumvent the carefully crafted and more limiting discovery rules imposed upon it in a civil action. Sells, supra, at 3143. Thus, Sells held that disclosure of grand jury material may only be made to a U.S. civil litigation attorney under a Rule 6(e)(3)(C)(i) court order.

Admittedly, the government did not seek a court order directing access to these materials, however, they contend that no order was necessary because the information in their possession is not grand jury material and hence does not fall under Rule 6(e) protection. The threshold question this court must decide is whether the evidence is in fact grand jury material within the meaning of Rule 6(e).

A. What are “grand jury materials”?

Grand jury materials have been held to be only those materials which directly or indirectly reveal what transpired before the grand jury. In re Grand Jury Matters (Catania), 682 F.2d 61, 63 (3d Cir.1982). Solely because evidence was presented to a grand jury does not render it “grand jury material” shrouded in the cloak of secrecy never to be used for any purpose ever again. The Third Circuit in Catania held that disclosure of information obtained from a source independent of the grand jury proceeding, although done so with the purpose of ultimately using it before the grand jury, is not “grand jury material” and falls outside the scope of Rule 6(e). This type of evidence exists apart from and was developed independently of the grand jury procedure. Catania at 64.

Catania involved an FBI investigation into possible voter fraud in a local election. A grand jury was convened but no federal prosecution resulted from the inquiry. At the request of the Federal Grand Jury, the government moved ex parte for a 6(e) order allowing it to release the material in its possession to the local district attorney for use in matters before a state grand jury. After reviewing the materials, in camera, the district court found that the materials were not matters occurring before the grand jury and could be disclosed.

The evidence consisted of information which was presented to the grand jury but was developed by the FBI investigation into alleged voter fraud. This material included tape recordings and transcripts of monitored conversations, documents obtained without a grand jury subpoena, and a prosecution memorandum summarizing the information compiled by the FBI investigation. The district court held, and the Court of Appeals affirmed, that the disclosure of information obtained from a source independent of the grand jury proceeding is not a violation of Rule 6(e). Catania at 64.

Moreover, the Catania court found that the district attorney was without knowledge of whether the materials were ever even presented to the grand jury for consideration and, therefore, the danger that disclosure would reveal what transpired before the grand jury was greatly minimized.

B. Was the Evidence a By Product of an Independent Investigation?

I. The Summary of Stock Transaction Contained in the FBI Report.

The FBI report indicates that stock subscription records of RDL, Inc. were obtained by a Federal Grand Jury subpoena. These business records was not developed independently of the grand jury process, but were the end result of the specific investigative tools the grand jury had at its disposal.

The Report and Recommendation concluded that although this information was the product of a subpoena, it was not grand jury material since its disclosure would not reveal the essence of what took place in the grand jury room. Citing In re Grand Jury Investigation, 630 F.2d 996, 1000 (3d Cir.1980), cert. denied, 449 U.S. 1081, 101 S.Ct. 865, 66 L.Ed.2d 805 (1981); United States v. Interstate Dress Carriers, Inc., 280 F.2d 52 (2d Cir.1960). Interstate involved an application by the Department of Justice for an order allowing the Interstate Commerce Commission (ICC) to inspect business records that were in the possession of the government pursuant to a grand jury subpoena duces tecum. The ICC was acting within its statutory authority to request inspection of these records. The motor carrier objected to releasing the records arguing that they were grand jury materials.

The Court of Appeals held that (1) because the ICC possessed independent legal authority to review the carrier’s financial records; (2) where the records are maintained in the normal course of business; and (3) where disclosure of the documents will not impinge upon the secrecy of the deliberative process, a court may grant an order to disclose grand jury materials.

We accept both the government’s contention and the Magistrate’s findings that a summary of the stock subscription records of RDL, Inc. does not reveal the inner workings of the grand jury process, we note that unlike the ICC in Interstate, plaintiff did not apply for a court order granting access to these materials. Interstate does not stand for the proposition that any evidence presented to a grand jury may be revealed so long as it doesn’t show what transpired before it. Only information which is acquired independently of the grand jury process may be revealed without a court order and under Rule 6(e)(3)(C)(i) plaintiff should have sought an order from the court providing for the disclosure of the stock subscription summary.

Even assuming, arguendo, that the summary of the stock subscription records does not provide the reader with any insight into the inter sanctuary of the grand jury proceeding, the use of the information violates a fundamental principal announced by the Supreme Court in the Sells decision, namely, automatic disclosure may invite abuses of the grand jury process by allowing the government to bypass the normal discovery rules and procedures used in civil litigation.

Counsel for defendants argues that “grand jury material” should be suppressed and the complaint dismissed. Reported case law involving the use of illegal grand jury material in subsequent civil actions is scant. Our research has located only one reported case which occurred, appropriately enough, in this district. Kocher Coal Company v. Marshall, 505 F.Supp. 156 (E.D.Pa.1981) involved the use of grand jury material in an administrative proceeding by the Department of Labor to issue citations and fines against the plaintiff coal company. Plaintiff petitioned the court requesting an order declaring that the reliance on the grand jury material to issue a citation was unlawful and that the citation was invalid, null and void. Id. at 158.

The court refused to grant plaintiffs request stating that sufficient evidence was developed to show that the Department of Labor may have “sterilized the basis of the citation” through other evidence so that the citation would still be valid despite the subsequent illegal use of grand jury material. Id. at 159.

Merely because the plaintiff is in possession of grand jury materials does not mandate that the complaint be dismissed. Defendants must prove (1) that this information was used by the government, and (2) that it was essential evidence to aid them in stating a claim. Our own observation is that this information was not necessary nor would it have affected the legal results of any of the motions decided by this court to date.

The court will issue an appropriate order enjoining the government from any further use of this material, however, the order is not to be interpreted to preclude the government from using the discovery mechanisms available to it to secure this same information. Both parties are entitled to discovery of all evidence relevant in assisting them in the presentation of their claims.

II. FBI Interviews With Potential Grand Jury Witnesses.

At issue within the FBI report are the purportedly prepared statements drafted by three grand jury witnesses that state they (1) were drafted in contemplation of being read to the grand jury and (2) summarized the information provided to the FBI agents who interviewed them. The court will address each statement individually.

Witness A.

Witness A was interviewed by FBI agents three times. The first interview was on November 13, 1979, the second January 10, 1980 and the last was on January 15, 1980. This person was represented by counsel at each interview. The summary of these interviews are not the by product of any grand jury process but the result of an independent investigation by the FBI. As the holding in Catania indicates, independent investigation, even if undertaken with a view toward presenting the information to a grand jury, does not make it grand jury material.

The FBI report also contains a statement prepared by witness A that states it was done so with the intent of reading it to the jury. Defendants believe this prepared statement is grand jury material, The court disagrees for these reasons.

First, the statement is not signed or dated so the government has no insight into whether it was ever presented to a grand jury. Second, the statement summarizes the same information provided to the FBI during its interviews with the person. No additional information on the defendants is included in this statement. It’s inclusion within the FBI report does not aid the plaintiffs nor provide a detriment to the defendants since the information was available from the investigative summaries derived from the previous interviews.

This unsigned and undated statement is not grand jury material, it was not derived from the grand jury process and even if it were, in light of the fact that the same information was already in the possession of the government, it is but harmless error that it was included in the report.

Witness B.

Witness B was interviewed on February 6,1980 by the FBI. A detailed summary of the interview was prepared by the agent. It appears from a notation within the FBI report that this witness testified to the grand jury approximately six months later on June 19, 1980. The information derived from the February 6, 1980 interview is the product of an independent investigation and not grand jury material. This witness also prepared a statement to be read to the grand jury summarizing the information provided in the February 6, 1980 interview. The statement according to the FBI was signed on June 19, 1980 and the original is on file in a local FBI office. The information in the unsigned and undated document is the same as provided the FBI on February 6, 1980. For the same reasons as stated for Witness A, the court finds that this information is not grand jury material. Witness C.

As with the previous two witnesses, the circumstances surrounding the FBI investigation are similar. Witness C was interviewed twice, the first time being January 10, 1980 and the last time was on January 15, 1980. The FBI report indicates that an original of the unsigned and undated prepared statement summarizing the information from the two interviews is on file in a local FBI office. It is signed by the witness and dated June 19, 1980. As with the previous two witnesses interviews and statements, the court finds that the interviews are the product of an independent investigation and that the unsigned and undated statement is not grand jury material.

For these reasons, we will uphold the Magistrate’s findings in the Report and Recommendation that the material derived from the FBI investigation is not grand jury material and that this civil action is not based on the unsigned and undated statements.

      . The government is not accused of abusing the process, nor does the court suggest that abuses occurred.

      . The witnesses will be identified by the letters A, B and C.

      . Counsel was provided for by RDL, Inc.