author: ROSENBAUM, District Judge.

text:
    UNITED TECHNOLOGIES COMMUNICATIONS COMPANY v. WASHINGTON COUNTY BOARD, Artie Schaefer, Donald Scheel, John Jergens, Sally Evert, Joseph Fogerty, as commissioners of the Washington County Board.
    Civ. No. 4-85-1369.
    United States District Court, D. Minnesota, Fourth Division.
    Nov. 13, 1985.

      Rebecca Palmer and Justin Perl, Maslon, Edelman, Borman & Brand, Minneapolis, Minn., for plaintiffs.
    Douglas G. Swenson and Robert Kelly, Washington Co. Atty., Stillwater, Minn., for defendants.
   ORDER

ROSENBAUM, District Judge.

In this case, brought before the Court on the basis of diversity jurisdiction, plaintiff United Technologies Communications Company (United Technologies) complains of defendant Washington County’s bid-letting process for a telecommunications system. Plaintiff comes before the Court seeking an injunction 1) preventing the execution and performance of a contract let by bid for the telephone system, 2) requiring Washington County to reject all bids received in its summer, 1985 bid-letting process, and 3) calling for new bids for a telephone system. This Order was first given to the parties by telephone conference on October 23,1985, at which time the parties were advised that this comprehensive Order would follow. Based upon the motion of the plaintiff, an injunction will issue barring the defendant, Washington County Board, from executing or proceeding under a contract based on the challenged bids.

I. Facts

The dispute before the Court arises from the bidding process used by defendant Washington County to secure a telephone system for its new County Government Center, currently under construction. In this regard, on July 1, 1985, the County circulated an invitation to bid (“Request for Proposals”, “RFP”, or “solicitation”) setting forth proposed specifications for its desired system. The solicitation sought bids on a “base system” and three “options”, these options being a computerized message system or “voice mailbox”, a microwave system, and an electronic key system. Sealed bids were submitted on August 8, 1985, and were opened and announced on August 9, 1985. At the opening, the County read only the bids on the base system; for that base system, United Technologies’ bid was the lowest.

Shortly after the opening, the County narrowed the submissions to three semifinalists, including the one provided by United Technologies. The contract was ultimately awarded to another bidder and semifinalist, International Office Systems (“IOS”), on September 24, 1985. On October 3, 1985, United Technologies applied for a temporary restraining order to prevent the county and IOS from consummating the contract agreement. That motion was denied.

For its motion for preliminary injunction, the company alleges irregularities in the County’s bidding process, which include a) variations between the County’s solicitation and IOS’s proposal, b) the County’s use of a subjective system of bid assessment, and c) the fact that the successful bid was not the lowest bid on the base system. Each is asserted as follows:

A. Variations between the County’s solicitation and IOS’s proposal.

The plaintiff claims there were fatal deviations in IOS’s submission for the first option, a computerized message recording system called a “voice mailbox.” The County’s specifications, couched in “shall” or mandatory language, directed that the system be capable of operating without control. Further, the system was to provide for a digital display of the number of messages stored, and the remaining message capacity of the system.

United Technologies asserts that its proposal complied with the mandatory language and IOS’s system did not. Plaintiff claims that IOS’s does not comply because its system requires human intervention in order to function and has no digital display of the status of the system.

B. The County’s use of a subjective system of bid assessment.

The next of the County’s alleged irregularities is the process by which bids were finally rated. This process was conducted by Mr. Frank Greenberg, a consultant hired by the County. Mr. Greenberg’s duties apparently included assessing the County’s telecommunications needs, drafting the Request for Proposals, narrowing the field of bidders to three semifinalists, and making a final recommendation to the County.

For present purposes, the most significant aspect of Mr. Greenberg’s involvement is the “point system” he used in evaluating submissions, a system which was neither suggested nor described in the County’s solicitation materials. By affidavit Mr. Greenberg asserts that the point system was divulged in an informational meeting with potential bidders on July 11, 1985. This assertion is controverted by the affidavit of another unsuccessful bidder. Under this point system, Mr. Greenberg assigned point values from 1-10 to eighteen different “factors” which he designated as evaluative items. He then added the eighteen scores, and multiplied the subtotal by another subjective figure from 1-10 based on his assessment several other factors. The multiplicative total thus derived apparently determined his recommendation to the County.

United Technologies claims that this means of evaluating the bids is impermissibly subjective.

C. The successful bid was not the lowest bid on the base system.

On the base system, standing alone, United Technologies’ rejected bid was lower than IOS’s bid. The difference on the base system was $17,669, or about 5%.

As explained above, the County asked for bids on a base system and on three options. The package of options finally selected by the County was the base system plus options one and three. Of the three semifinalists, United Technologies’ bid on the base system was the lowest, but its bid on the base system plus options one and three was the highest; United Technologies’ quote was $27,369 higher than the lowest bidder, IOS, on the combined system.

United Technologies claims that the County’s consideration of the base system plus options one and three was erroneous.

II. Analysis

An application for a preliminary injunction in the Eighth Circuit must satisfy the four part standard set forth in Dataphase Systems v. C.L. Systems, 640 F.2d 109, 114 (1981). In that case, the Court held that:

[wjhether a preliminary injunction should issue involves consideration of (1) the threat of irreparable harm to the movant; (2) the state of balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest.

It is to these factors, and the balance between them in this case that the Court now turns.

A. Irrevocable harm to the movant

United Technologies asserts that it will suffer three types of harm in the event of denial of its requested injunction. First, the company will be denied the opportunity to participate in a fair bidding process. Second, it will be deprived of the profit it might receive were it to be awarded the contract. Finally, the firm will be deprived of the prestige in the industry which comes from being competitively selected to provide a telephone service of this kind and complexity.

1. Deprivation of the right to participate in a fair bidding process

It is imperative that public bidding procedures be conducted in a carefully controlled and wholly open manner. To this end the legislature of the State of Minnesota has constructed and enacted into law a detailed code regulating public bidding procedures. MSA 16B, 375.21. The case law strongly supports these procedures. Even the slightest deviations from prescribed form are viewed with a most jaundiced eye. Foley Bros., Inc. v. Marshall, 266 Minn. 259, 123 N.W.2d 387, 389 (1963).

The Court is persuaded that the loss of the chance to participate in a fair bidding process raises a significant threat of irreparable injury to the plaintiff. The only true remedy for such injury is to issue the injunction sought by the plaintiff.

2. Lost Profits

Plaintiff claims that a conventional damages suit will not result in an award of the profits it anticipates from a contract with Washington County. Minnesota precedent and fundamental precepts of the law of remedies suggest that this is a plausible contention. In a recent case remarkably similar to that at hand, lost profits were not allowed. Telephone Associates v. St. Louis County Board, 364 N.W.2d 378 (Minn.Sup.Ct.1985). There was no injunction in that case and by the time Telephone Associates was considered the installation of the system had been completed. The Minnesota Supreme Court found that the bid had been wrongfully rejected but only allowed the bidder to recover its expenses in preparing its bid and reasonable attorney fees. The Court declined to include any lost profits in the award. 364 N.W.2d at 383.

Unlike the situation in Telephone Associates, construction in the present case has not yet begun. But future profits are only accessible through speculation. Sound principles limit recovery when the injury is overly speculative. See, e.g., D. Dobbs, Remedies, section 3.3 at 150-55 (1973). Nemmers v. City of Dubuque, 764 F.2d 502 (8th Cir.1985); Atkins v. Robinson, 733 F.2d 318 (8th Cir.1984).

The likelihood that United Technologies would profit on a contract with Washington County is, and must be, conjectural. Nevertheless, denying United Technologies its requested injunctive relief will deprive it of the actual opportunity to either profit or lose on its bid. This deprivation, like the opportunity to compete as an equal in a fair competition, can be prevented only by the issuance of an injunction. The plaintiff might well be unsuccessful in any other or later bidding. The marketplace, and the results of that bidding would then determine its profit or loss.

3. United Technologies’ loss of prestige

United Technologies argues a third type of irremediable injury: the loss of standing in the telecommunications industry which it would receive as the rightful recipient of the Washington County contract. The Court finds this injury to be too speculative to be cognizable for purposes of justifying the issuance of an injunction.

United Technologies by its own admission is a leader in the telecommunications industry and has supplied a number of systems comparable to the one at issue here. If injury exists at all, an assertion requiring a considerable leap of faith, United Technologies’ purported loss of face is de minimus and provides no foundation upon which to support the issuance of an injunction.

B. Balance of harm

As discussed in the previous section, United Technologies has set forth the very real harm of having been unable to participate in a fair bidding procedure. This goes to the very essence of the public bidding process and the public’s confidence in that process.

Washington County claims in response that several types of injury will result if the Court grants the requested injunction. The County would incur a loss of time in determining the telephone system it will have in its new building, and may face a potential loss of time in the installation of the system and construction of the building. Washington County also raises the chance that the bids will be higher in a second bidding, and that it may have to pay more for the same system. Finally, the County raises the possibility of a suit against it by IOS, the originally successful bidder.

1. Harm to the county from delay

United Technologies is seeking an injunction which could well force the County to initiate a new bidding process for its telephone system. This process would require a new Request for Proposal, the expiration of the statutorily mandated two week period before accepting bids, MSA 375.21, subd. 1, analysis of those bids, selection of one, and at least some time for the successful company to prepare the system.

The extent of this delay is uncertain, as is the amount of the additional expense a second bidding may generate. Regardless, it must be acknowledged that some delay in determining which telephone system will be installed will necessarily result from the issuance of an injunction. Although the impact on the overall construction schedule of a delay in the readiness of the telephone system is unclear, any delay introduces uncertainty. The County planners will be deprived of knowledge of their new telephone facilities, and this injury is real if not overwhelming.

On the other hand, though information was requested by the Court at both the oral argument for a temporary and for a preliminary injunction, the parties have provided no evidence that the delay in selecting a system will have an impact on either the construction schedule for the building or its date of readiness. No evidence has been provided suggesting that a later telephone installation would create structural complications which would delay completion of the building. In the total absence of evidence of serious physical and financial consequences, the principal burden imposed by delay remains the simple uncertainty of the system eventually to be installed.

2. The possibility of a higher bid

The County raised at argument the possibility that undergoing a new bidding process will subject it to a risk that higher bids will be submitted the second time around, and that the County will be forced to pay more for the same equipment.

The Court points out that if those sections of the bid solicitation which are couched in the mandatory (“shall”) language are inflexibly adhered to, the bids may, in fact, be higher, since arguably more rigid and onerous limitations may thereby be placed on the bidders. But the flexibility which has resulted up to now from the county’s haphazard waiver of these mandatory provisions is a major reason why the bidding process is asserted to be unfair.

On the other hand, it is possible that the bids in a second bidding may be lower. All of the bids on the base system were announced on August 9, 1985. It is possible that one effect of these disclosures is to designate a “ball park” figure to potential bidders on the new solicitation. Under these circumstances there is an equally strong possibility that the bid submissions will be lower.

The possibility that the County will be hurt in the process of a new bid procedure is therefore uncertain and subject to factors some of which are within the County’s capacity to control. This potential source of harm, like the harm resulting from delay, may exist, but cannot be persuasive as to whether or not an injunction should issue.

3. Suit by the successful bidder

Finally, Washington County raises the possibility that IOS will file suit against it should an injunction issue. While this threat exists, as seen below, it cannot be a factor in the Court’s decision.

It is a general principle of the law of contracts that one is not liable in an action for breach where that breach was the result of a court order. See, e.g., Village of Minneota v. Fairbanks, Morse & Co., 226 Minn. 1, 31 N.W.2d 920, 925-26 (1948). This notion is akin to the impossibility defense to breach of contract actions. Id. It has further been observed that, as a general principle, the rules determining excuses for nonperformance apply within the context of government contracts. 10 McQuillan, The Law of Municipal Corporations, section 29.119 at 540 (3d ed. 1981). An exception to this defense exists, however: An action for breach may lie where performance is prevented by a judicial decree or order and that order was the result of the defendant’s own negligence or breach of duty. 6 A. Corbin, Corbin on Contracts, section 1346 at 430 (1960 & Supp.1984). But this potential liability does not aid the County’s position.

The flaw in the County’s argument is that it would stand equity on its head. Consider: If United Technologies is to prevail it is because the County has erred in its procedures. Such error may subject the County to injury by suit. The threat of this suit mitigates against injunction and in favor of the County. Therefore the County’s injustice is to be considered in its favor in this cause.

The Court declines to reach the perverse result that the County’s wrongful actions, if any existed, should inure to its benefit by protecting it from an otherwise justified injunction. Any injury resulting to the County from a breach of contract action by IOS will therefore not impede the issuance of an injunction in this case.

The harms to the County cognizable for injunctive analysis therefore consist of a) its loss of time in determining the ultimately successful system and the attendant inconvenience and uncertainty, b) a possible but unresolved delay in the construction schedule, and c) an uncertain risk that the bids and the system cost will be higher the second time around. These tenuous injuries are weighed in the balance against the irreparable harm to United Technologies of being deprived of a fair competition against equals, and its chance to succeed or fail in an open and unbiased marketplace. The Court finds that the harm to the County generated by an injunction is decisively outweighed by the harm United Technologies will incur if an injunction does not issue. The first two factors of the Data-phase analysis therefore support the issuance of an injunction in this case.

C. Likelihood of success on the merits The specifics of the facts complained of by United Technologies are set forth in detail above. United Technologies objects to: 1) the deviation of IOS’s successful bid from the specifications of the County’s solicitation, 2) the subjective point system used by the County in evaluating bids, and 3) the County’s acceptance of a bid which exceeded other bids on the base system. An analysis of United Technologies’ chances of success on the merits must consider each of these allegations.

1. IOS’s deviation from the specifications of the County’s invitation to bid

United Technologies bases its application for injunctive relief in part on the set of departures in IOS’s successful bid from the specifications of the County’s solicitation. The principal focus of the company’s concern is the first option, the computerized voice mailbox system. The specifications listed by the County call for a system which will operate without control, and which will have a digital display showing the status of the system.

The successful bidder shall provide a state of the art, computerized phone message system, internal or peripheral to the PBX system. This system shall operate without control and shall function in the following manner.
* * Sj! * * SlS
n. The control computer shall be equipped with a digital display which displays the number of messages stored, remaining storage capacity of the system and number of mail box assignments in use and available.

Request for Proposals, Option 1, paragraph 6.01 (emphasis added).

A plain reading makes it clear that these provisions are not themselves optional.

United Technologies claims that IOS’s voice mailbox submission does not meet these requirements, first in that it does not operate without control, since an operator must activate the mailbox system and turn off the light that indicates that an individual has messages, and second that it lacks a digital display. It is United Technologies’ contention that these deviations render the underlying contract void.

Caselaw in Minnesota is consistent in its disdain for government contracts formed on a substantial or material deviation from the specifications. See, e.g., Coller v. City of St. Paul, 223 Minn. 376, 26 N.W.2d 835, 840 (1947). The test for what constitutes a material or substantial deviation is whether the successful bidder received a substantial advantage or benefit. Id.

While the evidence presently before the Court on the question of the magnitude of IOS’s deviation is incomplete, the fact of the deviation is certain; there is no digital display. There is no dispute that this is a deviation from the specifications, a deviation rendering the IOS system not in compliance with the invitation to bid. In the absence of conclusive evidence demonstrating that these deviations are or are not material, this Court is unprepared to venture an opinion. Nevertheless, the first component of an action for impermissible deviation, actual variance from specifications, is conclusively presented here.

To the element of variance from specifications, United Technologies adds allegations that IOS materially benefited from the deviation in that the system presented by IOS is cheaper to build. Waiving such a provision, then, benefited IOS and ran afoul of settled case law. Telephone Associates v. St. Louis County Bd., 364 N.W.2d 378, 382 (Minn.Sup.Ct.1985), Duffy v. Village of Princeton, 240 Minn. 9, 60 N.W.2d 27, 29 (1953). United Technologies claims that had it, too, been relieved of the display requirement it could have beaten IOS’s bid. United Technologies’ chances for success on the merits of this point thus appear good, and provide further support for the issuance of an injunction.

2. Washington County’s evaluation of bids

United Technologies objects to the high degree of subjectivity present in the County’s decision-making process. In addition, it avers that the bidders received no notice of either the fact nor the specifics of that evaluation system. Based on the evidence currently before the Court, United Technologies’ chances for success on the merits of these claims appear good.

The Company’s prospects are influenced by the standard of review. Courts, acting under the guidance of legislatures, are generally reluctant to second guess the substance of administrative decisions and decision-making processes. See, e.g., M.S.A. 14.69(f), calling for reversal when determinations are arbitrary and capricious, and Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 824 (Minn.1977). As a result, United Technologies will only succeed on the merits of its objections if it demonstrates that the County abused its discretion in its assessment system.

a. Subjectivity

Under the standard of review discussed above, the Court is reluctant to enter into a detailed assessment of the specific criteria used by the County. Several observations with respect to success on the merits can nevertheless be made. First, the subjectivity of the County’s assessment is extreme. As set forth above, the evaluation rated eighteen factors, added the ratings and multiplied that sum by yet another subjective factor. The resulting sum was said to underlie the County’s decision.

The Court is not instinctively offended by the presence of some subjectivity when a governmental agency selects sophisticated and expensive equipment. Nevertheless, as Washington County’s process has been presented to the Court, it is difficult to conceive of a more subjective assessment process. The Court is aware of no cases holding that extreme subjectivity either can or cannot support a finding that discretion has been abused, but if subjectivity can violate the relevant standard of review such a violation is reasonably likely here.

b. Lack of notice

A decision on the merits will also have to consider United Technologies’ allegation that bidders did not receive notice of the County’s assessment scheme. Regardless of whether any statement about a subjective test was made at the pre-bid meeting of July 11, 1985, it is uncontroverted that no written notice was provided, and there was no comprehensive description of the specific factors to be used in the County’s bid assessment.

Elemental fairness requires that bidders be entitled to notice of the bases upon which their bids will be evaluated. This is particularly true when the basis for decision making varies from a search for the “lowest responsible bidder” of MSA 16.B and 375.21. Even under a standard of review attaching liability only to arbitrary and capricious conduct, the County’s failure to give notice undermines the integrity of the entire bidding system. Here, success on the merits seems likely.

Plaintiff’s probability of success on the merits in these allegations, combined with IOS’s acknowledged deviation from the terms of thé bid proposal, supports the issuance of an injunction.

3. Washington County’s acceptance of a bid that was not the lowest of those received on the base system.

As is more fully described above, Washington County sought quotes on four separate types of equipment: a base system and three enhancements, termed “options.” At no time did the County indicate the possibility that if the lowest bid on the base system was not the lowest bid including selected options, the lowest bid including those options might be selected over the lowest bid on the base system.

In the present ease, at the August 9, 1985, bid opening, only the bids on the base system were read. United Technologies submitted the lowest bid on that base system — over $17,000 lower than IOS’s successful bid. In spite of these quotes, a contract for the base system and two options was awarded to IOS, which submitted the lowest bid on that parcel of goods.

The underlying issue again concerns notice to the parties and the fundamental integrity of the public bidding process. The County failed to communicate the possibility that it would proceed as it did, allowing the lowest bid on options to override the lowest bid on the base system. In the presence of prospects of success on the merits that already appear good, the Court need not delve deeply into the severity of this lack of notice. It stands at the very least as another potential basis for recovery, and combines with the other two bases discussed above to yield the conclusion that the third variable of the Dataphase calculus, chances for success, decidedly supports the issuance of injunctive relief in this case.

D. The public interest

Several facets of the public interest reflect on this case. The Minnesota Supreme Court recently declared a policy of favoring legitimate challenges to the public bidding process in the case of Telephone Associates v. St. Louis County Bd., 364 N.W.2d 378, 383 (Minn.1985). To this interest must be added the more general public interest in governmental compliance with the statutory regime of the public bid setting. In opposition, the County raises the efficiency-related need of public officials to perform their appointed tasks free of the shackles of inappropriately intrusive scrutiny.

The Court finds its strongest guidance in discerning the public interest in the Telephone Associates case. That case, like this one, dealt with alleged irregularities in a county’s bid letting for a telephone system. The situation under scrutiny in Telephone Associates raised the same conflicting policy issues as those raised here, specifically the conflict between the need for bureaucratic efficiency and the standards designed to insure the integrity of the public bidding process. The Court there stated that:

[t]he phone system is installed and operating. To order its removal now would not be in the public interest. Nevertheless, proper challenges to the bid letting process should be encouraged.

Id. (emphasis added).

This declaration is not binding on this Court as precedent, but it nevertheless constitutes a clear statement of enunciated public policy in Minnesota. Compliance with the Supreme Court’s established policy therefore supports the issuance of an injunction.

Further policy support for the injunction issued here lies in Minnesota’s statutory scheme of requirements for public bid-letting. MSA 16B.06, et seq., provides an extensive regime of requirements for public bids, including established decision-making priorities (16B.09, subd. 1), review and audit mechanisms (16B.06, subd. 1, 4), notice provisions and timetables (16B.07, subd. 3), and the bid management and opening provisions (Id.). Many of these requirements are mirrored and specifically applied to county boards by MSA 375.21. This extensive statutory regulation of the process by which public contracts are awarded both protects the integrity of that process and indicates that integrity is a high public priority. The level of detail further suggests that this priority outweighs the efficiency that might be gained by use of a more flexible, less detailed, process.

This Court is here presented with clear indications of policy from Minnesota’s second and third branches of government. Both espouse a public interest that values integrity in public bidding highly. In the face of these declarations, this Court finds that the public interest, like each of the other factors in the Dataphase analysis, supports injunctive relief in this case.

III. Conclusion

The application of the four-part injunctive analysis to the present case yields the conclusions that 1) United Technologies will be irreparably injured if an injunction does not issue, 2) this injury is not offset by the injury which will result to Washington County from an injunction, 3) United Technologies’ chances for success on the merits appear good in light of the evidence currently before the Court, and 4) the public interest favors the imposition of injunctive relief.

For the reasons stated above, IT IS ORDERED that:

1. The Washington County Board is prohibited from signing or performing a contract and from otherwise proceeding on the bids for a telephone system requested by it on July 1, 1985 and opened on August 9, 1985;

2. This injunction is to be effective upon the filing by plaintiff United Technologies of a bond in the amount of $55,000;

3. The Court reserves the possibility of further proceedings regarding the bond upon appropriate motion by either party.


source: Caselaw Access Project

author: GETZENDANNER, District Judge:

license: Public Domain

text:
    Gary DOTSON, Plaintiff, v. James H. DONNEWALD, Treasurer, State of Illinois, and Neil F. Hartigan, Attorney General, State of Illinois, Defendants.
    No. 85 C 7335.
    United States District Court, N.D. Illinois, E.D.
    Nov. 14, 1985.

      Warren Lupel, Chicago, 111., for plaintiff.
    Kathleen Kreisel, Gladys Stevens, Asst. Attys. Gen., Chicago, 111., for defendants.
   MEMORANDUM OPINION AND ORDER

GETZENDANNER, District Judge:

In this action, plaintiff Gary Dotson seeks a declaratory judgment that the Illinois Criminal Victims’ Escrow Account Act, Ill.Rev.Stat., ch. 70, ¶¶1401-410 (1982), may not be applied to him without violating the ex post facto clauses of the United States Constitution, Article I, Section 9, Clause 3 and Article I, Section 10, Clause 1. The named defendants are James H. Donnewald, the Illinois state treasurer, and Neil F. Hartigan, Illinois state attorney general. The matter is currently before the court on the motion of defendants to dismiss for failure to allege an actual controversy, or, alternatively, to state a claim upon which relief can be granted. For the reasons set forth herein, the motion is granted.

Facts

Plaintiff was indicted and convicted for the crime of rape and aggravated kidnapping against a certain Cathleen Crowell, now known as Cathleen Crowell Webb. The crime allegedly took place on the evening of July 9, 1977. On or about March 14, 1985, Cathleen Webb confessed to agents of the Cook County State’s Attorney’s Office that she had fabricated her original testimony, and that plaintiff was innocent of the crime for which he was convicted. The recantation resulted, among other things, in a commutation of plaintiff’s sentence to time served plus three years mandatory supervised release.

Webb’s recantation was nationally televised and reported extensively in the press and media. So were plaintiff’s continued efforts to clear his name. After plaintiff’s release from prison, he entered into an agreement with authors in which he granted certain literary rights to his life story. Plaintiff is also involved in negotiations concerning a film depiction of his life story, including the events surrounding his false accusation, subsequent imprisonment, and eventual release.

Two months subsequent to plaintiff’s conviction and about 26 months after his alleged crime occurred, the Illinois Criminal Victims’ Escrow Account Act, Ill.Rev.Stat., ch. 70, 1111401-410, went into effect. That Act provides a mechanism whereby commercial proceeds from crimes resulting in death or physical injury will be made available to the victims of the crimes. The pertinent language of the statute reads as follows:

Any person who has been charged with or convicted of a crime in this State, involving a victim as described in Section 2.3, who contracts with a person, or the representative or assignee of such person, with respect to the depiction of the crime in a movie, book, magazine article, radio or television production, or live presentation of any kind, or with respect to that person’s thoughts, feelings, opinions, or emotions regarding the crime, shall file a copy of such contract with the Treasurer. The person with whom the person charged or convicted has contracted shall pay over to the Treasurer any money which would otherwise, by terms of the contract, be owing to the person charged or convicted or his representatives. The Treasurer shall establish by deposit, within 3 days of receipt of such moneys, an escrow account in the name of the person charged or convicted for the benefit of and payable to any victim of crimes committed by such person. A victim who brought a civil action within 2 years of the date of the establishment of the escrow account shall be entitled to an amount ... equal to the amount of an unsatisfied judgment or a partially satisfied judgment against the person or his representative entered in a court of competent jurisdiction in an action arising out of a crime committed by the person.

Ill.Rev.Stat., ch. 70, 11403. If no civil actions are pending against the charged or convicted criminal within two years of the time the account is established, the funds shall be released to the convicted or charged person. Id. at ¶ 406.

On July 29, 1985, an amendment to the aforesaid Act was passed by a majority of the State legislature. Senate Bill 1289. This amendatory legislation would have added language to the above statute to prohibit the escrow account funds from ever becoming the property of the purported criminal, and providing instead that the funds after two years be released into a Violent Crime Victims’ Assistance Fund to be established in the State Treasury.

On August 16, 1985, Governor James Thompson signed Bill 1289 but returned it to the General Assembly with specific recommendations for change. Under Illinois law, the bill is considered in the same manner as a vetoed bill, ILL. CONST., art. 4, § 9(e), and will not take effect unless and until both houses of the Illinois legislature vote to accept the Governor’s recommendations for change, and the Governor certifies his acceptance upon representation. None of these contingencies has occurred, and the amendatory legislation is not law.

Based on public statements given by certain state legislators, plaintiff and some of the entities with whom he is contracting believe that the state “may seek to enforce” the Escrow Account Statute against him. Plaintiff brought the present action to declare the statute as applied to him ex post facto, and thus to declare any such attempt at enforcement unconstitutional.

Case or Controversy

[1] Defendants’ chief argument, and one which this court finds dispositive, is that plaintiff has failed to allege the existence of an actual “case or controversy” within the Article III jurisdiction of this court. In his response memorandum, plaintiff concedes that the applicability of the amendatory legislation is not yet ripe for decision, and seeks relief only with respect to the applicability of the statute as enacted in 1979. Plaintiff nowhere alleges, however, that defendants have enforced or even attempted to enforce the provisions of that Act to his detriment. Plaintiff does allege that public statements by state legislators lead him to believe in such a possibility, but nowhere alleges the contents of these statements, the dates on which they were allegedly made, or the persons making the statements.

Article III of the Constitution limits the exercise of judicial power to “cases” and “controversies.” Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 239, 57 S.Ct. 461, 463, 81 L.Ed. 617 (1937); J.N.S., Inc. v. State of Indiana, 712 F.2d 303, 305 (7th Cir.1983). This limitation applies to actions brought under the Declaratory Judgment Act, 28 U.S.C. § 2201, just as it does for actions seeking traditional injunctive relief.

Many years ago, the Supreme Court framed the test for the justiciability of a declaratory action: whether “there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941). A mere “threat of enforcement of state law” is not justiciable unless the threat presents “immediate coercive consequences” or “immediate business costs.” Alcan Aluminum, Ltd. v. Department of Revenue, 724 F.2d 1294, 1298 (7th Cir.1984); Nuclear Engineering Co. v. Scott, 660 F.2d 241, 251-52 (7th Cir.1981), cert. denied, 455 U.S. 993, 102 S.Ct. 1622, 71 L.Ed.2d 855 (1982). In other words, a litigant may not invoke the power of á federal court to pass upon the constitutionality of a statute simply because an actual controversy may or even will occur in the future: the controversy must presently exist in fact. J.N.S., Inc., 712 F.2d at 305.

Plaintiff argues that the pleadings demonstrate a “sufficient immediacy and reality” by virtue of his allegations that he is engaged in ongoing film and literary negotiations, that threats of enforcement have been publicly made, and that certain of the entities with whom he is negotiating believe the statute will be applied to him. In Nuclear Engineering Co., the Seventh Circuit made clear that when threatened governmental action causes immediate business costs, an “actual controversy” exists sufficient to support Article III jurisdiction. 660 F.2d at 252. The Court also stressed, however, that mere allegations of uncertain or speculative business injury are not enough; where the jurisdiction of the court is challenged as a factual matter, the party invoking jurisdiction must support the jurisdictional allegations of the complaint by competent evidence. Id. (citing Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir.1983).

In this case, plaintiff has responded to the defendants’ motion to dismiss simply by relying on the allegation that he and others “believe” the state will enforce the 1979 statute against him. Plaintiff nowhere alleges that parties with whom he is negotiating are refusing to do business with him or are paying over to the state monies properly owed to him. Plaintiff alleges no “immediate coercive consequences” as required by Nuclear Engineering and provides no factual allegations to bolster his suggestion of “immediate business costs.” A litigant in federal court must demonstrate an injury which is “real, not imaginary; concrete, not abstract; apparent, not illusory; and demonstrable, not speculative.” Myron v. Chicoine, 678 F.2d 727, 730 (7th Cir.1982). Plaintiff’s conclusory allegations are insufficient to meet this burden.

Even were plaintiff able to allege immediate business costs, it is highly questionable whether the alleged statements by public legislators are sufficient to constitute a threat of enforcement. State legislators do not enforce the provisions of the Act, nor are they parties to this action. Ordinarily, a reasonable apprehension of a justiciable controversy must be inspired by the defendants’ actions before jurisdiction will be held to exist. See, Crown Drug Co., Inc. v. Revlon, Inc., 703 F.2d 240, 243 (7th Cir.1983). While plaintiff’s name was apparently mentioned in the legislative debates over the amendatory legislation, that in itself does not indicate that the named defendants intend to enforce the old Act against plaintiff.

Accordingly, the defendants’ motion to dismiss is granted, and the action is dismissed for lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(2). Dismissal is by definition without prejudice to a future action should an actual controversy arise. The November 18, 1985 status date is stricken.

It is so ordered.


author: G. ERNEST TIDWELL, District Judge.

text:
    ROADWAY EXPRESS, INC., a Delaware Corporation v. William E. BROCK, Secretary of Labor and Alan C. McMillan, Regional Administrator, Region Four, U.S. Department of Labor.
    Civ. A. No. C85-997A.
    United States District Court, N.D. Georgia, Atlanta Division.
    Nov. 18, 1985.

      Michael C. Towers, Fisher & Phillips, Atlanta, Ga., for plaintiff.
    J. William Boone, Asst. U.S. Atty., Atlanta, Ga., for defendants.
   ORDER

G. ERNEST TIDWELL, District Judge.

The above-styled matter is presently before the court on plaintiff’s motion for summary judgment. Plaintiff attached to its motion for summary judgment a “Statement of Material Facts as to which there is No Genuine Issue to be Tried”, as required by L.R. 220 — 5(b)(1) (N.D.Ga.). The defendant neither responded to nor controverted those facts. Thus, Roadway’s Statement of Facts shall be deemed admitted. L.R. 220-5(b)(2) (N.D.Ga.).

STATEMENT OF FACTS

Plaintiff Roadway Express, Inc. (“Roadway”) is a common motor carrier, engaged in interstate trucking through the operation of commercial motor vehicles, which are used to transport cargo.

On November 22, 1983, Roadway discharged employee Jerry Hufstetler for an alleged act of dishonesty. Soon thereafter, Hufstetler filed a grievance, pursuant to the provisions of the National Master Freight Agreement (“NMFA”), a collective bargaining agreement made between Roadway and the Teamsters Local Union No. 528. Hufstetler contended that he was dismissed in retaliation for his reporting of violations of commercial motor vehicles rules and regulations.

On December 19, 1983, Hufstetler’s grievance was heard before an arbitration panel established under the terms of the NMFA. That panel deadlocked, and, as dictated by the NMFA, the case was referred to a second level arbitration panel. The panel was composed of an equal number of representatives from a company and a union, none of which was a representative of the plaintiff. After considering evidence presented by both Hufstetler and Roadway, the second panel rejected Hufstetler’s contentions and sustained his discharge for an act of dishonesty.

Hufstetler filed subsequently a complaint with the United States Department of Labor (“DOL”), alleging that he had been discharged without just cause, in violation of the NMFA and section 405 of the Surface Transportation Assistance Act (“STAA”), 49 U.S.C. § 2305, which prohibits, inter alia, retaliatory discharge for the reporting of safety violations.

Pursuant to 49 U.S.C. § 2305(c)(2)(A), DOL investigated Hufstetler’s complaint. The procedures utilized included a field investigation by an employee of DOL, a review of the investigator’s report by a regional supervisory investigator, and, where the supervisor found the complaint meritorious, review by the Occupational Safety and Health Administration’s regional administrator.

During the investigation, Roadway submitted, as requested, a written position statement explaining the circumstances of the discharge. However, Roadway was denied access to confidential statements of witnesses, and was denied the names of those individuals from whom statements were taken. Roadway thereby informed DOL that any preliminary order requiring Hufstetler’s reinstatement, prior to an evidentiary hearing, would constitute a denial of due process as guaranteed by the Fifth Amendment to the United States Constitution.

DOL determined, after eleven months of investigation, that there was reasonable cause to believe that Hufstetler was discharged in violation of 49 U.S.C. § 2305. On January 21, 1985, the Secretary of DOL thereby issued a preliminary order, pursuant to 49 U.S.C. § 2305(c)(2)(A), which required, inter alia, that Roadway immediately reinstate Hufstetler to his former position.

Prior to the issuance of the preliminary order, DOL did not conduct an evidentiary hearing to resolve disputed factual issues which were raised by the evidence. However, under 49 U.S.C. § 2305(c)(2)(A), DOL was not so required. It is this alleged infirmity in the statute which is the crux of this litigation.

Roadway filed suit on February 1, 1985, challenging the provisions of 49 U.S.C. § 2305(c)(2)(A), and seeking injunctive and declaratory relief. In addition to seeking relief from this court on constitutional grounds, Roadway filed, before an Administrative Law Judge (“ALJ”), objections to that part of DOL’s order which held that Hufstetler was wrongfully discharged. The ALJ has not yet rendered a decision as to the merits of Hufstetler’s discharge.

On February 11, 1985, this court granted Roadway's motion for preliminary injunction. Roadway Express, Inc. v. Donovan, 603 F.Supp. 249 (N.D.Ga.1985). The court found that Roadway proved the four elements necessary for the issuance of a preliminary injunction. Specifically, the court found preliminary injunctive relief warranted because Roadway showed: 1) a substantial likelihood of success on the merits, 2) the possibility of irreparable harm, 3) a comparatively greater possibility of harm than that of DOL, and 4) no adverse effect to the public interest. Roadway, 603 F.Supp. at 252-53. The court thereby restrained DOL from enforcing that portion of its January 21 preliminary order which required Roadway to temporarily reinstate Hufstetler without benefit of an evidentiary hearing.

Following this court’s entry of a preliminary injunction, Roadway moved for summary judgment, seeking a final order of injunctive and declarative relief.

JURISDICTIONAL ISSUES

DOL contends that summary judgment is not appropriate inasmuch as Roadway has failed to exhaust available administrative remedies. DOL alleges that the resolution of the constitutional question is dependent upon the compilation of an appropriate record for review pursuant to administrative procedures.

Roadway’s complaint is based upon the premise that there is no available administrative remedy prior to DOL’s order. It is this prehearing deprivation of a property right for which Roadway seeks relief.

It is well-established that “[cjonstitutional questions obviously are unsuited to resolution in administrative hearing procedures.” Califano v. Sanders, 430 U.S. 99, 109, 97 S.Ct. 980, 986, 51 L.Ed.2d 192 (1977). This is especially true when an adequate factual record has been compiled and the special expertise of the administrative agency is unnecessary for resolution of the collateral constitutional issues. See, McKart v. United States, 395 U.S. 185, 193-94, 89 S.Ct. 1657, 1662-63, 23 L.Ed.2d 194 (1969); Southern Ohio Coal Co. v. Donovan, 774 F.2d 693 (6th Cir.1985). Thus, inasmuch as Roadway’s due process claim is collateral to the substantive claims presently before the ALJ, and the expertise of the administrative agency is, in this instance, unavailable, jurisdiction in the district court is warranted. Mathews v. Eldridge, 424 U.S. 319, 330-32, 96 S.Ct. 893, 900-01, 47 L.Ed.2d 18 (1976); Cherry v. Heckler, 760 F.2d 1186, 1190 (11th Cir. 1985); Southern Ohio Coal, at 701-703.

Additionally, it is clear that “this issue is live and in dispute between the parties. The plaintiff remains in the [trucking] business and continues to be exposed to procedures which, it alleges, deprive it of due process. The Court is satisfied that this action continues to present an ‘actual controversy’ that is appropriate for declaratory relief.” Southern Ohio Coal v. Donovan, 593 F.Supp. 1014, 1021 (S.D. Ohio 1984). See, Powell v. McCormack, 395 U.S. 486, 517-18, 89 S.Ct. 1944, 1961-62, 23 L.Ed.2d 491 (1969). The governmental policy is definite, settled, and presently affecting Roadway’s interests; hence, declaratory relief in the district court is appropriate. Florida Board of Business Regulation v. National Labor Relations Board, 605 F.2d 916, 919 (5th Cir.1979).

In the alternative, DOL contends that the Court of Appeals rather than the district court has jurisdiction to review an order issued pursuant to 49 U.S.C. § 2305(c).

However, the statutory scheme is clear. 49 U.S.C. § 2305(d)(1) provides, in part: “Any person adversely affected or aggrieved by an order issued after a hearing under subsection (c) of this section may obtain review of the order in the United States Court of Appeals for the circuit in which the violation ... allegedly occurred ... [emphasis supplied].” Thus, this code section grants the Court of Appeals appellate jurisdiction only of substantive claims following a hearing on the merits, and is therefore inapposite to the matter before this court.

Having found that jurisdiction is properly invoked in this court, the sole issue remains: whether 49 U.S.C. § 2305(c)(2)(A), which requires, prior to an evidentiary hearing, immediate reinstatement of discharged employees, upon the Secretary’s finding of wrongful discharge, is unconstitutional and violative of the Fifth Amendment to the United States Constitution.

PROCEDURAL DUE PROCESS

• The Fifth Amendment to the United States Constitution assures that no person shall be deprived of property without due process of law. An essential and fundamental requirement of due process is that notice and an opportunity to be heard precede deprivation of a significant property interest, Mullance v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313, 70 S.Ct. 652, 656, 94 L.Ed. 865 (1950), except for extraordinary situations where important governmental interests justify postponing the hearing until after deprivation. Boddie v. Connecticut, 401 U.S. 371, 379, 91 S.Ct. 780, 786, 28 L.Ed.2d 113 (1971); see Cleveland Board of Education v. Loudermill, — U.S. -, 105 S.Ct. 1487, 1493, 84 L.Ed.2d 494 (1985).

The parties agree that a balancing test, as prescribed and applied by the United States Supreme Court in Mathews v. Eldridge, is necessary for determining whether procedures used in the deprivation of a property right comport with the requirements of due process. Thus, in determining the constitutionality of 49 U.S.C. § 2305(c)(2)(A), the court must consider: the private interest affected by the government’s action; the risk of an erroneous deprivation of such interest through the procedures used; and, the government’s interest, including the function involved and the administrative and fiscal burdens that the additional procedural requirement would entail. Mathews, 424 U.S. at 335, 96 S.Ct. at 903.

The private interest: This court, on Roadway’s motion for preliminary injunction, found that Roadway has important interests in not being compelled to reinstate an employee discharged for wrongful conduct and in upholding the arbitration provisions of its bargaining agreement. DOL argues nevertheless, that Roadway’s interests are insubstantial, inasmuch as the statute requires that a post-reinstatement hearing be “expeditiously conducted”. DOL contends that Roadway would be subject to, at most, a 120 day reinstatement order without benefit of hearing.

In Southern Ohio Coal, the Sixth Circuit Court of Appeals addressed a provision of the Federal Mine Safety and Health Act which required pre-hearing reinstatement in the same manner as the statute involved herein. The court held that an order requiring reinstatement for five days prior to a hearing violated the procedural due process rights of the employer. The Sixth Circuit reasoned that “[prolonged retention of a disruptive or otherwise unsatisfactory employee can adversely affect discipline and morale in the work place, foster disharmony, and ultimately impair the efficiency of an office or agency.” Southern Ohio Coal, at 703 (quoting Arnett v. Kennedy, 416 U.S. 134, 168, 94 S.Ct. 1633, 1651, 40 L.Ed.2d 15 (Powell, J. concurring) (1974).

In this instance, the arbitration panel, after a lengthy hearing, sustained Hufstetler’s discharge for an act of dishonesty. The statutory scheme however, required Roadway to reinstate, for possibly a four-month period, an arguably unsatisfactory employee, in violation of its collective bargaining agreement and at the expense of innocent employees. Certainly, Roadway’s interests in not doing so are substantial.

The risk of erroneous deprivation: The court found previously a clear risk of erroneous deprivation, inasmuch as the credibility and veracity of witnesses was not available to Roadway for scrutiny and cross-examination. Roadway, 603 F.Supp. at 252.

During its investigation, DOL requested and received from Roadway a written position statement, but failed to make available the names and statements of witnesses upon which its decision was based. “[Wjritten submissions do not afford the flexibility of oral presentations; they do not permit the [employer] to mold his argument to the issues the decision maker appears to regard as important. Particularly where credibility and veracity are at issue, as they must be in many [discharge] proceedings, written submissions are a wholly unsatisfactory basis for decision.” Goldberg v. Kelly, 397 U.S. 254, 269, 90 S.Ct. 1011, 1021, 25 L.Ed.2d 287 (1970). See also Mathews, 424 U.S. at 343-44, 96 S.Ct. at 907.

Dismissals for cause often, as in this case, involve disputed issues of fact. Loudermill, 105 S.Ct. at 1494. Even where the facts are not in dispute, the appropriateness of the discharge might be questioned, and the only meaningful opportunity to be heard is before the reinstatement order. Id. Thus, the procedures used by DOL were inherently unreliable, inasmuch as they did not provide any means for resolving disputed issues of fact and credibility. Southern Ohio Coal, at 704. An evidentiary hearing, prior to mandatory reinstatement, would clearly strengthen the reliability of the procedures and the ultimate decision, and hedge against the risk of erroneous deprivation.

The governmental interest: This court concluded on motion for preliminary injunction that the governmental interest in protecting employees from retaliatory discharge would not be impaired by requiring a hearing prior to reinstatement. Roadway, 603 F.Supp. at 252.

Although the governmental interests in promoting safety on the highways and prohibiting retaliatory discharge are indeed valid, DOL has failed to show any compelling considerations which necessitate postponing the hearing.

Inasmuch as the statute requires presently that a hearing be “expeditiously conducted” after reinstatement, the administrative or fiscal burdens attendant to such a hearing prior to reinstatement would be negligible. Loudermill, 105 S.Ct. at 1495; Southern Ohio Coal, at 703.

The court notes that a full evidentiary hearing prior to reinstatement is not required. Mathews, 424 U.S. at 343, 96 S.Ct. at 907. Rather, it is sufficient that an employer be given, at minimum, an opportunity to present his side and a chance to confront and cross examine witnesses. Southern Ohio Coal, at 705.

CONCLUSION

Considering the private and governmental interests involved, and the present risk of erroneous deprivation, the court concludes that the statutory procedures utilized by DOL do not conform to the dictates of due process. To the extent that the statute fails to provide employers with a meaningful opportunity to be heard, it ^ fails to meet the requirements of due process. Such deficiency may only be remedied by conducting a hearing, prior to an order of reinstatement, whereby the parties are given a meaningful opportunity to be heard prior to the Secretary’s decision.

In summary, the court determines that the plaintiff’s motion for summary judgment is meritorious, and the motion is hereby granted. It is the judgment of this court and it is declared that the Secretary’s preliminary order of January 21, 1985 is violative of the requirements of procedural due process to the extent that it requires the plaintiff to temporarily reinstate Hufstetler prior to an evidentiary hearing, and that portion is therefore void. It is declared further that 29 U.S.C. § 2305(c)(2)(A) is unconstitutional and void to the extent that it empowers defendants to order reinstatement of discharged employees prior to conducting an evidentiary hearing which comports with the minimum requirements of due process. Accordingly, the defendants, and any of their officers, agents, and anyone acting in active concert therewith, are hereby restrained and enjoined from further issuance of preliminary orders of reinstatement pursuant to 49 U.S.C. § 2305(c)(2)(A), without first conducting an evidentiary hearing which complies with the minimum requirements of procedural due process under the Fifth Amendment to the United States Constitution.


author: WARREN, District Judge.

text:
    Justus A. STOVALL, Plaintiff, v. ALLIS-CHALMERS CORPORATION, Defendant.
    No. 84-C-1255.
    United States District Court, E.D. Wisconsin.
    Nov. 19, 1985.

      Thomas E. Hayes, Milwaukee, Wis., for plaintiff.
    Bruce R. Alper, Vedder, Price, Kaufman & Kammholz, Chicago, 111., for defendant.
   DECISION AND ORDER

WARREN, District Judge.

Plaintiff Justus A. Stovall originally brought this action against defendant Allis-Chalmers Corporation in Milwaukee County Circuit Court, alleging breach of a collective bargaining agreement that governed his retirement status and benefits. Defendant subsequently removed the case to this Court on the ground that it raises federal questions under the Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a), and provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, 29 U.S.C. § 1001 et seq. Defendant now moves for summary judgment on the ground that no genuine issue of material fact exists between the parties and the defendant is entitled to judgment as a matter of law.

FACTS

Plaintiff Justus Stovall was employed by defendant Allis-Chalmers Corporation from 1951 to 1978. Late in 1978 plaintiff began to experience medical difficulties that allegedly impaired his ability to perform his job adequately. Stovall was granted medical leave for some weeks in 1978 and early 1979, but he never substantiated his claims of disability. (See Plaintiff’s Exhibits A and B.) On June 6, 1979, Stovall applied for regular early retirement, to be effective June 30, 1979. On June 29, Stovall changed his mind, requesting in a handwritten memo that his retirement application be cancelled. Allis-Chalmers complied, and sent him a telegram telling him not to report to work until July 17. On June 30, Stovall changed his mind again, saying he wanted to retire on a regular early retirement basis. Again, Allis-Chalmers complied, and Stovall was retired June 30, 1979.

On July 17, 1979, Stovall requested that his regular early retirement status be changed to disability retirement. Allis-Chalmers refused this request, stating that Stovall had already been granted regular early retirement as he had asked. Early in 1980, Stovall asked that his retirement be terminated and that Allis-Chalmers rehire him. The Company declined. In May 1980, Stovall gave Allis-Chalmers a letter from a physician stating that Stovall was fit to work. (See Defendant’s brief, Affidavit of Bernice Price, Exhibit 2.) This letter was returned to Stovall with a reminder that he had already taken regular early retirement. A few weeks later Stovall produced another letter from another physician, stating that he was completely and totally disabled as of June 30, 1979. (See Plaintiff’s Exhibit G.) Again he requested that his retirement status be changed to disability retirement. Again, Allis-Chalmers declined to do so.

Some four years later, this suit followed.

SUMMARY JUDGMENT

Summary judgment is appropriate when no genuine issue of material fact exists between the parties and the Court can thus decide the case purely as a matter of law. Federal Rules of Civil Procedure, Rule 56(b).

In this case the parties do not dispute any of the relevant facts. In fact, in the fourteen months since this litigation began, plaintiff has not introduced any of his own facts, nor challenged any of those adduced by defendant. The disagreement is purely one of law. The Court is therefore free to decide the case as a matter of law.

OPINION

The heart of plaintiff’s complaint is that defendant Allis-Chalmers breached the collective bargaining agreement (“Agreement”) under which plaintiff’s retirement rights are determined and benefits administered. The alleged breach occurred when defendant refused to reclassify plaintiff as disabled after he had already requested and been granted regular early retirement.

Defendant raises two affirmative defenses. First, it asserts that plaintiff failed to exhaust the administrative remedies for grievances as provided by the express terms of the Agreement itself. Second, it claims that plaintiff’s action is barred by the statute of limitations under both LMRA and ERISA.

I. Failure to Exhaust Contractual Remedies

It is well-settled that parties to a collectively bargained contract must attempt to exhaust the grievance remedies provided in the contract before an action will lie for its breach. Republic Steel Corp. v. Maddox, 379 U.S. 650, 652, 85 S.Ct. 614, 616, 13 L.Ed.2d 580 (1965).

Two provisions of the Agreement between Allis-Chalmers and the union of which plaintiff was an active member are of particular relevance to this case. The first of these is § 4.1, which provides that an employee is entitled to disability retirement benefits when he is “determined by the Board to be totally and permanently disabled____”

The second, § 8.5, establishes the procedure to be followed by employees or retired employees who seek to assert or clarify their rights under the Agreement:

Any question raised by an employee or retired employee concerning his rights under the Plan, including.. .(e) his permanent and total disability, if any; (f) the amount of his benefits under the Plan, if any, to which he claims to be entitled.. .shall be prepared in the form of a written statement signed by him in triplicate and presented to the appropriate Committee.

The Board in question consists of six members, three from the Company and three from the employees’ union. Each Committee comprises four members, two each from the Company and the Union. The Board reviews recommendations made by the various committees and acts as a kind of arbitration panel. Its decisions are binding on both Company and Union.

According to the uncontested facts of this case, plaintiff completely ignored these contractual mechanisms in his efforts to establish his disability. Nearly a year after voluntarily retiring from Allis-Chalmers on a regular early basis, he presented to the Company, within a period of less than a month, contradictory letters from different physicians. The first letter stated that plaintiff was fit to work; the second, that he had been completely and totally disabled since June of the previous year. Plaintiff never presented this evidence to the Board of review, as provided by the express terms of the Agreement. Nor did plaintiff bring his complaints about the Company’s refusal to grant him disability retirement to the appropriate Committee for resolution. In short, plaintiff made no attempt whatsoever to use the grievance procedures provided in the Agreement itself.

On these undisputed facts, the Court finds that plaintiff did not make an adequate effort to exhaust his contractual remedies, and therefore holds that, under the principle announced in Republic Steel, is barred from prosecuting this action.

Plaintiff argues that he was “excused” from the usual requirements that contractual remedies be exhausted before beginning a civil action because he is a “retiree” not an “employee”, that only “employees” are bound by the Agreement, and that therefore the exhaustion requirement does not apply to “retirees” such as himself.

This claim reflects a gross misreading of the express terms of the Agreement. Section 8.5, the grievance procedure, applies to “employees and retired employees.” (emphasis added). Plaintiff was bound by the terms of the Agreement before and after he retired, and he was therefore not excused from the requirement that he attempt to exhaust the internal remedies it provided before filing suit in court.

II. Failure to Satisfy the Statute of Limitations

Neither LMRA nor ERISA includes a statute of limitations. Therefore, in the Seventh Circuit, the timeliness of actions brought under either act is to be determined “as a matter of federal law, by reference to the appropriate state statute of limitations.” Jenkins v. Local 705 Intern. Broth. of Teamsters, 713 F.2d 247, 250-51 (7th Cir.1983). “The Court, in making this determination, must decide which statute of limitations period is ‘the most appropriate one provided by state law.’ ” Id. at 250. In doing so, “the court must be cognizant of and examine the underlying nature of the federal claim as well as the federal policies involved.” Id. at 251.

In Jenkins, plaintiff brought suit to recover benefits allegedly due him under an employee retirement plan and to clarify his rights under that plan. The Court characterized the suit as one in contract, not federal labor law, since it sought to define rights and obtain benefits under a written retirement plan and not to challenge the terms of the plan itself. The Court then held the action timely because it was brought within the time period provided by the state statue of limitations for contracts.

The Court finds Jenkins indistinguishable from the present case. Plaintiff seeks to establish that he is disabled and therefore eligible for disability benefits under the Agreement negotiated between Allis-Chalmers and plaintiff’s union. The Agreement itself is a written document. Plaintiff alleges that defendant breached the Agreement, not that the Agreement itself is somehow invalid as a matter of federal labor law.

Accordingly, the Court finds that the plaintiff’s action is one in contract and is therefore subject to Wisconsin’s six-year statute of limitations for contract actions. § 893.43 Wis.Stats. Because plaintiff brought this action within the required statutory period, it is not barred by the statute of limitations.

CONCLUSION

Plaintiff’s action is not time-barred. His failure to attempt to exhaust contractual remedies, however, entitles defendant to judgment as a matter of law.

Defendant’s motion for summary judgment is therefore GRANTED.


author: SWEET, District Judge.

text:
    SKANDINAVISKA ENSKILDA BANKEN, Plaintiff, v. Bernt RATHAUS, also known as Bernt C. Rathaus, Defendant.
    No. 85 Civ. 3208 (RWS).
    United States District Court, S.D. New York.
    Nov. 22, 1985.
    Seward & Kissel, New York City, for plaintiff; M. William Munno, James F.X. Hiler, of counsel.
    Lehrich & Lehrich, New York City, for defendant; Hyman D. Lehrich, Eric Moss, of counsel.
   OPINION

SWEET, District Judge.

The defendant in this action for collection of a debt, Bernt C. Rathaus (“Rathaus”), has moved pursuant to-Rule 55(c) of the Federal Rules of Civil Procedure for an order vacating a default for failure to serve a timely answer and has moved pursuant to Rule 42(a) for an order consolidating this action with the action entitled Sundsvallsbanken v. Fondmetal, Inc. and Robern International, Inc., 624 F.Supp. 811 (S.D.N.Y.1985). Plaintiff, Skandinaviska Enskilda Banken (“SEB”) cross-moved for summary judgment under Rule 56(a) of the Federal Rules of Civil Procedure. For the reasons set forth below, which constitute the findings of fact and conclusions of law, SEB’s motion for summary judgment is granted.

Summary Judgment Standards

A motion for summary judgment requires the district courts to resolve all doubts and draw all reasonable inferences in favor of the party opposing the motion, United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam); United States v. One Tintoretto Painting Entitled “The Holy Family with Saint Catherine and Honored Donor”, 691 F.2d 603, 606 (2d Cir. 1982), to allow the development of a full factual record through trial of the issues presented, a policy which is limited by the grant of summary judgment. See Jaroslawicz v. Seedman, 528 F.2d 727, 731 (2d Cir.1975). On the other hand, a litigant’s failure to allege substantial facts in dispute or his mere reliance on an unsubstantiated denial of the accuracy of the opponents’ affidavits is insufficient to controvert a motion for summary judgment. Project Release v. Prevost, 722 F.2d 960, 968 (2d Cir.1983); see WIXT Television, Inc. v. Meredith Corp., 506 F.Supp. 1003 (N.D.N. Y.1980). In such circumstances the use of summary judgment is desirable to avoid imposing and incurring “fruitless expenses of litigation.” Merit Motors, Inc. v. Chrysler Corporation, 569 F.2d 666, 673 (D.C. Cir.1977).

Undisputed Facts

SEB, a bank organized and existing under the laws of the Kingdom of Sweden and with its principal place of business in Stockholm, Sweden, brought this action to enforce Rathaus’ obligation to unconditionally guarantee repayment of a loan that SEB made to a Swedish corporation called Fondmetall A.B. (“Fondmetall”). On February 7, 1983 Rathaus, a citizen and resident of New York State, executed a written agreement entitled “Continuing Guaranty” which unconditionally promised to pay SEB all indebtedness up to the principal amount of six hundred thousand Swedish Crowns (“SEK”) plus interest due upon a loan agreement between SEB and Fondmetall entitled “Contract Cheque Account with Overdraft Facility.” Under the contract, SEB granted Fondmetall a loan facility in the form of a cheque account overdraft privilege of up to SEK 1,200,000.00, with interest fixed at 4.5% over the discount rate set by the Central Bank of Sweden. Fondmetall also promised to pay penalty interest of 2% if it failed to repay the overdraft loans when due.

In addition to the Overdraft Facility, Fondmetall maintained a Foreign Currency Account with SEB, and drew loans total-ling $270,000 before defaulting on these loans on July 31, 1984. This default prompted SEB’s termination of Fondmetall’s right to borrow under the contract, and on August 23, 1984 SEB demanded that Fondmetall repay the overdrawn SEK 1,200,000.00 which SEB had loaned under the contract, plus accrued interest. Fondmetall defaulted on this demand for repayment, triggering Rathaus’ obligation under his unconditional guaranty of the account. SEB notified Rathaus of this default by letter of August 24, 1984, and demanded payment of SEK 600,000.00 pursuant to the guaranty. To date Rathaus has failed to honor any portion of his obligation under the guaranty, despite SEB’s repeated attempts to secure- such compliance.

In January 1985, SEB received over $134,000 (equivalent to approximately SEK 2,222,000) wired to Fondmetall from an Italian customer, Terninoss Terni. SEB seized the funds and credited them equally to the defaulted Overdraft Facility account and Foreign Currency account loans.

Discussion

Rathaus admits to all of the facts outlined above and opposes SEB’s motion for summary judgment, however, with a request for additional time to pursue discovery under Rule 56(f) of the Federal Rules of Civil Procedure. Rule 56(f) provides:

When Affidavits Are Unavailable. Should it appear from the affidavits of a party opposing the motion that he cannot for reasons stated present by affidavit facts essential to justifying his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

It is the duty of this court under Rule 56(f) to ensure that the parties have been given a reasonable opportunity to make their record complete before ruling on a motion for summary judgment. Berne Street Enterprises, Inc. v. American Export Isbrandtsen Co., 289 F.Supp. 195 (S.D.N.Y.1968). However, Rule 56(f) is not a shield which will prevent the entry of summary judgment without a showing that the material sought is germane to the defense. Quaker Chair Corp. v. Litton Business Systems, Inc., 71 F.R.D. 527 (S.D.N.Y.1976). “A ‘bare assertion’ that the evidence supporting a plaintiff’s allegation is in the hands of the defendant is insufficient to justify a denial of a motion for summary judgment under Rule 56(f).” Contemporary Mission, Inc. v. U.S. Postal Service, 648 F.2d 97, 107 (2d Cir.1981).

Pursuant to the requirements of Rule 56(f), Rathaus has attempted to demonstrate that he has three defenses to SEB’s claim which require additional discovery of relevant material in the hands of SEB. Underlying these defenses is the claim of Rathaus that he has been defrauded by his former partner Anders J. Lofberg (“Lofberg”) and that Lofberg’s acts, together with those of the banks involved, have damaged him and relieved him of his liabilities.

Rathaus’ first defense is that SEB breached three duties which it owed with regard to the Fondmetall accounts at SEB, and that he requires additional discovery under Rule 56(f) to substantiate this defense. Specifically Rathaus charges that the funds wired to Fondmetall’s account at SEB were not properly accounted for, and should have been applied to reduce the debt in the Overdraft Facility account which he guaranteed. Rathaus contends that SEB has failed to produce account instructions for the two Fondmetall accounts and has failed to show that the seized Italian funds were not destined for the Overdraft account.

However, SEB has provided documentation relating to the Terninoss Terni transaction. In the Reply Declaration of Bengt A.S. Smith, bank attorney (¶¶ 4-6), SEB establishes that the funds were wired for deposit into Fondmetall’s Foreign Exchange account, and not to the Overdraft cheque account guaranteed by Rathaus. A copy of the wire advice from Citibank, the origin of the Terninoss Terni funds, marked with the Fondmetall Foreign Exchange account number is attached as an exhibit to the affidavit. Smith also rebuts Rathaus’ assertion that Terninoss Terni gave any deposit instructions to SEB regarding the wired funds (¶ 5) and Rathaus has alleged no facts, as opposed to speculation, on which he bases his defense.

Rathaus’ second defense alleges that another Swedish Bank, Sundsvallsbanken (“SVB”), agreed to indemnify him as to his guarantee of the Fondmetall account at SEB, and that SEB agreed to this substitution of SVB on the guaranty. To support this assertion, Rathaus stated that “SEB was kept constantly advised” of the negotiations between SVB, Rathaus and his partner Lofberg (Rathaus Affidavit ¶ 4) and that “SEB was directly concerned with, was advised of, and concurred in the terms of the aforementioned agreements” (Rathaus Affidavit 115). Rathaus asserts, pursuant to Rule 56(f), that SEB possesses some documentary evidence or can attest to its approval of this indemnity by SVB. However, Rathaus has not produced a single affidavit or other piece of documentary evidence to support the existence of such an agreement by SEB.

The documentary evidence which has been submitted, belies the contention that SVB undertook to fulfill his obligations to SEB under his unconditional guaranty. Exhibit A of the Rathaus affidavit, the “Limited Release and Indemnification Agreement” of June 7, 1984, states that the indemnification was not written to cover any claim “made under a personal guaranty from Bernt C. Rathaus to S.E. Bank-en, Sweden, for the debt of Fondmetall AB, a copy of which is attached hereto as Exhibit B,” (p. 1., 111). Rathaus asserts that although these documents underlying his negotiations with Lofberg and SVB purport only to indemnify his corporations from demands by SEB, this was a drafting error and they were meant to release him from personal liability from the guaranty of the Fondmetall account. Rathaus offers only one piece of evidence to substantiate this charge of a drafting error, a letter written by his attorney to SVB, sent five months after the execution of the indemnity agreement. Rathaus has failed to provide affidavits of anyone present at the SVB negotiations, any inconsistent prior drafts of agreement, or any contemporaneous correspondence among the parties to the negotiation. Any such evidence would contradict the explicit designation of parties to the indemnification agreement and would, therefore, run afoul of the agreements’ integration clause, which provides in part “This agreement constitutes the entire understanding between the parties hereto covering the subject matter hereof and supercedes, cancels and abrogates all pre-existing understandings between the parties, whether written or oral, covering said subject matter.” (Rathaus Affidavit Exhibit A, Doc. 2 U 11). Similarly, Rathaus has demonstrated no basis for his speculation that SEB accepted SVB as substitute guarantor, and without a firmer foundation these are merely “bare assertions” that undisclosed facts exist in the face of powerful evidence to the contrary, and cannot support denial of a summary judgment motion under Rule 56(f). Contemporary Mission, Inc. v. U.S. Postal Service, supra, 648 F.2d at 107.

Rathaus’ final claim is that his unconditional guaranty obligation only extends to fifty percent of the indebtedness of the Overdraft Facility Account because the other half was guaranteed by Lofberg. Rathaus asserts that SEB represented that any calls on the guaranty would be borne equally by Rathaus and Lofberg and that any payments received by SEB would be credited against their personal guarantees pari passu. Here too, Rathaus has not submitted any evidence to support his understanding of the agreement, has not pointed to any specific documents or information which he would seek to discover regarding this interpretation, and has submitted documents which controvert his interpretation of the guarantee.

Rathaus merely states that he has a “distinct recollection that this understanding was reduced to writing and entered into SEB’s records” (Rathaus Affidavit 9/23/85, II5), but offers no other basis for its existence. SEB has responded to this allegation, stating that it has no writing which in any way alters or divides his obligations to unconditionally guarantee the debt in the account up to SEK 600,000.00. This obligation appears to exist independent of the obligations of any other guarantor.

Rathaus has failed to demonstrate that there are any disputed issues of fact which warrant a full trial of this action. Furthermore, he has not demonstrated that postponement of a ruling on this motion, pursuant to Rule 56(f), would enable him to rebut SEB’s showing that no material factual disputes exist.

SEB is entitled to judgment on its debt as a matter of law. The language of Rathaus’ Continuing Guaranty is unambiguous and unconditional. The guaranty states:

Whereas SKANDINAVISKA ENSKILDA BANKEN (hereinafter called bank) has promised to grant to Fondmetall AB (hereinafter called borrowers) an overdraft facility of SEK 1,200,000. — provided that the obligations of the borrowers under the said financial accomodations [sic] are guaranteed to Bank by the undersigned (hereinafter called Guarantors);
Now therefore we [Rathaus], for valuable consideration unconditionally guarantee and promise to pay to Bank, or order, on demand, in lawful money in the Kingdom of Sweden any and all indebtedness of Borrowers to Bank under said financial accomodations [sic]. (Smith Decl., Ex. A, ¶ 1; emphasis added).

Where the guaranty provides that the guarantor’s obligations are unconditional, the guarantor’s liability attaches immediately upon a default by the primary obligor. General Phoenx Corp. v. Cabot, 300 N.Y. 87, 93, 89 N.E.2d 238 (1949). Rathaus admits that he issued an absolute guarantee to SEB, that SEB served him with repeated payment demands, and that this debt is as yet unpaid. SEB is, therefore, entitled to summary judgment, making it unnecessary to consider defendant’s motions to vacate default and to consolidate this action.

Submit judgment on notice.

IT IS SO ORDERED.

      . An English translation of section 17 of the Contract for the Overdraft Facility provides, in relevant part:
      Termination of the overdraft facility in certain cases
      Should the borrowere not fulfil [sic] in due course his obligations under this contract or any other undertaking vis-a-vis the Bank, or should the borrower misuse the account, the Bank is entitled to terminate the use of the overdraft facility immediately.
      If the Bank deems that the security for the contract, or for any other undertaking by the borrower vis-a-vis the Bank is no longer adequate, or there is otherwise a risk that the borrower will not fulfil [sic] his obligations in due course, the Bank is entitled to terminate the use of the overdraft facility on a date to be decided by the Bank.
      (Smith Declaration, Exhibit B, ¶ 17).

      . The first two duties alleged require only brief treatment, as Rathaus has not stated that they require additional factual development. In his answer, Rathaus claims that SEB "failed to preseve and protect the collateral pledged” under the contract for the Overdraft facility. Neither the contract nor Rathaus’ guaranty indicates that there was any collateral for the contract, and SEB flatly states that no collateral was pledged. Rathaus also claims that SEB breached its duty to pursue Fondmetall for the overdue loan before demanding payment of Rathaus. SEB has no such duty and it was specifically negated by the following provision of the Rathaus guaranty:
      Guarantors waive any right to require bank to (a) proceed agianst Borrowers ... or (c) pursue any other remedy in Bank’s power whatsoever.
      (Smith Delcaration, Exhibit A, ¶ 5).

      . As a matter of New York law, which by consent governs the construction of the Continuing Guaranty, the bank was not even obligated to divide the seized funds evenly between the two defaulted accounts, in view of the fact that the funds were wired to the Fondmetall Foreign Exchange Accounts. Both parties to this action conceded the authority of Long Island Trust Co. v. Vendall, Inc., 35 Misc.2d 464, 466, 231 N.Y. S.2d 131 (Sup.Ct.Nassau Co.1962), in which the court ruled ”[T]he mere fact that there is a surety for one of the debts does not preclude the creditor from applying a payment to the debt [for] which he has no security or less security (citations omitted).”


author: McLAUGHLIN, District Judge.

text:
    Robert ROYALL, Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant.
    No. 83 CV 4863.
    United States District Court, E.D. New York.
    Nov. 25, 1985.

      Andrew Mead Von Salis, Brooklyn, N.Y., for plaintiff.
    Raymond Dearie, U.S. Atty. for E.D.N.Y. by William B. Peterson, Asst. U.S. Atty., Brooklyn, N.Y., for defendant.
   MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

This is an action under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2, et seq. (“Title VII”), as applied to federal employees. 42 U.S.C. § 2000e-16. Plaintiff, who initiated the action pro se but now is represented by counsel, alleges that the denial of his request for a “tour of duty transfer” constituted racial discrimination in violation of Title VII.

Defendant moves to dismiss the complaint, Fed.R.Civ.P. 12(b)(1), (6), or in the alternative, for summary judgment, Fed.R. Civ.P. 56. In response, plaintiff moves to substitute the Postmaster General as defendant. For the reasons set forth below, plaintiff’s motion is granted and defendant’s motion is denied.

Facts

Plaintiff was employed by the defendant, United States Postal Service (“USPS”), from June 25, 1979 to January 20, 1984. He served as a computer mark-up clerk at the General Post Office in Brooklyn, New York. In September 1980, plaintiff began a two-year day school program at Steno-type Academy. In order to attend classes, plaintiff took one hour’s leave without pay each afternoon at the beginning of his work shift.

In April 1982, the duty shifts in plaintiff’s unit were consolidated. As a result, plaintiff’s work schedule conflicted with his studies, and he requested a transfer to another department for the duration of his academic program. Plaintiff’s request was denied and, consequently, he was unable to continue his studies.

Plaintiff contends that around August 1982, he perceived a pattern of discrimination in the USPS’s treatment of transfer requests. Hence, plaintiff contacted the Equal Employment Opportunity (“EEO”) office on August 30, 1982. He first met with an EEO counselor on September 10, 1982, and his final interview occurred on October 27, 1982. At that time, the EEO counselor advised plaintiff both verbally and by written notice that he had fifteen days within which to file a formal complaint. Plaintiff sent a formal complaint of discrimination to the USPS on November 13, 1982, seventeen days after his final interview.

On December 27, 1982, the USPS rejected plaintiff’s complaint on the grounds that he had failed to (1) contact his EEO counselor within thirty days of the alleged discriminatory event, and (2) file his formal complaint within fifteen days of his final interview with an EEO counselor.

On January 17, 1983, plaintiff filed an appeal with the Equal Employment Opportunity Commission’s (“EEOC”) Office of Review and Appeals. On September 22, 1983, plaintiff’s appeal was denied on the ground that he had failed to file a timely complaint within fifteen days of his final interview. On November 4, 1983, plaintiff commenced this action.

Discussion

Compliance with Administrative Regulations

Section 717 of Title VII provides for district court review of employment discrimination claims brought by federal employees. 42 U.S.C. § 2000e-16. A federal employee who seeks to file a court action based on Title VII must first exhaust available administrative remedies, as set forth in Section 717 and 29 C.F.R. § 1613.211 et seq. See Brown v. General Services Ad ministration, 425 U.S. 820, 832, 96 S.Ct. 1961, 1967, 48 L.Ed.2d 402 (1976).

The regulations require that an aggrieved employee seek counseling from an EEO counselor within thirty days of the event giving rise to the charge of discrimination (“the thirty-day rule”). If the matter has not been resolved by the final interview, the counselor shall inform the complainant in writing of the right to file a formal complaint within fifteen days (“the fifteen-day rule”). 29 C.F.R. §§ 1613.214(a)(1)© and (ii). Both time limits may be waived by the agency if the complainant either (a) was not notified or was otherwise unaware of the rule; (b) was prevented by circumstances beyond his control from complying with the rule; or if (c) the agency concludes that other reasons justify noncompliance. 29 C.F.R. § 1613.214(a)(4).

A. THE THIRTY-DAY RULE

Plaintiff was denied his transfer on April 3, 1982. Relying on Delaware State College v. Ricks, 449 U.S. 250, 258, 101 S.Ct. 498, 504, 66 L.Ed.2d 431 (1980), wherein the Supreme Court held that limitations periods on-discrimination claims begin to run when an employee first learns of the personnel action at issue, defendant characterizes plaintiffs August 30, 1982 meeting with the EEOC counselor as several months too late.

Plaintiff alleges, however, that discriminatory transfers of other Postal employees occurred between April 2, 1982 and August 30, 1982, and that he became aware of them within thirty days before his August 30, 1982 request for counseling. See EEO File at 13, 22 and 26. Thus, plaintiff contends that his claim was one of continuing discrimination, and that the limitations period begins anew each time a related discriminatory act occurs. See Valentino v. United States Postal Service, 674 F.2d 56, 65 (D.C.Cir.1982); Brown v. Brown, 528 F.Supp. 686, 689 (D.N.J.1981).

Whether these discriminatory transfers actually occurred and whether plaintiff became (or should have become) aware of them more than thirty days prior to his meeting with the EEOC counselor are questions of fact to be resolved at trial. Thus, defendant’s motion to dismiss the complaint for failure to comply with the thirty-day rule is denied.

B. THE FIFTEEN DAY RULE

It is clear that plaintiff filed his formal complaint with the EEOC two days late. He claims that the additional two days were “necessary for the completion of study and research in an effort to properly present [his] case.” See EEO File at 13. Plaintiff, who it must be remembered was proceeding without a lawyer, argues that his two-day peccadillo should be forgiven under traditional principles of equity.

In Zipes v. TWA, Inc., 455 U.S. 385, 102 S.Ct. 1127, 71 L.Ed.2d 234 (1982), a case involving a Title VII claim against a private employer, the Supreme Court held that the filing of a timely charge of discrimination with the EEOC, like a statute of limitations, is subject to waiver, estoppel, and equitable tolling. Id. at 393, 102 S.Ct. at 1132. Defendant argues, however, that sovereign immunity makes the Zipes holding inapplicable to a government employer. See Sims v. Heckler, 725 F.2d 1143, 1146 (7th Cir.1984); Rice v. Hamilton Air Force Base Commissary, 720 F.2d 1082, 1083 (9th Cir.1983).

Rejecting the sovereign immunity argument, several courts have extended Zipes to federal employers, and have held that the time limitations are subject to equitable tolling in appropriate cases. See Martinez v. Orr, 738 F.2d 1107, 1110 (10th Cir.1984); Kizas v. Webster, 707 F.2d 524, 543 (D.C. Cir.), cert. denied, 464 U.S. 1042, 104 S.Ct. 709, 79 L.Ed.2d 173 (1984); Milam v. United States Postal Service, 674 F.2d 860, 862 (11th Cir.1982); Malave v. Bolger, 599 F.Supp. 221, 223 (D.Conn.1984); But see Sims v. Heckler, 725 F.2d at 1145 (declining to extend Zipes to suits against federal employers). This view, which I adopt, is consistent with Congress’ intent to give federal employees essentially the same rights and remedies as employees in the private sector. Martinez v. Orr, su pra, 738 F.2d at 1110 (citing H.R.Rep. No. 238, 92nd Cong., 2d Sess., reprinted in 1972 U.S.Code Cong. & Ad.News 2137, 2159).

I turn now to the question whether equitable tolling is appropriate in' this case.

The procedural requirements of Title VII must be construed liberally in view of the beneficial purpose of exposing unlawful discrimination. Love v. Pullman, 404 U.S. 522, 526-27, 92 S.Ct. 616, 618-19, 30 L.Ed.2d 679 (1972). Accordingly, the failure to comply perfectly with those requirements need not be fatal to the employee’s cause of action. See Richerson v. Jones, 572 F.2d 89, 95-96 (3d Cir.1978). As one Court has noted:

To require that federal Title VII plaintiffs not only bring their claims to the attention of the agency through an EEO Counselor within thirty days, but also meet a subsequent fifteen-day deadline as a prerequisite to a civil action on the merits of the claim would be to create, in effect, a “double” statute of limitations. While the thirty-day requirement serves the conventional purpose of a limitations provision, in that it requires the commencement of an action within a specified period of time and promotes repose, the fifteen-day requirement serves no interest other than the internal agency interest in speedily processing discrimination claims. To require strict compliance with the fifteen-day requirement would be to impose a “technicality” “particularly inappropriate in a statutory scheme in which laymen, unassisted by trained lawyers, initiate the process.”

Brown v. Brown, supra, 528 F.Supp. at 691-92 (quoting Love v. Pullman, supra, 404 U.S. at 527, 92 S.Ct. at 619).

In this case, basic equity requires that plaintiff’s two-day lapse be forgiven. Defendant’s motion to dismiss plaintiff’s claims on the ground that plaintiff failed to file a formal administrative complaint within fifteen days of his final interview with an EEOC counselor is denied.

Substitution of Parties

Title VII of the Civil Rights Act of 1964, as amended, provides that a federal employee “if aggrieved by the final disposition of his complaint, or by the failure to take final action on his complaint, may file a civil action ... in which ... the head of the department, agency, or unit, as appropriate, shall be the defendant.” 42 U.S.C. § 2000e-16(c). In this pro se complaint, however, plaintiff improperly named the United States Postal Service as the sole defendant.

Plaintiff now requests that he be allowed to file an amended complaint substituting the Postmaster General as defendant. Inasmuch as allowing plaintiff to amend his complaint would clearly be in the interest of justice, it is hereby ORDERED that plaintiff’s request to amend his complaint to substitute the Postmaster General as defendant is granted, and all claims against the United States Postal Service are hereby dismissed. See Guilday v. Department of Justice, 451 F.Supp. 717, 726 (D.Del.1978).

Motion for Summary Judgment

Finally, defendant moves for summary judgment on plaintiff’s claims of discrimination. Fed.R.Civ.P. 56. However, the absence of discovery in this action militates against the grant of summary judgment at this stage of the litigation. Cf. Zahorik v. Cornell University, 729 F.2d 85, 91 (2d Cir.1984). Accordingly, defendant’s motion for summary judgment is denied without prejudice to renewal upon completion of discovery.

Conclusion

Plaintiff’s motion to amend the complaint to substitute the Postmaster General as defendant is granted and the claims against the defendant United States Postal Service are dismissed. In all other respects, defendant’s motions are denied.

The parties are directed to complete discovery in this action by June 13, 1986, and to appear before this Court for a final settlement conference on July 18, 1986 at 10:00 a.m.

SO ORDERED.

      . I need not address defendant’s assertion that plaintiffs claim for breach of contractual seniority rights must proceed through the contractual grievance procedure, since plaintiff has represented to the Court that he is not asserting such a claim.