author: GORDON, Senior District Judge.

text:
    Albert TURNER and Robert Goetzman, Plaintiffs, v. BARBER-SCOTIA COLLEGE; Mable P. McLean, President; and the United Presbyterian Church, USA, William P. Thompson, Stated Clerk, Defendants.
    Nos. C-82-379-S, C-82-625-S.
    United States District Court, M.D. North Carolina, Salisbury Division.
    March 12, 1985.

      Jonathan R. Harkavy, Greensboro, N.C., for plaintiffs.
    Guy F. Driver, Jr., and M. Ann Anderson, Winston-Salem, N.C., for defendants.
   MEMORANDUM OPINION

GORDON, Senior District Judge.

Plaintiffs Albert A. Turner and Robert Goetzman filed separate actions against defendants Barber-Scotia College, Mable P. McLean, and the United Presbyterian Church, U.S.A., on April 2, 1982, and June 3, 1982, respectively. Each alleged that defendants had discriminated against him in terms of his employment and because of his race, in violation of 42 U.S.C. § 1981 and Title VII of the Civil Rights Act of 1964, as amended (42 U.S.C. § 2000e et seq.). Each also alleged that defendants had illegally retaliated against him for pursuing his rights under Title VII.

The cases were consolidated and trial was held on November 26 through 30, 1984. Having fully considered the evidence presented at trial, arguments of counsel, trial briefs, stipulations, and other matters of record, the Court concludes that the plaintiffs have failed to show that defendants illegally discriminated against them because of their race or in retaliation for pursuing their rights under Title VII. Pursuant to Fed.R.Civ.P. 52(a), the Court enters the following Findings of Fact and Conclusions of Law.

I. FINDINGS OF FACT

1. Defendant Barber-Scotia College (BSC) is an institution of higher learning and is an employer within the meaning of Title VII of the Civil Rights Act of 1964. BSC is a predominantly black private school located in Concord, North Carolina, and is owned by the United Presbyterian Church, U.S.A.

2. Defendant United Presbyterian Church, U.S.A. is now known as the Presbyterian Church (U.S.A.), and is a religious institution headquartered in New York City and Atlanta, Georgia. This defendant is guarantor of the mortgages on the real property owned by BSC, and annually pays principal and interest with respect to those mortgages. The Church, until 1977, also provided operating funds to BSC.

3. Plaintiff Albert Turner is a white male who is currently a resident of Houston, Texas. Turner was employed on the faculty of BSC from August 20, 1973, until May 1, 1981.

4. Plaintiff Robert Goetzman is a white male who is currently a resident of St. Louis, Missouri. Goetzman was employed on the faculty of BSC from August 30, 1973, until May 1, 1981.

5. Defendant Mable P. McLean is a black female who has served as President of BSC since 1975.

A. Albert Turner

6. Turner has a Ph.D. in History from Duke University. He was hired by BSC as an Associate Professor of History in 1973, and was promoted to full Professor in 1975. McLean was Academic Dean at the time he was hired, and President when he was promoted.

7. Turner was highly respected by his colleagues and the administration at BSC. In 1975 Turner was made Director of the Center for Political and Social Development, one of five “centers” of study at BSC.

8. During the academic year 1978-1979, a contract dispute arose between BSC and certain of its faculty. BSC had promised salary increases contingent upon enrollment figures, but allegedly failed to abide by its promise. Turner was cosigner, along with Goetzman and certain other faculty members, of letters to the Board of Trustees and the Presbyterian Church concerning the “worsening problems” at BSC. During this same period Turner became involved, as Center Director, in a salary dispute between Mike Wolf, an adjunct professor within his center, and Dr. R. Timothy McDonald, then Vice President for Academic Affairs. On March 1, 1979, Dr. William E. Laukitis, Director of the Center for Humanities, resigned as a result of his own contract dispute and the alleged “hostility” of the administration.

9. During this period, certain of the faculty attempted to unionize the faculty members. Turner was active in the attempt, which failed.

10. In 1980 BSC reorganized from five “centers” to two “divisions.” Turner wanted to be a division chairman but was not appointed. While at one time all the center directors had been white, the two division chairmen, Drs. Fields and Pyles, were both black.

11. On March 21, 1980, Turner was evaluated by Dr. Myland Brown, who from 1979 through 1981 served as Vice President of Academic Affairs. The evaluation was very unfavorable to Turner, and he protested for procedural irregularities and lack of substantiation. The next month Brown criticized Turner for having too few office hours. Turner responded that he had more than six hours per week as required in the Barber-Scotia Policy Handbook, and that he felt he was being harassed. Turner sent a copy of this response to a lawyer. On the same day that Turner responded to his criticism, Brown sent a memo to the Coordinator of Personnel Records stating that Turner had “left is [sic] post prior to the end of his class schedule Friday, April 4, 1980,” and “left the campus at 1:39 p.m. Friday, April 4, 1980.”

12. In July of 1980, Turner informed Brown that as an historian, he was unqualified to teach the Geography course Brown had assigned him the next academic year. Turner notified Brown that another faculty member was qualified, and volunteered to teach another course instead. In his memo asking for an explanation, Brown stated that Turner's “full-time salary for part-time service is not economical and will not be extended beyond Fall and Spring Semesters 1980-1981.” When Turner asked for clarification of this statement, Brown concluded after reconsideration that Turner was, in fact, a full-time faculty member because he received three hours credit as Chief Academic Advisor of Students for Social Sciences Curriculum.

13. On October 21, 1980, Turner filed charges with the Equal Employment Opportunity Commission (EEOC) claiming that he had been discriminated against in terms of salary and other conditions of employment because of his race.

14. On January 22, 1981, Turner was evaluated by Dr. Richard L. Fields, who was then Associate Dean for Special Programs. He gave Turner the highest rating in every category.

15. During February and March of 1981, Turner and Fields had a dispute over Turner’s office hours. Turner accused Fields of harassment.

16. Beginning in March 1981, BSC undertook to revise its curriculum. As a result, a new “core” curriculum was developed, which included Western Civilization. When Dr. Fields informed the faculty that a new teacher would be hired to teach the course, Turner protested that as senior History professor he should be consulted in such hiring and scheduling matters and that he, in fact, was the logical person to teach the course. Turner informed the EEOC that BSC might be planning to terminate him in retaliation for having filed charges.

17. On April 27, 1981, a meeting of the BSC Academic Council was held. The meeting was chaired by Fields, and neither Turner nor Goetzman was present. The Council unanimously approved a recommendation submitted by Brown, who was also absent, to discontinue History and Political Science as majors because of lack of interest among the students. The next day the recommendation was presented to the entire faculty at a meeting presided over by Dr. Fields. Turner raised concern that the manner in which the recommendation had been made violated Southern Association of Colleges and Schools Standard Five, because he was not consulted before the recommendation was made. The recommendation passed sixteen in favor, one abstention, and two against: Turner and Goetzman.

18. Less than one week later, on May 1, 1981, Turner received notice that he would not be rehired. On May 6, 1981, Turner filed charges with the EEOC claiming that his firing was in retaliation for having filed charges previously.

19. For the next school year, Ms. Patricia Buggs was hired as an instructor of History, and she taught the course in Western Civilization. Buggs is less qualified than Turner, having only an M.S. degree, but she worked for only $11,800.00; Turner had earned $17,000.00 his last year at BSC, and claims that with salary increments he would have earned $19,000.00 had he been rehired. Buggs is black.

20. Turner had never been previously fired from an academic position. Following his discharge from BSC he was unemployed except for a part-time realty business for a period of eight months. On January 25, 1982, he accepted a position with Control Data Corporation in Houston, Texas. Until June 1982, when his family could follow him to Houston, he lived there alone and commuted to Charlotte, North Carolina, to visit his family. Turner claims lost wages, travel expenses, consequential damages caused by stress and humiliation, and punitive damages against the defendants. Because of cutbacks at Control Data, Turner has been informed that he will be laid off and asks the Court to reinstate him at BSC.

B. Robert Goetzman

21. Goetzman has a Ph.D. in English from the University of Iowa. He was hired by BSC as an Associate Professor of English in 1973. At that time, and throughout Goetzman’s career at BSC, BSC did not offer a major in English. McLean was Academic Dean when Goetzman was hired and President when he became a full Professor in 1978.

22. Goetzman was highly regarded by BSC students, faculty, and administration. While at BSC he was awarded a Danforth Visiting Faculty Fellowship at Princeton University, won a National Endowment for the Humanities grant, and was in charge of the Honors Program at BSC. Among the many honors bestowed on Goetzman at BSC was chairing the committee in charge of McLean’s inauguration as BSC President.

23. In the fall of 1978, Goetzman agreed to teach a journalism class and publish a school paper. The paper never materialized, however, because BSC could not afford a working press.

24. In February of 1979, Dr. Laukitas, who was Chairman of Goetzman’s “center,” wrote to McLean complaining that Goetzman was not being paid commensurately with his rank. The College had delayed Goetzman’s promotion and then his salary increase due to lack of funds.

25. During the academic year 1978-1979 Goetzman became involved in a contract dispute with BSC over its alleged failure to abide by a promised salary increase. Goetzman was cosigner, along with Turner and other faculty members, of letters to the Board of Trustees and the Presbyterian Church concerning the situation. At one time during this dispute Goetzman was shown on television telling of BSC’s failure to live up to its contract.

26. During this period, Goetzman was active in the failed attempt to unionize BSC.

27. On February 28, 1980, Goetzman was evaluated by Dr. Fields, who came to BSC in 1979. Out of 12 categories on the evaluation form, Fields marked only four, and gave mediocre marks with the caveat that they were based on limited experience with Goetzman. Goetzman protested as unprofessional the vague and unsubstantiated appraisal.

28. On October 21, 1980, Goetzman filed charges with the EEOC claiming that he was being discriminated against because of race. In addition to claiming that he was paid less than black professors, he alleged that since the school had reorganized into divisions, he had been left out of division activities and had been denied a vote on division matters.

29. In January of 1981, Goetzman was given the option of serving on a committee to choose “Miss Barber-Scotia”. He declined. Although BSC later claimed that Goetzman was obligated to accept, this is not true. Also, contrary to BSC’s claims, Goetzman was not responsible for the failure of the school newspaper, he did not refuse to serve in the communications lab or on the special recruitment committee, and he was never paid full-time wages for a part-time courseload.

30. During February and March, 1981, while Goetzman continued to complain about being left out of his division’s activities, administrators, including his division chairman, refused to sign Goetzman’s supply requisitions. It became clear at trial that although Goetzman had been properly informed that Fields was his division chairman, Fields thought that Goetzman was in the other division and never notified him of division functions. Goetzman was a “man without a division.” Goetzman informed McLean that he felt he was being discriminated against and harassed.

31. On March 26, 1981, Goetzman filed charges with the EEOC, alleging that BSC was retaliating against him for filing his previous charges.

32. On May 1,1981, Goetzman was notified that he would not be rehired. On May 6, 1981, BSC placed an advertisement for a replacement for Goetzman in The Chronicle of Higher Education. On June 10, 1981, Goetzman filed further charges with the EEOC.

33. In August of 1981, BSC hired Dr. Majumdar, a Ph.D. in English, and Dr. Meeks, a Ph.D. in Education. They, along with Ms. Reid, who was already on the faculty, and who had an M.S. degree, taught the courses Goetzman had taught. Majumdar is Asian; Meeks is black. They were hired at $14,000.00 per year each. During Goetzman’s last year at BSC he received $17,000.00.

34. Goetzman had never been fired from an academic position before. In September 1981 he accepted a position at Cardinal Newman College in St. Louis, Missouri, where he has taught since. There he has received much acclaim, and in fact has been recommended as President. However, according to Goetzman’s understanding, Cardinal Newman is undergoing serious financial difficulties and its future is uncertain. Goetzman seeks damages for moving expenses, mental anguish and expenses resulting therefrom, punitive damages, and reinstatement at BSC.

C. Barber-Scotia College

35. A jury has decided that Turner and Goetzman did not have tenure at BSC so it is not necessary that BSC prove their firings were based on cause or financial exigency. It is relevant, however, that on July 24, 1981, in response to the EEOC’s request for information, BSC stated that Turner was fired for financial exigency and discontinuance of major, and Goetzman was fired for financial exigency. BSC’s response to the EEOC also shows that all the other faculty members not rehired as of May 1, 1981, had been hired since 1979; Turner and Goetzman were senior professors in their respective departments, each hired in 1973.

36. BSC operates on a very limited budget. In 1977 BSC lost funding from the Presbyterian Church and has since been required by the church to operate in the black. BSC continues to operate with a surplus, and shortly after Turner and Goetzman were fired the number of faculty members at BSC was increased. Therefore, BSC was not financially exigent in the sense that its financial survival required the firings, although the school’s financial situation is difficult.

37. In May of 1981, BSC had eighteen full-time faculty members — thirteen blacks, four whites, and one “other”. In September, 1981, BSC had twenty-six full-time faculty — nineteen black, four white, and three “other”. Although the percentage of white faculty members was smaller, it should be noted that two new whites were hired after Turner and Goetzman were fired.

38. In the spring of 1983, the State Department of Public Instruction Division of Accreditation and Program Approval reported to the State Board of Education concerning BSC. This report was to determine if BSC should retain accreditation so its graduates could become public school teachers. Deficiencies were specifically noted in Western Civilization and certain English courses, courses taught by faculty hired to replace Turner and Goetzman. Accreditation approval was denied.

39. The senior administrators at BSC were aware that Turner and Goetzman had filed charges with the EEOC before Turner and Goetzman were discharged. Any testimony to the contrary by Brown is discredited.

II. DISCUSSION

Plaintiffs claim that they were discriminated against in violation of Title VII and 42 U.S.C. § 1981. The framework of proof under these two provisions is the same. Plaintiffs did not offer direct evidence of discriminatory animus, therefore we must look to the scheme of inferences and presumptions judicially adopted in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973).

To prove their case in this manner, plaintiffs have the burden to make a prima facie showing of discrimination. This requires “proof by a preponderance of the evidence that the plaintiff was not promoted or dismissed ‘under conditions which, more likely than not, were based upon impermissible racial considerations.’ ” Gairola v. Virginia Department of General Services, 753 F.2d 1281, 1286 (4th Cir., 1985) (quoting Young v. Lehman, 748 F.2d 194, 196 (4th Cir.), petition for cert. filed, 53 U.S.L.W. 3568 (U.S. Feb. 1, 1985) (No. 84-1239)). In this context, a prima facie case is “not the equivalent of a factual finding of discrimination ... [r]ather, it is simply proof of actions taken by the employer from which we infer discriminatory animus because experience has proved that in the absence of any other explanation it is more likely than not that those actions were bottomed on impermissible considerations.” Furnco Construction Corp. v. Waters, 438 U.S. 567, 579-80, 98 S.Ct. 2943, 2951, 57 L.Ed.2d 957 (1978).

If plaintiff makes a prima facie showing, then:

the burden of producing evidence shifts to the employer to articulate through the introduction of admissible evidence, a clear and reasonably specific legitimate, nondiscriminatory reason for its action. The articulation of this reason dispels the adverse inference arising from the claimant’s prima facie showing and entitles the employer to a judgment unless the claimant in the final stage of this scheme of proof can show that the stated reasons {i.e., plaintiff is not as qualified) are pretexts for discrimination. Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981); Cuthbertson v. Biggers Brothers, Inc., 702 F.2d 454, 458 (4th Cir.1983). A claimant can show pretext by evidence showing that “a discriminatory reason more likely motivated the employer or ... the employer’s proffered explanation is unworthy of credence.” Texas Department of Community Affairs v. Burdine, 450 U.S. at 256, 101 S.Ct. at 1095, 67 L.Ed.2d at 217. Plaintiff’s evidence must support with “substantial” or “reasonable probability,” as distinguished from “possibility” or “speculation,” plaintiff's contention that defendant’s explanation is pretextual. Fink v. Western Electric Co., 708 F.2d 909, 916 (4th Cir.1983). In this respect, it is not sufficient merely for a claimant to persuade the Court that the employer misjudged [his] qualifications, because an employer is entitled to exercise its own judgment as to qualifications. Texas Department of Community Affairs v. Burdine, 450 U.S. at 259, 101 S.Ct. at 1096, 67 L.Ed.2d at 219; Loeb v. Textron, Inc., 600 F.2d 1003, 1012 n. 6 (1st Cir.1979). The burden of persuasion under this scheme of proof remains throughout on the claimant.

Love v. Alamance County Board of Education, 581 F.Supp. 1079, 1092 (M.D.N.C.1984), aff'd., 757 F.2d 1504 (4th Cir.1985).

Absent direct proof of discriminatory intent, plaintiff can prove the elements of a prima facie case of discrimination by showing:

(i) that he is a member of the protected class; (ii) ‘that he ... was qualified for [the] job [and his performance satisfied his employer’s expectations] ...; (iii) that, despite his qualifications [and performance], he was [dismissed]; and (iv) that, after his [dismissal], the position remained open and his employer continued to seek applicants from persons of complainant’s qualifications.’

Gairola, 753 F.2d at 1286 (quoting Smith v. University of North Carolina, 632 F.2d 316, 332 (4th Cir.1980)). Analyzing the proof in the subject case according to this scheme, plaintiffs fall within a protected racial class. McDonald v. Santa Fe Trail Transportation Co., 427 U.S. 273, 96 S.Ct. 2574, 49 L.Ed.2d 493 (1976). Although both were clearly well qualified for the job, a question arises whether near the end of their tenures (used in the nontechnical sense of the word) at BSC, Turner and Goetzman were performing satisfactorily according to the legitimate expectations of BSC. This is the most difficult question arising in this lawsuit.

For years Turner and Goetzman were two of the top professors at BSC. Their credentials relative to the other faculty members were outstanding, and they earned the respect and admiration of students, faculty, and administration. But all this began to change in the 1978-79 academic year when the contract dispute arose.

According to the testimony of President McLean, who was clearly the most persuasive and credible witness offered by BSC, the contract dispute arose out of a shortage of funding at BSC which left the school unable to abide by its faculty contracts. Because of these and other tensions between administration and faculty, Turner and Goetzman became deeply involved in attempts to unionize the BSC faculty. The attempt failed, and thereafter relations between the two professors and the administration were strained. McLean testified that her vision of the College’s mission is that the faculty members, as a community, work toward the total growth of their charges; eighty per cent of the students at BSC come from families with no previous college experience, and ninety per cent require financial aid. McLean wanted the faculty community to develop the students into well-rounded individuals, including all aspects of social, intellectual, and spiritual development. Turner and Goetzman, she contends, failed to serve as integral parts of that community effort after the aborted union drive.

Turner and Goetzman had a somewhat different vision of BSC. They saw the school as a more professional and purely academic institution. They fought for strict adherence to the guidelines set forth by the Southern Association of Colleges and Schools (SACS), of which BSC was a member, and to the Statement of Principles on Academic Freedom and Tenure of the American Association of University Professors (AAUP), to which BSC ascribes. Turner and Goetzman expressed concern that BSC might lose its accreditation unless stricter attention were paid to these guidelines by BSC. Their motivation was probably a sincere concern for the academic standards and reputation of BSC as an institution. But the administration at BSC, in its continuing efforts to keep the financially troubled school afloat, frequently chose to give such guidelines secondary priority to what it considered its primary goal: the survival of BSC as an institution. The administration saw the efforts of Turner and Goetzman as disruptive and counterproductive; they were making waves in already troubled waters.

Turner and Goetzman began to be seen and treated as outsiders at BSC. They were viewed as conspirators against the faculty community, and were subjected to close and critical scrutiny. Questions were raised about Turner’s office hours, and the courseloads of both professors were challenged. Both professors were reprimanded for failure to participate adequately in extracurricular activities. At trial BSC failed to prove by objective evidence that these criticisms were well founded. However, at least as concerned President McLean, the conviction that Turner and Goetzman were not fulfilling their proper roles in the BSC community was sincere, even if highly subjective.

“When the evaluation of an employee’s performance is based on subjective criteria, and when the evaluators are themselves not members of the protected minority, the challenged employment decision is subject to particularly close scrutiny by the trial judge.” Page v. Bolger, 645 F.2d 227, 230 (4th Cir.) (en banc), cert. denied, 454 U.S. 892, 102 S.Ct. 388, 70 L.Ed.2d 206 (1981). We must remember, however, that the ultimate burden of proving that the decision was improperly motivated rests with the plaintiff. Burdine, 450 U.S. at 253, 101 S.Ct. at 1093.

In determining whether Turner and Goetzman were satisfying BSC’s legitimate expectations, the Court is constrained to give great credence to President McLean’s articulation of what those expectations are. Because BSC is a small, financially limited Christian school that considers its mission a community effort toward the total growth of each student, it is essential that each faculty member work efficiently within that community and be dedicated toward that goal. It is clear that after the contract and labor disputes of 1978-1979, Turner and Goetzman became aloof from that community and diverted from that goal. Whether it was due to a certain elitism on the part of the two professors or resentment on behalf of the administration is not for the Court to say. It is for the Court to determine whether the wedge driven between the two white professors and the predominantly black school was one of racial animus. The Court concludes that it was not.

Plaintiffs ask the Court to infer illegal animus from BSC’s failure to abide by standards and procedures set out by the AAUP, the SACS, the BSC Handbook, and the professors’ yearly contracts. Plaintiffs contend that, unless it were trying to hide something, the school would have lived up to its various obligations. It became clear during trial, however, that the proper inference to be drawn is that BSC was willing to sacrifice those obligations in favor of the survival of BSC and its mission. Plaintiffs failed to prove racial motivation for the school’s actions. If certain other faculty members were treated differently, if some received extra assignments and as a corollary slightly more pay, it was due to their being more philosophically aligned with the administration. That these people were black is a function more of the nature of BSC as a predominantly black institution and not evidence of discriminatory animus.

Thus, the Court is unable to conclude that, at the time they were fired, Turner and Goetzman were fulfilling the legitimate expectations of BSC, and is unable to infer from the evidence that race was a determining factor in the decision to discharge them. Therefore, it is concluded that plaintiffs have failed to establish a prima facie case of racial discrimination.

Plaintiffs have also alleged that the actions taken against them were in retaliation for their having filed charges with the EEOC. Both Turner and Goetzman first filed charges on October 21, 1980, and Goetzman filed his first retaliation claim on March 26, 1981, charging that the administration’s failure to let him participate in divisional meetings and refusal to approve his supply requisitions were retaliatorily motivated. Turner and Goetzman were fired on May 1, 1981, after which they each filed retaliation charges. Although the firings followed closely on the heels of the bringing of charges, plaintiffs have failed to prove a causal connection. Goetzman’s problems with requisitions and departmental assignment were a result of poor communication among the BSC administration and possibly personal animus, but not retaliation for earlier charges. The EEOC charges came in the midst of a larger and more profound controversy, and though they may have added to the growing sense that Turner and Goetzman were troublemakers and not to be trusted, plaintiffs failed to prove that the filing of the charges was the cause of the school’s actions.

In their brief plaintiffs claim that to prove retaliatory discrimination under Title VII and § 1981 they must show as one element a “protected opposition to employment practices or participation in charges of discrimination known by defendant.” For this proposition they cite Grant v. Bethlehem Steel Corp., 622 F.2d 43, 46 (2d Cir.1980), in which claimants succeeded in proving retaliation for filing charges with EEOC. Turner and Goetzman then argue that “they opposed BSC’s employment practices beginning about three years before their discharge when they raised questions about a number of terms of employment and ultimately sought to form a union to handle their grievances.” Plaintiffs’ Post-Trial Brief p. 4. While it is true that after the labor dispute BSC’s attitude toward plaintiffs began to change, the labor activity was not in response to racial policies. Thus, it was not the type of protected activity contemplated within a Title VII or § 1981 retaliation claim, and Grant is inapposite. Any causal connection between the labor dispute and BSC’s treatment of plaintiffs is irrelevant to this lawsuit. It is concluded that plaintiffs have failed to prove that the decision to fire them was in retaliation for plaintiffs’ exercise of their rights to file EEOC charges, and have not made out a prima facie case of retaliatory discrimination.

Because proving a prima facie case is a relatively low threshold burden the Court will add that, assuming arguendo that plaintiffs had satisfied the requirements of a prima facie case of discrimination, BSC has met its burden of articulating legitimate nondiscriminatory reasons for discharging the two professors. These reasons, as already indicated, are extremely subjective and therefore merit close scrutiny. The Court concludes, however, that considering BSC’s unique situation and perspective, the reasons it has articulated are legitimate and have rebutted any inference of discrimination.

Plaintiffs, on the other hand, have failed to show that the reasons articulated for the firings were pretextual and that racial animus motivated the decision. Indeed, some of the school’s allegations about plaintiffs’ conduct were exaggerated, but by claiming tenure, Turner and Goetzman put BSC in the position of trying to prove “cause” for the firings. And while there was animus between the school and the two professors, its roots were professional and philosophical. The administration was in a position to enforce its views and did. Although the Court does not condone its methods, neither will it condemn them as pretexts for racially motivated behavior.

CONCLUSIONS OF LAW

1. This Court has jurisdiction over the parties and over the subject matter of this action.

2. Defendants did not discriminate against plaintiffs Turner and Goetzman because of their race in violation of 42 U.S.C. § 1981 and 42 U.S.C. § 2000e-2(a).

3. Defendants did not discharge the plaintiffs Turner and Goetzman in retaliation for charges filed with the EEOC in violation of 42 U.S.C. § 2000e-3(a).

      . The cases were also consolidated with contract claims that each plaintiff had pending against Barber-Scotia. The issues were whether Turner & Goetzman had achieved tenure at Barber-Scotia, and whether Barber-Scotia had breached its contracts with the professors. The case was heard before a jury, which returned a verdict that the professors did not have tenure but that the school had, in fact, breached notice provisions in their contracts. Plaintiffs were awarded damages accordingly. Turner v. Barber-Scotia College, No. C-83-1033-S (M.D.N.C. Jan. 8, 1985).

        . Only one member of the incoming freshman class had declared History as a major; three had declared Political Science. Between 1975 and 1979 only 14 History majors and no Political Science majors had graduated among the 252 total graduates with declared majors.

      . Once a teacher is awarded tenure, he can only be terminated for cause or financial exigency. These are relatively strict standards.


source: Caselaw Access Project

author: STANLEY S. HARRIS, District Judge.

license: Public Domain

text:
    DISTRICT OF COLUMBIA, Plaintiff, v. OWENS-CORNING FIBERGLAS CORPORATION, et al., Defendants.
    Civ. A. No. 85-140.
    United States District Court, District of Columbia.
    March 13, 1985.

      Jared H. Silberman, Asst. Corp. Counsel, Washington, D.C., for plaintiff.
    John F. Mahoney, Jr., Washington, D.C., for Owens-Coming.
    Timothy C. Russell, Thomas S. Schaufelberger, Washington, D.C., for Georgia Pacific.
    William L. Gardner, Washington, D.C., for U.S. Gypsum.
    Paul Wallaeh, Washington, D.C., for W.R. Grace Co.
   MEMORANDUM OPINION AND ORDER

STANLEY S. HARRIS, District Judge.

This suit involves a claim for damages allegedly sustained as a result of the use of defendants’ asbestos products in plaintiff’s public buildings and facilities. The suit was filed on December 14, 1984, in the Superior Court of the District of Columbia. Named as defendants were 41 identified companies and an additional 200 “John Doe” companies. This case is presently before this Court on defendants’ January 14, 1985, petition to remove and on plaintiff’s January 25 counter-motion to remand the case back to the Superior Court.

The basic provision governing removal is 28 U.S.C. § 1441, which provides in pertinent part:

(a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.
(b) Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

Removal from the Superior Court of the District of Columbia may be achieved in the same manner as actions removed from State courts. 28 U.S.C. § 1451.

The notion of removal is directly linked to original jurisdiction. The decisive issue is whether this Court has subject matter jurisdiction to entertain the claim. Defendants contend that this Court’s subject matter jurisdiction exists pursuant to 28 U.S.C. § 1332 (diversity) and/or 28 U.S.C. § 1345 (agency of the United States). This Court disagrees, and grants the motion to remand.

Diversity

The controlling issue is whether diversity exists between the District of Columbia and the citizens of the various states. Diversity jurisdiction exists when a suit is between citizens of different states. Diversity jurisdiction does not exist when a suit is between a state and a citizen of another state. Ohio v. Wyandotte Chemicals Corp., 401 U.S. 493, 91 S.Ct. 1005, 28 L.Ed.2d 256 (1971). Municipalities are considered citizens of their respective states. Illinois v. City of Milwaukee, Wisconsin, 406 U.S. 91, 92 S.Ct. 1385, 31 L.Ed.2d 712 (1972). Based on these well-established propositions, defendants argue that the plaintiff is a municipal corporation, and as such, is a citizen of the District of Columbia. Defendants’ position is that complete diversity exists in that the District of Columbia is a citizen of itself and the defendants are citizens of other states.

This same argument previously has been advanced and was rejected by this Court. District of Columbia v. L.B. Smith, Inc., of Virginia, 474 F.Supp. 894 (D.D.C.1979); see also Mann v. District of Columbia, 742 F.2d 750 (3d Cir.1984). L.B. Smith involved a situation procedurally similar to the instant action. The defendant in that case sought to remove the action from the Superior Court of the District of Columbia, alleging subject matter jurisdiction here based on diversity. The Court, in granting plaintiff’s motion to remand, stated in part:

The rationale for treating a municipal corporation as a “citizen” of its chartering state has no relevance when that corporation is in reality an alter ego for the “State.” Consequently, the District’s appearance in this suit as a municipal corporation has no bearing on the subject matter jurisdiction of this court. [L.B. Smith, 474 F.Supp. at 897.]

This Court is unpersuaded by the defendants’ argument in this case and finds no reason to deviate from the holding in L.B. Smith. This Court’s subject matter jurisdiction may not be based on a claim of diversity.

District of Columbia as an Agency

Wholly apart from diversity, the defendants advance the novel contention that this Court’s jurisdiction may be founded on 28 U.S.C. § 1345, which reads:

Except as otherwise provided by Act of Congress, the district courts shall have original jurisdiction of all civil actions, suits or proceedings commenced by the United States, or by any agency or officer thereof expressly authorized to sue by Act of Congress.

Defendants propose that, for the limited purpose of 28 U.S.C. § 1345,.the District of Columbia should be categorized as an “agency” of the United States. The definition of agency is set forth in 28 U.S.C. § 451. It provides in part:

The term “agency” includes ... any corporation in which the United States has a proprietary interest, unless the context shows that such term was intended to be used in a more limited sense.

Government National Mortgage Association v. Terry, 608 F.2d 614 (5th Cir.1979), is a case in which there was a genuine issue as to whether the plaintiff was a federal agency. The opinion in it sets forth the standards by which to evaluate agency status for § 1345 purposes. Terry lays out several factors a court may consider in order to make its determination as to whether the United States has the requisite proprietary interest in the entity such that an entity may be accorded agency status under Title 28. Applying those factors to the case at bar would call this Court to focus on the functioning, financing, and management of the District of Columbia, a detailed task which is unnecessary here.

The District of Columbia functions as an independent municipal corporation with broad legislative powers over local matters. Bradshaw v. United States, 443 F.2d 759, 764 (D.C.Cir.1971); Convention Center Referendum Committee v. District of Columbia Board of Elections & Ethics, 441 A.2d 889, 903 (D.C.1981); D.C.Code § 1-102 (1981 ed.). It is true that the plaintiffs functions are of a governmental nature. However, they serve a primarily local proprietary interest rather than a federal or national proprietary interest.

The basic purpose of Congress in delegating certain legislative powers to the District of Columbia Government was to relieve Congress of the burden of legislating on matters essentially local in nature. District of Columbia v. Washington Home Ownership Council, 415 A.2d 1349, 1351 (D.C.1980) (en banc); McIntosh v. Washington, 395 A.2d 744, 753 (D.C.1978); D.C.Code § 1-201 (1981 ed.). Implicit in this delegation is Congress’ recognition that even when it is exercising its legislative authority over the nation’s capital, pursuant to Art. I, § 8, of the United States Constitution, it does so not with any federal interest in mind but instead while acting in its role as a local legislator. District of Columbia v. Thompson, 346 U.S. 100, 104-07, 73 S.Ct. 1007, 1009-11, 97 L.Ed. 1480 (1953). Thus, while the management of the District of Columbia ultimately may rest with Congress, the recipient of the proceeds of this management is the locality of the District of Columbia. (This is particularly true with respect to the public buildings and facilities involved here, all of which are owned and operated by the District of Columbia.) This is to be contrasted with Terry, in which the benefits of Congress’ management of the Government National Mortgage Association were felt on a national level.

Upon consideration of these factors, and of the others set forth in detail in the pleadings filed on behalf of the District of Columbia, the Court declines to adopt defendant’s unrealistic proposition that the United States Government has the proprietary interest in the District of Columbia necessary under 28 U.S.C. § 451 to place the District of Columbia in a federal agency status within the contemplation of 28 U.S.C. § 1345. The jurisdictional basis of this suit thus also may not be founded on that section.

Conclusion

For the foregoing reasons, the Court concludes that jurisdiction is lacking here, and that the removal was improvident. The case, including a certified copy of this Memorandum Opinion and .Order, is remanded to the Superior Court of the District of Columbia pursuant to 28 U.S.C. § 1447(c). Defendants shall pay the plaintiff just costs as determined by the Clerk of this Court.

SO ORDERED.

      . Plaintiff's reply pleading was filed on March 1. The Court has expedited its consideration of this matter, in major part because of a discovery dispute arising from plaintiff’s ongoing abatement of the presence of asbestos. The pleadings on that subject give hope that those problems may have been worked out voluntarily. If they have not been, an early resolution of the discovery problems will be necessary.

      . Of course, there also is a requirement that the amount in controversy exceed $10,000. 28 U.S.C. § 1332(a).

      . For diversity purposes, the word "States" includes the District of Columbia. 28 U.S.C. § 1332(d).

      . Uniformly similar results have been reached by other judges of this Court in unreported orders, and by the United States Court of Appeals for the District of Columbia Circuit in an unreported judgment in Stewart v. District of Columbia, No. 77-1430 (Dec. 7, 1980).

      . In Terry, "Ginnie Mae” was represented by attorneys from the Civil Division of the Department of Justice, another factor reflective of its federal status. Here, of course, the District of Columbia is represented by its Corporation Counsel’s office.


author: URBOM, Chief Judge.

text:
    Dean ROWSE and Helen Rowse, Plaintiffs, v. PLATTE VALLEY LIVESTOCK, INC., a Nebraska corporation, Defendant.
    No. CV84-L-227.
    United States District Court, D. Nebraska.
    March 14, 1985.

      Richard A. Koehler, Geneva, Neb., D.L. Pelton, Papillion, Neb., for plaintiffs.
    Robert M. Cook, Norfolk, Neb., for defendant.
    Sally Johnson, Asst. U.S. Atty., Lincoln, Neb., for intervenor United States of America.
   MEMORANDUM OP DECISION

URBOM, Chief Judge.

Trial was had December 11, 1984, on the plaintiffs’ complaint to enforce a reparations order issued in their behalf by the Secretary of Agriculture under § 309 of the Packers and Stockyards Act of 1921, as amended (codified as 7 U.S.C. § 210). Evidence was taken on both the count seeking enforcement of the order and on a second count seeking damages for interest paid by the plaintiffs on a loan they procured to replace the capital lost in the bad-check transaction underlying the reparations count.

The basic facts and history of the case have been stated previously, see Memorandum and Order on Motion for Summary Judgment and Motion to Dismiss (Nov. 2, 1984), 597 F.Supp. 1055, filing 23, and need not be repeated. In that memorandum I found that the Secretary and this court had subject matter jurisdiction because the alleged activity of the defendant constituted a “practice” under 7 U.S.C. § 208(a). Now the legal issue in the first count concerns whether the defendant’s “practice” was “unjust, unreasonable, or discriminatory” under § 208(a).

The preliminary question is whether there is substantial evidence on the administrative record to support the Secretary’s findings. Rice v. Wilcox, 630 F.2d 586, 591 (8th Cir.1980); 5 U.S.C. § 706(2)(E). If so, then “the findings and orders of the Secretary shall be prima facie evidence of the facts therein stated.” 7 U.S.C. § 210(f). If not, then the Secretary’s order is inadmissible. Mid-South Order Buyers, Inc. v. Platte Valley Livestock, Inc., 210 Neb. 382, 396, 315 N.W.2d 229, 236 (1982). Under the prima facie evidence standard, the defendant-may introduce evidence to rebut the prima facie effect of the order. Id.; cf. ICC v. Atlantic Coast Line Railroad Co., 383 U.S. 576, 594, 86 S.Ct. 1000, 1011, 16 L.Ed.2d 109 (1966) (interpreting similar provision of Interstate Commerce Act, § 16(2)).

Having examined the administrative record, including the hearing transcript, I find there to be substantial evidence to support at least those of the Secretary’s findings of fact that establish a violation of § 208. Therefore, pursuant to § 210(f), the plaintiffs have sustained their burden of going forward with the evidence, assuming the correctness of the Secretary’s interpretation of the law, the second question in the present inquiry.

While the Secretary’s findings of law must be reviewed de novo, Rice, 630 F.2d at 589; 5 U.S.C. § 706, it is a tenet of judicial review of administrative decisions that “[wjhen faced with a problem of statutory construction” courts are bound to give “great deference to the interpretation given the statute by the officers or agency charged with its administration.” Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1964). This principle applies to the problem of fleshing out the meaning of the § 208 prohibition of “every unjust, unreasonable, or discriminatory regulation or practice” with respect to the furnishing of stockyard services. Hays Livestock Commission Co. v. Maly Livestock Commission Co., 498 F.2d 925, 930 (10th Cir.1974); United States v. Donahue Brothers, 59 F.2d 1019 (8th Cir.1932). The Secretary’s interpretation of the facts, to the effect that the defendant engaged in an unjust and unreasonable practice violative of § 208, is to be accorded great deference if the factual findings are supported by substantial evidence. Id. at 931; Van Wyk v. Bergland, 570 F.2d 701, 705 (8th Cir.1978). As the court noted in Hays Livestock, this level of deference arises because the statute fails to define the critical phrase, leaving its meaning to “ ‘be determined by the facts of each case within the purposes of the Packers and Stockyards Act,’ ” and because “ ‘the responsibility for efficient regulation of market agencies and packers lies with the Secretary of Agriculture ____’” 498 F.2d at 930 (quoting Capitol Packing Co. v. United States, 350 F.2d 67, 72, 76 (10th Cir.1965)).

Several sections of the Nebraska Uniform Commercial Code clarify the legal rights of the parties: the Rowses; Ken Kaba, the buyer; and the defendant, Platte Valley, the consignment seller. “Where payment is due and demanded on the delivery to the buyer of goods or documents of title, his right as against the seller to retain or dispose of them is conditional upon his making the payment due.” Neb.Rev.Stat. UCC § 2-507(2) (Reissue 1980). “[P]ayment by check is conditional and is defeated as between the parties by dishonor of the check on due presentment.” UCC § 2-511(3).

(1) ... A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though
(b) the delivery was in exchange for a check which is later dishonored, or
(d) the delivery was procured through fraud punishable as larcenous under the criminal law.
(2) Any entrusting of possession of goods to a merchant for purposes of sale who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business.

UCC § 2-403.

Under these rules, the Rowses had the right to recover the cattle when they discovered that Kaba’s check had been dishonored. Peck v. Augustin Brothers Co., 203 Neb. 574, 279 N.W.2d 397 (1979); see J. White & R. Summers, Handbook of the Law under the Uniform Commercial Code § 3-6, at 115 (2d ed. 1980). The fact that after their dishonor Dean Rowse allowed Kaba a short time to make good the checks did not change the rights between the Rowses and Kaba, retroactively alter the state of title, or turn the sale into a credit transaction. By the time the Rowses learned of the dishonor, the cattle had been sold on consignment by Platte Valley for Kaba’s account, and the various purchasers obtained good title even though Kaba’s title was only conditionally valid at the time of the auction sale and even though the condition failed. As an agent for Kaba, selling on commission, Platte Valley’s rights could rise no higher than those of its principal. Mid-South Order Buyers, Inc. v. Platte Valley Livestock, Inc., 210 Neb. 382, 395, 315 N.W.2d 229, 236 (1982). As against the Rowses, neither Kaba nor his agent was entitled to the proceeds, because Kaba’s rights were only conditional until the checks cleared. However, at the time of the sale and disposition of proceeds Kaba’s checks had not yet been dishonored. Therefore, no conversion action would lie under state law, at least as to the portion of the proceeds sent to Dale Van Wyk, because the Rowses did not then have an immediate right to possession. Allen v. Dealer Assistance, Inc., 207 Neb. 455, 299 N.W.2d 744 (1980).

Whether Platte Valley’s distribution of the sale proceeds to itself and Dale Van Wyk, a creditor of Kaba, or its retention of the portion of the proceeds it kept to offset Kaba’s debt to it, after the Rowses’ possessory interest was revived or after the Rowses demanded the money, would be actionable under state conversion law is relevant here only to the extent that the question casts light on what an unjust practice is under the federal law — the plaintiff’s suit is based on the federal law rather than any state law.

Regardless of the legality of Platte Valley’s original distribution of the proceeds, its retention of a portion after being informed of the Rowses’ claim was unjustified. At that point Platte Valley’s president, Gene Lenhart, knew that the Rowses had not been paid and that they were the true owners of the cattle, as between them and Kaba, rendering ineffective Kaba’s oral approval of Platte Valley’s distribution of the proceeds. Platte Valley should have paid to the Rowses the portion of the proceeds still in its hands once Lenhart learned the full facts, as it had done for the Rezac Brothers after the Rezacs complained that Kaba had not paid them for cattle he purchased from them and sold through Platte Valley.

The proceeds from the cattle sale were trust funds in Platte Valley’s hands. 9 C.F.R. § 201.42. A trustee may not offset a debt owing to the trustee individually and not as trustee. Mid-South Order Buyers, Inc. v. Platte Valley Livestock, Inc., 210 Neb. 382, 394, 315 N.W.2d 229, 235 (1982). The conversion or commingling of trust funds is an unjust practice under the Packers and Stockyards Act. United States v. Donahue Brothers, 59 F.2d 1019 (8th Cir.1932).

The majority rule at common law is that an auctioneer who sells goods on behalf of a principal who lacks valid title, or who holds it subject to a mortgage or other lien, or who for other reasons has no right to dispose of it, is liable to the true owner, lien holder, or conditional vendor for conversion, despite the auctioneer’s good faith and lack of knowledge of the competing interest. Annot., 96 A.L.R.2d 208, 210 (1964). The Nebraska Supreme Court adopted the majority rule in State Securities Co. v. Svoboda, 172 Neb. 526, 110 N.W.2d 109 (1961). The state legislature responded by enacting Neb.Rev.Stat. § 69-109.01, which exempts from liability an auctioneer who in good faith and without notice of a “security interest” sells personal property at auction for a principal whose identity has been disclosed, if the auctioneer has no interest and only acts as an intermediary of the owner. The statute did not abrogate the common law rule, but only provided an exemption if the statutory conditions are met. State Securities Co. v. Norfolk Livestock Sales Co., 187 Neb. 446, 449, 191 N.W.2d 614, 617 (1971) (also holding that the Packers and Livestock Act did not exempt livestock auctioneers from liability for conversion under Svoboda).

The Secretary found that the defendant “did not, so far as the records shows, make the disclosure of the principal’s identity required by” § 69-109.01. As the court held in Norfolk Livestock Sales, disclosure must be made by some form of public announcement prior to the sale, and simple notation on documents open to public inspection does not suffice. At trial Lenhart testified that at the auction he did announce Kaba’s name as the seller of the cows. Even if this is sufficient to rebut the Secretary’s finding on that point, the Rowses, as the Secretary observed, were defrauded cash sellers upon the dishonor of the checks, not holders of a security interest. The right to reclaim created by UCC § 2-507(2) “is a right to undo the transaction, not a right to ‘secure’ payment of the price as required by the definition of ‘security interest’ ” under UCC § 1-201(37). Guy Martin Buick, Inc. v. Colorado Springs National Bank, 184 Colo. 166, 519 P.2d 354, 359 (1974) (en banc); cf. In re Mel Golde Shoes, Inc., 403 F.2d 658 (6th Cir.1968) (seller’s right to reclaim goods from insolvent buyer under UCC § 2-702(2) is not a “security interest”). Therefore, Neb.Rev.Stat. § 69-109.-01 does not override the Svoboda rule concerning an auctioneer’s liability to the true owner notwithstanding lack of actual notice of the competing claim.

Under the regulations promulgated by authority of 7 U.S.C. § 228(a), a market agency may not pay the net proceeds from a consignment sale to anyone other than the consignor or shipper unless “(1) such market agency has reason to believe that such person is the owner of the livestock, (2) such person holds a valid, unsatisfied mortgage or lien upon the particular livestock, or (3) such person holds a written order authorizing such payment executed by the owner at the time of or immediately following the consignment of such livestock____” 9 C.F.R. § 201.39(a). Neither recipient of the net proceeds from the sale of the Rowse cattle was the owner or a mortgage or lien holder with respect to those 108 cows. Though Kaba obtained oral permission from Kaba, the apparent owner, he knew that Kaba had recently failed to pay for cattle he had purchased from three others, including Platte Valley itself.

Platte Valley argues that Lenhart could not have been expected to discover the Rowses’ continued interest in the cattle at the time of the auction sale or distribution of proceeds. It is true that on February 28 the checks had not yet bounced and that no one, except perhaps Kaba and his bank, knew that they might. Also, all of the specific information that Lenhart had about the Rowse cattle was consistent with the idea that Kaba had paid for them. However, in light of what he knew about Kaba’s recent failures to pay for cattle, Lenhart should have asked Kaba if the Rowses had been paid. Nothing in the record indicates that such an inquiry would have been fruitless. Had Kaba told Len-hart that the cattle proceeds were necessary to make the checks good, Platte Valley should have paid them either to Kaba, so that the checks would be covered, or directly to the Rowses, either of which would have been allowed by the regulation quoted above. Had Kaba assured Lenhart that there was no problem with the payment to the Rowses, then Platte Valley could not be charged with knowledge of the flaw in Kaba’s title.

In the cases most closely analogous to the present suit, the market agencies actually knew before they offset the proceeds that the cattle sellers had not been paid by the consignors. E.g., Rice v. Wilcox, 630 F.2d 586 (8th Cir.1980); Mid-South Order Buyers. However, in Rice the hearing officer had noted that it was an unjust practice for the market agency to retain the proceeds in payment of the consignor’s debts owed to it with knowledge that the consignor had not paid the owner, or “ ‘with timely notice of sufficient facts to cause a reasonably prudent person to make a further investigation to ascertain whether there was an adverse interest in the cattle.’ ” 630 F.2d at 588 n. 2. The Secretary reiterated that interpretation of the statute in the present case.

Aside from the rule that the Secretary’s interpretation is entitled to great weight, the view that actual knowledge on the part of the market agency is not necessary for a violation of § 208 is supported by the policies behind the Act. One purpose of the Act is “to protect the owner and shipper of live stock, and to free him from the fear that the channel through which his product passed, through discrimination, exploitation, overreaching, manipulation, or other unfair practices, might not return to him a fair return for his product.” United States v. Donahue Brothers, 59 F.2d 1019, 1023 (8th Cir.1932); accord Mid-South Order Buyers, 210 Neb. at 394, 315 N.W.2d at 235 (“One of the apparent purposes of this regulation is to prevent the market agency from using the trust account to finance its own operations. Concomitant with that purpose is the objective of assuring that the seller of the cattle is paid.”). The offset of a debt unrelated to the transaction and the payment of sale proceeds to one of the market agency’s president’s friends, who had become a creditor of the consignor in an unrelated transaction, were exercises of dominion over the proceeds that were inconsistent with the agency’s limited roles as the auctioneer of the cattle and the trustee of the proceeds. The Secretary’s interpretation of the disbursement regulation limits the agency’s power to make decisions about who is entitled to proceeds, leaving those decisions instead in the hands of those in a better position to know the relevant facts. It promotes stability and certainty in the marketing of livestock by eliminating the ability of the market agency to favor some of the consignor’s creditors, including itself, over others, and by restricting the payment of the proceeds to those directly involved with the cattle from whose sale they arose. Under this view, when the market agency puts on judicial robes to weigh the competing claims of the consignor’s creditors, it assumes the risk of personal liability if it chooses to make a payment not authorized by the regulation and it turns out that payment according to the regulation was necessary to pay the seller.

The fact that Kaba orally authorized the payment does not change the outcome. First, his right to dispose of either the cattle or the proceeds was conditional upon his check being honored. When the payment failed, and the Rowses right to reclaim arose, Kaba’s authorization became voidable, and was indeed voided when the Rowses claimed the proceeds. Second, it was not “a written order authorizing such payment executed by the owner.” 9 C.F.R. § 201.39(a)(3). It was not written, and Kaba was only the conditional owner. Third, as the Secretary found, Lenhart was not entitled to rely on Kaba’s authorization, in light of what he knew about Kaba’s recent financial dealings, without inquiring into whether the proceeds were needed to pay for the cattle. Deference to the Secretary’s interpretation of the duties of market agencies vis-a-vis cattle sellers is appropriate on this point.

The evidence presented at trial by the defendant to rebut the plaintiff’s prima facie case does not change the legal result. The new evidence reinforces the fact that Lenhart did not actually know that the Rowses had not been paid, but it also reiterates that Lenhart did not inquire of Kaba about whether the Rowses had been paid, although he knew that Kaba had failed to pay for cattle on three other recent occasions. The evidence shows that the proceeds from the sale of the Rowse cattle were not disbursed until after Lenhart obtained oral permission from Kaba and it raises a question as to whether Lenhart told Kaba what would happen to the proceeds before he asked his approval or asked him first; however, given the view I have taken of the law and the weight I have accorded the Secretary’s interpretation of the market agency’s duties, it would make no difference even if I were to take Lenhart’s testimony as true on every point.

Therefore, to the extent that it finds the defendant liable for the gross proceeds of the sale of the Rowse cattle, the reparations award is supported by substantial evidence and is based on a correct interpretation of the law, and the defendant has failed to rebut the plaintiff’s prima facie case.

Two questions remain: First, is the reparations order’s award of prejudgment interest authorized by law? Second, does the court have jurisdiction to award the plaintiffs damages for actual interest expenses, though the reparations award did not do so, and, if it does, have the plaintiffs proven their entitlement to such damages?

The underlying obligation of the defendant arose from federal law, so federal law applies to the question of damages. Cf. Textile Workers v. Lincoln Mills, 353 U.S. 448, 456, 457, 77 S.Ct. 912, 917, 918, 1 L.Ed.2d 972 (1957); Clearfield Trust Co. v. United States, 318 U.S. 363, 366-67, 63 S.Ct. 573, 574-75, 87 L.Ed. 838 (1943); United States v. Bass, 215 F.2d 9, 15 (8th Cir.1954). In the absence of a federal statute allowing or barring recovery of interest, it is for the federal courts to determine the appropriate measure of damages, including interest, for non-payment of the amount found to be due. Royal Indemnity Co. v. United States, 313 U.S. 289, 296, 61 S.Ct. 995, 997, 85 L.Ed. 1361 (1941). The courts fashion rules granting or denying prejudgment interest on particular statutory obligations by an appraisal of the congressional purpose in imposing them and in light of general principles of damages. Rodgers v. United States, 332 U.S. 371, 373, 68 S.Ct. 5, 6, 92 L.Ed. 3 (1947).

[A] persuasive consideration in determining whether such obligations shall bear interest is the relative equities between the beneficiaries of the obligation and those upon whom it has been imposed. And this Court has generally weighed these relative equities in accordance with the historic judicial principle that one for whose financial advantage an obligation was assumed or imposed, and who has suffered actual money damages by another’s breach of that obligation, should be fairly compensated for the loss thereby sustained.

Id. The award of interest is discretionary with the court and turns on considerations of practical justice and fairness rather than a rigid theory of compensation. Bass, 215 F.2d at 14, 15. It is not necessarily a bar to the allowance of interest that a claim has not been liquidated. Id. at 15. In approving an interest award by the Interstate Commerce Commission in Louisville & Nashville Railroad Co. v. Sloss-Sheffield Steel & Iron Co., 269 U.S. 217, 240, 46 S.Ct. 73, 81, 70 L.Ed. 242 (1925), the Court said, “The mere fact that the validity of the claim is disputed and that the amount recoverable is uncertain obviously does not bar the recovery of interest.” Nebraska’s restrictive rules on liquidation do not control the availability of prejudgment interest under either the Interstate Commerce Act or the Packers and Stockyards Act.

One purpose of prejudgment interest is to “help[] compensate plaintiffs for the true cost of money damages they have incurred.” General Facilities v. National Marine Service, Inc., 664 F.2d 672, 673 (8th Cir.1981). “[Ejquitably, particularly in these days of high interest rates, the wronged party should ordinarily collect prejudgment interest where the damages can be computed with reasonable precision.” Nebraska Public Power District v. Borg-Warner Corp., 621 F.2d 282, 287 n. 10 (8th Cir.1980). Courts interpreting the same statutory language at issue here— “shall be liable to the person or persons injured thereby for the full amount of damages sustained in consequence of such violation,” compare 7 U.S.C. § 209(a) with former 49 U.S.C. § 8 (repealed 1978))— have long approved of the Interstate Commerce Commission’s policy of awarding interest on reparations orders from the date of exaction of excessive freight charges. E.g., Louisville & Nashville Railroad Co. v. Sloss-Sheffield Steel & Iron Co., 269 U.S. 217, 46 S.Ct. 73, 70 L.Ed. 242 (1925); Missouri Pacific Railway Co. v. C.E. Ferguson Sawmill Co., 235 F. 474 (8th Cir.1916). In the present case, the Secretary awarded prejudgment interest at a 13 percent rate, apparently pursuant to a policy published at 45 Fed.Reg. 37872 (June 5, 1980) (changing the long-standing rate of 8 percent).

The award of prejudgment interest on at least some part of the reparations award pursuant to Department of Agriculture policy was legal. I shall address later the question of whether interest is appropriate on all of the award. The inquiry now turns to the claim for actual interest expenses.

The plaintiffs’ second cause of action is based on evidence presented at trial that the Rowses wrote a check to the First National Bank of Atkinson, in reliance on the validity of the Kaba checks, to pay off part of their indebtedness to the bank; that the Rowses’ account contained insufficient funds to cover their check to the bank once it became known that Kaba’s checks, which they had deposited in their account, had been dishonored; that the Rowses took out a new loan for $58,000 to replace the funds represented by Kaba’s checks and to cover their check to the bank; that the replacement loan has been refinanced subsequently, but remains unpaid; and that the Rows-es have incurred substantial interest expenses under the replacement loan at rates varying from 13% to 17V2 percent. As of the date of trial, the unpaid balance of principal and interest was $117,067.75, and interest was accruing at the rate of $41.41 per day.

According to the administrative record, the facts concerning the making of the replacement loan and its amount were brought out on cross-examination of a bank officer during his deposition, but no evidence was elicited concerning the interest paid on that loan. The reparations complaint before the Secretary sought the amount of the net sales proceeds from the auction of the Rowse cattle “plus daily interest thereon from February 27, 1980, forward,” but did not allege the existence of the replacement loan or seek damages for the interest incurred on that loan. The plaintiffs’ briefs to the Secretary, filed approximately two years after the replacement loan was taken out, did not mention that loan or seek damages for interest actually paid as a result of the defendant’s violation of the Act; instead, the only reference to interest was a plea in the summary of the reply brief for the net sales proceeds and the commission, “and with interest on this total amount at the rate of at least 12% from February 27, 1980, forward,” without mentioning the authority for the 12 percent rate. The reparations order mentioned the execution of the promissory note to the Rowses’ bank after Kaba’s checks bounced, but made no mention of interest incurred on that loan. Instead, the Secretary, without explanation, included in the order an award of interest at the rate of 13 percent from April 1,1980, until paid. The apparent basis of the interest award was 45 Fed.Reg. 37872 (June 5, 1980), rather than damages for actual interest expenses. Therefore, it is apparent that the issue of recovery of actual interest expenses as an item of damages for violation of the Act was not presented to the Secretary. Evidence of the amount of actual interest expenses and argument that they should be included in the measure of damages were first presented to this court.

The defendant argues that this court lacks jurisdiction to modify the reparations award by giving the plaintiffs additional relief, because the Secretary declined to grant actual interest damages by awarding interest at a flat rate instead and, because the plaintiffs declined to seek judicial review under 5 U.S.C. §§ 702 and 703. As discussed above, I do not agree that the issue of actual interest was presented to the Secretary, although some of the evidence relevant to the claim came out in a different context. Nor do I agree that the court lacks subject matter jurisdiction to award more relief than was given by the Secretary. The Administrative Procedure Act is not an independent jurisdictional provision; rather, 28 U.S.C. § 1331, “subject only to preclusion-of-review statutes created or retained by Congress, [confers] jurisdiction on federal courts to review agency action.” Califano v. Sanders, 430 U.S. 99, 105, 97 S.Ct. 980, 984, 51 L.Ed.2d 192 (1977). The procedure for review is provided by the Administrative Procedure Act, unless overridden by a more specific statute, but jurisdiction comes from the general statute granting district courts jurisdiction over federal questions.

The cases cited by the defendant are inapposite. United States v. ICC, 337 U.S. 426, 69 S.Ct. 1410, 93 L.Ed. 1451 (1949), merely applied the traditional election-of-remedies doctrine to the remedy section of the Interstate Commerce Act. The court restated what 49 U.S.C. § 9 said explicitly: although damages for a violation of the Act may be sought either by complaint to the ICC or by court action, if a remedy is pursued in one forum, a fresh action in the other forum is barred. However, the court pointed out that the election rule does not prevent a shipper whose ICC complaint is denied from seeking court review of the denial under 28 U.S.C. § 1336. While there is no specific jurisdictional statute for review of denial of Packers and Stockyards Act complaints, none is necessary since the elimination of the $10,000 jurisdictional requirement from § 1331. In Crain v. Blue Grass Stockyards Co., 399 F.2d 868 (6th Cir.1968), the court held that a plaintiff under who chose under 7 U.S.C. § 209(b) to seek a court remedy directly should have brought an administrative claim first because it was based on issues within the “primary jurisdiction” of the Secretary. In United States v. Bass, 215 F.2d 9 (8th Cir.1954), the court held that the district court could enforce an order of the Reconstruction Finance Corporation but could not modify it because a statute provided that only the Emergency Court of Appeals had jurisdiction to review such orders.

In the present case, the plaintiffs did go to the Secretary first and now are seeking to enforce the portion of the order in their favor and to modify it to add relief not sought from the agency. While it would have been preferable for the actual interest claim to have been presented to the Secretary in the reparations proceedings, on balance the interests of the government and the defendant are not weighty enough to require either remand of that portion of the claim or its dismissal on the basis of waiver. The actual interest claim is wholly dependent on the finding of an unjust practice, the same question underlying the relief granted by the Secretary. The underlying question certainly was one properly committed to initial determination by the agency as a matter within its primary jurisdiction. Interpretation of the Act and of the agency’s own regulations are matters best addressed first by the agency because of its special knowledge and expertise in the area. However, the question of the proper remedy in a reparations proceeding does not invoke such special administrative expertise. Under 7 U.S.C. § 209 the defendant is liable for “the full amount of damages sustained in consequence of such violation.” While setting standards for the just and reasonable rendering of stockyard services may be a matter committed to the agency’s domain, determining questions of damages and causation has been a judicial function for centuries. Section 210(f) requires de novo judicial review of questions of law. While deference is due the Secretary on such mixed question of fact and law as whether the facts of the case show an “unjust practice,” no such deference would be due on the mixed fact/law questions of causation and compensation. The review scheme contemplates that the court would take evidence to rebut or support the Secretary’s factual findings; therefore, it is not necessary to give the agency a chance to develop the factual record on the actual interest issue.

Under the circumstances present here, I see no danger to the integrity of the agency’s adjudicative process if these plaintiffs or others are allowed during the enforcement action in court to seek items of damage they did not seek at the agency level. There is no procedural advantage to sandbagging the claim. To the contrary, had the defendant chosen to pay the award rather than compel the plaintiffs to go to court to enforce it, the plaintiffs would have lost any opportunity to present the omitted claim later. The incentive is to present the entire case to the Secretary. Also, the defendant has pointed to no prejudice to its ability to defend against the actual interest claim as a result of the plaintiffs waiting (or forgetting) to bring it until now.

The remedy provisions of the Packers and Stockyards Act are significantly different from those of the National Labor Relations Act. The latter give the regulatory agency alone the power to hear complaints of unfair labor practices, to order a violator to cease and desist the practice, “and to take such affirmative action ... as will effectuate the policies of this subchapter.” 29 U.S.C. § 160(c). Review from the board’s order is to the court of appeals on the agency record, findings of the board are conclusive as to the facts, although the court may remand to the board for additional evidence, and the appellate court may not consider any objection that was not urged before the board. § 160(e). In light of this scheme, the Supreme Court has held that the court of appeals erred when it modified the board’s cease-and-desist order by adding reimbursement of litigation expenses and excess organizational costs resulting from the defendant’s illegal conduct, because the question of what remedies will best effectuate the purpose of the labor laws was committed by Congress to the board. NLRB v. Food Store Employees Union, 417 U.S. 1, 94 S.Ct. 2074, 40 L.Ed.2d 612 (1974). By contrast, the remedy provision involved here simply allows those injured by a violation to recover resulting damages as a remedy cumulative to, rather than in place of, existing common law or statutory remedies and gives concurrent jurisdiction to the Secretary and the district courts (subject to the judicial gloss of the primary jurisdiction doctrine). The Act is structured so that its purposes are furthered by compensation per se, rather than on a case-by-case discretionary basis. The court may award all compensation to which the plaintiffs are entitled even though a portion was not considered by the Secretary.

Therefore, the actual interest claim is properly before the court. The next question is whether the plaintiffs should be allowed actual interest damages rather than the flat rate allowed by the Secretary. This inquiry goes not to whether the Secretary made an error of law or acted arbitrarily, but to whether the plaintiffs have proven their second cause of action. If they are entitled to recover actual interest, the prejudgment interest component of the reparations order must fall as duplicative rather than as erroneous.

Much of what I have said about why a prejudgment interest award is proper for compensating victims of unjust stockyards practices also supports my conclusion that actual interest should be awarded when that provides a more accurate measure of the plaintiffs’ losses. The Secretary’s notice of a proposed increase from 8 to 13 percent in the prejudgment interest rate for reparation awards noted that the reason for the change was “to bring such rate more in line with current rates of interest.” 45 Fed.Reg. 19590 (March 26, 1980). The purpose of prejudgment interest in general is to allow compensation more closely approximating the plaintiff’s actual losses than would mere payment of the amount originally withheld. The Act itself calls for award of the plaintiff’s “full amount of damages.” Where the evidence of the actual amount of interest paid in consequence of the violation is available, that measure more accurately compensates the plaintiffs than does the flat rate of the agency’s policy. “ ‘Where there is more than one method of estimating damages, that method which is most definite and certain should be adopted____ [T]hat one should be chosen which best achieves the fundamental purpose of compensation to the injured person for his loss____’” Big Rock Mountain Corp. v. Stearns-Roger Corp., 388 F.2d 165, 170 (8th Cir.1968).

Under 7 U.S.C. § 209(a), the plaintiffs are entitled to their full damages “sustained in consequence” of the violation. While principles of restitution might support allowing interest only on the portion of the net sales proceeds retained by the defendant, because the defendant has benefitted from retention of those funds, the purpose of compensation inherent in the statute supports allowance of interest on all of the net sales proceeds. It certainly was foreseeable to a man with Lenhart’s experience in the cattle business that a rancher who parted with nearly $58,000 worth of cattle without being paid would have to borrow to cover the loss and would thereby incur interest expenses. The plaintiffs have adequately proven, through the testimony of Dean Rowse and Daniel Kramer, that the sole cause of the $58,000 loan in early April 1980 was to replace agricultural operating funds lost because of the failure of the defendant to pay out the proceeds of the sale according to the federal regulations.

However, interest is not recoverable on all $58,000. The net sales proceeds that should have been paid to Kaba or the Rowses amounted to $57,184.33. The Secretary also required forfeiture of the commission, but this amount is more in the nature of a penalty for the violation of the Act than compensation for the plaintiffs’ injuries. Had the defendant adhered to the regulations, the defendant would have been entitled to retain the commission and that amount would not have been available to the plaintiffs. Prejudgment interest generally is not available on penalties. United States v. West Texas Cottonoil Co., 155 F.2d 463, 466-67 (5th Cir.1946). The amount of the loan over the amount of the sales proceeds cannot be said to have been caused by the defendant’s violation.

Therefore, the only portion of the award against which prejudgment interest could be charged as compensation for actual interest expenses is the amount of the net sales proceeds. The evidence is clear that no part of the $58,000 loan has been repaid and that no interest on the balance has been paid. That allows calculation of the amount of the interest properly 'attributable to the retention of the net sales proceeds. As of the date of trial, December 11, 1984, there had accrued $59,067.75 in interest on the full $58,000 principal. The proportion attributable to the $57,-184.33 net sales proceeds is $58,237.06. Since the trial, interest on the entire balance has been accruing at a rate of $41.41 per day. This converts to a rate of $40.83 attributable to the net sales proceeds. Though the forfeited commission of $692.80 should not draw interest before its forfeiture, the levy of interest against it at the rate set by agency policy, 13 percent, is appropriate from the date of the Secretary’s order — from that point the interest is more akin to postjudgment interest, but the statutory rate of 28 U.S.C. § 1961 does not apply because the award was not by a district court. After the date of judgment, interest will accrue on the entire judgment at the rate set by 28 U.S.C. § 1961.

In summary, the damages consist of the following amounts:

' —$57,184.33 in compensatory damages for failure to pay the net sales proceeds in accordance with regulations;

—$692.80 as forfeiture of the commission on the sale of the cattle;

—$58,237.06 in damages for actual interest expenses until the date of trial, December 11, 1984, plus $40.83 for each day from December 12, 1984 until the date of final judgment;

—Simple interest on the forfeited commission at the rate of 13 percent per annum from the date of the Secretary’s order, February 3, 1984, until the date of final judgment.