source: Caselaw Access Project

author: REYNOLDS, Chief Judge.

license: Public Domain

text:
    BROAN MFG. COMPANY, INC., Plaintiff, v. WESTINGHOUSE ELECTRIC CORP., Defendant.
    Civ. A. No. 84-C-5.
    United States District Court, E.D. Wisconsin.
    Nov. 15, 1984.
    See also D.C., 101 F.R.D. 773.
    Stephen T. Jacobs, Timothy A. Bascom, Milwaukee, Wis., for plaintiff.
    Richard C. Ninneman, Marcia R. Schwartz, Barbara J. Janaszek, Milwaukee, Wis., for defendant.
   DECISION AND ORDER

REYNOLDS, Chief Judge.

The plaintiff in this diversity action seeks compensatory and declaratory relief for allegedly defective electric motors manufactured by the defendant and incorporated into attic fans sold by the plaintiff. Currently pending before the court are defendant’s motion for judgment on the pleadings seeking dismissal of the plaintiffs tort claims, plaintiff’s motion to compel production of documents, and defendant’s motion for modification of the scheduling order.

The plaintiff seeks tort remedies in its fourth and fifth claims for relief which allege negligence and recklessness. The defendant seeks judgment on the pleadings dismissing these tort claims based on this Court’s recent ruling that under Wisconsin law, a manufacturer is limited to theories of warranty and contract law to recover against the suppliers of its component parts. Twin Disc, Inc. v. Big Bud Tractor, Inc., 582 F.Supp. 208 (E.D.Wis.1984). Accepting the allegations of plaintiff’s complaint as true for the purposes of this motion, the defendant is entitled to judgment dismissing the tort claims as a matter of law.

The plaintiff argues that without tort remedies to enable a manufacturer to recover recall costs from the supplier of a defective component, the manufacturer has some incentive to risk consumer injury. Consequently, the plaintiff urges the court to recognize an exception to Big Bud to enable the manufacturer to enforce the supplier’s duty to consumers to refrain from negligent or reckless conduct.

The duties imposed on sellers by the Consumer Product Safety Act, 15 U.S.C. § 2051 et seq., adequately protect the public interest. Consequently, there is no need to insert tort remedies into commercial disputes between manufacturers and component suppliers. This rule applies to the negligence and recklessness claims, since both are premised on duties owed to consumers.

The plaintiff’s discovery motion seeks to compel the production of diagrams and instructions for the wiring of a more complex Westinghouse motor to show that a higher standard of care is followed in wiring that motor than is followed in wiring the motor supplied to Broan. The motion will be denied. The plaintiff has failed to demonstrate that the motors are sufficiently similar to permit meaningful comparison. In addition, comparison of.the standard of care followed in wiring these motors is not relevant to the plaintiff’s contract and warranty theories.

In light of the dismissal of the plaintiff's tort claims, the defendant’s motion for modification of the scheduling order will be granted in part. The parties will be required to identify their expert witnesses and provide the reports required in the scheduling order no later than thirty (30) days from the entry of this order.

IT IS THEREFORE ORDERED that the defendant’s motion for judgment on the pleadings is granted and the fourth and fifth causes of action in the first amended complaint are dismissed.

IT IS FURTHER ORDERED that the plaintiff’s motion to compel production of documents is denied.

IT IS FURTHER ORDERED that the parties must identify and provide reports for any witnesses to be called at trial as experts within thirty (30) days of the entry of this order or they will be barred from calling such witnesses as experts at trial.


author: GARRITY, District Judge.

text:
    CABOT CORPORATION et al., Plaintiffs, v. ASHLAND OIL, INC., Defendant.
    Civ. A. No. 84-3165-G.
    United States District Court, D. Massachusetts.
    Nov. 15, 1984.

      Lee Johnson, Harold Hestnes, Hale & Dorr, Boston, Mass., for plaintiffs.
    R. Reed Baer, John R. Hally, Nutter, McClennen & Fish, Boston, Mass., for defendant.
   MEMORANDUM AND ORDER ON PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION

GARRITY, District Judge.

On October 5, 1984, plaintiffs filed a complaint seeking declaratory and injunctive relief, as well as an application for a temporary restraining order and a motion for preliminary injunction. At a hearing held on that same date, plaintiffs obtained a temporary restraining order from Judge Nelson, which was extended in force through October 22, 1984 by agreement of the parties. A subsequent hearing was held by this court on October 19, 1984 on plaintiffs’ motion for preliminary injunction. At that time, the court ordered that the temporary restraining order remain in force until it ruled on plaintiffs’ motion for a preliminary injunction. After hearing oral argument and reviewing briefs and affidavits submitted by the parties, the court grants plaintiffs’ motion for preliminary injunction. The court further orders that plaintiff provide bond in the amount of $750,000.

This action arises out of a sales agreement (“Agreement”) entered into by the parties on August 26, 1983, in which defendant agreed to sell to plaintiffs substantially all of its international carbon black operations. The sale includes defendant’s operation known as Ashland Chemical (France) S.A. (“ACF”), located in Port Jerome France, which is the subject of the present dispute.

According to section 3 of the Agreement, the different operations owned by defendant, including ACF, are to be sold to plaintiffs in separate “transactions.” Section 10 of the Agreement provides that the closing of each particular transaction is subject to the satisfaction of specified conditions precedent, including the receipt of all governmental approvals deemed necessary by defendant’s legal counsel. Pursuant to this provision in the Agreement, on October 25, 1983 plaintiffs notified the French Ministry of Economy, Finance and Budget and the Ministry of Industry of their intent to acquire ACF. Government approval was required under French competition law because plaintiffs already owned a carbon black plant at Berre, France and, therefore, the acquisition of ACF would give plaintiffs more than 40% of the French national carbon black market. On June 19, 1984, the Ministries entered a joint decree enjoining plaintiffs from acquiring ACF.

After the issuance of the decree, the parties met to discuss an appeal of this decision and explore alternatives which would permit plaintiffs to purchase ACF. In August of 1984, plaintiffs’ representatives also met with French officials and proposed selling their French plant at Berre in order to reduce their market share below 40%. Under the terms of the proposal, plaintiffs would sell its plant to an independent manufacturing company, but retain an option to repurchase the plant in the event of a successful appeal of the decree. The French authorities indicated that the French Administration would approve this proposal. ' Plaintiffs have since appealed the decision of the Ministries to the French Administrative Superior Court and are in the process of negotiating the sale of their plant at Berre to an independent manufacturing company.

Defendant chose not to participate in the appeal of the Ministries’ decision. Furthermore, on September 26, 1984, defendant sent plaintiffs a letter stating that as a result of the June 19,1984 decree enjoining plaintiffs from acquiring ACF, defendant concluded that it was legally impossible for plaintiffs to satisfy the conditions precedent to closing the sale. Therefore, defendant notified plaintiffs of its intent to pursue negotiations for the sale of ACF with other potential buyers, particularly with a German carbon black manufacturer, Degussa A.G. Plaintiffs subsequently brought the instant action, and now seek to preliminarily enjoin defendant from either selling its interest in ACF or negotiating with potential buyers for the sale of that interest.

Before issuing a preliminary injunction, the court must determine whether plaintiffs’ legal remedies are inadequate. Because this action involves the sale to plaintiffs of defendant’s entire French operation, damages would be virtually impossible to calculate. See Restatement (Second) of Contracts, §§ 357-360. Plaintiffs have persuasively shown that ACF is unique due to its geographical location, proprietary technology, quality of product and skilled personnel. Therefore, we conclude that plaintiffs’ legal remedies are in fact inadequate.

Plaintiffs must establish the following four criteria in order to be entitled to a preliminary injunction: (1) that they have exhibited a likelihood of success on the merits; (2) that they will suffer irreparable injury if the injunction is not granted; (3) that such injury outweighs any harm which granting injunctive relief would inflict on the defendant; and (4) that the public interest will not be adversely affected by the granting of the injunction. Auburn News Co. v. Providence Journal Co., 1 Cir.1981, 659 F.2d 273, 277, cert. denied, 1982, 455 U.S. 921, 102 S.Ct. 1277, 71 L.Ed.2d 461.

With respect to the first criterion, the court finds that plaintiffs are likely to succeed on the merits on both the questions of contract interpretation and impossibility of performance. Contrary to defendant’s interpretation of the Agreement, we hold that although the contract requires that the parties proceed “as rapidly as possible” toward the closing of each transaction (section 4(a)), they are not presently entitled to terminate their agreement to sell ACF due to the French Ministries’ decree. Section 4(d) of the Agreement provides: “If any transaction is not closed due to non-fulfillment of a condition precedent by June 30, 1985, that transaction shall not be closed thereafter unless separately agreed to between the parties____” Therefore, under the terms of the Agreement, defendant is not entitled to terminate the ACF transaction for failure of a condition precedent until June 30, 1985.

Defendant next argues that the French Ministries’ decree enjoining plaintiffs from acquiring ACF makes the transaction impossible to perform, thereby excusing defendant from any further obligation with respect to the sale. New York recognizes legal impossibility as an excuse for performance. Metpath, Inc. v. Birmingham Fire Insurance Co. of Pennsylvania, Sup.Ct.1982, 86 A.D.2d 407, 449 N.Y.S.2d 986, 989. Furthermore, under New York law, an injunction may give rise to a claim of impossibility of performance. Lowenschuss v. Kane, 2 Cir.1975, 520 F.2d 255. In Lowenschuss, the Second Circuit held that a preliminary injunction, while not final as a matter of law, could form the basis of a claim of impossibility, if, in view of the large amount of time and money required to appeal the injunction, as well as the consequent tie-up of capital, the appeal could be viewed as an “impractical venture.”

Without plaintiffs’ alternative proposal to sell their carbon black plant at Berre, France, it is quite possible that the sale of ACF could be considered legally impossible to perform. While there is a clear divergence of opinion in the affidavits of the French attorneys as to the probability of success of plaintiffs’ appeal of the Ministries’ decision, the likelihood that the appeal will be decided before June 30, 1985 seems slight. Therefore, without considering plaintiffs’ alternative plan to get French government approval of the sale of ACF, this appeal might well be deemed an “impractical venture.” However, plaintiffs’ affiant, Samuel B. Coco, has testified that plaintiffs are currently negotiating the sale of their operations at Berre to an independent manufacturing company under the terms discussed with French officials. It,is quite possible that plaintiffs will be able to complete this sale, and thereby obtain the requisite French government approval, by the end of June, 1985. Therefore, we conclude that it is not impossible for plaintiffs to satisfy the conditions precedent to the sale of ACF at the present time, either by selling its plant at Berre or by a successful appeal of the decree of the French Ministries.

The court further finds that the balance of hardship lies in favor of plaintiffs. Denial of a preliminary injunction would enable defendant to sell ACF to another concern. Because plaintiffs’ damages are not quantifiable, this would cause plaintiffs irreparable harm by effectively denying them a complete remedy. In contrast, any potential harm to defendant as a result of bemg wrongfully enjoined can be remedied with money damages. Furthermore, a preliminary injunction in this case will preserve the status quo, since it will prevent defendant from transferring ACF to a third party. Finally, we see no possible adverse effect that an injunction might have on the public interest.

The court, therefore, grants plaintiffs’ motion for preliminary injunction. Defendant is enjoined from transferring to any entity other than plaintiffs its'interest in ACF until further order of this court. Defendant is also enjoined from participating in any negotiations concerning the sale of ACF with any entity except plaintiffs.

Finally, after considering the parties submissions on the point, the court orders that plaintiffs provide a bond in the amount of $750,000, which is approximately one-fourth the amount requested by defendant. We conclude that a bond in this lesser amount is reasonable primarily because we find that the likelihood of a sale to Degussa, as well as its terms and timing, are more speculative than submitted by defendant. Therefore, any loss of opportunity to defendant to- invest the proceeds of a possible sale to Degussa at a favorable rate of interest is also speculative. Assuming that the court has erred in freezing the status quo and enjoining negotiations until the merits have been decided, defendant will have been damaged primarily by its inability to dispose of ACF as soon as possible, since, according to defendant, its value is diminishing due to monthly losses. However, to some extent these losses appear to be only a matter of accounting between a parent corporation and its wholly owned subsidiary. Balancing these various factors and anticipating that the case will be ripe for a hearing on the merits in the early spring of next year, we conclude that a bond in the amount of $750,000 will be adequate.

PRELIMINARY INJUNCTION

After hearing oral argument and considering memoranda and affidavits submitted by the parties, and on the basis of findings and conclusions stated in the memorandum of decision filed contemporaneously herewith, the court grants plaintiffs’ motion for preliminary injunction, subject to plaintiffs’ posting security in conformity to Rule 65(c), Fed.R.Civ.P. and in a form approved by the court, in the sum of $750,-000.

It is hereby ordered that defendant, its officers, agents, servants, employees, and attorneys, and those persons in active concert with them who receive actual notice of the order by personal service or otherwise, are enjoined from

(1) transferring defendant’s interest in Ashland Chemical (France) S.A. to any person, firm, or corporation other than plaintiffs and
(2) negotiating concerning the transfer of such interest with any person, firm or corporation other than plaintiffs.

This- injunction shall become effective when plaintiffs’ security of $750,000 has been approved by the court and shall remain in effect until further order of this court.

      . Section 11 of the Agreement provides that a "Satellite Agreement” may be terminated "by failure of any condition to the terminating party’s obligations.” Because no Satellite Agreement has been executed for the ACF transaction, this section is inapplicable.'

      . Section 13(a) of the Agreement provides that the creation, interpretation, performance, and discharge of this contract shall be governed by New York law.

      . During the hearing on October 19, 1984, Mr. Coco wrote the name of the manufacturing company on a piece of paper and sealed that paper in an envelope. The envelope has been impounded pursuant to court order.

      . Plaintiffs argue that negotiations by defendant with any other entities, particularly Degussa, are detrimental to plaintiffs’ appeal of the Ministries' decree. This argument, in conjunction with section 3(c) of the Agreement, which provides that for the payment of $2 million, defendant agrees not to "design, construct or operate any carbon black plant, or' license or assist in any way any other individual, entity or government to design or operate such a facility in any place in the world except the U.S.A. and Canada during the period beginning with the date hereof [August 26, 1983] and ending June 30, 1985," warrants our granting of plaintiffs’ request that all negotiations be enjoined.

      . In this connection the parties are requested to file within two weeks statements of position as to advancing trial of this action on the merits. See Rule 65(a)(2), Fed.R.Civ.P. Most relevant facts seem susceptible to stipulation. Affidavits might be received in lieu of direct testimony.


author: WEXLER, District Judge.

text:
    LANCER PRODUCTS INC., Plaintiff, v. RALLY ACCESSORIES, INC., Mark Iacovelli and Stephen Lapidus Sales, Inc., Defendants.
    No. CV 83-4838.
    United States District Court, E.D. New York.
    Nov. 15, 1984.

      Amster, Rothstein & Engelberg, New York City, for plaintiff.
    Wolder, Gross & Yavner, New York City, for defendants.
   MEMORANDUM AND ORDER

WEXLER, District Judge.

This is,an action for copyright and trademark infringement, and for unfair competition. Defendant Iacovelli has moved to dismiss the complaint with respect to him on the ground of lack of personal jurisdiction.

Defendant Iacovelli is president and 50% shareholder of defendant Rally Accessories, Inc. Iacovelli is also an officer and 50% shareholder of Rally Manufacturing, Inc., which is not a party.

Plaintiff asserts personal jurisdiction over Iacovelli on the basis of N.Y.C.P.L.R. Section 302(a)(2), which provides for personal jurisdiction over a nondomiciliary who in person or through an agent commits a tortious act within the state. Plaintiff contends that Iacovelli, through an agent, caused certain products to be marketed within the state, and that such marketing constituted copyright and trademark infringement, and unfair competition. Iacovelli contends that Iacovelli did not market his own products in the state, (but rather marketed the products of Rally Accessories), that Iacovelli therefore could not foresee being subject to personal jurisdiction in New York state court, that it would therefore be violative of the Due Process Clause of the Fourteenth Amendment for a New York state court to subject Iacovelli to personal jurisdiction, and that this Court therefore lacks personal jurisdiction over Iacovelli under Rule 4 of the Federal Rules of Civil Procedure. Iacovelli relies upon World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Iacovelli further contends that any acts he may have performed which would otherwise give rise to personal jurisdiction over him were performed in his capacity as president of Rally Accessories, and that he is therefore immune from personal jurisdiction under New York’s “fiduciary shield doctrine”.

We see no basis for Iacovelli’s suggestion that a person who markets products within a state on behalf of his employer cannot constitutionally be subject to personal jurisdiction by such state’s courts as to a cause of action arising from such activity. To adopt this suggestion would be to convert the fiduciary shield doctrine into a constitutional principle. The Second Circuit, however, has stated that “[t]he fiduciary shield doctrine is not a constitutional principle ...” Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 902 n. 3 (2d Cir.1981). World-Wide, supra, is not on point. There, defendant did not carry on any activity in the forum state. We therefore hold that a person who markets products on behalf of his employer within a state may be subject to personal jurisdiction by such state’s courts as to a cause of action arising from such activity, under the Due Process Clause of the Fourteenth Amendment.

Under New York’s fiduciary shield doctrine, an individual who has contact with the state only by virtue of his acts as a fiduciary of a corporation may be shielded from personal jurisdiction. Marine Midland, supra, 664 F.2d at 902. However, “its application requires an analysis of the particular facts of the case. In each instance, fairness is the ultimate test.” Id. at 903. If the corporation is a mere shell for its owner, the owner’s actions shall be viewed as being in his own interest, and he will not be shielded from personal jurisdiction. Id.

In the instant case, papers submitted by plaintiff establish a prima facie showing that Rally Accessories has no assets, income, or expenses; that Rally Manufacturing takes payment for goods sold under the name of Rally Accessories; and that Rally Accessories is a mere shell for Rally Manufacturing. However, no showing has been made that Rally Manufacturing is itself a shell. Consequently, while there is a basis for saying that actions taken by Iacovelli were essentially for the benefit of Rally Manufacturing, there is no basis for saying that Iacovelli’s actions were essentially simply for his own benefit. Of course, given the fact that Iacovelli is a 50% shareholder in Rally Accessories and Rally Manufacturing, any actions taken by Iacovelli must have been in large part for his own benefit. However, the Second Circuit, in stating that the fiduciary shield doctrine will not apply to the owner of a shell corporation, thereby implied that the doctrine will apply to a 100% shareholder in a non-shell corporation. The doctrine should therefore apply to a 50% shareholder in a non-shell corporation. On a motion to dismiss for lack of personal jurisdiction, if the Court does not hold an evidentiary hearing, plaintiff need only make a prima facie showing of jurisdiction through its papers in order to. defeat the motion and postpone resolution of'the issue of jurisdiction until trial. Id. at 904. In the instant case, plaintiff’s papers construed in the light most favorable to plaintiff show that Iacovelli acted on behalf of a corporation, Rally Accessories, which was a shell for another corporation, Rally Manufacturing, which is not itself a shell and of which Iacovelli is a 50% shareholder. We hold that under these facts New York’s fiduciary shield doctrine is applicable and Iacovelli is not subject to personal jurisdiction under N.Y.C.P.L.R. Section 302(a)(2), that plaintiff has failed to make a prima facie showing of jurisdiction, and that Iacovelli’s motion to dismiss for lack of personal jurisdiction should be granted.

Plaintiff places great reliance upon Kinstler v. Saturday Evening Post Co., 507 F.Supp. 113 (S.D.N.Y.1981). There, the court refused to apply the fiduciary shield doctrine where defendant’s “activities were such that she should have foreseen consequences in this forum”, where defendant was not “an incidental actor in the corporate heirarchy” but.“directly responsible” for the alleged tort, and where defendant “as the corporate officer most intimately connected with corporate conduct involved in this law suit. ... will be required— whether or not herself a party — actively to participate in plaintiff’s related actions” against the corporation. We respectfully decline to follow this case, which we believe is out of harmony with the Second Circuit’s view of the fiduciary shield doctrine as suggested in Marine Midland, supra, and would tend largely to abolish the doctrine.

Defendant Iacovelli’s motion to dismiss the complaint with respect to said defendant for lack of personal jurisdiction is granted. The Clerk shall not enter judgment at this time.

SO ORDERED.


author: MURRAY M. SCHWARTZ, District Judge.

text:
    PHILLIPS PETROLEUM COMPANY, Shell Oil Company, Northern Petrochemical Company, and El Paso Products Company, Plaintiffs, v. UNITED STATES STEEL CORP., Hercules Incorporated and Phillips Petroleum Company, Defendants.
    Civ. A. Nos. 83-143, 83-148, 83-547, 83-801 and 84-79 MMS.
    United States District Court, D. Delaware.
    Nov. 16, 1984.
    C. Waggaman Berl, Jr., Wilmington, Del. (Harry J. Roper, Sidney Neuman, George S. Bosy, Nicholas A. Poulos, and William H. Frankel, Neuman, Williams, Anderson & Olson, Chicago, 111., of counsel), for Phillips Petroleum Co. and Shell Oil Co.
    Charles S. Crompton, Jr., Francis Potter, Anderson & Corroon, Wilmington, Del. (Francis T. Carr, Kenneth E. Madsen, and Philip G. Hampton, II, Kenyon & Kenyon, New York City), for Northern Petrochemical Co., U.S. Steel Corp. and Hercules Inc.
    Arthur G. Connolly, Jr., Connolly, Bove, Lodge & Hutz, Wilmington, Del. (Thomas F. Reddy, Jr., and Stanton T. Lawrence, III, Pennie & Edmonds, New York City), for El Paso Products Co.
   OPINION

MURRAY M. SCHWARTZ, District Judge.

Plaintiff El Paso Products Company (“El Paso”) initiated a declaratory judgment action against Phillips Petroleum Company (“Phillips”) challenging the validity of a Phillips patent. After accepting a license, El Paso moved to “Retain Royalties Pendente Lite.” The motion requests this Court to issue an order determining that:

(a) All royalty payments due Phillips Petroleum Company (“Phillips”) pursuant to the License Agreement under the ’851 patent entered into between defendant Phillips and El Paso may be retained in escrow by El Paso pendente lite;
(b) El Paso is entitled to recover and/or retain all post-challenge royalty payments that were made or became due pursuant to the terms of the License Agreement under the ’851 patent from the time of the challenge until the invalidity, unenforceability and/or non-infringement of the ’851 patent is finally determined; and
(c) Such retention of royalties pursuant hereto shall not be deemed a default under said License Agreement and Phillips shall not exercise its option of termination because of El Paso’s compliance with the terms of this order.

Dkt. 28, at 1-2 (emphasis added). For the reasons set forth below, this motion will be denied.

El Paso requests the Court to authorize payment of royalties into escrow and prohibit Phillips from terminating the license agreement during the period El Paso pays into escrow in lieu of payment to Phillips. El Paso avers that relief is needed to “preserve the status quo.” Dkt. 29, at 20.

While not denominated as such, El Paso’s motion is a request for preliminary injunction. See Milton Roy Co. v. Bausch & Lomb, Inc., 418 F.Supp. 975, 977 (D.Del.1976). In Milton Roy, a patent licensee moved to require that the license payments be paid into escrow pending the outcome of the suit and to forbid the licensor from terminating the license. Judge Wright interpreted that motion as a prayer for injunctive relief. 418 F.Supp. at 977. In actions before other courts challenging patents, motions for similar relief — payment into escrow and prohibition of license termination — have been considered as motions for preliminary injunctions and granted only if the moving party met the standards for preliminary injunctive relief. See Nebraska Engineering Corp. v. Shivvers, 557 F.2d 1257, 1258-59 (8th Cir.1977); USM Corp. v. Standard Pressed Steel Co., 524 F.2d 1097, 1099-1100 (7th Cir.1975).

A party seeking preliminary injunctive relief must show:

(1) a threat of immediate irreparable harm; (2) that the public interest would be better served by issuing than by denying the injunction; (3) a likelihood of success on the merits; and (4) that the balance of hardship on the parties favored [the moving party].

S.J. Stile Assoc. Ltd. v. Snyder, 646 F.2d 522, 525, 68 CCPA 27 (1981); see also Phillips Petroleum Co. v. U.S. Steel Corp., 566 F.Supp. 1093, 1098 (D.Del.) aff'd mem., 727 F.2d 1120 (Fed.Cir.1983). El Paso made no effort to satisfy these prerequisites to preliminary injunctive relief. Having failed to meet its burden, El Paso's request to prohibit Phillips from terminating the license agreement will be denied. See Milton Roy Co., 418 F.Supp. at 981.

In its reply brief and oral argument, El Paso also stressed that it sought an order decreeing that El Paso can retain royalties due under the license agreement, and that such retention is not a material breach of its license agreement. El Paso urges that Lear, Inc. v. Adkins, 395 U.S. 653, 89 S.Ct. 1902, 23 L.Ed.2d 610 (1969), forbids a patent licensee from, being required to pay royalties during the pendency of litigation over the validity of a patent. The short answer to this argument is that no one has asked the Court to require El Paso to pay royalties. Indeed, counsel for Phillips conceded during oral argument that El Paso has the right under Lear to refuse to pay royalties, albeit at its own risk, until the validity of the patent is determined.

El Paso’s real concern is that Phillips might terminate its license for non-payment if El Paso retains royalties. Rather than ask the Court to enjoin Phillips from terminating the license, however, El Paso now asks the Court to declare that its failure to pay royalties would not be a material breach of the license agreement. El Paso has cited no authority upon which the Court could rely in issuing this preliminary or interlocutory declaratory relief. In fact, the Supreme Court has stated that “prior to final judgment there is no established declaratory remedy, comparable to a preliminary injunction.” Doran v. Salem Inn, Inc., 422 U.S. 922, 931, 95 S.Ct. 2561, 2567, 45 L.Ed.2d 648 (1975). I conclude I have no authority to issue the declaratory relief El Paso requests. Accordingly, El Paso’s Motion to Retain Royalties Pendente Lite will be denied.

      . Validity and enforcement of the patent have not been determined. Counsel for El Paso conceded at oral argument that the issue of whether El Paso can recover royalties paid to Phillips if the patent is held invalid or unenforceable is not properly before the Court.


author: LEIGHTON, District Judge.

text:
    AMERICAN HOSPITAL SUPPLY CORPORATION, Plaintiff, v. DAMON CORPORATION, Defendant.
    No. 83 C 7838.
    United States District Court, N.D. Illinois, E.D.
    Nov. 19, 1984.

      William Brinks, Olds, Hofer, Gilson & Lione, Ltd., Clyde F. William, Stephen Z. Szczepanski, Wannell M. Baird, Chicago, 111., for plaintiff.
    Nicholas D. Chabraja, Robert T. Markowski, Jenner & Block, Daniel J. King, Chicago, 111., John A. Lahive, Jr., Norman A. Hubley, Ralph A. Loren, Lahive & Cock-field, Boston, Mass., for defendant.
   MEMORANDUM

LEIGHTON, District Judge.

This cause is before the court on the motion of defendant, Damon Corporation (“Damon”), pursuant to Fed.R.Civ.P. 12(b)(1), to dismiss plaintiff’s complaint on the ground that the court lacks jurisdiction over the subject matter of the suit. Also before the court is the motion of plaintiff, American Hospital Supply Corporation (“AHSC”), pursuant to Fed.R.Civ.P. 15(a), to file an amended complaint.

I

The litigation arises out of a license agreement entered into by the parties whereby AHSC became licensee to a patent for chemical analyzers owned by Damon. Subsequent to this agreement, AHSC allegedly developed an immunoassay system for the monitoring of therapeutic drugs and the detection of infectious diseases, which included a system known as the “Stratus analyzer.” Since that time, the parties have been embroiled in a dispute as to whether the analyzer is covered by the patent owned by Damon and licensed to AHSC. Damon takes the position that the patent is valid, that the analyzer falls within the scope of the patent, and that royalties are due under the licensing agreement. AHSC takes the opposite view, and has filed petitions for reexamination of the patent before the United States Patent and Trademark Office which have been denied.

AHSC then filed this lawsuit, seeking a declaratory judgment adjudication of the validity of the patent, and for return of royalties. The court’s jurisdiction was invoked pursuant to the patent statute, 28 U.S.C. § 1338(a), and the federal diversity statute, 28 U.S.C. § 1332. Based on Damon’s contention that the patent in question is valid, it moved to dismiss the action for lack of a justiciable controversy between the parties, as required by the patent statute. Absent such a controversy, this court would be without jurisdiction to enter a declaratory judgment. AHSC opposes the motion by stating that it has satisfied all justiciability requirements.

II

It is well established that in a motion to dismiss for lack of subject matter jurisdiction, the existence of jurisdiction may be established by the use of evidence outside the pleadings. Grafon Corporation v. Hausermann, 458 F.Supp. 91, 92 (N.D.Ill.1978), rev’d on other grounds, 602 F.2d 781 (7th Cir.1979). In this case, the parties have made oral presentations to the court, and have submitted various affidavits and other materials for the court’s consideration. After careful review of this evidence, the court concludes that that it has jurisdiction over the dispute.

The “actual controversy” requirement of the Declaratory Judgment Act, 28 U.S.C. § 2201, is a jurisdictional prerequisite in a constitutional sense. Grafon Corporation v. Hausermann, 602 F.2d at 783. Generally, courts have interpreted the “controversy” requirement in the patent field to mean that plaintiff has a sufficient interest in the controversy, and that there is a reasonable threat that the patentee or licensor will bring an. infringement suit against the alleged infringer. C.R. Bard, Inc. v. Schwartz, 716 F.2d 874, 879 (Fed.Cir.1983). A license agreement need not have been terminated for a licensee to maintain a declaratory action for patent invalidity. Id. at 882.

Whether there is an “actual controversy” in any given case requires application of these legal principles to an examination of the “totality of circumstances” of that case. Id. at 880. It seems obvious that AHSC has satisfied the first prong of the justiciability requirement, interest in controversy, by not wanting to pay what it considers undeserved royalties to defendant. The court also concludes that AHSC had a reasonable apprehension of an infringement suit, despite the fact that its license with Damon was still valid. At the time of this lawsuit, AHSC, the licensee, had not paid running royalties on the “Stratus analyzer” for the third quarter of 1983; and was not marking the analyzers with the patent number of the patent in suit. Either of these actions constituted a breach of the licensing agreement, for which Damon had the right to terminate the agreement upon 30 day notice. In its answer, in fact, Damon asserts that if no such license agreement existed, such acts would constitute infringement of the patent.

It is true that AHSC later paid royalties due, but this court does not believe that action acts as a bar to maintenance of a suit for patent invalidity. In such a case, a licensee need not sit back and continue to wonder if it is justly paying royalties or merely paying a bribe to the patentee not to threaten him with business disruption and a possible damage suit if he terminates royalty payments. Precision Shooting Equipment Company v. Allen, 646 F.2d 313, 318 (7th Cir.1981). Clearly, where the parties and their actions dispute the validity of the patent in question, there is sufficient controversy for jurisdiction, under the patent statute or under the diversity statute which turns on the same considerations. Id. at 316. Accordingly, defendant’s motion to dismiss for lack of subject matter jurisdiction is denied.

Ill

Defendant opposes plaintiffs amending its complaint, for the reason that it believes the amendment does not cure jurisdictional deficiencies in the original complaint. This court disagrees. The amended complaint sets forth jurisdictional requirements more clearly than the original complaint, by detailing facts of the dispute between the parties, and by specifically alleging that “the continual assertions by Damon regarding the validity, coverage and infringement of the patent in suit, combined with Damon’s vigorous opposition in reexaminations of the patent in suit, gave AHSC a reasonable apprehension that if the royalty payments are not made, Damon would cancel the agreement and sue for infringement of the patent in suit.” Under the liberal pleading rules of the Federal Rules of Civil Procedure, leave to amend should be “freely given.” Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). Accordingly, plaintiff’s motion for leave to amend is granted.

In summary, therefore, defendant’s motion to dismiss plaintiff’s complaint for lack of subject matter jurisdiction is denied; and plaintiff’s motion to file an amended complaint is granted.

So ordered.


author: ROBERT H. HALL, District Judge.

text:
    W. Raymond BIRGE, Plaintiff, v. DELTA AIR LINES, INC., Defendant.
    Civ. A. No. C82-646A.
    United States District Court, N.D. Georgia, Atlanta Division.
    Nov. 19, 1984.

      Alice M. Montgomery, San Francisco, Cal., for plaintiff.
    Gregory L. Riggs, Atlanta, Ga., for defendant.
   ORDER

ROBERT H. HALL, District Judge.

Plaintiff brings this Title VII, 42 U.S.C. § 2000e et seq., action alleging that defendant refused to hire him as a pilot because of his race in January of 1973. Presently pending before the court is defendant’s motion to dismiss. The asserted ground for dismissal is plaintiff’s failure to file a Complaint within 90 days from his receipt of the Equal Employment Opportunity Commission’s (“EEOC’s”) right-to-sue letter as required by 42 U.S.C. § 2000e-5(f)(1).

FACTS

The EEOC issued plaintiff a right-to-sue letter on August 13, 1980, which stated:

IF YOU DECIDE TO SUE, YOU MUST DO SO WITHIN 90 'DAYS FROM THE RECEIPT OF THIS NOTICE OF RIGHT TO SUE; OTHERWISE YOUR RIGHT TO SUE IS LOST.

(Exhibit A to motion, ¶ 3) (Capitals in original). According to plaintiff, he received this letter on August 18, 1980.

On November 10, 1980, plaintiff filed his right-to-sue letter with the United States District Court for the Western District of Washington. An affidavit filed with the letter stated that plaintiff had contacted an attorney regarding his case and had been informed that “all of the necessary information” had not been received from the EEOC. The affidavit concluded:

[A]ffiant [plaintiff] wishes to commence his action against Delta Air Lines by the filing of a copy of the Notice of Right to Sue letter. [Plaintiff] will file a complaint in this matter as soon as the necessary information is received.

(Id.). No summons or other court process issued; however, defendant was served with the affidavit.

The court assigned a case number to the filings (C80-508T) despite the absence of a Complaint and apparently did not inform plaintiff that the documents were insufficient to “commence” a civil action.

On October 28, 1981, plaintiffs attorney filed another affidavit similar in content to the November 10, 1980 affidavit, stating that a Complaint would be filed as soon as he received the necessary information from the EEOC. On November 12, 1981, the court on its own motion dismissed the case for failure to prosecute. Upon learning of the dismissal, counsel for plaintiff contacted the Clerk on November 17, 1981, to inquire why the case had been dismissed for lack of prosecution given that plaintiff had just recently filed the “Affidavit of Action.” (Exhibit F to plaintiff’s memorandum). The Clerk indicated to counsel that she would review the file to see if the dismissal was proper and would also retrieve the Complaint and' Summons which had been sent to the court for filing and inadvertantly forwarded to another Clerk’s office. (Id.)

After review of the file and before plaintiff filed a motion to vacate, the court on November 18, 1981, vacated its Order of Dismissal on the ground that it was “erroneously issued.” The Order did not expressly determine whether the action had “commenced” as a matter of law upon the November 10, 1980, filing of the right-to-sue letter and affidavit.

Plaintiff’s Complaint was subsequently filed on November 20, 1981, 459 days following receipt of the right-to-sue letter. Defendant filed a timely Answer and asserted several affirmative defenses, one of which was plaintiff’s failure to file a Complaint within the required 90-day period. On March 8,1982, the case was transferred to this court for venue reasons. On June 27,1984, the case was transferred from the judge of this court originally assigned to it to the instant judge.

DISCUSSION

A. Timeliness of motion to dismiss

Plaintiff’s initial response to defendant’s motion to dismiss is couched in terms suggesting that defendant is guilty of laches in asserting the motion or has waived its right to assert the motion and that, therefore, the motion should be denied. Plaintiff seems to contend that, by not seeking dismissal of the Complaint before answering, or by not asserting this issue in its Motion to Dismiss or Transfer due to improper venue (made before the Washington court), defendant has surrendered its right to raise plaintiff’s failure to file a timely Complaint as ground for dismissal. The Federal Rules of Civil Procedure and relevant case law establish that plaintiff’s contention is without merit.

First, the court considers plaintiff’s waiver argument. As for plaintiff’s assertion that defendant waived its right to bring the instant motion to dismiss by failing to seek a dismissal of the Complaint before answering, the court finds no procedural rule which requires a defendant to present a defense or objection by motion prior to asserting it in a responsive pleading. Cf. Fed.R.Civ.P. 12(b) (certain defenses may at the option of the pleader be made by motion before filing a responsive pleading). Thus, defendant did not waive its right to move for dismissal on untimeliness grounds by filing its Answer before its motion to dismiss. Accord Rice v. New England College, 676 F.2d 9, 10 (1st Cir.1982).

As for plaintiff’s assertion that defendant waived its right to object to the Complaint on untimeliness grounds by omitting this objection from its original motion to dismiss, the court finds that the procedural rule cited by plaintiff fails to support his argument. Rule 12(h)(1) of the Federal Rules of Civil Procedure sets forth the waiver principle upon which plaintiff is relying:

A defense of lack of jurisdiction over the person, improper venue, insufficiency of process, or insufficiency of service of process is waived (A) if omitted from a motion in the circumstances described in subdivision (g)____

Subsection 12(g) in turn provides:

Consolidation of Defenses in Motion ____ If a party makes a motion under [Rule 12] but omits therefrom any defense or objection then available to him which this rule permits to be raised by motion, he shall not thereafter make a motion based on the defense or objection so omitted, except a motion as provided in [Rule 12(h)(2)]____

(Emphasis added). Subsection (h)(2) of Rule 12 preserves, among other rights, the right to assert a defense of failure to state a claim upon which relief can be granted:

A defense of failure to state a claim upon which relief can be granted ... may be made in any pleading permitted or ordered under Rule 7(a), or by motion for judgment on the pleadings, or at the trial on the merits.

Thus, the defenses of lack of personal jurisdiction, improper venue, insufficiency of process, and insufficiency of service of process are waived if they are omitted from a Rule 12(b) motion; the defense of failure to state a claim upon which relief can be granted is never waived.

The question presented by this case is whether the untimeliness defense raised by defendant, a non-Rule 12 defense, can be waived by failure to consolidate. Because in this circuit, the 90-day filing requirement for commencing a Title VII action is considered akin to a statute of limitations, see, e.g., Sessions v. Rusk State Hospital, 648 F.2d 1066, 1069 (5th Cir.1981); Lewis v. Conners Steel Co., 673 F.2d 1240, 1241 n. 2 (11th Cir.1982), the court agrees with plaintiff that the right to assert this defense is subject to waiver. Cf. Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 393, 102 S.Ct. 1127, 1132, 71 L.Ed.2d 234 (1982) (Title VII requirement of filing a timely charge with the EEOC is akin to a statute of limitations and subject to waiver). However, the court does not find the untimeliness defense waived by failure to consolidate.

Thus far the only waiver principle that has been extended to a statute of limitations defense, a non-Rule 12 defense, is the principle that failure to include the defense in the responsive pleading constitutes a waiver of the right to assert this defense. Fed.R.Civ.P. 12(h)(1)(B). See, e.g., Wagner v. Fawcett Publications, 307 F.2d 409 (7th Cir.1962), cert. denied, 372 U.S. 909, 83 S.Ct. 723, 9 L.Ed.2d 718 (1963). The court declines to extend the “consolidation waiver” principle of Rule 12(h) to the defense raised by defendant’s motion (and thus to statute of limitations defenses) given the express language of Rule 12(g) limiting that waiver principle to certain motions permitted by Rule 12 (i.e., motions to dismiss for lack of personal jurisdiction, for improper venue, and for insufficiency of process or service of process). See generally 2A J. Moore and J. Lucas, Moore’s Federal Practice ¶ 12.22 (2d ed., 1981). Unlike the failure-to-plead waiver principle, which is drawn not only from Rule 12(h)(1) but also from Rule 8(c), Rule 8(d) and Rule 12(b), the consolidation waiver principle is based only on the express language of Rule 12(g). Because defendant had no reason to expect that it was required to consolidate the instant motion with its motion to dismiss for improper venue, the court declines to apply the consolidation waiver principle to the non-Rule 12 defense in question.

The court does not read Zipes v. Trans World Airlines, Inc., supra, as authority supporting the liberal application of the consolidation waiver principle urged by plaintiff. In that case the court merely said that the Title VII administrative filing requirement is subject to waiver without indicating that a broader waiver principle would apply than the one which had been applied in the past to statutes of limitation. 455 U.S. at 393.

Turning to plaintiff's laches argument, the court similarly finds no merit in plaintiffs contentions. Plaintiff appears to contend that, because defendant did not make this motion some time ago, plaintiff has lost the evidence which would justify his conduct. Plaintiff blames defendant for the loss of the purported evidence and suggests that defendant is foreclosed from making this .motion for that reason.

Plaintiff overlooks one important fact in constructing this argument. Defendant’s Second Affirmative Defense to Plaintiff’s Complaint states: “The Court lacks jurisdiction over the subject-matter ... because plaintiff failed to bring his action within the specified ninety (90) day period.” Hence, from the date defendant filed its Answer (December 18, 1980), plaintiff was on notice of defendant’s position that he failed to timely file his Complaint. It became plaintiff’s duty to preserve whatever evidence existed to show that plaintiff had timely filed a Complaint or that the filing period should be equitably tolled. Plaintiff cannot now place the blame on defendant for his lack of foresight.

B. Estoppel

Plaintiff advances another argument, related to his waiver and laches arguments, to the effect that defendant’s failure to respond to his motion to vacate the dismissal for want of prosecution (made before the Washington court) “es-tops” defendant from making the present motion to dismiss. This argument also fails.

First, there is no evidence that defendant was ever served with the motion. The copy of the motion introduced to this court (Exhibit H to plaintiff’s memorandum) bears no certificate of service and defendant’s in-house counsel has testified that he has no recollection of ever receiving a copy of the motion and did not know of the motion until June of 1984. (Riggs Affidavit, attached as exhibit A to defendant’s reply memorandum).

Second, even if the motion had been served on defendant, defendant’s failure to respond is understandable in light of the fact that the court granted the relief requested by the motion the day before the motion was filed; there was no reason to expect defendant to oppose a motion that had already been granted.

In sum, the court does not find that defendant is any way “estopped” from bringing the instant motion to dismiss.

C. Mootness of motion

Plaintiff also objects to defendant’s motion on the ground that the filing of the Complaint in November, 1981, “relates back” to the filing of the right-to-sue letter and affidavit in November, 1980, such that the issue of whether the Complaint was timely filed is moot. In essence, plaintiff urges that the Complaint be deemed filed on November 10, 1980, within the requisite 90-day filing period.

Based on the “relation back” procedural rule, the court finds this argument unpersuasive. Rule 15(c) of the Federal Rules of Civil Procedure provides:

Whenever [a] claim ... asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading.

(Emphasis added). In this case, the original pleading was the Complaint; the letter and affidavit do not constitute a “pleading” so the Complaint cannot be considered an amended pleading. There can be no “relation back” of the Complaint to November, 1980, and, thus, the issue raised by defendant’s motion is not moot.

D. Res judicata or law of the case

Plaintiff’s next argument is that the Washington court’s vacation of its Order of Dismissal for want of prosecution is fes judicata or binding law of the case on the question of the sufficiency of plaintiff's filing. The court does not find this argument persuasive either.

First, the court does not find that the Washington court ever decided the issue of whether plaintiff’s filing of the right-to-sue letter and affidavit "commenced” a civil action as a matter of law. The Washington court’s action in vacating its Order of Dismissal appears to.be purely ministerial. The Local Rules of the Western District of Washington provide for dismissal for want of prosecution after one year of inactivity; the Clerk, believing that one year had passed without any activity, initiated the dismissal process. When plaintiff’s counsel pointed out that an affidavit had been filed within the one-year period, the court recognized that the Order of Dismissal had been entered in error and vacated the Order. There is nothing to indicate that the court ever considered defendant’s position that no action had been “commenced” as a matter of law as no motion had been filed by defendant, nor does it appear that the court considered plaintiff’s arguments that the action had “commenced” as the court vacated the dismissal before receiving plaintiff’s brief. The court cannot infer that the court reached a decision on the “commencement” issue without supporting evidence.

However, even if the court were to find that the Washington court ruled on the sufficiency of plaintiff’s filing, this court would nevertheless be free to reconsider that decision under the law of the case doctrine. While it is true that under that doctrine, when a district judge has rendered a decision in a case and the case is later transferred to another judge, the successor should not ordinarily overrule the earlier decision, the law of the case doctrine also provides that a ruling in a case is subject to modification when it is subsequently found to be erroneous, is no longer sound, or would work an injustice. See Loumar, Inc. v. Smith, 698 F.2d 759, 762 (5th Cir.1983). See generally 18 C. Wright, A. Miller and E. Cooper, Federal Practice and Procedure § 4478, at 790 (1981). “The law of the case doctrine is not ... a barrier to correction of judicial error.” Loumar, 698 F.2d at 762.

Plaintiff’s contention that collateral estoppel or res judicata applies here evi-. dences a fundamental misunderstanding of those doctrines. Collateral estoppel and res judicata prevent the relitigation of factual questions or legal issues decided in previous litigation. See generally 18 C. Wright, A. Miller, and E. Cooper, Federal Practice and Procedure § 4401 et seq. (1981). Unless plaintiff is prepared to concede that the Washington action was prior, independent litigation, in which case his Complaint in this court would be clearly untimely, these doctrines do not apply to this case.

E. Commencement date

Plaintiff’s fourth argument in opposition to defendant’s motion to dismiss is that he “commenced” his Title VII action within 90 days following the receipt of the right-to-sue letter as required by 42 U.S.C. § 5000e-5(f)(1) by filing the right-to-sue letter and explanatory affidavit on November 10, 1980.

The court must reject this argument as only the filing of a Complaint “commences” a civil action under the Federal Rules of Civil Procedure, Fed.R.Civ.P. 3 (“A civil action is commenced by filing a complaint with the court.”), even for purposes of Title VII. Baldwin County Welcome Center v. Brown, — U.S. -, 104 S.Ct. 1723, 80 L.Ed.2d 196 (1984) (per curiam); Judkins v. Beech Aircraft Corp., 745 F.2d 1330 (11th Cir.1984). In Baldwin County Welcome Center, the Supreme Court reasoned:

Because we ... can find no satisfactory basis for giving Title VII actions a special status under the Rules of Civil Procedure, we must disagree with the conclusion of the [Eleventh Circuit] Court of Appeals [that a Title VII action is commenced upon the filing of a right-to-sue letter].

— U.S. at-, 104 S.Ct. at 1725.

Procedural requirements established by Congress for gaining access to the federal courts are not to be disregarded out of a vague sympathy for particular litigants. As we stated in Mohasco. Corp. v. Silver, 447 U.S. 807, 826 [100 S.Ct. 2486, 2497, 65 L.Ed.2d 532] (1980), “[I]n the long run, experience teaches that strict adherence to the procedural requirements specified by the legislature is the best guarantee of even-handed administration of the law.”

Id. at-, 104 S.Ct. at 1726.

Plaintiff attempts to distinguish Baldwin County Welcome Center on the ground that “it was not plaintiff’s filing of the right to sue [letter] which was deemed improper. Rather, it was plaintiff’s subsequent conduct which rendered her action deficient.” (Plaintiff’s first memorandum in opposition to defendant’s motion, p. 2). Plaintiff suggests that the Supreme Court did not overrule cases holding that the filing of a right-to-sue letter commences a Title VII action. (Id., p. 7). The court must disagree; the Supreme Court’s opinion makes clear that it felt that filing a right-to-sue letter does not commence a Title VII action:

The issue before the Court of Appeals and before this Court is whether the filing of a right-to-sue letter with the District Court constitutes the commencement of an action. The Court of Appeals held that it was and based its judgment on that ground. We reverse that judgment.

Id. at-, 104 S.Ct. at 1725 n. 4.

Plaintiff next attempts to distinguish Baldwin County Welcome Center on the ground that he filed an affidavit in addition to his right-to-sue letter, unlike the plaintiff in that case. While the Baldwin County Welcome Center Court did not address the situation where an affidavit or letter describing a plaintiff’s claim is filed along with the right-to-sue letter (finding that neither of the lower courts had assessed the significance of such a letter, id. at-, 104 S.Ct. at 3752 n. 4), the Court’s opinion makes clear that the filing of anything short of a Complaint will not “commence” a Title VII action. Id. A Complaint is defined under the Federal Rules of Civil Procedure as a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). In this case, plaintiff’s affidavit did not describe his claim (other than saying the basis of his action was racial discrimination) and cannot be considered the equivalent of a Complaint. Cf. Judkins v. Beech Aircraft Corp., supra (filing of EEOC “Charge of Discrimination” which contained factual basis for discrimination claim considered equivalent of filing a Complaint).

In sum, plaintiff is in the same situation as the Baldwin County Welcome Center plaintiff was in and cannot escape the holding of that case based on factual distinctions.

Plaintiff’s final effort to avoid the mandate of Baldwin County Welcome Center is to argue that the case should not be applied retroactively. Specifically, plaintiff argues that an application of the decision to this case, where the right-to-sue letter was filed nearly three and a half years before the decision, would unfairly deprive him of a remedy on the basis of a “superseding legal doctrine that was quite unforseeable.” Chevron Oil Co. v. Huson, 404 U.S. 97, 108, 92 S.Ct. 349, 356, 30 L.Ed.2d 296 (1971). Plaintiff also argues that an application of Baldwin County Welcome Center to this case would “produce substantial inequitable results” because he would be deprived of a remedy for the alleged discrimination by defendant and, for the same reason, would defeat the purposes of Title VII. Id. at. 107, 92 S.Ct. at 355.

Addressing plaintiff’s first argument, the court finds that it was not unforeseeable that at the time plaintiff filed his documents the Supreme Court would later conclude that the mere filing of a right-to-sue letter does not “commence” a Title VII civil action, despite a plaintiff’s intentions. Although the issue was an issue of first impression for the Supreme Court, the Court’s resolution of the issue was foreshadowed. First, the Federal Rules of Civil Procedure clearly spell out that the filing of a Complaint is necessary to “commence” a civil action and clearly spell out what constitutes a Complaint. Fed.R.Civ.P. 3 and 8(a)(2). Second, the language of Title VII does not suggest that a Title VII action can be “commenced” other than as stated in the Federal Rules of Civil Procedure. And, third, the case law existing at the time plaintiff filed his documents-did not suggest that a party in plaintiff’s position could “commence” a civil action by the mere filing of a right-to-sue letter; at that time, several courts had liberally construed the procedural requirements for commencing a Title VII action but only for pro se plaintiffs who had requested appointment of counsel within the statutory filing period. See Wrenn v. American Cast Iron Pipe Co., 575 F.2d 544, 546 (5th Cir.1978), and Huston v. General Motors Corp., 477 F.2d 1003, 1008 (8th Cir.1973), and cases cited therein.

As for plaintiff’s second argument that because he will be deprived of a remedy for the alleged discrimination, application of Baldwin County Welcome Center is inequitable, the court notes that even if the court applied the case law existing at the time plaintiff filed his documents, id., rather than Baldwin County Welcome Center, the result would be the same (that is, plaintiff, who had the benefit of counsel, would be deprived of a remedy based on the law as it was in 1980); thus, retroactive application of Baldwin County Welcome Center is not inequitable.

Plaintiffs final argument, that applying Baldwin County Welcome Center will defeat the remedial purpose of Title VII, requires little further comment. The court only adds that Title VII does not require that the “procedural requirements established by Congress for gaining access to the federal courts ... be disregarded by courts out of a vague sympathy for [Title VII] litigants.” Baldwin County Welcome Center, — U.S. at-, 104 S.Ct. at 1726. In other words, Congress did not express an intent that the remedial purpose of Title VII be furthered at all costs, including excepting, for no special reason, Title VII litigants from the procedural requirements imposed on all other litigants.

Plaintiffs reliance on a series of “equitable tolling” cases misses the mark. These cases do not address the question of whether the law in effect in 1980 was that the filing of a right-to-sue letter “commenced” a civil action, but rather illustrate situations where equitable tolling was deemed appropriate. See discussion infra.

The court, finding no reason to not apply Baldwin County Welcome Center retroactively and finding no significant factual distinctions, concludes that plaintiffs filing of his right-to-sue letter and explanatory affidavit did not “commence” a Title VII action and that his action was not “commenced” until he filed a Complaint in December of 1981, more than a year and three months after he received his right-to-sue letter.

F. Equitable Tolling

The question for the court now is whether the statutory 90-day period for filing a Title VII Complaint was tolled by the circumstances surrounding the filing of the right-to-sue letter and affidavit such that plaintiffs Complaint should be considered timely. Baldwin County Welcome Center, — U.S. at-, 104 S.Ct. at 1725-26. Cf. Zipes v. Trans World Airlines, Inc., supra (the requirement of a timely filing of a charge of discrimination with the EEOC is subject to equitable tolling). Plaintiff submits the following grounds for applying the equitable tolling doctrine to this case: (1) the Washington court led him to believe that he had done enough to preserve his Title VII claim; (2) he was unable to file a Complaint before the expiration of the 90-day period because the EEOC failed to furnish him necessary information in time; and (3) defendant “actively lulled” him into thinking that he had properly “commenced” a Title VII action by not objecting prior to the expiration of the filing period. The court addresses each argument seriatim.

1. Court action

Plaintiff points to the Washington court’s treatment of this action as properly commenced (accepting his documents for filing, and assigning a case number and judge), its silence as to the insufficiency of the documents for commencing a civil action in the face of his affidavit explaining his intentions, and its vacation of its dismissal for want of prosecution as actions by the Washington court which led him to believe he had properly commenced a Title VII action.

Initially, the court concedes that the Washington court’s Order vacation of its dismissal could have led plaintiff to believe he had commenced an action; in fact, even the court’s earlier dismissal of the “case” could have led plaintiff to. believe he had commenced an action. However, these orders were not entered until November of 1981, a year after plaintiff filed his right-to-sue letter and affidavit. Plaintiff could not have relied on these actions in not filing a Complaint within the 90-day period following the receipt of his right-to-sue letter. In other words, only those actions by the court which occurred within the 90-day filing period can be considered for equitable tolling purposes.

Turning to those actions, this court finds that the Washington court’s clerical actions and silence cannot be said to have “ratified” plaintiff’s action or in any way “lulled” plaintiff into not filing a timely Complaint; the Clerk of a court and the court itself have no duty to sua sponte inform parties of the sufficiency of their documents. To the extent that plaintiff relied on the court’s “inaction” in believing that it would let plaintiff know if his documents were insufficient, this reliance was unreasonable, especially considering that plaintiff had the benefit of legal counsel.

2. Lack of information

The court rejects plaintiff’s contention that it was not possible for him to file a Complaint within the 90-day period because he had not yet received necessary information from the EEOC. First, as defendant correctly points out, plaintiff could have filed a Complaint based on his personal knowledge without having the EEOC information in his possession; any information gained from the EEOC could have been incorporated into an amendment to the Complaint. Second, it does not appear that plaintiff even relied on the EEOC material when he ultimately filed his Complaint as there is no mention of the material in the Complaint.

3. Defendant’s inaction

Plaintiff’s argument that defendant “lulled” him into thinking that he had filed all that was necessary to commence his lawsuit by not pointing out that a Complaint was required to be filed within the 90-day period is somewhat incredulous. A defendant has no obligation to aid a plaintiff in complying with pleading requirements or statutory limitations periods. Plaintiff’s failure to file a Complaint within the filing period Cannot be blamed on defendant. See also discussion on waiver, laches, estoppel supra.

In sum, the court finds no grounds for equitably tolling the 90-day period. Plaintiff has cited no case to convince the court otherwise.

CONCLUSION

Finding that defendant’s motion to dismiss is timely, that defendant is not “es-topped” from bringing the motion, that plaintiff failed to file a Complaint within 90 days following receipt of his EEOC right-to-sue letter, and finding that the facts do not warrant an equitable tolling of the 90-day period, the court GRANTS defendant’s motion to dismiss for failure to file a timely Complaint.

Plaintiff’s request for a stay of this action to allow him the opportunity to discover admissible evidence to justify equitable tolling of the filing period is DENIED; plaintiff has not convinced the court that a stay would lead to such evidence, especially in light of the amount of time which has already been allowed him to produce such evidence.

This Order terminates this action.

      . Plaintiff filed his charge of discrimination with the EEOC on or about July 18, 1974. He did not request a right-to-sue letter 180 days later and the right-to-sue letter was only issued after a six-year lapse.

      . Plaintiff contends that he discussed his situation with the Clerk of the Washington court and that the Clerk expressly indicated that his filings would suffice to commence a civil action. However, plaintiff fails to introduce admissible evidence to prove this factual contention.

      . Rule 8(c) and 8(d) concern the requirements to plead affirmative defenses and to deny averments in a preceding pleading; Rule 12(b) reiterates the general rule that all defenses be pleaded.

      . Plaintiff has not argued that because the 90-day period is not jurisdictional, the untimeliness defense was not properly pleaded. Such a form-over-substance argument would be rejected even if it were made. See Rice v. New England College, supra, 676 F.2d at 10.

      . Plaintiff cites Henderson v. Eastern Freight Ways, Inc., 460 F.2d 258 (4th Cir.1972), as support for his relation back argument. As this case has no relevance to Rule 15(c) and the relation back doctrine, the court finds the citation confusing. That case involved a plaintiff who had initiated a Title VII action before receiving a right-to-sue letter from the EEOC, but who had received a "suit letter” before defendant moved to dismiss on that ground. The court held that because plaintiff had "validated the pending action” prior to the motion to dismiss, dismissal was improper. Id. at 260. (If plaintiff cited this case for the proposition that he "validated” his action (i.e. corrected any deficiency in his pleading) prior to defendant’s motion to dismiss, the court rejects this suggestion; his action was never "validated” if he failed to file a timely Complaint. See discussion infra.).

      . To the extent that plaintiff argues that the court’s acceptance of his documents and its assignment of a case number establishes that the court determined that plaintiff had "commenced” a Title VII action, the court finds that these actions do not represent a legal conclusion but rather the acts of clerical personnel more relevant to the issue of equitable estoppel. See discussion infra.

      . Local Rule 41(b) of the United States District Court for the Western District of Washington states:

        Involuntary Dismissal; Effect Thereof. (1) All cases that have been pending in this Court for more than one year without any proceeding of record having been taken may be dismissed by the Court on its own motion for lack of prosecution.

      . Plaintiff does not contend that he filed any document which could be labelled a Complaint on November 10. See Judkins v. Beech Aircraft Corp., 745 F.2d 1330 (11th Cir.1984) (filing of EEOC "Charge of Discrimination” considered filing of a Complaint because it contained factual basis for the claim of discrimination); Rice v. Hamilton Air Force Base Commissary, supra, (document containing a description of plaintiffs claim considered a Complaint although it had not been labelled as such).

      . To the extent that plaintiff argues that the facts of this case justify equitable tolling of the filing period unlike the facts of the Baldwin County Welcome Center case, see discussion infra.

      . The Ninth Circuit Court of Appeals had not addressed the issue of what commences a Title VII action at the time plaintiff filed his documents. Since then, in 1983 it adopted the reasoning of Wrenn v. American Cast Iron Pipe Co. and Huston v. General Motors Corp., and held that a pro se plaintiff who files a description of his or her claim along with a right-to-sue letter and a petition for appointment of counsel “commences” a Title VII action. Rice v. Hamilton Air Force Base Commissary, supra, 720 F.2d 1084. See also Millard v. LaPointe's Fashion Store, Inc., 736 F.2d 501 (9th Cir.1984) (pro se plaintiffs request for counsel and right-to-sue letter insufficient to constitute the filing of a civil action); Mahroom v. Defense Language Institute, 732 F.2d 1439 (9th Cir.1984) (filing of letter requesting counsel, EEOC’s decision, and right-to-sue letter sufficient to constitute the filing of civil action).

      . The court chooses to address the retroactivity of Baldwin County Welcome Center rather than simply apply case law existing in 1980 because Baldwin County Welcome Center is the pronouncement of the highest court in this country and is thus obviously more compelling.

      . The equitable tolling doctrine takes into account situations where there are equitable reasons for tolling the period in which an action must be commenced. See discussion infra.


author: THOMAS F. HOGAN, District Judge.

text:
    James L. MAYNOR, Plaintiff, v. Margaret M. HECKLER, Secretary, Department of Health and Human Services, Defendant.
    Civ. A. No. 84-473.
    United States District Court, District of Columbia.
    Nov. 19, 1984.

      Robin Herman, Community Law Offices, Washington, D.C., for plaintiff.
    Deborah A. Robinson, Asst. U.S. Atty.,' Washington, D.C., for defendant.
   MEMORANDUM OPINION AND ORDER

THOMAS F. HOGAN, District Judge.

Plaintiff brought this action under Section 205(g) of the Social Security Act (Act), which incorporates 42 U.S.C. § 405(g), for a reversal of the decision of the Secretary of Health and Human Services (Secretary), defendant in this action, denying plaintiffs claim for Disability Benefits under Title II of the Act.

Background

Plaintiff Maynor incurred a back injury in March of 1979. He applied for disability benefits, but his applications were denied initially and on reconsideration. A hearing de novo was held before an administrative law judge (AU), who concluded that plaintiff is not disabled. The Appeals Council affirmed the AU’s decision which then became the final decision of the Secretary.

Issues Presented on Appeal

Plaintiffs complaint and motion for summary judgment asserts four grounds for reversal. For clarification, they are:

1. The Secretary’s decision erroneously failed to evaluate plaintiff’s claim under 20 C.F.R. § 404.1520(f)(2) and 20 C.F.R. § 404.1562;

2. The Secretary’s decision erroneously finds plaintiff capable of performing light work;

3. The decision is based on a misapplication of the Medical-Vocational Guidelines;

4. Plaintiff was denied his due process rights because he did not receive a full and fair hearing.

The Court carefully considered plaintiffs arguments and the defendant’s cross-motion for a judgment of affirmance. For the reasons that follow, the Court grants plaintiff’s motion for reversal with remand to the Secretary for a rehearing.

Discussion

1. The Secretary’s Finding, that Plaintiffs Claim is not Actionable Under 20 C.F.R. § 404-1520(f)(2), is not Supported by Substantial Evidence.

The AU decided the issue of disability under 20 C.F.R. § 404.1520(a). Under Section 1520(a), the AU considered the claimant’s current work activity, the severity of physical and mental impairments, the claimant’s residual functional capacity, and age, education and work experience to determine eligibility for disability benefits. The AU expressly found that plaintiff is not currently employed, is unable to perform his past work as a construction laborer, but that plaintiff retained a residual functional capacity to do light work. He also found that plaintiff is a person approaching advanced age, has a marginal education, is able to perform unskilled work, and that plaintiff does not have any non-exertional limitations. The AU applied these findings to the Medical-Vocational Guidelines in 20 C.F.R. Appendix 2, Table No. 2, Subpart P, Regulation No. 4, and therein found that Rule 202.10 directed a decision that plaintiff is not disabled. (Tr. at 20-21.)

Plaintiff argues that 20 C.F.R. § 404.-1520(f)(2), which establishes special standards for determining disability of persons who have a long work history limited to arduous unskilled physical labor, should have been applied in this instance. The AU found that plaintiff is not disabled under Section 1520(f). (Tr. at 21.)

The findings of the Secretary as to any fact, if supported by substantial evidence, shall be conclusive. 42 U.S.C. § 405(g). Substantial evidence means “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Davis v. Heckler, 566 F.Supp. 1193, 1195 (D.D.C.1983) (citing Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971)). The Court concludes that the Secretary’s finding is not supported by substantial evidence.

Regulation 20 C.F.R. § 404.1520(f)(2) provides:

If you have only a marginal education, and long work experience (i.e., 35 years or more) where you only did arduous unskilled physical labor, and you can no longer do this kind of work, we use a different rule (see § 404.1562).

Under 20 C.F.R. § 404.1562,

If you have only a marginal education and work experience of 35 years or more during which you did arduous unskilled labor, and you are not working and are no longer able to do this kind of work because of severe impairment(s), we will consider you unable to do lighter work, and therefore, disabled____

Both the transcript of the hearing (Tr.-at 32-51) and the AU’s decision (Tr. at 16-22) contain no findings relevant to the applicability of these regulations. Most notably, there is no determination of the plaintiff’s work history. On the other hand, the record contains clear evidence that plaintiff had entered his 35th year of employment as a construction worker. (Tr. at 83.) Plaintiff argues that he could have proved a work history of more than 35 years of arduous labor, dating back to the time when he left school in the fifth grade, if the AU had pursued a line of questioning about plaintiff’s job history.

Plaintiff aptly characterizes the duty of the AU when a claimant appears without counsel. “[T]he AU has an affirmative duty ‘to investigate fully all matters in issue, and to develop the comprehensive record required for a fair determination ____ This duty to probe and explore scrupulously all the relevant facts is particularly strict when the claimant ... is not represented by an attorney.’ ” Narrol v. Heckler, 727 F.2d 1303, 1306 (D.C.Cir.1984) (quoting Diabo v. Secretary of Health, Education and Welfare, 627 F.2d 278, 281-82 (D.C.Cir.1980)). The AU in the instant case did not fulfill has obligation where he did not question plaintiff’s length of employment and the potential applicability of § 404.1562 is fairly obvious from the evidence in the record.

This Court can order additional evidence to be taken before the Secretary upon a showing that there is new and material evidence and that there is good cause for failure to incorporate such evidence in the record in a prior proceeding. See 42 U.S.C. § 405(g). Because plaintiff was not represented by counsel and because the AU did not pursue questioning in this vein, plaintiff has satisfied his burden and shall be permitted to submit new evidence of his length of employment as an arduous laborer.

2. The ALJ’s Finding That Plaintiff has a Residual Functional Capacity to Perform Light Work is Supported by Substantial Evidence.

Plaintiff contends that the AU erred in failing to give appropriate weight to plaintiff’s testimony without a finding of lack of credibility. The Court finds no error in the AU’s conclusion that plaintiff is capable of performing light work.

The Court is not permitted to reweigh the evidence and reach its own determination, but may only review whether the decision is supported by substantial evidence. Reyes v. Secretary of Health, Education and Welfare, 476 F.2d 910, 914 (D.C.Cir.1973). The medical evidence of all the physicians, taken together, leaves no doubt that the record contains relevant evidence to support the AU’s conclusion. That this Court might have found otherwise is irrelevant. Plaintiffs testimony-does not, as plaintiff suggests, provide overwhelming evidence contrary to the AU’s conclusion. Subjective testimony of pain is not relevant to a determination of a claimant’s residual functional capacity. It is relevant to the issue of non-exertional limitations, and as such, it is addressed in the next section.

3. The Decision is Based on a Misapplication of the Medical-Vocational Guidelines.

Plaintiff argues that the AU erroneously concluded that plaintiff does not have any non-exertional limitations and that as a result he failed to consider the effect of plaintiff’s non-exertional limitations on plaintiff’s residual functional capacity to do light work. Plaintiff makes a related argument that the AU erroneously failed to provide a vocational expert to testify to the availability of jobs in the national economy, as required when non-exertional factors limit the full range of jobs in claimant’s residual functional category. Again the Court must agree with plaintiff.

The relevant regulation is 20 C.P.R.App. 2, Subpart P, Regulation No. 4, § 200.00(e). This section states:

Since the rules are predicated on an individual’s having an impairment which manifests itself by limitations in meeting the strength requirements of jobs, they may not be fully applicable where the individual’s impairment [results in sensory impairments.]
[W]here an individual has an impairment or combination of impairments resulting in both strength limitations and non-exertional limitations, the rules in this sub-, part are considered in determining first whether a finding of disabled may be possible based on the strength limitations alone and, if not, the rules ... provide a framework for consideration of how much the individual’s work capability is further diminished in terms of any types of jobs that would be contraindicated by the non-exertional limitations. § 200.-00(e)(2)

and,

[T]hese combinations of exertional and non-exertional limitations ... cannot be wholly determined under the rules in Appendix 2, ... § 200.00(e)(2)

This regulation clearly points out that the medical-vocational guidelines cannot be used to “direct” an outcome in cases where non-exertional limitations diminish the claimant’s capacity to perform the full range of jobs contemplated in his residual functional capacity category. See McCoy v. Schweiker, 683 F.2d 1138, 1146 (8th Cir.1982).

The AU concluded that Mr. Maynor’s pain was not, in and of itself, disabling. (Tr. at 21.) However, this finding does not preclude further consideration of pain as a factor in determining disability. The court in Gagnon v. Secretary of Health and Human Services, 666 F.2d 662, 665-66 (1st Cir.1981), sustained a finding that claimant’s pain was not severe enough to be a separate ground for disability, but remanded because the lower court failed to consider the pain in combination with claimant’s residual functional capacity-

In the instant case, pain is a non-exertional limitation which could diminish the types of jobs, contemplated by the light-work category, which Mr. Maynor could perform. See Gagnon, 666 F.2d at 666 and n. 8. The AU should have considered whether Mr. Maynor’s pain significantly affects his capacity to do light work, instead of directing a decision under Rule 202.10 that plaintiff was not disabled. See id. at 666.

On remand, the AU shall provide a vocational expert if plaintiff’s pain is found to be significant enough to limit his capacity to perform some of the jobs in his exertional category. See Allred v. Heckler, 729 F.2d 529, 533 (8th Cir.1984) (citing McCoy v. Schweiker, 683 F.2d at 1146); Gagnon, 666 F.2d at 666.

4. Due Process Rights to a Full and Fair Hearing

Plaintiff argues that the AU, through his failure to.properly advise plaintiff of his right to counsel and his failure to fully develop the evidence in the record, he denied plaintiff of a full and fair hearing of his claim. The Court cannot agree.

A claimant must be informed of his or her right to counsel before an administrative hearing and he or she must knowingly waive it. See Dobrowolsky v. Califano, 606 F.2d 403, 407 (3rd Cir.1979). In the hearing below, the AU informed plaintiff of his right to counsel and the need to make a decision. Plaintiff argues that the AU’s next statement: “I see you’re here with a friend today. I assume you’re going on your own behalf without an attorney.”, was an assumption, as opposed to an inquiry, and may have deterred Mr. Maynor from choosing to obtain representation.

An AU should avoid statements which deter a claimant from choosing to postpone a hearing and obtain counsel. However, plaintiff should bear the burden of proving that his result in fact occurred. Counsel’s argument, that it might have occurred is not sufficient. Nor does this Court think the AU’s statement is particularly influential or deterrent. Accordingly the Court finds plaintiff was informed and knowingly waived his right to counsel at the hearing.

Plaintiff’s due process argument also rests on allegations that the AU failed to develop several highly material issues. While the Court feels certain that the questioning could have been pursued more vigorously, this issue need not be decided because the disposition of the issues above will cure any deficiencies in the hearing below.

Conclusion

The Court’s disposition of the first and third issues necessitates a rehearing to receive and consider new evidence of plaintiff’s work history and the extent of plaintiffs non-exertional limitations due to pain.

If it is found that plaintiff is not disabled under 20 C.F.R. §§ 404.1520(f)(2) and 404.-1562, the AU shall proceed to determine whether the types of jobs contemplated in the light work category are diminished by plaintiff’s non-exertional limitation. Upon a finding that some jobs are contraindicated, the Secretary must provide a vocational expert to prove that there are jobs available for Mr. Maynor.

It is this 19th day of November, 1984,

ORDERED that this case is reversed and remanded for further proceedings consistent herewith.


author: SHOOB, District Judge.

text:
    FLIGHT INTERNATIONAL, INC., Plaintiff, v. FEDERAL RESERVE BANK OF CHICAGO, et al., Defendants.
    Civ. A. No. C83-2696A.
    United States District Court, N.D. Georgia, Atlanta Division.
    Nov. 19, 1984.
   ORDER

SHOOB, District Judge.

This matter comes before the Court on the motion by Defendant, Federal Reserve Bank of Chicago, for an order vacating the Memorandum of Opinion and Order entered in this action on February 24, 1984. 583 F.Supp. 674. On consideration thereof, it appearing to the Court that all claims asserted in this action have been settled, that this action was dismissed with prejudice by stipulation of all parties on October 22, 1984, and that the motion before the Court is unopposed, and it further appe.aring to the Court that Defendant is entitled to the requested relief, it is therefore

ORDERED that the Memorandum of Opinion and Order entered in this action on February 24, 1984, shall be, and hereby is, vacated and shall have no precedential effect.