author: LIVAUDAIS, District Judge.

text:
    Sulochana MANDHARE v. W.S. LaFARGUE ELEMENTARY SCHOOL, the Lafourche Parish School Board, the Parish of Lafourche.
    Civ. A. No. 83-1141.
    United States District Court, E.D. Louisiana.
    March 29, 1985.

      Dorothy Waldrup, Lambert & Waldrup, New Orleans, La., Risley C. Triche, Triche, Sternfels & Nail, Napoleonville, La., for plaintiff.
    Ralph R. Alexis, III, Porteous, Hainkel, Johnson & Sarpy, New Orleans, La., for defendants.
   REASONS FOR JUDGMENT

LIVAUDAIS, District Judge.

Plaintiff, Sulochana Mandhare, a female of Asian (India) origin, filed suit against defendants, W.S. LaFargue Elementary School, the Lafourche Parish School Board and the Parish of Lafourche, alleging that defendants discriminated against her by denying her re-appointment for the 1981-1982 school year because of her national origin, in violation of Title VII of the Civil Rights Act of 1964. At trial it was stipulated that the Lafourche Parish School Board is the proper defendant in this case. The School Board contends that plaintiff was terminated, or not re-employed because her heavy accent and speech patterns and grammar problems prevented her from effectively communicating with primary school students.

Plaintiff obtained her Bachelor’s of Arts degree and Bachelor’s of Education degree in 1957 and 1964, respectively, in India and in 1972 she received a Master’s of Education from Loyola University in New Orleans, Louisiana. In 1979 she received certification as a school librarian from Nichols State University at Thibodaux, Louisiana. Plaintiff served as a librarian at J.B. Maitland Elementary School for one year before she applied for employment as a librarian with the Lafourche Parish School Board, a school system which has direct jurisdiction over W.S. LaFargue Elementary School, its principal and teachers, and which employs more than fifteen persons on a regular annual basis. Plaintiff was employed by the Board as a librarian at the W.S. LaFargue Elementary School during the school year of 1980-81. W.S. LaFargue Elementary School is an elementary school serving kindergarten through second grade.

In July 1981, plaintiff was notified that she would not be re-appointed for the 1981-82 school year because of her inability to communicate well in English. On August 11, 1981 plaintiff timely filed a Charge of Discrimination with the Equal Employment Opportunity Commission (EEOC), alleging discrimination based on national origin, Asian (India), and on December 9, 1982 the U.S. Department of Justice issued plaintiff a right to sue letter after a determination was made by the EEOC on August 31, 1982 that there was reasonable cause to believe that the charge by plaintiff was true. Plaintiff timely filed suit on March 9, 1983.

Defendant’s articulated basis for not renewing plaintiff’s employment contract was that plaintiff had a communication problem because of her heavy accent and speech patterns which prevented her from effectively communicating with primary school students. Defendant explained that a part of plaintiff’s job was to tell stories to the children and to introduce them to the library and her failure to master the English language inhibited her ability to perform these tasks. Defendant also explained that as a non-tenured teacher, plaintiff was under contract for a year at a time for three years and that within her year of employment with LaFargue Elementary she was periodically observed and notified that she needed to work on improving her English. Mr. Oneid Andras, the principal of LaFargue Elementary, prepared an evaluation of plaintiff based on these observations. In this evaluation Andras stated that plaintiff did an excellent job of organizing, categorizing and preparing library materials. He also stated that she needed to improve her English as students and teachers were having difficulty understanding her. Lastly, Andras stated that he believed plaintiff would do an excellent job at a school where her speech and story telling skills would not be so critical.

On April 30, 1981, Andras again evaluated plaintiff’s skills and at this time he recommended that she not be re-employed at LaFargue Elementary because her problems with speech and grammar made it difficult for her to be understood by students and teachers. He again commented that he believed that plaintiff would do an excellent job at a school where her speech, grammar and story telling would not be so critical.

Jeffrey LeBlanc, Superintendent of Schools for Lafourche Parish, asked plaintiff to meet with him to discuss the possibility of her requesting a transfer. At the suggestion of LeBlanc, plaintiff requested that she be transferred to another school and LeBlanc recommended to the Board that plaintiff be appointed at Thibodaux Junior High School, as a librarian. Unfortunately, the School Board did not heed LeBlanc’s recommendation and the Board voted not to appoint plaintiff. This was the first time the Board had not approved one of his recommendations for appointment. After going into executive session, the Board reconvened in public session and accepted all listed appointments recommended by the Superintendent except the appointment of (p) (Exhibit P-4 at 6). No name was mentioned at the public session. The minutes of the meeting reflect that (p) was Mrs. Sulochana Mandhare. Testimony was adduced to the effect that the Board in executive session was concerned over plaintiff’s possible communication difficulty with small children, notwithstanding the fact that her recommended appointment was to a Junior High School. There was other testimony to the effect that when plaintiff’s name came up in this executive session someone mentioned that she was a foreigner and some people had a hard time understanding her. There was no testimony concerning the failure to state plaintiff’s name and prospective position when the Board resumed public session, a conspicuous sheepish action.

This court has jurisdiction of this case under 42 U.S.C. § 2000(e) et seq. and 28 U.S.C. § 1331.' The defendant qualifies as an employer under 42 U.S.C. § 2000(e). The statutory conditions precedent to instituting this suit have been complied with by plaintiff.

The United States Court of Appeals, Fifth Circuit has set forth the requisites for evaluation of this case. In Lyford v. Schilling, 750 F.2d 1341, 1344 (5th Cir., 1985) the court states:

“... Plaintiff misunderstands the nature of review given a Title VII case that has been fully tried on the merits. The three-step analysis of prima facie case, rebuttal, and showing of pretext defined by McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973) and Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981), is not the proper method of evaluating such a case. Williams v. Southwestern Bell Telephone Co., 718 F.2d 715, 717 (5th Cir.1983); see e.g. Wall v. National Railroad Passenger Corp., 718 F.2d 906, 908-09 (9th Cir.1983). As the Supreme Court stated in United States Postal Service Board of Governors v. Aikens, 460 U.S. 711, 103 S.Ct. 1478, 1482, 75 L.Ed.2d 403 (1983):
[w]hen the defendant fails to persuade the district court to dismiss the action for lack of a prima facie case, and responds to the plaintiff’s proof by offering evidence of the reason for the plaintiff’s rejection, the fact finder must then decide whether the rejection was discriminatory within the meaning of Title VII. At this stage, the McDonnell-Burdine presumption “drops from the case,” and “the factual inquiry proceeds to a new level of specificity.” The “factual inquiry” in a Title VII case is “whether the defendant intentionally discriminated against the plaintiff.” (citations omitted).
Once the parties have introduced all their evidence, the district court, as in every civil case, must decide whether plaintiff has proved by a preponderance of the evidence that defendant violated Title VII by intentionally discriminating against her. This burden may be satisfied by “persuading the court that a discriminatory reason more likely motivated the employer or indirectly by showing that the employer’s proferred explanation is unworthy of credence.” Burdine, 101 S.Ct. at 1095, quoted in Aikens, 103 S.Ct. at 1482.”

Defendant’s contention that its legitimate reason for plaintiff’s termination or non appointment was that she had a communication problem because of her accent which prevented her from effectively communicating with primary school students is a feigned contention. Plaintiff was not being considered for a position which would require such communication. She was to be appointed librarian at a Junior High School, a position for which it was established that she was eminently qualified.

The ultimate issue, discrimination vel non, is treated the same as any other issue of fact. Aikens, 103 S.Ct. at 1482. Defendant’s explanation of its motivation is unworthy of credence. Plaintiff is entitled to relief.

42 U.S.C. § 2000e-5(g) provides in pertinent part that upon the finding of an unlawful employment practice, “the court may ... order such affirmative action as may be appropriate, which may include, but is not limited to reinstatement or hiring of employees, with or without back pay ... or any other equitable relief as the court deems appropriate,” and that “[i]nterim earnings or amounts earnable with reasonable diligence by the person ... discriminated against shall operate to reduce the back pay otherwise allowable.” As stated by the Supreme Court in Albemarle Paper Company v. Moody, 422 U.S. 405, 418, 95 S.Ct. 2362, 2372, 45 L.Ed.2d 280 (1975), “it is also the purpose of Title VII to make persons whole in injuries suffered on account of unlawful employment discrimination. This is shown by the very fact that Congress took care to arm the court with full equitable powers.”

In the instant case, the fashioning of an appropriate remedy for the defendant’s unlawful discrimination against plaintiff presents an apparently unique problem. Plaintiff was non tenured and had she served that second year as librarian at a Junior High School the possibility remained that she might not have been recommended for re-appointment for a third year of employment. Further, she might not have been granted tenure after a third year. Throughout these proceedings plaintiff has persisted in her desire to be re-instated.

Had plaintiff not so persisted the court would conclude that an award of back pay, at least for the 1981-1982 school year subject to credits established by the evidence, would be consistent with the purposes of Title VII. Upon consideration, the Court concludes that a reasonable remedy consistent with the purposes of Title VII to make persons whole for injuries suffered on account of unlawful employment discrimination, and considering the relative merits and all aspects of this case, is to order reinstatement without back pay, in this manner. The Lafourche Parish School Board shall, for the 1985-1986 school year, reinstate plaintiff to employment as librarian at a Junior High School, or with the mutual consent of the parties, at any other type of school, within its school system. This employment shall be subject to the terms and conditions of plaintiff’s initial employment by defendant and this employment shall be considered plaintiff’s second year of employment in the defendant school system. Garza v. Brownsville Independent School Dist., 700 F.2d 253, 255 (5th Cir.1983). The statute, 42 U.S.C. § 2000e-5(g), does not provide that other equitable relief as the court may deem appropriate may be ordered in addition. It provides that such may be ordered in the alternative.

The statute does provide for prevailing party attorney’s fees. 42 U.S.C. § 2000e-5(k). At a subsequent hearing plaintiff’s attorneys submitted materials relevant to such an award, their contemporaneous time records and hours claimed. The court’s discretion in awarding fees must be exercised within evidentiary bounds and in accord with the dictates of Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). The ultimate goal is to award fees “adequate to attract competent counsel but which do not produce windfalls.” Hensley, 103 S.Ct. at 1938 n. 4 (quoting S.Rep. No. 94-1011, p. 6 (1976).

In this case plaintiff engaged the services of two attorneys, which has resulted in some duplicative effort and time expended, which will be adjusted accordingly. Defendant is not called upon to pay each attorney for performing services where the services of one would be sufficient. As a starting point the court will consider the number of hours reasonably expended on the litigation, excluding those claimed but not reasonably expended, and multiply the result by a reasonable hourly rate. Hensley, 103 S.Ct. at 1939.

Plaintiff’s exhibit Fee 1 received at the hearing on damages and attorney’s fees consists of the contemporaneous time records of Ms. Dorothy Waldrup and that of Risley C. Triche, Esq., plaintiff’s two attorneys. For the reasons explained, the Court will adjust these records, as follows:

Ms. Waldrup’s items:
02-22-84 research, etc., from 6 to 2 hours, excessive;
02-23-84 editing, etc., from 3 to 1 hour, excessive;
02-28-84 depositions, etc., from 6 to 2 hours, duplicative;
12-04-84 preparation for trial, etc., from 5 to 0 hours, repetitious;
12-05-84 preparation for trial from 6 to 2 hours, excessive and repetitious;
12-05-84 trial preparation and court appearance, etc., from 10 to 4 hours, duplicative;
12-07-84 trial appearance, from 7 to 4 hours, duplicative;
01-10-85 review of case law, from 2 to 0 hours, excessive;
01-10-85 review of trial notes, etc., from 5 to 1 hour, excessive;
01-14-85 draft, etc., from 4 to 0 hours, excessive and cumulative to 1-10-85 4 hour item.

This adjustment reduces the number of hours claimed by Ms. Waldrup from 157.80 to 119.80, which the court deems to be reasonable and proper.

Mr. Triche’s items:
02-21-84 meeting with Dorothy Waldrup from 6% to 0 hours, duplicative;
02-28-84 depositions in Thibodaux, from 3% to 2 hours, duplicative;
12-06-84 trial, etc., from 14 to 8 hours, duplicative;
12-07-84 trial, etc., from 8V2 to 6 hours, duplicative;
02- 23-8T 03- 02-84 03-03-84 11- 26-84 12- 03-84 items for office employee time are disallowed

This reduces the number of hours claimed by Mr. Triche from 89 hours to 73V2 hours, which the court deems to be reasonable and proper and to which will be added the 4½ hours claimed for 12-03-84 services by his associate attorney Mr. Bourgeois.

Having determined the number of hours reasonably expended the court must multiply that by a “reasonable hourly rate.” Hensley, 103 S.Ct. at 1939. Reasonable fees “are to be calculated according to the prevailing market rates in the relevant community” that is “those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation.” Blum v. Stenson, — U.S. -, 104 S.Ct. 1541, 1547, 79 L.Ed.2d 891 & n. 11 (1984).

Criteria set forth in Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir.1974) were touched upon at the hearing on damages and attorney’s fees and the court concludes that a reasonable hourly rate for the services of Ms. Waldrup would be $90.00 and for Mr. Triche $100.00. The 4½ hours claimed for 12-03-84 services by Mr. Triche’s associate at $85.00 is appropriate. In making this conclusion the court has weighed the experience and reputation of the attorneys, the fact that Mr. Triche was lead trial counsel and has considered awards made in similar eases in this entire court.

Finally the court must consider the degree of success obtained that is, the extent to which plaintiff prevailed in the litigation. Hensley, 103 S.Ct. at 1938-1939, 1941. Where a plaintiff has been only partially successful, the court “may attempt to identify specific hours that should be eliminated, or it may simply reduce the award to account for the limited success.” Hensley, 103 S.Ct. at 1941; Davis v. West Community Hospital, 755 F.2d 455 at 468 (5th Cir.1985). The court opts the latter and concludes that the award should be reduced 25%. Here plaintiff sought back pay, reinstatement, general and equitable relief and attorney’s fees. Plaintiff did not prevail on that significant claim for relief, back pay, nor did she prevail on the request for general and equitable relief.

Thus, Ms. Waldrup would be entitled to an attorney’s fee in the sum of $8,086.50 (119.80 X $90 - 25%) and Mr. Triche to an attorney’s fee in the sum of $5,799.38 (73.5 X $100 + 4.5 X $85-25%).

Judgment will be entered in favor of plaintiff Sulochana Mandhare, and against defendant, Lafourche Parish School Board, directing that defendant, for the 1985-1986 school year reinstate plaintiff to employment as a librarian at a Junior High School, or with mutual consent of plaintiff and defendant, at any other type of school within defendant’s school system, such employment to be subject to the terms and conditions of plaintiff’s initial (1980) employment by defendant and such employment to be treated and considered plaintiff’s second year of employment in the defendant school system. Further, that defendant pay plaintiff attorney’s fees in the sum of $8,086.50 for services rendered by Ms. Dorothy Waldrup and $5,799.38 for services rendered by Risley C. Triche, Esq. Plaintiff shall recover costs of these proceedings.


source: Caselaw Access Project

author: FOREMAN, Chief Judge.

license: Public Domain

text:
    Karen D. HARBERS, Plaintiff, v. SHOP ’N SAVE WAREHOUSE FOODS, INC. and United Food and Commercial Workers’ International Union, Retail Clerks’ Local 304, Defendants.
    Civ. No. 84-3041.
    United States District Court, S.D. Illinois, East St. Louis Division.
    March 29, 1985.
    William J. Mateyka, Mateyka, Hill & Hill, Granite City, Ill., for plaintiff.
    Harold G. Baker, Jr., Belleville, Ill., McMahon, Berger, Breckenridge, Hanna, Linihan & Cody, St. Louis, Mo., Robert W. Stewart, St. Louis, Mo., Bruce Goldstein, Edwardsville, Ill., Neal D. Rosenfeld, Jonathan D. Karmel, Karmel & Rosenfeld, Chicago, Ill., for defendants.
   MEMORANDUM AND ORDER

FOREMAN, Chief Judge.

Before the Court are defendant Shop ’N Save Warehouse Foods, Inc.’s Motion for Summary Judgment and defendant United Food and Commercial Workers’ International Union, Retail Clerks’ Local 304’s Motion for Summary Judgment. Plaintiff was employed by defendant Shop 'N Save in 1979 as a checker. On November 21, 1983, she was discharged. Between May 4, 1981, and October 22, 1983, plaintiff was issued twelve Employee Correction Reports as a result of disciplinary infractions; most of these reports were signed by plaintiff, and plaintiff does not dispute that these disciplinary measures were taken or that the underlying behavior which triggered the disciplinary actions occurred. In fact, plaintiff admits to other infractions which did not result in disciplinary action.

On September 14, 1983, plaintiff was placed on probation for carelessness regarding a check transaction. On October 12, 1983, plaintiff was suspended for five working days for defective, improper work and carelessness. The conduct underlying this infraction involved opening another checker’s cash drawer, without the other checker’s knowledge, for the purpose of making change. This conduct was expressly prohibited, as demonstrated by a memorandum posted by the management of Shop ’N Save and admittedly initialed by plaintiff. On October 22, 1983, plaintiff was again issued an Employee Correction Report for defective, improper work and carelessness for failing to balance her till within company policy; her probation period was extended until March 9, 1984. Plaintiff did not file a grievance over any of the above-mentioned disciplinary actions.

On November 19, 1983, plaintiff checked out merchandise purchased by her grandfather, in direct contravention of company policy as expressed in the Shop ’N Save Employee Handbook, which sets forth policies and rules to be followed by employees. Plaintiff had signed a statement to the effect that she received a copy of this handbook, read the company policies and rules, and agreed to follow these rules. Depositions of both plaintiff and her grandfather indicate that plaintiff habitually checked out her grandfather’s merchandise. Further, plaintiff had previously been admonished regarding other incidents involving her checking out purchases of other family members. On November 21, 1983, the decision was made to discharge plaintiff. All of the foregoing facts are undisputed.

Following her discharge, plaintiff filed a grievance with the union. The union, however, decided not to pursue her grievance or submit the matter of her termination to arbitration pursuant to the collective bargaining agreement. Plaintiff filed a lawsuit in this Court asserting jurisdiction under Section 301 of the Labor Management Relations Act. Count I of plaintiff’s Complaint challenges Shop ’N Save’s October 19, 1983, five-day suspension of plaintiff for using another checker’s cash drawer, as well as this defendant’s termination of plaintiff’s employment for checking out merchandise purchased by relatives. Plaintiff implies that her discharge resulted from a conversation she had regarding the hiring of new personnel. Count II of plaintiff’s complaint alleges that the union breached its duty of fair representation. Both defendants have filed Motions for Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.

Summary judgment is appropriate only where the record shows that “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56. The party moving for summary judgment has the burden of establishing the lack of a genuine issue of material fact. Korf v. Ball State University, 726 F.2d 1222, 1226 (7th Cir.1984). The Court must view the evidence, and the reasonable inferences to be drawn therefrom, in the light most favorable to the party opposing summary judgment. Where the moving party fails to meet its strict burden of proof, summary judgment cannot be entered even if the opposing party fails to respond to the motion. Yoker v. Pittsburg Corning Corp., 733 F.2d 1215 (7th Cir.1984).

Where the moving party has met its initial burden and the opposing party asserts the existence of a question of fact, the Seventh Circuit has identified two considerations to be used in determining whether summary judgment is proper. The Court must determine whether the non-moving party has established that there is a genuine issue as to that fact.

To create a question of fact, an adverse party responding to a properly made and supported summary judgment motion must set forth specific facts showing that there is a genuine issue for trial.... A party may not rest on mere allegations or denials of his pleadings; similarly, a bare contention that an issue of fact exists is insufficient to raise a factual issue.

Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.), cert. denied, — U.S. -, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983). Furthermore, the disputed fact must be material, that is, it must be outcome-determinative under the applicable law. Egger v. Phillips, 710 F.2d 292, 296 (7th Cir.) (en banc), cert. denied, — U.S. -, 104 S.Ct. 284, 78 L.Ed.2d 262 (1983).

Applying these principles to the instant case, the Court finds that there is no issue of material fact and that defendants are entitled to judgment as a matter of law. Plaintiff concedes that the union did not breach its duty of fair representation as regards her suspension, since plaintiff did not seek union representation in this matter. (Plaintiff’s Memorandum in Opposition to Defendant Union’s Motion for Summary Judgment, page 9; Deposition of Plaintiff, page 124.) With respect to the matter of alleged wrongful conduct on the part of Shop ’N Save for its actions in suspending plaintiff for five days, the law is clear that in the absence of invoking available contractual remedies under the collective bargaining agreement, a claim is not viable and must be dismissed. Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 563, 96 S.Ct. 1048, 1055, 47 L.Ed.2d 231 (1976); Republic Steel Corp. v. Maddox, 379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965). Thus, summary judgment for both defendants is clearly an appropriate disposition of plaintiff’s claims regarding her five-day suspension.

Plaintiff’s claims regarding termination, however, require further analysis, as plaintiff did seek union representation for this disciplinary action. Plaintiff contends that the union should have submitted her grievance to arbitration and that it failed to adequately investigate her claim. In support of her position, plaintiff alleges that a union representative, Oma South, was unaware of plaintiff’s statement regarding a co-manager’s receiving an oral warning after checking out a pack of cigarettes for a relative. According to plaintiff, this indicates that the matter of her termination had not been fully investigated before the decision was made that to arbitrate would be futile.

Plaintiff, asserts that in Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 96 S.Ct. 1048, 47 L.Ed.2d 231 (1976), the United States Supreme Court “held that a Union’s failure to investigate evidentiary leads submitted by an employee-grievant was tantamount to a breach of their duty of fair representation.” (Plaintiff’s Memorandum in Opposition to Defendant Union’s Motion for Summary Judgment, page 10.) A careful reading of Hines, however, does not support plaintiff’s interpretation of the holding of that case. In Hines, the question before the Supreme Court was expressly limited to the finality of a decision reached after arbitration as regards a later suit against an employer. 424 U.S. at 560-61, 96 S.Ct. at 1054-55. The Hines Court held that when it can be proved that a union has breached the duty of fair representation, a § 301 remedy is not foreclosed against an employer, even in the face of an arbitrator’s decision in favor of the employer. 424 U.S. at 570-72, 96 S.Ct. at 1059-60.

The facts of Hines are quite distinguishable from the facts of the instant case. In Hines, employee truck drivers were discharged for dishonesty after having been accused of seeking reimbursement for motel expenses in excess of the actual charges. The union represented the employees throughout the grievance process, including arbitration. The joint arbitration committee sustained the discharges. A year later, however, a motel clerk admitted that he had falsified registration cards and pocketed the funds at issue, thus explaining the discrepancy. In Hines, the employees were innocent of the infractions on which their discharges were based, and the Court stated that “if they prove an erroneous discharge and the Union’s breach of duty tainting the decision of the joint committee, [they] are entitled to an appropriate remedy against the employer as well as the Union. It was error to affirm the District Court’s final dismissal of [the employees’] action against [the employer]. To this extent the judgment of the Court of Appeals is reversed.” Hines, 424 U.S. at 570, 96 S.Ct. at 1059.

In the instant case, plaintiff does not contend that she was innocent of the infractions. Plaintiff cites Hines to establish that the union breached its duty of fair representation because it failed to adequately investigate the matter of her termination, as shown, according to plaintiff, by South’s lack of awareness that a co-manager suffered only an oral reprimand for once checking out a pack of cigarettes for a relative.

The standards which govern whether a union has breached its duty of fair representation are well settled. “A breach of the statutory duty of fair representation occurs only when a union’s conduct toward a member of the collective bargaining unit is arbitrary, discriminatory, or in bad faith.” Vaca v. Sipes, 386 U.S. 171, 190, 87 S.Ct. 903, 916, 17 L.Ed.2d 842 (1967). There must be intentional misconduct, not mere negligence. Dober v. Roadway Express, Inc., 707 F.2d 292 (7th Cir.1983). The union’s conduct must be deliberate and unjustified. Superczynski v. P.T.O. Services, Inc., 706 F.2d 200, 202-03 (7th Cir.1983). See also Motor Coach Employees v. Lockridge, 403 U.S. 274, 91 S.Ct. 1909, 29 L.Ed.2d 473 (1971); Graf v. Elgin, Joliet & Eastern Ry., 697 F.2d 771 (7th Cir.1983); Cote v. Eagle Stores, Inc., 688 F.2d 32 (7th Cir.1982); Hoffman v. Lonza, 658 F.2d 519 (7th Cir.1981); Swatts v. United Steelworkers of America, 585 F.Supp. 326 (S.D.Ind.1984). Plaintiff has not made a showing that the stringent standard set forth above can be met, and therefore the Court finds that the union did not breach its duty of fair representation. Accordingly, summary judgment in favor of the union is appropriate in this case.

Regarding the claim against the employer, Shop ’N Save, it is well settled that an essential element of a § 301 action against an employer is a showing that the union has breached its duty. United Parcel Service, Inc. v. Mitchell, 451 U.S. 56, 61-62, 101 S.Ct. 1559, 1563-1564, 67 L.Ed.2d 732 (1981); Hines, 424 U.S. at 570-71, 96 S.Ct. at 1059-60; Superczynski, 706 F.2d at 203-04; Cote, 688 F.2d at 35; Gill v. Westinghouse Electric Corp., 568 F.Supp. 479, 482 (N.D.Ill.1983). In view of the Court’s conclusion that the defendant union has not been shown to have breached its duty of fair representation, the claim against the defendant employer must fail.

Accordingly, the Court hereby GRANTS Shop ’N Save Warehouse Foods, Inc.’s Motion for Summary Judgment (Document No. 18) and United Food and Commercial Workers’ International Union, Retail Clerks’ Local 304’s Motion for Summary Judgment (Document No. 22). The Clerk is hereby ORDERED to enter judgment in favor of defendants and against plaintiff Harbers.

IT IS SO ORDERED.


author: DIANA E. MURPHY, District Judge.

text:
    John CORBEY, Plaintiff, v. Brooks GRACE, and A.G. Becker Paribas, Inc., a New York corporation, Defendants.
    Civ. No. 4-84-736.
    United States District Court, D. Minnesota, Fourth Division.
    March 29, 1985.

      Dale Thornsjo, Minneapolis, Minn., for plaintiff.
    J.D. Jackson, Tracy Van Steenburgh, Dorsey & Whitney, Minneapolis, Minn., for defendant A.G. Becker Paribas, Inc.
   MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

Plaintiff John Corbey brought this action for damages against defendants Brooks Grace and A.G. Becker Paribas, Inc. (Becker), alleging violations of federal and state securities laws and common law violations. Jurisdiction is alleged under 28 U.S.C. § 1331, 15 U.S.C. § 78aa, and 28 U.S.C. § 1337. Jurisdiction of the state claims is founded upon pendent jurisdiction. This matter is now before the court upon the motion of Becker to dismiss.

Factual Background

The following facts are alleged by plaintiff in his complaint and are taken as true for the purposes of this motion to dismiss under Federal Rules of Civil Procedure 12(b)(6).

Becker is a national securities broker-dealer with an office in Hennepin County, Minnesota. At the time of this dispute Brooks Grace was employed by Becker as a securities salesman. Corbey alleges numerous securities violations by the defendants arising from Grace’s successful efforts to have Corbey open a margin account and engage in trading on margin and from the subsequent unauthorized trading in the account by Grace.

Prior to the transactions at issue here, Corbey maintained a security account with Becker. Corbey alleges in the complaint that his investment needs and objectives were conservative because he had irreplaceable income and savings and was responsible for monthly nursing home expenses for his wife. Corbey further alleges that Grace knew this background information and that accordingly Corbey’s account should have been limited to stable and income-producing securities, designed for a steady flow of income.

Nevertheless, Grace represented to Cor-bey that because the stock of Analyst International, Inc. was guaranteed to rise in value, he should purchase on margin. In fact, the stock was a volatile and speculative security but Corbey was never informed of this information. In addition, the defendants never fully explained the fundamental aspects of a margin account to Corbey. They simply offered to extend credit or arrange for a loan for Corbey, and ultimately they did extend credit by opening the margin account. Thus, Corbey was not informed that if the stock held on margin was to diminish in value, Becker would be required to send a “margin call”, which would require Corbey to send additional sums of money to Becker in order to retain the stock in the margin account. Otherwise, Becker would by law be forced to sell such stock to keep the account within legal limits.

After these conversations with Grace, Corbey decided to sell warrants of Chrysler Corporation from his security account to pay for stock of Analysts International, Inc. This was subsequently purchased on margin on or about July 27, 1983. Corbey alleges that this transaction ultimately resulted in losses in excess of $30,000. Subsequently, Grace purchased an additional 800 shares of Analysts Internationa], Inc. on or about October 11, 1983 for Corbey’s account without Corbey’s approval. When Corbey was notified of the purchase, he demanded immediate recission of the transaction. Even though the demand for recission came within 7 days of the original purchase order, the time period allowed for recission, Grace informed Corbey that the transaction could no longer be rescinded. Corbey alleges that this transaction ultimately resulted in losses in excess of $30,-000. This action was filed by Corbey on July 18, 1984, and an amended complaint was filed on October 11, 1984.

Discussion

Becker is moving to dismiss with prejudice those parts of counts one arid two which allege violations of section 15(c)(1) and rules 15c 1-2, 15c 2-5, and 10b-3, and count ten. It seeks to dismiss all remaining counts without prejudice.

Section 15 Claims

In counts one and two of the complaint Corbey asserts in part that the willfully fraudulent and deceptive conduct of defendants violates section 15(c)(1) of the Securities Exchange Act of 1934, 15 U.S.C. § 78o (c)(1) and rule 15c 2-5, 17 CFR § 240.15c 2-5, promulgated thereunder. Section 15(c)(1) provides that brokers and dealers are prohibited from making use of the mails or any means of interstate commerce “to effect any transaction in, or to induce the purchase or sale of, any security” in over-the-counter transactions and transactions on exchanges of which the broker-dealer is not a member by means of any “manipulative, deceptive, or other fraudulent device or contrivance.” 15 U.S.C. § 78o (c)(1). It is a counterpart to section 10(b) and rule 10b-5, the general antifraud provisions applicable to “any security registered on a national securities exchange or any security not so registered”. Securities Exchange Act of 1934, § 10(b), 15 U.S.C. § 78j(b). Becker argues that this claim should be dismissed because there is no private right of action under section 15(c)(1) or its rules. Corbey asserts that section 15(c)(1) contains within it a valid private right of action against broker-dealers.

The central inquiry to such a determination is whether Congress intended to create, either expressly or by implication a private cause of action. Touche Ross & Co. v. Redington, 442 U.S. 560, 575, 99 S.Ct. 2479, 2488, 61 L.Ed.2d 82 (1979). The language and focus of the statute, its legislative history, and its purpose are the factors traditionally relied upon in determining legislative intent. Id. at 575-76, 99 S.Ct. at 2488-89.

While there is no express grant of a private right of action in section 15(c)(1), the statute does proscribe fraudulent conduct in the sale of securities. Thus, it is possible to argue that an intent to confer a private right of action can be implied from the focus of the section. See Pierson v. Dean, Witter, Reynolds, Inc., 551 F.Supp. 497 (C.D.Ill.1982).

The remaining Touche Ross factors support a conclusion that no implied private right of action exists, however. Neither party cites to any legislative history which indicates that Congress intended to provide a private right of action for violation of this section. Corbey contends, however, that the express reference to the section in the limitations period of section 29 of the Securities Exchange Act of 1934, 15 U.S.C. § 78cc(b), evidences that a cause of action exists. This court is not persuaded by the interpretation given to the legislative history of section 29 in holding that a private right of action exists under section 15(c)(1). Maher v. J.R. Williston & Beane, Inc., 280 F.Supp. 133, 137 (S.D.N.Y.1967), relied on the legislative history of section 29 in finding a private right of action under section 15(c)(1). The court stated that the provision in section 29(b) establishes a limitation period for violation of section 15(c) and then cited a 1950 Yale law review article taking the view that the amendment of section 29 to include this limitations period gives rise to the implication that Congress had always assumed that private actions under section 15(c) were available.

The amendment to section 29 should not be read so broadly, however. The limitation period of section 29, by its express terms, applies only to actions brought under section 29 itself. Douglas v. Glenn E. Hinton Inv., Inc., 440 F.2d 912, 914 (9th Cir.1971). Certain securities contracts are voided by section 29(b) if they violate any provision of the Securities Exchange Act of 1934 or any rule or regulation thereunder. Section 29(b) further provides that no contract shall be deemed void by reason of the violation of any rule or regulation prescribed pursuant to section 15(c)(1) unless an action is brought within one year of discovery of the violation. Thus, section 29 creates substantive rights of its own, including a statute of limitations for those claims brought under it and based on a violation of section 15(c)(1). This does not provide any support for Corbey’s claims under section 15(c)(1) because the source of his rights must be found, if at all, in section 15(c)(1), the substantive provision which he seeks to enforce. Touche Ross & Co., 442 U.S. at 577, 99 S.Ct. at 2489. The 1938 amendment to section 29 to include the limitations provision is evidence of Congressional intent on section 29 alone.

The purpose of the statute is the final traditional factor used to determine legislative intent. Courts addressing the purpose of the Act and section 15(c)(1) after the Touche Ross decision have found that because of the similarities between section 15(c)(1) and section 10(b), it would not further the purpose of the regulatory framework to allow an implied private right of action under section 15(c)(1). Pierson v. Dean, Witter, Reynolds, Inc., 551 F.Supp. at 502-03; see also Berk v. Oppenheimer & Co., Inc., Fed.Sec.L.Rep. ¶ 99,603 (N.D.Ill.1983); Chapman v. Merrill Lynch, Pierce, Fenner & Smith, Inc., Fed.Sec.L. Rep. ¶ 99,419 (D.Md.1983). Both provisions proscribe the use of any manipulative, deceptive, or other fraudulent device or continuance in the purchase or sale of any security. The protections provided by section 15(c)(1) are all subsumed within the provisions of section 10(b). The private right of action under section 10(b) and rule 10b-5 encompasses fraud by broker-dealers involving over-the-counter transactions or transactions on exchanges of which the broker-dealer is not a member. Pierson v. Dean, Witter, Reynolds, Inc., 551 F.Supp. at 503; see Superintendent of Ins. v. Bankers Life and Casualty Co., 404 U.S. 6, 10, 92 S.Ct. 165, 167, 30 L.Ed.2d 128 (1971); Hooper v. Mountain States Sec. Corp., 282 F.2d 195 (5th Cir.1960), cert. denied, 365 U.S. 814, 81 S.Ct. 695, 5 L.Ed.2d 693 (1961); Fratt v. Robinson, 203 F.2d 627 (9th Cir.1953).

The private remedy for this type of fraud must be found in section 10(b) and not in section 15(c)(1). In a parallel situation, the Eighth Circuit Court of Appeals held there is no private right of action in section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a). Shull v. Dain, Kalman & Quail, Inc., 561 F.2d 152, 155 (8th Cir.1977), cert. denied, 434 U.S. 1086, 98 S.Ct. 1281, 55 L.Ed.2d 792 (1978). The court found that section 17(a) does not confer in its terms a private cause of action to a purchaser and refused to imply such a right noting that Congress expressly provided a remedy to purchasers in section 12(2) of the ‘33 Act. Similarly, section 10(b) provides a remedy to those claiming wrongs under section 15(c)(1). It is true that the similarities in language could cut in favor of finding that Congress intended to create a private right of action under both sections. Yet, the Supreme Court’s acquiesence in implying a private right of action under section 10(b) was in part based upon the 25 year-old' recognition by the lower federal courts of an implied action under § 10(b). Touche Ross, 442 U.S. at 577-78 n. 19, 99 S.Ct. at 2489-90 n. 19. No such longstanding lower-court interpretation supports section 15(c)(1). Furthermore, Shull presents an analogous situation where no implied private right of action was found under section 17(a) for purchasers even though its antifraud provisions are also similar to section 10(b). See Shull, 561 F.2d at 155.

The weight of authority on the traditional factors of legislative intent support a conclusion that no implied right of action exists. The cases cited by plaintiff either do not address the issue of whether an implied cause of action exists under section 15(c)(1) or are pre-Touche Ross decisions. Accordingly, the court finds that no private right of action exists under section 15(c)(1).

NASD Rules

The motion to dismiss Corbey's claims under sections 1, 2, 18, and 27 of the NASD Rules of Fair Practice requires the court to engage in the same analysis of legislative intent. It is unsettled in this circuit whether a private cause of action is available for damage to a customer through a violation of a private trade association rule. See Harris v. Stifel, Nicolaus & Co., Inc., 600 F.2d 139, 146 (8th Cir.1979).

Congress had not expressly authorized private actions for violations of NASD rules. The complaint does not specify the statutory section, if any, under which Cor-bey claims a private action may be implied. Courts that have examined possibly relevant sections of the 1934 Act have found they neither “confer rights on private parties nor proscribe any conduct as unlawful,” Touche Ross v. Redington, 442 U.S. 560, 569, 99 S.Ct. 2479, 2485, 61 L.Ed.2d 82 (1979), and cannot, by their very terms, indicate a legislative intent to create a private cause of action. See, e.g., Jablon v. Dean Witter & Co., 614 F.2d 677, 681 (8th Cir.1980); Emmons v. Merrill Lynch, Pierce, Fenner & Smith, 532 F.Supp. 480, 483 (S.D.Ohio 1982).

There is also no hint of Congressional intent regarding private causes of action in the legislative history of statutes regulating the NASD. Emmons, 532 F.Supp. at 483. Finally, the conclusion that no section provides private causes of action under the NASD rules is further supported by the explicit provision for private causes of action in sections 9(e), 16(b), and 18 of the 1934 Act. Thus, “when Congress wished to provide a private damage remedy, it knew how to do so and did so expressly.” Touche Ross, 442 U.S. at 572, 99 S.Ct. at 2487; Jablon, 614 F.2d at 681. The statutory scheme regulating securities associations does provide that the NASD may suspend or otherwise discipline its own members, 15 U.S.C. § 78o —3(b)(7)—(8), indicating that this was to be the exclusive means of enforcement. Emmons, 532 F.Supp. at 483; Coleman v. D.H. Blair & Co., 521 F.Supp. 646, 653-54 (S.D.N.Y.1981).

The examination of the statute, its legislative history, and its purpose, demonstrate a clear congressional intent not to create a private cause of action for violations of the NASD rules pled by plaintiff. Se0e, e.g., Walck v. American Stock Exchange, Inc., 687 F.2d 778 (3d Cir.1982), cert. denied, 461 U.S. 942, 103 S.Ct. 2118, 77 L.Ed.2d 1300 (1983) (action against stock exchangers for violations of their rules); Jablon v. Dean Witter & Co., 614 F.2d 677 (9th Cir.1980); Gustafson v. Strangis, 572 F.Supp. 1154 (D.Minn.1983) (no private cause of action for the NASD’s failure to prevent member misconduct); Emmons v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 532 F.Supp. 480 (S.D.Ohio 1982). This conclusion holds true even where, as here, fraud is alleged. Chapman v. Merrill Lynch, Pierce, Fenner & Smith, Inc., Fed.Sec.L.Rep. ¶ 99,419 (D.Md.1988).

Section 10(b), Rule 10b-5

Counts one and two also allege that defendants’ misstatements or omissions in the opening of Corbey’s margin account with Becker caused the plaintiff to purchase securities on margin. Becker moves to dismiss on the basis that representations or omissions regarding the operation of a margin account are not made “in connection with” the purchase or sale of a security as required under rule 10b-5. The fraud, taken as alleged in the complaint, is a mixed bag of misrepresentations going both to the risks of financing stock investment through a margin account and the recommendation by Grace of Analyst International, Inc. The fraud alleged need only “touch” on the sale of a security for there to be redress under section 10(b). Superintendent of Insurance v. Bankers Life and Casualty Co., 404 U.S. 6, 12-13, 92 S.Ct. 165, 168-69, 30 L.Ed.2d 128 (1971); Arrington v. Merrill Lynch, Pierce, Fenner & Smith, 651 F.2d 615, 619 (9th Cir.1981). These misrepresentations as alleged state a claim for fraud “in connection with” the sale of securities. Arrington, 651 F.2d at 619.

Count three alleges deceptive conduct by Grace in engaging in unauthorized trading and then incorrectly informing Cor-bey that he could not rescind the transaction. Becker moves to dismiss on the basis that claims of unauthorized trading do not involve an element of deception. The deception alleged by Corbey is more than unauthorized trading, however. It is primarily based on the statement that the unauthorized transaction could not be rescinded when, in fact, it could have been. Precisely when the transactions were finalized is a question of intent for the finder of fact. Lewelling v. First California Co., 564 F.2d 1277, 1280 (9th Cir.1977). In this case the fraud could possibly arise from omissions during the course of the transaction or misstatements in response to Cor-bey’s inquiries on recission. These allegations are sufficient to satisfy the requirement that the fraud occur in connection with the purchase or sale of a security. Id. Pross v. Baird Patrick & Co., Inc., 585 F.Supp. 1456 (S.D.N.Y.1984), relied on by Becker for its position is distinguishable because it was decided in the posture of summary judgment. Also, the plaintiff in that case did state a claim by alleging a material omission in the broker’s failure to disclose that it was “making a market” in a particular security. The defendant only subsequently demonstrated on summary judgment that it adequately disclosed its market-maker- status.

Count four alleges a breach of fiduciary duty due to the special relationship between the parties arising under the margin agreement. “Fiduciary duty arises out of a relationship between persons; it goes beyond the mere duty not to lie or deliberately omit material facts.” McGinn v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 736 F.2d 1254, 1258 (8th Cir.1984). Whether such a duty exists between a broker and a customer is a question of state law. Id. In Minnesota, a claim for breach of fiduciary duty requires a showing of more than a simple broker-customer contract. See Rude v. Larson, 296 Minn. 518, 207 N.W.2d 709 (1973) (per curiam); see also McGinn, 736 F.2d at 1258. The Minnesota Supreme Court stated in Rude:

Absent a special agreement to the contrary, a licensed broker owes his customer only the duty to exercise due care in executing all instructions expressly given to him by the principal. He is not a guarantor or insurer against loss sustained by his customer.

296 Minn, at 519-20, 207 N.W.2d at 711.

Corbey alleges only that the special agreement arises out of the margin agreement itself. He does not allege that the particular agreement has language indicating the existence of a special relationship or that it is anything other than a standard broker agreement. Under the reasoning of Rude, Corbey has failed to specify the content of any special agreement or relationship and thus, does not state a claim for breach of fiduciary duty in count four.

Corbey requests that he be allowed to amend the complaint to identify the contract allegedly breached under count five as being the margin agreement dated July 23, 1983. Becker indicated at the hearing it had no objection. Accordingly, the court will allow plaintiff twenty days in which to amend count five.

Since Corbey is entitled to proceed with claims under section 10(b) and rule 10b-5, the court has jurisdiction over the federal claim in count seven and continues to have jurisdiction over the pendent claims.

ORDER

Accordingly, based upon the above and all the files, records, and proceedings herein,

IT IS HEREBY ORDERED that

1. Counts one and two insofar as they allege violations of section 15(c)(1), 15 U.S.C. § 78o (c)(1), and the rules promulgated thereunder are dismissed with prejudice.

2. Count ten is dismissed with prejudice.

3. Count four is dismissed without prejudice.

4. Plaintiff, John Corbey, is given twenty days from the date of this order to amend count five to allege the contract at issue.

5. In all other respects the motion to dismiss of defendant A.G. Becker is denied.


author: BUA, District Judge.

text:
    KAPCO MFG. CO., INC., Plaintiff, v. C & O ENTERPRISES, INC., Thomas Carter, Jack O’Neil, The Shelburne Co., A.G. Busch, Inc., Bruce Creager, Richard Wharton, Richard Kinzalow, Roy Thomas, Inc., Roy Jackson, Thomas Fogarty, Margaret Groves, Texaco, Inc., Defendants.
    No. 84 C 10129.
    United States District Court, N.D. Illinois, E.D.
    March 29, 1985.

      Eugene F. Friedman, Eugene F. Friedman, Ltd., Chicago, Ill., for plaintiff.
    Robert M. Tarnoff, Daniel E. Beederman, Schoenberg, Fisher & Newman, Ltd., Chicago, Ill., for defendants A.G. Busch Inc., Bruce Creager, Richard Wharton, and Richard Kinzalow.
    Marvin A. Tenenbaum, M. Marshall Seeder, Alexander, Unikel, Bloom, Zalewa & Tenenbaum, Ltd., Chicago, Ill., for defendants C & O Enterprises, Inc. and Thomas Carter.
    David W. Rosenberg, Brown, Dashow & Doran, Chicago, Ill., for defendants Roy Thomas, Inc., Roy Jackson, Thomas Fogarty, and Margaret Groves.
    Thomas A. Reynolds, III, Winston & Strawn, Chicago, Ill., for defendant Texaco, Inc.
   MEMORANDUM ORDER

BUA, District Judge.

This Memorandum Order is entered pursuant to the Court’s Order dated March 26, 1985. Before the Court are the following motions filed by the plaintiff: (1) motion to reinstate the present action; (2) motion for declaration that defendants have breached the settlement agreement; and (3) motion for temporary restraining order or, alternately, preliminary injunction. Also pending is defendant C & O Enterprises’ motion for an order establishing escrow account. For the reasons stated below, plaintiff’s motion to reinstate the present action is denied; plaintiff’s motion for temporary restraining order or, alternately, preliminary injunction is denied. Plaintiff’s motion for declaration that defendants have breached the settlement agreement will be considered as a motion to enforce the settlement agreement. Defendants are ordered to respond to the motion to enforce settlement as set forth below. Finally, defendant C & O Enterprises’ motion for an order establishing escrow is denied.

I. FACTS

After a lengthy pretrial conference on December 20, 1984, this cause was dismissed as settled between all the parties. The Court retained jurisdiction to enforce the settlement. Order of Dismissal, 84 C 10129, Dec. 20, 1984. Although neither a settlement agreement nor consent judgment has been submitted to the Court, the terms of the settlement agreement were read into the record by the attorneys on December 20, 1984 and transcribed by the court reporter.

In relevant part, the terms of the settlement agreement may be summarized as follows:

(1) “The defendant C & O Enterprises, Inc. [“C & O”] will purchase 16,000 car starters with the name DASH-GO on the starters from the plaintiff [Kapco Mfg. Co., Inc. (“Kapco”) ]. [C & O] will then sell 30,000 [car starters (assuming sufficient orders) ] with the name DASH-GO manufactured by defendant A.G. Busch, Inc. (“Busch”). Thereafter, “with respect to any programs ... initiated prior to February 1, 1985, [C & O] will purchase any car starters with the name DASH-GO on a 5%0 basis from [defendant A.G. Busch, Inc. (“Busch”) and Kapco].”
(2) C & O and its officers and directors agree to “quit claim all rights, title, and interest to the name DASH-GO to [Kapco].”
(3) “[A]fter February 1, 1985, [C & O] will initiate no programs and will not use in any new programs the name DASH-GO for any car starters that [C & 0] sells.” C & O, however, will be able “to use the name DASH-GO” for programs initiated prior to February 1,1985, pursuant to the purchasing plan outlined in paragraph (1), above.
(4) “Kapco agrees that it will honor all warranties relating to the car starters under the name DASH-GO that it produces for C & 0 Enterprises.” Kapco “will refurbish at its cost and expense any units that are returned for being defective.”
(5) Kapco “will provide a reasonable notice of ... any request for returns that it receives.”
(6) “Kapco agrees that it will honor all warranties relating to the car starters under the name DASH-GO that it produces for C & 0 Enterprises.”
(7) Kapco “will ship within seven days of order” except for ear starters ordered under the 50/50 program (see ¶ 1, above), which Kapco will ship within 14 days.
(8) Kapco shall receive payment, by check, “on shipment within three days.” The “grouping of orders” shall be “commercially reasonable.”
(9) This cause will be dismissed “with prejudice of all claims and counterclaims that are raised by any parties in this litigation....”
(10) The parties “will enter into a settlement agreement that will include a provision that will provide that the Court will retain continuing jurisdiction over ... all of the parties with respect to the enforcement of all of the terms of the settlement agreement.”
(11) C & O and Kapco will submit a “consent judgment ... setting forth the terms of the settlement agreement [between Kapco, its officers, and C & O].”
(12) Busch agrees “to pay the sum of $950 to Kapco in return for which [a suit between Busch and Kapco pending in the Circuit Court of Cook County] will be dismissed with prejudice.” The payment by Busch “will be no admission of liability by any part.”
(13) Copies of “all purchaser orders” shall be exchanged between the parties to ensure compliance with the settlement agreement.

Transcript of Proceedings, 84 C 10129, Dec. 20, 1984, pp. 1-12.

On February 15, 1984, plaintiff filed three motions: (1) a motion to reinstate the present action; (2) a motion for declaration that defendants have breached the settlement agreement; and (3) a motion for temporary restraining order or, alternately, preliminary injunction. Plaintiff alleges that defendants have materially breached the December 20 settlement agreement in several respects. First, plaintiff alleges that defendants have failed to sell 16,000 Kapco DASH-GO units and, instead, defendants have sold car starters under the name DASH-GO pursuant to programs initiated before February 1, 1985 which were manufactured by defendants Roy Thomas, Inc. and Busch. Plaintiffs Motion, filed Feb. 15, 1985, at 3-5. Second, plaintiff alleges that C & O and Busch have failed to exchange purchase orders for sales of car starters after December 20, 1984. Third, plaintiff alleges that C & O has initiated new advertising programs utilizing the name DASH-GO and a picture of Kapco’s product after February 1, 1985. Fourth, plaintiff alleges that C & O has failed to quit claim its claim of ownership of the name DASH-GO to Kapco. Finally, plaintiff alleges that Busch has failed to pay Kapco $950 to settle the state court suit. Plaintiffs Reply Memorandum, filed March 15, 1985, at 4 and 14.

II. DISCUSSION

A. Motions to Reinstate and for Injunctive Relief

Plaintiff argues that under Warner v. Rossignol, 513 F.2d 678 (1st Cir.1975), the Court should vacate the dismissal order and allow plaintiff to proceed on the merits of the complaint. In Warner, the court (applying Maine law) held that when a defendant repudiates or commits a material breach of a settlement agreement, the plaintiff may elect either to sue to enforce the settlement or “press forward upon the original cause.” Id. at 683. In Warner, however, the court viewed the “settlement agreement” as an “informal agreement ... between lawyers” and not as a “final substitute for plaintiff's pending action.” Id. at 682. In this case, the December 20, 1985 settlement was not an “informal agreement between lawyers,” but rather a final resolution of “all claims and counterclaims ... raised by any parties in the litigation.” Transcript of Proceedings, 84 C 10129, Dec. 20, 1984, at 6.

Furthermore, unlike in Warner, defendants here have neither repudiated nor materially breached the December 20, 1984 settlement. In Warner, the plaintiff failed to receive $6,000 from the defendant, which was to be payment in full for all of 'the plaintiff’s claims. On that basis, the court held that the defendant had either repudiated or materially breached the settlement agreement. The court reasoned that a plaintiff, “who believed he was surrendering a lawsuit for $6,000 cash in hand,” need not be bound to the original settlement when “he in fact surrendered it only for an empty promise of $6,000.” Id. at 683.

In this case, Kapco has received more than an “empty promise” of cash in exchange for surrendering its lawsuit on December 20, 1984. First, Kapco admits that, between December 20, 1984 and March 15, 1985, 9,636 Kapco car starting cord sets were ordered by C & O. Affidavit of Kenneth L. Rubel, dated March 15, 1985, at ¶¶ 33 and 34. C & O states that, as of March 25, 1985, over 11,000 DASH-GO units were ordered by C & O from Kapco. Defendants’ Sur-Reply, filed March 25, 1985, at 2. In any event, plaintiff clearly did not receive an “empty promise” on December 20, 1984 from C & O that Kapco units would be ordered. Kapco’s real complaint is that C & O is apparently not honoring its promise to purchase the first 16,000 units from Kapco. Although this allegation, if true, would constitute a breach of the settlement agreement (see discussion infra, at 257), it does not constitute a “material breach” which would allow plaintiff to reinstate its case under Warner.

Second, plaintiff’s allegation that defendants have initiated new advertising programs under the name DASH-GO does not warrant reinstating the case. Although this allegation, if true, would warrant immediate injunctive relief from the Court, plaintiff has simply failed to substantiate its allegation with any evidence. The Rubel affidavit dated March 15, 1985, states that in January, 1985 a person received an advertisement for a DASH-GO car starter cord manufactured by Busch. In light of the fact that the person received the advertisement in January, 1985, it is impossible to infer that the advertisement was initiated after February 1,1985 in violation of the settlement agreement. The Friedman and Craig affidavits simply state that C & O’s attorney told them mailings were initiated after February 1, a charge which C & O’s attorney denies. The Rubel affidavit dated February 12, 1985, states that, on January 25, 1985, Rubel’s wife received an advertisement for DASH-GO from Amoco Oil which consisted of a car starter manufactured by defendant Roy Thomas, Inc. Again, this affidavit does not support plaintiff’s charge that C & O has initiated DASH-GO programs after February 1, 1985. Since plaintiff has presented no evidence that C & O is utilizing the name DASH-GO in any programs initiated after February 1, 1985, the Court will not allow this conclusory allegation to allow reinstatement of the original complaint.

Neither do plaintiff’s remaining allegations warrant reinstatement of the case. The failure of defendants to provide Kapco with purchase orders can be cured by a motion to enforce settlement. Similarly, C & O’s failure to quit claim its rights in the name DASH-GO can be cured by a motion to enforce settlement. For all of these reasons, plaintiff’s motions to reinstate the case and for injunctive relief are denied.

B. Motion to Enforce Settlement

Although the Court declines to hold that plaintiff’s allegations of breach of the settlement justify reinstating the merits of the case under Warner, plaintiff’s allegations are clearly not insubstantial. Plaintiff may be entitled to substantial damages and possibly future injunctive relief based upon the terms of the December 20, 1984 settlement agreement.

The Court rejects defendants’ argument that the December 20 settlement agreement allowed C & 0 to “sell off” its remaining inventory of Busch units before it ordered 16,000 Kapco units. The terms of the December 20 settlement agreement unambiguously provide that “defendant, C & O Enterprises, Inc., will purchase 16,000 car starters ... from the plaintiff ... then sell 30,000 ... by the defendant, A.G. Busch ... and then ... 5%o from Busch and Kapco.” Transcript of Proceedings, December 20, 1984, at 3. If C & O had desired to permit an undesignated number of Busch sales before the 16,000 Kapco sales, such a provision should have been made explicit. In the absence of such a statement, the Court must interpret the settlement as it was reduced to writing by the court reporter of December 20, 1984. The Court interprets the agreement to mean that C & O was required to fill the first 16,000 orders after December 20, 1984 with Kapco products.

In light of plaintiff’s allegations of defendants’ breach of the December 20, 1984 settlement agreement, the following schedule shall be maintained to ensure all parties’ compliance with their agreement:

(1) Plaintiff and defendants shall reduce to writing, within 30 days of entry of this order, the terms of the settlement agreement entered on the record December 20, 1984. If the parties are unable to agree upon the terms of the settlement within 30 days, the Court will consider the December 20, 1984 transcript as the final settlement agreement between the parties.

(2) Kapco and C & 0 shall, within 30 days of entry of this order, submit the Consent Judgment provided by the December 20 settlement. The Consent Judgment should provide all terms of the settlement between Kapco and C & O including, but not limited to, use of the DASH-GO name, future purchasing requirements, procedures for monitoring compliance with the Consent Judgment and settlement agreement, appropriate sanctions for either parties’ noncompliance, and the continuing jurisdiction of the Court to ensure the parties’ compliance. If Kapco and C & O fail to submit a Consent Judgment within 30 days, the Court will enter an appropriate judgment order to ensure future compliance with the December 20, 1984 settlement agreement.

(3) All defendants shall, within 30 days of entry of this order, submit to Kapco a verified and detailed accounting of all orders and sales of car starting cord sets from December 21, 1984 to the date the accounting is prepared. Plaintiff may apply for further periodic accounting with leave of Court. Plaintiff may submit a motion for summary judgment on damages, if any; within 10 days of its receipt of the accounting.

(4) Any party may, with leave of Court, initiate appropriate discovery under Ill.Rev. Stat., ch. 110, ¶ 2-1402 to ensure compliance with the settlement agreement.

(5) C & O’s motion for an order establishing escrow is denied.

(6) All parties shall bear their own fees and costs on this motion.

IT IS SO ORDERED.


author: McMILLEN, Senior District Judge.

text:
    Joseph P. SULLIVAN, Plaintiff, v. Donald STEFANIK; Henry Nulle, Sheriff of McHenry County, Illinois; McHenry County Illinois; and Unknown Deputies or Employees of the McHenry County Sheriff's Department, Defendants.
    No. 84 C 2446.
    United States District Court, N.D. Illinois, E.D.
    March 29, 1985.
    Stephen D. Tousey, E.K. Collison, John Early, John Regan, Early, Collison, Tousey & Regan, Elgin, Ill., for plaintiff.
    Thomas A. Morris, John Collins, Brydges, Risebroough, Morris, Franke & Miller, Chicago, Ill., for Stefanik.
    Gregory G. Lawton, Byron D. Knight, Judge & Knight, Ltd., Park Ridge, Ill., for Nulle and McHenry County.
   DECISION

McMILLEN, Senior District Judge.

Pending against defendant Stefanik in the above case are pendent claims for false imprisonment (Count IV) and for malicious prosecution (Count V). He has filed a motion for summary judgment on both Counts of the Second Amended Complaint on the grounds that plaintiff was submitted to a preliminary hearing on probable cause, that the Court found probable cause for his arrest and prosecution, and that he is therefore collaterally estopped from proceeding on both pendent Counts. We find and conclude that the record of the hearing is incomplete and, therefore, not sufficient to collaterally estop the plaintiff from proceeding with his amended complaint on these two counts, assuming, of course, that he can obtain Federal jurisdiction.

The record from the Circuit Court of McHenry County, which is attached to defendants’ memorandum as Exhibit B, in to to is as follows:

Steven MeArdle, Assistant States Attorney present. Defendant in court in person and without counsel. Defendant examined and found to be indigent. Court appoints Public Defender. Defendant in court in person and with his court-appointed attorney Dan Hoffman, Assistant Public Defender. Leave given state to amend complaint on its face. Preliminary hearing heard. Court finds probable cause shown....

It is apparent from the foregoing record that the requirements for collateral estoppel which were set forth in Guenther v. Holmgreen, 738 F.2d 879 (7th Cir.1984) have not been satisfied in this case. We cannot tell who testified at the preliminary hearing, and there is a reasonable inference from the record that plaintiff was not aggressively and thoroughly represented by a Public Defender who was apparently appointed just at the time of that hearing. We do not know whether plaintiff testified or even whether Stefanik testified. We do not even know precisely what the finding of probable cause applied to, since the “amended complaint” is not yet part of the record in this case.

Therefore a genuine issue of material fact remains in this case concerning what, if anything, plaintiff may be collaterally estopped about and whether the Illinois law on this subject has been satisfied. Raper v. Hazelet & Erdal, 114 Ill.App.3d 649, 652, 70 Ill.Dec. 394, 449 N.E.2d 268 (1st Dist. 1983); see also Illinois State Chamber of Commerce v. Pollution Control Board, 78 Ill.2d 1, 34 Ill.Dec. 334, 398 N.E.2d 9 (1979). Since collateral estoppel is a matter of substantive law, we must follow the Illinois guidelines. Nathan v. Tenna Corp., 560 F.2d 761 (7th Cir.1977).

The case at bar is more analogous to Whitley v. Seibel, 676 F.2d 245 (7th Cir.1982). In that case, the Court held that the plaintiffs alibi defense had not necessarily been waived at the preliminary hearing, and, although it was subsequently determined to be sufficiently valid to nolle pros the charge, the finding of probable cause was not sufficient to collaterally estop the plaintiff’s action under Section 1983. In the case at bar, the trial judge apparently did not have an opportunity to test the veracity of the testimony of the prosecuting witness (presumably Stefanik), and may well have based his finding upon hearsay testimony which would not be admissible in a trial. Nor does it appear from the record why the charge against the plaintiff was nolle prossed.

Another Court of Appeals decision which is instructive on the somewhat tenuous question of collateral estoppel is Brown v. Green, 738 F.2d 202 (7th Cir.1984). In that case, the Court of Appeals held that the record in the state court proceeding was ambiguous, because the plaintiff had originally been found guilty of criminal battery and resisting arrest, had been sentenced to one year probation, and had subsequently been sentenced to supervision under Chapter 38, § 1005-6-1(c) of the Illinois Revised Statutes (1983). Thus, although the record showed that the original finding of guilty had been vacated when plaintiff was placed on supervision, the Court of Appeals ruled that the trial court proceedings should have been admitted in the plaintiff’s Section 1983 action, but that the plaintiff should have been given an opportunity to rebut any inference arising from the state court record. Even though the Illinois statute for supervision requires a plea of guilty or a stipulation by the defendant of facts supporting the charge or of a finding of guilty, the Court of Appeals held that the state court records should not have been given “preclusive effect” in the civil rights complaint but should have been admitted as prima facie evidence of the facts upon which the conviction is based, if the record of the criminal proceedings is found to be relevant to some issue involved in a civil proceeding.

The same disposition of the state court proceedings on plaintiff’s preliminary hearing may be applicable in the case at bar if the defendant can reconstruct the record of the preliminary hearing sufficiently to show its relevancy. Thorton v. Paul, 74 Ill.2d 132, 23 Ill.Dec. 541, 384 N.E.2d 335 (1978). Both the Whitley and the Brown decisions allow the jury to determine the probative value of a non-precluswe state court record.

In an effort to reconstruct the state court record, plaintiff is entitled to take the deposition of Steven McArdle, the Assistant States Attorney who participated in the preliminary hearing. Two of the former defendants who were in this case before the civil rights counts were dismissed have filed a motion to preclude taking McArdle’s deposition. Although McArdle is immune from civil liability under Section 1983 (Imbler v. Pachtman, 424 U.S. 409, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976)), he is not immune from being deposed in order to determine, if possible, what actually happened at the preliminary hearing and whether any other Deputy Sheriffs or employees of the McHenry County Sheriff’s Department may have been involved in an alleged deprivation of plaintiff’s civil rights under Section 1983. McArdle can be asked to testify as to what happened at the preliminary hearing and can even be asked for his professional opinion as to what probable cause was shown at that time. It would be improper, however, to ask him about his own mental processes or opinions unless they were stated on the record at the time of the preliminary hearing. In that event they may or may not be admissible before a jury.

This case will be set for a status report on Monday, May 6, 1985 at 11:00 o’clock a.m. by which time McArdle’s deposition should be completed and plaintiff's investigation concerning the potential defendants in Counts I, II and III should also be completed. By the time of the status report, the parties will also be expected to know how much of the proceedings of the preliminary hearing can be reconstructed for the possible use at trial and if Counts I, II and III are to be amended with new defendants.


author: ORINDA D. EVANS, District Judge.

text:
    UNITED STATES of America v. S. Sam CALDWELL, et al.
    Cr. No. CR84-32AA.
    United States District Court, N.D. Georgia, Atlanta Division.
    April 1, 1985.
    See also, D.C., 594 F.Supp. 548.
    Robert Stubbs, Jere Morehead, Asst. U.S. Attys., Atlanta, Ga., for plaintiff.
    Theodore Worozbyt, Atlanta, Ga., for defendant.
   ORDER

ORINDA D. EVANS, District Judge.

This criminal case is before the court on Defendant’s application for release of detention pending appeal. Oral argument on Defendant’s application was held on March 28, 1985.

Pursuant to the recently enacted 18 U.S.C. § 3143, the court finds, by clear and convincing evidence, that Mr. Caldwell is not likely to flee or pose a danger to the safety of any other person or the community if released. The court also finds that the appeal is not for the purpose of delay. However, the court does not find that the appeal raises a substantial question of law or fact which, if determined adversely to the government, would likely result in reversal or an order for a new trial.

In United States v. Giancola, 754 F.2d 898 (11th Cir.1985), the Court of Appeals discussed what constitutes a “substantial question of law or fact” under § 3143(b)(2). A “substantial question” is one of more substance than would be necessary to a finding that it was not frivolous. Also,’it involves a “close” question or one that very well could be decided the other way. Whether a question is “substantial” must be determined on a case-by-case basis. Id.

Several of Caldwell’s grounds for appeal address evidentiary rulings. While the court does not regard these grounds as frivolous, and notes that this is a circumstantial evidence case, it still cannot find that these are “close” questions. A trial judge is vested with a fair degree of discretion in making evidentiary rulings during trial. Worsham v. A.H. Robins Co., 734 F.2d 676, 680 (11th Cir.1984).

The contested rulings regarding the sufficiency of the evidence to support a guilty verdict and regarding possible juror misconduct are not substantial issues. That this case is a circumstantial evidence case is the only factor which keeps the insufficient evidence argument from being frivolous. The juror misconduct issue (which challenges the court’s refusal to permit counsel to cross-examine jurors either during the trial or thereafter concerning whether any of the jurors had prematurely determined the issue of guilt) is of a higher degree of substantiality than that of mere non-frivolity, but it still does not reach the level of a substantial issue. The factual context involved here (anonymous phone call suggesting that jurors had decided the Defendant’s guilt before the evidence had closed; a credible denial by the implicated juror at an in-chambers conference with the judge; no suggestion that extrinsic influence had been brought to bear on any jurors) gave the court some discretion in determining whether to grant counsel the right to cross examine jurors. Compare United States v. Brantley, 733 F.2d 1429, 1439-40 (11th Cir.1984) with United States v. Sedigh, 658 F.2d 1010, 1013-14 (5th Cir.1981), cert. denied, 455 U.S. 921, 102 S.Ct. 1279, 71 L.Ed.2d 462 (1982).

The issue of the court’s refusal to give Caldwell’s requested jury instructions on mail fraud (instead of those submitted by the government) is a “substantial question” due to a possible conflict in binding decisions of the Court of Appeals of the Fifth and Eleventh Circuits. However, under Giancola, supra, the mere presence of a substantial issue on appeal is insufficient to grant release pending appeal. The court must also look to see whether a ruling adverse to the government on the substantial issue would result in reversal or an order for a new trial. In this case, Caldwell was given concurrent sentences on all counts, including the mail fraud charges. Therefore, even if the convictions on the mail fraud counts were reversed, it would not necessarily require a new trial on the other counts. In fact, the Court of Appeals might even choose not to consider the validity of the convictions on the mail fraud counts under the concurrent sentence doctrine. See United States v. Fuentes-Jimenez, 750 F.2d 1495 (11th Cir.1985). In the court’s opinion, it is not likely that reversal on the mail fraud counts would result in the requirement of a new trial on other counts. The most damaging evidence against Caldwell was admissible as to other counts of the indictment.

Finally, Defendant argues that the recently enacted § 3143 should not be applied to his request for release because the criminal conduct for which he was convicted occurred prior to the enactment of that statutory section. This ex post facto claim is without merit for the reasons set forth in United States v. Miller, 753 F.2d 19, 21 (3d Cir.1985).

Defendant’s application for release of detention pending appeal is hereby DENIED. Defendant’s request for voluntary surrender is hereby GRANTED and Defendant Caldwell is hereby ORDERED to surrender as directed and designated by the Attorney General of the United States.


author: NEAHER, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. STARRETT CITY ASSOCIATES, Starrett City, Inc. Delmar Management Company, Defendants.
    No. 84 CV 2793 (ERN).
    United States District Court, E.D. New York.
    April 2, 1985.
    William Bradford Reynolds, Asst. Atty. Gen., U.S. Dept. of Justice, Civil Rights Div., Housing and Civil Enforcement Section by Linda F. Thome, Washington, D.C., for plaintiff.
    Paul, Weiss, Rifkind, Wharton & Garrison by Morris B. Abram, Peter Buscemi, Michael G. Carey, New York City, for defendants.
   MEMORANDUM AND ORDER

NEAHER, District Judge.

Following upon the public announcement in May 1984 that the parties in Arthur v. Starrett City Associates, et al., 89 F.R.D. 542 (E.D.N.Y.) had agreed upon a settlement which, if approved by the Court, would terminate that litigation, the Attorney General of the United States filed this civil action against the Starrett defendants only (hereinafter “Starrett”). The government's complaint, as in the Arthur suit, alleges in substance that Starrett discriminates on the basis of race, color and national origin in the rental of its apartments, in violation of Title VIII of the Civil Rights Act of 1968, 42 U.S.C. § 3601 et seq. The government states that the complaint was filed “to place before the Court the issue joined but expressly left unresolved by the parties in the proposed consent decree in Arthur ... that is, the legality of defendants’ policy and practice of limiting the number of apartments available to minorities in order to maintain a prescribed degree of racial balance at the Starrett City housing complex.”

The proposed consent decree in Arthur, which is presently under consideration by the Court, explicitly provides in ¶ 14 that

“The Court has made no findings of violation of law or of the legality of the practices complained of. No party, by entering into this settlement, admits or is deemed to admit any violation of law or the legality of the practices complained of at Starrett City.”

Obviously, the legality of Starrett’s rental practices at Starrett City will remain an open question even if the proposed consent decree is approved by the Court.

Starrett has nonetheless moved to dismiss the present action on the ground that the government’s previous refusal to intervene in the Arthur suit precludes further litigation under the doctrine of judicial estoppel. That doctrine is limited to changes of position in judicial proceedings, IB Moore’s Federal Practice, ¶ 0.405[8], at 239 (2d ed. 1983), and “[i]ts essential function and justification is to prevent the use of ‘intentional self-contradiction ... as a means of obtaining unfair advantage in a forum provided for suitors seeking justice.’ ” Allen v. Zurich Ins. Co., 667 F.2d 1162, 1167 (4th Cir.1982); Accord Tenneco Chemicals v. William T. Burnett & Co., 691 F.2d 658, 665 (4th Cir.1982); Moore’s supra, at 243 (in the absence of clear fraud the assertion of a legal conclusion or opinion will not result in preclusion).

Judicial estoppel has not been embraced by all jurisdictions, Konstantinidis v. Chen, 626 F.2d 933, 938 (D.C.Cir.1980); the standard of proof necessary to show judicial estoppel is not uniform, Garcia v. Andrus, 692 F.2d 89, 94 (9th Cir.1982); and where applied, the principle has been applied with caution, only to positions which were legally relevant in the prior proceeding, Allen v. Zurich Ins. Co., supra. Moreover, it is less than clear whether the doctrine has vitality in the Second Circuit. See United States v. Bedford Associates, 713 F.2d 895, 904 (2nd Cir.1983); Universal City Studios v. Nintendo Co., 578 F.Supp. 911, 920-921 (S.D.N.Y.1983), aff'd 746 F.2d 112 (2d Cir.1984); but cf. Sperling v. United States, 692 F.2d 223, 227-229 (2nd Cir.1982) (Van Graafeiland, J., concurring), cert. denied, 462 U.S. 1131, 103 S.Ct. 3111, 77 L.Ed.2d 1366 (1983). In a court which does embrace it, the doctrine has been defined as follows:

“The doctrine of judicial estoppel applies to a party who has successfully and unequivocally asserted a position in a prior proceeding; he is estopped from asserting an inconsistent position in a subsequent proceeding.... Judicial estoppel ... is intended to protect the integrity of the judicial process ... The essential function of judicial estoppel is to prevent intentional inconsistency; the object of the rule is to protect the judiciary, as an institution, from the perversion of judicial machinery.... Judicial estoppel addresses the incongruity of allowing a party to assert a position in one tribunal and the opposite in another tribunal. If the second tribunal adopted the party’s inconsistent position, then at least one court has probably been misled.”

Edwards v. Aetna Life Insurance Company, 690 F.2d 595, 598-599 (6th Cir.1982) (citations omitted).

The essential elements for the application of judicial estoppel gleaned from the foregoing authorities appear to be (1) an unequivocal assertion of law or fact by a party in one judicial proceeding, (2) the assertion by that party of an intentionally inconsistent position of law or fact in a subsequent judicial proceeding, (3) in order to mislead the Court and obtain unfair advantage as against another party. In the Court’s opinion not one of those elements has been established in the scenario the Starrett defendants have depicted.

The prior judicial proceeding here was, of course, the Arthur suit. Shortly after the complaint was filed, the Starrett and State defendants moved pursuant to Rules 12(b)(7) and 19 to dismiss the complaint for failure of the plaintiffs to join the federal Department of Housing and Urban Development (HUD) as an indispensable party defendant. Copies of defendants’ motions were also served upon the United States Attorney. The Arthur plaintiffs strenuously opposed defendants’ motions, pointing out that HUD was neither an indispensable nor a necessary party under Rule 19(a). HUD, speaking through the United States Attorney, similarly opposed being joined as a defendant, pointing out that the Arthur complaint contained no allegation that HUD was in any way involved in the alleged violations attributed to defendants or had violated any statutory duty.

Satisfied that no justification had been shown requiring the plaintiffs to implead HUD, the Court denied defendants’ motions, concluding that their

“attempted implication of HUD based, upon the latter’s approval of the Starrett AFHM [Affirmative Fair Housing Marketing] plan might more accurately be characterized as a defense on the merits rather than a cause for dismissal [of the Arthur complaint] under Rule 12(b)(7).... Here, the chain of events that defendants suggest will result from the grant of relief sought in this [Arthur] action is far too remote to support a finding that Starrett faces a “substantial” risk of inconsistent obligations if HUD is not bound by the judgment in the case.”

Arthur v. Starrett City Associates, 89 F.R.D. 542, 546, 547 (E.D.N.Y.1981).

The record in the Arthur case plainly reveals that Starrett cannot satisfy even the first element requisite for the invocation of judicial estoppel in the government’s present case. Neither the government nor any of its agencies was in fact a party in Arthur and Starrett’s oblique efforts to implead HUD were firmly resisted. Strongly disavowed also was Starrett’s apparent assumption that HUD supported racially based tenant selection practices at Starrett City. In letters to the Court dated March 31, 1980 and February 24, 1981, HUD stated unequivocally that it had not approved or required any of the discriminatory practices alleged in the Arthur complaint, and that if those allegations were true, the defendants were acting in violation of HUD conciliation agreements, HUD regulations and the provisions of the Fair Housing Act.

Starrett also fails to meet the second and third requisites for the application of judicial estoppel to bar the government’s action. The assertion of an intentionally inconsistent position of law or fact on the part of the government is wholly absent. The government’s position in the present action does nothing more than reaffirm the Arthur plaintiffs’ allegations that Starrett has been and is employing racial quotas to deny housing to minority applicants in violation of Title VIII. Thus there is no inconsistent position on the government’s part designed to play “fast and loose” with the Court or obtain an unfair advantage as against Starrett.

Accordingly, defendants’ motion to dismiss the complaint is denied.

SO ORDERED.

      . Section 3604 of Title VIII prescribes that "it shall be unlawful—
      (a) To refuse to sell or rent ... or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, or national origin," (emphasis added).

      . Response of the United States in Opposition to the Defendants’ Motion to Dismiss at 1.

      . Although the matter is now academic, Starrett’s attention was called to the proper procedure to be followed, if it really desired HUD’s presence in the Arthur action. As the Court pointed out, Starrett could have joined HUD as a party defendant, see Boles v. Greeneville Housing Authority, 468 F.2d 476 (6th Cir.1972), or requested its participation as amicus curiae, see Guesnon v. McHenry, 539 F.2d 1075, 1078 (5th Cir.1976). Arthur, 89 F.R.D. at 548. Starrett's failure to avail itself of those options strongly suggests its early recognition that HUD would not endorse Starrett’s rental practices.

      . Assuming that the doctrine of judicial estoppel would have any application where, as seemingly is the case here, the Attorney General is exercising his unreviewable prosecutorial discretion in a case of general public importance.


author: KATZ, District Judge.

text:
    In the Matter of the Application of Jean-Baptiste Edvard PIERRE, For a Writ of Habeas Corpus. Jean-Baptiste Edvard PIERRE, Petitioner, v. Lyle KARN, as District Director of the Philadelphia District of the Immigration and Naturalization Service, Respondent.
    Civ. A. No. 85-0216.
    United States District Court, E.D. Pennsylvania.
    April 2, 1985.

      Justin T. Loughry, Michael Carroll, Philadelphia, Pa., for petitioner.
    Alexander Ewing, Asst. U.S. Atty., Philadelphia, Pa., for respondent.
   MEMORANDUM AND ORDER

KATZ, District Judge.

Petitioner, a Haitian, seeks a Writ of Habeas Corpus for release from detention pending the Government’s consideration of his application for asylum in the United States. A hearing on this Petition was held on March 28, 1985. The Petition For Writ of Habeas Corpus will be Denied with leave to renew if the application for asylum is not resolved expeditiously.

On January 19, 1983, petitioner left Haiti and arrived at Philadelphia International Airport. Petitioner entered this country with false documentation and used forms with a fictitious name. Since the time of his arrival petitioner has been incarcerated. On January 24, 1983, petitioner submitted a Request For Asylum in the United States to the Immigration and Naturalization Service. At an exclusion hearing held on February 24, 1984, petitioner conceded excludability and pressed his claim for asylum. This hearing was adjourned to May 26, 1983 in order for the United States Department of State to analyze the. asylum claim. At the conclusion of the May 26 hearing, the Immigration Judge denied the request for asylum and ordered petitioner excluded and deported. In August, 1983, the transcript of the May 26 exclusion hearing was made available to petitioner. On January 4, 1984, petitioner was notified that as soon as it received the record file in this case, the Board of Immigration Appeals would consider his appeal. On February 17, 1984, the Board of Immigration Appeals responding to objections from both sides regarding the quality of the transcript remanded the record in order to give the parties an opportunity to agree on omissions and corrections.

On April 3, 1984, counsel for petitioner moved for a de novo hearing on the ground that the transcript was defective. The Immigration Judge denied this as well as two additional requests for de novo hearings on May 16, 1984 and September 26, 1984. On November 7, 1984, the Board of Immigration Appeals remanded the case to the Immigration Court for a new hearing on the ground that the record was inadequate. This hearing was held February 21, 1985. To date, no decision has been rendered by the Immigration Court. Petitioner’s requests for parole pending a resolution of his application for asylum were denied on May 24, 1984 and June 15, 1984.

The authority to promulgate and implement laws and regulations regarding the admission of aliens to this nation has long been committed to the legislative and executive branches of government. See Landon v. Plasencia, 459 U.S. 21, 32, 103 S.Ct. 321, 329, 74 L.Ed.2d 21 (1982). Under these laws an alien may under certain circumstances be paroled pending a resolution of his or her request for admission. The Immigration and Nationality Act provides that “[t]he Attorney .General may ... in his discretion parole into the United States temporarily under such conditions as he may prescribe for emergent reasons or for reasons deemed strictly in the public interest any alien applying for admission to the United States....” 8 U.S.C. § 1182(d)(5)(A). The Immigration and Naturalization Service has promulgated regulations to guide the district director in making a parole decision. The parole of certain groups of aliens, including those with close family relatives in the United States, is usually deemed to be “strictly in the public interest” as long as the applicant presents “neither a security risk nor a risk of absconding.” 8 C.F.R. § 212.5(a)(2).

In his petition for a writ of habeas corpus, petitioner alleges that his continued incarceration violates his rights under the Fifth, Eighth, and Fourteenth Amendments to the United States Constitution in that the government’s own procedures and administrative errors have delayed the decision on his application for asylum. He further argues that there is no rational reason for his continued detention.

Whether non-resident aliens who are awaiting a final decision on admission or an order of deportation are entitled to constitutional rights is a question that has divided this nation’s judiciary. See Jean v. Nelson, 727 F.2d 957 (11th Cir.), cert. granted, — U.S. -, 105 S.Ct. 563, 83 L.Ed.2d 504 (1984) (non-resident aliens may not challenge parole decision on fifth amendment grounds); Rodriguez-Fernandez v. Wilkinson, 654 F.2d 1382 (10th Cir.1981) (non-resident aliens entitled to due process guarantees of fifth amendment pending deportation). This Court need not resolve this issue of the rights of aliens. Even if nonresident aliens were entitled to protection under the United States Constitution, I find that the delays experienced by the petitioner, while substantial, violate no constitutional protection at this point in time.

The fact that an individual’s incarceration has been extended on account of delays prior to resolution of the matter for which he is in custody does not necessarily entitle that person to a writ of habeas corpus. To the contrary, in determining whether a constitutional violation has taken place, a reviewing court must examine several factors including the length of the delay, the reasons for the delay, and what prejudice the delay has caused the petitioner.

Upon arriving in this country in January, 1983, the petitioner initially received prompt consideration and resolution of his application for asylum. In May 1983 following two hearings he was denied asylum by the District Director. The delays petitioner experienced in receiving review of this initial decision on exclusion were largely a result of faulty transcription of the proceedings below and the inability of the parties to reconstruct transcript omissions. Following the November 1984 ruling of the Board of Immigration Appeals, petitioner’s application for asylum was heard for a second time by the Immigration Court. Petitioner has failed to show how the delays in resolving his application for asylum prejudiced his chances for success in that proceeding. I find that although the petitioner has suffered hardships as a result of his continuing incarceration, the length of said incarceration, alone, does not rise to the level of a constitutional violation. This case is distinguishable from Rodriguez-Fernandez v. Wilkinson, 654 F.2d 1382 (10th Cir.1981), where the Tenth Circuit held an incarcerated alien's due process rights had been violated. In Rodriquez-Fernandez the petitioner had already received a final determination that he would not be admitted into the United States and was being held indefinitely pending deportation to a country that refused to allow him to return. In this case, petitioner’s incarceration is not of indefinite duration; he remains incarcerated only until a final determination of his application for asylum has been rendered. Thereafter, he will be free to live in the United States or he will be deported.

I further find that the District Director has not acted contrary to the law by denying parole to the petitioner. The Attorney General has broad discretion to grant or deny parole to an alien pending a decision on his application for admission to this country. See 8 U.S.C. § 1182(d)(5)(A). The proper standard for judicial review of parole decisions is “whether the agency’s decision is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law.” See Moret v. Karn, 746 F.2d 989, 991 (3d Cir.1984). A judge may not, however, substitute his judgment for that of the administrative officer.

Under 8 C.F.R. § 212.5 the government may deny parole to an alien who otherwise would qualify if that person presents a risk of absconding. In his May 24, 1984, letter denying parole, the district director concluded that due to the petitioner’s lack of family ties in this country he would be “very likely” to abscond if parole were granted. This conclusion was buttressed, in the District Director’s opinion, by the fact that the petitioner possessed and used documents with a false name upon his arrival in this country. Based upon an independent analysis of the administrative record, this court cannot say that the district director abused his discretion, in finding that the petitioner would likely flee if paroled. Therefore, the district director’s decision to deny parole will not be overturned.

Although this Court has found that the decision of the district director to deny parole was not an abuse of discretion and that the delay in resolving petitioner’s application for asylum did not violate the United States Constitution, it should be emphasized that the Government may not drag out its decision making indefinitely. Regardless of whether the petitioner is entitled to those constitutional rights enjoyed by American citizens, Congress has mandated a minimum amount of due process by specifying the procedures under which an alien may apply for asylum. See Jean v. Nelson, 727 F.2d 957, 968, cert. granted, — U.S. -, 105 S.Ct. 563, 83 L.Ed.2d 504 (1984). The procedures set forth by Congress for determining whether an individual may gain asylum in this nation were designed to create an orderly system for determining which claims for asylum are meritorious. This Court expects the Government to move expeditiously in resolving whether the petitioner is entitled to asylum. Although this Court denies Mr. Pierre’s Petition For A Writ of Habeas Corpus, it grants him leave to renew his Petition if his claim to asylum is not resolved expeditiously. Detention pending deportation may be justified, in the exercise of discretion, as a necessary, temporary measure. If detention becomes an indefinite imprisonment, unrelated to expeditious proceedings to exclude or deport, then it takes on the aspect of punishment which this Court will not tolerate. While the government may have the right to exclude or deport the Petitioner, it does not have the right to keep him locked up indefinitely. The Court expects Mr. Pierre’s case to move expeditiously.

      . These factors are similar to those considered by a court in reviewing whether a defendant’s Sixth Amendment right to a speedy trial has been violated. See Barker v. Wingo, 407 U.S. 514, 92 S.Ct. 2182, 33 L.Ed.2d 101 (1972) (setting forth four pronged balancing test).
      In addition, cases regarding the due process rights of pretrial detainees provide a useful methodology for determining whether any Fifth Amendment rights an alien arguably may possess have been violated by his detention pending resolution of his application for asylum. Cf. Note, The Indefinite Detention of Excluded Aliens: Statutory and Constitutional Justifications and Limitations, 82 Mich.L.Rev. 61, 79 (1983). In order to decide whether a pretrial detainee's constitutional rights have been violated, a court must look to whether the disability is imposed for the purpose of punishment or whether it is but an incident of some other legitimate governmental purpose. The detention will violate the individual's constitutional rights if it is for the purpose of punishment or, if it is excessive in relation to the legitimate governmental purpose it furthers. See Bell v. Wolfish, 441 U.S. 520, 537-39, 99 S.Ct. 1861, 1873-74, 60 L.Ed.2d 447 (1979). I find that the detention of th? petitioner pending a resolution of his request for asylum is not punitive but rather furthers the public interest in preventing persons who may be excludable from vanishing. I further find that the length of the petitioner’s detention, while substantial, is not yet excessive when weighed against the important reasons for that detention.