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OPINION OF THE COURT GOLDBERG, Judge: I. INTRODUCTION This case reviews whether a provision in an insurance policy is ambiguous. Upon review of the relevant case law and the tenets of contract construction, we And there are two reasonable interpretations of the policy language. Therefore, pursuant to Delaware law, we conclude that the provision is ambiguous, and we construe it in favor of the insured. We remand the case to the District Court for further findings in accordance with this decision. II. BACKGROUND This case addresses whether particular language contained in a “personal injury” provision of a comprehensive general Lability (“CGL”) insurance policy is ambiguous. The CGL policy at issue is a standard form policy prepared by the Insurance Service Office (“ISO”). It provides that the insurer will defend and indemnify the insured against claims alleging damages for “personal injury.” The personal injury offenses covered under the policy include definition 10(c), which reads as follows: 10. “Personal injury” means injury, other than “bodily injury,” arising out of one or more of the following offenses: c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor. App. of Appellant, at A141 (CGL Policy No. GL 590-62-18-RA). The above language gave rise to a declaratory judgment action brought on October 21, 1996 by New Castle County, Delaware (“the county”) in the District Court for the District of Delaware against National Union Fire Insurance Company of Pittsburgh, Pennsylvania (“National”). Between 1991 and 1994, the county purchased a series of CGL policies from National (collectively “the CGL policy” or “the policy”). When Frank E. Acierno, a developer, filed three lawsuits against the county (collectively, “the Acierno actions”), the county turned to National to defend and indemnify it against the suits. In general, the Acierno actions alleged that the county violated Acierno’s constitutional rights by re-zoning or refusing to issue building permits for his property. More specifically, the actions were styled as follows: (1) the first suit alleged violations of Acierno’s constitutional rights for failure to issue a commercial building permit on a parcel of land owned by Acierno; (2) the second alleged that an ordinance passed by the county to re-zone one of his properties violated his civil rights; and (3) the third, filed after the county’s final denial of the building permit, essentially restated the same facts and violations as the first suit. Because the county believed that the Acierno actions state a claim for “invasion of the right of private occupancy” as defined in definition 10(c) of the CGL policy, it sought to have National defend and indemnify it in those suits. National disclaimed coverage under the CGL policy for the Acierno actions. The county then filed the declaratory judgment action underlying this appeal. National responded to the County’s declaratory judgment action with two counter-arguments. First, National asserted that the offense of “invasion of the right of private occupancy,” as contemplated by definition 10(c), is limited to tangible interference with a possessory interest in property. Since the Acierno actions > did not allege interference with a possessory interest, but rather with the use and enjoyment of land, National asserted that the actions do not fall within the coverage of definition 10(c) and, consequently, National had no obligation to defend or indemnify the county. Second, National argued that based on the “by or on behalf of’ language in definition 10(c), coverage is available only when the insured commits an “invasion” as the owner, landlord, or lessor of the property at issue. Since the county does not claim to be the owner, landlord, or lessor of any Acierno properties, National maintained that it had no obligation to defend the county in those suits. On December 30, 1997, the District Court issued an opinion granting summary judgment to National, holding that definition 10(c) unambiguously “contemplates coverage for acts such as evictions, entries and invasions committed by one acting by or on behalf of the property’s owner, landlord or lessor.” New Castle County v. National, 1997 WL 809207, at *7. According to the District Court, the county cannot be considered the owner, landlord, or lessor of the property and therefore National had no obligation to defend or indemnify the county. Having thus held, the court explicitly declined to reach the question of whether the constitutional violations alleged in the Acierno actions “constitute an invasion of the right of private occupancy.” New Castle County v. National, 1997 WL 809207, at *8. This appeal ensued. The county asserts that the District Court erred in finding that definition 10(c) only provides coverage for acts committed by or on behalf of an owner, landlord, or lessor. On appeal, the county argues that definition 10(c) is ambiguous and should be construed in its favor. The issue presented to this Court on appeal is thus a narrow one. In short, we must determine whether definition 10(c) is ambiguous. Because the issue addressed in this opinion is one of first impression under Delaware law, we must predict how the Delaware Supreme Court would resolve it. After examining the parties’ conflicting interpretations, relevant case law, tenets of contract construction, and the policy’s language and purpose as a whole, we conclude that definition 10(c) is ambiguous and must be construed in favor of the county. Like the District Court we, too, will not reach the question of whether the allegations made in the Acierno actions state a color-able claim for an invasion of the right of private occupancy. Accordingly, the District Court’s determination that definition 10(c) is unambiguous will be reversed, and this case will be remanded to the District Court to determine, in light of our holding, whether the violations alleged in the Acier-no actions constitute an invasion of the right of private occupancy. III. DISCUSSION A. Scope and Standard of Review We assert jurisdiction over this appeal under 28 U.S.C. § 1291. Jurisdiction below was premised on diversity of citizenship, and the District Court properly applied the substantive law of Delaware. See Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Since the Delaware Supreme Court has yet to address the issue presented by this appeal, we must predict how that court would decide it. See Epstein Family Partnership v. Kmart Corp., 13 F.3d 762, 766 (3d Cir.1994). The issue before this Court, simply put, is whether definition 10(c) is ambiguous. Whether an insurance policy is ambiguous is a question of law, see International Union v. Mack Trucks, Inc., 917 F.2d 107, 111 (3d Cir.1990), and we have plenary review over the issue. See Pacific Indem. Co. v. Linn, 766 F.2d 754, 760 (3d Cir.1985). And, as a general rule, we will consider only issues passed upon by the court below. See, e.g., Selected Risks Ins. Co. v. Bruno, 718 F.2d 67, 69 (3d Cir.1983). B. Delaware Law on Interpreting Insurance Policies As we must predict how the Delaware Supreme Court would decide this issue, it is necessary that we first understand Delaware law on this matter. Before an insurer is obligated to defend or indemnify a policyholder, the insured must demonstrate that coverage is available under the policy. See New Castle County v. Hartford Accident and Indem,. Co., 933 F.2d 1162, 1181 (3d Cir.1991) (“New Castle v. Hartford /”) (applying Delaware law). An insurer’s duty to defend is broader than its duty to indemnify, see Charles E. Brohawn & Bros., Inc. v. Employers Commercial Union Insurance Co., 409 A.2d 1055, 1058 (Del.1979), but “is limited to suits which assert claims for which it has assumed liability under the policy.” Continental Cas. Co. v. Alexis I. duPont School Dist., 817 A.2d 101, 103 (Del.1974). “[W]here there exists some doubt as to whether the complaint against the insured alleges a risk insured against, that doubt should be resolved in favor of the insured.” Id. at 105. Most importantly therefore, an insurer is “required to defend any action which potentially states a claim which is covered under the policy.” New Castle County v. Hartford Accident and Indem. Co., 673 F.Supp. 1359, 1367 (D.Del.1987) {“New Castle v. Hartford II”). Thus, in this case, if the Acierno actions potentially state a claim that is covered under definition 10(c), National is required to defend the county in those actions. -Whether the Acierno actions potentially state a claim for which National has assumed liability depends upon how we interpret definition 10(c). As a basic matter, Delaware law requires us to interpret insurance contracts “in a common sense manner.” SI Management L.P. v. Wininger, 707 A.2d 37, 42 (Del.1998); see also New Castle v. Hartford I, 933 F.2d at 1189 (according the terms of an insurance policy their “ordinary, usual meaning”). We must also examine the disputed language in the context of the entire policy. See, e.g., New Castle v. Hartford I, 933 F.2d at 1194 (ascertaining whether a term “is ambiguous in the context of a specific insurance policy”); New Castle County v. Hartford Accident and Indem. Co., 970 F.2d 1267, 1271 (3d Cir.1992) {“New Castle v. Hartford III”) (construing a term “in context with the function of the [insurance] policy”); see also Porter v. Pathfinder Servs., Inc., 683 A.2d 40, 42 (Del.1996) (construing language of an employment contract in its context as a whole). “Absent some ambiguity, Delaware courts will not destroy or twist policy language under the guise of construing it,” Rhone-Poulenc Basic Chemicals Co. v. American Motorists Insurance Co., 616 A.2d 1192, 1195 (Del.1992) (citation omitted), because “creating an ambiguity where none exists could, in effect, create a new contract with rights, liabilities and duties to which the parties ha[ve] not assented.” Hallowell v. State Farm Mut. Auto. Ins. Co., 443 A.2d 925, 926 (Del.1982) (citations omitted). .When policy language is ambiguous, however, under Delaware law this Court must apply the doctrine of contra proferentem. See Oglesby v. Penn Mut. Life Ins. Co., 877 F.Supp. 872, 881 (D.Del.1994) (applying Delaware law). That is, ambiguous language must be construed against the drafter and in conformance with the reasonable expectations .of the insured. See Swfte Int’l, Ltd. v. Selective Ins. Co. of Am., No. Civ. A. 94-44-SLR, 1994 WL 827812, at *5 (D.Del. Dec.30, 1994); see also Steigler v. Ins. Co. of N. Am., 384 A.2d 398, 400 (Del.1978). • The premise underlying the principle of contra proferentem is that an insurance contract is one of adhesion. See State Farm Mut. Auto. Ins. Co. v. Johnson, 320 A.2d 345, 347 (Del.1974). As the Delaware Supreme Court recently explained, [T]he insurer ... is the entity in control of the process of articulating the terms [of an insurance contract]. The other party ... usually has very little to say about those terms except to take them or leave them or to select from limited options offered by the insurer!... Therefore, it is incumbent upon the dominant party to make the terms clear. Convoluted or confusing terms are the problem of the insurer ...—not the insured .... Penn Mut. Life Ins. Co. v. Oglesby, 695 A.2d 1146, 1149-50 (Del.1997). As noted earlier, due to the insurer’s dominant position, when an ambiguity is found in insurance policy language, we must construe the language against the insurer as a matter of Delaware law. And therefore, unlike with other types of contracts, we need not inquire into the parties’ actual intent. See New Castle v. Hartford I, 933 F.2d at 1182 n. 43; Oglesby, 877 F.Supp. at 881 (noting that “Delaware courts ... consistently construfe] ambiguities in favor of the insured as a matter of law.”). Because ambiguous language is construed against the insurer as a matter of law, we take special note of Delaware law for determining whether language is ambiguous. “The settled test for ambiguity is whether the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings.” Phillips Home Builders, Inc. v. Travelers Ins. Co., 700 A.2d 127, 129 (Del.1997) (internal quotation marks and citation omitted). An insurance policy is not ambiguous, however, “merely because two conflicting interpretations may be suggested. Rather, both interpretations must reflect a reasonable reading of the contractual language.” Aetna Cas. and Sur. Co. v. Kenner, 570 A.2d 1172, 1174 (Del.1990). Thus, we must examine, not only whether the county’s reading of definition 10(c) is possible, but also whether it is reasonable. See id.; see also New Castle v. Hartford III, 970 F.2d at 1271 (rejecting one reading of the policy language at issue' because, while possible, it was not reasonable). C. Definition 10(c) is Ambiguous Against this backdrop of Delaware law, we turn to the task before us of determining whether definition 10(c) is ambiguous. First, we consider the respective arguments of the parties and the relevant case law. We attempt to balance the weight of authority on this precise issue, but find that additional guidance is needed. Consequently, we turn to the tenets of contract construction. Finally, we examine the disputed language within the policy as a whole. Using these tools, we conclude that definition 10(c) is ambiguous. National and the county assert different interpretations of the phrase “by or on behalf of its owner, landlord or lessor.” National argues, and the District Court held, that the phrase can only mean that the wrongful act—the eviction, entry or invasion—was done “by or on behalf of [the premises’] owner.” The county replies that it is equally logical, or at least reasonable, to interpret the phrase as explaining how the premises in question is occupied. In its view, the language indicates that the “room, dwelling or premises” must have been occupied “by or on behalf of its owner, landlord or lessor.” This distinction is critical because the county’s reading does not require that the wrongful act have been instigated by the “owner, landlord or lessor” of the premises while National’s does. As the county clearly was not -an “owner, landlord or lessor” of Acierno’s property, the latter interpretation is the only one under which the county can claim coverage. 1. National’s Interpretation of Definition 10(c) Under National’s construction, to qualify for coverage, the invasion offense must be committed “by or on behalf of the owner, the landlord, or lessor.” Applied to the facts in this case, National would be obligated to defend the county against claims of invasion only if the county were the owner, landlord, or lessor of the property at issue in the Acierno actions. In support of this position, National cites three cases: (1) United States Fidelity and Guaranty Co. v. Goodwin, 950 F.Supp. 24 (D.Me.1996); (2) TerraMatrix, Inc. v. United States Fire Insurance Co., 989 P.2d 483 (Colo.Ct.App.1997); and (3) TGA Development, Inc. v. Northern Insurance Co. of New York, 62 F.3d 1089 (8th Cir.1995). National’s citations are instructive, yet ultimately we find the reasoning in these cases unavailing. In Goodwin, the court held that language identical to definition 10(c) “unambiguously requires that the wrongful entry be committed by the owner, landlord, or lessor of the room, dwelling, or premises.” 950 F.Supp. at 27. We fail to understand the logic underlying Goodwin, however. Reviewing the same phrase, ie., [t]he wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor, The Goodwin court found that the word “its” modifies “room, dwelling or premises,” and not “person.” 950 F.Supp. at 27. Yet, replacing “its” with any of the words the court found “its” to modify does not foreclose either National or the county’s reading of the provision. For example, consider the following: “The wrongful eviction from a room that a person occupies by or on behalf of the room’s owner, landlord or lessor.” Or, consider this: “The invasion of the right of private occupancy of a premises that a person occupies by or on behalf of the premises’ owner, landlord or lessor.” Both examples illustrate the flaw in the Goodtuin court’s reasoning; that is, neither clarifies whether “by or on behalf of’ requires the offense to be committed by the owner, landlord, or lessor, or whether it defines the possesso-ry interest of the claimant. Thus, determining what “its” modifies neither strengthens nor undermines either of the competing interpretations of definition 10(c) forwarded by National and the county- In TerraMatrix, the Colorado Court of Appeals also found language identical to definition 10(c) “unambiguous and applicable only to entries, evictions and invasions committed by or on behalf of the owner, landlord or lessor.” 939 P.2d at 489. Although the TerraMatrix court professed to be “persuaded by the reasoning of other courts,” it cited only Goodwin in support of its conclusion that the provision was unambiguous. Id. As we explained above, the reasoning in Goodwin is flawed at best. Because the TerraMatrix court does not offer any analysis of its own, without more, we cannot accord significant weight to its holding. In TGA Development, the Eighth Circuit commented that it “doubt[ed] very much that coverage is available under” a personal injury provision identical to definition 10(c) because the insured could not “even eolorably be characterized as owner, landlord, or lessor.” TGA Development, 62 F.3d at 1091 (internal quotation marks omitted). National points to this language to bolster its claim that the insured must be the owner, landlord,, or lessor to qualify for coverage under definition 10(c). The Eighth Circuit’s commentary is purely dicta, however. Indeed, the TGA court explicitly “pass[ed] over” the issue presented by this appeal. See id. Instead, the court based its conclusion that coverage was not available on the policy’s exclusion of coverage clause prohibiting recovery “for personal injury for which the insured has assumed liability in a contract or agreement.” See 62 F.3d at 1091. The dicta from TGA Development has “no binding authority” on this Court. Gruber v. Price Waterhouse, 911 F.2d 960, 967 (3d Cir.1990). In addition to the above cases, the District Court also cited Patel v. Northfield Insurance Co., 940 F.Supp. 995 (N.D.Tex.1996), for the proposition that definition 10(c) is unambiguous. In Patel, the court found that language identical to definition 10(c) was unambiguous. The case is different in one fundamental respect, however. The Patel court based its finding on Decorative Center v. Employers Casualty, 833 S.W.2d 257, 260 (Tex.App.1992), which examines language. different from definition 10(c). In Decorative Center, the personal injury offense was “other invasion of the right of private occupancy.” Id. at 1001.' Importantly, it does not include the “by or on behalf of’ language that forms the basis for this appeal. The Patel court dismissed the difference between the Decorative Center language and language identical to definition 10(c) as having “no practical effect.” Id. at 1001 n. 10. We, however, find that language critical to this case. Indeed, the sole focus of this appeal is definition 10(c)’s “by or on behalf of’ language. In sum, National has offered some authority that suggests definition 10(c) is not ambiguous. Upon close inspection of the cases, however, we find the authority to be unpersuasive or of limited precedential value. As such, standing alone, the authority forwarded by National does not resolve whether definition 10(c) is clear or ambiguous. With that we turn to the county’s interpretation of definition 10(c). 2. The County’s Competing Interpretation of Definition 10(c) The county urges this Court to accept an alternative reading of definition 10(c) as reasonable. According to the county, the phrase “by or on behalf of’ defines the possessory interest of the person aggrieved in 10(c). Under this interpretation, in order for the insured to invoke coverage for an invasion, the claimant must have the right to occupy the premises, either as owner, landlord, or lessor, or with the permission of the owner, landlord, or lessor. In support of its interpretation, the county cites United States v. Security Management Co., 96 F.3d 260 (7th Cir.1996). In that case, the Seventh Circuit examined language identical to definition 10(c). Although the District Court found the provision to be ambiguous, the Seventh Circuit read the language beginning “that a person occupies ...” as unambiguously “refinfing] the nature of the prerequisite ‘right’ of private occupancy.” Id. at 265. In other words, in the view of the Security Management court, the language at issue “limit[s] coverage to those instances where ‘a person occupies by or on behalf of its owner, landlord or lessor’ ” and functions to “exclude! ] at least unapproved sub-lessees from coverage.” Id. The Seventh Circuit’s commentary on the meaning of the clause again is dicta, however. Its holding is based on the fact that the litigants claiming an invasion in that case “unquestionably lacked any ... enforceable claim of occupancy,” Id. at 265; indeed, the litigants were “testers,” or civil rights activists who posed as apartment-hunters but who did not actually rent a unit. Id. at 265. As we noted earlier, we are not bound by this dicta, although we may consider it in our analysis if we deem it appropriate. See supra n. 7. The county also cites Blackhawk—Central City Sanitation District v. American Guarantee & Liability Insurance Co., 856 F.Supp. 584 (D.Colo.1994), for the proposition that definition 10(c) is ambiguous. In that case, the court was asked to construe language identical to definition 10(c), and the parties’ arguments mirror those presented here. Appellee contended that language identical to definition 10(c) “requires that the eviction, entry or invasion be by or,; on behalf of the owner, landlord or lessor of‘the premises.” Id. at 590. The appellant, on the other hand, argued that the provision could “be read to modify, not the party who evicts, enters or invades, but rather on whose authority the current occupant holds the property.” Id. Faced with these competing interpretations, the court deemed the provision ambiguous and construed the language in favor of the insured. See id. The Blackhawk — Central court, however, did not elaborate on how it reached its conclusion and thus provides us with little guidance. In sum, the county has presented this Court with authority to suggest that definition 10(c) is ambiguous. The case law it cites—Security Management and Black-hawk—Central—however, is either dicta or void of analysis and thus it does not, by itself, establish that definition 10(c) is ambiguous or that the county’s interpretation is reasonable. Having reviewed the relevant case law supporting both sides of the issue, we consider the weight of the authority. 3. The Weight of the Authority To predict how the Delaware Supreme Court would decide this case, we must consider “reliable data tending convincingly to show how the highest court in the state would decide the issue at hand.” McKenna v. Ortho Pharm. Corp., 622 F.2d 657, 663 (3d Cir.1980). This includes “relevant state precedents, analogous decisions, considered dicta, [and] scholarly works.” Id. Having reviewed the relevant precedent, it is difficult to predict how the Delaware Supreme Court would decide the issue before us. Importantly, we can discern no appreciable trend among the cases. First, the universe of cases that examines language identical to definition 10(c) is very small. While our job is not simply to count the number of cases on both sides, even if we did so, the line of cases on each side would be roughly equal. Moreover, one Circuit Court of Appeal has weighed in on each side of the issue, and each time only in dicta. Still other cases offered only bare-boned analyses. And finally, with particular relevance to our task, not one of the cases cited is from a Delaware state court or a federal court construing Delaware law. The most we can glean from the conflicting case law on this issue is that, as a starting point, definition 10(c) may reasonably be susceptible to more than one interpretation. When faced with a similar situation in another case, we explained that [although the presence of conflicting judicial decisions does not automatically mandate a finding of ambiguity, we think it has some relevance.... We are confronted here with two lines of contrasting cases ... While it is our responsibility to ascertain which of these lines is most likely to -be followed in Delaware, we cannot help but view such a division as at least suggesting that the ... [contested term] is susceptible of more than one reasonable definition. New Castle v. Hartford I, 933 F.2d at 1196. In short, “that different courts have arrived at conflicting interpretations of the policy is strongly indicative of th[is] policy’s essential ambiguity.” Little v. MGIC Indem. Corp., 836 F.2d 789, 796 (3d Cir.1987) (citation omitted). Thus, as a starting point, we tend to view the case law as indicating that definition 10(c) is susceptible to more than one reasonable interpretation and, as such, is ambiguous. For greater guidance on this issue, we now turn to the traditional rules of contract interpretation. 4. Rules of Contract Interpretation Insurance policy disputes often turn on the meaning of a single term or phrase. See, e.g., New Castle v. Hartford I, 933 F.2d at 1193-99. The case before us is somewhat different because it turns on the function of a phrase—“by or on behalf of’—within a larger provision. As a consequence, we will look to the grammatical arrangement of clauses in definition 10(c) to construe the meaning of definition 10(c). See Lake County v. Rollins, 130 U.S. 662, 670, 9 S.Ct. 651, 32 L.Ed. 1060 (1889) (“To get at the thought or meaning expressed in a statute, a contract, or a constitution, the first resort, in all cases, is to the natural significance of the words, in the order of grammatical arrangement in which the framers of the instrument have placed them.”); see also VIA Am.Jur.2d Contracts § 369 (1991) (instructing a court to give “due force to the grammatical arrangement of clauses” because grammatical construction of a contract “is often a reliable signpost” in construing its language). National argues that definition 10(c) is not ambiguous. The heart of its argument is that the phrase “by or on behalf of its owner, landlord or lessor” modifies “wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy,” and thus requires that the insured be the owner, landlord or lessor of the property at issue. The county, on the other hand, maintains that “by or on behalf of’ pertains to its nearer antecedent “person,” establishing the requirement that the claimant have the right to occupy the premises. The grammatical construction of contracts generally requires that a qualifying or modifying phrase be construed as referring to its nearest antecedent. See Bakery and Confectionery Union and Indus. Int’l Pension Fund v. Ralph’s Grocery Co., 118 F.3d 1018, 1026 (4th Cir.1997) (construing a collective bargaining agreement) (citation omitted); see also Aks v. Southgate Trust Co., 1994 WL 171537 (D.Kan. Mar. 31, 1994), at *9 (concluding that the “[r]ules of grammar and contract interpretation as well as simple logic dictate” that a particular clause modifies the word directly preceding it). The Ninth Circuit applied this rule of contract interpretation in construing the language of an insurance contract in Interstate Fire and Casualty Co. v. Archdiocese of Portland in Oregon, 35 F.3d 1325 (9th Cir.1994) (applying Florida law). Under the terms of the policy, the underwriters agreed “to indemnify the Assured for all sums which the Assured shall be obligated to pay by reason of the liability imposed upon the Assured by law ... for damages ... on account of personal injuries ... arising out of any occurrence happening during the period of Insurance.” Id. at 1329 (ellipses in original). The insurance underwriter argued that the assuring clause required that all damages occur within the policy period in order to be covered. In contrast, the court concluded that “based on the plain meaning of the assuring clause ... it is the occurrence, rather- than the damages, that must happen during the policy period.” Id. (internal quotation marks omitted). Thus, in this example, “happening during the period of Insurance” modifies “occurrence,” the noun that directly precedes it, and not “damages,” which is more remote. When we apply this rule of construction to definition 10(e), it is plain that “by or on behalf of’ modifies “that a person occupies,” the language that directly precedes it, and not the “wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy” language that commences definition 10(c). On this basis, we find the county’s interpretation of definition 10(c) to be entirely reasonable. Because definition 10(c) is subject to more than one reasonable interpretation, it is ambiguous, and must be construed in favor of the county. See supra section III.B. (noting that ambiguous language is construed against the insurer as a matter of Delaware law). Our finding that the county’s interpretation of definition 10(c) is reasonable is not diminished by the fact that this interpretation may render portions of the provision surplusage in cases of “wrongful eviction” and “wrongful entry.” As noted earlier, under Delaware law, we must consider the phrase “by or on behalf of’ in the context of definition 10(c) as a whole. See Cheseroni v. Nationwide Mut. Ins. Co., 402 A.2d 1215, 1217 (Del.1979) (“[A] single clause or paragraph of a contract cannot be read in isolation, but must be read in context, and every portion of the contract deserves consideration.”); New Castle v. Hartford III, 970 F.2d at 1271 (“[A] word or term cannot be considered in isolation; it must be read in the semantic and functional context of the policy or clause at issue to determine if two competing, reasonable interpretations exist”). We have said that “by or on behalf of’ is ambiguous because it can reasonably be interpreted to require the insured to commit the offense as owner, landlord, or lessor, or to define the possessory status of the claimant. It follows, then, that “wrongful eviction from a room ... by or on behalf of the owner, landlord or lessor” can mean either that the owner, landlord, or lessor must commit the eviction, or that the claimant must have the right to possess the room. The latter interpretation, however, seems to render the term “wrongful” superfluous. Indeed, an eviction is not “wrongful” unless the evicted party (the claimant) has a right to possess the premises. And this Court takes care not to render other portions of a provision or contract superfluous when construing contract language. See, e.g., Contrans, Inc. v. Ryder Truck Rental, Inc., 836 F.2d 163, 169 (3d Cir.1987) (applying Pennsylvania law); see also Restatement (Second) of Contracts § 203(a) (1979) (stating that “an interpretation which gives a reasonable, lawful and effective meaning to all the terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect”). In this vein, we note that interpreting the phrase “by or on behalf of’ to require a claimant to have the right to possess the room does not necessarily render the word “wrongful” surplusage. Whereas an “invasion of the right of private occupancy” is itself a tortious act, both evictions and entries can be executed rightfully. For example, a landlord may rightfully evict a tenant who has not paid rent. Thus, the word “wrongful” complements the “by or on behalf of’ language by ensuring that coverage under definition 10(c) is limited to situations in which the insured has com mitted a wrongful, tortious act. As we have noted in the past, insurance policies are often written with an abundance of caution; indeed, they routinely use words or groups of words that are fairly synonymous with one another, particularly to underline a salient point. See New Castle v. Hartford I, 933 F.2d at 1194 & n. 56 (concluding that the Delaware Supreme Court would persist in giving a term its plain meaning even though other courts feared that construction rendered the term surplusage). Therefore, notwithstanding a potential contextual defect, we are unwilling to override our conclusion that the county’s interpretation of definition 10(c) is reasonable when the contextual defect is itself subject to competing interpretations. Although we would prefer to give equal effect to all of the language in definition 10(c), we refuse to reject an otherwise reasonable reading to avoid what might only be a potential contextual infirmity. In sum, the contextual complexity of definition 10(c) only reinforces our conclusion that the provision is ambiguous. We also reject National’s argument that its interpretation of definition 10(c) alone makes sense when viewed in the context of the entire CGL policy. It argues that the “entire object of the CGL policies” is “to insure against the tortious conduct of the insured.” Br. of Appellee, at 28. We recognize that the Delaware Supreme Court has considered the “purpose of liability policies in general” to determine the scope of coverage. E.I. du Pont de Nemours & Co. v. Allstate Ins. Co., 686 A.2d 152, 157 (Del.1996) (construing a CGL insurance policy). Contrary to National’s argument, however, viewing “by or on behalf of’ in the context of the entire policy does not foreclose the county’s interpretation of definition 10(c). Indeed, the county’s position that “by or on behalf of’ requires the claimant to have the right to possess the premises is consistent with the purpose of the policy as stated by National; the language as construed by the county ensures that the only claims covered under the policy are for tortious conduct. Furthermore, we reject National’s claim that under the county’s interpretation there would have been no conceivable way for Appellee to rate the actuarial risk involve in issuing the CGL policies .... Appellee can only sell Appellant a policy of CGL insurance if there is a readily quantifiable number of properties which Appellee [sic: Appellant] owns, leases or rents. If Appellant’s interpretation had been accepted by the parties at the time the subject CGL policies were issued, the premium charged to Appellant for such coverage would have been astronomical since Appellant could potentially be held liable for wrongfully entering or invading an everexpanding number of “rooms, dwellings, or premises” within New Castle County. Br. of Appellee, at 41. In brief, National claims that its interpretation of definition 10(c) is the only reasonable one because otherwise, it would have been impossible for National to assess the actuarial risk involved in issuing a policy to the county. National’s argument fails for several reasons. First, National claims that it would only issue a policy to the county if National could quantify the number of properties the county owned, leased, or rented. Yet, this Court could not find, and indeed National did not identify, any provision in the policy that limited the county’s ability to buy, lease, or rent new properties while covered by the policy. Thus, there does not appear to be any policy mechanism that fixes the number of properties the county owns, leases, or rents within the limits supposedly established by the amount of the premium. Second, the invasion offense is just one of several personal injury offenses listed in definition 10. See App. to Br. of Appellant, at A141 (CGL Policy). National claims that without knowing the number of properties owned, leased, or rented by the county, it could not assess the county’s risk for claims of eviction, entry, or invasion. Assuming that is true, how does National assess the county’s risk for “false arrest, detention, or imprisonment” without knowing how many people the county could falsely arrest? Or “malicious prosecution,” without knowing how many people the county could potentially maliciously prosecute? And again National has not indicated that the policy limits the coverage of these personal injury offenses to a specific number. It seems to this Court that there are a potentially infinite number of people the county could libel or slander through an infinite number of written and oral statements, and yet National was able to calculate a premium to insure the county in connection with those offenses. Third, we must be sure to read the policy language from the average consumer’s point of view. See New Castle v. Hartford I, 933 F.2d at 1190 (noting that “under Delaware law, the parties to an insurance contract are bound by the popular, lay meaning of its terms, regardless of the sophistication of the insured.”); see also Continental Ins. Co. v. Burr, 706 A.2d 499, 501 (Del.1998) (construing ambiguous language to satisfy the average consumer’s expectations). The average consumer can be expected to appreciate that the insurer will insure a particular risk only under certain circumstances when those circumstances are explicitly spelled out in the contract. For example, it is clear that the insurer deems a particular event too risky for it to insure the policyholder against when the insurer includes a clause explicitly excepting that risk in the policy. This was the case in New Castle v. Hartford III, where we stated that an exclusion clause “embodies an understanding that the insurer will only underwrite a certain, specific risk, calculable to a margin of actuarial certainty and rational from an economic point of view for both parties.” Id. at 1272. In contrast, definition 10(c) is not an exclusion clause and does not “embody” a similar understanding. National’s argument thus expects too much from the average insurance consumer. Lastly, and most importantly, what National intended definition 10(c) to mean is very different from what the provision’s language conveys. At best, National’s actuarial argument suggests that National has a sound business rationale for the interpretation of definition 10(c) it urges on this Court. The argument does not, however, demonstrate that National succeeded in drafting a policy that limited coverage for the invasion offense only to cases when the county was the owner, landlord, or lessor. Cf. Little, 836 F.2d at 796 (acknowledging an insurer’s “sound business reasons” for not wanting to be obligated to defend the insured, while rejecting notion that such reasons prove that the insurer “succeeded in drafting a policy that unambiguously states this intention.”). In sum, both National and the county “offer reasonable, though problematic, interpretations” of definition 10(c). Phillips Home Builders, Inc. v. Travelers Ins. Co., 700 A.2d 127, 129, 130 (Del.1997) (“We find problems with both sides’ interpretations. Neither one gives full effect to all of the contract language and both could be applied in ways that a reasonable person probably would not have intended.”). And, the case law before us fails to offer definitive guidance, but leads us to suspect that definition 10(c) is ambiguous. This finding is supported by the rules of contract construction. Also, in holding that definition 10(c) is ambiguous, we recognize Delaware’s strong insistence that insurance companies are accountable for confusing policy language. In this case, National had the “opportunity and responsibility to state the terms of its coverage ... in clear and understandable language.” Id. at 130. Thus, because using the tools of contract interpretation leads to two reasonable interpretations of the “by or on behalf of’ language in definition 10(c), we hold that it is ambiguous. Finally, because the District Court did not reach the issue of whether the Acierno actions stated a claim for an invasion, we decline to reach that issue on appeal. See Selected Risks, 718 F.2d at 69 (stating that generally this Court will not consider an issue not passed upon by the court below). Thus, we will not address the county’s argument that the nature of Acierno’s claims is consistent with an invasion of the right of private occupancy. Nor will we address National’s response that the invasion offense is limited to landlord-tenant scenarios and situations that involve tangible interference with a possessory interest in land. Such arguments go to the nature of the invasion offense itself and are outside of our scope of review. We leave it to the District Court to determine whether invasions are limited to the landlord-tenant context and whether they are limited to tangible interference with possessory interest. The District Court will examine them on remand when it decides whether the claims made in the Acierno actions constitute an “invasion of the right of private occupancy.” IV. CONCLUSION For the foregoing reasons, the portion of . the District Court judgment finding that definition 10(c) is unambiguous will be reversed. The case will be vacated and remanded to the District Court to determine whether the Acierno actions constitute an invasion of the right of private occupancy. . The District Court based its jurisdiction on diversity of citizenship. See 28U.S.C.§ 1332 (1994). . The county purchased three CGL policies from National: Policy No. GL 590-44-26-RA, effective July 1, 1991 to July 1, 1992; Policy No. GL 590-62-18-RA, effective July 1, 1992 to July 1, 1993; and Policy No. GL 590-73-01-RA, effective July 1, 1993 to July 1, 1994. As the District Court noted, these policies do not differ from one another in any significant way. See New Castle County, Delaware v. National Union Fire Ins. Co. of Pittsburgh, PA, No. CIV. A. 96-504 LON, 1997 WL 809207, at *1 n. 1 (D.Del. Dec.30, 1997) if‘New Castle County v. National ”). National has disclaimed coverage under Policy No. 590-44-26-RA, the one it considers to have been in effect when the first two actions against the county were filed. Br. of Appellee, at 7. National has not declared its coverage position with respect to the other two CGL policies. . Acierno v. Mitchell, No. Civ. A. 92-384-SLR ("Acierno I"). Acierno moved for a preliminary injunction, which the trial court granted on December 30, 1992. On appeal, this circuit held that the dispute was not ripe for judicial review, vacated the lower judgment, and remanded the case with instructions to dismiss it without prejudice. See Acierno v. Mitchell, 6 F.3d 970, 977-78 (3d Cir.1993). . Acierno v. Cloutier, No. Civ. A. 92-385-SLR ("Ademo II"). This case was disposed of by a joint stipulation approved by the District Court on October 24, 1997. Br. of Appellant, at 12. . Acierno v. New Castle County, No. Civ. A. 93-579-SLR ("Ademo III”). This case was tried in the Spring of 1997. According to the county, it was required to issue a building permit and the case was eventually settled in accordance with the Ademo II stipulation. Br. of Appellant, at 14. . National has actually only disclaimed coverage under the CGL policy for Ademo I and II. Yet, the District Court concluded in its opinion that, although National has apparently not declared its official coverage position with regard to Ademo III, the issue of National's obligation to defend and indemnify the county in Ademo III was nonetheless ripe for adjudication, in part because it is likely that National would disclaim any obligation to defend or indemnify the county in connection with Ademo III. See New Castle County v. National, 1997 WL 809207 at *3-4. We have no occasion to disrupt the District Court's finding on this matter. . We can, of course, accord dicta as much weight as we deem appropriate. See, e.g., Girard Trust Co. v. United States, 161 F.2d 159, 162 (3d Cir.1947) (recognizing that although a finding was dicta, it was "made after a careful consideration of authorities"). . The ISO added the "by or on behalf of” language to definition 10(c) in 1986. Thus, in addition to Patel, we reject Liberty Mutual Insurance Co. v. East Central Oklahoma Electric Cooperative, 97 F.3d 383 (10th Cir.1996), Martin v. Brunzelle, 699 F.Supp. 167 (N.D.Ill. 1988), and Harbor Insurance Co. v. Anderson Leasing, Inc., 1989 WL 112532 (Del.Super.Ct. Sept.27, 1989) as persuasive precedent, because they too are based on the pre-1986 version of definition 10(c). . Similarly, the Eleventh Circuit, in Gibbs v. Air Canada, applied the same rule of contract construction to a contract in which a company called Aircraft Services agreed to provide various ramp services to Air Canada. 810 F.2d 1529, 1531 (11th Cir.1987). A liability provision in the contract stated that "Service Inc. does not assume any liability for damages caused by or resulting from directly or indirectly, wholly or in part, any failure or fault other than negligence or willful misconduct....” Id. at 1536. Noting that the "grammatical construction of contracts generally requires that a qualifying phrase be construed as referring to its nearest antecedent,” the court concluded that the "natural reading” of the phrase was that "wholly or in part” modified "caused by or resulting from directly or indirectly,” id., the language that most directly preceded it. . We hoped that an examination of the punctuation used in definition 10(c) might clarify any ambiguity therein. See, e.g., Plymouth Mut. Life Ins. Co. v. Illinois Mid-Continent Life Ins. Co. of Chicago, IL, 378 F.2d 389, 391 (3d Cir.1967) (stating that "punctuation may be used as an aid in interpreting a contract”); 17A Am.Jur.2d Contracts § 370 (1991) (slating that "where words do not have a plain meaning, the rules of punctuation may be of some assistance”). We were disappointed. At oral argument, counsel for National represented to this Court that, in construing definition 10(c), one is supposed to "breathe” in between the terms "that a person occupies” and "by or on behalf of,” presumably to break the natural link between the two phrases. Yet in drafting this policy, National could easily have inserted a comma in between "occupies” and "by or on behalf of" to function as an "interruption in continuity of thought or sentence structure.” The Chicago Manual of Style (John Grossman ed., University of Chicago Press, 14th ed.1993). That is, a comma would have alerted the reader that National did not intend for "by or on behalf of” to flow uninterrupted from "that a person occupies.” National chose instead, however, to assume that the reader would "breathe” in between "by” and “occupies.” In making this choice, National also assumed the risk that the language might be misconstrued. And, "convoluted or confusing terms are the problem of” National, not the county. Emmons v. Hartford Underwriters Ins. Co., 697 A.2d 742, 745 (Del.1997). . The language "a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor” applies to all three offenses—wrongful eviction, wrongful entry, and invasion of the right of private occupancy. We know this because wrongful eviction is followed by “from,” entry by "into,” and invasion by "of." "From," "into” and "of" are all prepositions, and as such, have an object. The objects in this case are the room, dwelling, or premises. Thus, definition 10(c) must be read, for example, as "wrongful eviction from a room ...,” "wrongful entry into a room ...," or "invasion of the right of private occupancy of a room....”
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11,620,380
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Remanded to the Federal Labor Relations Authority by published per curiam opinion. OPINION PER CURIAM: These cases are before us on remand from the Supreme Court incident to its vacatur of our decision, in United States Dep’t of Interior v. FLRA, 132 F.3d 157 (4th Cir.1997), in which we had granted a petition to review and denied enforcement of an order of the Federal Labor Relations Authority (Authority) that had required the U.S. Geological Survey of the Department of the Interior (Survey) to bargain endterm over a union proposal to include in a collective bargaining agreement a requirement that the Survey bargain over union-initiated midterm proposals. In two earlier decisions, we had held (1) that the Federal Service Labor-Management Relations Act (Act), 5 U.S.C. §§ 7101 et seq. (West Supp.1997), imposes no general obligation on federal agencies to bargain over union-initiated midterm proposals, see Social Security Admin. v. FLRA 956 F.2d 1280, 1281 (4th Cir.1992) (SSA) and, accordingly, (2) that no contractual duty to bargain midterm could be imposed upon an agency by the Authority, see U.S. Dep’t of Energy v. FLRA, 106 F.3d 1158, 1163 (4th Cir.1997) (Energy). Relying on those decisions, we had then held in the instant cases that neither could the Authority require an agency to bargain endterm over a union proposal to impose a contractual obligation to bargain over union-initiated midterm proposals. See 132 F.3d at 161-62. And, on that basis we had denied enforcement of the Authority’s order requiring the Survey so to bargain. See id. at 162. Reviewing our decision, the Supreme Court rejected our premise in SSA that the Act imposes no general obligation on federal agencies to bargain midterm and, in consequence, our reasoning in Energy and the instant cases based upon that premise. And, in the process, the court also rejected the directly conflicting positions of the Authority and of the D.C. Circuit, see National Treasury Employees Union v. FLRA 810 F.2d 295, 301 (D.C.Cir.1987), that the Act absolutely requires agencies to bargain over union-initiated midterm proposals. Instead, the Court held that the Act is ambiguous both as to “whether, when, and where” midterm bargaining is required by law and, consequently, as to whether an agency must bargain endterm over a particular union proposal to require midterm bargaining. See National Fed’n of Fed. Employees, Local 1309 v. Department of Interior, — U.S. -, 119 S.Ct. 1003, 1007-11, 143 L.Ed.2d 171 (1999). And, the Court held that under controlling administrative law principles this ambiguity left those questions, when raised in specific cases, for resolution by the Authority “within appropriate legal bounds.” Id. at 1010. For these reasons, the Court then opined that in the instant cases “the Authority should have the opportunity to consider these questions aware that the [Act] permits, but does not compel, the conclusions it reached.” Id. at 1011. And, on that basis, the Court vacated our decision and remanded the cases for further proceedings consistent with its opinion. See id. Complying with that mandate, we remand the cases to the Authority for further proceedings consistent with the opinion of the Supreme Court. SO ORDERED.
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3,741,596
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PER CURIAM: Gregory Robinson appeals the denial of his motion to reduce his sentence. 18 U.S.C. § 3582(c)(2). Robinson argues that he is eligible for a sentence reduction under Amendment 706 and his sentence is unreasonable. Although the district court erred by ruling that it lacked jurisdiction to modify Robinson’s sentence, the error was harmless because the district court ruled alternatively that Robinson’s sentence should not be reduced. We affirm the denial of Robinson’s motion. We review “de novo a district court’s conclusions about the scope of its legal authority under 18 U.S.C. § 3582(c)(2).” United States v. Jones, 548 F.3d 1366, 1368 (11th Cir.2008) (per curiam). A district court may reduce a term of imprisonment when the guideline range is lowered by the Sentencing Commission. 18 U.S.C. § 3582(c). When the district court recalculates the sentence under the amended guidelines, “all original sentencing determinations remain unchanged with the sole exception of the guideline range that has been amended since the original sentencing.” United States v. Bravo, 203 F.3d 778, 781 (11th Cir.2000). The district court must decide, in the light of the statutory sentencing factors, 18 U.S.C. § 3553(a), “whether, in its discretion, it will elect to impose the newly calculated sentence under the amended guidelines or retain the original sentence.” Bravo, 203 F.3d at 781. We will not reverse based on an error that is harmless. See United States v. Keene, 470 F.3d 1347, 1349 (11th Cir.2006). We review the reasonableness of the sentence imposed for an abuse of discretion. Gall v. United States, 552 U.S. 38, 128 S.Ct. 586, 597, 169 L.Ed.2d 445 (2007). The district court erred when it refused to modify Robinson’s sentence based on its finding that he was responsible for more than 4.5 kilograms of cocaine base. At Robinson’s original sentencing hearing, the district court found that Robinson’s “offense behavior involved in excess of five hundred grams of cocaine base.” The district court cannot later revise that finding based on its recollection of the evidence. See Bravo, 203 F.3d at 781; United States v. Cothran, 106 F.3d 1560, 1562-63 (11th Cir.1997). We need not reverse the denial of Robinson’s motion because we can say “ ‘with fair assurance ... that the sentence was not substantially swayed by the error.’” United States v. Mathenia, 409 F.3d 1289, 1292 (11th Cir.2005) (per curiam) (quoting United States v. Hornaday, 392 F.3d 1306, 1315-16 (11th Cir.2004)). The district court stated that even were it “to find that [it] did have jurisdiction to reduce [Robinson’s] offense or his sentence,” the court “would let life remain as [Robinson’s] sentence.” The district court applied the new guideline range of 360 months to imprisonment for life, “considered all of the factors in section 3553(a)(1) through 7,” and explained that a sentence of life imprisonment was necessary to address Robinson’s recidivism, “several disciplinary problems while he’s been incarcerated,” and future dangerousness. 18 U.S.C. § 3553(a); Gall, 128 S.Ct. at 597. Robinson’s sentence is reasonable. The order denying Robinson’s motion to modify his sentence is AFFIRMED.
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3,748,369
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PER CURIAM: Freddie Sandoval and Angel Mazariegos appealed their conviction and sentences of 180 months and 160 months incarceration respectively. They jointly raise numerous allocations of error. We consider each in turn. The court did not clearly err in denying Sandoval’s motion to suppress a show-up identification. The show-up was immediately after the illegal crimes took place to determine the identity of the suspects in custody. Show-ups are unnecessarily suggestive when “police aggravate the suggestiveness of the confrontation.” See Johnson v. Dugger, 817 F.2d 726, 729 (11th Cir.1987). This was not done. It was not clear error to refuse to suppress the identification evidence. Sandoval had a leadership role in the events. Undisputed facts justify the increase in Sandoval’s base offense levels pursuant to U.S.S.G. § 3Bl.l(b). He exercised a measure of authority over the others and had decision making power over the group. There was more than minimal planning. A particular rival gang member was targeted, but substantial planning proceeded the drive-by-shooting of the rival members house. There was more planning than would be involved in a “simple form” drive-by-shooting. There was no error in enhancing Sandoval’s sentence for more than minimal planning per U.S.S.G. § 2A2.2(b)(l). Possession of a firearm is not a RICO offence. We therefore remand for reconsideration of Sandoval’s sentence without the RICO enhancement. Mazariegos argues that the district court erred by admitting three pieces of evidence that were inadmissible character evidence: photographs of gang graffiti, book-in photographs and prior arrest records, and evidence of uncharged criminal conduct. We review for an abuse of discretion. United States v. Calderon, 127 F.3d, 1314, 1331 (11th Cir.1997). The evidence was useful to prove the defendant’s identity and the existence of a common scheme, and thus admissible under Federal Rule of Evidence 404. There was no abuse of discretion. Mazariegos next argues that the evidence was insufficient to prove beyond a reasonable doubt that he personally engaged in two racketeering acts. The government is not obligated to prove defendant’s personal involvement in two racketeering acts, but only the existence of “an agreement on an overall objective.” United States v. To, 144 F.3d 737, 744 (11th Cir.1998). Mazariegos’s argument fails. Mazariegos argues that the evidence presented was insufficient to prove beyond a reasonable doubt that he committed the February 20, 2002 car theft. We review legal questions de novo. To, 144 F.3d at 743. The record indicates that the ear was reported stolen and thirty minutes later the car was recovered. Mazariegos was arrested at the scene. The inference that Mazariegos stole the car was not unreasonable under all of the circumstances. Mazariegos next argues that the District Court erred by increasing his base offense level for engaging in more than minimal planning before committing the alleged drive-by shooting. We review the District Court’s application of the Sentencing Guidelines de novo and its findings of fact for clear error. United States v. Baker, 432 F.3d 1189, 1253 (11th Cir.2005). The record does not reflect that Mazariegos engaged in any planning before committing the drive-by-shooting. Although the car turned around after the victim was sighted, nothing suggests that Mazariegos ordered the car to turn around. Further, the record does not indicate that Mazariegos used the interim between the sighting of the victim and the committing of the offense to engage in any type of tactical planning. Instead, the record shows that Mazariegos’s offense was committed on the spur-of-the-moment. Minimal planning does not take place even when an offender waits to commit an offense until no witnesses are present. See U.S.S.G. § 2A2.2, comment (n.2). The District Court erred by enhancing Mazariegos’s sentence for more than minimal planning. We remand to the District Court for re-sentencing without this enhancement. Mazariegos next argues that the District Court erred by increasing his base offense level for the use of a minor (Joshua Shivers) per U.S.S.G. § 3B1.4. The primary question is whether Mazariegos’s actions indicate that he “used” Shivers, the car’s driver, to commit the offense. The commentary to the guidelines states the “use” of a minor includes “directing, commanding, encouraging, intimidating, counseling, training, procuring, recruiting, or soliciting.” Id., comment, (n.l). Although Shivers turned the car around after the victim was sighted, nothing in the record suggests that Mazariegos ever directed or commanded Shivers to do so. While it is possible that Mazariegos directed Shivers to turn the car around, the prosecutor failed to fully elucidate this issue. As such, there can be reasonable doubt as to whether Mazariegos directed or commanded Shivers to turn the car around. Similarly, although Shivers helped Mazariegos flee the scene of the offense, nothing in the record establishes that Mazariegos directed Shivers to do so. Shiver’s assistance after the fact does not trigger the enhancement. See U.S.S.G. § 3B1.4. Mazariegos sentence enhancement for using a minor, is set aside. We remand for re-sentencing without the two enhancements. AFFIRMED IN PART AND REVERSED AND REMANDED IN PART. PRYOR, Circuit Judge, concurring in the result: I concur in the result because the enhancement to Mazariegos’s sentence for more than minimal planning is clearly erroneous. The government makes a reasonable argument that any error is harmless, but a remand will allow the district court to enter a sentence that may still be well above the guideline range.
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3,745,941
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PER CURIAM: In this personal injury action, David Wert appeals from the grant of summaiy judgment to Jefferds Corporation, the lessor of a forklift that caused Wert serious injury. We affirm. I. Jefferds leases forklifts to Wert’s employer, Yokohama Tire Company. At all relevant times, Jefferds bore responsibility for periodically inspecting and maintaining the forklifts. To that end, Thomas Spence, an employee of Jefferds, serviced the forklifts on Yokohama’s property. The inspection and maintenance included servicing of strobe lights, which operate when the forklifts are in use, and alarms, which sound when the forklifts are in reverse. Yokohama employees, however, found the reverse alarms and strobe lights irritating and so routinely disabled them. On February 26, 2005, a Yokohama employee backed a forklift over Wert’s left foot crushing all of its major bones. Wert did not see any strobe lights or hear any reverse alarm on the forklift, which would have warned him of its approach. Moreover, Wert’s expert concluded that the strobe lights and reverse alarm were disconnected from their power source at the time of the accident. All parties agree that Spence performed the scheduled preventative maintenance for the forklift in question on February 18, 2005, eight days before the accident. Seeking compensation for his injuries, Wert brought this action against Jefferds. The district court rejected all of Wert’s theories of liability and granted summary judgment to Jefferds. Wert timely appeals, contesting the grant of summary judgment with respect to only one claim— common law negligence. II. We review de novo a district court’s grant of summary judgment, viewing the facts in the light most favorable to the nonmoving party. Colgan Air, Inc. v. Ray-theon Aircraft Co., 507 F.3d 270, 275 (4th Cir.2007). As the site of the accident, Virginia law governs this case. Id. Moreover, in determining whether the district court erred in granting Jefferds summary judgment, we may only consider the materials presented to the court at the time it ruled on that motion. Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214, 242 (4th Cir.2002). Finally, in order to prevail on a negligence claim, a plaintiff like Wert must offer evidence from which a jury could conclude that the defendant— Jefferds—owed him a legal duty, which it breached. Atrium Unit Owners Ass’n v. King, 266 Va. 288, 585 S.E.2d 545, 548 (2003). With these principles in mind, we turn to the case at hand. III. Wert initially contends that the district court erred in holding, “as a matter of law, that plaintiff was barred from a common law negligence claim because plaintiff David Wert was not in privity of contract with defendant Jefferds.” Brief of Appellant at 8. The district court, however, never held that the lack of privity barred a negligence action. Rather the court held that (1) the only duty Jefferds possibly owed Wert arose from contract and (2) any such contractual duty could not give rise to recovery in negligence. The district court certainly did not err with respect to the second point. Well-established Virginia law holds that a duty that arises solely from a contract can only provide the basis for a contract claim; it cannot provide the basis for a negligence claim. Richmond Metro. Auth. v. McDevitt St. Bovis, Inc., 256 Va. 553, 507 S.E.2d 344, 347 (1998). The district court’s initial conclusion— that the only duty possibly owed by Jef-ferds to Wert sounded in contract—requires a bit more analysis. This analysis also addresses Wert’s central contention: that he has presented facts sufficient for a jury to conclude that Jefferds breached some sort of common law, non-contractual duty. Wert first argues that Jefferds had some non-contractual ongoing general duty to inspect the forklifts. Wert points to no authority for such a proposition, and common sense dictates that, absent a contractual obligation, a company that leases or repairs equipment owes no ongoing duty of inspection. Alternatively, Wert contends that, once Jefferds undertook to service the forklift on February 18, that undertaking created a duty to repair the vehicle in a reasonable manner. No Virginia case explicitly recognizes such a duty, but even if we assume Jefferds owed Wert a duty of reasonable repair, Wert cannot prevail. For, in order to avoid summary judgment, Wert must offer evidence from which a jury could conclude that Jefferds breached this duty. Wert attempts to do this by asserting that Jefferds (1) faded to assure that an alarm was installed on the forklift at the time of the accident and/or (2) inadequately serviced the reverse alarm and strobe lights. Wert’s first repair argument fails because prior to the grant of summary judgment, Wert offered no evidence that the forklift did not have a reverse alarm. Although Spence testified at deposition that he often replaced reverse alarms on forklifts, this evidence does not provide any information about the state of the reverse alarm on the particular forklift at issue. To support his second repair argument, Wert primarily relies on the absence of a checkmark next to the item “pedestrian warning devices” on a February 18, 2005 service maintenance log and purported inconsistencies in Spence’s deposition testimony as to whether he inspected the reverse alarm and strobe lights on that date. In fact, at deposition, Spence explained that he indicated the functioning of the reverse alarm and strobe lights by putting a checkmark next to the category “operation of accessories” (and not “pedestrian warning devices”) on the service maintenance log. On the February 18 log, a checkmark in the first column next to “operation of accessories” indicates that Spence found that the “accessories” on the relevant forklift were “O.K.” on that day. Spence also testified that if there had been a problem with the reverse alarm or the strobe lights he would have issued a work order for them, and that he did not do that. Wert provides no evidence to support his contention that the strobe lights or reverse alarm were, in fact, included in the category “pedestrian warning devices.” Instead, Wert relies on certain arguably contradictory deposition statements by Spence explaining why some items on the maintenance log lack a checkmark. Although this part of Spence’s deposition is slightly confusing, it is also irrelevant. Spence testified consistently that the inspection of the reverse alarm and strobe lights was included within “operation of accessories,” an item clearly checked as “O.K.” Indeed, Wert’s attorney effectively conceded in the district court that Spence had adequately inspected and repaired the forklift when counsel agreed that eight days before Wert’s accident Jefferds (through Spence) had “fixed it.” Wert’s expert report similarly creates no jury issue as to breach of duty. The expert essentially stated that a reverse alarm could have prevented the accident and that Spence should have noticed a broken reverse alarm or strobe light. Although perhaps accurate, this opinion provides no information about the reasonableness or effectiveness of Spence’s servicing on February 18, because it does not contain any information about the state of the alarm or lights when Spence returned the forklift to Yokohama. Wert’s expert appears to assume that Jefferds had a duty of ongoing inspection, which, as discussed above, does not exist at common law. Finally, Wert suggests Jefferds breached its duty of proper repair by not “fixing” the forklift to render it tamper-resistant. This argument fails for two reasons, both of which the district court identified. First, Wert offered no evidence that Jef-ferds “fixed” the reverse alarm or strobe lights at all. In fact, no record evidence indicates the reverse alarm and strobe lights needed repair on February 18; rather a checkmark identified them as “O.K.” Second, uncontroverted evidence indicates that Spence generally repaired reverse alarms and strobe lights with butt connectors, which restore the wiring to its original strength. Absent a contractual agreement to do otherwise, returning the forklift to its “normal, working condition” does not breach any duty of repair. Baker v. Poolservice Co., 272 Va. 677, 636 S.E.2d 360, 365 (2006). Thus the record contains no evidence supporting a breach of duty. IV. For the foregoing reasons, the judgment of the district court is AFFIRMED. It appears that Jefferds and Yokohama did not have a written contract in effect at the time of Wert's accident. But because the parameters of any contract (written or oral) do not affect the resolution of this appeal, we need not determine the terms of any possible contract.
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3,742,727
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ORDER In a span of less than 2 years, Yaodi Hu brought 13 separate lawsuits against various defendants in the United States District Court in Chicago. In this case, one of the 13, he sued his landlord and two other tenants who lease office space in the same building. Hu claims that the building owner violated his civil rights by charging exorbitant rent be cause of his race, see 42 U.S.C. §§ 1981, 1982, and that all three defendants violated federal and state antitrust laws and the First Amendment by preventing him from providing or marketing tax-preparation services in the building. The district court granted the defendants’ motions to dismiss under Federal Rule of Civil Procedure 12(b)(6). We affirm. We take as true the facts Hu alleges in his amended complaint. Hu and his wife, both ethnically Chinese, operate various businesses in Chicago, including a mortgage brokerage, a real-estate brokerage, and a tax-preparation business. They were running their ventures out of an office less than five miles from Chinatown (Chinatown is about a mile and a half from downtown Chicago), but decided to target the Chinatown market more directly. They leased from Peter Huey additional office space in “a small three story commercial building with front footage of about 45 feet” in the heart of Chinatown. Hu alleges that Huey, who is also ethnically Chinese, had been renting the space to State Farm Insurance and charging the company a “much lower” rent because it “is controlled by white people.” Hu’s allegations about the commercial real estate market in Chinatown are inconsistent; he first says that Huey’s building was “the only space available” in Chinatown, but later explains in his complaint that the number of “available office spaces for rent” in the neighborhood was limited. A clause in their lease prohibits Hu and his wife from providing tax-preparation services. Huey insisted on including this term because two other tenants, Angela Ip and K.Y. Chau, were also operating a tax-preparation business, and they had negotiated into their lease a restrictive covenant preventing Huey from leasing space in the building to other tax preparers. Ip and Chau have been performing tax-preparation services in Chinatown for over 20 years and are a “formidable market force” in the area. There are, however, a “handful” of other tax preparers in Chinatown, and Ip and Chau charge rates “significantly higher than the average.” In 2006 Hu’s wife told a client at the Chinatown office about the tax-preparation services that she and Hu offered. Chau and Ip learned about the conversation and complained to Huey, who informed Hu that discussing tax-preparation services with customers in the Chinatown office violated the lease. In May 2007 Huey instituted eviction proceedings against Hu and his wife. According to the state-court complaint, Huey sought to evict the couple because they owed Huey back rent and other expenses. On appeal Hu principally argues that the district court erred in dismissing his complaint under Rule 12(b)(6). He first contends that his amended complaint states a claim under § 1 of the Sherman Act because, Hu insists, the restrictive covenant in Huey’s lease with Ip and Chau is an illegal restraint on tax-preparation services in the Chinatown market. Restrictive covenants in lease agreements do not violate antitrust laws unless they unreasonably restrict trade. See Hecht v. Pro-Football, Inc., 570 F.2d 982, 995 (D.C.Cir.1977); Savon Gas Stations No. Six, Inc. v. Shell Oil Co., 309 F.2d 306, 309 (4th Cir.1962); Milton R. Friedman & Patrick A. Randolph, Jr., Friedman On Leases § 28:1; Richard A. Lord, 6 Williston on Contracts § 13:10; see also Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 127 S.Ct. 2705, 2712, 168 L.Ed.2d 623 (2007) (explaining that § 1 of the Sherman Act forbids only “unreasonable restraints” on trade); BCB Anesthesia Care, Ltd. v. Passavant Mem’l Area Hosp. Ass’n, 36 F.3d 664, 666 (7th Cir.1994) (same). A restraint on trade is unreasonable if it has an adverse effect on competition in the relevant market. See State Oil Co. v. Khan, 522 U.S. 3,10, 118 S.Ct. 275, 139 L.Ed.2d 199 (1997); Chi. Bd. of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 62 L.Ed. 683 (1918); 42nd Parallel N. v. E St. Denim Co., 286 F.3d 401, 404 (7th Cir.2002). In determining the reasonableness of a restraint, relevant considerations include the affected business and the history, nature, and effect of the restraint. State Oil Co., 522 U.S. at 10, 118 S.Ct. 275. Hu cannot prevail because, according to his own allegations, the restrictive covenant in Huey’s lease agreement with Ip and Chau has not adversely affected the market for tax services in Chinatown. The lease agreement restricts the commercial activity of just one building—which Hu describes as “small” and only 45 feet long and three stories tall. It is difficult to see how a restrictive covenant that covers such a small area could adversely impact the entire Chinatown market. See Harold Friedman Inc. v. Thorofare Markets Inc., 587 F.2d 127, 143-44 (3d Cir.1978) (noting that the size of the area covered by the restrictive covenant in relation to the entire geographic market is relevant to the reasonableness analysis). Furthermore, Hu tells us that a “handful” of other tax preparers operate in Chinatown, so price-sensitive consumers who are dissatisfied that Ip and Chau’s prices are “significantly higher than the average” can take their business elsewhere. Hu’s lease might prevent him from operating his tax-preparation business in what he perceives to be the most desirable location given its proximity to a major competitor, but antitrust laws operate “not to protect businesses from the working of the market” but to “protect the public from the failure of the market.” Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 458, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993). As Hu’s complaint makes clear, the consumers of Chinatown are not harmed by this restrictive covenant. We also conclude, as did the district court, that Hu cannot state a claim that Huey, Ip, and Chau violated his First Amendment right by stifling his ability to tell his customers about his tax-preparation business. Only those acting under color of law may be held liable for violating a plaintiff’s constitutional rights, and Huey, Ip, and Chau are private individuals, not state actors. See Wagner v. Washington County, 493 F.3d 833, 836 (7th Cir.2007); Thurman v. Vill. of Homewood, 446 F.3d 682, 687 (7th Cir.2006). Hu argues that Huey became a state actor by filing an eviction proceeding in state court. (Hu has not yet been forced to leave the building; he identifies the Chinatown office as his address on his appellate briefs.) But Hu is wrong. A non-governmental defendant acts under color of state law only where there is “such a ‘close nexus between the State and the challenged action’ that seemingly private behavior ‘maybe fairly treated as that of the State itself.’ ” Brentwood Acad. v. Tenn. Secondary Sch. Athletic Ass’n, 531 U.S. 288, 295, 121 S.Ct. 924, 148 L.Ed.2d 807 (2001) (quoting Jackson v. Metro. Edison Co., 419 U.S. 345, 351, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974)). Illinois has no interest in the outcome of the eviction proceeding, and it did not transform Hu into a state actor “ ‘merely by holding its courts open to litigation.’ ” Paisey v. Vitale, 807 F.2d 889, 893 (11th Cir.1986) (quoting Henry v. First Nat’l Bank of Clarksdale, 444 F.2d 1300, 1309 (5th Cir.1971)); Skol-nick v. Spolar, 317 F.2d 857, 859 (7th Cir.1963). Hu next argues that the district court should not have dismissed his claim of race discrimination. Hu asserts that Huey discriminated against him on the basis of his race by charging him higher rent than he would have charged a white tenant. Hu alleges that Huey raised the rent after the former tenant, State Farm Insurance—a company Hu says “is controlled by white people”—moved out. Hu contends that these allegations state a claim under 42 U.S.C. § 1981, which prohibits discrimination on the basis of race in entering into contracts, see Runyon v. McCrary, 427 U.S. 160, 170, 96 S.Ct. 2586, 49 L.Ed.2d 415 (1976), and § 1982, which prohibits racial discrimination in leases of property, see Jones v. Alfred H. Mayer Co., 392 U.S. 409, 436, 88 S.Ct. 2186, 20 L.Ed.2d 1189 (1968). Hu’s allegations, however, are contradicted by the lease agreement between Huey and the former tenant. Huey submitted this lease to the district court, and Hu does not dispute its authenticity or argue that it is not the agreement his complaint references. Because Hu’s complaint refers to the lease terms and they are central to Hu’s race-discrimination claim, we may consider the lease agreement. See Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir.1998); Wright v. Associated Ins. Cos., 29 F.3d 1244, 1248 (7th Cir.1994). The lease reveals that in 2002 Huey leased the office space Hu now occupies to Mark Yun. Although Yun sells State Farm’s insurance products, see www. markyun.com, he signed the lease on his own behalf; State Farm’s name appears nowhere on the document and Yun does not purport to bind State Farm to its terms. Because the lease document undermines the premise of Hu’s discrimination claim—that State Farm, a “white” company, received a better deal from Huey—the claim must fail. The district court was correct to dismiss the complaint under Rule 12(b)(6). We have considered Hu’s remaining arguments, and conclude that they are merit-less. AFFIRMED.
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3,743,310
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PER CURIAM: Oscar Brown, Jr., appeals the district court’s order denying his motion for reduction of sentence under 18 U.S.C. § 3582(c)(2) (2006). We have reviewed the record and find no reversible error. Accordingly, we affirm for the reasons stated by the district court. See United States v. Brown, No. 7:02-cr00014-BR-1 (E.D.N.C. Dec. 10, 2008). We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. AFFIRMED.
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3,740,538
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PER CURIAM: Angel Castro-Nepomunceno (Castro) appeals his 24-month sentence following his guilty plea to illegal reentry. He argues that the district court violated Fed.R.Crim.P. 32(i)(3)(B) when it did not make a specific ruling or finding on his request for a downward adjustment for time spent in state custody. Castro failed to object at sentencing to the district court’s noncompliance with Rule 32. We review for plain error. See United States v. Reyna, 358 F.3d 344, 349-50 (5th Cir.2004) (en banc). Because the district court adopted the presentence report (PSR) and having considered the record as a whole, we are not left to second guess the basis for the district court’s refusal to depart downward. See United States v. Carreon, 11 F.3d 1225, 1231 (5th Cir.1994). Castro argues that the district court, in failing to rule on his motion for downward departure and in not adequately explaining the basis for the sentence, committed a “significant procedural error.” An appellate court’s review of a sentence must start with whether the district court committed any “significant procedural error, such as failing to calculate (or improperly calculating) the Guidelines range, treating the Guidelines as mandatory, failing to consider the 18 U.S.C. § 3553(a) factors, selecting a sentence based on clearly erroneous facts, or failing to adequately explain the chosen sentence.” Gall v. United States, 552 U.S. 38, 128 S.Ct. 586, 597, 169 L.Ed.2d 445 (2007). Because Castro did not raise this argument in the district court, review is limited to plain error. See United States v. Izaguirre-Losoya, 219 F.3d 437, 441 (5th Cir.2000). At sentencing, the district court specifically stated that it considered the § 3553(a) factors and that a sentence within the guidelines range satisfied the objectives of § 3553. The district court committed no procedural error. See Rita v. United States, 551 U.S. 338, 127 S.Ct. 2456, 2468, 168 L.Ed.2d 203 (2007). We are without jurisdiction to consider Castro’s argument that the district court erred in denying his motion for a downward departure as there is no indication in the record that the district court was under the mistaken impression that it could not depart. See United States v. Hernandez, 457 F.3d 416, 424 (5th Cir. 2006). We retain jurisdiction to review “whether the district court’s imposition of a guideline sentence instead of a non-guideline sentence was reasonable.” United States v. Nikonova, 480 F.3d 371, 375 (5th Cir.), cert. denied, — U.S.-, 128 S.Ct. 163, 169 L.Ed.2d 112 (2007). Because Castro did not object in the district court to the unreasonableness of his sentence, review is for plain error. See United States v. Lopez-Velasquez, 526 F.3d 804, 806 (5th Cir.2008). If the sentencing judge imposes a sentence within a properly-calculated guidelines range, the sentence is entitled to a presumption of reasonableness. See Rita, 127 S.Ct. at 2462. The district court imposed a sentence at the bottom of the properly-calculated guidelines range after considering the § 3553(a) factors. Castro has failed to show that the sentence is unreasonable. The sentence is affirmed. AFFIRMED. Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5th Cir. R. 47.5.4.
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6,130,312
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BENEDICT, District Judge. The fact that these same defendants were indicted by the grand jury for the same offence described in this information, which indictment was quashed because of insufficient averments, affords no ground whatever upon which to ask that this information be quashed. The district attorney had the right to proceed by information notwithstanding the fact that, on a former occasion, he had elected to proceed by indictment and had submitted the case to the consideration of a grand jury. It is no objection to an information filed in open court by the sworn assistant of the district attorney, that the signature of the district attorney attached to the information was written by such assistant, by virtue of a general authority conferred upon him by the district attorney. The motion to quash the information is denied.
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11,628,177
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RONEY, Senior Circuit Judge: Defendant Orlando Gallego challenges his drug conviction pursuant to 18 U.S.C. § 2255. The single issue on appeal is whether the magistrate judge applied the wrong legal standard to determine whether defendant’s counsel rendered ineffective assistance of counsel by failing to properly advise defendant that he had a constitutional right to testify that only he could waive, so that defendant’s waiver of that fundamental right was knowing and intelligent. Because the district court followed an erroneous legal standard in assessing defendant’s claim, we vacate and remand. The charges against Gallego stem from an undercover narcotics investigation in which the federal joint drug task force in Miami, Florida set up a phony import company through which a Colombian cocaine broker could distribute cocaine in the United States. Although the investigation was months long, involving multiple co-defendants, we recite here only the facts germane to Gallego’s case. On the day of his arrest, agents observed Gallego leave the body shop where he was employed, drive to a cocaine-filled van parked in a shopping center, enter and exit the van and leave again. The agents later observed Gallego return to the shopping center, re-enter the van, and drive it to his sister’s house, and park it in the garage. When the agents executed a search warrant at the house, they observed that most of the cocaine had been unloaded from the van, removed from burlap sacks and placed into other boxes marked with kilogram amounts. Defendant and a co-defendant were convicted by a jury of conspiracy to possess with intent to distribute cocaine, in violation of 21 U.S.C. §§ 841(a)(1) and 846 (Count I); and possession with intent to distribute cocaine, in violation of 21 U.S.C. § 841(a)(1) and 18 U.S.C. § 2. (Count II). At the time of trial, four other co-defendants had been declared fugitives. Immediately prior to defendant’s trial, the court granted a severance to Gallego’s sister, who was also the wife of one of the co-defendants. Defendant was sentenced to 292 months incarceration on both counts to run concurrently. This Court affirmed the conviction on direct appeal. Gallego then filed his motion to vacate under 28 U.S.C. § 2255 in the United States District Court for the Southern District of Florida. A United States Magistrate conducted an evidentia-ry hearing and issued a report recommending that the motion be denied. The district court adopted the recommendation of the magistrate judge. On appeal, defendant challenges the district court’s rejection of his allegations that his counsel failed to properly advise him of his right to testify. A claim of ineffective assistance of counsel is the proper framework to analyze defendant’s allegation that his attorney has violated his right to testify. See United States v. Teague, 953 F.2d 1525, 1534 (11th Cir.) (en banc) cert. denied, 506 U.S. 842, 113 S.Ct. 127, 121 L.Ed.2d 82 (1992). A criminal defendant has a “fundamental constitutional right to testify in his or her own behalf at trial. This right is personal to the defendant and cannot be waived either by the trial court or by defense counsel.” Teague, 953 F.2d at 1532. Where counsel has refused to accept the defendant’s decision to testify and refused to call him to the stand, or where defense counsel never informed the defendant of his right to testify and that the final decision belongs to the defendant alone, defense counsel “has not acted ‘within the range of competence demanded of attorney’s in criminal cases,’ and the defendant clearly has not received reasonably effective assistance of counsel.” Teague, 953 F.2d at 1534 (citing Strickland, 466 U.S. at 687, 104 S.Ct. 2052). In his § 2255 motion, Gallego contended that despite his repeated requests to testify, his counsel prevented him from doing so by “failing to discuss the strategic implications of testifying or not testifying and Gallego’s right to ultimately make the final decision.” The following testimony was adduced at the evidentiary hearing: Galle-go’s trial attorney, Robert Hertzberg, testified that he visited Gallego only two times prior to trial. After Hurricane Andrew, he stated, “Gallego was lost within the system.” He spoke with Gallego just prior to the trial commencing, and discussed with Gallego the potential testimony of Gallego’s employer to prove that Gallego was associated with the auto body shop. With regard to whether Gallego should testify, Hertzberg said he “[m]et with, spoke with him on the telephone, felt his English was marginal, did not think he was comfortable speaking, did not think he would be a good witness at trial.” Hertz-berg had no documentation as to what was discussed in any of his pre-trial discussions with Gallego, and nothing other than his own testimony regarding whether he discussed with Gallego his right to testify and that it was his right alone to waive. Hertzberg testified that the right to testify is an issue he discusses in every case and that on at least one or two occasions he spoke with Gallego concerning his right to testify. He denied that Gallego repeatedly requested the opportunity to testify. For his part, Gallego confirmed that he had only two meetings with Hertzberg and in neither meeting did Hertzberg explain to Gallego his constitutional right to testify. He testified he did not fully understand his right to testify until the Federal Public Defender appointed to represent him at sentencing explained his rights fully- The magistrate observed that the evidence boiled down to “the defendant’s word against that of counsel,” and rejected defendant’s version, stating that “a bare-bones assertion by a defendant, albeit made under oath, is insufficient to require a hearing or other action on his claim that his right to testify in his own defense was denied.” The court relied upon the reasoning in a Seventh Circuit opinion, Underwood v. Clark, 939 F.2d 473, 476 (7th Cir.1991), and said: At this time, the Court is mindful of the Seventh Circuit’s opinion in Underwood, where the Court noted the difficulty in establishing a mechanism for protecting the defendant’s right to testify without rendering the criminal process unworkable. See 939 F.2d at 475. This Court is also troubled by the system-wide ramifications of the Federal Courts vacating convictions based upon unsubstantiated allegations that a defendant was denied an opportunity to testify, especially when defense counsel testifies under oath to the exact opposite. With this in mind, the Court finds that the defendant has not carried his burden of proving that counsel deprived him of his right to testify. (emphasis in original). It is perfectly legitimate for the district court to find, based on all the evidence in the record, that a defendant’s testimony about his participation in a drug scheme is not credible. The magistrate judge here, however, based the decision on the fact that defendant’s allegations were unsubstantiated and incorrectly found as a matter of law that defendant could not carry his burden without presenting some evidence in addition to his own word, which is contrary to that of counsel’s. The magistrate says nothing about the internal consistency of the defendant’s testimony, or his candor or demeanor on the stand. Indeed, the magistrate does not even state simply why the defendant’s lawyer is the more credible witness in this case. There is nothing in the report to indicate the magistrate weighed defendant’s credibility. Compare United States v. Camacho, 40 F.3d 349 (11th Cir.1994)(court made specific findings of fact after an evidentiary hearing regarding defendant’s credibility), cert. denied, 514 U.S. 1090, 115 S.Ct. 1810, 131 L.Ed.2d 735(1995). The fact that defendant’s testimony is uncorroborated is not enough standing alone to support a credibility finding. Counsel’s testimony was also unsubstantiated by other evidence. While we appreciate the concerns enunciated in Underwood, we cannot adopt a per se “credit counsel in case of conflict rule,” which allows that in any case where the issue comes down to the “bare-bones testimony” of the defendant against the contradictory testimony of counsel, defendant is going to lose every time. We therefore remand for a new evidentiary hearing. Because of the intervening death of District Judge C. Clyde Atkins, the case will necessarily come before a different district judge. We suggest that in view of the nature of the case, if the matter is referred to a magistrate, it be sent to a different magistrate judge. VACATED AND REMANDED. HATCHETT, Chief Judge, dissenting: I respectfully dissent because the magistrate judge obviously made a credibility finding. This is an 18 U.S.C. § 2255 action; the appellant must use the record to establish this claim through a preponderance of the evidence. If the evidence is in equipoise, the appellant (defendant) loses. See Collier v. Turpin, 155 F.3d 1277, 1285 n. 14 (11th Cir.1998).
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3,739,712
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PER CURIAM: Calvin McCrorey, Jr., appeals from the district court’s order denying his motion to reduce his sentence under 18 U.S.C. § 3582(c)(2) (2006). We have reviewed the record and find no reversible error. Accordingly, we affirm for the reasons stated by the district court. See United States v. McCrorey, No. 0:98-cr-01186-JFA-11 (D.S.C. Jan. 28, 2009) (noting that MeCrorey’s Sentencing Guidelines range remained unchanged after Amendment 706 to the Sentencing Guidelines because his statutory maximum sentence was below his guidelines sentencing range). See U.S. Sentencing Guidelines Manual § 5Gl.l(a) (2008) (noting that where statutorily authorized maximum sentence is less than the minimum of the applicable guidelines range, the maximum sentence shall be the guidelines range). We dispense with oral argument as the facts and legal contentions are adequately addressed in the materials before the court and argument would not aid the decisional process. AFFIRMED.
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3,742,982
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PER CURIAM: J. Harold Smith petitions for a writ of mandamus seeking an order compelling the district court to rule on his motion and seeking recusal of the district court judge. Our review of the district court’s docket sheet reveals that the court has ruled on Smith’s motion. Accordingly, because the district court recently decided Smith’s case, we deny the petition for writ of mandamus as moot. We dispense with oral argument because the facts and legal con tentions are adequately presented in the materials before the court and argument would not aid the decisional process. PETITION DENIED.
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7,389,941
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MEMORANDUM-DECISION & ORDER BARTELS, District Judge. In general, United States extradition law imposes several substantive requirements on all requests for extradition before they may be granted. Three of these requirements are that: (1) the offense be “extraditable” under the applicable treaty; (2) the offense satisfy so-called “dual criminality;” and (3) there be probable cause that the relator committed the crime for which he is sought. M. Bassiouni, International Extradition 319 et seq. (1987). In this case the Court is called upon to decide, as against these requirements, whether the certification of the extradition of one Rosario Spatola was proper. INTRODUCTION Petitioner Rosario Spatola brings this petition for a writ of habeas corpus pursuant to 28 U.S.C. § 2241. He challenges the legality of an order of United States Magistrate John L. Caden certifying the request of the Republic of Italy for Spatola’s extradition pursuant to the Treaty on Extradition between the Government of the United States of America and the Government of the Republic of Italy, Oct. 13, 1983, — U.S.T_, T.I.A.S. No. 10837 (the “Treaty”)- The Magistrate found that Spatola was extraditable to Italy to serve the remainder of the sentence imposed on him for convictions of “association” to commit crimes and “association” to commit crimes of drug trafficking. Spatola claims that extradition for these convictions is not proper because, on the basis of the record submitted by Italy, there is no probable cause that Spato-la committed these crimes, and the acts for which he was convicted do not satisfy dual criminality in that they are not illegal under American criminal law. FACTS On June 6, 1983, in Italy, Spatola was convicted of three crimes: (1) “association” to commit crimes; (2) “association” to commit crimes of drug trafficking; and (3) failure to surrender foreign currency. He was sentenced to 13 years’ imprisonment, plus an 80-million lire fine, with 2 years of the sentence to be “remitted.” Spatola spent four years, three months, two days in jail, and then, on September 28, 1984, was released pending appeal. After his release on bail pending appeal, Spatola was convicted, on December 4, 1984, of an additional charge of bribing a public official, in violation of Article 319 of the Italian Penal Code. The conviction stemmed from his bribing one Giuseppe Vetere to obtain a contract to build public housing units in Palermo, Italy. In connection with this incident, Vetere was convicted for bribery too. Thereafter, on December 20, 1984, the Court of Appeal of Palermo affirmed Spa-tola’s June 6, 1983, conviction, but reduced the sentence to 10 years, with another two years to be “remitted.” However, instead of returning to prison after the appeal, Spatola fled to the United States, and on March 12, 1986, the District Attorney General at Palermo issued a warrant for Spato-la’s arrest for him to serve the remainder of his sentence for the June 6, 1983, conviction. On May 21, 1987, the Investigative Magistrate at the Tribunal of Palermo, Italy, issued another warrant for Spatola’s arrest. This warrant charged Spatola under Article 319 of the Italian Penal Code with paying a 50 million lire bribe to a public official, one Vito Ciancimino, to obtain approval for Spatola’s company’s construction of public housing units in Sperona, Italy. The facts and circumstances of the Cian-cimino “bribe” were, apparently, identical to those involved with the Vetere “bribe.” However, on October 26, 1987, the Court of Appeal of the District of Palermo reversed Spatola’s December 4, 1984, conviction for bribing Vetere, holding that, based on the evidence, he could only have been convicted of a lesser form of bribery, i.e., a “gratuity” under Article 318 of the Italian Penal Code, which apparently forbids the giving or taking of anything of value by a public official for performing a duty imposed by law. The court held that the statute of limitations had run on this lesser charge of “gratuity” under Article 318, and therefore dismissed the case entirely. On December 2, 1988, by a complaint made under oath by an Assistant United States Attorney, the Government obtained a “provisional” warrant for Spatola’s arrest from a United States Magistrate in the District of New Jersey. The complaint was made at the request of Italy, pending a formal extradition request. The charges for which the provisional arrest warrant was requested and issued was Spatola’s “bribe” of Ciancimino and Vetere. Spatola was eventually arrested in this district on May 8, 1989. On June 9, 1989, United States Magistrate John L. Caden of this District, issued a Memorandum and Order denying Spatola’s motion to vacate provisional arrest warrant and his application for bail. As to the provisional arrest warrant the Magistrate noted that there is a question among the federal courts as to whether a provisional arrest for extradition has to be upon probable cause as normally required by the Constitution for arrests for violation of the criminal laws of this country. See Caltagirone v. Grant, 629 F.2d 739 (2d Cir.1980); Bassiouni at 527. Nevertheless, the Magistrate proceeded to find that the Complaint and Affidavit of Assistant United States Attorney Eric Friedberg established probable cause, holding that the information supplied therein, taken as true, even if hearsay, would justify a reasonable belief that Spatola committed the crime of bribery in Italy. The Magistrate noted that the fact that there may have been an innocent explanation of the evidence was irrelevant to establishing probable cause in extradition. He further held that whether there is “urgency” as required by the Treaty for a provisional arrest warrant is a justiciable question, see Caltagirone v. Grant, 629 F.2d at 744 n. 10 (prior extradition treaty with Italy), and, given Italy’s assertion that this was a “serious” case of bribery, and since both countries’ believed that there was a serious risk that Spatola would flee absent an arrest, the Magistrate found that there was “urgency” in the present case. Accordingly, Spatola’s motion to vacate the provisional arrest warrant was denied. As to the issue of bail, the Magistrate noted that bail in extradition proceedings is only available under “special circumstances” (quoting Wright v. Henkel, 190 U.S. 40, 60, 23 S.Ct. 781, 785, 47 L.Ed. 948 (1903)), and “special circumstances” are found “only in the most pressing circumstances and when requirements of justice are absolutely peremptory” (quoting United States v. Leitner, 784 F.2d 159, 160 (2d Cir.1986) (in turn quoting In re Mitchell, 171 F. 289 (S.D.N.Y.1909))). Considering this legal background, the Magistrate held that the fact that Spatola might not pose a serious risk of flight was not dispositive regarding bail. In any event, the Magistrate found that Spatola did pose a serious risk of flight, denied Spatola’s motion for bail, and remanded him pending the determination of the extradition proceedings. Subsequently, in a document dated June 19, 1989, Italy formally requested the Unit ed States Department of State to extradite Spatola (1) for the charge of “bribing” Ciancimino; and (2) to serve the three years, eight months, and twenty-eight days remaining on his sentence for the association crimes (i.e., “association” to commit crimes, and “association” to commit crimes of drug trafficking) and for failure to surrender foreign currency. This document' was received and filed by the United States Attorney’s Office on June 22, 1989, which was the expiration date of the time period provided for by the Treaty for Italy to formally request extradition. Documentation in support of all four crimes was forwarded with the June 19, 1989, request. On June 26, 1989, a preliminary conference was held before the Magistrate, and on July 3, 1989, he issued a Memorandum and Order denying Spatola’s motions that the provisional arrest warrant be vacated, and that bail be granted. In regard to the arrest warrant, the Magistrate disagreed with Spatola that the formal extradition request had to contain a physical description, photographs, and fingerprints of Spa-tola, holding, per the Treaty, that these items are required only “if available.” He also disagreed with Spatola’s contention that, because Italy’s formal request for extradition was admittedly incomplete, it was fatally flawed. The Magistrate held that, although incomplete, the formal request was complete enough to meet initial muster under the Treaty, since the Treaty specifically provides Italy with a “reasonable” period of time within which to complete documentation. Finally, in regard to bail, the Magistrate again denied Spato-la’s application for the reasons set forth in the June 9, 1989, Memorandum & Order. An extradition hearing was held before the Magistrate on August 24, 1989. The Government submitted its exhibits, consisting of the documents in support of Italy’s extradition request, and then rested. These exhibits were: (1) Italian documents in support of the extradition request; (2) translations of those documents; (3) certifications that the translations were correct; (4) the declaration of Robin Jo Frank, of the Office of the Legal Advisor for the United States Department of State, containing Italy’s formal request for extradition dated June 19, 1989, and a copy of the Treaty; (5) the affidavit of Richard A. Martin, Senior Counsel for International Law Enforcement with the United States Department of Justice, and Justice Attache at the Embassy of the United States in Rome, Italy, averring that, based on the opinion of an Italian investigating magistrate, Spatola was still chargeable with “bribing” Cian-cimino despite the reversal of his conviction for “bribing” Vetere; and (6) documents establishing the identity of Spatola as the person sought to be extradited. Spatola’s case consisted of a copy of the Italian appellate opinion reversing his conviction for “bribing” Vetere and the live testimony of M. Cherif Bassiouni, Professor of Law at DePaul University in Chicago, who testified regarding extradition law and the criminal law of America and Italy. In a thorough Memorandum and Order, dated October 20, 1989, the Magistrate certified Italy’s application to extradite Spato-la to serve the remainder of his sentence for the association crimes, but denied Italy’s request for extradition on the bribery charge and on the remainder of the sentence imposed for failure to turn over currency. The Magistrate found that, based on the Italian appellate court’s overturning of Spatola’s conviction for bribing Vetere, there was not probable cause to believe that Spatola had “bribed” Ciancimino to the degree with which he was charged under Italian law — there was only probable cause to believe that Spatola had committed the lesser typé of bribery (i.e., giving a “gratuity”) for which he had not been charged and for which the Italian statute of limitations had run. The Magistrate then turned to the convictions of Spatola for which extradition is sought — i.e., association to commit crimes, association to commit crimes of drug trafficking, and failure to hand over foreign currency — and found, based on the record proffered by the Government on behalf of Italy, that- he was unable to make an independent determination regarding probable cause because [t]he facts which the Government relies upon to establish probable cause are in reality nothing more than the conclusions reached by the Court of Appeal of Palermo in affirming Spatola’s conviction, and the underlying facts upon which the Court’s decision was based are not apparent from the opinion submitted by the Government. Without the underlying facts and evidence upon which the Court of Appeal of Palermo and the trial court reached its determinations, this court is unable to make an independent factual finding of probable cause. He held, however, that such a determination was unnecessary because convictions are conclusive as to probable cause under federal case law (citing United States v. Clark, 470 F.Supp. 976 (D.Vt.1979) and In re Edmondson, 352 F.Supp. 22 (D.Minn.1972)) and under the Treaty itself. Furthermore, relying on a provision of the Treaty that provides that the American crime of conspiracy and the Italian Crime of “association” shall “be extraditable offenses,” and noting the Senate ratification history thereto, the Magistrate found that the Treaty itself declared conspiracy and “association” to be crimes sufficiently analogous to make “association” an offense for which extradition would lie. As to the failure-to-surrender-foreign-currency conviction, however, the Magistrate determined that the offense did not satisfy dual criminality, there being no American analogue for it. In sum, the Magistrate granted certification of Italy’s extradition request on the association crimes, but denied certification in all other respects. As there is no direct appeal available from a certification of extradition, Collins v. Miller, 252 U.S. 364, 369, 40 S.Ct. 347, 349, 64 L.Ed. 616 (1920); Shapiro v. Ferrandina, 478 F.2d 894, 901 (2d Cir.1973), on December 4, 1989, Spatola filed the instant Petition for a Writ of Habeas Corpus, and a Stay of Extradition was immediately granted by District Judge Reena Raggi. On May 25, 1990, an initial status conference and bail hearing was held before the undersigned, some 382 days after Spatola’s provisional arrest. The Court denied Spa-tola’s motion for bail pending its decision on the habeas corpus petition, substantially for the reasons set forth by the Magistrate in his Memorandum and Order of June 9, 1989. The Government does not contest the Magistrate’s rulings as to Spa-tola’s non-extraditability for the Ciancimino “bribe” charge or the foreign currency conviction. Accordingly, there are two issues presented by the petition: (1) dual criminality of the association crimes; and (2) probable cause for the association crimes. TREATY PROVISIONS The Magistrate relied principally on two sections of the Treaty to make the two decisions challenged by the present petition. The first is Article II of the Treaty which provides, in pertinent part: 1. An offense, however denominated, shall be an extraditable offense only if it is punishable under the laws of both Contracting Parties by deprivation of liberty for a period of more than one year or by a more severe penalty.... 2.Any type of association to commit offenses described in paragraph 1 of this Article, as provided by the laws of Italy, and conspiracy to commit an offense described in paragraph 1 of this Article, as provided by the laws of the United States, shall also be extraditable offenses. The Magistrate relied on the above provisions in finding dual criminality as to the associations crimes, holding that [t]he only fair reading of this language ... is that the extradition magistrate may not make an independent assessment of double criminality pursuant to Article 11(1) of the Treaty when the crime for which extradition is sought is criminal association under the laws of Italy or the crime of conspiracy under the laws of the United States. As long as the object of the association is punishable under the laws of both countries, the crime of criminal association under Italian law is extraditable. The Court, however, finds that while Article II, paragraph 1, does indeed impose a dual criminality requirement, the above provisions do not answer the dual criminality question. The second pertinent provision of the Treaty is Article X, which is relevant to the probable cause issue. Article X inter alia provides that extradition requests for a person who has been charged but not convicted of a crime must be accompanied by a summary of the facts of the case, of the relevant evidence and of the conclusions reached, providing a reasonable basis to believe that the person sought committed the offense for which extradition is requested.... Article X also provides, however, that extradition requests for a person already convicted of a crime need be accompanied only by (a)a copy of the judgment of conviction (b) if the penalty has been pronounced, a copy of the sentence and a statement as to the duration of the penalty still to be served; and (c) documents establishing that the person sought is the person convicted. In holding that the certified copy of the appellate opinion affirming Spatola’s conviction for the association was sufficient to satisfy probable cause, the Magistrate found it significant that Article X’s provision as to extradition for conviction does not require “a reasonable basis to believe that the person sought committed the offense for which extradition is sought,” thus apparently obviating the need for an independent probable cause determination by a United States judicial officer in extradition cases involving convictions. DISCUSSION I. General Considerations Before turning to the specific claims raised by Spatola’s petition, it is first necessary to note several general rules of law relating to extradition. As to this Court’s jurisdiction, although it is based on the habeas corpus statute, 28 U.S.C. § 2241, its review over the certification of extradition is quite narrow, much more narrow, in fact, than the collateral review habeas proceedings traditionally provide for American convictions. In the context of extradition, “habeas corpus is available only to inquire whether the magistrate had jurisdiction, whether the offense charged is within the treaty and, by a somewhat liberal extension, whether there was any evidence warranting the finding that there was reasonable ground to believe the accused guilty.” Fernandez v. Phillips, 268 U.S. 311, 312, 45 S.Ct. 541, 542, 69 L.Ed. 970 (1925) (Holmes, J.). See also Shapiro v. Ferrandina, 478 F.2d at 901. “[T]he judgment of the magistrate, rendered in good faith on legal evidence that the accused is guilty of the act charged, and that it constitutes an extraditable crime, cannot be reviewed on the weight of the evidence, and is final for the purposes of the preliminary examination, unless palpably erroneous in law.” Ornelas v. Ruiz, 161 U.S. 502, 508-09, 16 S.Ct. 689, 691-92, 40 L.Ed. 787 (1896). The reasons for this very limited review are several. First, extradition proceedings are neither criminal trials nor full-blown civil actions; they are administrative in character, and, as such, are not burdened with the legalism and formalities with which American courts are familiar. See Wright v. Henkel, 190 U.S. 40, 57, 23 S.Ct. 781, 784, 47 L.Ed. 948 (1903); I Wigmore On Evidence § 4(6) at 75 (1983); Fed.R. Evid. advisory committee note. For instance, the Federal Rules of Criminal Procedure are not applicable to extradition proceedings, Fed.R.Crim.P. 54(b)(5); nor are the Federal Rules of Evidence, Fed.R.Evid. 1101(d)(3)—thus, hearsay is freely admissible. Shapiro v. Ferrandina, 478 F.2d at 905; In re Ryan, 360 F.Supp. 270, 273 (E.D.N.Y.) aff'd, 478 F.2d 1397 (2d Cir.1973). Accordingly, it is a mistake for extradition habeas courts to suppose that the legal process due to a relator in extradition is anywhere near the “due process” American courts afford criminal defendants. As Justice Holmes wrote in Glucksman v. Henkel, 221 U.S. 508, 31 S.Ct. 704, 55 L.Ed. 830 (1911): It is common in extradition cases to attempt to bring to bear all the factitious niceties of a criminal trial at common law. But it is a waste of time. For while of course a man is not to be sent from the country merely upon demand or surmise, yet if there is presented, even in somewhat untechnical form according to our ideas, such reasonable ground to suppose him guilty as to make it proper that he should be tried, good faith to the demanding government requires his surrender. Id. at 512, 31 S.Ct. at 705. Thus, arguments against extradition which “savor of technicality,” Bingham v. Bradley, 241 U.S. 511, 517, 36 S.Ct. 634, 637, 60 L.Ed. 1136 (1916), are to be rejected by the habe-as corpus court. The second reason behind the very limited habeas review of extradition proceedings is that extradition is primarily an aspect of foreign relations and is therefore directed through diplomatic channels. See Bassiouni at 41. Grounded in notions of comity, and formally established by treaty, extradition, like all foreign affairs, is soundly committed to the political branches of government. See Id. See also Oetjen v. Central Leather Co., 246 U.S. 297, 302, 38 S.Ct. 309, 310-11, 62 L.Ed. 726 (1918). Indeed, extradition decisions are so much the especial province of the executive branch that, even after a United States magistrate or district judge has certified an extradition request, the executive branch can refuse the request as a matter of unbridled discretion. See generally Bas-siouni at 601-04. Accordingly, undue interference with the diplomatic process of extradition by the judicial branch is as unseemly and disruptive of separation of powers and of the foreign relations of the nation as any judicial foray into this very political realm. See United States v. Curtiss-Wright Export Co., 299 U.S. 304, 318-21, 57 S.Ct. 216, 221, 81 L.Ed. 255 (1936); Mackenzie v. Hare, 239 U.S. 299, 36 S.Ct. 106, 60 L.Ed. 297 (1915); Holtzman v. Schlesinger, 484 F.2d 1307 (2d Cir.1973), cert. denied, 416 U.S. 936, 94 S.Ct. 1935, 40 L.Ed.2d 286 (1974). The role of the judiciary in extradition is simply to determine whether the executive branch is authorized by statute and treaty to honor a particular extradition request. Valentine v. United States ex rel. Neidecker, 299 U.S. 5, 57 S.Ct. 100, 81 L.Ed. 5 (1936); 18 U.S.C. §§ 3183-3184; Bassiouni at 39-40, 71, 72. In making this determination, then, the Court is particularly mindful of its limited role and of the Government’s substantial foreign affairs interest in promoting good relations with Italy by honoring its criminal convictions and recognizing the integrity of its criminal justice system. See Senate Comm, on Foreign Relations, Treaty With Italy, S.Rep. No. 33, 98th Cong., 2d Sess. 1-2 (1984), reprinted, in 24 I.L.M. 1531, 1532. Cf Rosado v. Civiletti, 621 F.2d 1179, 1190 (2d Cir.1980), cert. denied, 449 U.S. 856, 101 S.Ct. 153, 66 L.Ed.2d 70 (1980). For while treaty interpretation is a judicial function, Sullivan v. Kidd, 254 U.S. 433, 442, 41 S.Ct. 158, 161, 65 L.Ed. 344 (1921), extradition treaties are to be liberally construed to effect their underlying purpose of delivering criminals to justice. Valentine v. United States ex rel. Neidecker, 299 U.S. at 10, 57 S.Ct. at 103; Wright v. Henkel, 190 U.S. at 57, 23 S.Ct. at 784; In re Edmondson, 352 F.Supp. 22, 25 (D.Minn.1972). Finally, since comity — i.e., respect and cooperation between sovereign nations — is at the very heart of extradition, a judicial proceeding in extradition is not the proper vehicle for challenging or questioning the fairness of another country’s criminal justice system. The President and the Senate have made the political decision that Italy’s criminal justice system comports with basic American notions of fairness and therefore entered into the Treaty, and this Court is bound by the existence of the Treaty to assume that Spatola’s trial was fair. See Glucksman v. Henkel, 221 U.S. 508, 512, 31 S.Ct. 704, 705, 55 L.Ed. 830 (1911). Thus, this Court cannot inquire into the “fairness” of Spatola’s conviction since “supervising the integrity of the judicial system of another sovereign nation ... would directly conflict with the principle of comity upon which extradition is based.” Jhirad v. Ferrandina, 536 F.2d 478, 485 (2d Cir.), cert. denied, 429 U.S. 833, 97 S.Ct. 97, 50 L.Ed.2d 98 (1976). See also Bassiouni at 372. II. As indicated above, three of the substantive requirements imposed by United States law upon extradition requests are: (1) that the relator be sought for an “extraditable offense;” (2) that the offense satisfy dual criminality; and (3) that there be probable cause that the relator has committed the offense for which he is sought. The phrase extraditable offense” is a term of art and means something more than the eventual finding that the relator is in fact extraditable. Bassiouni at 328. Moreover, the requirement that a crime be “extraditable” in order to supply a basis for extradition, is different than the requirement of dual criminality. Id. For a crime to be an “extraditable” offense it must be an offense that is either listed or defined as such by the applicable treaty. Id. at 329. For a crime to satisfy dual criminality, the act committed by the relator must be criminal in both the requesting and the requested country. Id. at 324. “Extraditable Offenses" With regard to the determination of “extraditability” in this technical sense, the Treaty is a double-method treaty. On the one hand, it uses the so-called “elimi-native method” in Article II, ¶ 1, by defining as “extraditable” those offenses which are punishable by imprisonment for more than one year, see Bassiouni at 331, and on the other hand, the Treaty uses in Article II, ¶ 2, the so-called “ennumerative method,” by specifically naming as “extraditable offenses” conspiracy or association to commit crimes defined in Article II, ¶ 1. Despite the fact that “association” is specifically an “extraditable” offense under the Treaty, it is still necessary to determine whether dual criminality exists. As a noted commentator has explained: It might be supposed that if two States agree, in a treaty, to a list of offenses for which extradition shall take place, they would include only those acts which are crimes in both States. However, questions nevertheless may arise. Certain acts may, under the law of the requesting State, constitute a listed treaty offense while, under the law of the requested State, the same acts may constitute no crime or, more frequently, one not listed in the treaty. 6 M. Whiteman, Digest of International Law 773-74 (1968) (emphasis added). As Professor I.A. Shearer has recognized, “the double criminality rule serves the most important function of ensuring that a person’s liberty is not restricted as a consequence of offenses not recognized as criminal by the requested State.” I.A. Shearer, Extradition in International Law 137. (1971). And “[t]he point is by no means an academic one even in these days of growing uniformity of standards.... ” Shearer at 138. Thus, in specifically naming as “extraditable offenses” association and conspiracy to commit crimes defined in Article II, H 1, the Treaty did not obviate the essentially ad hoc inquiry into dual criminality where the crime charged is association to commit a crime punishable by the laws of both countries by more than one year’s imprisonment, and the Magistrate erred in so holding. Although the association crimes for which Spatola was convicted are “extraditable” under the Treaty, those offenses must also meet the dual criminality test to be the subject matter for extradition. Dual Criminality To determine dual criminality, the Court must examine the underlying conduct for which Spatola was convicted and determine whether that conduct is illegal under American law. See Bassiouni at 349. “[A]n offense is extraditable only if the acts charged are criminal by the laws of both countries.” Collins v. Loisel, 259 U.S. 309, 311, 42 S.Ct. 469, 470, 66 L.Ed. 956 (1922). In making this determination, however, the court should not limit its inquiry to the name of the charge, but should inquire into the criminal conduct and the crime to which it gave rise. See Collins v. Loisel, 259 U.S. at 312, 42 S.Ct. at 470; United States ex rel. Rauch v. Stockinger, 269 F.2d 681, 685-87 (2d Cir.), cert. denied, 361 U.S. 913, 80 S.Ct. 257, 4 L.Ed.2d 183 (1959); Bassiouni at 340. The Court finds that the acts for which Spatola was convicted would be illegal if committed here. This is clearly revealed by the contents of the Italian appellate court opinion set out at the end of this opinion as an appendix. In sum, however, the Court of Appeal of Palermo found that Spatola “had a foremost role in the association to commit crimes, a role that presupposed his participation also in the specific program to procure very large quantities of American dollars by means of drug trafficking, even though other persons were engaged in the activity of obtaining and exporting the drugs.” In the group Spa-tola was “outstanding for his position as mafia ‘manager’, near the top level and having the task of large-scale ‘launderer’....” In light of these findings, and the information set forth in the appendix, and without engaging in an unnecessary, comparative law, element-by-element statutory analysis, the Court finds that the acts for which Spatola was convicted, and the actions of the group for which Spatola as co-conspirator was liable, are clearly illegal here. See, e.g., 18 U.S.C. § 371 (conspiracy to violate laws of United States); 18 U.S.C. § 874 (kickbacks from public works employees); 18 U.S.C. § 875 (interstate communication of kidnapping ransom demands); 18 U.S.C. § 876 (mailing threatening communications);. 18 U.S.C. § 1952 (interstate and foreign travel or transportation in aid of racketeering enterprises); 18 U.S.C. § 1956 (laundering of monetary instruments); 18 U.S.C. § 1957 (engaging in monetary transactions in property derived from specified unlawful activity); 18 U.S.C. § 1962 (racketeer influenced and corrupt organizations); 21 U.S.C. § 841(a)(1) (manufacture or possession of controlled substances with intent to distribute); 21 U.S.C. §§ 846, 963 (attempt or conspiracy to violate certain drug laws); 21 U.S.C. § 848 (continuing criminal enterprise); 21 U.S.C. § 953 (exportation of controlled substances). The requirement of dual criminality is therefore satisfied. III. Probable Cause Normally, before another country’s extradition request can be granted where the relator is charged with a crime, there must be an independent finding by an American judicial officer that there is probable cause that the relator committed the offense for which he is sought. See, e.g., Neely v. Henkel, 180 U.S. 109, 123, 21 S.Ct. 302, 307, 45 L.Ed. 448 (1901); In re D’Amico, 185 F.Supp. 925, 931 (S.D.N.Y.1960). As stated by the Senate report on the Treaty: “United States extradition treaty practice ... has uniformly required that our treaty partners, in requesting the extradition of a person charged by them, provide sufficient documentation to demonstrate probable cause to believe that the crime for which extradition is sought was committed and that the person sought committed it.” Senate Comm, on Foreign Relations, Treaty With Italy, S.Rep. No. 33, 98th Cong., 2d Sess. 5, reprinted in 24 I.L.M. at 1533. “To establish the level of probable cause necessary to certify one for extradition, evidence must be produced that is ‘sufficient to cause a person of ordinary prudence and caution to conscientiously entertain a reasonable belief of the accused’s guilt.’ Coleman v. Burnett, 477 F.2d 1187, 1202 (D.C.Cir.1973).” In re Extradition of Atta, 706 F.Supp. 1032, 1050 (E.D.N.Y.1989). Furthermore, “[t]he primary source of evidence for the probable causé determination is the extradition request, and any evidence in it is deemed truthful for purposes of this determination.” Id. at 1050-51 (citing Collins v. Loisel, 259 U.S. at 315-16, 42 S.Ct. at 471-72). A magistrate’s finding that there is probable cause will not be overturned so long as there is any evidence warranting the finding that there was reasonable ground to believe the accused guilty. Collins v. Loisel, 259 U.S. at 315, 42 S.Ct. at 471. As noted above, although the Magistrate felt that, based on the record before him, he was unable to make an independent determination of probable cause, he nevertheless found that the certified copy of the appellate opinion affirming Spatola’s conviction was “sufficient proof that probable cause exists that Spatola committed [the association] crimes, thus satisfying the requirements of 18 U.S.C. § 3184.” The Magistrate noted that “[t]his approach is consistent with the Treaty, which requires that an extradition request for a person who has been charged but not convicted of a crime must provide a reasonable basis to believe that the person sought committed the offense for which extradition is sought, but has no such requirement for extradition requests relating to a person who has already been convicted. See Articles X(3)(b) and X(4) of the Treaty.” Spatola claims that an independent determination of probable cause is required by the Constitution, and that the Treaty is unconstitutional insofar as it dispenses with this independent determination. It is true that the Constitution, to some as yet ill-defined extent, restrains the extradition activities of the United States Government via treaty. For while the Constitution declares that both it and treaties are the “supreme Law of the Land,” U.S. Const, art. VI, the Second Circuit has unequivocally declared that “although the Constitution cannot limit the power of a foreign sovereign to prescribe procedures for the trial and punishment of crimes committed within its territory, it does govern the manner in which the United States may join the effort.” Rosado v. Civiletti, 621 F.2d at 1195 (emphasis added). Contrary to Spatola’s argument, however, the requirement that there be probable cause in order to extradite “has not yet been interpreted as emanating from the Fourth Amendment.” Bassiouni at 552. And while the Second Circuit has expressed “grave questions” concerning the constitutional propriety of a treaty that would allow provisional arrest in extradition without probable cause, Caltagirone v. Grant, 629 F.2d at 748, 748 n. 19, the Court has no such “grave” questions here where there has been a conviction, even if the probable cause requirement in extradition is required by the Constitution. The Treaty does require probable cause for extradition on post-trial convictions just as for extradition on pre-trial charges, and the Treaty’s different treatment of extradition requests in each instance is merely meant to avoid a statement of the obvious. In the case of mere charges, no adjudication of guilt has yet been made against the relator and thus there is a need for the so-called “independent” determination of probable cause similar to preliminary hearings in American criminal cases. Where, however, there has been a judgment of conviction, there is no need for an “independent” determination of probable cause; the relator’s guilt is an adjudicated fact which a fortiori establishes probable cause. Thus, a certified copy of an appellate court opinion affirming a relator’s conviction is enough to establish probable cause. The same is true for a certified copy of a judgment of conviction. See United States v. Clark, 470 F.Supp. 976, 978 (D.Vt.1979); In re Edmondson, 352 F.Supp. at 24. Cf. Shearer at 151. However, even if an “independent” determination of probable cause was required, the contents of the opinion of the Court of Appeal of Palermo, as set forth supra in the section on dual criminality and in the appendix, assuredly provided enough information to permit such a determination. “Probable cause” in the context of this case is nothing more than a reasonable, conscientious belief by a person of ordinary prudence and caution that Rosario Spatola has committed the crimes for which Italy seeks his extradition. There is no doubt that Spatola has been convicted in Italy of association to commit crimes and association to commit crimes of drug trafficking. There is, in the record, a certified copy of the appellate court opinion affirming his conviction for these crimes, and the appellate opinion sets forth much more than a mere declaration that Spatola committed the association crimes and was properly found guilty. The evidence, findings, and holding recited in the Italian court opinion clearly set out the nature and activities of the association, and Spatola’s role in and efforts on behalf of the association, thus amply justifying a reasonable belief that Spatola committed the association crimes. See Shapiro v. Ferrandina, 478 F.2d at 905 (hearsay admissible in extradition proceedings); Collins v. Loisel, 259 U.S. at 315-16, 42 S.Ct. at 471-72 (evidence submitted by requesting state deemed truthful for purposes of probable cause determination); Glucksman v. Henkel, 221 U.S. at 512, 31 S.Ct. at 705 (court bound by existence of extradition treaty to assume requesting state’s criminal procedure is fair). In sum, the Magistrate was correct in holding that the Italian appellate court opinion affirming Spatola’s conviction was sufficient to establish probable cause. CONCLUSION The Magistrate correctly certified the extradition request of Italy as to Rosario Spatola’s conviction for association to commit crimes and for association to commit crimes of drug trafficking since the association crimes are “extraditable” under the Treaty and satisfy the requirement of dual criminality; and since probable cause that Spatola committed the association crimes has been established. Accordingly, Spato-la’s petition for a writ of habeas corpus pursuant to 28 U.S.C. § 2241 is DENIED, and the petition is DISMISSED. However dismissal of the petition is STAYED for ten days to permit application for a further stay from the Court of Appeals. SO ORDERED. APPENDIX A careful examination of the appellate court opinion reveals the following: 1) The Gambino, Inzerillo, & DiMaggio families were joined together in a “single organic group” for criminal purposes. The group was engaged in organized crime in Palermo, Italy, New York, and New Jersey. The group was “an association of mafia type,” bound by bonds of silence, “family,” and “the full and exclusive devotion of its associates to the common cause.” Spatola once extolled the virtues of the mafia, “asserting it to be good and not bad, and giving an apologetic definition of ‘omerita’ (conspiracy of silence)....” 2) On January 16, 1980, 24 kilograms of heroin, contained in two suitcases, were seized in New York. The group was responsible for the importation of this heroin from Palermo to New York via Rome. 3) In March of 1980, a 40-kilogram seizure of heroin was made in Milan when the group attempted to mail it to Gambi-no associates in New York. 4) The group engaged in the purchase of base morphine in Milan, and then transported it to Palermo to manufacture heroin. 5) The group was also involved in two other episodes of heroin trafficking. These episodes, together with the January and March 1980 incidents, although differing in the dramatis personae of minor characters, all centered around Salvatore Inzerillo (in Palermo) and the Gambinos (in New York). Furthermore, legally authorized electronic surveillance of an Inzerillo-owned business telephone revealed coded conversations about drug trafficking and money laundering. 6) The group engaged in extortion in connection with construction projects whereby contractors were forced to pay “commissions” or peace money. In fact, it was, in part, “the methods used by SPATOLA ... to obtain the award of the [a particular] contract and to force the holder to let him build on [a particular tract of land]” that evinced that the group “is an association of mafia type.” 7) Spatola, a mutual cousin of Salvatore Inzerillo and Rosario Gambino, occupied a high position in the group. Although he did not involve himself directly in drug trafficking, he played the role of a respectable businessman in the construction trade, thereby enabling the group to launder large amounts of foreign currency representing the proceeds of wholesale distribution of drugs. 8) Spatola was one of the “foremost members of the group of families.... [H]e came to have, in the organization, the main task of recycling foreign currency and the illicit proceeds received— behind a facade of apparent respectability — by means of exchange operations and using companies of which he was the owner or co-owner.” In this way, and in the course of only ten years, Spatola went from “issuing a dud check to possessing sufficient capital and reliability to construct large buildings and to organize big worksites, and to have so much good fortune as to obtain, on the one hand, lands against deferred payment, and on the other hand supplies on credit and considerable bank loans without adequate guarantees.” Spatola admitted associating with Inzerillo and Gambino, and explained that the large amounts of foreign currency given by them to him represented their partners’ contribution to his company. This explanation, however, was untruthful. 9) Spatola was perfectly well aware that his relations (DiMaggio, Inzerillo, Gambi-no) were members of the mafia and he deliberately joined the association to play the chief role of director of mafia building contractors. And the proceeds of unlawful trafficking, including the dollars earned in drug running, were also to be used in these companies. And the origin of these proceeds ... could not have been unknown to Spatola, in view of the notorious — to say the least — figures of his cousins, and given that such a huge quantity of American dollars could have come from nowhere else. 10) To further the interests of the group, Spatola participated in the sham “kidnapping” of a Michele Sindona in New York, on August 2, 1979. In connection with this incident, Spatola, his brother Vincen-zo, Giovanni Gambino, Francesco Fazzi-no, Sindona himself, and others, were arrested in Italy for aggravated extortion. .SD 29; 116-20. Citations to "SD" refer to sequentially-numbered pages in the bound volume of English language “Supporting Documents” which the Government adduced as its Exhibit 1 at the extradition hearing. Article 416 of the Italian Penal Code provides: When three or more persons associate for the purpose of committing more than one crime, those who promote or constitute or organize the association shall be punished, for that alone, by imprisonment for from three to seven years. For the act of participating in the association alone, the punishment shall be imprisonment for from one to five years. The leaders shall be subject to the same punishment prescribed for the promoters. If the associates roam the countryside or public roads in arms, the term of imprisonment shall be for from five to fifteen years. The punishment shall be increased if the number of associates is ten or more. SD 116. Italian Law No. 685 of December 22, 1975, provides: When three or more persons conspire together for the purpose of committing more than one offense among those foreseen in [the penal laws dealing with narcotics trafficking], those who promote, form, organize or finance the conspiracy shall be punished, for this alone, by imprisonment for not less than fifteen years and by a fine of a hundred million lire to four hundred million lire. For the sole fact of taking part in the conspiracy, the penalty shall be imprisonment for three to fifteen years and a fine of 20 million to a hundred million lire. The leaders shall be liable to the same penalty fixed for the promoters. The penalty shall be increased if the number of associates is ten or more or if among the participants there are persons addicted to narcotic or psychotropic drugs. If the association is armed the penalty, in the cases indicated in the first and the third paragraphs of the present article, may not be less than 20 years' imprisonment and, in the case foreseen in the second paragraph, than 5 years’ imprisonment. An association or conspiracy is considered armed when three or more participants possess arms, or even when the arms are concealed or kept in a place of deposit. SD 117-18. Decree Law No. 31 of March 4, 1976, provides, in pertinent part: Any person who, in violation of currency regulations, fails to hand over within thirty days, to the Italian Exchange Office, any foreign currency, however acquired or held in the national territory, shall be subject to [a term of imprisonment of one to six years and to a fine of twice to four times the value of the currency not handed over]. SD 119-20. . SD 33. . Article 319 of the Italian Penal Code provides: A public officer who, for omitting or delaying an act of his office, or for doing an act contrary to his official duties, receives, for himself or a third person, money or any other thing of value, or accepts a promise thereof, shall be punished by imprisonment for from two to five years and a fine of 600,000 to 4,000,000 lire. The punishment shall be increased if the act results: (1) in conferring public employment, salaries, pensions, honors, or in the conclusion of a contract in which the administrative body of which the officer is part is an interested party; or (2) in favor or prejudice to one of the parties to a civil, penal or administrative proceeding. The punishment of imprisonment for from six to twenty years and a fine of not less than 5,000,000 lire shall be imposed if the act resulted in a conviction and sentence to life imprisonment or to imprisonment. [The punishment of death shall apply if the act resulted in a sentence to the punishment of death.] Whenever the public officer receives the money or thing of value for having acted contrary to his official duties, or for having omitted or delayed an official act, the punishment shall be imprisonment for from one to three years and a fine of from 40,000 to 400,-000 lire. SD 19. Article 321 of the Italian Penal Code makes Article 319 applicable to non-officials, providing: The punishments prescribed in the first paragraph of Article 318, and Articles 319 and 320 shall also apply to one who gives or promises the money or other thing of value to a public officer or person charged with a public service. SD 20. . SD 1. . SD 25-26. . SD 29-31. . SD 8-12. . See Government’s Exhibit 6 at ¶ 7, adduced at the extradition hearing. . See Defendant’s Exhibits A-l and A-2, adduced at the extradition hearing. . "In case of urgency,” the Treaty provides for the provisional arrest of "any person charged or convicted of an extraditable offense." Treaty, Art. XII, ¶ 1. The Treaty then proceeds to detail how an application for a provisional arrest warrant is to be made, and sets out the procedures for issuing and executing the warrant. Id. 18 U.S.C. § 3184 provides in pertinent part: Whenever there is a treaty or convention for extradition between the United States and any foreign government, any justice or judge of the United States, or any magistrate authorized so to do by a court of the United States, ... may, upon complaint made under oath, charging any person found within his jurisdiction, with having committed within the jurisdiction of any such foreign government any of the crimes provided for by such treaty or convention, issue his warrant for the apprehension of the person so charged, that he may be brought before such justice, judge, or magistrate, to the end that the evidence of criminality may be heard and considered. Id. (emphasis added). Local General Rule 40(b)(12) of the District of New Jersey lists, as one of the Duties of Magistrates in Criminal Cases, “conducting extradition proceedings in accordance with 18 U.S.C. 3184.” . The United States Magistrates of this District have been authorized to preside over extradition proceedings by Local Magistrate Rule 9. . The Magistrate was not then aware of the disposition of Spatola’s conviction for “bribing” Vetere. . See n. 10, supra. . The reasons for this finding were that Spato-la had: i) entered this country illegally; ii) was denied temporary residence status because he had been convicted in Italy of a conspiracy to sell narcotics and of repeatedly failing to return foreign currency, risking deportation from the United States upon his release; iii) is a fugitive from Italy in connection with the association crimes and the failure to surrender foreign currency of which he had been tried, convicted, and sentenced, but skipped bail pending appeal once the appeal was denied; iv) told an agent he would rather be electrocuted than be extradited to Italy when arrested in the present case; and v) said he “could not recall” his present address when interviewed by the pretrial service officer after his arrest on the provisional warrant. . See Treaty, art. XII, ¶ 4. . Id., art. X, f2(a). . See Id., art. XI, ¶ 1. .The Treaty, art. VIII, provides that “[e]xtradition shall not be granted when the prosecution, or the enforcement of the penalty, for the offense for which extradition had been requested has become barred by lapse of time under the laws of the Requesting Party.” . Memorandum and Order, dated October 20, 1989, at 18 n. 7. . See Treaty, art. II, ¶¶ 1, 2. . Through a series of judicial recusals and illness, the undersigned is the fourth district judge to whom this petition has been assigned. The case was re-assigned to the undersigned on May 14, 1990. .See Government’s Memorandum of Law in Opposition to Petition for Writ of Habeas Corpus at 30 n. 4. . Treaty, art. II, ¶¶ 1-2. . Memorandum and Order, dated October 20, 1989, at 20-21 (emphasis added). . Treaty, art. X, ¶ 3(b) (emphasis added). . Id., art. X, ¶ 4. . Memorandum and Order, dated October 20, 1989, at 19 n. 8. . The Court therefore denies Spatola's request that it hold a hearing to determine whether his trial was fair, pace Ahmad v. Wigen, 726 F.Supp. 389 (E.D.N.Y.1989) (Weinstein, J.). . Shearer notes: “[I]n Western Europe alone sharp variations are found among the criminal laws relating to such matters as abortion, adultery, euthanasia, homosexual behaviour, and suicide." Shearer at 138. Even in the context of extradition among our several states, dual criminality is not a dead issue. See N.Y. Times, June 21, 1990, at B4, col. 1 (governor of New York refuses Alabama’s extradition request on obscenity charges based on material that would not be deemed obscene in New York). An example in the record of an "extraditable" offense which would probably not fulfill dual criminality is the portion of the Italian criminal law which enhances the penalty for association where there are persons addicted to narcotic or psychotropic drugs among the participants in the association. See n. 1, supra. Arguably, if Italy sought the extradition of an addicted association member for conviction under this provision, the United States would deny the request, because, even though association is an "extraditable offense” under the treaty, under American constitutional law one cannot be punished for being a drug addict. See Robinson v. California, 370 U.S. 660 (1962). . The magistrate felt that legislative history showed that the Treaty’s specific declaration of American conspiracy and Italian association as “extraditable offenses” ipso facto established dual criminality. See Senate Comm, on Foreign Relations, Treaty With Italy, S.Rep. No. 33, 98th Cong., 2d Sess. 3, reprinted in 24 I.L.M. at 1532. The cited passage of legislative history, however, seems to go to what an Italian court might hold with regard to an extradition request from the United States predicated upon a RICO or CCE charge, which is irrelevant in this case. . SD 105. . SD 111. . See Senate Comm, on Foreign Relations, Treaty With Italy, S.Rep. No. 33, 98th Cong., 2d Sess. 3, reprinted in 24 I.L.M. at 1532 ("it is the nature of the underlying conduct, not its denomination in each country, that is critical to the application of the dual criminality principle"). . Memorandum and Order, dated October 20th, 1989, at 18. . Id. at 19 n. 8. . See, e.g., Sahagian v. United States, 864 F.2d 509, 513 (7th Cir.1988) (Bill of Rights limits government’s' treaty-making power as well as actions taken by federal officials pursuant to treaties); Plaster v. United States, 720 F.2d 340, 348 (4th Cir.1983) (same), Henkin, Rights: American & Human, 79 Colum.L.Rev. 405, 411 (1979) (treaty power cannot "trump" Bill of Rights since rights guaranteed therein antecede the Constitution and are above government abrogation); Bassiouni at 40 (“To date, there has never been a conflict between an extradition treaty and a constitutional provision, and in the case of such a conflict the Constitution would presumably prevail”). Cf. Reid v. Covert, 354 U.S. 1 (1957); Power Auth. of New York v. Federal Power Comm’n, 247 F.2d 538 (D.C.Cir.1957). But see Missouri v. Holland, 252 U.S. 416 (1920). . See Declaration of Mary Ellen Warlow, Senior Counsel for International Law Enforcement, United States Department of Justice, dated July 7, 1990 at 3, and exhibit thereto (quantum of proof for conviction in Italy is considerably more demanding than American standard of “probable cause;” Italian judge must be certain or secure of defendant’s guilt; where there is any reasonable possibility of innocence, defendant must be acquitted). See also Ital. Const. Title I, art. 27, cl. 2 (accused not considered guilty until judgment imposed). . Cf. Compton v. Ide, 732 F.2d 1429, 1434 (9th Cir.1984) (one found guilty of a charge is es-topped from claiming lack of probable cause for arrest and prosecution on that charge); Brewster v. Woodward & Lothrop, Inc., 530 F.2d 1016, 1017 (D.C.Cir.1976) (criminal conviction establishes, without other proof, probable cause); Turner v. Green, 704 F.Supp. 139, 141 (N.D.Ill.1988) (conviction establishes probable cause); Konon v. Fornal, 612 F.Supp. 68, 71 (D.Conn.1985) (conviction is conclusive proof of probable cause). . And the same rule obtains in the context of American interstate extradition where probable cause is as much a requirement as in the context of international extradition. See, e.g., Ex parte Gray, 426 S.W.2d 241 (Ct.Crim.App.Tex. 1968) (copy of indictment together with judgment of conviction sufficient to extradite to another state); Burnette v. McClearn, 162 Colo. 503, 427 P.2d 331, 332 (1967) (copy of judgment of conviction was all that was necessary to support extradition); Ex parte Glasper, 170 Tex. Crim. 628, 343 S.W.2d 712 (1961) (same); Travis v. People, 135 Colo. 141, 308 P.2d 997 (1957) (where extradition request contained no indictment, information, or affidavit, copy of judgment of conviction was sufficient to support extradition). . SD 36 et seq. . SD 36-37. . SD 90. . SD 82-83, 85-86, 94. . SD 90-91. . SD 38-39. . SD 39. . SD 48. . SD 55. . SD 40. . SD 48-49. . SD 89-90. See also SD 101. . SD 88. . SD 37, 88-89, 92-94, 97-98. . SD 47-48. . SD 96. . SD 97. . SD 97. . SD 104. . SD 37-38. See also 104.
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BOWMAN, Chief Judge. Southern Union Company appeals from the judgment of the District Court entered on a jury verdict returned in favor of Carl Morse on his age discrimination claims. We affirm. I. “ ‘We recite the facts in the light most favorable to the jury verdict and the district court’s findings.’ ” Denesha v. Farmers Ins. Exch., 161 F.3d 491, 496 (8th Cir.1998) (quoting Newhouse v.. McCormick & Co., 110 F.3d 635, 637 (8th Cir.1997)). In 1964, Morse began working for Gas Service Company, which underwent several ownership changes before . being acquired by Southern Union in February 1994. Southern Union formed a division called Missouri Gas Energy (MGE) to operate the acquired company. Morse held a variety of positions during his thirty-two years with the company and had a positive work history. He joined the plant accounting department in 1967, becoming a supervisor in 1976 and a manager in 1980. In 1985, when the accounting department was moved to Topeka, Kansas, Morse chose to take a non-management position in the engineering department in Lee’s Summit, Missouri, instead of moving to Topeka. In March 1994, Stuart harbour, MGE’s Controller, recruited Morse to join MGE’s newly-created plant accounting department as its supervisor. In April 1995, Southern Union’s top management, including President Peter Kelley, ‘held a series of “roundtable” meetings with all MGE supervisory-level employees. During these meetings, according to the testimony of Morse and several former MGE employees, Kelley expressed a preference for younger employees and indicated that dramatic changes were on the way for MGE. He wanted young blood and a young, fresh, new look. Kelley stated MGE was not a place people should expect to retire from and people should not work anywhere for more than ten years. Kelly also wanted younger supervisors because they accepted change better and had more ambition. The supervisory-level employees in attendance were asked to recall when they had last fired someone and were reminded that they possessed the authority to fire employees within their supervision. Morse’s supervisor, Stuart Harbour, attended one of these roundtable meetings, and Harbour terminated Morse’s employment approximately nine months after the meeting. Morse presented evidence that Harbour had made various remarks to him about his age, including repeated references to him as the “old man” in accounting. At a celebration honoring Morse’s thirty years of service, Harbour stated that it was rare for people to work for one company as long as Morse had and noted that he was only five or six years old when Morse began working for the company. Harbour also had given Morse a drawing of a wrinkled older man with no hair or teeth that was labeled “Typical Plant Accountant,” which Harbour had brought back from Southern Union’s headquarters because it had reminded him of Morse. On January 22, 1996, Harbour terminated Morse’s employment without providing a reason for the termination. Morse was fifty-two years old. Morse had received a good performance review from Harbour in November 1994, and he was awarded a four percent merit-based salary increase in May 1995. A less favorable review in November 1995 was, according to Harbour’s testimony, the result of Morse’s alleged deficiencies in learning the operations of a new computer system and his failure to draft an operating manual for the new system. The review, however, set numerous goals for Morse in the upcoming year that would “greatly benefit MGE and further develop [Morse’s] abilities.” Appel-lee’s App. at 359. Only a few weeks after this review, Harbour made the decision to fire Morse. At trial, Southern Union argued Morse’s position was eliminated on account of efficiencies created by a new computer system which became operational on June 30, 1995. According to Southern Union, this new computer system allowed one accountant to accomplish the tasks previously performed by four employees and eliminated the functions of Morse’s position with the exception of a thirty-minute manual calculation per month. Harbour testified that Morse was displaced from his position because of the computer-created efficiencies, and not for performance reasons. Harbour and the personnel director testified that no positions were available within the company to which Morse could have transferred when his position was eliminated and; consequently, that Morse’s employment with Southern Union was terminated. Morse sued Southern Union for age dis- . crimination in violation of the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-634 (1994), and the Missouri-Human Rights Act (MHRA), Mo. Rev.Stat. §§ 213.010-.137 (1994). The jury returned a verdict for Morse, finding that Morse’s age was a motivating and determining factor in Southern Union’s employment actions regarding Morse and that Southern Union’s violation of the ADEA was willful. The jury awarded Morse $450,000 in compensatory damages for emotional distress, $6,250,000 in punitive damages, and $29,073 in back pay. The District Court, on post-trial motions, reduced the compensatory and punitive damages awards and entered final judgment awarding Morse $70,000 in compensatory damages, $400,000 in punitive damages, $29,073 in back pay, $86,456 in front pay, and attorney fees and expenses. Southern Union appeals the District Court’s denial of its motion for judgment as a matter of law on the issues of liability, punitive damages, and willful violation of the ADEA an the denial of its motion for a new trial on the basis of alleged instructional errors. Southern Union also asserts that the remitted compensatory and punitive damages awards are grossly excessive and that the District Court abused its discretion in awarding front pay. For the reasons stated below, we affirm the judgment of the District Court. II. In reviewing de novo the denial of a motion for judgment as a matter of law (JAML), we must determine whether sufficient evidence supports the jury verdict. See Denesha, 161 F.3d at 497. Our review of a jury verdict is extremely deferential and we will not reverse for insufficient evidence unless “ ‘after viewing the evidence in the light most favorable to the verdict, we conclude that no reasonable juror could have returned a verdict for the non-moving party.’ ” Id. (quoting Ryther v. KARE 11, 108 F.3d 832, 836 (8th Cir.1997), cert. denied, 521 U.S. 1119, 117 S.Ct. 2510, 138 L.Ed.2d 1013 (1997)). We must consider the evidence in the light most favorable to Morse, assume all conflicts in the evidence were resolved in Morse’s favor, assume Morse proved all facts that his evidence tended to prove, and give Morse the benefit of all favorable inferences that reasonably may be drawn from the proven facts. See id. To prevail on its motion for JAML, Southern Union has the difficult task of demonstrating that all the evidence points in Southern Union’s direction and is susceptible of no reasonable interpretation sustaining Morse’s position. See id. We apply the same analysis to Morse’s ADEA and MHRA claims. See Breeding v. Arthur J. Gallagher & Co., 164 F.3d 1151, 1156 (8th Cir.1999). A. Southern Union argues insufficient evidence exists to support the jury’s verdict that it intentionally discriminated against Morse because of his age. Contending that no evidence causally links Kelley’s remarks to the termination of Morse because Harbour was the sole decision-maker and did not consider Kelley’s remarks in his decision, Southern Union characterizes Kelley’s remarks as either stray remarks or statements by a non-decisionmaker and, thus, as insufficient evidence of intentional discrimination. We disagree. “When a major company executive speaks, ‘everybody listens’ in the corporate hierarchy, and when an executive’s comments prove to be disadvantageous to a company’s subsequent litigation posture, it can not compartmentalize this executive as if he had nothing more to do with company policy than the janitor or watchman.” Lockhart v. Westinghouse Credit Corp., 879 F.2d 43, 54 (3d Cir.1989), overruled on other grounds, Starceski v. Westinghouse Elec. Corp., 54 F.3d 1089 (3d Cir.1995); see also Haun v. Ideal Indus., Inc., 81 F.3d 541, 546 (5th Cir.1996) (finding president’s statement to personnel department that he did not want to hire older workers was sufficient to show company used age as a determinative factor in employment decisions generally); Radabaugh v. Zip Feed Mills, Inc., 997 F.2d 444, 449 (8th Cir.1993) (stating that documents setting forth a company’s overall direction and demonstrating a preference for youth cannot be characterized as “stray remarks” even when the documents are not directly related to the employment action). The evidence reflects that Kelley expressed a strong preference for a younger workforce and encouraged MGE’s supervisors to use their firing powers to effectuate company objectives. Although Southern Union strongly denies that a preference for younger employees was stated, our review does not include an assessment of the credibility of witnesses. See Curtis v. Electronics & Space Corp., 113 F.3d 1498, 1502 (8th Cir. 1997). The jury was free to credit or discredit testimony as it believed appropriate, and it was for the jury to decide whose witnesses were telling the truth about Kelley’s comments at the roundtable meetings. See id. Although Harbour testified that he never received an impression from Kelley that he should terminate older workers, an admission to the contrary would be unlikely in a discrimination case, and it was the jury’s function to assess credibility and weigh the evidence. From the evidence presented, the jury reasonably could have inferred that Kelley’s stated preference for younger employees motivated Harbour’s decision to terminate Morse. This inference that age motivated Har-bour’s decision to terminate Morse is strengthened by the events occurring between Morse’s November 1995 review and his January 1996 termination. The November 1995 review outlining goals for the following year suggests that Harbour intended Morse to remain in his position for at least another year. Harbour’s supervisor, Donald Kvapil, however, wrote on the review that immediate action should be taken by Morse to produce the operating manual for the new computer system despite the explicit deadlines already set in the review for producing an outline (January 31,1996) and a partial draft (March 31, 1996) of the manual. Furthermore, Kelley testified that he personally reviewed the performance evaluations of all supervisory-level employees. Shortly thereafter, Har-bour made the decision to discharge Morse. The weak showing made by Southern Union regarding its purported attempt to transfer Morse to another position also lends support to the jury’s finding of intentional discrimination. Southern Union presented evidence that it tried to place Morse into another position but that no positions were available. The testimony of Harbour and the personnel director regarding the search for available positions was conflicting, and Harbour’s testimony that he spoke to Jerry Fast, the manager of operations in Lee’s Summit, regarding openings in Lee’s Summit was directly contradicted by Fast. In addition, Fast testified that a position may have been available in Lee’s Summit and there was also testimony that a lower-level position was available in the accounting department. Given the other evidence we already have discussed, the jury reasonably could have inferred that Southern Union discharged Morse because of his age. Southern Union introduced evidence that its shift to a new computer system was initiated long before the roundtable meetings and that Morse’s position was eliminated as a result of efficiencies created by the new computer system. Southern Union therefore asserted it had a nondiscriminatory reason for its actions regarding Morse. Morse countered by presenting evidence that his job functions were not eliminated by the new system, he testified extensively about his job functions both before and after the conversion to the new system and stated that he worked with the new system every day. In addition, Morse testified that when he discussed Kelley’s comments with Harbour during the- November 1995 review, Har-bour said that because of Morse’s experience and knowledge in plant accounting he had nothing to worry about. It was the jury’s function to consider the competing evidence and the competing views of that evidence. The jury afforded greater credit to Morse’s view of the facts in rendering its verdict and we cannot change the verdict simply because Southern Union presents a different view of the facts. See Glover v. McDonnell Douglas Corp., 981 F.2d 388, 392 (8th Cir.1992), vacated on other grounds, 510 U.S. 802, 114 S.Ct. 42, 126 L.Ed.2d 13 (1993). Morse presented direct evidence of age animus and also presented evidence discrediting Southern Union’s stated reasons for eliminating his position and terminating his employment. On this record, we cannot say the evidence is insufficient to support the jury’s verdict that Southern Union intentionally discriminated against Morse because of his age. The District Court, therefore, did not err in denying Southern Union’s motion for JAML. B. Southern Union also argues insufficient evidence supports the jury’s punitive damages award. Under Missouri law, “ ‘[p]unitive damages may be awarded for conduct that is outrageous, because of the defendant’s evil motive or reckless indifference to the rights of others.’ ” Nelson v. Boatmen’s Bancshares, Inc., 26 F.3d 796, 803 (8th Cir.1994) (quoting Burnett v. Griffith, 769 S.W.2d 780, 789 (Mo.1989) (en banc)). The Missouri standard for punitive damages requires actual out-rageousness, which is not present in the willfulness standard of the ADEA’s liquidated damages provision, and can be satisfied by evidence that the defendant’s conduct shocks the conscience and causes outrage. See id. at 803-04. This Court has sustained a punitive damages award under the Missouri standard in a case with similar facts. In Dene-sha, the plaintiffs supervisor several times stated that older employees’ work was inferior to that of younger employees and there was evidence that management held older employees to different standards than younger employees. We found that the quantum of outrageousness necessary to support a punitive damages award had been established because the actions of key decision-makers permitted an inference of discriminatory animus on their part. See Denesha, 161 F.3d at 503-04; see also Kimzey, 107 F.3d at 576 (upholding punitive damages where supervisors harassed women and management repeatedly failed to investigate complaints or discipline offenders); Kientzy v. McDonnell Douglas Corp., 990 F.2d 1051, 1062 (8th Cir.1993) (upholding punitive damages because management disciplined female employee differently than male employees for violating similar company rules, resulting in plaintiffs discharge); Finley v. Empiregas, Inc., 975 F.2d 467, 472 (8th Cir.1992) (upholding punitive damages because employer had established policy of discriminating against women and knew policy was unlawful). In support of its argument that its conduct did not rise to the level of outrageousness necessary to support punitive damages, Southern Union cites Nelson, 26 F.3d at 804, and Glover, 981 F.2d at 396. Each of these cases, however, unlike the one before us, was a close case as to whether the plaintiffs evidence even was sufficient to support the jury's verdict on intentional discrimination. Morse’s evidence, credited by the jury, establishes that Southern Union’s top management had stated a preference for a younger workforce and had reminded supervisors of their authority to fire employees to achieve company objectives. Consequently, the jury reasonably could have inferred that Harbour was carrying out company policy when he terminated Morse’s employment. From the jury’s verdict, it is obvious that the jury was outraged by Southern Union’s actions, as was the District Court, which stated that it is “hard to imagine a much more flagrant violation of age protection laws.” Morse v. Southern Union Co., 38 F.Supp.2d 1120, 1125 (W.D.Mo.1998). On this record, we cannot conclude that the evidence is insufficient to support the jury’s finding that Southern Union’s treatment of Morse was shocking and outrageous. Accordingly, the jury’s finding that Morse is entitled to recover punitive damages must be sustained. III. The District Court remitted the $450,000 compensatory damages award to $70,000 and the $6,250,000 punitive damages award to $400,000, yet Southern Union asserts that the remitted compensatory and punitive damages awards still are grossly excessive. We must consider whether the awards, as remitted by the District Court, are “so grossly excessive as to shock the court’s conscience.” Kientzy, 990 F.2d at 1061 (internal quotation omitted). We review the remitted awards for a clear abuse of discretion. See id. at 1062. Southern Union cites eases approving compensatory awards for emotional distress in the range of $2000 to $35,000. See Ramsey v. American Air Filter Co., 772 F.2d 1303, 1313-14 (7th Cir.1985); Carter v. Duncan-Huggins, Ltd., 727 F.2d 1225, 1238 (D.C.Cir.1984); Block v. R.H. Macy & Co., 712 F.2d 1241, 1245 (8th Cir.1983). A review of recent employment discrimination cases from this Circuit, however, reveals that we have upheld compensatory damages awards for emotional distress that are larger than the $70,000 awarded Morse. See Kim v. Nash Finch Co., 123 F.3d 1046, 1067 (8th Cir.1997) ($100,000); Nelson, 26 F.3d at 802 ($74,-811); Kientzy, 990 F.2d at 1061-62 ($150,-000); Wilmington v. J.I. Case Co., 793 F.2d 909, 922 (8th Cir.1986) ($400,000); cf. Delph v. Dr. Pepper Bottling Co., 130 F.3d 349, 357-58 (8th Cir.1997) (reducing $150,-000 compensatory damages award to $50,-000 because emotional complaints were vague, ill-defíned, and not intense). An expert in forensic psychology testified that in January 1997 he diagnosed Morse as suffering from major depression as a result of losing his job with Southern Union. Morse and his wife testified extensively about the emotional suffering Morse has endured since his employment suddenly was terminated after thirty-two years with the company. In light of prior cases and Morse’s evidence, we cannot say that $70,-000 in compensatory damages is grossly excessive, and, therefore, the District Court did not abuse its discretion in remitting the compensatory damages award to $70,000. Southern Union also argues that the punitive damages award is grossly excessive and should be remitted further. Missouri does not have a set limit on punitive awards, but requires both the trial court and the appellate court to review the jury’s punitive damages award to ensure that it is not an abuse of discretion. See Kimzey, 107 F.3d at 576. Factors to consider in determining if the punitive damages award is fair and reasonable include: “the degree of malice or outrageousness of the defendant’s conduct, aggravating and mitigating circumstances, the defendant’s financial status, the character of both parties, the injury suffered, the defendant’s standing or intelligence, and the relationship between the two parties.” Id. (citing Call v. Heard, 925 S.W.2d 840, 849 (Mo.1996) (en banc), cert. denied, 519 U.S. 1093, 117 S.Ct. 770, 136 L.Ed.2d 716 (1997)). Morse’s evidence, which the jury credited, shows that Southern Union’s top management expressed a preference for younger workers while challenging its supervisors to exercise their firing powers to achieve company objectives. Such age-based animus in top management likely may affect other employees of the company. The award of $400,000 is less than one one-thousandth of Southern Union’s approximately $500,000,000 net worth and the ratio of punitive to compensatory damages (not including the separate awards of back pay and front pay) is less than 6:1, a ratio that in these circumstances does not set off any alarm bells. We have approved large punitive damages awards in the past to deter employment discrimination. See Denesha, 161 F.3d at 504 ($700,000); EEOC v. HBE Corp., 135 F.3d 543, 556-57 (8th Cir.1998) ($380,000 and $100,000); Kim, 123 F.3d at 1067 ($300,000); Kimzey, 107 F.3d at 576-78 ($350,000); Kientzy, 990 F.2d at 1062 ($400,000). The punitive damages awarded here cannot be considered so excessive as to shock the Court’s conscience. We also do not find the remitted punitive damages award to be unconstitutionally excessive so as to violate the Due Process Clause of the Fourteenth Amendment. See BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 575, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996) (standard). We cannot say the District Court abused its discretion in remitting the punitive damages award to $400,000. IV. Southern Union argues that the District Court abused its discretion by denying Southern Union’s motion for a new trial based on several alleged instructional errors. A district court has broad discretion in instructing the jury, and jury instructions “do not need to be technically perfect or even a model of clarity.” Cross v. Cleaver, 142 F.3d 1059, 1067 (8th Cir.1998). When an instructional error has been properly preserved for appeal, we review for abuse of discretion and we “must determine simply ‘whether the instructions, taken as a whole and viewed in light of the evidence and applicable law, fairly and adequately submitted the .issues in the case to the jury.’ ” Kim, 123 F.3d at 1057 (quoting Karcher v. Emerson Elec. Co., 94 F.3d 502, 510 (8th Cir.1996), cert. denied, 520 U.S. 1210, 117 S.Ct. 1692, 1693, 137 L.Ed.2d 820 (1997)). To properly preserve a claim of instructional error, a party must make a sufficiently precise objection before the district court and propose an alternate instruction. See Nelson v. Ford Motor Co., 150 F.3d 905, 907 (8th Cir.1998); Kehoe v. Anheuser-Busch, Inc., 96 F.3d 1095, 1104 (8th Cir.1996). If the instructional error has not been preserved, the claim is waived and we review the district court’s instructions only for plain error. See Kehoe, 96 F.3d at 1104. Under plain error review, we reverse “only if the error prejudices the substantial rights of a party and would result in a miscarriage of justice if left uncorrected.” Cross, 142 F.3d at 1068 (internal quotations omitted). Plain error review is “narrow and confined to the exceptional case where error has seriously affected the fairness, integrity, or public reputation of the judicial proceedings.” Ryther, 108 F.3d at 847 (internal quotation omitted). A. The first claim of instructional error raised by Southern Union alleges the jury was improperly instructed on the standard for awarding punitive damages under the MHRA. The jury instruction stated that a preponderance of the evidence was required. The Missouri Supreme Court has held that a plaintiff seeking punitive damages under the common law must establish by clear and convincing evidence that the defendant’s conduct was outrageous. See Rodriguez v. Suzuki Motor Corp., 936 S.W.2d 104, 111 (Mo.1996) (en banc). The parties, however, did not object to this aspect of the submitted instruction. The claim therefore is waived and we review only for plain error. Assuming, without deciding, that the jury instruction incorrectly stated the legal standard for punitive damages under the MHRA, the error does not reach the level required for reversal under plain error review. Because neither party objected to the instruction, the error was invited by the parties. The District Court was “positive that any instructional error was harmless, given the amount of the award and the evidence of outrageous conduct.” Morse, 38 F.Supp.2d at 1126. We agree. This error did not seriously affect the fairness of the trial, its integrity, or its public reputation. See Baker v. Delo, 38 F.3d 1024, 1026 (8th Cir.1994) (finding no plain error when instruction stated incorrect legal standard); Turner v. White, 980 F.2d 1180, 1182 (8th Cir.1992) (same). The error also did not prejudice the substantial rights of Southern Union nor would a mis carriage of justice result if this error were left uncorrected. We find no plain error in this jury instruction. B. For its second claim of instructional error, Southern Union argues that the special verdict form improperly instructed the jury that it could find for Morse if it disbelieved Southern Union’s proffered reason for discharge, without any finding that the real reason was age discrimination. Southern Union did not object to this portion of the instructions nor did it offer an alternate instruction; therefore, we find Southern Union did not properly preserve this issue for appeal and review only for plain error. Having considered this issue, and having examined the entire instruction, we conclude that any error in the instruction does not rise to the level of plain error and thus does not amount to a reason for reversal. We are satisfied the jury was adequately informed that in order to return a verdict for Morse it would have to find from the evidence, not only that the defendant’s stated reasons for its decision were not the true reasons, but also that the real reason for the defendant’s decision was intentional discrimination on account of Morse’s age. See Ryther, 108 F.3d at 837-38; Rothmeier v. Investment Advisers, Inc., 85 F.3d 1328, 1334-37 (8th Cir.1996). C. Southern Union’s other claims of instructional error do not warrant discussion. Having carefully considered them, we conclude they are entirely lacking in merit. V. Southern Union argues the District Court abused its discretion in awarding front pay. Under the ADEA, the District Court had discretion to shape a remedy to compensate Morse for what was lost on account of the age discrimination, but it could not reject or contradict the jury’s findings in doing so. See Curtis, 113 F.3d at 1503-04. The District Court was required to presume Morse would have worked at Southern Union until he retired, unless Southern Union provided evidence to the contrary. See Neufeld v. Searle Lab., 884 F.2d 335, 341 (8th Cir.1989). Southern Union argues Morse could not have continued working at the company because his position was eliminated for business reasons, but the jury specifically rejected this argument. In addition, the jury’s verdict awarding back pay establishes that Morse would not have been discharged prior to the date of the verdict absent age discrimination. See Curtis, 113 F.3d at 1504. The evidence shows that Morse had performed numerous jobs with the company and was capable of working for the company in other capacities if and when his plant accounting position was eliminated for a nondiscriminatory reason. See id. at 1505. The somewhat conflicting testimony of Har-bour and the personnel director regarding the lack of available positions was countered by the testimony of Jerry Fast that a position may have been available in the Lee’s Summit office and by evidence of an opening in the accounting department. The District Court did not abuse its discretion in awarding front pay. VI. For the foregoing reasons, the judgment of the District Court is affirmed. . The Honorable Howard F. Sachs, United Stales District Judge for the Western District of Missouri. . Southern Union also asserts Harbour’s age comments were stray remarks or remarks unrelated to the employment decisions. ’ Although these comments alone may not be sufficient evidence to support the jury’s verdict, the jury reasonably could have considered the comments along with the other evidence of age animus in reaching its verdict. . Southern Union also argues the evidence was insufficient to support the jury's verdict that it willfully violated the ADEA. The District Court did not award liquidated damages under the ADEA and Morse has conceded that the "jury’s finding of a willful violation of the ADEA is therefore only relevant if the Court should rule that punitive damages were not properly awarded.” Appellee's Brief at 24 n. 6. Because this opinion upholds the award of punitive damages, we need not address this issue. See supra, Part II.B., and infra, Part III. . After trial, Southern Union submitted the affidavit of one of its attorneys stating that an objection was made to this instruction off the record. The District Court was satisfied that the point was not expressed on or off the record. Even assuming the argument was made, it was Southern Union’s responsibility to make its objection and propose an alternate instruction on the record. . The parties stipulated that the present value of front pay until Morse reaches age sixty-two is $86,456. Southern Union reserved the right to dispute its liability for front pay.
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MEMORANDUM OPINION HOYT, District Judge. Plaintiffs Hodge E. Mason and Hodge E. Mason Engineers, Inc. have filed suit contending copyright infringement pursuant to Copyright Act of 1976, as amended, 17 U.S.C. §§ 101-914 (1977 and Supp.1990) (hereinafter referred to as 1976 Act) and seeking statutory damages pursuant to sec. 504(c) of the 1976 Act. Plaintiffs contend that defendants infringed 234 of their copyrights and are seeking damages in the amount of $11,700,000. Defendants have moved for partial summary judgment. Three motions are before the Court (instrument numbers 44, 46, and 63). The three motions present only two issues: 1) whether the 1987 registrations of copyrights in map sheets first published in 1968 and during the 1970’s would bar recovery of statutory damages and 2) whether statutory damages are recoverable for only two infringements because the 234 separate registrations are in fact part of two compilations. These two issues will be referred to as the first motion and second motion, respectively. Having considered the motions and responses thereto, the record on file, and the applicable law, the Court is of the opinion that partial summary judgment should be granted as to the first motion, rendering the second motion moot. FACTUAL BACKGROUND In 1967, Plaintiffs began creating land ownership maps for Montgomery County, Texas based upon United States Geological Survey maps and using title data obtained from public records as well as data supplied by an agreement with Conroe Title & Abstract Co., Inc., a defendant herein. By July 1969, 118 individual map sheets that Plaintiffs created were published with copyright notices. The map sheets contain identification, location, and relative position, size, and shape of land grants and real property in Montgomery County and representations of survey lines, tract boundaries, identification of deeds, abstract numbers, and other information that was allegedly Plaintiffs’ original work of authorship. Plaintiffs made revisions to ' the original map sheets, and 115 revised map sheets were published with copyright notices during the period from 1970 to 1980. Plaintiffs contend that Defendants made an unauthorized derivative edition of the original maps by cutting and pasting Plaintiffs’ copyrighted map sheets into new configurations. The Defendants then copied the surveys, tract boundaries, topography, and other features from Plaintiffs’ copyrighted maps on transparent overlays. Defendant Landata, Inc. of Houston (“Landa-ta”) had bought a set of Plaintiffs’ pre-reg-istered map sheets in a public store for use without any constraints. Landata then did its own updating of the map sheets for distribution by Defendant Montgomery Data, Inc. (“MDI") to its subscribers. Plaintiffs learned of this activity in September 1985, when Landata sought permission, which was denied, to use the copyrighted map sheets in a computer title plant to be made available to other title companies. Registration of Plaintiffs’ copyright in one original map sheet was filed in October 1968 (copyright certificate F 47925); copyrights in the remaining 117 original map sheets were registered in October 1987. Registrations of the copyrights in the 115 revised maps were filed in October, November, and December of 1987. SUMMARY JUDGMENT Summary judgment is appropriate when there is evidence on file that specifically shows that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. F.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Resolution of the two issues presented depends on this Court’s interpretation of the applicable provisions of the 1976 Act. It is the function of the courts to interpret statutes in a way that effectuates the disclosed intent of Congress. Sutton v. United States, 819 F.2d 1289, 1292 (5th Cir.1987). In determining legislative intent, consideration is given to the plain wording of the statute as well as to the language and design of the statute as a whole. See Nupulse, Inc. v. Schlueter Co., 853 F.2d 545, 548-49 (7th Cir.1988) (citing K-Mart Corp. v. Cartier, Inc., 486 U.S. 281, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988)). If the intent of Congress is not disclosed on the face of the statute, and the intent appears ambiguous, then legislative history of the statute must be considered. American Trucking Associations, Inc. v. Interstate Commerce Commission, 659 F.2d 452, 459 (5th Cir.1981), cert. denied, 460 U.S. 1022, 103 S.Ct. 1272, 75 L.Ed.2d 493 (1983). It is clear that legislative history and statutory interpretation are questions of law that are properly decided on a motion for summary judgment. Saroyan v. William Saroyan Foundation, 675 F.Supp. 843, 844 (S.D.N.Y.1987), aff'd, 862 F.2d 304 (2d Cir.1988). See Tarka v. Franklin, 891 F.2d 102, 105 (5th Cir.1989); Oklahoma ex rel. Department of Human Services v. Weinberger, 741 F.2d 290, 291 (10th Cir.1983). Statutory damages under the 1976 Act are recoverable pursuant to sections 504(c) and 412(2). Section 504(c)(1) provides as follows: [T]he copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more in-fringers are liable jointly and severally, in a sum of not less than $500 or more than $20,000 as the court considers just. For the purpose of this subsection, all the parts of a compilation or derivative work constitute one work. Section 412(2) provides that neither statutory damages nor attorney’s fees are available for “any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.” BELATED REGISTRATIONS The issue in the first motion is whether Plaintiffs’ late registrations would bar recovery of statutory damages, if there is an ultimate finding of infringement. Defendants assert that pursuant to sec. 412(2) of the 1976 Act, there is no entitlement to statutory damages as provided in sec. 504(c) for infringements of 233 of the copyrights because registration did not take place until more than three months after their publication. The plain language of sec. 412(2) means that no statutory damages would be available, in the instant case, because infringement began after the various publication dates in 1968 and in the 1970’s but before registration in 1987. It is clear that the registrations did not occur until more than three months after the first publication. In addition to the plain language of sec. 412(2) of the 1976 Act, Defendants rely on the holding in Business Trends Analysts, Inc. v. Freedonia Group, Inc., 887 F.2d 399 (2d Cir.1989). Where a work is not registered until after the infringement, the copyright holder is not eligible for statutory damages and is limited to actual damages and profits under sec. 504(b) of the 1976 Act. Id. at 404. Furthermore, where the alleged infringing activity commences prior to the registration of a copyright, the copyright claimant may not claim statutory damages for continued post-registration activity. See Singh v. Famous Overseas, Inc., 680 F.Supp. 533, 536 (E.D.N.Y.1988); Johnson v. University of Virginia, 606 F.Supp. 321, 325 (W.D.Va.1985). A “new” or “separate” basis for the award of statutory damages is created, however, only where there is a difference between pre- and post-registration infringing activities. Whelan Associates, Inc. v. Jaslow Dental Laboratory, Inc., 609 F.Supp. 1325, 1331 (E.D.Pa.1985), aff'd on other grounds, 797 F.2d 1222 (3d Cir.1986), cert. denied, 479 U.S. 1031, 107 S.Ct. 877, 93 L.Ed.2d 831 (1987). Plaintiffs concede that no statutory damages can be awarded for pre-registration infringements, but they contend that a distinction exists between pre- and post-re gistration infringements. Plaintiffs accuse Defendants of revising, copying, and distributing overlays in 1985, 1988, and 1989. Because these activities were not of a continuous nature, Plaintiffs urge application of the doctrine of multiple infringements. Under this doctrine, where a party has committed many widely separated, distinct acts of infringement commencing after registration of the copyrights, then statutory damages must be awarded if Plaintiff so elects. In arguing for the application of this doctrine, Plaintiffs rely on a number of cases decided under the Copyright Act, ch. 320, 35 Stat. 1075 (1909) (current version at 17 U.S.C. § 101 et seq. (1977)) (hereinafter 1909 Act). See e.g., Westermann v. Dispatch Printing Co., 249 U.S. 100, 39 S.Ct. 194, 63 L.Ed. 499 (1918); Universal Statuary Corp. v. Gaines, 310 F.2d 647 (5th Cir.1962). In urging application of the 1909 Act, which did not contain sec. 412(2), rather than the 1976 Act, Plaintiffs argue that the doctrine of multiple infringements makes better sense because the copyright holder is not penalized for continued infringement following registration. Plaintiffs would have us believe that because sec. 412(2) does not mention post-registration infringements, the statute is ambiguous. The plain language of the statute does not reveal that Congress intended to distinguish between pre- and post-registration infringements. Where there is an allegation of ambiguity in a statute, one looks also to the legislative history but does not resort to previous, superseded legislation. This Court must therefore examine the legislative history of the applicable statute. When one considers the legislative history behind sec. 412(2), the doctrine of multiple infringements does not make better sense. Although copyright registration is not required under the 1976 Act, Congress clearly recognized a need for registration and sought to encourage prompt registration by denying statutory damages in cases of belated registration. Moreover, it is clear that Congress did not intend for the doctrine of multiple infringements to be applicable in cases arising under the 1976 Act; By enacting sec. 412, Congress sought to establish registration as a prerequisite to the extraordinary remedy of statutory damages and provided that this remedy is to be denied where infringement commences before registration. The only exception Congress provided was to allow for a grace period to take care of newsworthy or suddenly popular works which could be infringed before the copyright owner has a reasonable opportunity to register his claim. H.R.Rep. 1476, 94th Con.2d Sess., reprinted in 1976 U.S.Code Cong. & Admin.News 5659, 5774. Taking Plaintiffs’ argument to its logical conclusion would mean another exception would be needed by inserting the words “and continues after registration” to sec. 412(2). Considering that Congress was seeking to provide an incentive, in the form of statutory damages, for prompt registration, this Court cannot discern a need for the language “and continues after registration”. Interpreting “commencement of infringement” in a way most' in keeping with congressional intent is the duty of this Court. See Sutton, 819 F.2d at 1295. This Court, therefore, interprets the words “commencement of infringement” to mean the first act of infringement in a series of on-going separate infringements. See Whelan, 609 F.Supp. at 1331. In the instant case, a new copyright infringement has not commenced each time defendants have used any of the map sheets. Plaintiffs’ arguments are not acceptable, because Defendants are accused of committing the same activity each time, for the same purpose, and using the same copyrighted material. The acts of alleged infringement clearly constitute a series of on-going separate infringements, with the first act occurring before registration, with registration occurring more than three months after first publication. In the Singh, Johnson, and Whelan cases, supra, defendants committed infringements before registration; in the case at bar, defendants allegedly infringed also before registration. This Court agrees with the reasoning expressed in those cases that there is no incentive to register early if the owner may obtain statutory damages for acts of infringement continuing after belated registration. Plaintiffs further argue that the copyright owner is penalized and the infringer is favored by application of the 1976 Act. The penalty, however, is imposed by delayed registration and the copyright owner penalizes himself by not promptly making a public record of his copyright claim. The copyright holder is still permitted, however, to recover actual damages plus any applicable profits not used as a measure of damages. Sec. 504(b), 1976 Act. Plaintiff has filed this lawsuit pursuant to the 1976 Act and it is clearly the applicable statute; it is curious, however, that Plaintiffs now seek application of the 1909 Act. When considering the legislative history as set forth in H.R.Rep. 1476 and the reasoning already set forth on this issue in other districts, Plaintiffs’ position is totally untenable. Plaintiffs first became aware of Defendants’ alleged infringement in 1985, but Plaintiffs did not register their map sheets until 1987 even though they had been published more than 8 years before registration. Plaintiffs are therefore not entitled to statutory damages for any continued infringement, by Defendants herein, because of the late registrations of their copyrights. The first motion should be granted. TWO COMPILATIONS In the second motion, Defendants contend that statutory damages are recoverable for only two infringements, because the 234 registrations are part of two compilations. This motion is moot because of the Court’s ruling on the first motion that Plaintiffs are not entitled to statutory damages due to the belated registrations. Defendants contend that Plaintiffs published one compilation, consisting of 118 registrations, in 1968 and a second compilation, consisting of 115 registrations, in 1972. If this Court were to find that there were indeed two compilations, statutory damages would not be allowed because the compilations were published and infringements commenced before registration. On the other hand, if this Court were to find that Defendants would be liable for 234 infringements, an award of statutory damages could only be imposed for infringement of the one registration made at the time of first publication. CONCLUSION It is the finding of this Court that upon proof of infringement, Plaintiffs may be entitled to statutory damages for the one map sheet registered in 1968 (copyright certificate F 47925). As for the remaining 233 registrations, upon proof of infringement, Plaintiffs’ recovery will be limited to actual damages and Defendants’ profits. It is therefore ORDERED that the first motion for partial summary judgment (instrument numbers 44 and 46) be, and the same is hereby, GRANTED. The second motion (instrument number 63) is MOOT.
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HARLINGTON WOOD, JR., Circuit Judge. Defendant Gary D. Lowis appeals his conviction on a single count indictment charging him with possession of a controlled substance, namely, amphetamine and marijuana, with intent to distribute in violation of 21 U.S.C. § 841(a)(1). First, the defendant objects to certain evidentiary rulings, any one of which he claims merits a new trial. In any event, he argues the cumulative effect of these claimed incorrect evidentiary rulings compels reversal. The defendant recognizes that he has a heavy burden in challenging a trial court’s evidentiary rulings on appeal, because “a reviewing court gives special deference to the evidentiary rulings of the trial court.” United States v. Briscoe, 896 F.2d 1476, 1489-90 (7th Cir.1990) (citation omitted). Our standard of review when determining if the district court committed reversible-error in admitting or excluding evidence is for an abuse of discretion. United States v. Whitaker, 127 F.3d 595, 601 (7th Cir.1997) (citation omitted). Secondly, Lowis questions the sufficiency of the evidence. Again he has a heavy burden. He must convince this court that no rational trier of fact, after viewing the evidence in the light most favorable to the government, could have found the essential elements of the crime beyond a reasonable doubt in order to convict the defendant. United States v. Pribble, 127 F.3d 583, 590 (7th Cir.1997) (citations omitted). In United States v. Hickok, 77 F.3d 992, 1002 (7th Cir.1996), we described the defendant’s burden in challenging the sufficiency of the evidence as “nearly insurmountable.” Underlying the evidentiary issues is the defendant’s claim that this case, if anything, is no more than the possession by him of a controlled substance for purposes of his own consumption, without any intent to distribute to others. The defendant further claims that over his objections, the government tried this case as if a conspiracy had been charged so as to permit the government to broaden its basis of admissible evidence. The defendant has made a good, but unsuccessful, effort to overcome his burdens relating to these issues. Therefore, we must affirm. In view of the evidentia-ry issues raised, however, some detail is necessary to explain that conclusion. Background The events in this story take place in and around the small town of Palmer in central Illinois where the defendant resided in a rented house. His former girlfriend, Becky Clayton, occupied a trailer in the backyard of the property. The drug trail leading to the defendant, however, actually originated in Oklahoma in 1995. Brenda Holmes, the wife of Earl Holmes, both of whom resided in Oklahoma, was interviewed by Oklahoma agents of the Drug Enforcement Administration (DEA). She revealed that her husband had been transporting two to four pound quantities of methamphetamine to a resident of Palmer, Illinois on a monthly basis. Whenever her husband made that trip, she said, he stayed at a particular Holiday Inn near Palmer. Agents in Illinois followed up on that information by obtaining the Holiday Inn records. The records showed that Holmes had stayed at the hotel on various occasions and that calls had been placed from Holmes’ hotel room to defendant’s Palmer residence. Thereafter, in April 1996, a Holiday Inn clerk notified the Illinois State Police and the DEA that Holmes had again checked in. The agents quickly responded and identified Holmes’ truck at the hotel. A drug dog of the canine unit later alerted on the truck. During the agents’ surveillance, Holmes and his wife were seen to come out of the hotel, get in their truck, and drive down the highway in the general direction of Palmer. Along the way the agents stopped them and executed a search warrant for the truck. That search turned up over $29,000 in cash stashed behind the driver’s seat and an additional $14,000 in cash hidden under the hood. Mrs. Holmes consented to the search of her purse in which small amounts of meth amphetamine and marijuana were found and seized. Later' that day the agents executed a search warrant for the defendant’s residence in Palmer. When the agents arrived they saw Brian Nation, later identified as defendant’s nephew, run across the backyard and try to hide under Clayton’s trailer. In addition to finding Nation under the trailer, the agents found six plastic baggies containing 647 grams of marijuana and a thermos bottle containing 64.4 grams of amphetamine, a plastic baggie with approximately 33 grams of marijuana and additional empty plastic baggies. Also found was an electronic scale, a plastic smoking pipe, and some personal effects of Debbie Beck, the defendant’s girlfriend at that time. While executing the warrant, agents found defendant inside the house along with his current girlfriend, Debbie Beck, and also his former girlfriend, Becky Clayton, who lived in the trailer behind the house. It was from their company that Nation, the nephew, had quickly departed to try to hide under Clayton’s trailer. The search of the house resulted in the seizure of a 9mm handgun, a loaded .38 Derringer pistol, two night vision scopes, and miscellaneous items including baggies of amphetamine and of marijuana, in addition to some papers recording apparent drug sales along with Holmes’ Oklahoma phone number. There was also an empty bottle of ephedrine, a precursor chemical for the manufacture of methamphetamine and amphetamine. The search warrants were not challenged. In October 1997, defendant was charged in a complaint with possession of amphetamine and marijuana with intent to distribute and was arrested in Lincoln, Illinois as he was leaving the residence of Randy Melvin. The defendant was in his car with Debbie Beck and another man at the time he was arrested. The agents also arrested Randy’s brother, Keith Melvin, who was sought on a Missouri warrant. Subsequently, during a search of the defendant’s car, as well as the car and residence of Randy Melvin, a quantity of methamphetamine along with other items used to produce methamphetamine were seized. The district court, however, granted the defendant’s motion in limine to exclude the evidence connected with the events in Lincoln. After those searches and defendant’s arrest, agents interviewed the defendant and attempted to obtain his cooperation in identifying Earl Holmes as his source for methamphetamine. The defendant declined to cooperate unless he got a “free ride,” stating he feared retaliation by Holmes. Evidentiary Rulings The government argues preliminarily that the challenged evidentiary rulings were waived as they were “for the most part perfunctory and undeveloped,” and not supported by pertinent authority, citing United States v. Berkowitz, 927 F.2d 1376, 1384 (7th Cir.1991). Berkowitz is sound law but, under the circumstances of this case, the waiver argument is so intertwined with the merits that we will give the defendant the benefit of the waiver doubt and proceed to consider the claims on their merits. Therefore, assuming the defendant’s arguments were preserved, we will give particular deference to the rulings of the trial court and will reverse only if there has been an abuse of discretion. Whitaker, 127 F.3d at 601. First, Lowis argues that the district court erred in admitting the testimony of the conversation the agents had with him after his Lincoln arrest when they were seeking his cooperation in naming his drug sources. This was the conversation where defendant declined to cooperate unless he got a “free ride.” The government argues that the testimony was properly admitted since it implied defendant’s consciousness of guilt. We need not, however, examine the district court’s initial ruling admitting that conversation as the district court subsequently instructed the jury to disregard that portion of the government’s evidence. As mentioned previously, the district court had granted defendant’s motion in limine to eliminate evidence of the other events occurring in Lincoln, Illinois. The objected-to admissions of defendant’s “consciousness of guilt” conversation with the agents were an aftermath of the Lincoln events. The defendant argues that the admitted statements were so prejudicial to him that in spite of the district court’s best efforts with its curative instruction for the jury to disregard that evidence, as a practical matter it was impossible to “unring the bell.” In our judgment, viewed in the context of all the evidence, even if initially admitted in error, that particular evidence was not a very “loud bell.” The defendant has presented no evidence to convince us that this evidence was overwhelmingly prejudicial. See United States v. Shukitis, 877 F.2d 1322, 1329 (7th Cir.1989); United States v. Catalano, 450 F.2d 985, 990 (7th Cir.1971). The district court’s instruction was adequate to “unring” this bell. We have no reason to assume that the jury disregarded the court’s instruction. See Shukitis, 877 F.2d at 1329. A curative jury instruction is a very practical and useful way, in many circumstances, for the trial court to have an immediate opportunity to correct its own perceived errors before it is too late. “Unring the bell” is a good analogy which can save a lot of words in making the point. That phrase originated, as far as we can find, in Sandez v. United States, 239 F.2d 239, 248 (9th Cir.1956), and was elaborated on in Dunn v. United States, 307 F.2d 883, 886 (5th Cir.1962), which added other pertinent analogies. “After the thrust of the saber it is difficult to forget the wound,” was another, and then the most colorful one of all, “If you throw a skunk into the jury box, you can’t instruct the jury not to smell it.” Dunn, 307 F.2d at 886. In the present case there was no skunk thrown in the jury box. As also mentioned in Dunn, “Trials are rarely, if ever, perfect, but gross imperfections should not go unnoticed.” Id. We find no gross imperfections which would overpower the district court’s instruction to the jury to disregard Lowis’ statement. Next, the defendant claims that the district court erred in admitting the evidence of the large amount of money that was found hidden in Holmes’ truck when it was searched pursuant to a warrant. In addition, the defendant argues that the admission of the Holiday Inn records concerning Holmes’ previous monthly trips was erroneous. Both the money and the hotel records were tendered under Federal Rule of Evidence 404(b) as proof of the defendant’s motive, intent, knowledge, and plan. The money seized when Holmes was traveling in the general direction of the defendant’s residence and the hotel records reflecting ongoing contact between Holmes and the defendant were relevant as part of the prior acts evidence. The court gave the jury a limiting instruction adequate to confine the “other acts evidence” to its limited purposes. That was sufficient. There was no abuse of discretion resulting in reversible error. The district court also admitted the testimony of a special agent who explained to the jury the process of manufacturing methamphetamine and amphetamine. The defendant labels this evidence irrelevant as the defendant had not been charged with manufacturing drugs. The defendant was charged with possessing amphetamine and marijuana with the intent to distribute, whereas the prior acts testimony related only to methamphetamine. The special agent’s testimony explained that amphetamine and methamphetamine are produced by a chemical process and that ephedrine is one of the chemicals used to produce both drugs. The agent explained that methamphetamine and amphetamine have an identical appearance as the only difference is chemi cal. Therefore, a person may not know whether the substance is one or the other. The testimony appears to be merely an effort by the government to educate and help the jury generally understand about the substances involved in the context of this case. Cf. Whitley v. Seibel, 676 F.2d 245, 251 (7th Cir.1982). The government likely could have made its case with less jury education and just left the jury wondering, but we see no error. The last specific evidentiary error charged by the defendant was the admission of evidence concerning the small amount of methamphetamine and marijuana found in the purse of Brenda Holmes when she consented to its search. Even if we assume that to be error, it could not, in the context of the other evidence, prejudice the defendant and could not affect any of his substantial rights; it was harmless error. Fed.R.Crim.P. 52(a). That bit of purse evidence could not have substantially or adversely affected the jury’s verdict. See United States v. Moore, 115 F.3d 1348, 1358 (7th Cir.1997). There was no abuse of discretion by the trial judge and thus no reversible error. Sufficiency of Evidence Defendant argues that the government did not produce enough evidence of guilt to permit a rational jury to find the defendant guilty of the charges of possession of amphetamine and marijuana with intent to distribute. In part, the government’s evidence included the seized drugs, a scale, and papers denoting apparent drug sales, all recovered during the search of defendant’s house. The defendant’s involvement with Earl Holmes showed where defendant’s drugs had come from. The records, scale, the supply of baggies, and the amount of drugs in his possession, along with his other actions, showed defendant’s intent not merely to possess the drugs for personal use but to distribute. Under the Pribble standard, the defendant failed to show that no rational trier of fact could have found that the evidence presented by the government proved the elements of the crime beyond a reasonable doubt. See Pribble, 127 F.3d at 590. If there remained any doubt about Lowis’ guilt as charged, it could not be a reasonable doubt. The district judge was well aware of the possibility of this trial slipping into a conspiracy trial, which it was not. He guarded against it as well as any trial judge could and avoided error. We find no reversible error and therefore affirm the defendant’s conviction. . Lowis was sentenced on July 6, 1998 to a term of 168 months incarceration to be fol lowed by three years supervised release. The sentence is not contested on appeal.
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11,625,094
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MURPHY, Circuit Judge. Larry and Patricia Bergman, husband and wife, brought this tax refund suit against the United States to recover certain amounts they paid for the 1990 tax year because of a disallowed deduction for operating losses of one of several corporations owned or controlled by Larry Bergman. The district court granted their motion for summary judgment, and the United States appeals. We reverse and remand. I. During 1990 Larry Bergman was the president and owner of three S corporations: Advanced Flex, Inc. (AFI), AF2, Inc. (AF2), and AF3, Inc. (AF3). Each corporation had its own manufacturing plant at a separate site and its own employees. AFI was started in 1976, and Bergman incorporated AF2 in 1984. These two companies manufactured rigid multilayer printed circuit boards, and both had been profitable in most years. AFI focused on medium-to-large quantity production runs while AF2 specialized in smaller or more experimental orders. AF3 was established in 1989, primarily with assets purchased from Honeywell. AF3 manufactured flexible printed circuit boards and was never profitable. Its revenues in 1990 did not cover costs, and it sustained a loss of $1,512,917 for the year. AF3 received a number of cash infusions from Bergman and from AF2. Bergman made an initial capital contribution of $20,-000 to AF3 in November 1989, and later that month lent it $5000. In December 1989 he advanced $50,000 to the corporation, and he also loaned it an additional $150,000 during February and March of 1990. Bergman drew on a $200,000 personal line of credit at Marquette Bank to finance most of these advances. AF2 also made cash advances to AF3 during 1990 and received notes in return. The loans from AF2 to AF3 totaled $1,690,000 by December 20, 1990, and unpaid interest accrued on them. Near the end of 1990, Bergman was advised that he would not be able to deduct all of AF3’s losses on his personal income tax return because his basis in the corporation was insufficient. Under the Internal Revenue Code a taxpayer can only increase his basis in an S corporation by adding capital or loaning money to it. I.R.C. § 1366(d). The $1,690,000 debt AF3 owed to AF2 did not affect Bergman’s basis in AF3 because it did not run directly to him. In order to increase his personal basis in AF3, Bergman arranged a series of transactions on December 20, 1990 to restructure the debt the corporation owed AF2. First, AF3 issued checks totaling $1,690,000 to AF2 to repay the loans it had made during 1990. Next, AF2 loaned Bergman the same amount, issuing him checks for $780,000 and $910,000’ and receiving notes from him in return. Finally, Bergman wrote checks to AF3 for $780,-000 and $910,000 and it issued notes of indebtedness to him. Thus, when all the transactions were concluded, AF3 owed the $1,690,000 debt to Bergman instead of to AF2, and the Bergmans deducted this amount as an operating loss on their 1990 tax return. All of the December 20 checks were drawn on accounts maintained at Marquette Bank by Bergman and the two corporations. The funds cleared simultaneously during that day’s account reconciliation, and at the end of the day the same amount of funds was in each account as at the beginning of the day. AF3’s books reflected its indebtedness to Bergman, and interest was accrued on the loan but not paid. Interest was also accrued on the AF2 loans and was eventually paid off in full in 1992. AF3 continued to face financial troubles during 1991. Bergman made some additional loans to it during the course of that year, and then on December 31 he contributed to AF3’s capital several notes the corporation had given him, including the $780,000 and $910,000 notes of December 20, 1990. Also on December 31, 1991 Bergman used a $200,000 distribution he received from AF2 to pay back to the company approximately one year’s worth of interest on the loans he had received from it. Bergman executed a major corporate restructuring during 1992, and sometime during that year the Internal Revenue Service (IRS) began to examine the December 20, 1990 transactions more closely. On July 1,1992 Bergman consolidated his three corporations into one and paid off several outstanding debts. AF3 borrowed money from AFI to pay Bergman interest of $287,813 on its outstanding debts. AFI paid a $2,533,387 dividend to Bergman who in turn repaid AF2 $2,768,507.01 in loans and interest. This transaction settled all amounts owed on the notes for $780,000 and $910,000 given on December 20, 1990. AF3, which had never become profitable, was dissolved after its assets were transferred to AFI in return for AFI’s assumption of its liabilities. In addition, AF2 was merged into AFI, creating a single S corporation for accounting and tax purposes. Following the restructuring, AFI continued to operate the businesses and plants formerly owned by AF2 and AF3, but in 1996 the assets which had belonged to AF3 were sold. The Bergmans deducted operating losses of $1,512,917 for AF3 on their 1990 personal income tax return. The IRS disallowed most of this deduction in its 1992 audit on the theory that the December 20 transactions had not increased Bergman’s basis in AF3 and the couple was therefore not entitled to deduct the. full amount. Additional tax of $378,360 plus $168,446 in interest was assessed. The auditor reasoned that Bergman had made no actual economic outlay during the December transactions and they thus could not have increased his basis in AF3. The auditor requested technical assistance, and the national office of the IRS issued a technical advice memorandum which concluded that under the economic outlay doctrine Bergman’s basis had not been increased. The Bergmans paid the tax and interest due, and then filed an administrative claim for a refund. After six months elapsed with no action, they filed suit in the district court to compel a refund in accordance with I.R.C. §§ 6231(a)(1) and 7422. After discovery and briefing, they moved for summary judgment. The government argued that the December 20 transactions had no economic substance as there had been no actual outlay of Bergman’s funds. It also argued that summary judgment would be improper because evidence had been presented sufficient for a reasonable factfinder to infer that the loans had not been intended to be repaid and thus were not genuine. The district court concluded that undisputed facts established that the December 20, 1990 transactions increased Bergman’s basis in AFB and that the government had not presented facts to show the transactions were anything other than valid loans. It cited in support Gilday v. Commissioner, 43 T.C.M. (CCH) 1295 (1982) (shareholders acquired basis in their S corporation by restructuring a bank loan to the corporation), and it reasoned that the economic outlay doctrine was a “guaranty” doctrine inapplicable to a “loan” case and that the government’s reliance on Underwood v. Commissioner, 535 F.2d 309 (5th Cir.1976), was therefore misplaced. The court granted the Bergmans’ motion and ordered the government to refund to them income taxes and interest paid for 1990 after recalculating their tax liability based upon a tax basis in AF3 increased by the $1,690,000 loan. The government appeals from the judgment and argues the court should find that Bergman’s basis was not increased as a matter of law and that it is entitled to judgment or remand the case for further proceedings. It asserts that genuine issues of material fact prevent summary judgment for the Bergmans and that questions remain whether the December 20 transactions were genuine and whether they had sufficient economic substance to increase Bergman’s basis in AF3. The taxpayers respond that undisputed facts establish that as a matter of law Bergman’s December 20 checks to AF3 increased his basis in the corporation. II. Summary judgment is reviewed de novo and is only proper if, viewing the evidence in the light most favorable to the non-moving party, there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). An issue is material if it could affect the outcome of the case under the applicable substantive law, and a genuine issue is raised when the evidence presented in the district court is “such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). All inferences and credibility determinations must be made in favor of the non-moving party. Id. at 255, 106 S.Ct. 2505; Lundell Mfg. Co. v. American Broad. Cos., 98 F.3d 351, 358 n. 2 (8th Cir.1996). Subchapter S of the Internal Revenue Code provides that a small business may choose to have its profits and losses allocated pro rata to its shareholders and reported on their individual income tax returns rather than pay corporate income tax. I.R.C. § 1366(a). Corporations making elections under this subchapter essentially function as “pass-through” entities for tax purposes; however, S corporation losses may only be deducted to the extent a shareholder has basis in the corporation. I.R.C. § 1366(d). This limitation prevents a shareholder from deducting more than he has invested in the corporation. See S.Rep. No. 85-1983 (1958), reprinted in 1958 U.S.C.C.A.N. 4791, 5008. Basis in an S corporation may be acquired either by contributing capital or directly lending funds to the company. I.R.C. § 1366. No basis is created for a shareholder, however, when funds are advanced to an S corporation by a separate entity, even one closely related to the shareholder. Golden v. Commissioner, 61 T.C. 343, 1973 WL 2529 (1973) (partnership); Prashker v. Commissioner, 59 T.C. 172, 1972 WL 2512 (1972) (estate); Burnstein v. Commissioner, 47 T.C.M. (CCH) 1100 (1984) (S corporation). The parties agree that AF3 was an S corporation with losses in excess of $1.5 million in 1990 and that the loans which AF2 had made to AF3 did not increase Bergman’s basis in AF3, but the key question is whether the December 20 loan restructuring did increase his basis. The government argues that the December 20 transactions did not create basis because they did not have any real economic consequences and did not involve an actual outlay of Bergman’s funds. At a minimum, it argues, there are real factual disputes regarding whether the loans from AF2 to Bergman and from him to AF3 were genuine, that is whether or not at the time they were made the parties intended to enforce them. The taxpayers respond that summary judgment was properly granted because undisputed facts show that Bergman loaned $1.69 million to AF3 and thus increased his basis in the corporation. In their view, the $1,690,000 loaned by AF2 to AF3 earlier in 1990 was actually Bergman’s money and the December 20 transactions merely corrected a mistake in the way the loan had been originally structured. The original loans from AF2 to AF3 were in substance loans from Bergman to AF3 because he wholly owned AF2 and it was actually his money that was placed at risk. They acknowledge that basis in AF3 was not created for Bergman when the original loan from AF2 to AF3 was made, but argue that this was only because the transaction did not comply with the form requirements of § 1366. After the restructuring, the loans ran directly from Bergman to AF3 so the form requirements were satisfied and additional basis in AF3 had been created for Bergman. They further argue that the economic outlay doctrine is not an obstacle to their recovery because Bergman made an actual payment of $1,690,000 to AF3. As a general rule a transaction must have a purpose, substance, or utility beyond creating a tax deduction for it to have that tax effect. Knetsch v. United States, 364 U.S. 361, 365-67, 81 S.Ct. 132, 5 L.Ed.2d 128 (1960); Gregory v. Helvering, 293 U.S. 465, 469-70, 55 S.Ct. 266, 79 L.Ed. 596 (1935). Tax minimization is not an improper objective of corporate management, but transactions may be disregarded if they are not actually what they are claimed to be. Haberman Farms Inc. v. United States, 305 F.2d 787, 791 (8th Cir.1962). In line with this general rule, a stockholder must make an actual economic outlay to increase his basis in an S corporation. Reser v. Commissioner, 112 F.3d 1258, 1264 (5th Cir.1997); see also Selfe v. United States, 778 F.2d 769, 772 (11th Cir.1985); Underwood v. Commissioner, 535 F.2d 309 (5th Cir.1976); Hitchins v. Commissioner, 103 T.C. 711, 715, 1994 WL 711926 (1994). A taxpayer claiming a deduction must show it was based on “ ‘some transaction which when fully consummated left the taxpayer poorer in a material sense.’ ” Perry v. Commissioner, 54 T.C. 1293, 1296, 1970 WL 2283 (1970), aff'd, 1971 WL 2651 (8th Cir.) (citation omitted). The economic outlay doctrine does not apply only to loan guarantees, but it has been used to explain that a shareholder who guarantees a bank loan to an S corporation does not create additional basis because he is only secondarily and conditionally liable. See Putnam v. Commissioner, 352 U.S. 82, 85, 77 S.Ct. 175, 1 L.Ed.2d 144 (1956); Uri v. Commissioner, 949 F.2d 371, 373-74 (10th Cir.1991); Brown v. Commissioner, 706 F.2d 755, 757 (6th Cir.1983). But see Selfe v. United States, 778 F.2d 769 (11th Cir.1985). The principle underlying the doctrine extends beyond such circumstances to transactions which purport to be direct loans. See, e.g., Underwood, 535 F.2d 309 (no basis created by an exchange of notes rearranging loan of funds from a C corporation to an S corporation). Transactions which are purported to create loans from shareholders to S corporations do not create basis if there has been no actual outlay of the shareholder’s funds. See Reser v. Commissioner, 112 F.3d 1258, 1264 (5th Cir.1997) (“It is well established that a shareholder cannot increase his basis in his S corporation stock without making a corresponding economic outlay.”); see also Wilson v. Commissioner, 62 T.C.M. (CCH) 1122, 1991 WL 220399 (1991); Shebester v. Commissioner, 53 T.C.M. (CCH) 824, 1987 WL 40297 (1987); Burnstein v. Commissioner, 47 T.C.M. (CCH) 1100, 1984 WL 15384 (1984). It is possible for a loan made as part of a loan restructuring to create additional basis under § 1366(d) since any genuine increase in indebtedness adds basis. For example, basis was created when a shareholder, who had previously only guaranteed a loan to an S corporation, borrowed funds in an arm’s length transaction from a bank and then loaned them to the corporation. Gilday v. Commissioner, 42 T.C.M. (CCH) 1295 (1985). The involvement of an independent third party lender was critical to the result because there is no question that a lender such as a bank intends to force repayment, truly placing the shareholder’s money at risk. When all of the entities involved in a transaction are owned by a single individual, however, it may be unclear whether the shareholder or the corporation is placed at risk. Cf. Underwood v. Commissioner, 535 F.2d 309, 312 (5th Cir.1976). The rationale of the cases has placed “a heavy burden on shareholders who seek to rearrange the indebtédness of related closely held S corporations.” Bhatia v. Commissioner, 72 T.C.M. (CCH) 696, 1996 WL 537423 (1996). The existence of a close relationship between the parties to the transaction “is not necessarily fatal if other elements are present which clearly establish the bona fides of the transactions and their economic impact.” Id. The Fifth Circuit was faced with a factual situation similar to this case in Underwood v. Commissioner, 535 F.2d 309 (5th Cir.1976). In Underwood, a transaction restructured a loan originally made from a C corporation owned by the taxpayers to an S corporation which also belonged to them. The S corporation first surrendered $110,000 worth of the C corporation’s notes and marked them paid. The taxpayers then gave the S corporation their personal demand note for $110,000 and they received from the C corporation a demand note for the same amount. The Fifth Circuit held that no basis had been created in the taxpayers because it was not clear that they would ever have had to repay the loan to the C corporation. Until they actually paid the debt, they could not be said to have made an additional investment that would increase their adjusted basis. Id. at 312. The fact that no new funds were actually advanced was further evidence that the loans were not genuine. Id. Other courts have similarly emphasized that a loan to an S corporation does not create basis in taxpayers when it is not clear that their money is in fact at risk. Brown v. Commissioner, 706 F.2d 755, 756-57 (6th Cir.1983); Hafiz v. Commis sioner, 75 T.C.M. (CCH) 1982, 1998 WL 113926 (1998). On the taxpayers’ motion for summary judgment, the facts and the inferences from them must be viewed in favor of the government. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When the undisputed facts are viewed in favor of the government, it is not clear that the loans created on December 20 were genuine. Although Bergman ultimately repaid the loans to him from AF2, the evidence construed in favor of the government does not show that he intended to do so at the time of the transaction. Bergman testified in his deposition that he could not recall if any collateral secured the loans and that he never intended to enforce his loan to AF3 by foreclosing on any collateral in the event of a default. The only actual economic outlay may have been the original loans from AF2 to AF3 since the subsequent transactions could be viewed as merely a series of offsetting entries among bank accounts held in the same bank by entities controlled by Bergman. On the Bergmans’ motion for summary judgment, it cannot be held that Bergman’s actual indebtedness was increased. When the evidence is viewed in the light most favorable to the government, material issues remain whether on December 20, 1990 Bergman intended to repay the loan to AF2, and whether he gave money to AF3 on that day which made him poorer in a material sense. On this record summary judgment should not have been granted to the taxpayers. Accordingly, the judgment is reversed and the case is remanded to the district court for further proceedings. . Bergman owned all of the voting stock of AF2 and AF3 and approximately 97.5 percent of the voting stock of AFI. It appears that his sons owned additional non-voting stock in AFI and AF2 but that there was no non-voting stock in AF3. . After the contribution to capital, AF3's remaining debt to Bergman was $214,761.67. . It is not clear exactly when the IRS investigation began, but there is a letter in the record from Bergman's accountant, dated June 16, 1992, responding to IRS queries regarding the December 20, 1990 transactions. . $1,358,288 of the deduction was disallowed. . A technical advice memorandum is a statement of the IRS position regarding a specific set of facts; it may not be cited as precedent. I.R.C. § 6110(b), (j)(3). .The Bergmans have suggested that the government has changed its argument on appeal, abandoning the position that there was no actual economic outlay and arguing instead that the December 20 transactions did not have any economic substance. These are not distinct theories, however, but rather the same argument presented at different levels of generality. Loan transactions, like all transactions, must have independent economic substance to confer tax benefits on the parties. See, e.g., Knetsch v. United States, 364 U.S. 361, 364-65, 81 S.Ct. 132, 5 L.Ed.2d 128 (1960). The tax benefits of creating indebtedness thus may be set aside if the taxpayer's economic situation has not actually changed. See, e.g., Drobny v. Commissioner, 86 T.C. 1326, 1346, 1986 WL 22150 (1986), Karme v. Commissioner, 73 T.C. 1163, 1186-87, 1980 WL 4447 (1980), aff'd, 673 F.2d 1062 (9th Cir.1982). Actual indebtedness is created only where there is an economically significant change in the taxpayer's wealth; in other words, there must be an actual economic outlay that leaves the taxpayer poorer in a material sense. See, e.g., Perry v. Commissioner, 54 T.C. 1293, 1295-96, 1970 WL 2283 (1970), aff'd, 1971 WL 2651 (8th Cir.). . I.R.C. § 1366(d)(1) provides that: The aggregate amount of losses and deductions taken into account by a shareholder under subsection (a) [allows shareholders to deduct their pro rata shares of an S corporation's loss] for any taxable year shall not exceed the sum of - (A) the adjusted basis of the shareholder's stock in the S corporation ... (B) the shareholder’s adjusted basis of any indebtedness of the S corporation to the shareholder ... Losses that cannot be deducted in one year may be carried over indefinitely. I.R.C. § 1366(c).
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11,626,088
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TASHIMA, Circuit Judge: Churchill County appealed to a Nevada state court the decision of the Nevada State Engineer, R. Michael Turnipseed, granting a water rights transfer application to the United States Fish and Wildlife Service. The United States District Court for the District of Nevada enjoined the state court proceeding because the state proceeding interfered with the district court’s exclusive jurisdiction to hear appeals regarding the water rights at issue, rights that had been originally adjudicated by the district court. Churchill County appeals, contending that the district court erred in issuing the injunction. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm. I. At the turn of this century, the Secretary of the Interior, acting pursuant to congressional authorization, withdrew from the public domain a large tract of land in western Nevada. This land became the Newlands Reclamation Project, a project diverting and storing water from the Truckee and Carson Rivers in a reservoir behind Lahontan Dam and distributing it downstream by means of canals for irrigation and related uses. See Nevada v. United States, 463 U.S. 110, 113-18, 103 S.Ct. 2906, 77 L.Ed.2d 509 (1983) (giving overview of history and geography of the Truckee River and Carson River basins). In 1913, the United States began quiet title proceedings in the United States District Court for the District of Nevada to adjudicate the water rights of all users, including the Newlands Reclamation Project, to the Truckee River. A final decree was entered in 1944, known as the Orr Ditch Decree. The United States brought a similar proceeding for the Carson River in the same federal court in 1925, which resulted in 1980 in the Alpine Decree. This appeal involves water rights owned by the United States, specifically, the United States Fish and Wildlife Service (“Fish and Wildlife Service”), in the New- lands Reclamation Project in Churchill County, Nevada. Applications to change the place of diversion or the manner or place of use of water rights adjudicated under these Decrees are directed in the first instance to the State Engineer of Nevada (“State Engineer”). See United States v. Orr Water Ditch Co., 914 F.2d 1302, 1311 (9th Cir.1990); United States v. Alpine Land & Reservoir Co., 697 F.2d 851, 860 (9th Cir.1983) (“Alpine I ”). •On April 4, 1996, the Fish and Wildlife Service filed two applications with the State Engineer to change the place and manner of use of the water rights it had purchased from other users and that had been adjudicated under the Alpine and Orr Ditch Decrees. Under the Fish and Wildlife Service’s application, the water was to be transferred from the Newlands Reclamation Project to the Lahontan Valley Wetlands and used for recreation, wildlife, and maintaining the wetlands. Churchill County filed a protest to each application with the State Engineer, asserting that the transfer of water would deplete Churchill County’s groundwater supply, harm its tax base, and create a dust hazard. On October 30,1996, the State Engineer conducted a public hearing and found that the transfer would result in little if any effect on the groundwater supply, negligible tax consequences, and no threat of a dust hazard. Accordingly, the State Engineer granted one of the Fish and Wildlife Service’s applications. In November 1996, Churchill County filed an appeal of the State Engineer’s ruling in the Third Judicial District Court of the State of Nevada. The State Engineer filed a motion to dismiss for lack of jurisdiction, which the court denied. The Nevada court narrowly construed the relevant federal court precedent, which held that the federal district court exercises appellate jurisdiction over decisions of the State Engineer that involve federally decreed water rights. The state court further held that Nevada Revised Statute § 533.450 applies only to water rights decrees entered by state courts. On August 11, 1997, the State Engineer filed a motion in the United States District Court for the District of Nevada asking the court to enjoin, pursuant to 28 U.S.C. §§ 1651 and 2283, further proceedings in the state court. The United States, in its capacity as plaintiff in the Alpine and Orr Ditch actions, filed a brief in support of the State Engineer’s motion. While the motion was pending, Churchill County filed a motion in the state court to enjoin the federal proceeding, which the state court granted. On September 17, 1997, in identical orders under the Alpine and Orr Ditch Decrees, the federal district court issued its own injunction. Churchill County contends that the district court erred in enjoining the state proceeding because the district court does not have exclusive jurisdiction over all of the State Engineer’s rulings regarding waters of the Carson and Truckee Rivers. According to Churchill County, the district court’s jurisdiction is limited to decisions that implicate federal interests in the oper ation of the Newlands Reclamation Project. Churchill County also argues that the district court improperly reviewed the decision of the Nevada state court. IL We review the existence of subject matter jurisdiction de novo. See Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1153 (9th Cir.1998). The question of whether the district court could enjoin the state court proceeding under the Anti-Injunction Act is also reviewed de novo. See Quackenbush v. Allstate Ins. Co., 121 F.3d 1372, 1377 (9th Cir.1997). However, the district court’s decision to issue an injunction that comes within an exception to the Act is reviewed for an abuse of discretion. See id. “A district court abuses its discretion when it rests its conclusions on clearly erroneous factual findings or on incorrect legal standards.” Id. III. A. JURISDICTION Churchill County argues that the district court did not have jurisdiction to enjoin the state court proceeding. We disagree. We conclude that the district court’s jurisdiction over disputes arising under the Alpine and Orr Ditch Decrees is both continuing and exclusive. 1. Continuing Jurisdiction We have consistently interpreted both the Alpine and Orr Ditch Decrees to provide for federal district court review of decisions of the State Engineer regarding applications to change the place of diversion or manner or place of use of water rights derived from the Alpine and Orr Ditch Decrees. The Alpine Decree expressly provides the district court with continuing jurisdiction over transfer applications: Applications for changes in the place of diversion, place of use or manner of use as to Nevada shall be directed to the State Engineer. Any person feeling himself aggrieved by any order or decision of the State Engineer on these matters may appeal that decision or order to this Court. (Emphasis added.) This jurisdictional arrangement has been repeatedly upheld. See United States v. Alpine Land & Reservoir Co., 878 F.2d 1217, 1219 n. 2 (9th Cir.1989) (“Alpine II”) (“Pursuant to the Alpine decree, the federal district court acts as an appellate court for decisions of the state Engineer.”); Alpine I, 697 F.2d at 858; United States v. Alpine Land & Reservoir Co., 919 F.Supp. 1470, 1474 (D.Nev.1996) (“Aqueduct I ”). We have also interpreted the Orr Ditch Decree as providing for continuing federal court jurisdiction over appeals from decisions of the State Engineer arising under that Decree. See Orr Water, 914 F.2d at 1308-09 & n. 8. For change applications, the Orr Ditch Decree instructs that [p]ersons whose rights are adjudicated hereby, their successors or assigns, shall be entitled to change in the manner provided by law the point of diversion and the place, means, manner or purpose of use of the waters to which they are so entitled or any part thereof, so far as they may do so without injury to the rights of other persons whose rights are fixed by this decree. (Emphasis added.) Although the Orr Ditch Decree does not expressly provide for federal district court review of the decisions of the State Engineer, we have interpreted Nevada law, which provides for jurisdiction of appeals from decisions of the State Engineer “in the court that entered the decree,” as providing for federal court review under the Orr Ditch Decree. Orr Water, 914 F.2d at 1309 n. 8 (quoting Nev.Rev.Stat. § 533.450(1)). “Nevada law thus supports the system adopted by the federal courts for appeals of Engineer decisions on federal-eourt-decreed water rights.” Id. We must determine whether the Fish and Wildlife Service’s transfer application comes within the ambit of the jurisdiction reserved in the Decrees. Churchill County argues that the transfer application does not because the jurisdiction retained by the Alpine Decree is “highly extraordinary” and limited to cases involving federal interests in the Newlands Reclamation Project. Even assuming, arguendo, that the transfer application at issue is unrelated to the United States’ interest in the Newlands Reclamation Project, we reject Churchill County’s construction of the Decrees as too narrow in light of this circuit’s precedent. Churchill County’s belief that federal court jurisdiction must be based on the existence of a federal interest stems from language in Alpine I and Alpine II. In particular, in Alpine I, this court stated that “[t]he United States is not concerned with the routine change application, but with the possibility that federal interests will be ignored by the Nevada State Engineer.” Alpine I, 697 F.2d at 858. The Alpine I court found that district court appellate jurisdiction over transfer applications combined with the United States’ ability to participate in proceedings before the State Engineer would “provide full vindication of the admitted federal interests in the operation of federal reclamation projects.” Id.; see also Alpine II, 878 F.2d at 1219 n. 2 (quoting the same language). Reasons for providing federal court jurisdiction, however, are not the same as prerequisites for jurisdiction. The Alpine I court addressed a dispute over whether applications for change in the place of diversion or manner or place of use should be directed to the State Engineer at all. The language cited above responds to a concern that federal interests might be ignored. The Alpine I court did not say that federal court jurisdiction would lie only when a federal interest is implicated. See also Aqueduct I, 919 F.Supp. at 1474 (stating broadly that “this Court acts as an appellate court for decisions of the State Engineer with regard to federally decreed water rights”). Churchill County also points to this court’s statement in Alpine II that district court appellate jurisdiction over the decisions of the State Engineer “is highly extraordinary.” Alpine II, 878 F.2d at 1219 n. 2. This language, however, does not mean that the district court may exercise jurisdiction only in rare instances. As evidenced by Alpine II’s citations to the cases that gave rise to the Rooker-Feld-man doctrine, District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983), and Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923), the Alpine II court was referring to the extraordinary nature of the district court’s appellate jurisdiction under the Alpine Decree in relation to the doctrine that district courts may not exercise appellate jurisdiction over state court rulings. The Alpine II court expressly noted that, in spite of its extraordinary nature, “[w]e specifically approved of this jurisdictional arrangement in [Alpine I ].” Alpine II, 878 F.2d at 1219 n. 2. Thus, we find that the transfer application at issue comes within the scope of jurisdiction intended by the Alpine and Orr Ditch Decrees. 2. Exclusive Jurisdiction Not only is the district court’s jurisdiction continuing, it is exclusive. The district court held that it had exclusive jurisdiction because the Alpine and Orr Ditch matters are in rem actions and the district court gained jurisdiction over the res first. We find the district court’s jurisdiction to be exclusive for two reasons. First, the district court implicitly retained exclusive jurisdiction in the Alpine and Orr Ditch Decrees. As discussed above, the Alpine Decree expressly reserves appellate jurisdiction over decisions of the State Engineer for the district court, and the Orr Ditch Decree has been similarly interpreted. Neither the Decrees nor the cases interpreting these Decrees mention concurrent jurisdiction with the Nevada state courts. Furthermore, to construe these Decrees so that the district court does not retain exclusive jurisdiction would render the retention of jurisdiction a nullity. We have explained, in the context of a settlement agreement, why retaining jurisdiction should be interpreted as retaining exclusive jurisdiction: The reason why exclusivity is inferred is that it would make no sense for the district court to retain jurisdiction to interpret and apply its own judgment to the future conduct contemplated by the judgment, yet have a state court construing what the federal court meant in the judgment. Such an arrangement would potentially frustrate the federal district court’s purpose. Flanagan v. Arnaiz, 143 F.3d 540, 545 (9th Cir.1998). The Flanagan court, of course, also noted that it did “not mean to exclude the possibility that in some circumstances, the words, context, or subsequent order of the federal court might show that retention of jurisdiction was not intended to be exclusive.” Id. In light of the fact, however, that the Alpine and Orr Ditch Decrees were complex and comprehensive water adjudications for which conflicting federal and state constructions would be entirely unworkable, the district court’s retention of jurisdiction was intended to be exclusive. Second, the district court’s jurisdiction is exclusive because its jurisdiction is best characterized as in rem jurisdiction. Churchill County does not dispute the well-established proposition that the first court to gain jurisdiction over a res exercises exclusive jurisdiction over an action involving that res. See, e.g., Kline v. Burke Constr. Co., 260 U.S. 226, 229, 43 S.Ct. 79, 67 L.Ed. 226 (1922); Bergeron v. Loeb, 100 Nev. 54, 675 P.2d 397, 400 (1984). [State and federal courts] do not belong to the same system, so far as their jurisdiction is concurrent; and although they co-exist in the same space, they are independent, and have no common superior. They exercise jurisdiction, it is true, within the same territory, but not in the same plane; and when one takes into its jurisdiction a specific thing, that res is as much withdrawn from the judicial power of the other, as if it had been carried physically into a different territorial sovereignty. To attempt to seize it by a foreign process is futile and void. Kline, 260 U.S. at 229-230, 43 S.Ct. 79 (quoting Covell v. Heyman, 111 U.S. 176, 182, 4 S.Ct. 355, 28 L.Ed. 390 (1884)) (internal quotation marks omitted). Instead, Churchill County contends that the Nevada state court had exclusive jurisdiction because it asserted jurisdiction over the res before the district court, and therefore, it was the district court that was undermining the jurisdiction of the state court. We are not persuaded. The actions that resulted in the Orr Ditch and Alpine Decrees are sufficiently analogous to in rem actions to provide the district court with exclusive jurisdiction. Nevada law treats water rights as real property. See In re Filippini, 66 Nev. 17, 202 P.2d 535, 537 (1949). Furthermore, the Supreme Court has “recognized that actions seeking the allocation of water essentially involve the disposition of property and are best conducted in unified proceedings.” Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 819, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) (treating the pending state court proceeding as an in rem action). The Supreme Court has noted that, although equitable actions to quiet title are technically in personam, actions, “water adjudications are more in the nature of in rem proceedings.” Nevada v. United States, 463 U.S. 110, 143—44, 103 S.Ct. 2906, 77 L.Ed.2d 509 (1983) (“everyone involved in Orr Ditch contemplated a comprehensive adjudication of water rights”); see also Alpine I, 697 F.2d at 853 (noting that “[tjhis litigation is a virtually comprehensive adjudication”) (internal quotation marks omitted) (citation omitted). The Nevada state court could not have exercised in rem jurisdiction first because the federal district court had already asserted jurisdiction over the water rights in question when it adjudicated the Alpine and Orr Ditch Decrees and because it continued to retain such jurisdiction. Therefore, because the district court retained exclusive jurisdiction and because the Decrees are properly analogized to in rem proceedings, the district court exercises exclusive jurisdiction over actions arising under these Decrees. B. PROPRIETY OF THE INJUNCTION Churchill County contends that the district court did not need to enjoin the state court proceeding to protect what jurisdiction it does have. We find that the district court did not abuse its discretion in doing so. 1. The Anti-Injunction Act The Anti-Injunction Act, 28 U.S.C. § 2283, prohibits federal courts from enjoining state court proceedings unless one of three exceptions applies: “A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” 28 U.S.C. § 2283 (1994). These three exceptions are to be construed narrowly, “resolv[ing] doubts in favor of letting the state action proceed.” Quackenbush, 121 F.3d at 1378; see also Atlantic Coast Line R.R. v. Brotherhood of Locomotive Eng’rs, 398 U.S. 281, 297, 90 S.Ct. 1739, 26 L.Ed.2d 234 (1970) (“Any doubts as to the propriety of a federal injunction against state court proceedings should be resolved in favor of permitting the state courts to proceed in an orderly fashion to finally determine the controversy.”). “[T]he exceptions [to the Anti-Injunction Act] should not be enlarged by loose statutory construction.” Id., 398 U.S. at 287, 90 S.Ct. 1739. The district court relied on the second exception that an injunction may issue “where necessary in aid of [the court’s] jurisdiction.” § 2283. The district court was correct to do so for two reasons. First, it has long been held that the first court to exercise jurisdiction over real property is entitled to enjoin proceedings in another court regarding that property. See, e.g., Kline, 260 U.S. at 229, 43 S.Ct. 79; Bergeron, 675 P.2d at 400. Kline, 260 U.S. at 229, 43 S.Ct. 79. Therefore, by definition, the state proceeding impairs the federal court’s jurisdiction over this matter. It is settled that where a federal court has first acquired jurisdiction of the subject-matter of a cause, it may enjoin the parties from proceeding in a state court of concurrent jurisdiction where the effect of the action would be to defeat or impair the jurisdiction of the federal court. Where the action is in rem the effect is to draw to the federal court the possession or control, actual or potential, of the res, and the exercise by the state court of jurisdiction over the same res necessarily impairs, and may defeat, the jurisdiction of the federal court already attached. Second, the “where necessary in aid of its jurisdiction” exception applies because the district court retained jurisdiction over the Orr Ditch and Alpine Decrees. In Flanagan, we held that the district court’s retention of jurisdiction in a settlement agreement was sufficient to support its injunction against proceedings in state court. See 143 F.3d at 545-46. “Where the district court expressly retains jurisdiction to enforce a settlement agreement, and to resolve disputes that may arise under it, litigation in state court would pose a significant risk of frustrating the district court’s jurisdiction over the consent judgment.” Id. at 545 (internal quotation marks omitted) (citation omitted). Because the retention of jurisdiction to enforce water rights adjudications raises similar concerns, we conclude that the Anti-Injunction Act does not bar a federal court injunction in this ease. 2. The Decision to Issue the Injunction Federal courts are empowered by the All Writs Act, 28 U.S.C. § 1651, to enjoin state court proceedings that interfere with federal judgments. See Keith v. Volpe, 118 F.3d 1386, 1390 (9th Cir.1997). As discussed above, the district court had exclusive jurisdiction over appeals from decisions of the State Engineer regarding water rights adjudicated under the Alpine and Orr Ditch Decrees; its decision to issue the injunction fits within the “necessary in aid of’ exception to the Anti-Injunction Act. In light of the foregoing, there are no grounds to conclude that the district court abused its discretion in enjoining the state court proceeding. “Although comity requires federal courts to exercise extreme caution in interfering with state litigation, federal courts have the power to do so when them jurisdiction is threatened.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1025 (9th Cir.1998). Moreover, Nevada has expressly provided that where a court decree governs water rights, a review of the State Engineer’s decisions “shall be initiated in the court that entered the decree.” Nev.Rev.Stat. § 533.450(1). C. DISTRICT COURT REVIEW OF STATE COURT INJUNCTION Finally, Churchill County argues that the district court’s order enjoining the Nevada state court proceeding amounted to direct federal district court review of a state court decision. Specifically, Churchill County objects to the district court’s ruling that the state court’s injunction is void for lack of jurisdiction and that the state court misinterpreted a state statute. Under 28 U.S.C. § 1257, the Supreme Court has jurisdiction to review certain state court decisions. Under the Rooker-Feldman doctrine, the lower federal courts do not have this authority. See Feldman, 460 U.S. at 476, 103 S.Ct. 1303; Rooker, 263 U.S. at 416, 44 S.Ct. 149. Churchill County is mistaken, however, in characterizing the district court’s actions as appellate review of a state court judgment. Although the district court opined that the state court had erred in interpreting a Nevada statute, the district court’s decision amounted to a determination that it had exclusive jurisdiction over the matter at issue and that it needed to protect its exclusive jurisdiction. That is, the district court’s decision rested on its own determination that it had exclusive jurisdiction, not on any error on the part of the state court in asserting jurisdiction. If Churchill County’s argument were to succeed, it would be impossible for a federal court to enjoin a state court proceeding, despite satisfying an exception to the Anti-Injunction Act, because the federal court would always be bound by the state court’s determination of jurisdiction. Moreover, as discussed above, this circuit has expressly upheld the admittedly “highly extraordinary” scheme of having the federal district court exercise appellate review of the State Engineer’s decisions in cases arising under the Alpine and Orr Ditch Decrees. Alpine II, 878 F.2d at 1219 n. 2. Because this scheme does not require federal court review of Nevada state court proceedings, it also does not implicate the Rooker-Feldman doctrine. Therefore, the district court did not run afoul of the Rooker-Feldman doctrine. IV. The district court has continuing and exclusive jurisdiction to hear appeals from decisions of the Nevada State Engineer involving water rights adjudicated under the Alpine and Orr Ditch Decrees. The injunction at issue in this case was necessary to protect the district court’s exclusive jurisdiction. Therefore, the district court did not abuse its discretion by enjoining the Nevada state court proceeding. Accordingly, the order of the district court is AFFIRMED. . As a result of the State Engineer's decision to grant one of its applications, the Fish and Wildlife Service withdrew its second application. . Section 533.450 provides that "on stream systems where a decree of court has been entered, the [appeal of the decision of the State Engineer] shall be initiated in the court that entered the decree.” Nev.Rev.Stat. § 533.450 (1997). . The injunction reads: THE COURT ORDERS that the Third Judicial District Court of Nevada’s Order enjoining State Engineer R. Michael Turnip-seed from proceeding in this action and enjoining this Court from proceeding in this action is hereby held to be VOID as being entered without jurisdiction and in derogation of this Court’s exclusive jurisdiction over the water rights at issue; ... The Court ENJOINS further proceedings in Case No. 23656, Department No. II, in the Third Judicial District Court of the State of Nevada in and for the County of Churchill. (Emphasis in original). . We express no view on this subject. . We also reject Churchill County's argument that the district court lacked jurisdiction because the State Engineer cannot satisfy the test for supplemental jurisdiction under 28 U.S.C. § 1367. Supplemental jurisdiction under § 1367 is distinct from the equitable doctrine of ancillary jurisdiction, which allows a court to adjudicate related claims “to manage its proceedings, vindicate its authority, and effectuate its decrees.” Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 380, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). The latter is aL work here. So long as the dispute in this case is related to the district court’s earlier Decrees, the district court retains jurisdiction to adjudicate the dispute. . The district court noted that Churchill County conceded that the federal district court was the first court to acquire jurisdiction over the water rights in question, a concession Churchill County disputes. The district court's reliance on this supposed concession did not control the result it reached, however, because the district court found that it had gained jurisdiction over the water rights at issue when the Orr Ditch and Alpine cases were first filed in federal court. Therefore, whether there was ever such a concession is irrelevant for purposes of this appeal. . Churchill County contends that the decision of Landi v. Phelps, 740 F.2d 710 (9th Cir.1984), which held that a federal court may not enjoin a state court proceeding merely because the federal court had exclusive jurisdiction over the matter, deprived the district court of authority to enjoin the state proceeding. See id. at 713. However, Landi involves neither an in ram proceeding nor a situation where the federal court retained jurisdiction. It is these factors that bring the instant case within the “when necessary in aid of its jurisdiction” exception. [I]f the District Court does have jurisdiction, it is not enough that the requested injunction is related to that jurisdiction, but it must be "necessary in aid of" that jurisdiction! ... [S]ome federal injunctive relief may be necessary to prevent a state court from so interfering with a federal court's consideration or disposition of a case as to seriously impair the federal court's flexibility and authority to decide that case. Atlantic Coast, 398 U.S. at 295, 90 S.Ct. 1739 (emphasis in original). . Because we agree with the district court that its injunction was proper under the "necessary in aid of its jurisdiction” exception, we offer no opinion on whether any other exceptions to the Anti-Injunction Act might apply. . In fact, the district court’s disagreement with the Nevada state court's interpretation of state law was ultimately irrelevant to the district court’s decision because the district court found that a state statute cannot strip a federal court of exclusive jurisdiction over an in ram action.
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11,619,968
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OPINION OF THE COURT GREENBERG, Circuit Judge. I. INTRODUCTION A jury convicted appellant Clinton Duf-fus of certain drug-related offenses including conspiracy to distribute cocaine and cocaine base, RICO, possession of cocaine with intent to distribute, and money laundering. The district court on November 26, 1991, sentenced Duffus to concurrent sentences so that his effective custodial term was 400 months. Duffus appealed but we affirmed on October 29, 1992, by judgment order. See United States v. Duffus, 980 F.2d 725 (3d Cir.1992) (table). Duffus did not file a petition for certiorari. In March 1997, Duffus, who was pro se throughout the proceedings under 28 U.S.C. § 2255 in the district court involved in this appeal, filed a motion seeking an extension of time to file a motion to vacate, set aside, or correct sentence pursuant to section 2255. While the Antiterrorism and Effective Death Penalty Act of 1996 (“AEDPA”) provides “[a] 1-year period of limitation to a motion under” section 2255 measured from the latest of several events, the Department of Justice has taken the position that prisoners were entitled to a grace period after AEDPA’s effective date of April 24, 1996, to file section 2255 motions. Furthermore, we have held that federal prisoners were entitled to a full one-year period after April 24, 1996, to file section 2255 motions so that the AEDPA would not be “impermissibly retroactive.” See Burns v. Morton, 134 F.3d 109, 111-12 (3d Cir.1998). Without that grace period, if Duffus had filed a motion for relief under section 2255 in March 1997, it would have been untimely as it is clear that in his case the one year would have been measured from the date when we affirmed his conviction on direct appeal and the period for seeking a writ of certiorari expired. See Kapral v. United States, 166 F.3d 565, 577 (3d Cir.1999). Thus, the effect of Bums v. Morton was to make Duffus’s conviction and all other convictions in this circuit otherwise final before the effective date of the AEDPA, April 24, 1996, final on that day for purposes of calculating the limitations period under section 2255. The district court, by order dated April 18, 1997, denied Duffus’s motion for an extension of time to file a motion for relief under section 2255, as it did not have the authority to extend the AEDPA statute of limitations. Nevertheless, the court indicated that Duffus could file his section 2255 motion “and request leave to supplement it within 30 or 60 days.” On April 23, 1997, Duffus filed a timely section 2255 motion within the grace period established by Burns v. Morton. In his motion Duffus asserted that his attorney had been ineffective because the attorney failed to contend on appeal that the evidence was insufficient to convict Duffus of money laundering and because the attorney failed to object at sentencing to the district court’s use of the sentencing guide-hues in effect at the time of the sentencing rather than those in effect in April 1988, when Duffus allegedly withdrew from the conspiracy. Duffus also asserted that the district court wrongfully attributed more than 50 kilograms of cocaine to him in calculating his sentence. The government filed a response urging that the “motion should be denied in its entirety” on the grounds that it was procedurally defective and lacking in merit. Thereafter on October 28, 1997, more than six months after Duffus filed his section 2255 motion and five years after we affirmed his conviction on his direct appeal, Duffus moved to amend the motion. His proposed amendment included various bases for relief and, as germane here, urged that his trial attorney had been ineffective for failing to move to suppress evidence. Duffus explained in his brief supporting his motion to amend, that when the Philadelphia police stopped him on December 31, 1987, while he was driving a motor vehicle, they said that they did so because he had run a stop sign. They also stated that he ran away and dropped a sock containing nine ounces of cocaine which they recovered. Duffus indicated that when he found out that he was being charged for an offense arising out of his possession of this cocaine he advised his attorney that the police had stopped him for no reason and then found the cocaine inside his vehicle. Nevertheless, his attorney did not move to suppress the cocaine as evidence and he did not even investigate Duffus’s assertion. Duf-fus argued that if his attorney had moved to suppress the evidence there was a reasonable probability that in evaluating the credibility of the witnesses the court would have believed him and granted the motion to suppress. He asserted that suppression of the evidence would have led to his ac quittal on the charge of possession of cocaine with intent to distribute. The court referred Duffus’s section 2255 motion, including the motion to amend, to a magistrate judge who filed a report and recommendation on April 6, 1998, recommending that the district court deny both Duffus’s original motion and his motion to amend without an evidentiary hearing. On May 19,1998, the district court entered an order approving and adopting the report and recommendation and denying the section 2255 motion, and thus the motion to amend as well, without an evidentiary hearing. Duffus then moved for reconsideration but the district court denied that motion on July 7,1998. Duffus then appealed from the July 7, 1998 order, and filed a motion asking the district court to issue a certificate of appealability. The district court denied the motion by order entered August 20, 1998. Duffus also filed a request for a certificate of appealability with this court which a motions panel granted on August 20, 1998, on three issues, the third being Duffus’s allegation “that the district court erred in denying [his] motion to amend his section 2255 motion.” On August 28, 1998, the government filed a motion seeking reconsideration of the order granting the certificate of appealability which the motions panel referred to the merits panel. On this appeal, Duffus argues only that the magistrate judge and the district court abused their discretion when they respectively recommended that the amendment not be allowed and denied the motion to amend. This appeal, however, can be only from the district court’s order. The particular argument that Duffus sought to make in his motion to amend, which he presses on this appeal, is that his attorney rendered ineffective assistance by failing to move to suppress the nine ounces of cocaine seized when the police arrested him on December 31,1987. II. DISCUSSION The magistrate judge recommended that the district court deny the motion to amend because he concluded that Duffus’s delay in presenting the issues in the amendment was unwarranted. He pointed out that Duffus waited six years before he filed the section 2255 motion and that he had the advantage of the one-year grace period. Moreover, there was nothing in the motion to amend that could not have been included in the original motion. The magistrate judge also noted that the district court indicated that it would allow Duffus additional time, 30 or 60 days, to move to supplement his motion. Yet, Duffus filed the motion to amend well after the court’s deadline. Finally, the magistrate judge said that the motion to amend sought to advance issues that had “no merit.” The district court entered its order approving and adopting the report and recommendation and denying the motion to amend without opinion. The Federal Rules of Civil Procedure apply to motions to amend habeas corpus motions. See Riley v. Taylor, 62 F.3d 86, 89 (3d Cir.1995). We review a district court order denying a motion to amend for an abuse of discretion. See id. Rule 15(a) provides that a party may amend his pleading once as a matter of course at any time before a responsive pleading is filed. In this case, however, the government filed a responsive pleading before Duffus sought to amend his motion and it opposed the amendment. Therefore, in issue here is the portion of Rule 15(a) providing that when amendment as a matter of course is not allowed, “a party may amend the party’s pleadings only by leave of court [which] leave shall be freely given when justice so requires.” The Supreme Court has indicated that in the absence of evidence of “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowing the amendment [or] futility of amendment,” leave to amend should be freely given. Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). Furthermore, we have indicated that ordinarily delay alone is not a basis to deny a motion to amend. See, e.g., Riley, 62 F.3d at 91; Cornell & Co., Inc. v. Occupational Safety and Health Remeto Comm’n, 573 F.2d 820, 823 (3d Cir.1978). Thus, at first glance it might be thought that Duffus makes a strong showing that the district court abused its discretion in.denying leave to amend unless the amendment would have been futile. There is, however, a special situation here. Under the AEDPA statute of limitations, with its recognized grace period, Duffus had until April 23, 1997, to file his motion because 28 U.S.C. § 2255 provides that motions must be filed within one year from “the date on which the judgment of conviction becomes final.” While section 2255 has three additional provisions providing for later dates from which the statute runs, none is implicated here. Thus, in the absence of the one-year grace period, the AEDPA would have barred Duf-fus’s motion when the AEDPA became effective. As we have explained, however, because of the grace period, Duffus’s conviction for purposes of the section 2255 limitations period became final on April 24, 1996. Accordingly, if the district court had granted the motion to amend, filed on October 28, 1997, it would have frustrated the intent of Congress that claims under 28 U.S.C. § 2255 be advanced within one year after a judgment of conviction becomes final unless any of the other circumstances in 28 U.S.C. § 2255 are applicable. Therefore, we cannot possibly say that the court abused its discretion when it denied the motion to amend. We do not go so far as to suggest that the district court could not have permitted any amendment of the motion after April 23, 1997. Certainly the court could have permitted an amendment to clarify a claim initially made. Here, however, while Duf-fus asserted in his initial motion that his attorney had been ineffective, the particular claim with respect to failing to move to suppress evidence was completely new. Thus, the amendment could not be deemed timely under the “relation back” provisions of Fed.R.Civ.P. 15(c). As the Court of Appeals for the Eighth Circuit recently explained in United States v. Craycraft, 167 F.3d 451, 457 (8th Cir.1999), “If the ineffective conduct alleged by Craycraft in his first petition cannot be said to have arisen out of the same set of facts as his amended claim, his amendment cannot relate back and his claim must be time-barred since it was filed after the statutory period of limitation.” We find Craycraft to be a compelling precedent. In these circumstances and considering the April 23, 1997 deadline, the district court was correctly circumspect in considering an application to amend. Indeed, the court was generous, perhaps to a fault, in indicating that it would consider a request made by Duffus, within 30 or 60 days after he filed his original motion, to supplement the motion. We reiterate that if the court permitted the amendment it would have acted contrary to the policy of the AEDPA, which requires courts to measure the running of the limitations periods from the date on which the judgment of conviction becomes final. While the statute will run from “the date on which the facts supporting the claim or claims presented could have been discovered through the exercises of due diligence” if that date follows the date the judgment of conviction becomes final, Duf-fus was aware of the facts to support his claim before his conviction became final. In these circumstances, an amendment to introduce the new theory into the case that his trial attorney had been ineffective for failing to move to suppress the cocaine, is simply not acceptable. In reaching our result we recognize that the law governing habeas corpus motions can be quite technical and that it may be difficult for even an attorney to grasp all of its nuances. Surely, then, a court could not expect a pro se litigant such as Duffus to understand all the aspects of those proceedings. Duffus, however, raised an issue that was not technical and that he identified before his trial even began. Moreover, he does not claim that he thought that his trial attorney in fact moved to suppress. Therefore, Duffus had every reason to include an argument that his attorney had been ineffective by failing to move to suppress evidence in his initial section 2255 motion. Accordingly, the court' did not abuse its discretion in denying the motion to amend. See Parker v. Champion, 148 F.3d 1219, 1222 (10th Cir.1998), cert. denied, — U.S. -, 119 S.Ct. 1053, 143 L.Ed.2d 58 (1999). We make one final point. We do not suggest that the government would have been prejudiced by Duffus’s delay if the court granted his motion to amend. In fact, the magistrate judge recommended rejection on the merits of all of Duffus’s contentions in his initial section 2255 motion, and clearly he similarly would have recommended that the court reject the ineffective assistance of counsel argument if Duffus had included it in his initial motion. After all, the magistrate judge said the issues Duffus raised in the proposed amendment had “no merit.” Furthermore, we cannot say that the passage of time, either from the conviction date until the time of the initial section 2255 motion, or from the time of that motion until Duf-fus sought to amend, would have impaired the government’s ability to prosecute this case if the district court had ordered a new trial. We do not predicate our result, however, on a finding of prejudice. Instead, we have reached our conclusion in recognition of the principle that usually statutes of limitations operate without taking prejudice from delay into account. A prisoner should not be able to assert a claim otherwise barred by the statute of limitations merely because he asserted a separate claim within the limitations period. III. CONCLUSION For the foregoing reasons we will affirm the order of July 7,1998. . Section 2255 provides in relevant part: A 1-year period of limitation shall apply to a motion under this section. The limitation period shall run from the latest of— (1) the date on which the judgment of conviction becomes final; (2) the date on which the impediment to making a motion created by governmental action in violation of the Constitution or laws of the United States is removed, if the movant was prevented from making a motion by such governmental action; (3) the date on which the right asserted was initially recognized by the Supreme Court, if that right has been newly recognized by the Supreme Court and made retroactively applicable to cases on collateral review; or (4) the date on which the facts supporting the claim or claims presented could have been discovered through the exercise of due diligence. . The government also contended that the petition was late because it was docketed in the district court on April 29, 1997. The court, however, regarded it as timely because Duffus placed it in the prison mail box on April 23, 1997. See Burns v. Morton, 134 F.3d at 112—13. The government does not challenge this decision on this appeal. . Inasmuch as the district court denied a certificate of appealability, Duffus’s appeal could not go beyond those three issues. See United States v. Eyer, 113 F.3d 470, 474 (3d Cir.1997). . The amendment raised other issues but Duf-fus does not advance them on this appeal. . In our discussion we are proceeding on the understanding that none of the statutory bases for extending the statute of limitations beyond one year after the judgment of conviction is applicable here. Obviously we are not concerned here with an amendment of a section 2255 motion lo advance a claim that is timely under that section. . Duffus cannot claim reasonably that the court misled him by indicating that it would entertain a motion to supplement the original motion as the court limited the period to file the motion to 30 or 60 days after Duffus filed his first motion, and Duffus took six months to seek to amend.
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7,395,120
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ORDER SHOOB, District Judge. This action was filed in 1986 to challenge the 1983 Amendment of a Farmers Home Administration (“FmHA”) regulation. The Amendment abolished a tenant’s right to an administrative hearing prior to eviction from FmHA-financed housing. Plaintiffs allege that the agency eliminated the grievance and appeals procedure in violation of the Administrative Procedure Act (“APA”). The action also challenges the failure of local defendants to provide grievance hearings to plaintiffs and contests the amount of late fees charged to tenants. Several motions are now pending before the Court. Cross-motions for summary judgment by plaintiffs and federal defendants are pending, as well as plaintiffs’ request for attorney fees in connection with their second motion to compel and plaintiffs’ motion for Rule 11 sanctions. The only remaining substantive issue concerning the local defendants involves the amount of late fees owners may charge tenants. For the reasons set forth below, the Court will grant in part and deny in part both plaintiffs’ motion for summary judgment against federal defendants and federal defendants’ motion for summary judgment. The Court will deny plaintiffs’ request for Rule 11 sanctions. Finally, the Court will grant plaintiffs’ motion for summary judgment on the issue of late fees and will deny local defendants’ motion for summary judgment on the same issue. I. Background Plaintiffs are residents of a low-income apartment complex in Douglas County, Georgia. The construction of the housing was financed by the FmHA pursuant to 42 U.S.C. § 1485 (1982 & Supp. V 1987), and the tenants’ rents are subsidized by HUD pursuant to Section 8 of the United States Housing Act of 1937. See 42 U.S.C. § 1437f(b)(1) (1982 & Supp. V 1987). Defendants Richard E. Lyng and Vance Clark (the “federal defendants”) are responsible for FmHA’s participation in the joint project. Defendants Douglas Village, Ltd.; Interfaith, Inc.; Interfaith Management, Inc.; and Eugene Bowens (the “local defendants”) own and operate the Douglas County apartment complex. In 1978, the National Housing Act was amended, authorizing the Secretary of Agriculture to: issue rules and regulations which assure that applicants denied assistance under this subchapter or persons or organizations whose assistance under this title is being substantially reduced or terminated are given written notice of the reasons for denial, reduction or termination and are provided at least an opportunity to appeal an adverse decision and to present additional information relevant to that decision to a person, other than the person making the original determination, who has authority to reverse the decision. 42 U.S.C. § 1480(g) (1982). In 1980, FmHA implemented an appeals procedure pursuant to § 1480(g) to handle tenant grievances, including eviction or termination of tenancy. See 7 C.F.R. §§ 1944.554-559 (1980). It is that appeals procedure that is the subject matter of this action. The grievance and appeals procedure enables tenants to meet informally with owners/managers to resolve disputes. If the dispute is not resolved informally, the tenants may pursue an administrative hearing before a hearing officer or panel. Id. Al though the rules of evidence do not apply, the administrative hearing affords many familiar due process protections, including (1) an impartial decision maker; (2) the right to be represented by counsel; and (3) the right to present and refute evidence. Id. While the hearing officer’s determination is binding on the parties, it “does not preclude either party’s right thereafter to seek judicial relief through the courts.” 7 C.F.R. § 1944.558(b) (1990). In 1982, FmHA proposed to remove termination of tenancy and eviction from the appeals procedure and invited comment from all interested parties. See 47 Fed. Reg. 17,300 (1982) (proposed April 22, 1982). The final rule as published in 1983 (the “Amendment”) exempted from the appeals procedure the issues of termination of tenancy and eviction. 7 C.F.R. § 1944.553(f) (1990). The Amendment specifies that: [tjermination of tenancy and eviction must be based on material violation of the lease terms or for other good cause as determined by the borrower or the project manager.... The borrower shall not evict any tenant except by judicial action pursuant to State or local law and in accordance with the requirements of this subpart. Id. The elimination of termination and eviction actions from the appeals procedure prompted this lawsuit. Plaintiffs contend that the amendment is not in accordance with 42 U.S.C. § 1480(g) and is arbitrary and capricious in violation of the Administrative Procedure Act (“APA”). 5 U.S.C. § 551-59 (1988). By order dated August 28, 1987, the Court dismissed plaintiffs’ complaint to the extent it challenged the amendment as contrary to the requirements of § 1480(g). The Court found that § 1480(g) did not mandate an administrative hearing for termination of tenancy and eviction. See Order dated August 28, 1987, at 11. The Court did not dismiss, however, plaintiffs’ APA claim because plaintiffs had not conducted discovery. Id. at 13. Discovery ensued and the administrative record was filed on November 30, 1987. After several discovery disputes, a revised administrative record was filed on August 8, 1988. Discovery closed on November 7, 1988, and the present motions for summary judgment were filed, followed by numerous supplemental briefs. II. Discussion A. Federal Defendants 1. The Arbitrary and Capricious Claim Plaintiffs seek summary judgment against federal defendants on the grounds that the amendment process violated the APA. The APA requires a court to set aside agency rules if they are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A) (1988). Judicial review of an administrative action should be conducted with a presumption of administrative regularity and with deference to the agency action. Organized Fishermen of Florida v. Hodel, 775 F.2d 1544, 1549-50 (11th Cir.1985), cert. denied, 476 U.S. 1169, 106 S.Ct. 2890, 90 L.Ed.2d 978 (1986). The agency’s actions, however, are not reviewed without some degree of scrutiny. Nevertheless, the agency must examine the relevant data and articulate a satisfactory explanation for its action including a “rational connection between the facts found and the choice made.” In reviewing that explanation, [the Court] must “consider whether the decision was based on consideration of the relevant factors and whether there has been a clear error of judgment.” Normally, an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. Motor Vehicle Manufacturers Association v. State Farm Mutual, 463 U.S. 29, 43, 103 S.Ct. 2856, 2866, 77 L.Ed.2d 443 (1983). FmHA’s actions do not withstand scrutiny even under this narrow standard. After a thorough review of the revised administrative record and for the reasons stated in detail below, the Court finds that FmHA eliminated the grievance and appeals procedure in violation of the APA because it failed to consider an important aspect of the change: the degree of protection provided to tenants through state and local eviction procedures. The Court also finds FmHA’s explanation of the change contrary to the bulk of evidence before the agency. In response to its initial request for comments on the proposed regulations, FmHA received numerous comments from opponents of the change concerning the adequacy of state laws to protect the rights of tenants in eviction cases. See Revised Administrative Record at Tab 14. FmHA announced on November 19, 1982, that it would hold an informal meeting to discuss and clarify the comments received as a result of the proposed rule change. See Revised Administrative Record at Tab 19. In addition, the agency solicited additional comments on the following question: What would be the adequacy of State and local laws to protect the rights of all parties involved? What assurances do State and local law provide to make sure due process will be served? Id. FmHA was aware from the onset of possible challenges to state and local laws. An informal meeting regarding the proposed change in the grievance and appeals procedure took place on December 6, 1982. A summary of the meeting prepared by L.D. Elwell (“Elwell”), FmHA Assistant Administrator of Housing, acknowledged that opponents of the change argued that the Amendment violated 1480(g) and insisted that many state laws did not provide tenants adequate due process. See Revised Administrative Record at Tab 21. “FmHA should not require evictions [sic] be settled under State law. State laws vary and may effectively prohibit a tenant’s rights of appeal. FmHA’s present regulation provides a uniform appeal process.” Id. Supporters of the Amendment contended that later supplements to the rule by FmHA could cure any state law inadequacies. Id. Elwell concluded that the “Office of General Counsel has given a written opinion that State laws are adequate to provide due process in eviction proceedings involving FmHA financed projects.” Id. FmHA initially attempted to respond to the comments concerning the adequacy of state laws. On December 23, 1982, Elwell wrote Lee P. Reno of the National Housing Law Project requesting a list of the state laws which the organization contended did not adequately protect tenants’ rights. See Revised Administrative Record at Tab 23. Elwell later retracted the request, however, in a letter dated February 7, 1982, stating that “[w]e have determined that we are going to address termination as the major issue of the above-named procedure rather than the judicial process of eviction.” Id. at Tab 26. In its promulgation of the final rule, FmHA acknowledged the commentary concerning the inadequacy of state laws but responded summarily. The agency has addressed this issue by stipulating termination of tenancy and evictions are to be handled by judicial action pursuant to State and local law. The Agency determined that in the case of evictions or termination of tenants that the right of tenants are fully protected under State and local law when a Judicial Process is required.... [T]he borrower [must] advise a tenant, in a termination notice, that the tenant is entitled to a court proceeding pursuant to State or local law at which he or she may present a defense to eviction. The borrower is prohibited from resorting to “self-help” evictions or any non-judicial process, even where authorized by State or local law. 48 Fed.Reg. 56,176 (December 19, 1982) (emphasis added). The Court does not find that this type of cursory treatment amounts to serious consideration of important aspects of the change. FmHA nevertheless contends that its prohibition of “self-help” evictions in the final rule was an adequate response to the concerns expressed by the commentators regarding state and local eviction proceedings. A review of the Administrative Record indicates otherwise. Opponents of the amendment did argue that many state laws allowed self-help evictions and, therefore, denied the tenant an opportunity to be heard. There were also, however, many other challenges to state procedures. Commentators argued that retaliatory eviction was not prohibited in many states and noted the absence of the implied warranty of habitability as a protection for tenants in other states. See Letter to FmHA from National Housing Law Project dated June 8, 1982, Revised Administrative Record at Tab 14; Letter to FmHA from Housing Assistance Council, Inc., dated June 21, 1982 at Tab 14; Letter to FmHA from Attorney Martha A. Miller, dated December 7,1982, at Tab 22. Others argued that while there is a federal “good cause” eviction requirement, many state courts are not aware the tenant is being evicted from FmHA housing and the unrepresented tenant often fails to inform the court of this fact. See Letter to FmHA from Virginia Housing Network dated June 18, 1982, Revised Administrative Record at Tab 14. In addition, because many states did not themselves have a good cause requirement in eviction cases, the tenant’s right to a finding of good cause for eviction is not protected. See Letter from Attorney Martha A. Miller; Letter to FmHA from Virginia Housing Network, Revised Administrative Record at Tab 22; Letter to FmHA from Evergreen Legal Service, Washington State, Revised Administrative Record at Tab 22. Finally, opponents of the amendment argued that tenants often were not entitled to an opportunity to conduct discovery prior to summary judicial proceedings and were financially unable to appeal the decision of the trial court. See Letter for National Housing Law Project at Tab 14. At no place in the record does FmHA attempt to refute specific allegations concerning state laws made by opponents of the change. Proponents of the Amendment offered little argument and summarily found that state laws would adequately protect tenants rights. The Court finds that FmHA either did not consider or ignored these important aspects of the Amendment and, as such, its decision cannot stand. For many of the same reasons, the Court concludes that the FmHA decision is not adequately supported by the record. FmHA contends that it eliminated the grievance and appeals procedure in response to complaints that the procedure was duplicitous and burdensome. FmHA solicited comments and received well-reasoned and legitimate challenges, yet the record reflects that the explanation runs counter to the information provided. Neither agency expertise nor differing points of view can account for FmHA’s failure to consider relevant factors. Motor Vehicle Manufacturers Ass’n, 463 U.S. at 43, 103 S.Ct. at 2866. Indeed, the explanation offered for the change in the final rule does not even contemplate that some tenants may not be afforded the due process guarantees secured by § 1480(g). The Court, therefore, will grant plaintiffs’ motion for summary judgment against federal defendants on the grounds that the agency’s action was arbitrary and capricious. 2. Enforcement of the Grievance Regulations Plaintiffs claim that FmHA inadequately enforced the grievance regulations against the local defendants in violation of the APA. See 5 U.S.C. §§ 701-06 (1988). An agency’s decision not to prosecute or enforce is a decision generally committed to the agency’s absolute discretion. Heckler v. Chaney, 470 U.S. 821, 831, 105 S.Ct. 1649, 1655, 84 L.Ed.2d 714 (1985). Where the enforcement decision involves a balancing of factors which are particularly within the agency’s expertise, a federal court is ill-equipped to review the agency’s decision. Brown v. Housing Authority of McGrae, 784 F.2d 1533, 1540 (11th Cir.1986), vacated and rev’d on other grounds, 820 F.2d 350 (1987). However, enforcement decisions that do not involve the exercise of discretion are generally reviewable, particularly where an agency takes an affirmative step pursuant to its own regulations. Id. 470 U.S. at 832-33, 105 S.Ct. at 1656-57. Despite plaintiffs’ reference to regulations governing FmHA’s duty to oversee management practices and eligibility determinations of owners, there are no regulations governing FmHA’s enforcement of the grievance regulations. FmHA’s decision not to enforce the grievance regulations against local defendants was within the agency’s discretion and, therefore, presumptively unreviewable. The Court will grant defendants’ motion for summary judgment on the issue of failure to enforce. 3. Rule 11 Sanctions Plaintiffs move for the imposition of sanctions against federal defendants pursuant to Federal Rule of Civil Procedure 11 based on the filing of an administrative history in a Maine case challenging the same regulation, Brewer v. Lyng, No. 87-0351-B (D.Maine), that varied from the administrative record filed in the instant case. Federal defendants maintain that the production in the Maine case was inadvertent and that, in any event, the filing in this action was well grounded in law and fact. See Donaldson v. Clark, 819 F.2d 1551 (11th Cir.1987). The administrative record in this action has subsequently been revised to conform to the record in Brewer. There is no question that plaintiffs labored to obtain all the information considered by FmHA in promulgating the new rule. While federal defendants were unclear about the exact contents of the administrative record, the Court does not feel that the agency commented on the completeness of the administrative record without any basis in fact. Apparently there was confusion among counsel for federal defendants in this case and Brewer concerning a coordinated approach to production of the administrative record. Federal defendants made good faith, albeit inconsistent, arguments that the record was complete. The Court will not sanction defendants for otherwise proper conduct. B. Local Defendants Plaintiffs and local defendants have settled all issues except the amount of late fees that Douglas Village Apartments (the “apartments”) may charge tenants. Local defendants argue that a fee of up to $30.00 may be charged for late payment of rent; plaintiff Brenda Hussion insists the amount may not exceed $5.00 as specified in her lease. The Court finds local defendants’ interpretation of applicable regulations unreasonable. Two federal agencies interact to provide assistance to the owners and tenants of the apartments. FmHA provided loan funds for the construction of the apartments and tenants’ rents are subsidized by HUD. All tenants of the apartments who receive HUD assistance must meet FmHA eligibility requirements. 7 C.F.R. § 1930, Subpt. C, Exh. B, Para. IV C (1990). Conflicts between HUD requirements and FmHA requirements are referred to the FmHA District Director and “[generally, the most restrictive HUD or FmHA requirements or limitations will apply.” Id. There is no HUD regulation that restricts the amount of late fees that an owner may charge. A provision in the HUD Handbook governing late fees does not apply to Section 515 projects that receive Section 8 assistance. See HUD Handbook 4350.3 CHG-1 at para. 1-2. There is, however, an FmHA regulation which restricts late fees to a maximum of $10.00 per month. 7 C.F.R. § 1930, Subpt. C Exh. B, Para. IX B (1990). In addition, FmHA regulations require that late fee provisions be stated in the leases of all tenants. Id. at Para. VIII C. Local defendants argue they may charge late fees up to $30.00 per month because this amount is more restrictive than the FmHA limit of $10.00 per month. The Court finds that defendants must abide by the late fee requirements of the FmHA regulation, and, therefore, are bound by the $5.00 limit in plaintiff Hussion’s lease. Local defendants may formally amend their leases pursuant to FmHA and HUD regulations, but in no event may late fees exceed $10.00. III. Conclusion This action presented a difficult question regarding FmHA’s elimination of an important protection for rural tenants. The Court is not concerned with the substance of the rule change by FmHA. It is the procedure employed by the agency during the rule change that violates the APA. The administrative record is replete with legitimate concerns over the elimination of evictions from the grievance and appeals procedure. The record is devoid, however, of any indication that the agency considered important aspects of the change raised by opponents of the new rule. In addition, FmHA’s conclusion that state and local laws provide adequate protections to tenants runs counter to much of the evidence before the agency. FmHA may attempt to re-promulgate the rule the Court finds invalid today; if it does, however, the agency must give serious consideration to all sides of the argument. Accordingly, the Court GRANTS IN PART and DENIES IN PART plaintiffs’ motion for summary judgment and GRANTS IN PART and DENIES IN PART federal defendants' cross-motion for summary judgment. The Court DENIES plaintiffs’ motion for Rule 11 sanctions and GRANTS plaintiffs’ motion for summary judgment against local defendants on the issue of late fees. The Court DENIES local defendants’ motion for summary judgment. IT IS SO ORDERED. . The Court previously approved a settlement agreement relating to all other issues concerning local defendants. See Order dated January 17, 1990. . According to the summary of the meeting, advocates of the proposed rule change commented that: (e) Existing federal laws insure due process and have precedence [sic] over State laws. Every tenant aggrieved has the right to a day in court which cannot be administratively denied. (f) Inadequacies in State laws covering evictions can be eliminated by issuing FmHA State supplements to the proposed instructions. Revised Administrative Record at Tab 21. . Defendants contend that the memorandum of the Office of General Counsel is not part of the administrative record and should be stricken. See Federal Defendants’ Opposition to Plaintiffs' Motion for Summary Judgment at 11, n. 12. The Court has not considered the memorandum in its decision. . The Court previously noted the importance of the due process aspect of the Amendment. In its earlier order, the Court found that, while 42 U.S.C. § 1480(g) did not mandate an administrative hearing, "Congress’ overriding intent was to guarantee due process.” See Order dated August 31, 1987, at p. 12, n. 6. The Court noted that the legislative history of § 1480(g) indicated that the grievance and appeals procedure would include at least a written notice of the ability to appeal an adverse decision, an opportunity to appeal to a person who had no role in making the original determination and who has the authority to reverse the decision, an opportunity to inspect agency records relevant to the initial decisions, to present additional relevant information and to receive the reviewing official's final decision with supporting reasons in writing. Id. at p. 10, n. 4 (quoting House Conf. Rep. No. 95-1792, 95 Cong.2d Sess. (1978)), U.S.Code Cong. & Admin.News 1978, 4773. . Tenant advocates were not the only commentators expressing apprehension over complete reliance by FmHA on state laws in tenant eviction cases. On June 14, 1982, Henry B. Gonzalez, Chairman of the U.S. House of Representatives Subcommittee on Housing and Community Development, wrote Charles Shuman, Administrator of FmHA, expressing the committee’s concern over the proposed change in the grievance and appeals procedure. "The existing eviction procedures were designed taking into account that different states and localities had laws which varied greatly in the degree of protection for tenants.” Id. at Tab 27. Representative Gonzalez requested a response from FmHA regarding the committee’s concerns. There is no evidence of such a response in the administrative record. .Commentators suggested that FmHA incorporate a good cause requirement in the changed regulation to assure that such a burden would be part of an owner’s case similar to the good cause requirement of the HUD regulation governing eviction from Section 8 housing. See 24 C.F.R. § 880.607(b)(2) (1989). . FmHA's own office in Woodland, California advised that "State law is fairly lenient toward landlord in termination of tenancy and it is normally an expensive process for a tenant to challenge termination or eviction and obtain full due process." See Letter dated December 1, 1982, at Tab 22. . Plaintiffs question FmHA's justification for initiating the rule change. "In excluding evictions from the grievance process in 1983, FmHA justified its actions on undocumented complaints that the grievance process was burdensome, difficult to administer, lengthy and duplicated state eviction procedures.” Memorandum In Support of Plaintiffs’ Motion For Summary Judgment at 17. It is peculiar that the bulk of the complaints FmHA relies upon for such a major change in its procedures were oral and undocumented. In addition, FmHA was aware of this criticism when it initially promulgated the grievance and appeals procedure. However, FmHA need only provide a "reasoned analysis” supporting its change in course. Motor Vehicle Manufacturers, 463 U.S. at 43, 103 S.Ct. at 2866. FmHA indicates that contacts with field offices and meetings with concerned participants prompted the change in the regulation. Notwithstanding prior notice of these type of complaints, this is an adequate explanation for the initiation of the amendment process. . The Court questions FmHA's efforts to solicit truly relevant comment from interested parties. Plaintiffs and federal defendants disagreed throughout this litigation over the status of the only documented material concerning the grievance and appeals procedure. M.K. Smith, an employee of FmHA, collected and complied information regarding the appeals procedure with the help of FmHA staff from around the country. The compiled paper, entitled "Study of Farmers Home Administration Tenant Griev-anee and Appeals Procedure,” was completed and presented to the agency in December of 1981. The study indicated, among other things, that from September 1979 until sometime between June and November 1981, only 69 grievances had been filed nationwide. Plaintiffs insist that if the agency had made the study available, commentators could have responded more intelligently and critically to the proposed changes. The data collected by M.K. Smith and other staffers is the only documented information concerning the grievance and appeals procedure cited by any of the parties. While technically the study was not conducted by the FmHA, it is the most complete compilation of information on the procedure available to the agency or the public. If the FmHA sought truly relevant comment on the proposed change in 1982, it would have revealed during the commentary period the existence of the study. .Congress found low-income tenants’ due process rights important in its elimination of the appeals procedure for HUD tenants. 42 U.S.C. § 1437d(k) (1982 & Supp. V 1987). This statute empowers HUD to exempt evictions from its administrative appeals procedure if the jurisdiction provides the "basic elements of due process.” To assure that state laws provide adequate protection for tenants, HUD conducts an analysis of each state’s evictions laws before removing evictions from the administrative grievance procedure. The agency recently determined that eviction proceedings in Magistrate’s Court in Georgia do not provide the basic elements of due process because a tenant is not entitled to discover agency records relevant to the decision. See Plaintiffs' Notice Of Determination By HUD That Evictions In Magistrate Courts In Georgia Do Not Provide Due Process, Exhibit 1.
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3,739,572
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PER CURIAM. Samuel William Cocke appeals the eighteen-month sentence he received for violating a condition of his supervised release. Despite the fact his sentence is three months below the low end of the range recommended under U.S. Sentencing Guidelines Manual § 7B1.4(a) (21-27 months based on the Grade B violation Cocke admitted to and his Criminal History Category of VI), Cocke argues the district court imposed an unreasonable sentence. We review the sentence imposed for an abuse of discretion. United States v. Charles, 531 F.3d 637, 640 (8th Cir.2008). The record indicates the district court was aware of, and considered, the relevant sentencing factors listed in 18 U.S.C. § 3553(a) for determining an appropriate sentence for a violation of supervised release. The record also indicates the district court considered Cocke’s arguments for imposing a lower sentence. We see nothing in the record to indicate the district court abused its discretion in imposing a sentence that was already below the recommended Guidelines, and therefore affirm. . The Honorable John R. Tunheim, United States District Judge for the District of Minnesota.
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7,393,816
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MEMORANDUM AND ORDER ON DEFENDANT’S MOTIONS TO DISMISS SKINNER, District Judge. The plaintiff, a black woman, filed this action alleging racial discrimination in employment. The amended complaint pleads two counts under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and one count each under 42 U.S.C. § 1981, M.G.L. c. 12, § 111, and M.G.L. c. 93, § 102. The defendant has moved to dismiss the § 1981 and state law claims. Plaintiffs Allegations According to the complaint, the defendant hired the plaintiff in Pennsylvania in 1981. In September 1985, after two pro motions, the plaintiff was transferred to Lexington, Massachusetts to work as a data management specialist. The plaintiff was the defendant’s only black employee in Lexington. In December 1985, the plaintiff began complaining to her supervisor and other company officials about discriminatory treatment. Unlike her white coworkers, she was given negative performance appraisals, was denied salary increases, and was not allowed to attend meetings and seminars necessary to effective job performance. Beginning in early 1986, the plaintiff complained to company officials that suspected co-workers were making “unwelcome” telephone calls to her at home at night in which they made “racially offending and derogatory remarks.” Despite her numerous complaints, the defendant did not take appropriate action to end this harassment. In January 1987, the defendant fired the plaintiff on the pretext that she was insubordinate in sending an objectionable electronic communication to her supervisor. White employees were not fired for similar acts. Her discharge was in retaliation for her complaints about racial discrimination. Count III: 42 U.S.C. § 1981 The defendant maintains that the plaintiff’s § 1981 claim is precluded by Patterson v. McLean Credit Union, — U.S. -, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989), which holds that relief is not available under § 1981 for harm caused by discriminatory job conditions after an employment relationship has been established. Section 1981 states: All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other. In Patterson, the Court stated: Section 1981 cannot be construed as a general proscription of racial discrimination in all aspects of contract relations, for it expressly prohibits discrimination only in the making and enforcement of contracts.... By its plain terms, the relevant provision in § 1981 protects two rights: “the same right ... to make ... contracts” and “the same right ... to ... enforce contracts.” The first of these protections extends only to the formation of a contract, but not to problems that may arise later from the conditions of continuing employment. The statute prohibits, when based on race, the refusal to enter into a contract with someone, as well as the offer to make a contract only on discriminatory terms. But the right to make contracts does not extend, as a matter of either logic or semantics, to conduct by the employer after the contract relation has been established, including breach of the terms of the contract or imposition of discriminatory working conditions. Such postformation conduct does not involve the right to make a contract, but rather implicates the performance of established contract obligations and the conditions of continuing employment, matters more naturally governed by state contract law and Title VII.... The second of these guarantees, “the same right ... to ... enforce contracts ... as is enjoyed by white citizens,” embraces protection of a legal process, and of a right of access to legal process, that will address and resolve contract-law claims without regard to race.... It also covers wholly private efforts to impede access to the courts or obstruct nonjudicial methods of adjudicating disputes about the force of binding obligations, as well as discrimination by private entities, such as labor unions, in enforcing the terms of a contract.... The right to enforce contracts does not, however, extend beyond conduct by an employer which impairs an employee’s ability to enforce through legal process his or her established contract rights.... ... § 1981 ... covers only conduct at the initial formation of the contract and conduct which impairs the right to enforce contract obligations through legal process. 109 S.Ct. at 2372-73, 2374. Patterson expressly held that claims based on racial harassment, denial of salary increases, and other discriminatory job conditions are not cognizable under § 1981. 109 S.Ct. at 2373-74. Accordingly, the plaintiffs similar claims under Count III must be dismissed. Her claim for discriminatory firing, though, presents a separate issue not reached in Patterson. Most courts that have decided this issue have held that the rationale of Patterson precludes claims for discriminatory discharge under § 1981. See, e.g., McKnight v. General Motors Corp., 902 F.2d 244 (7th Cir.1990); Lavender v. V & B Transmissions & Auto Repair, 897 F.2d 805, 807-08 (5th Cir.1990); Overby v. Chevron USA, Inc., 884 F.2d 470, 473 (9th Cir.1989). Cf. Sherman v. Burke Contracting, Inc., 891 F.2d 1527 (11th Cir.1990) (rejecting claim for retaliatory interference with plaintiffs subsequent employment on similar grounds). To date, only one court of appeals has held that racially motivated discharge is still actionable under § 1981. Hicks v. Brown Group, Inc., 902 F.2d 630 (8th Cir.1990). The majority opinion in Hicks, however, follows the logic of the dissenters in Patterson, and in my opinion it is inconsistent with the teaching of Patterson. The Court’s restrictive reading of § 1981 is explained in part by the Court’s desire to minimize the overlap between § 1981 and Title VII, fostering the administrative resolution of employment claims under Title VII. See 109 S.Ct. at 2375. As in Patterson, that consideration militates against permitting the plaintiff’s § 1981 claim for wrongful discharge. The Court noted that the necessary overlap between the statutes regarding refusal to hire makes sense because Title VII’s mediation and conciliation procedures are less effective before there is an employee-employer relation to salvage. 109 S.Ct. at 2375. Despite her termination, the plaintiffs five-year relationship with the defendant formed a basis for administrative mediation and conciliation. But see Hicks, 902 F.2d at 640-41 (after discharge, “there is no relationship to salvage”). Accordingly, the circumstances of the plaintiff’s discharge, like the conditions of her employment, are “more naturally governed by ... Title VII.” 109 S.Ct. at 2373. The plaintiff also asserts that the defendant interfered with her right to enforce her employment agreement by complaining about disparate treatment. Except for certain cases of retaliatory discharge, however, wrongful termination does not impair the right to enforce a contract. See, e.g., Hicks, 902 F.2d at 638-39 n. 20. But see Birdwhistle v. Kansas Power and Light Co., 723 F.Supp. 570, 575 (D.Kan.1989) (discharge is directly related to contract enforcement). Since the plaintiff was not pursuing legal redress or other adjudicative procedures but was simply complaining to her superiors, the defendant’s firing her did not violate her right to enforce her employment contract under § 1981. See Patterson, 109 S.Ct. at 2373. Count IV: M.G.L. c. 12, § 111 The complaint alleges disparate treatment, racial harassment by co-workers, and racially motivated, retaliatory discharge. M.G.L. c. 12, § 11/ provides a remedy for racial harassment. O’Connell v. Chasdi, 400 Mass. 686, 511 N.E.2d 349, 353 (1987) (extending remedy to sexual harassment by private defendants, based on right to equality). The complaint alleges that the plaintiff's co-workers made “unwelcome” telephone calls in which they subjected her to “racially offending and derogatory remarks.” Although the plaintiff was not assaulted, like the plaintiff in O’Connell, whether these calls actually threatened or intimidated her is a question of fact. The plaintiffs harassment claim under M.G.L. c. 12, § 11/ is nevertheless precluded by the specific remedy for employment discrimination accorded by M.G.L. c. 151B. Cf. Mouradian v. General Electric Co., 23 Mass.App. 538, 503 N.E.2d 1318, 1321, rev. denied, 399 Mass. 1105, 507 N.E.2d 1056 (1987) (wrongful discharge based on age discrimination); Sereni v. Star Sportswear Mfg. Corp., 24 Mass.App. 428, 509 N.E.2d 1203, rev. denied, 400 Mass. 1107, 513 N.E.2d 1289 (1987) (following Mouradian). But cf. O’Connell, 511 N.E.2d at 353 n. 9 (expressing no opinion whether M.G.L. c. 151B, § 4 would be exclusive remedy against covered employers for sexual harassment, since defendant employer was not covered by c. 151B). The other discriminatory acts alleged do not involve “threats, intimidation or coercion” as construed under M.G.L. c. 12, §§ 11H and 111. Marsman v. Western Elec. Co., 719 F.Supp. 1128, 1138 (D.Mass.1988) (negative employment decision alone does not constitute threats, intimidation, or coercion); Appling v. City of Brockton, 649 F.Supp. 258, 261 (D.Mass.1986) (same); Mouradian, 503 N.E.2d at 1321 n. 5 (same) (dictum). A violation of M.G.L. c. 12, § 11/ requires “an actual or potential physical confrontation accompanied by a threat of harm.” Layne v. Superintendent, Massachusetts Correctional Institution, 406 Mass. 156, 546 N.E.2d 166 (1989) (physical barrier to access by handicapped plaintiffs not coercive). See also Bally v. Northeastern University, 403 Mass. 713, 532 N.E.2d 49, 52-53 (1989) (no actionable threat in mandatory drug testing of school athletes). There must be something akin to duress which causes the victim to relinquish her rights. A direct deprivation of rights, as by the alleged wrongful termination here, lacks the quality of coercion. See Longval v. Cormn’r of Correction, 404 Mass. 325, 535 N.E.2d 588, 593 (1989) (use of force by prison officials); Pheasant Ridge Assocs. Ltd. Partnership v. Town of Burlington, 399 Mass. 771, 506 N.E.2d 1152, 1158-59 (1987) (wrongful taking of property). The plaintiff alleges that in addition to unlawfully discriminating against her the defendant violated her right to free speech. See Bally, 532 N.E.2d at 52 (defendant violates M.G.L. c. 12, §§ 11H and 11/ when its cancellation of contract coerces plaintiff not to exercise right to free speech), citing Redgrave v. Boston Symphony Orchestra, Inc., 399 Mass. 93, 502 N.E.2d 1375 (1987). Since the gravamen of this claim is retaliation for complaints about employment discrimination, it is likely that Mouradian precludes it also. In any case, even if the plaintiff had a constitutionally protected right to voice her complaints in the workplace, the alleged retaliatory discharge did not silence her through “threats, intimidation or coercion.” Based on the recent Massachusetts cases cited above, I disagree with the ruling in Karetnikova v. Trustees of Emerson College, 725 F.Supp. 73, 78 (D.Mass.1989), that silencing employment-dependent speech through job termination may constitute coercive deprivation of First Amendment rights. The claim in Redgrave concerned the coercive effect of economic sanctions on the plaintiffs right to engage in unrelated political speech. Because I have ruled that Count IV fails to state a claim, I need not decide whether the amended complaint “relates back” to the time the action was commenced for the purpose of applying the statute of limitations. Count V: M.G.L. c. 93, § 102 The Massachusetts equal rights act, 1989 Mass.Acts c. 332, M.G.L. c. 93, § 102, was enacted after this action was filed. Although declared by the Governor to be emergency legislation, the statute does not state that it is to be applied retrospectively. Under Massachusetts law, statutes dealing with substantive rights, rather than remedies or procedure, are not given retroactive effect in the absence of clear legislative intent. Lawton v. Commonwealth Gas Co., 400 Mass. 209, 508 N.E.2d 611, 613-14 (1987); Mayor of Salem v. Warner Amex Cable Communications, Inc., 392 Mass. 663, 467 N.E.2d 208, 211 (1984). See also Carter v. Supermarkets General Corp., 684 F.2d 187, 191 n. 9 (1st Cir.1982) (citing cases). Procedural statutes may be applied to pending actions if the procedural stage affected by the legislation has not already been passed. City Council of Waltham v. Vinciullo, 364 Mass. 624, 307 N.E.2d 316 (1974). A statute imposing new legal duties and creating a new cause of action for their enforcement is clearly substantive and should be presumed to operate prospectively. The plaintiff argues that M.G.L. c. 93, § 102 merely codifies pre-existing duties under federal law; therefore, it does not affect the defendant’s substantive rights and should be applied retroactively. The plaintiff relies on Bohner v. Bohner, 18 Mass.App. 545, 468 N.E.2d 653 (1984), which held that not every statute that creates a new cause of action is substantive. In Bohner, the Appeals Court decided that a statute authorizing Massachusetts courts to grant alimony after a foreign divorce would be applied to a New Hampshire divorce that pre-dated the enactment. Since the plaintiff had a pre-existing right to seek alimony in New Hampshire, the court held that the statute in essence only provided an alternative forum and should not be “deemed” to affect substantive rights. The defendant had no significant right not to be sued in Massachusetts as opposed to New Hampshire. The court likened the alimony statute to the long arm statute and other laws that have retrospectively expanded jurisdiction. The court distinguished Hay v. Cloutier, 389 Mass. 248, 254, 449 N.E.2d 361 (1983), which held that the new statutory right to equitable division of property was substantive, therefore prospective. The plaintiff argues that the equal rights act was enacted to create a state remedial procedure for unlawful discrimination equivalent to that of 42 U.S.C. § 1981 as construed prior to Patterson, supra. Contrary to the plaintiffs argument, however, the Massachusetts statute does not merely adopt preexisting federal law. On its face it is broader than 42 U.S.C. § 1981, as construed. For example, it prohibits discrimination on the basis of sex. Moreover, the plaintiffs argument is self-contradictory. The plaintiff argues that her state claim is not controlled by Patterson or later cases construing § 1981. The scope of M.G.L. c. 93, § 102 awaits delineation by the Massachusetts courts. Based on its legislative history, it is almost certain to be given a broader construction than 42 U.S.C. § 1981. Since the plaintiff’s substantive federal and state race discrimination claims might ultimately receive different treatment by the highest courts of the two sovereigns, M.G.L. c. 93, § 102 does more than provide a new forum for claims based on the breach of pre-exist-ing federal duties. Indeed, the Governor declared that the statute “gives back job discrimination protections that the U.S. Supreme Court recently took away,” referring to Patterson. News Release, Aug. 3, 1989 (Ex. 7 to Plaintiff’s Mem. filed Apr. 4, 1990). Clearly, the equal rights act deals less "with the 'how’ or 'where’ of the [anti-discrimination] rights than the ‘what’ of those rights.” Bohner, 468 N.E.2d at 656. The plaintiff makes a weak argument for implied retroactive application based on the purpose of the Massachusetts equal rights act. The legislature’s purpose to secure the relief formerly available under § 1981 from erosion by the Supreme Court, the plaintiff argues, would be defeated if the equal rights act were not applied retroactively. In my opinion, the materials submitted by the plaintiff are meager evidence of an intent to make the legislation retroactive when such a purpose could easily have been stated by express language. Any uncertainty in the legislature’s intent must be resolved against retroactive application. Austin v. Boston University Hospital, 372 Mass. 654, 363 N.E.2d 515, 518 (1977). In summary, the Massachusetts equal rights act expands upon preexisting law, imposing new substantive duties on private citizens and creating a novel state remedy. There is insufficient evidence of a legislative intent to make the statute retroactive. Observing the general rule, I hold that the equal rights act does not apply to conduct occurring before its effective date, such as that alleged in the complaint. I need not consider the defendant’s argument that M.G.L. c. 151B provides the exclusive state remedy for employment-related discrimination. Accordingly, the defendant’s motions to dismiss Counts III, IV, and V are allowed. The plaintiff has no right to a jury trial of her Title VII claims (Counts I and II). In addition, the plaintiff’s motion for an extension of the time for completion of discovery is denied, good cause not having been shown. The plaintiff’s lawyer’s motion for leave to withdraw his appearance is denied, for the reasons stated in the defendant’s opposition. L.R. 7(c). . Because counsel’s assistance is helpful in understanding the implications of Patterson, I shall excuse the plaintiff’s seven-month delay in opposing this motion. The plaintiff’s motion for leave to file a late response and the defendant’s motion for leave to file a reply are both allowed. . The Supreme Judicial Court has adopted the following dictionary definition of coercion: “the application to another of such force, either physical or moral, as to constrain him to do against his will something he would not otherwise have done." Deas v. Dempsey, 403 Mass. 468, 530 N.E.2d 1239, 1241 (1988), quoting Webster’s New International Dictionary at 519 (2d ed. 1959). See also Delaney v. Chief of Police of Wareham, 27 Mass.App. 398, 539 N.E.2d 65, 72 (1989), which defines threat as "acts or language by which another is placed in fear of injury or damage;” intimidation as "creation of fear to compel conduct;” and coercion as "the active domination of another's will.” . If c. 93, § 102 merely duplicates § 1981, then the plaintiff’s state law claim is subject to dismissal for the same reason that her § 1981 fails to state a claim. . The plaintiff does not refer in her argument to the pre-existing rights enforceable through Title VII, M.G.L. c. 12, §§ 11H and 111, M.G.L. c. 15 IB, or the common law. I note, however, that the Massachusetts equal rights act has sig nificantly broader reach than any of these laws. The historical sources submitted by the plaintiff show that the legislature intended to address perceived wrongs for which there was no available relief under current law.
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OPINION HAROLD A. ACKERMAN, District Judge. INTRODUCTION Plaintiff, Oritani Savings & Loan Corporation, (“Oritani”), seeks a declaratory judgment in this matter that ■ defendant, Fidelity & Deposit Company of Maryland, (“Fidelity”), is obligated to indemnify it under a Savings and Loan Blanket Bond (an insurance contract) executed between the parties. Oritani also claims that Fidelity breached its covenant of good faith and fair dealing by denying insurance coverage and that it is therefore entitled to compensatory and punitive damages, as well as attorneys’ fees. The two count complaint asserting these claims was originally filed in the Superior Court of New Jersey, Bergen County, Law Division, on October 23, 1989, and the action was removed to this Court by Fidelity on December 27, 1989, on the grounds that there is diversity in citizenship and an amount in controversy in excess of $50,000.00. Presently before the Court is a motion by Fidelity for summary judgment on both counts of the complaint on the grounds that, under the express terms of the blanket bond and the undisputed facts of this case, no coverage is afforded for Oritani’s claim. BACKGROUND The material facts of this case which bear on the issue of coverage are undisputed. It is admitted that the parties had a valid contract of insurance during the rele vant time period. The blanket bond expressly covered “[a]ll the Insured’s [plaintiffs] offices or premises in existence at the time this bond becomes effective....” At the time in question, Oritani had about eighteen branch offices all located in New Jersey. The provisions of the bond at issue, (as identified in paragraph 2 a) of the Complaint), provide coverage for: (A) Loss resulting directly from dishonest or fraudulent acts of an Employee committed alone or in collusion with others; (B)(1) Loss of Property resulting directly from (a) robbery, burglary, misplacement, mysterious unexplainable disappearance and damage thereto or destruction thereof while the Property is lodged or deposited within offices or premises located anywhere, or (b) theft, false pretenses, common law or statutory larceny committed by a person (i) present in an office of, or on the premises of, the Insured, or (ii) present on the premises in which the Property is lodged or deposited. It is undisputed that in May, 1988, Orita-ni suffered a “loss of property” within the meaning of the contract in the sum of 1172,50o. However, defendant contests the issue of whether this loss of property was caused by dishonesty of an employee; or robbery, burglary, mysterious misplacement, etc.; or theft, false pretenses, etc., such that coverage should be afforded under the terms of the policy. The undisputed facts giving rise to the loss are as follows. On May 10, 1988, Jack Rowé, a vice president of Oritani, was working in Orita-ni’s main office in Hackensack, New Jersey, and, on this date, he had the responsibility of processing wire transfer requests for Oritani’s customers. On said date, Mr. Rowe received a telephone call from a person who identified herself as “Debbie” and an employee of Oritani’s branch office in Ho-Ho-Kus, New Jersey. Although Orita-ni did, in fact, have a branch office in Ho-Ho-Kus, Mr. Rowe does not recall whether there was, in fact, a “Debbie” working in that office at that time. At any rate, “Debbie” requested that Mr. Rowe effect a wire transfer of funds ■ in the amount of $85,300.00 from an identified Oritani customer account. “Debbie” identified the customer Aaron D. Tyler, together with his account number 04012461, as well as all other appropriate information. Mr. Rowe responded by effecting the transfer. On May 13, 1988, a similar request for a wire transfer in the amount of $87,300.00 was made by one “Susan”, who also identified herself'as an employee from Oritani’s Ho-Ho-Kus branch office; “Susan” requested that the money be transferred from the same customer account (Mr. Tyler’s account), just as “Debbie” had done, and Mr. Rowe effected the transfer. On May 20, 1988, Mr. Rowe learned that the Ho-Ho-Kus office had no record of these wire transfers and further, that Mr. Tyler’s account had insufficient funds to cover the transfers. Since the monies had already been dispersed by the recipient banks, however, Oritani suffered the loss in the total amount of $172,500.00. Oritani has admitted that Mr. Rowe was not a knowing participant in the aforementioned fraudulent scheme which caused Ori-tani to suffer this loss. It appears that Mr. Rowe made no effort to verify whether funds existed to cover the wire transfers at the time they were made, and it further appears that the account in question was little more than a year old and its balance never exceeded $4,000. See Affidavit of Andrew T. Fede, June 13, 1990, (“Fede Aff.”), and Exhibit A. Nevertheless, Mr. Rowe testified at his deposition that he followed his normal procedure in effecting the transfers. See Rowe dep. at 49, (De fendant’s brief, Exhibit D). Oritani’s procedures for effecting wire transfers was the subject of a memorandum dispersed to branch managers and senior officers of the bank. See Rowe dep. at 27-28 (Fede Aff., Exhibit K). Oritani has investigated the matter and has been unable to determine whether the persons who made the phone calls were actually employees of Oritani and/or present in Oritani’s branch office. See Oritani’s Answer to Admission No. 4. However, the parties apparently concede that Mr. Rowe was of the impression that “Debbie” and “Susan” were employees of and calling from the Ho-Ho-Kus branch office. The callers used Mr. Rowe’s nickname, “Jack”, when making the calls, and he states that only employees of Oritani would know this. See Rowe dep. at 58. The funds that were transferred were Ori-tani funds that were on deposit and wired by United Jersey Bank to the First National Bank in Barthesville, Oklahoma, and the Lawrence National Bank in Lawrence, Kansas. Oritani’s Answer to Admission No. 5. Defendant has now moved for summary judgment asserting that no coverage is afforded, because there is no evidence that “Debbie” and “Susan” were actually on Oritani’s premises at the time the fraudulent schemes were carried out. DISCUSSION A. Standard of Review Rule 56 of the Federal Rules of Civil Procedure provides that “judgment ... shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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.Pro. 56(c). The moving party has the initial burden of satisfying this standard, (Matsushita Elec. Indus, v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1985)), which can be accomplished by demonstrating that there is an absence of evidence to support the nonmov-ing party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986); Peters Twp. School Dist. v. Hartford Acc. & Indem., 833 F.2d 32, 34 (3d Cir.1987). In opposing summary judgment, the non-moving party cannot rely upon the allegations of his pleadings; he must come forward with evidence supporting a claim that there is a material fact in dispute to be resolved by the trier of fact. First Nat’l Bank v. Cities Serv. Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 1592, 20 L.Ed.2d 569 (1968). All inferences to be drawn from the facts should be resolved in favor-of the nonmoving party. Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir.1987). However, the construction of contracts is a question of law for the court. Ram Constr. Co., Inc. v. Am. States Ins. Co., 749 F.2d 1049, 1053 (3d Cir.1984); Northeast Custom Homes, Inc. v. Howell, 230 N.J.Super. 296, 301, 553 A.2d 387 (Law Div.1988). Ultimately, at trial, it would be necessary for this Court to instruct the jury as to what coverage the policy provides. Davis v. The Equitable Life Assur. Soc., 90 N.J.Super. 328, 331, 217 A.2d 459 (App.Div.1966). As the parties concede, the issue presented to this Court for decision involves only a question of law; namely, whether no coverage is afforded under the insurance policy, because there is no evidence that Debbie and Susan were actually on the insured’s premises. B. Choice of Law Since this is a diversity suit, the first issue that must be addressed is the choice of law to be applied. Under Klaxon Co. v. Stentor Co., 313 U.S. 487, 494, 61 S.Ct. 1020, 1020-21, 85 L.Ed. 1477 (1941), I must look to the conflict of law rules prevailing in the State in which this Court sits, namely, New Jersey, to determine the applicable law. The parties have proceeded on the premise that New Jersey law governs this dispute; the plaintiff’s offices which are the subject of the insurance contract are located in New Jersey; and it appears that the contract was executed in New Jersey. Thus, I shall apply New Jersey law. See State Farm Ins. Co. v. Sim mons’Estate, 84 N.J. 28, 37, 417 A.2d 488 (1980); McNeilab, Inc. v. North River Ins. Co., 645 F.Supp. 525, 529 n. 5 (D.N.J.1986), aff'd, 831 F.2d 287 (3d Cir.1987). C. The “ON THE PREMISES” Clause The issue presented to me for decision—whether the “on the premises” clause of a blanket bond bars coverage for a fraudulent scheme involving the use of a telephone call from off the premises of the insured—has apparently not been decided by any court in the state of New Jersey. Thus, I am to be guided by relevant state precedent governing interpretation of insurance policies in general, analogous decisions in other jurisdictions, considered dicta, scholarly works, and other reliable data. McNeilab, 645 F.Supp. at 532 & n. 9. Under New Jersey law, insurance contracts are generally considered to be “contracts of adhesion, prepared unilaterally by the insurer, and have always been subjected to careful judicial scrutiny to avoid injury to the public.” Sparks v. St. Paul Ins. Co., 100 N.J. 325, 335, 495 A.2d 406 (1985). It has long been the policy in New Jersey that [i]f the controlling language [of the policy] will support two meanings, one favorable to the insurer, and the other favorable to the insured, the interpretation sustaining coverage must be applied. Courts are bound to protect the insured to the full extent that any fair interpretation will allow. * * * [DJoubts as to the existence of coverage must be resolved in favor of the insured. Mazzilli v. Accident & Cas. Ins. Co., 35 N.J. 1, 7-8, 170 A.2d 800 (1961); accord Kopp v. Newark Ins. Co., 204 N.J.Super. 415, 420, 499 A.2d 235 (App.Div.1985). This settled rule of law that doubts and ambiguities must be resolved in favor of coverage applies as well to fidelity bonds issued to banks. Fidelity & Deposit Co. of Md. v. Hudson United Bank, 653 F.2d 766, 772 n. 8 (3d Cir.1981). Moreover, even if the contract language is not necessarily ambiguous, the contract should be interpreted in accordance with the reasonable expectations of the insured. See Sparks, 100 N.J. at 336-38, 495 A.2d 406; Meier v. New Jersey Life Ins. Co., 101 N.J. 597, 612, 503 A.2d 862 (1986) (“courts will enforce only the restrictions and the terms in an insurance contract that are consistent with the objectively reasonable expectations of the average insured”); see also Perrine v. Prudential Ins. Co., 56 N.J. 120, 126-27, 265 A.2d 521 (1970); Gerhardt v. Continental Ins. Co., 48 N.J. 291, 297-300, 225 A.2d 328 (1966); Killeen Trucking v. Great Am. Surplus Lines Ins. Co., 211 N.J.Super. 712, 716-17, 512 A.2d 590 (App.Div.1986). Thus, the controlling, overriding, goal in interpreting a contract of insurance is to fulfill the reasonable expectations of the insured. To the extent there are any hidden pitfalls in the policy language which conflict with the insured’s reasonable expectations, the pitfalls should not be applied to defeat coverage. See Am. Policyholders’ Ins. Co. v. McClinton, 100 N.J.Super. 169, 175, 241 A.2d 462 (Ch.Div.1968) (“in order to fulfill the insured’s reasonable expectations he should not be subjected to technical encumbrances or to hidden pitfalls”); see also Transamerica Ins. Co. v. Keown, 451 F.Supp. 397, 400 (D.N.J.1978) (“the insured should not be subjected to hidden pitfalls”). In light of these standards, and for the reasons explained in more detail below, I reject defendant’s proffered construction of the “on the premises” clause in the bond in this matter. I find that the language of the contract is ambiguous and can be interpreted to afford coverage for the loss sustained in this case, and further, that defendant’s construction does not comport with the reasonable expectations of the insured. Moreover, I find that summary judgment should not be granted in defendant’s favor for the additional reason that a question of fact exists as to whether coverage is available under Section (A) of the bond. (i) Ambiguities in the Contract Language The provision of the blanket bond at issue is ambiguous and can be interpreted to afford coverage in two respects. First, the blanket bond states, in part, that coverage is afforded for “false pretenses ... committed by a person ... present in an office of, or on the premises of, the Insured," This language can reasonably be interpreted to mean that coverage is afforded where either (1) the person committing the false pretense is present at the insured’s office; or (2) the false pretense is committed at the insured’s premises. In the latter case, the person making the false pretense need not necessarily be located at the insured’s premises. This interpretation comports with the typical application of blanket bonds. For instance, there are a number of cases in which coverage has been afforded under blanket bonds for losses incurred as a result of schemes involving the passing of bad checks. The “on the premises” clauses in the blanket bonds in such cases have not been interpreted to defeat coverage. See, e.g., National Bank of Commerce in New Orleans v. Fidelity & Cas. Co. of N.Y., 312 F.Supp. 71 (E.D.La.1970), aff'd, 437 F.2d 96 (5th Cir.1971), cert. denied, 403 U.S. 906, 91 S.Ct. 2209, 29 L.Ed.2d 682 (1971), where the court stated: Defendant maintains, however, that because clause B is entitled “ON PREMISES,” all of the items mentioned therein must have occurred on the premises of the insured in order to be covered ... ... Hughes mailed a deposit from Dallas to the New Orleans bank. He intended the New Orleans bank to believe the check was good when the New Orleans bank received it, and his expectation was borne out. The act of depositing it in New Orleans constituted a false representation there. Id. at 76 (emphasis added). Likewise, in Hartford Acc. & Indem. Co. v. Fed. Deposit Ins. Corp., 204 F.2d 933 (8th Cir.1953), the insured had suffered a loss resulting from the presentment of bad checks and issuance of credit to an account with insufficient funds. “At the trial the defendant asserted that the loss was not covered by the bond because the false representations were not made on the Bank’s premises_” Id. at 935. The court rejected this contention and held that there was a false pretense on the premises of the insured within the meaning of the fidelity bond such that coverage was afforded. Id. at 937. See also First Nat’l Bank of Decatur v. Insurance Co. of N. Am., 424 F.2d 312, 315, 317 n. 3 (7th Cir.1970), cert. denied, 398 U.S. 939, 90 S.Ct. 1844, 26 L.Ed.2d 272 (1970) (blanket bond provides coverage for check kiting scheme despite an “on the premises” clause); Fidelity & Cas. Co. of N. Y. v. Bank of Altenburg, 216 F.2d 294, 303-04 (8th Cir.1954), cert. denied, 348 U.S. 952, 75 S.Ct. 440, 99 L.Ed. 744 (1955) (same). Moreover, if defendant’s construction were adopted such that the phrase “on the premises of the insured” required the person committing the false pretense to be present at the insured’s office, the phrase “on the premises of the insured” in the policy would be surplusage. Naturally, a person who is present in an office of the insured will be on the premises of the insured. However, as discussed above, a false pretense can be committed on the premises of the insured without the presence of the defrauder at the insured’s office. Thus, to interpret Section (B)(l)(b)(i) to require either that the defrauder be present at the insured’s office, or that the false pretense be committed at the insured’s premises, gives meaning to each of the words used in this provision. On the other hand, defendant’s construction renders part of the provision superfluous. Accordingly, the insurance contract is ambiguous and can reasonably be interpreted to afford coverage for false pretenses committed on the insured’s premises, irrespective of the location of the defrauder. If defendant intended to exclude coverage for frauds perpetrated on the insured’s premises through telephonic or other means of communication, (as it suggests on this motion), it could have easily said so. Compare Solomon v. Continental Ins. Co., 122 N.J.Super. 125, 134, 299 A.2d 413 (App.Div.1972) (“[i]t is the insurer’s burden to obtain, through its representatives all information pertinent to the risk, and to make exclusionary provisions plain, clear and prominent to the layman”). However, defendant included no. such exclusion in the policy. The false pretenses in this case were committed on the insured’s premises, as “Debbie” and “Susan” telephoned Orita-ni’s main branch and made false representations to Mr. Rowe while he was there. Thus, coverage should be afforded under Section B(l)(b)(i) of the bond, subject to any additional defenses the defendant may raise. Beyond this, as I indicated above, there is a second reason why the language of the bond is ambiguous. Even if the bond were construed to mean that the person committing the false pretense must be “present” at the insured’s premises, (and not just that the false pretense must be committed at the insured’s premises), there is an ambiguity because the language of the bond does not take into account the fact that a defrauder may be constructively present at the insured’s premises. Although the term “present” is not defined in the bond, Black’s Law Dictionary defines “presence” as: Presence. Act, fact, state of being in a certain place and not elsewhere_ The existence of a person in a particular place at a given time particularly with reference to some act done there and then. Besides actual presence, the law recognizes constructive presence, which latter may be predicated of a person who, though not on the very spot, was near enough to be accounted present by the law, or who was actively cooperating with another who was actually present. Black’s Law Dictionary 1065 (5th ed. 1979) (emphasis added). See Midland Bank & Trust Co. v. Fidelity & Deposit Co. of Md., 442 F.Supp. 960, 970 (D.N.J.1977) (Whipple, C.J.) (referring to Black’s Law Dictionary to determine meaning of words used in an insurance bond). Indeed, the term “constructive presence” is commonly used in cases involving the commission of criminal offenses. See, e.g., Sayles v. State, 552 So.2d 1883, 1389 (Miss.1989); Sutton v. Commonwealth, 324 S.E.2d 665, 672 (Va.1985); State v. Gazerro, 420 A.2d 816, 828 (R.I.1980); State v. Pomerleau, 363 A.2d 692 (Me.1976); State v. Ruffin, 90 N.C.App. 712, 370 S.E.2d 279, 281 (N.C.Ct.App.1988); State v. Hamsley, 672 S.W.2d 437, 439 (Tenn.Ct.App.1984); State v. Maynard, 65 N.C.App. 612, 309 S.E.2d 581, 582 (N.C.Ct.App.1983); State v. Stapleton, 638 S.W.2d 850, 857-58 (Tenn. Ct.App.1982). The term is also frequently used in connection with findings of “direct contempt” which must be based upon conduct within the “presence,” (actual or constructive), of the court. See, e.g., People ex rel. Finck v. Locher, 172 Ill.App.3d 706, 122 Ill.Dec. 542, 545, 526 N.E.2d 935, 938 (1988); In re Carroll, 28 Ohio App.3d 6, 501 N.E.2d 1204, 1207 (1985); State v. Diamond, 94 N.M. 118, 607 P.2d 656, 658 (1980); Commonwealth v. Fladger, 250 Pa. Super. 36, 378 A.2d 440, 442 n. 2 (1977). The term has been used in connection with jurisdictional questions, (see, e.g., Diaz v. Diaz, 568 F.2d 1061, 1062 (4th Cir.1977); State v. Sparks, 701 S.W.2d 731, 733 (Mo. Ct.App.1985)), and a defendant’s constitutional right to be “present” at trial. See, e.g., Smith v. State, 453 So.2d 505, 506 (Fla. Dist. Ct.1984), pet. for rev. denied, 462 So.2d 1107 (Fla.1985). Particularly noteworthy is Commonwealth v. Allen, 441 S.W.2d 424 (Ky.Ct.App.1969), where the court held that the defendant was constructively present at the sale of unregistered securities, because he made himself available to the salesman by telephone both at his office and his home. A “constructive presence” definition has also been applied in construing “on the premises” clauses in blanket bonds. In particular, blanket bonds have been construed to require that the property loss be suffered by the insured from property located at the insured’s premises. In Bank of Dade v. Fidelity and Deposit Co. of Md., 483 F.2d 735 (5th Cir.1972), at issue was a policy providing coverage for “[a]ny loss of Property ... while the Property is (or is supposed to be) lodged or deposited within any offices or premises.... ” Id. at 736. In that case, the bank president received a telephone call from a kidnapper who was holding his wife and child and demanding ransom. The president removed money from the bank, placed it in a carport outside his home, and sometime later, he delivered it to the extortionist. Id. at 737-38. Although the loss of property actually occurred a distance from the bank’s offices and sometime after being removed therefrom, the court held that the bond provided coverage. Id. Defendant, Fidelity, has cited a dictionary definition for the word “present” which would foreclose a “constructive presence” interpretation. See Defendant’s Brief at 8. However, since the policy provides no definition for the word “present”, I must accept the definition that is most favorable to the insured. See, e.g., Ohio Cas. Ins. Co. v. Flanagin, 44 N.J. 504, 519, 210 A.2d 221 (1965). See also Solomon, supra, 122 N.J.Super. at 133, 299 A.2d 413 (App.Div.1972) (ambiguity concerning the use of the word “premises” required that the court accept a definition extending coverage to outbuildings). Accordingly, even if the bond required the presence of the defrauder at the insured’s premises, (and not just that the false pretense be committed on the insured’s premises), I would find coverage here. The word “present” as used in the “on the premises clause” of the blanket bond should be construed to include both actual or constructive presence. Here, “Debbie” and “Susan” were constructively present at the insured’s premises, since they were in direct contact with Mr. Rowe by telephone, their audio-presence at the premises was necessary for the success of their scheme, and they represented that they were present at Oritani’s Ho-Ho-Kus office. (ii) Reasonable Expectations of the Insured The construction which I have placed upon the blanket bond, as set forth above, is compelled by the principle that the reasonable expectations of the insured must be fulfilled. It appears that the bulk (if not all) of the cases relating to coverage for false pretenses under blanket bonds issued to banks relate to check kiting or other similar schemes. See, e.g., First Nat’l Bank of Decatur, supra, 424 F.2d at 315; Fidelity & Cas. Co. of N. Y., supra, 216 F.2d at 294; Hartford Acc. & Indem., supra, 204 F.2d at 933; National Bank of Commerce, supra, 312 F.Supp. at 71; see also United Pac. Insur. Co. v. Idaho First Nat’l Bank, 378 F.2d 62, 65 (9th Cir.1967). Almost all (if not all) of the fraudulent schemes in . these cases did not require or entail the presence of the defrauder at the bank’s premises. Thus, if I were to accept defendant’s construction here, the type of coverage historically afforded under this type of bond would be eviscerated. Moreover, in light of modern technology and the ever-increasing use of telephonic and computerized communications, defendant’s construction would afford very little coverage under this provision of the bond. This simply does not comport with the reasonable expectations of the insured. Compare Kievit v. Loyal Protective Life Ins. Co., 34 N.J. 475, 483, 170 A.2d 22 (1961) (“[wjhere particular provisions, if read literally, would largely nullify the insurance, they will be severely restricted so as to enable fair fulfillment of the stated policy objective”). I note that defendant relies heavily upon Southern Nat’l Bank of N.C., (“SNB”) v. United Pac. Ins. Co., 864 F.2d 329 (4th Cir.1989), in support of its position that no coverage is afforded, because there is no evidence that “Debbie” and “Susan” were actually present at Oritani’s offices. However, I decline defendant’s invitation to apply this case here. SNB involved a third party who made absolutely no representations that he was an employee of the bank, and it was not argued in that case that a false representation was made on the premises of the insured and/or that the third party was constructively on the insured’s premises. Rather, the issue in that case concerned the interpretation of Section B(l)(b)(ii) of the blanket bond and whether the third party was constructively on the same premises as the property of the insured. See SNB, 864 F.2d at 331. The instant case involves an interpretation of Section B(2)(b)(i) of the bond and the issue of whether the false pretenses were committed on the insured’s premises. Thus, SNB involved different facts and different legal issues than the instant case. Moreover, New Jersey courts have not been hesitant to disagree with those jurisdictions which have resolved novel questions of insurance policy coverage in fayor of the insurer. See, e.g., Broadwell Realty v. Fi delity & Cas. Co. of N. Y, 218 N.J.Super. 516, 529-31, 528 A.2d 76 (App.Div.1987) (coverage extends to abatement remedies to prevent contamination of property to third parties despite policy exclusion for insured’s own property); and NPS Corp. v. Ins. Co. of N. Am., 213 N.J.Super. 547, 553, 517 A.2d 1211 (App.Div.1986) (coverage for bodily injury extends to emotional distress and mental anguish). As discussed above, the provision of the bond at issue should be construed to provide coverage where the false pretense was committed “on the premisés” of the insured and/or where the defrauder is actually or constructively present at the insured’s premises. I predict that New Jersey would follow this construction of the blanket bond in this case. D. Section A of the Bond It appears that plaintiff alleges, in paragraph 2(a) of its complaint, that coverage should be afforded under Section A of the blanket bond. This provision provides coverage for “[l]oss resulting directly from dishonest ... acts of an [ejmploy-ee.... ” I find that summary judgment should not be entered in favor of defendant, because a question of fact exists as to whether this section provides coverage in this matter. In Nat’l Newark & Essex Bank v. American Ins. Co., 76 N.J. 64, 385 A.2d 1216 (1978), the Supreme-Court of New Jersey interpreted a similar blanket bond provision and held that a “dishonest” act of an employee must be very broadly interpreted to include an act that “indicates ‘a reckless, wilful and wanton disregard for the interest of the employer—if it be an act manifestly unfair, to the employer and palpably subjects him to likelihood of loss.’ ” Id. at 76, 385 A.2d 1216 (quoting London and L. Indem. Co. v. People’s Nat’l Bank and Trust Co., 59 F.2d 149, 152 (7th Cir.1932)). For instance, in Nat’l Newark & Essex Bank, the Court held that the acts of the employee in that case were “dishonest” within the meaning of the bond where the employee granted various under-collateral-ized loans to a customer whose accounts were overdrafted. The employee did not personally ■ profit from the loans, and his subjective intent may have been blameless; the customer who was granted the loans had a longstanding account and enjoyed a special status. See id. 76 N.J. at 85, 385 A.2d 1216 (Sullivan, J., dissenting). However, the employee was held to the standards of trust and probity of a fiduciary, and the Court found that he had put the customer’s interests above those of his employer. See id. at 78, 385 A.2d 1216. See also Midland Bank & Trust, 442 F.Supp. at 970 (“[i]t is generally recognized in New Jersey that fidelity bonds indemnifying employers against dishonest acts of their employees are to be broadly construed”). Thus, while instances .of mere neglect or incompetence are not covered under a blanket bond, (see National Newark & Essex, 76 N.J. at 77, 385 A.2d 1216), reckless acts which subject the employer to a likelihood of loss are covered. Although Mr. Rowe testified that he followed normal company procedures in effecting the transfers in this case, the parties have not adequately addressed the issue of whether he was reckless and disregarded the interests of Orita-ni in authorizing wire transfers in the amount of $172,500.00 from an account which was approximately a year old and never had a balance exceeding $4,000.00. As discussed in Nat’l Newark & Essex Bank, Mr. Rowe’s subjective intent is not determinative, but rather, the issue is whether he was reckless and disregarded Oritani’s interests in favor of the interests of the customer. 76 N.J. at 78, 385 A.2d 1216. Ordinarily, the issue of whether the employee’s act was dishonest within the bond coverage is for the jury to decide, Mortgage Corp. of N.J. v. Aetna Cas. & Surety Co., 19 N.J. 30, 38, 115 A.2d 43 (1955), unless the facts reasonably permit of but a single conclusion. Id. At this stage, it does not appear that the facts permit of but the single conclusion that Mr. Rowe’s acts were not dishonest within the meaning of the bond, and summary judgment must be denied for this reason as well. CONCLUSION For all the foregoing reasons, defendant’s motion for summary judgment is denied. Although I have found that coverage exists under the undisputed facts of this case, I decline to enter judgment in favor of the insured, as plaintiff has not so moved and defendant may seek to assert additional defenses. . The issue of whether the loss of monies was a "property loss” within the meaning of the bond was not raised by defendant. However, this cannot reasonably be disputed. "Property” is defined under the bond as including "money, securities, negotiable instruments, certificates of deposit, ... evidences of debt, ...", etc. See also Portland Fed. Employees Credit Union v. Cumis Ins. Society, 894 F.2d 1101 (9th Cir.1990).
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3,748,036
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PER CURIAM: Elvis David Lewis, a native and citizen of Grenada, seeks review of an order of the Board of Immigration Appeals (Board) declining to exercise its sua sponte authority to grant Lewis’s third motion to reconsider. We do not have jurisdiction to review the Board’s decision not to invoke its sua sponte power to grant relief. See Mosere v. Mukasey, 552 F.3d 397, 400-01 (4th Cir.2009). We accordingly dismiss the pe tition for review. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. PETITION DISMISSED.
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3,741,325
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PER CURIAM: Reginald Earl Rice appeals his conviction and life sentence for bank robbery by force or violence in violation of 18 U.S.C. § 2113(a) (2006). Rice contends the district court erred in denying his motion to suppress evidence obtained as a result of a constitutionally deficient search warrant. We affirm. We review the district court’s factual findings underlying a motion to suppress for clear error, and the district court’s legal determinations de novo. United States v. Wilson, 484 F.3d 267, 280 (4th Cir.2007) (citing Ornelas v. United States, 517 U.S. 690, 699, 116 S.Ct. 1657, 134 L.Ed.2d 911 (1996)). When a suppression motion has been denied, we review the evidence in the light most favorable to the government. United States v. Uzenski, 434 F.3d 690, 704 (4th Cir.2006). In reviewing the propriety of issuing a search warrant, the relevant inquiry is whether, under the totality of the circumstances, the issuing judge had a substantial basis for concluding that there was probable cause to issue the warrant. Illinois v. Gates, 462 U.S. 213, 238, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983). Although the search warrant at issue failed to specify the exact address of the premises to be searched, under the totality of the circumstances we find there were sufficient corroborating facts establishing probable cause supporting the issuance and execution of the search warrant. See id. at 238, 103 S.Ct. 2317. Accordingly, we affirm the district court’s judgment. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. AFFIRMED.
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3,744,752
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ORDER CARLOS F. LUCERO, Circuit Judge. This matter is before the court on Lawrence Tolbert’s “Objection to the U.S. COA Denial of Certificate of Application [sic] of Appealability,” which we construe as a petition for panel rehearing. Tolbert requests that the panel revisit its decision to apply the “firm waiver” rule that any issue not raised through objections to a magistrate’s report is waived on appeal, Moore v. United States, 950 F.2d 656, 659 (10th Cir.1991), in our order denying a certificate of appealability (“COA”), Tolbert v. Ulibarri, 2008 WL 4330386 (10th Cir. Sept.23, 2008) (unpublished). We are persuaded by his petition that we should have construed his premature notice of appeal from the magistrate’s Proposed Findings and Recommended Disposition as an objection, cf. Maldonado v. Snider, 12 Fed.Appx. 868, 870 n. 1 (10th Cir.2001) (unpublished), and we now grant panel rehearing. We vacate our September 23, 2008, order and replace it with the order issued herewith. ORDER DENYING CERTIFICATE OF APPEALABILITY Lawrence Tolbert, a New Mexico state prisoner proceeding pro se, seeks a certificate of appealability (“COA”) to appeal the district court’s denial of his 28 U.S.C. § 2254 habeas petition. Because each of his claims lacks merit, we deny a COA and dismiss the appeal. I Tolbert was convicted by a jury on three counts of criminal sexual penetration in the first degree, one count of kidnapping in the first degree, one count of aggravated burglary in the second degree, and one count of aggravated battery in the third degree. He was sentenced to a total of 132 years’ imprisonment. After the New Mexico state courts rejected his direct and collateral appeals, Tolbert filed a pro se petition for federal habeas relief on October 20, 2006. Liberally construed, see Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir.1991), his petition claimed ineffective assistance of trial counsel, ineffective assistance of appellate counsel, prosecutorial misconduct, and that the combination of these led to denial of due process. He requested an evidentiary hearing. The district court referred the petition to a magistrate judge, and on December 5, 2007, the magistrate issued a “Proposed Findings and Recommended Disposition” (“Report”) without conducting an eviden-tiary hearing. The Report recommended dismissal on the merits and noted that: Within ten (10) days after a party is served with a copy of these Proposed Findings and Recommended Disposition, that party may ... file written objections to such proposed findings and recommended disposition. A party must file any objections ... within the ten (10) day period allowed if that party wants to have appellate review of the proposed findings and recommended disposition. If no objections are filed, no appellate review will be allowed. Although Tolbert did not file a motion labeled as an objection, he did file a “Notice of Appeal” on December 19, within the ten-day period. See Fed.R.Civ.P. 6(a)(2) (2007) (a time period in any court order of less than eleven days is computed excluding weekends). The notice contained no substantive legal argument. On January 4, 2008, the district court adopted the Report in full and denied the petition. It subsequently denied Tolbert a COA. On January 28, 2008, a panel of this court denied Tolbert’s December 19 appeal as premature. On January 30, Tolbert filed a notice of appeal from the district court’s order adopting the Report. Because we construe the December 19 notice of appeal as an objection to the magistrate’s Report, cf. Maldonado v. Snider, 12 Fed.Appx. 868, 870 n. 1 (10th Cir.2001) (unpublished), we conclude that Tolbert did not waive his right to appeal and proceed to consider his request for a COA. II Because the district court did not grant Tolbert a COA, he may not proceed absent a grant of a COA by this court. 28 U.S.C. § 2253(c)(1)(A). To obtain a COA, Tolbert must make a “substantial showing of the denial of a constitutional right.” § 2253(c)(2). This requires him to show “that reasonable jurists could debate whether (or, for that matter, agree that) the petition should have been, resolved in a different manner or that the issues presented were adequate to deserve encouragement to proceed further.” Slack v. McDaniel, 529 U.S. 473, 484, 120 S.Ct. 1595, 146 L.Ed.2d 542 (2000) (quotation omitted). Construing his application liberally, Tol-bert seeks a COA on the same claims he made before the federal district court: (1) prosecutorial misconduct, (2) ineffective assistance of trial counsel, (3) ineffective assistance of appellate counsel, and (4) a resulting denial of due process. In addition, he challenges the decision not to hold an evidentiary hearing. Tolbert asserts prosecutorial misconduct for presenting evidence and testimony that was “in error” and “unclear.” We apply the standard articulated in Donnelly v. DeChristoforo, 416 U.S. 637, 94 S.Ct. 1868, 40 L.Ed.2d 431 (1974), to claims of prosecutorial misconduct when a petitioner does not allege the prosecutor’s argument directly affected a specific constitutional right. Under Donnelly, habeas relief is available for prosecutorial misconduct only when the misconduct is so egregious that it renders the entire trial fundamentally unfair. Id. at 642-48, 94 S.Ct. 1868. A careful review of the record reveals that Tolbert’s complaint on this issue is that not all the forensic evidence collected placed him at the scene of crime. In particular, he was excluded as the source of DNA from the victim’s body cavities. However, the DNA report did conclude that Tolbert was the source of the DNA found on the victim’s face and bedsheet and calculated the probability of error at no more than 1 in 6.08 million. Because reasonable jurists would agree that the presentation of inconclusive evidence does not render a trial fundamentally unfair, see Young v. Workman, 383 F.3d 1233, 1238 (10th Cir.2004), Tolbert is not entitled to relief on this claim. Tolbert also claims that his trial and appellate counsel were ineffective in failing “to get[ ] the courts to review” his allegations that he was convicted based upon flawed or insufficient DNA evidence and related testimony, including in failing to call additional witnesses. To establish ineffective assistance of counsel, Tolbert must show (1) that his counsel’s actions fell below an objective standard of reasonableness and (2) that this conduct prejudiced the proceedings such that, absent counsel’s errors, the outcome would have been different. Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984). We proceed based on “a strong presumption that counsel’s conduct falls within the wide range of reasonable professional assistance; that is, the defendant must overcome the presumption that, under the circumstances, the challenged action might be considered sound trial strategy.” Id. at 690, 104 S.Ct. 2052 (quotation omitted). Upon reviewing the pleadings and the record, we conclude that Tolbert cannot show that either counsel’s performance was deficient. Trial counsel moved to suppress the DNA evidence and to exclude associated testimony, and appellate counsel reasserted the challenge. Both attempts were unsuccessful. In addition, counsel repeatedly challenged the DNA evidence as unreliable and inconclusive at trial, highlighting the very weaknesses in the prosecution’s case that have been the focus of Tolbert’s collateral challenges. We conclude that it was within the wide range of permissible trial strategy to focus on the weaknesses in the state’s evidence rather than call an additional expert witness. See Boyle v. McKune, 544 F.3d 1132, 1139 (10th Cir.2008) (“[T]he decision of which witnesses to call is quintessentially a matter of strategy for the trial attorney.”). Thus, reasonable jurists would agree that counsel’s performance at each level met the constitutionally guaranteed standard. We construe Tolbert’s assertion that the above claims led to a denial of due process as one of cumulative error. Cumulative error applies only when there are two or more actual errors, and it does not apply to the accumulation of non-errors. Castro v. Ward, 138 F.3d 810, 832 (10th Cir.1998). Because the alleged ineffective assistance of trial and appellate counsel occurred in separate proceedings and Tolbert has not shown prosecutorial misconduct, reasonable jurists would agree that “there is nothing to cumulate.” Young v. Sirmons, 551 F.3d 942, 972 (10th Cir.2008) (quotation omitted). Finally, Tolbert asserts that he should have been granted an evidentiary hearing below. Because we conclude from the record before us that he is not entitled to relief, reasonable jurists would agree that neither the magistrate nor the district court needed to hold an evidentiary hearing. See Young, 551 F.3d at 970 (“[Petitioner’s] allegations, even assuming them to be true, are insufficient to [require relief under] Strickland. Therefore the district court was not required to hold a hearing.”). Ill For the reasons set forth above, Tol-bert’s request for a COA is DENIED and his appeal is DISMISSED. . To the extent that we can discern additional claims in Tolbert’s application for a COA and opening brief, such as improper juror influence and double jeopardy, these claims were not raised before the federal district court, and we decline to consider them. United States v. Jarvis, 499 F.3d 1196, 1201-02 (10th Cir.2007). In addition, we must reject Tol-bert's claim that his state habeas counsel was ineffective. Even construing his petition below to raise such a claim, prisoners have no constitutional right to assistance of counsel on state collateral attack. Coleman v. Thompson, 501 U.S. 722, 757, 111 S.Ct. 2546, 115 L.Ed.2d 640 (1991).
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PER CURIAM: Sidney Lawrence Sims pled guilty, pursuant to a plea agreement, to possession of a firearm by a felon in violation of 18 U.S.C. § 922(g)(1) (2006). The conditional plea preserved Sims’s right to appeal the district court’s denial of his motion to suppress. Sims was sentenced to seventy-five months’ imprisonment. Sims’s attorney has filed a brief in accordance with Anders v. California, 386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed.2d 493 (1967), certifying that there are no meritorious grounds for appeal, but alleging that the district court erred in denying Sims’s motion to suppress. Sims filed a pro se supplemental brief, reiterating the arguments raised in counsel’s brief. The Government did not file a reply brief. Finding no reversible error, we affirm. In reviewing the district court’s ruling on a motion to suppress, we review the district court’s factual findings for clear error, and its legal determinations de novo. United States v. Cain, 524 F.3d 477, 481 (4th Cir.2008). The facts are reviewed in the light most favorable to the prevailing party below. United States v. Jamison, 509 F.3d 623, 628 (4th Cir.2007). With these standards in mind, and having reviewed the transcript of the suppression hearing, we conclude the district court did not err in denying Sims’s motion to suppress. See United States v. Burton, 228 F.3d 524, 528 (4th Cir.2008) (finding that officers must have both reasonable suspicion of criminal activity as well as reason to believe suspect armed and dangerous in order to conduct constitutional frisk for weapons). In accordance with Anders, we have reviewed the record in this case and have found no meritorious issues for appeal. We therefore affirm the district court’s judgment. This court requires that counsel inform Sims, in writing, of the right to petition the Supreme Court of the United States for further review. If Sims requests that a petition be filed, but counsel believes that such a petition would be frivolous, then counsel may move in this court for leave to withdraw from representation. Counsel’s motion must state that a copy thereof was served on Sims. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. AFFIRMED.
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3,748,108
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PER CURIAM: Faiza Maxwell seeks to appeal the district court’s order denying her motion for reduction of sentence under 18 U.S.C. § 3582 (2006). In criminal cases, the defendant must file the notice of appeal within ten days after the entry of judgment. Fed. R.App. P. 4(b)(1)(A); see United States v. Alvarez, 210 F.3d 309, 310 (5th Cir.2000) (holding that § 3582 proceeding is criminal in nature and ten-day appeal period applies). With or without a motion, upon a showing of excusable neglect or good cause, the district court may grant an extension of up to thirty days to file a notice of appeal. Fed. R.App. P. 4(b)(4); United States v. Reyes, 759 F.2d 351, 353 (4th Cir.1985). The district court entered its order denying the motion for reduction of sentence on August 22, 2008. Maxwell filed the notice of appeal on September 19, 2008, after the ten-day period expired but within the thirty-day excusable neglect period. Because the notice of appeal was filed within the excusable neglect period, we remand the case to the district court for the court to determine whether Maxwell has shown excusable neglect or good cause warranting an extension of the ten-day appeal period. The record, as supplemented, will then be returned to this court for further consideration. REMANDED.
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3,738,773
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PER CURIAM: Milton Clifton Williams seeks to appeal the district court’s order denying relief on his 28 U.S.C. § 2254 (2006) petition. The order is not appealable unless a circuit justice or judge issues a certificate of ap-pealability. See 28 U.S.C. § 2253(c)(1) (2006). A certificate of appealability will not issue absent “a substantial showing of the denial of a constitutional right.” 28 U.S.C. § 2253(c)(2) (2006). A prisoner satisfies this standard by demonstrating that reasonable jurists would find that any assessment of the constitutional claims by the district court is debatable or wrong and that any dispositive procedural ruling by the district court is likewise debatable. See Miller-El v. Cockrell, 537 U.S. 322, 336-38, 123 S.Ct. 1029, 154 L.Ed.2d 931 (2003); Slack v. McDaniel, 529 U.S. 473, 484, 120 S.Ct. 1595, 146 L.Ed.2d 542 (2000); Rose v. Lee, 252 F.3d 676, 683-84 (4th Cir.2001). We have independently reviewed the record and conclude that Williams has not made the requisite showing. Accordingly, we deny a certificate of appealability and dismiss the appeal. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. DISMISSED.
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3,745,242
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MEMORANDUM Adolfo Gonzalez-Rodriguez, a native and citizen of El Salvador, petitions for review of the Board of Immigration Appeals’ (“BIA”) order dismissing his appeal from an immigration judge’s decision denying his application for asylum, withholding of removal, and relief under the Convention Against Torture (“CAT”). Our jurisdiction is governed by 8 U.S.C. § 1252. We review for substantial evidence factual findings, Santos-Lemus v. Mukasey, 542 F.3d 738, 742 (9th Cir.2008). We dismiss in part and deny in part the petition for review. We dismiss the petition as to Gonzalez-Rodriguez’s asylum and withholding of removal claims because the particular social group he asserts to the court is different from the social group he argued to the BIA, such that his claim is unexhausted, see Barron v. Ashcroft, 358 F.3d 674, 678 (9th Cir.2004), and Gonzalez-Rodriguez has waived any other challenge to the agency’s nexus finding, see Martinez-Serrano v. INS, 94 F.3d 1256, 1259-60 (9th Cir.1996). We lack jurisdiction to review Gonzalez-Rodriguez’s contention regarding ineffective assistance of counsel because he failed to raise that issue before the BIA. See Ontiveros-Lopez v. INS, 213 F.3d 1121, 1124 (9th Cir.2000) (requiring ineffective assistance of counsel claims to be presented first to the BIA). Substantial evidence supports the agency’s denial of CAT relief because Gonzalez-Rodriguez failed to show it was more likely than not that he would be tortured if he returns to El Salvador. See Santos-Lemus, 542 F.3d at 747-48. PETITION FOR REVIEW DISMISSED in part; DENIED in part. This disposition is not appropriate for publication and is not precedent except as provided by 9 th Cir. R. 36-3.
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3,745,605
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MEMORANDUM Vasu Singh, a native and citizen of India, petitions for review of the Board of Immigration Appeals’ (“BIA”) order dismissing his appeal from an immigration judge’s (“IJ”) decision denying his application for asylum and withholding of removal. We have jurisdiction under 8 U.S.C. § 1252. We grant the petition for review. Without making an explicit adverse credibility determination, the IJ conflated what she may have intended to be an adverse credibility finding with her finding that Singh failed to meet his burden of proving persecution. The BIA compounded the error by adopting and affirming the IJ’s non-existent credibility finding. In these circumstances, the BIA should have either addressed the IJ’s conclusion that Singh failed to carry his burden of proof or remanded the case to the IJ for a credibility finding. See Huang v. Mukasey, 520 F.3d 1006, 1008 (9th Cir.2008) (per cu-riam). Because the BIA did neither, we grant the petition for review as to Singh’s asylum and withholding of removal claims and remand this case to the agency for further proceedings consistent with this disposition. See id. (citing INS v. Ventu-ra, 537 U.S. 12, 16-17, 123 S.Ct. 353, 154 L.Ed.2d 272 (2002) (per curiam)). PETITION FOR REVIEW GRANTED; REMANDED. This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.
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3,747,700
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PER CURIAM: James Walker, through counsel, appeals the district court’s denial of his motion to reduce his sentence, pursuant to 18 U.S.C. § 3582(c)(2). Walker’s § 3582(c)(2) motion was based on Amendment 706 to the Sentencing Guidelines, which reduced the base offense levels applicable to crack cocaine offenses. On appeal, Walker, who was sentenced based on his status as a career offender, acknowledges that, in United States v. Moore, 541 F.3d 1323, 1330 (11th Cir.2008), cert. denied, McFadden v. United States, — U.S.-, 129 S.Ct. 965, 173 L.Ed.2d 156 (2009), and cert. denied, — U.S.-, 129 S.Ct. 1601, 173 L.Ed.2d 689 (2009), we held that defendants whose sentencing ranges were based on their career offender status are not eligible for relief under § 3582(c)(2) and Amendment 706. Walker asserts, however, that Moore was wrongly decided, and, pursuant to the Supreme Court’s decision in United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), the district court should have reevaluated the substantive reasonableness of his sentence. “Under the well-established prior panel precedent rule of this Circuit, the holding of the first panel to address an issue is the law of this Circuit, thereby binding all subsequent panels unless and until the first panel’s holding is overruled by the Court sitting en banc or by the Supreme Court.” Smith v. GTE Corp., 236 F.3d 1292, 1300 n. 8 (11th Cir.2001). Thus, we affirm the denial of Walker’s § 3582(c)(2) motion in accordance with Moore. 541 F.3d at 1330. AFFIRMED.
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3,739,757
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PER CURIAM: Jack Moore seeks to appeal the district court’s order denying his Fed.R.Civ.P. 60(b) motion for reconsideration of the district court’s order denying relief on his 28 U.S.C. § 2254 (2006) petition. The order is not appealable unless a circuit justice or judge issues a certificate of appealability. 28 U.S.C. § 2253(c)(1) (2006); Reid v. An-gelone, 369 F.3d 363, 369 (4th Cir.2004). A certificate of appealability will not issue absent “a substantial showing of the denial of a constitutional right.” 28 U.S.C. § 2253(c)(2) (2006). A prisoner satisfies this standard by demonstrating that reasonable jurists would find that any assessment of the constitutional claims by the district court is debatable or wrong and that any dispositive procedural ruling by the district court is likewise debatable. Miller-El v. Cockrell, 537 U.S. 322, 336-38, 123 S.Ct. 1029, 154 L.Ed.2d 931 (2003); Slack v. McDaniel, 529 U.S. 473, 484, 120 S.Ct. 1595, 146 L.Ed.2d 542 (2000); Rose v. Lee, 252 F.3d 676, 683-84 (4th Cir.2001). We have independently reviewed the record and conclude that Moore has not made the requisite showing. Accordingly, we deny a certificate of appealability and dismiss the appeal. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. DISMISSED.
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3,743,939
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ORDER AND JUDGMENT NEIL M. GORSUCH, Circuit Judge. We have before us the application of Leo Simmons, a Colorado prisoner, for a certificate of appealability (“COA”) permitting him to appeal the district court’s dismissal of his application for a writ of habeas corpus under 28 U.S.C. § 2254. We grant the application in part and reverse. In 1998, a Colorado state court convicted Mr. Simmons of conspiracy to possess a controlled substance, a felony charge, and sentenced him to twelve years’ imprisonment. He filed his federal habeas petition on September 25, 2008, along with a request to proceed in forma pauperis (“IFP”). His petition alleges three bases for relief. First, he argues that he received constitutionally ineffective representation. Second, he claims that he was denied the preliminary hearing to which Colorado law entitled him. Finally, he says that the “constitutional fact doctrine” requires his release. The district court concluded that Mr. Simmons’s motion for leave to proceed IFP was defective because he did not submit the prisoner’s trust fund account statement (“Account Statement”) described in 28 U.S.C. § 1915(a)(2). That provision, enacted as part of the Prison Litigation Reform Act (“PLRA”), provides that “[a] prisoner seeking to bring a civil action ... without prepayment of fees or security therefor ... shall submit a certified copy of the trust fund account statement (or institutional equivalent) for the prisoner for the 6-month period immediately pre ceding the filing of the complaint----” Id. The district court gave Mr. Simmons thirty days to file the Account Statement or face dismissal of his petition. When Mr. Simmons did not file the statement by the deadline, the district court dismissed his habeas petition without prejudice. Mr. Simmons sought rehearing, which was denied. Because the district court dismissed his petition on procedural grounds, Mr. Simmons must show two things in order to obtain a COA: (1) “that jurists of reason would find it debatable whether the petition states a valid claim of the denial of a constitutional right,” and (2) “that jurists of reason would find it debatable whether the district court was correct in its procedural ruling.” Slack v. McDaniel, 529 U.S. 473, 484, 120 S.Ct. 1595, 146 L.Ed.2d 542 (2000). He has cleared both hurdles. First, one of Mr. Simmons’s substantive challenges to his confinement “states a valid claim of the denial of a constitutional right.” Id. at 484, 120 S.Ct. 1595. His papers appear to allege that his trial lawyer had a conflict of interest and failed to inform him adequately about one of the charges against him. Without passing on them merits, these allegations, if true, could lend support to a claim of ineffective assistance of counsel. Second, the district court’s procedural ruling was erroneous. Section 1915(a)(2)’s Account Statement requirement, while applicable in many other contexts, does not apply in habeas corpus actions brought by state prisoners under § 2254. United States v. Simmonds, 111 F.3d 737, 743 (10th Cir.1997), overruled on other grounds by United States v. Hurst, 322 F.3d 1256, 1261 n. 4 (10th Cir.2003); see also In re Phillips, 133 F.3d 770 (10th Cir.1998) (extending Simmonds to mandamus proceedings related to habeas corpus). Because Mr. Simmons was not required to file an Account Statement, the district court’s decision to dismiss his habeas petition for failure to do so was erroneous. We therefore grant the COA with respect to Mr. Simmons’s ineffective assistance claim. With respect to that claim, the judgment of the district court is reversed, and the case remanded for further proceedings consistent with this order. With respect to Mr. Simmons’s remaining claims, we deny the COA and dismiss the appeal. Mr. Simmons’s application for leave to proceed IFP on appeal is granted. After examining appellant's brief and the appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed. R.App. P. 34(a)(2) and 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent except under the doctrines of law of the case, res judicata and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R.App. P. 32.1 and 10th Cir. R. 32.1. . Before the deadline, Mr. Simmons submitted an amended habeas petition. On what appears to be the reverse side of the last page of this document, he included a note to the district court describing his difficulties obtaining the Account Statement from prison authorities and asking for the court’s assistance in obtaining it. In its dismissal order the district court held that Mr. Simmons had failed to communicate with the court about the Account Statement at all, but did not address this note (perhaps because it didn’t see it due to its obscure location). Mr. Simmons points to his pre-deadline communication as evidence that the district court’s dismissal was erroneous. In light of our disposition that follows, however, it is unnecessary to address this contention. . Neither of Mr. Simmons's other claims form a basis for habeas relief. Violation of Colorado procedures relating to preliminary hearings is not a basis for federal habeas relief. Estelle v. McGuire, 502 U.S. 62, 67-68, 112 S.Ct. 475, 116 L.Ed.2d 385 (1991) (”[F]ederal habeas corpus relief does not lie for errors of state law.”) (quotation omitted). And the doctrine of constitutional fact has no application to Mr. Simmons's case.
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3,746,383
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PER CURIAM: Christopher Walker appeals the district court’s order denying his motion for reduction of sentence pursuant to 18 U.S.C. § 3582(c) (2006). We have reviewed the record and find no reversible error. Accordingly, we affirm for the reasons stated by the district court. United States v. Walker, No. 3:96-cr-00123-REP-2 (E.D.Va. Dec. 8, 2008); see also United States v. Dunphy, 551 F.3d 247 (4th Cir.2009). We further deny Walker’s motion for appointment of counsel. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. AFFIRMED.
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11,620,775
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Vacated and remanded by published opinion. Judge NIEMEYER wrote the opinion, in which Judge WILLIAMS and Judge SMITH joined. NIEMEYER, Circuit Judge: This consolidated admiralty case presents questions about the proper court management of three constituent maritime actions, two actions filed by the families of fishing boat crewmen who were lost at sea and one limitation-of-liability action filed by the boat’s owner with respect to the other two actions. The district court consolidated all three actions for trial, finding that to do so would “eliminate the possibility of an inconsistent resolution on common issues and necessitate fewer judicial resources.” The court also noted that through consolidation “a time savings would result ... and witnesses would suffer less inconvenience.” Even though we believe that the district court might be able, through the entry of further procedural orders, to fulfill the essential purposes of the limitation-of-liability action filed by the shipowner, we are required to enforce the mechanism specified by the Shipowner’s Limitations of Liability Act that all other actions against the owner “with respect to the matter in question shall cease.” 46 U.S.C. app. § 185. Accordingly, we vacate the consolidation order and remand this case with instructions that only the limitation-of-liability action proceed until the limitation issues are determined. I Roy L. Pickle and Jonathan M. Williams, Jr., were two crewmen on the F/V Char-Lee II, a fishing boat owned by Char Lee Seafood, Inc. Jesse Lee Dempsey was hired by the owner to serve as captain of the F/V Char-Lee II. While Pickle, Williams, and Dempsey were fishing on the vessel approximately 30 miles southeast of Cape Lookout, North Carolina, in late March and early April 1997, gale-force winds and rough seas erupted. On March 31 and April 1, Captain Dempsey had his last radio contacts with other vessels in the fishing fleet, discussing the deteriorating weather conditions. Allegedly, he told other captains that “he was staying out to catch fish.” While the other boats in the fishing fleet returned to port on April 1, 1997, the F/V Char-Lee II never returned. Following a massive Coast Guard search, only unidentified debris was found. Several weeks later, the boat’s “electronic position indicator radio beacon” was found 300 miles east of Cape Henry, Virginia, attached to a three-by-six foot piece of board with the words “F/V Char-Lee II” painted on it. The F/V Char-Lee II was presumed to have sunk between April 1 and April 4, 1997, resulting in the deaths of Pickle, Williams, and Captain Dempsey. The estates and families of Pickle and Williams filed separate actions in admiralty in the district court against Char Lee Seafood and its primary officers, directors, and shareholders (collectively “Char Lee Seafood”), alleging negligence under the Jones Act, negligence and unseaworthiness under general maritime law, negligence and unseaworthiness under the Death on the High Seas Act, and wrongful death under North Carolina law. In addition to alleging the owner’s failure to train the crew and to equip the F/V Char-Lee II properly, the plaintiffs alleged negligence of the owners as follows: Upon information and belief, [Char Lee Seafood] pressured Captain Dempsey to keep the F/V Char-Lee II at sea during severe storms in order to catch more fish and make more money. As a result of this constant pressure, Captain Dempsey habitually kept the F/V Char-Lee II and her crew out at sea during severe storms. Captain Dempsey gained a reputation for keeping the F/V Char-Lee II out at sea when other fishing boats headed for port, and he became known as “Hurricane Jesse.” Confronting these two actions, Char Lee Seafood filed a separate action in the district court invoking the Shipowner’s Limitation of Liability Act, 46 U.S.C. app. § 183 et seq., and alleging that its liability in any and all suits relating to the disappearance of the F/V Char-Lee II was limited to the value of the ship after the accident, amounting to the estimated $250 value of the radio beacon that had been found. The district court issued an order in that action requiring public notice of the action and enjoining the filing and prosecution of all other actions relating to the disappearance of the F/V Char-Lee II until determination of the limitation action. The court also required Char Lee Seafood to post a bond in the amount of $1,000. On April 1, 1998, six months after the district court entered its injunction in the limitation-of-liability action, the district court sua sponte entered an order consolidating for trial the two individual actions brought by the estates and families of Pickle and Williams with the limitation-of-liability action. Acting pursuant to Federal Rule of Civil Procedure 42, the court stated that consolidation would eliminate the possibility of inconsistent resolutions and would reduce the expenditure of judicial and litigant resources. The court concluded by noting that it could foresee “no prejudice to any of the parties by consolidating these cases.” Char Lee Seafood, which had never had the opportunity to present its position on the propriety of consolidation, filed a motion for reconsideration and requested that the limitation-of-liability action be severed from the other two actions. When the court denied its motion by order dated June 15,1998, Char Lee Seafood filed this interlocutory appeal. II Pickle and Williams contend as a threshold matter that the district court’s June 15, 1998 order denying Char Lee Seafood’s motion for reconsideration of the district court’s sua sponte consolidation order and for severance of the limitation-of-liability action from the other two actions is not an order from which an interlocutory appeal may be taken. They also contend that Char Lee Seafood’s notice of appeal was in any event filed untimely because the time should be counted from the district court’s consolidation order and not from the order denying the motion to reconsider and for severance. In response, Char Lee Seafood relies on 28 U.S.C. § 1292(a)(1) (permitting interlocutory appeals from orders “granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions”), and 28 U.S.C. § 1292(a)(3) (permitting interlocutory appeals from decrees “determining the rights and liabilities of the parties to admiralty cases in which appeals from final decrees are allowed”). The district court initially entered an injunction in the limitation-of-liability action, staying any court proceedings relating to the disappearance of the F/V Char-Lee II, other than the limitation-of-liability proceeding. But thereafter, it implicitly modified that injunction when it entered an order, sua sponte, consolidating for trial the actions filed by Pickle and Williams with the limitation-of-liability action, thus permitting all three actions to continue to trial. While Char Lee Seafood did not appeal the consolidation order dated April 1,1998, it did file a motion for reconsideration and for severance, explaining why the district court should not have sua sponte entered the consolidation order. . Through its motion for reconsideration and for severance, Char Lee Seafood was seeking to return to the status under the original injunction. Thus, when the court denied Char Lee Seafood’s motion for reconsideration and for severance on June 15,1998, it was denying a request for a modification of the court’s consolidation order which in turn modified its original injunction. It is, of course, well established that an order denying a request to modify an injunction is subject to interlocutory appeal under 28 U.S.C. § 1292(a)(1). See In re Bowoon Sangsa Co., 720 F.2d 595, 597 (9th Cir.1983) (holding that the “denial, modification, or dissolution of an injunction in a limitation proceeding is appealable as a matter of right under 29 U.S.C. § 1292(a)(1)”); see also Gorman v. Cerasia, 2 F.3d 519, 523 (3d Cir.1993) (same); Complaint of Mucho K, Inc., 578 F.2d 1156, 1157 (5th Cir.1978) (same). Accordingly, we conclude that we have jurisdiction to consider this appeal. Ill Char Lee Seafood challenges the district court’s consolidation order, arguing that it compromises the exclusivity of its limitation-of-liability action provided for by the Shipowner’s Limitation of Liability Act. It maintains that the effect of the court’s order is to deny it a “eoncursus of all claims” in the one action and the right to have its Jones Act liability, a question on which a jury trial is ordinarily afforded, tried to the court in the limitation-of-liability case. Both of these consequences would be avoided, Char Lee Seafood argues, if the district court honored the Limitation Act’s statutory mandate that all other actions “cease.” 46 U.S.C. app. § 185. The Shipowner’s Limitation of Liability Act, enacted in 1851 to assist shipowners by placing them in parity with European (and particularly English) shipowners who had long enjoyed the benefits of limiting their liability for marine disasters, provides that a shipowner’s liability for a maritime loss or mishap is limited to the value of the ship and her pending freight if the mishap occurred “without the privity or knowledge” of the owner. 46 U.S.C. app. § 183(a). Congress designed the Limitation Act “to induce the heavy financial commitments the shipping industry requires by mitigating the threat of a multitude of suits and the hazards of vast, unlimited liability as the result of a maritime disaster.” Maryland Casualty Co. v. Cushing, 347 U.S. 409, 414, 74 S.Ct. 608, 98 L.Ed. 806 (1954). This American limitation statute is particularly beneficial to shipowners. Unlike under the English statute on which it was modeled, under the American statute, the fund against which the claimants must make their claim is equal to the value of the ship after the voyage on which the incident occurred. See Norwich Co. v. Wright, 80 U.S. (13 Wall.) 104, 120-22, 20 L.Ed. 585 (1871). “Thus if the ship is lost, the value is zero; if a few strippings from the wreck and a life boat or two are saved, those may be solemnly handed over to a trustee or their value ascertained and a bond posted.” Grant Gilmore & Charles L. Black, Jr., The Law of Admiralty § 10-29, at 907 (2d ed.1975). Under the procedures established both by statute and rule, when the shipowner files a complaint in admiralty to limit its liability for claims arising in connection with its ship and deposits with the court an amount equal to its “interest in the vessel and freight,” all claims, except the limitation action, shall “cease,” and claimants are required to file their claims in the limitation action. See 46 U.S.C. app. § 185; Fed.R.Civ.P. Supp. R. F(l)-(3), (5). The proceeding is conducted before a court in admiralty without a jury. Through this limitation mechanism, all claims are marshaled and brought into one action — establishing a “concursus ” of all claims, Cushing, 347 U.S. at 415, 74 S.Ct. 608 — and if it is determined that limitation applies, the one action allocates to claimants pro rata the limited funds equaling the value of the ship and its freight pending. See 46 U.S.C. app. § 184; Fed.R.Civ.P. Supp. R. F(8). As the Court in Cushing noted, “the concursus is not solely for the benefit of the shipowner. The elaborate notice provisions of the Admiralty Rules ... ensure that all claimants, not just a favored few, will come in on an equal footing to obtain a pro rata share of their damages.” 347 U.S. at 417, 74 S.Ct. 608. If the shipowner fails to establish its right under the Limitation Act and limitation is therefore denied, the claimants are released to pursue their original claims in full. They may do this through a continuation of the limitation proceeding, or they may return to their original forums and prosecute their original claims which had been enjoined by the order entered in the limitation action. See Wheeler v. Marine Navigation Sulphur Cartiers, Inc., 764 F.2d 1008, 1011 (4th Cir.1985); see also Fecht v. Makowski, 406 F.2d 721, 722-23 (5th Cir.1969); Moore-McCormack Lines, Inc. v. Richardson, 295 F.2d 583, 595-96 (2d Cir.1961); Pershing Auto Rentals, Inc. v. Gaffney, 279 F.2d 546, 552 (5th Cir.1960); In re Wood, 230 F.2d 197, 199 (2d Cir.1956); The Silver Palm, 94 F.2d 776, 780 (9th Cir.1937). IV The estates and families of Pickle and Williams have alleged Jones Act violations which would entitle them to a trial by jury. See 46 U.S.C. app. § 688(a). Because these plaintiffs have demanded a jury trial, the parties to this appeal have expressed differing views about whether and how the right to jury trial is impacted by the district court’s consolidation order. Char Lee Seafood argues that because all claims must be marshaled into the limitation-of-liability action which is tried to the court, the claimants have no rights to a jury trial on those claims. While the claimants acknowledge that the limitation-of-liability action must be determined first without a jury, they argue for a joint trial before the court and a jury, arguing that “there is no prejudice to the petitioners to proceed with parallel, joined suits in admiralty and at law.” They then propose a model under which the claimants would begin the consolidated trial by presenting their evidence before both the court and a jury on their claim against the owner for negligence and unseaworthiness. The shipowner would follow with its evidence with respect to a lack of fault, privity, and knowledge. The court would then determine the limitation-of-liability issues. If the court did not limit liability, the claimants would present their evidence of damages to the jury. They argue that this model would preserve Char Lee Seafood’s Limitation Act rights as well as them jury trial right. We have previously noted that when general maritime claims for negligence and products liability are alleged in a single complaint together with common law claims for negligence and products liability, all of which arise out of the same incident, the entire case is tried to the jury. See Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 153-54 (4th Cir.1995) (citing Fitzgerald v. United States Lines Co., 374 U.S. 16, 21, 83 S.Ct. 1646, 10 L.Ed.2d 720 (1963) (combining for jury trial a maintenance and cure claim with a Jones Act claim)). But the very language of the Shipowner’s Limitation of Liability Act precludes the simultaneous trial of a limitation action and a Jones Act action, by providing explicitly that actions other than the limitation-of-liability action must “cease.” See 46 U.S.C. app. § 185. Moreover, the claimants must, if they wish to present their claims, reassert them in the limitation-of-liability action apart from their original actions. See Fed.R.Civ.P. Supp. R. F(5). Thus, insofar as claimants proceed in a limitation-of-liability action, they are not entitled to a tidal by jury, even if the basis of their claim for fault is made under the Jones Act. But if the limitation-of-liability is denied, then the claimants may elect to proceed with their original actions before any jury authorized and demanded in those actions. See Wheeler, 764 F.2d at 1011; In re Wood, 230 F.2d at 199. While the district court’s consolidation order does not preclude the court from later entering procedural orders which would arrange .the order of proof in a way that might be sufficient to protect the parties’ interests, the process could become unduly complex. Moreover, while the proofs in the various actions might overlap, it might also turn out that in a limitation action, fault would be conceded in view of the small amount ($1,000) deposited in the district court, thereby obviating the complex process. Even though we can foresee that an experienced judge, such as the district judge in this case, could steer the parties through the process in the circumstances where he has all the cases before him with satisfaction to all, prudence dictates that we heed the Supreme Court’s statement in The San Pedro: [AJfter [limitation] proceedings have been commenced in the proper district court in pursuance thereof, the prosecution pari passu, of distinct suits in different courts, or even in the same court by separate claimants, against the shipowners, is, and must necessarily be, ut terly repugnant to such proceedings, and subversive of their object and purpose. 223 U.S. 365, 373, 32 S.Ct. 275, 56 L.Ed. 473 (1912) (citation and quotation marks omitted) (emphasis added). Accordingly, we conclude that during the pendency of the limitation-of-liability proceeding, the claimants’ original actions must remain stayed. If, however, the district court deniefs] limitation of liability, the reason for concursus disappear[s], since the district court no longer need[s] to ensure the fair distribution among claimants of the limitation fund. With the reason for concursus and restraint of other proceedings removed, no reason [would] remain[ ] to deprive [the claimants] of their choice of forum or of their statutory right to jury trials. Wheeler, 764 F.2d at 1011. This process is the same as that articulated some 30 years earlier by the Second Circuit: [T]he issue of the owner’s privity or knowledge must be litigated in the admiralty court, which has exclusive jurisdiction over that issue.... In the interim, the owner is entitled to a restraining order against prosecution of any other suits on claims subject to limitation. If, however, the owner shall be found not to be entitled to a limitation, his liability will be unlimited and there will be no need for a concourse to marshal the various claims. In that event the claims will no longer be “subject to limitation” within the meaning of [Supplemental Rule F(3) to the Federal Rules of Civil Procedure] and, therefore, any order denying the owner’s right to limitation should contain provisions for lifting the restraining order. At that time the claimants may elect to pursue their claims to judgment in the admiralty court or pursue their rights under the Jones Act. In re Wood, 230 F.2d at 199 (footnotes omitted). V For the foregoing reasons, we remand this case with instructions to the district court to sever the limitation-of-liability action from the other actions and to determine it first while staying the other actions. In the event that the limitation of liability is denied, the court should lift the stay and provide the claimants a choice to pursue their claims in the limitation-of-liability action or to revive their original actions wherein they have demanded trials by jury. IT IS SO ORDERED. . While Char Lee Seafood also relies on 28 U.S.C. § 1292(a)(3) to justify its interlocutory appeal, we note that that section does not apply to procedural determinations such as the one under review in this case. See Misk-iewicz v. Goodman, 341 F.2d 828, 830-31 (4th Cir.1965); see also Evergreen Int’l Corp. v. Standard Warehouse, 33 F.3d 420, 424-25 (4th Cir.1994). . The Shipowner’s Limitation of Liability Act provides that all claims and proceedings, other than the limitation action, "shall cease,” 46 U.S.C. app. § 185, possibly suggesting out of context that those claims and proceedings shall come to a permanent end. But in the context of the contingency as to the success, or not, of the limitation action, the word “cease” must be given the meaning of "to forebear” or "to suspend” in order to preserve the rights of claimants to their original actions, including the rights of forum-selection and jury trial, in the event that the limitation action is found to be without merit. See Complete and Universal Dictionary of the English Language 167 (1851) (defining "to cease” as "to forebear or discontinue an action”); see also 2C The Oxford English Dictionary 207 (1978) (defining “to cease” as "to come to the end or to an intermission”); Black’s Law Dictionary 223 (6th ed.1990) (stating that alternative definitions of “cease" include "to bring to an end” and "to suspend”). This conclusion is mandated by our decision in Wheeler, 764 F.2d at 1011, and is consistent with the decisions from the other circuits cited in the text.
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11,627,273
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MURPHY, Circuit Judge. Boyd Rosene and Associates, Inc., appeals an award of attorney’s fees granted to Kansas Municipal Gas Agency and the City of Winfield, Kansas. Rosene argues on appeal that under Oklahoma choice-of-law principles, Kansas law applies and the grant of attorney’s fees to the defendants pursuant to Oklahoma Statute title 12, § 936 was inappropriate.. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, this court concludes that Oklahoma choice-of-law principles would compel the application of Kansas law on attorney’s fees. Because Kansas disallows recovery of attorney’s fees in the absence of a contractual or statutory provision to the contrary, the district court’s award of attorney’s fees is Reversed. I. Background Boyd Rosene and Associates, Inc. (“Ro-sene”), sued Kansas Municipal Gas Agency (“KMGA”) and the City of Winfield, Kansas (“Winfield”) in a breach of contract and tort action. Rosene filed its diversity action in federal court in the Northern District of Oklahoma. In a paragraph entitled “Choice of Law,” the underlying contract provided that it was to be governed and construed in accordance with Kansas law but was silent on the issue of attorney’s fees. The district court entered summary judgment in favor of the defendants, KMGA and Winfield, and ordered all parties to pay their own attorney’s fees. The district court’s decision was initially affirmed on appeal. See Boyd Rosene & Assocs. v. Kansas Mun. Gas Agency, Nos. 96-5199, 96-5209, 96-5211, 1997 WL 297677 (10th Cir. June 5, 1997) {Rosene I). KMGA and Winfield, however, successfully petitioned for rehearing en banc on the issue of their entitlement to attorney’s fees. Upon rehearing en banc, this court clarified Bill’s Coal Co. v. Board of Public Utilities, 887 F.2d 242 (10th Cir.1989), and held that in a contract suit, “rather than automatically applying the law of the state providing the substantive contract law, a district court must first apply the forum state’s choice-of-law rules in resolving attorney’s fees issues.” Boyd Rosene & Assocs. v. Kansas Mun. Gas Agency, 123 F.3d 1351, 1353 (10th Cir.1997) {Rosene II). The en banc court remanded the case to the district court for the application of Oklahoma’s choice-of-law rules in resolving defendant’s claims for attorney’s fees. See id. In applying Oklahoma’s choice-of-law rules, the district court noted that matters of procedure, in contrast to matters of substantive law, are governed by the law of the forum. The district court then held that Oklahoma’s attorney’s fee statutes are procedural, not substantive, and proceeded to apply Oklahoma statute title 12, § 936, which provides for the imposition of attorney’s fees in a breach-of-contract claim. The court concluded that KMGA and Win-field were entitled to reasonable attorney’s fees on Rosene’s breach-of-contract claim and ordered that Rosene pay $100,365.88 to KMGA and $33,727.26 to Winfield. II. Discussion Review of a district court’s determinations of state law in a diversity case is de novo. See Salve Regina College v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991); Mitchell v. State Farm Fire & Cas. Co., 902 F.2d 790, 792-93 (10th Cir.1990) (reviewing choice-of-law determination in diversity case de novo). Underlying factual determinations are reviewed for clear error. See Mid-America Pipeline Co. v. Lario Enters., 942 F.2d 1519, 1524 (10th Cir.1991). A. Choice of law: General Principles A federal court sitting in diversity must engage in a two-step inquiry. See Servicios Comerciales Andinos, S.A. v. General Electric Del Caribe, Inc., 145 F.3d 463, 479 (1st Cir.1998). First, the court must determine whether a particular matter is procedural or substantive for Erie Railroad Co. v. Tompkins purposes. 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). If the matter is procedural, then federal law applies; if the matter is substantive, then the court follows the law of the forum state. See Erie, 304 U.S. at 78 (holding that federal court sitting in diversity must apply state substantive law). Second, if the court has determined that the matter is substantive, then it looks to the substantive law of the forum state, including its choice of law principles, to determine the applicable substantive law. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Barrett v. Tallon, 30 F.3d 1296, 1300 (10th Cir.1994). These two steps are distinct inquiries; thus, what is substantive or procedural for Erie purposes is not necessarily substantive or procedural for choice-of-law purposes. See Sun Oil Co. v. Wortman, 486 U.S. 717, 726, 108 S.Ct. 2117, 100 L.Ed.2d 743 (1988) (rejecting notion that “there is an equivalence between what is substantive under the Erie doctrine and what is substantive for purposes of conflict of laws”) (citing Guaranty Trust Co. of N.Y. v. York, 326 U.S. 99, 108, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945)). Consequently, even though attorney’s fees are substantive for diversity purposes, see King Resources Co. v. Phoenix Resources Co., 651 F.2d 1349, 1353 (10th Cir.1981), they are not thereby necessarily substantive under Oklahoma choice-of-law rules. B. Oklahoma Choice of Law Oklahoma choice-of-law principles require a court to apply Oklahoma rules to procedural matters even when those principles require the application of the substantive law of another jurisdiction. See Veiser v. Armstrong, 688 P.2d 796, 799 n. 6 (Okla.1984) (“In a conflict-of-law analysis matters of procedure are governed by the law of the forum.”) (citing Northern Pac. Ry. Co. v. Babcock, 154 U.S. 190, 194, 14 S.Ct. 978, 38 L.Ed. 958 (1894)); cf. Restatement (Second) of Conflict of Laws § 122 (1971) (“A court usually applies its own local law rules prescribing how litigation shall be conducted even when it applies the local law rules of another state to resolve other issues in the case.”). Unfortunately, Oklahoma law is silent on the classification of attorney’s fees as substantive or procedural for choice-of-law purposes. Nonetheless, it is this court’s responsibility to ascertain how the Oklahoma Supreme Court would decide the choice-of-law issue. See Klaxon, 313 U.S. at 496-97; First Nat. Bank of Durant v. Trans Terra Corp. Int'l, 142 F.3d 802, 806 (5th Cir.1998). Oklahoma courts have classified attorney’s fees as procedural, but did so in the context of determining a statute’s retroactive application. See, e.g., McCormack v. Town of Granite, 913 P.2d 282, 285 (Okla.1996) (“[Statutes relating to the award of attorney fees to a prevailing party are procedural, and subject to retrospective operation.”); Qualls v. Farmers Ins. Co., 629 P.2d 1258, 1259 (Okla.1981) (“ Taxing of attorneys’ fees as costs relates to a mode of procedure.’ ” (quoting Phoenix Fed. Sav. & Loan v. Great S.W. Fire Ins. Co., 603 P.2d 356, 358 (Okla.Ct.App.1979) (internal quotation omitted))); Cox v. American Fidelity Assur. Co., 581 P.2d 1325, 1327 (Okla.Ct.App.1977) (same); Jeffcoat v. Highway Contractors, Inc., 508 P.2d 1083, 1087 (Okla.Ct.App.1972) (holding that § 936 related only to the remedy or mode of procedure). KMGA argues that these cases resolve the issue here. The characterization of an issue as procedural for retroactivity purposes cannot be so easily transplanted into a choice-of-law context. Recalling the admonition that the substantive/procedural dichotomy for Erie purposes is not the same for choice-of-law purposes, the Restatement (Second) of Conflict of Laws cautions generally that “[substantive/procedural] characterizations, while harmless in themselves, have led some courts into unthinking adherence to precedents that have classified a given issue as ‘procedural’ or ‘substantive,’ regardless of what purposes were involved in the earlier classifications.” § 122 cmt. b. The Restatement then provides the example of a decision classifying an issue as procedural for ret-roactivity purposes which “might mistakenly be held controlling on the question whether [the issue] is ‘procedural’ for choice-of-law purposes.” Id. The Supreme Court has iterated this principle: “The line between ‘substance’ and ‘procedure’ shifts as the legal context changes. ‘Each implies different variables depending upon the particular problem for which it is used.’ ” Hanna v. Plumer, 380 U.S. 460, 471, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) (quoting Guaranty Trust, 326 U.S. at 108, 65 S.Ct. 1464). The purposes underlying the substantive/procedural dichotomies employed in retroactivity and choice-of-law cases are completely different. In the choice-of-law context, most matters are treated as substantive. Only in particular instances should a court consider a matter to be procedural. If a case “has foreign contacts and ... many issues in the case will be decided by reference to the local law of another state,” a state should label an issue “procedural” and thus apply its own law only when to do so would serve the purpose of efficient judicial administration. Restatement § 122 cmt. a. The range of issues relating to efficient judicial administration is narrow and includes such items as “the proper form of action, service of process, pleading, rules of discovery, mode of trial and execution and costs.” Id; see generally id. ch. 6. These are matters in which it would be especially disruptive or difficult for the forum to apply the local rules of another state, and in which failure to employ another state’s law will not undermine interstate comity. See id. § 122 cmt. a The general presumption in retroactivity determinations is that a statute will not apply retroactively unless the legislature has clearly expressed its intent that it apply retroactively. See Landgraf v. USI Film Prods., 511 U.S. 244, 275, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994). If the legislature has made its intent clear, a court need not even consider whether the statute should be classified as substantive or procedural. See id. at 280, 114 S.Ct. 1483. Only if the legislature’s intent is not clear should a court consider whether the statute is substantive or procedural. See id. at 275-80, 114 S.Ct. 1483. The question then becomes whether the retroactive operation of the statute would alter the parties’ vested rights. If the parties’ vested rights would be affected, then the statute is substantive and will not be applied retroactively. Otherwise, the statute is deemed to be procedural and may apply retroactively because parties generally have a diminished reliance interest in pro- cedural matters. See id.; see also id. at 275 n. 29, 114 S.Ct. 1483 (noting some instances in which procedural rules will not be applied retroactively). Thus, the considerations entertained by a court in classifying a particular matter as procedural or substantive are quite different depending upon whether the context is choice of law or retroactive application of a statute. Choice-of-law analysis concerns judicial efficiency, while retroactivity analysis primarily concerns legislative intent and only secondarily considers fairness with regard to party expectations. While the divergent purposes of retroac-tivity and choice-of-law analyses render the Oklahoma retroactivity precedents in-apposite in this case, this court acknowledges that both inquiries share a concern about disrupting the parties’ expectations. Nonetheless, the roles of party expectations in each inquiry are meaningfully different. Because conflicts of law are inevitable in a federal system, parties to a contract are empowered to and frequently do choose a particular state’s law to apply to the execution and interpretation of the contract. Absent special circumstances, courts usually honor the parties’ choice of law because two “prime objectives” of contract law are “to protect the justified expectations of the parties and to make it possible for them to foretell with accuracy what will be their rights and liabilities under the contract.” Restatement § 187 cmt. e; see also Williams v. Shearson Lehman Bros., 917 P.2d 998, 1002 (Okla.Ct.App.1995) (concluding that parties’ contractual choice of law should be given effect because it does not violate Oklahoma’s constitution or public policy); Barnes Group, Inc. v. C & C Prods., Inc., 716 F.2d 1023, 1029 n. 10 (4th Cir.1983) (“[P]arties enjoy full autonomy to choose controlling law with regard to matters within their contractual capacity.”). Consistent with the primacy of party expectations in determining contractual obligations, party choice of law is a significant consideration in determining whether an attorney’s fees statute is substantive or procedural for state choice-of-law purposes. See, e.g., El Paso Natural Gas Co. v. Amoco Prod. Co., Civ. A. No. 12083, 1994 WL 728816, at *4-5 (Del.Ch. Dec. 16, 1994) (holding that attorney’s fees are procedural for choice-of-law purposes, that issue of applicability of Texas attorney’s fee statute was substantive because contract contained a Texas choice-of-law provision); Atchison Casting Corp. v. Dofasco, Inc., No. 93-2447-jwl, 1995 WL 655183, at *8-9 (D.Kan.1995) (concluding that issue of entitlement to attorney’s fees was substantive for choice-of-law purposes in part because parties’ choice-of-law provision indicated that they relied upon law of another jurisdiction). In contrast, the parties’ expectations are not given the same elevated status in ret-roactivity cases. Only if legislative intent is unclear are the parties’ expectations considered by the court. Because parties’ expectations are not critical in retroactivity cases, they were not even considered in the Oklahoma cases holding that Oklahoma’s attorney’s fees statute may be applied retroactively. In contrast, when determining choice-of-law issues, Oklahoma courts prioritize party expectations. See, e.g., Shearson Lehman, 917 P.2d at 1002; cf. Bakhsh v. JACRRC Enters., 895 P.2d 746, 747 (Okla.Ct.App.1995) (holding, in choiee-of-forum case, that “[pjarties to a contract may choose the jurisdiction in which all actions arising from their transaction shall be heard”). Finally, this court is not convinced that what counts as procedural for choice-of-law purposes is the same as what counts as procedural for retroactivity purposes. For support we look to the Restatement, to which Oklahoma courts routinely refer on issues relating to choice of law. See, e.g., Beard v. Viene, 826 P.2d 990, 994-98 (Okla.1992); Bohannan v. Allstate Ins. Co., 820 P.2d 787, 795-96 (Okla.1991); Shearson Lehman, 917 P.2d at 1002. Chapter six of the Restatement is dedicated to the general rule that a forum should apply its own local rules “prescribing how litigation shall be conducted even when it applies the local law rules of another state to resolve other issues in the case.” § 122. Oklahoma follows this general rule. See Veiser, 688 P.2d at 799 n. 6. Though not purporting to be exhaustive, chapter six of the Restatement surveys the matters normally considered procedural for choice-of-law purposes. The section “Rules for Management of Litigation” appears to be where a loser-pays attorney’s fees provision would be listed, if at all. See id. §§ 123-36. The procedural issues listed, however, clearly relate to vehicles by which litigation proceeds, such as service of process and notice, pleading and conduct of proceedings, burden of proof, pleading requirements for set-off or counterclaim, and enforcement of judgment, to name a few. See id. §§ 126, 127, 128, 131, 133. Although Oklahoma has not comprehensively addressed which matters it considers procedural for choice-of-law purposes, a few Oklahoma courts have concluded that certain issues, similar to those listed by the Restatement, are procedural for choice-of-law purposes. See, e.g., Flanders v. Crane Co., 693 P.2d 602, 605 (Okla.1984) (summary judgment standards); Veiser, 688 P.2d at 799 & n. 6 (procedure to collaterally attack judgment); Stephens v. Household Fin. Corp., 566 P.2d 1163, 1165 (Okla.1977) (set off, counterclaim, and recoupment). This court is unable to discern any relationship between a loser-pays attorney’s fees provision and the Restatement’s classification of procedural issues for choice-of-law purposes. Moreover, KMGA fails to explain why Oklahoma’s retroactivity cases compel this court to conclude that attorney’s fees are also procedural in a choice-of-law context. Consequently, the retroactivity cases are not controlling in the determination of the status of attorney’s fees for choice-of-law purposes. See also Dofasco, 1995 WL 655183, at *7 (noting Restatement's, caution and rejecting contention that cases holding attorney’s fees procedural in retroactivity context control in choice-of-law context (citing Restatement (Second) of Conflict of Laws § 122 cmt. b)). Taking a different approach, KMGA cites to two cases to support its argument that “under Oklahoma law, the law of the forum governs the mode of procedure and remedy in breach of contract cases, regardless of the law applicable to the substantive contract issues.” In Clark v. First National Bank of Marseilles, Illinois, the Oklahoma Supreme Court stated: The law of the state where the contract is entered into determines matters bearing upon its execution, interpretation, and validity, but the law of the state where the contract is sought to be enforced determines the remedy and mode of procedure in enforcing the same. 157 P. 96, 96 para. 3 (Okla.1916) (syllabus by the court); see also Aetna Cas. & Sur. Co. of Hartford, Conn. v. Gentry, 132 P.2d 326, 326 para. 2 (Okla.1942) (similar). Clark and Aetna, however, do not address the issue here. In Clark, the issue before the Oklahoma Supreme Court was whether a lender who had seized the debt- or’s chattel in Kansas had been entitled to avail itself of Kansas-law procedures for seizing and selling mortgaged chattels. See id. at 97-98. After the seizure and sale in Kansas, the lender had sued the debtor on the promissory note in Oklahoma court. See id. at 97. That court had refused the debtor’s request to assess against the lender a penalty prescribed by Illinois law for a mortgagee who fails to strictly follow the Illinois statute’s procedural requirements for chattel-mortgage foreclosures. See id. Rejecting the debt- or’s argument that Illinois law, not Kansas law, governed the remedy available to a lender because the mortgage had been created and largely performed in Illinois, the court on appeal stated that: [T]he laws of Illinois ... could have no applicability in the state of Kansas where [lender] sought to enforce his chattel mortgage, and that the [lender] having followed the remedy prescribed by the laws of Kansas ... the [debtor] cannot be heard to complain. 157 P. at 99 (emphasis added). Clark did not purport to apply Oklahoma choice-of-law rules and the language quoted by KMGA provides no insight as to how the Oklahoma Supreme Court would decide the issue here. Although Aetna did involve a choice of law issue, it is of no assistance to KMGA’s position. The issue in Aetna was whether Kansas or Oklahoma law applied, the former creating a direct cause of action by victims against a tortfeasor’s insurer and the latter rejecting direct insurer liability. 191 Okla. 659, 132 P.2d 326, 330-31 (Okla.1942). The contract at issue was made in Kansas, pursuant to Kansas law. See id. at 331. Despite the defendant’s argument that the cause of action brought in Oklahoma “constitute[d] merely a procedural or remedial right under the law of [Kansas], and as such is not recognizable or enforceable under the law of Oklahoma, ... where such a right does not exist,” the court concluded that “[t]he nature of the liability on the contract ... is governed by the law of the state where it was made.” Id. Plainly the court concluded that the issue was substantive and thus is consistent with Oklahoma choice-of-law principles providing that the law of the state with the most significant relationship to the transaction and the parties governs the contract. See, e.g., Shearson Lehman, 917 P.2d at 1002 (citing to Restatement § 188, law governing in absence of effective choice by parties). Moreover, KMGA does not argue and we cannot find anything in Aetna to suggest that attorney’s fees would also be considered procedural by the Oklahoma Supreme Court. Despite the parties’ arguments to the contrary, Oklahoma law provides no guidance for the classification of attorney’s fees for choice-of-law purposes. 1. Tenth Circuit Cases Rosene cites to two Tenth Circuit cases to support its assertion that attorney’s fees are substantive. In Hess Oil Virgin Islands Corp. v. UOP, Inc., this court stated: We are convinced that the district court correctly looked to the Oklahoma conflict of laws rule to determine whether Oklahoma would apply its own statute on attorney’s fees or that of the Virgin Islands where the substantive claim arose.... We also agree with the trial court’s view that Oklahoma would apply the law of the Virgin Islands since the right of recovery of the attorney’s fee is intertwined with that of the substantive right. 861 F.2d 1197, 1210 (10th Cir.1988) (citations omitted). Although a federal court and not an Oklahoma state court applied Oklahoma choice-of-law principles, Hess is the only case that discusses the issue here. As precedent, however, Hess is so problematic it does not aid this court’s decision. First, Hess was decided before Salve Regina College v. Russell, in which the Supreme Court rejected the prevailing dear-error standard of review of district courts’ determinations of state law and required instead that courts of appeals review such determinations de novo. 499 U.S. 225, 231, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991). More significantly, however, it is doubtful that Hess remains viable after Rosene II. See Rosene II, 123 F.3d at 1353. Other Tenth Circuit cases also hold that attorney’s fees are substantive, but they do not purport to engage in a choice-of-law analysis for Oklahoma. In Prudential Insurance Co. of America v. Carlson, this court stated that “[statutes providing for attorneys’ fees impose a liability which one may enforce as a matter of right. Such fees are put in controversy in the suit and are a part of the substantive right.” 126 F.2d 607, 611 (10th Cir.1942). Prudential, however, employed the reasoning rejected by Rosene II: “Since the substantive rights of the parties are governed by the lex loci, it follows that the law of [the state where the contract was made] ... governs the right to recover attorneys’ fees.” Id.; see also R.L. Clark Drilling Contractors v. Schramm, Inc., 835 F.2d 1306, 1309 (10th Cir.1987) (citing Prudential). KMGA points to A.T. Clayton & Co. v. Missouri-Kansas-Texas Railroad Co. to support its claim that the Tenth Circuit has “effectively recognized the procedural nature of Oklahoma’s attorney fee statutes.” 901 F.2d 833 (10th Cir.1990). In Clayton the issue was whether an Oklahoma attorney’s fee statute was preempted by a federal statute, the Carmack Amendment, previously determined to preempt state common-law remedies. See id. at 834-35. The Clayton court relied upon a Supreme Court decision concluding that a Texas attorney’s fee statute was not preempted by the Carmack Amendment because the Texas statute did not contradict or burden the Carmack Amendment. See id. (quoting Missouri, Kansas & Texas Ry. Co. v. Harris, 234 U.S. 412, 419-21, 34 S.Ct. 790, 58 L.Ed. 1377 (1914)). The Clayton court concluded that, similar to the Texas statute, the Oklahoma statute “simply provides an incidental compensatory allowance for the expense of employing an attorney” and does not “substantively enlarge the responsibility of the carrier.” See id. at 835 (construing Okla. Stat. tit. 12, § 940 A (1981)). KMGA argues that the Clayton court’s willingness to apply the Oklahoma attorney’s fee statute even when the case was substantively governed by the law of another jurisdiction indicated the court’s view that the statute was procedural. Clayton, however, is completely devoid of state choice-of-law analysis, and the court’s conclusion that an Oklahoma attorney fee statute had a de minimis effect on a defendant’s liability under the Carmack Amendment contributes nothing to the discussion here. Unlike choice-of-law principles which are a zero-sum game (either state A or state B’s law will be applied), preemption law permits the concurrent application of state and federal law if the state law is not inconsistent with the federal law. See Gade v. National Solid Wastes Management Ass’n., 505 U.S. 88, 98-99, 112 S.Ct. 2374, 120 L.Ed.2d 73 (1992) (discussing conflict preemption). Moreover, because federal procedural law is applicable in federal courts, the procedural or substantive nature of Oklahoma’s attorney’s fee statute was irrelevant. See Hanna, 380 U.S. at 465, 85 S.Ct. 1136. 2. Other Jurisdictions KMGA cites the Wyoming Supreme Court decision Smithco Engineering, Inc. v. International Fabricators, Inc. for the proposition that § 936, the Oklahoma attorney’s fee statute at issue here, is procedural. 775 P.2d 1011, 1017-1019 (Wyo.1989). The issue in Smithco was whether, by virtue of contract situs, the party who sued in Wyoming could nonetheless “[utilize] the Oklahoma attorneys’ fees ... statute” in Wyoming. Id. at 1017. The Wyoming Supreme Court reiterated the proposition that matters of procedure are governed by the law of the forum, even if the applicable substantive law is from another jurisdiction. See id. at 1018; see also 16 Am.Jur.2d Conflict of Laws § 151 nn.35 & 37 (1998) (citing Smithco, among other cases, for this proposition); accord Veiser, 688 P.2d at 800 n. 6 (“In a conflict-of-law analysis matters of procedure are governed by the law of the forum.”)- The court proceeded to hold that attorney’s fees are procedural in Wyoming. See id. at 1018. KMGA relies upon dicta in which the court stated that “[w]e are buttressed in our view [that attorney’s fees are procedural] by the fact that Oklahoma recognizes that the assessment of attorney’s fees as costs under ... § 936 ... is procedural.” Id. Smithco is not helpful because the Wyoming Supreme Court expressly engaged in an analysis of Wyoming, not Oklahoma, choice of law. See id. at 1017-18. Additionally, although a state is free to consult the choice-of-law determinations of another state in deciding whether its own statute is substantive or procedural, state courts are not compelled to do so. Cf. Nesladek v. Ford Motor Co., 46 F.3d 734, 737 (8th Cir.1995). Rather, the forum’s law controls the substantive/procedural determination, and KMGA provides no support for the proposition that Oklahoma has found Wyoming choice-of-law analysis compelling enough to adopt it. See Klaxon, 313 U.S. at 496 (requiring federal court sitting in diversity to apply conflict-of-law rules of state in which court sits). For these reasons, Smithco is no more compelling than Dofasco, which held that under Kansas choice-of-law principles, attorney’s fees are substantive. See Dofasco, 1995 WL 655183, at *9. Moreover, the Oklahoma cases upon which Smithco relies are the retroactivity cases already discussed and rejected as insufficiently analogous for choice-of-law purposes. See discussion supra, at 1119-22. Finally, KMGA cites City of Carter Lake v. Aetna Casualty & Surety Co., 604 F.2d 1052 (8th Cir.1979). In Carter, the court considered whether the attorney’s fee statute in the forum state, Nebraska, was substantive or procedural. See id. at 1062. The Eighth Circuit had only to look to the Nebraska Supreme Court, which had addressed the issue and held that the attorney’s fee statute in question was procedural. See id. (citing Hawkeye Cas. Co. v. Stoker, 154 Neb. 466, 48 N.W.2d 623, 634 (1951)). Had Oklahoma decided the issue before us, this decision would be as easy as that in Carter. Carter is also unpersuasive because, like Smithco, it does not purport to apply Oklahoma choice-of-law principles. Moreover, to the extent that KMGA cites to Carter for the appearance of uniformity among courts who have considered the issue here, this court notes that other courts have decided that their attorney’s fee statutes are substantive, not procedural, indicating that this is by no means an obvious or settled issue. For example, an Oregon state court held that because attorney’s fees must be pleaded and proved, “awarding them is a matter of substantive, rather than procedural, right.” Seattle First Nat’l Bank v. Schriber, 51 Or.App. 441, 625 P.2d 1370, 1373 (Or.Ct.App.1981); see also Aries v. Palmer Johnson, Inc., 153 Ariz. 250, 735 P.2d 1373, 1380 & n. 3 (Ariz.Ct.App.1987) (holding that Arizona law providing for award of attorney’s fees was substantive, and citing cases from several other states); Corrosion Rectifying Co. v. Freeport Sulphur Co., 197 F.Supp. 291, 292 (S.D.Tex.1961) (“Texas authorities and other cases clearly hold the issue of attorneys’ fees to be one of substantive rights.... ”). C. § 936 Attorney’s Fees Are Substantive The particular factual circumstances of this case lead this court to conclude that the Oklahoma Supreme Court would classify § 936 attorney’s fees as substantive. This conclusion is compelled by the nature of the attorney’s fees statute at issue and the nature of the underlying contractual dispute. 1. The distinction between loser-pays and bad-faith attorney’s fees This court recognizes a distinction, as do other courts and commentators, between loser-pays attorney’s fees, that is, attorney’s fees awarded to a party simply because it prevailed, and attorney’s fees assessed for a ■willful violation of a court order or against a losing party who acted in bad faith, vexatiously, wantonly, or for oppressive reasons [hereinafter “bad-faith attorney’s fees”]. See, e.g., Servicios Comerciales, 145 F.3d at 480 n. 9 (noting that a rule awarding loser-pays attorney’s fees “has a much better claim to being ‘substantive’ than a rule awarding attorney’s fees only as a sanction for frivolous litigation”). Loser-pays attorney’s fees are normally not within a court’s inherent power. Instead, they reflect a conscious policy choice by a legislature to depart from the American rule and codify the English rule. See 20 Am.Jur.2d Costs § 57 (1995) (“Fees paid to attorneys are ordinarily not recoverable from the opposing party as costs, in the absence of express statutory or contractual authority.”). The authority to award bad-faith attorney’s fees, though frequently codified, is usually within a court’s inherent powers, which it has discretion to exercise in the interests. of justice and efficient judicial administration. For example, the Oklahoma Supreme Court noted that a court’s inherent power to make “an award of attorney’s fees against an opponent under the ‘bad faith’ exception to the American Rule” was based upon its need “to manage its own affairs so as to achieve the orderly and timely disposition of cases.” Winters v. City of Oklahoma City, 740 P.2d 724, 725 (Okla.1987) (discussing Roadway Express, Inc. v. Piper, 447 U.S. 752, 764-65, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980)); see also Pennsylvania v. Delaware Valley Citizens’ Council for Clean Air, 478 U.S. 546, 562 n. 6, 106 S.Ct. 3088, 92 L.Ed.2d 439 (1986). The attorney’s fees provided by § 936 are not assessed for bad-faith litigation; they are instead simply granted to the prevailing party. While courts award bad-faith attorney’s fees for reasons related to judicial administration, § 936 attorney’s fees do not seem to fit the same rubric. See Servicios Comerciales, 145 F.3d at 481 n. 9. 2. Contractual Choice of Law Because parties are empowered to make contractual choice-of-law provisions, their expectations about the applicability of those choice-of-law provisions are a significant factor in the determination of whether an issue is substantive or procedural for choice-of-law purposes. In determining whether an issue is substantive or procedural, the Restatement considers whether the parties shaped their actions with reference to the local law of a certain jurisdiction. See Restatement § 122 cmt. a; see also Dofasco, 1995 WL 655183, at *8-9 (applying Restatement factors and concluding that attorney’s fees are substantive for Kansas choice-of-law purposes). In accord with the Restatement, a few courts have concluded that party reliance on contractual choice-of-law provisions compels a conclusion that attorney’s fees are substantive. Even though the Supreme Court of Delaware had held that attorney’s fees are “a procedural matter governed by the law of the forum,” Chester v. Assiniboia Corp., 355 A.2d 880, 882 (Del.1976), the Delaware Court of Chancery concluded that the parties’ contractual choice of law created a substantive claim of right to attorney’s fees under Texas law. See El Paso, 1994 WL 728816, at *5. The facts of El Paso are quite similar to this case. In a breach-of-contract suit between Amoco and El Paso, the contract in question did not address attorney’s fees but did contain a general choice-of-law provision designating Texas law as controlling. See' id. Texas permits the recovery of attorney’s fees and Delaware does not. See id. at *4. Amoco, the prevailing party, argued that because of the contractual choice-of-law provision, Texas law should govern and hence it should recover attorney’s fees; El Paso argued that because Delaware considers attorney’s fees to be procedural, the law of the forum should apply. See id. The court stated that the core analysis should be “whether the issue is one that constitutes or is vitally bound up with the adjudication of the asserted substantive right.” Id. The court noted, however, that certain attorney’s fees statutes, for example, those which award attorney’s fees as a result of bad-faith litigation, do not involve a substantive right. See id. Thus, the court reasoned, the application of the law of the forum in those instances would not be perceived as failing to afford full faith and credit to sister states, or as disappointing the reasonable expectations of either party. See id. Not confronted with this type of attorney’s fee, the court found compelling the contractual provision that Texas law governed. See id. at *5. Even though the contract did not specifically address attorney’s fees, the parties had nevertheless made the victor’s entitlement to fees a “substantive contractual right by reason of designating as governing the law of ... Texas.” Id. The El Paso court is not alone. In Dofasco the Kansas federal district court concluded that attorney’s fees were substantive in part because the contract, although silent as to attorney’s fees, provided for Canadian law to control, tending to show that the parties had shaped their conduct in light of Canadian law. See Dofasco, 1995 WL 655183, at *8-9. Cf. Bensen v. American Ultramar Ltd., No. 92 CIV. 4220, 1997 WL 317343, at *15 (S.D.N.Y. June 12, 1997) (despite conclusion that attorney’s fees were procedural under New York choice of law, stating that even if law of foreign jurisdiction applied, “it would be unjust to compel plaintiff to absorb defendants’ sizable legal bill when he was not aware of the possibility and did not have the opportunity to conduct the litigation accordingly”). In this case, the parties expressed in their choice-of-law provision that Kansas law would govern their agreement. They said nothing, however, about the allocation of attorney’s fees. While Kansas law does not statutorily permit recovery of attorney’s fees, it does not prohibit the parties from contracting to shift or allocate attorney’s fees. See Kan. Stat. Ann. § 84-2-710, cmt. 1 (1997) (“Seller’s incidental damages: Attorney’s fees incurred in bringing the breach of contract action, however, are not recoverable as incidental damages under this section.”); see also T.S.I. Holdings, Inc. v. Jenkins, 260 Kan. 703, 924 P.2d 1239, 1254 (Kan.1996). The parties’ failure to provide for attorney’s fees, in the face of their adoption of Kansas law, indicates their expectation that each party would bear its own costs. Moreover, the. contract was created in 1994 when Bill’s Coal, decided in 1989, was the law. Thus, if the parties contracted with an eye toward the applicable law, their expectation would have been that Kansas law would govern the recovery of attorney’s fees. This court therefore concludes that, consistent with the parties’ expectations, Oklahoma choice-of-law principles would apply Kansas law which does not allow recovery of attorney’s fees absent a contractual provision to the contrary. This decision is fully in accord with Ro-sene II. Rosene II states that “rather than automatically applying the law of the state providing the substantive contract law, a district court must first apply the forum state’s choice-of-law rules.” 123 F.3d at 1353 (emphasis added). Rosene II thus prescribes a process by which a court must abide in determining a choice-of-law issue; it does not prescribe a result. A court is not permitted to slavishly adhere to the law of the state providing the substantive law. Neither, however, is a court prohibited from weighing heavily the expectations of the contracting parties when, as here, such parties’ reliance is a consideration in the forum state’s choice-of-law principles. D. Attorney’s fees as costs Because it seems incontrovertible that costs are procedural, the question remains whether it matters that § 936 provides attorney’s fees “be taxed and collected as costs.” Okla. Stat. tit. 12, § 936. Under Oklahoma law, attorney’s fees are not synonymous with costs. See Sisk v. Sanditen Inv., Ltd., 662 P.2d 317, 320 (Okla.Ct.App.1983) (“The usage of the word ‘costs’ in a statute providing for the award thereof is not ordinarily understood to include attorney fees.”). Instead, attorney’s fees awards are only permitted under statutes specifically providing for recovery of attorney’s fees. See Harlow Corp. v. Bryant Exploration & Prod. Co., 816 P.2d 1154, 1155 (Okla.Ct.App.1991) (holding that statute authorizing award of “costs” did not authorize trial court to award attorney’s fees to prevailing party). Although costs must also be allowed by statute, Oklahoma provides for their universal award to successful plaintiffs and defendants as a matter of course. See Okla. Stat. tit. 12, § 928 (“Where it is not otherwise provided by this and other statutes, costs shall be allowed of course to the plaintiff, upon a judgment in his favor, in actions for the recovery of money only, or for the recovery of specific, real or personal property.”); id. § 929 (similar, defendants). That attorney’s fees are taxed as costs is a matter of form, not substance, and does not render attorney’s fees procedural for choice-of-law purposes. Y. Conclusion This court concludes that § 936 attorney’s fees are a substantive issue in the litigation arising from the contract between Rosene and KMGA. Accordingly, Oklahoma choice-of-law principles would compel the application of Kansas law to this issue. The judgment of the federal court in the Northern District of Oklahoma awarding attorney’s fees to KMGA and Winfield is REVERSED and this case is REMANDED to the district court for entry of judgment consistent with this opinion. . Section 936 provides: In any civil action to recover on an open account, a statement of account, account stated, note, bill, negotiable instrument, or contract relating to the purchase or sale of goods, wares, or merchandise, or for labor or services, unless otherwise provided by law or the contract which is the subjecti[of] the action, the prevailing party shall be allowed a reasonable attorney fee to be set by the court, to be taxed and collected as costs. Okla. St. Ann. tit. 12, § 936 (West 1988). . In its reply brief, Rosene argues that UCC § 1-105’s choice-of-law provision supersedes Oklahoma common-law choice-of-law rules and requires the application of Kansas law to the remedies. See Okla. Stat. tit. 12A, § 1-105. Rosene's argument misses the mark because it presupposes that attorney’s fees are substantive. Were this court to decide that attorney’s fees are procedural, the law of the forum would apply regardless of a substantive-law provision such as UCC § 1-105. Although this court concludes that attorney’s fees are substantive, we nonetheless decline to address Rosene's argument because it comes too late in the day. Rosene never raised this argument in the district court and only made the argument on appeal in its reply brief, constituting waiver on two grounds. See Sac & Fox Nation v. Hanson, 47 F.3d 1061, 1063 (10th Cir.1995) (issue raised for first time on appeal will not be reviewed except for most manifest error); State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979, 984 n. 7 (10th Cir.1994) (failure to raise issue in opening brief constitutes waiver). . KMGA proffers Gable & Gotwals Pension Plan & Trust v. Southwest Medical Center-Moore, Inc. to support its claim that Oklahoma considers attorney’s fees to be procedural for choice-of-law purposes. In Gable, the Oklahoma court of appeals held that attorney's fees are procedural for purposes of choice of law. See No. 84,241, slip op. at 4 (Okla.Ct.App. Apr. 26, 1996). Unfortunately, Gable is unpublished and Oklahoma does not permit unpublished opinions to be considered as precedential. See Okla. Stat. tit. 12, § 15, app. 1, Rule 1.200(b)(5) (West 1998) ("Because unpublished opinions are deemed to be without value as precedent and are not uniformly available to all parties, opinions so marked shall not be considered as precedent by any court or cited in any brief or other material presented to any court, except to support a claim of res judicata, collateral es-toppel, or law of the case.”). Furthermore, in making its decision, the Gable court relied upon the retroactivity cases discussed infra and made no effort to explain their applicability to choice-of-law considerations. See id. . KMGA argues that because the attorney’s fee statute is located in the civil procedure portion of the Oklahoma statutes and not among the substantive provisions of the statutes, the Oklahoma legislature viewed § 936 as procedural and not substantive. This argument fails because Title 12 of the Oklahoma Statutes, which contains the fee statute in issue, also contains substantive-law provisions, such as Oklahoma’s law on libel and slander, and its law pertaining to change of name. See Okla. Stat. tit. 12, §§ 1441-1449, 1631-1637 (West 1998). . Although two cases concluded that attorney's fees are substantive for retroactivity purposes, the rulings were limited to the context of permanent-total-disability cases in which the award of attorney's fees was statutorily "dependent upon the award of compensation benefits itself, which is substantive.” Burr v. Snitker, 865 P.2d 1258, 1259-60 (Okla.Ct.App.1993), overruled on other grounds in Special Indem. Fund v. Weber, 895 P.2d 292, 297-98 (Okla.1995); see also Ailey v. D & B Constr. Co., 855 P.2d 147, 149 (Okla.Ct.App.1993), similarly overruled by Weber, 895 P.2d at 297-98. In these cases, the trial court's retroactive application of a new statute dictating periodic rather than lump-sum payment of attorney’s fees resulted in a substantive change in the parties' vested rights to such fees. The issue here, in contrast, is entirely independent of an award of damages, rendering these cases inapplicable. . The Restatement (Second) of Conflict Laws notes that "[pjrobably the most important function of choice-of-law rules is to make the interstate ... system[ ] work well. Choice-of-law rules, among other things, should seek to further harmonious relations between states and to facilitate commercial intercourse between them.” See id. § 6 cmt. d. . The Restatement offers four factors to consider in classifying an issue for choice-of-law purposes, one of which is whether the parties shaped their actions with reference to the local law of a certain state. See Restatement § 122 cmt. a. The parties' expectations, the Restatement notes, are "a weighty reason for applying [the law relied upon].” Id. . Party expectation plays such a significant role in contract choice of law cases that even when the parties to a contract fail to make a choice-of-law, the test provided by the Restatement to assist the court in discerning which state's law ought to govern includes consideration of the parties’ expectations. See Restatement § 188 cmt. b ("[T]he protection of the justified expectations of the parties is of considerable importance in contracts.”). . The Restatement does not similarly survey substantive matters’. . Restatement § 130, "Methods of Securing Obedience to Court,” might include attorney's fees awarded to sanction bad-faith conduct, but not loser-pays attorney’s fees. The difference between these two types of attorney’s fees is discussed infra. . The Restatement also considers whether: (1) the issue is one whose resolution would be likely to affect the ultimate result of the case; (2) the precedents have tended consistently to classify the issue as procedural or substantive for conflict-of-laws purposes; and (3) applying another jurisdiction’s rules of judicial administration would unduly burden the forum. See id. § 122, cmt. a. We note that these remaining factors leave the decision in this case in equipoise. The attorney's fees issue will not affect the ultimate disposition of this case, which weighs in favor of KMGA. On the other hand, applying the Kansas law of attorney's fees would not unduly burden the court, which weighs in favor of Rosene. Finalfy, as already noted, there is no consistent classification of attorney's fees to be found in either Oklahoma or Tenth Circuit law. . Without suggesting that the conclusion would have been different, this court notes that in Du-Wel Products, Inc. v. United States Fire Insurance Co., perhaps the most cogent state court decision concluding that attorney’s fees are procedural for choice-of-law purposes, the contract at issue did not contain a choice-of-law provision. See 236 NJ.Super. 349, 565 A.2d 1113, 1120 (N.J.Super.Ct.App.Div.1989). . Restatement § 122 states that "[a] court usually applies its own local rules prescribing how litigation shall be conducted even when it applies the local law rules of another state to resolve other issues in the case.” Comment a explains that issues of judicial administration include "the proper form of action, service of process, pleading, rules of discovery, mode of trial and execution and costs." Id. cmt. a. (emphasis added).
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3,739,781
|
PER CURIAM: Adrian Howard Jackson appeals the district court’s order denying his motion for reduction of sentence pursuant to 18 U.S.C. § 3582(c) (2006), and a subsequent order denying his motion for reconsideration. We have reviewed the record and find no reversible error. Accordingly, we affirm for the reasons stated by the district court. United States v. Jackson, No. 0:98-cr-01126-JFA-2 (D.S.C. filed Dec. 18 & entered Dec. 19, 2008; filed Jan. 7, 2009 & entered Jan. 8, 2009). We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. AFFIRMED.
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3,746,097
|
PER CURIAM: The attorney appointed to represent John Arredondo has moved for leave to withdraw and has filed a brief in accordance with Anders v. California, 386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed.2d 493 (1967). Arredondo has filed a response. Our independent review of the record, counsel’s brief, and Arredondo’s response discloses no nonfrivolous issue for appeal. Accordingly, counsel’s motion for leave to withdraw is GRANTED, counsel is excused from further responsibilities herein, and the APPEAL IS DISMISSED. See 5th Cir. R. 42.2. Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5th Cir. R. 47.5.4.
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3,746,360
|
PER CURIAM. Jim Housley appeals the district court’s 28 U.S.C. § 1915(e)(2)(B) preser-vice dismissal of his civil rights complaint and the court’s denial of his motion to proceed in forma pauperis (IFP) on appeal. We grant leave to proceed IFP and affirm. Upon de novo review of the dismissal, see Moore v. Sims, 200 F.3d 1170, 1171 (8th Cir.2000) (per curiam) (standard of review), we agree that any claims Housley asserted that challenged his conviction— explicitly or implicitly—were properly dismissed, see Preiser v. Rodriguez, 411 U.S. 475, 489-90, 93 S.Ct. 1827, 36 L.Ed.2d 439 (1973) (state prisoner challenging conviction on federal constitutional grounds is limited to habeas corpus); Heck v. Humphrey, 512 U.S. 477, 486-87, 114 S.Ct. 2364, 129 L.Ed.2d 383 (1994) (when state prisoner seeks damages in § 1983 suit, district court must consider whether judgment would necessarily imply invalidity of conviction and, if it would, must dismiss case if plaintiff cannot demonstrate that conviction has already been invalidated), but we modify the dismissal of any such claims for damages to be without prejudice, see Schafer v. Moore, 46 F.3d 43, 45 (8th Cir.1995) (per curiam) (dismissal under Heck of claims for damages should be without prejudice so plaintiff can refile if he satisfies Heck requirements). We also agree that any other claims Housley raised which arose out of events preceding his conviction were properly dismissed on statute-of-limitations grounds. See 18 U.S.C. § 2520(e) (civil action may not be commenced later than 2 years after date upon which claimant first has reasonable opportunity to discover violation); 42 U.S.C. § 1986 (1-year statute of limitations); Ark.Code. Ann. § 16-56-105 (3-year personal-injury statute of limitations); Roach v. Owen, 689 F.2d 146, 146-47 (8th Cir.1982) (per curiam) (state’s general statute of limitations usually applies to civil rights suits; court properly applied Arkansas’s 3-year statute of limitations to plaintiffs 42 U.S.C. § 1985 claim); Miller v. Norris, 247 F.3d 736, 739 (8th Cir.2001) (Arkansas 3-year personal injury statute of limitations applies to 42 U.S.C. § 1983 action); see also Myers v. Vogal, 960 F.2d 750, 751 (8th Cir.1992) (per curiam) (district court can dismiss IFP complaint under predecessor statute to § 1915(e)(2)(B) if it is apparent statute of limitations has run). We also affirm the dismissal of nousley’s claims challenging his transfer and conditions of confinement, because Holley's allegations failed to state a claim on which relief may be granted. See Helling v. McKinney, 509 U.S. 25, 35, 113 S.Ct. 2475, 125 L.Ed.2d 22 (1993) (prisoner states Eighth Amendment claim by alleging prison officials have, with deliberate indifference, exposed him to levels of ETS that pose unreasonable risk of serious damage to his future health); Madewell v. Roberts, 909 F.2d 1203, 1207 (8th Cir.1990) (finding no protected liberty interest in particular prison classification status; stating elements of Eighth Amendment claim for compelled labor). Finally, we find no reversible error by the district court in denying Housley’s motion to amend his complaint to add allegations related to his parole status. See Greenholtz v. Inmates of Neb. Penal and Corr. Complex, 442 U.S. 1, 9-11, 99 S.Ct. 2100, 60 L.Ed.2d 668 (1979) (statute that provides for possibility of parole does not create liberty interest protected by Due Process Clause); Holloway v. Dobbs, 715 F.2d 390, 393 n. 3 (8th Cir.1983) (per cu-riam) (any error in district court denying plaintiff leave to amend complaint against defendant who had not served responsive pleading was harmless because amended complaint failed to state claim). In sum, the judgment is modified to reflect that, to the extent Housley has asserted Heck-barred claims for damages, they are dismissed without prejudice, and the judgment is affirmed as modified. . The Honorable Jimm Larry Hendren, Chief Judge, United States District Court for the Western District of Arkansas, adopting the report and recommendations of the Honorable James R. Marschewski, United States Magistrate Judge for the Western District of Arkansas. . We note that the district court has already ordered collection of the appellate filing fee in installments.
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3,743,571
|
PER CURIAM: Dwayne Morrison appeals the district court’s order granting Defendant’s summary judgment motion on his retaliation claims, brought pursuant to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e to 2000e-17 (2000). We have reviewed the record and find no reversible error. Accordingly, we affirm the district court’s order. See Morrison v. Nicholson, No. 4:07-cv-00003-RAJ-JEB (E.D. Va. filed July 11, 2008; entered July 14, 2008). We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. AFFIRMED. Although Morrison’s complaint also asserted that he was unlawfully terminated because of his race, Morrison withdrew this discrimination claim during the course of proceedings before the district court,
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3,748,347
|
PER CURIAM: Pierre Ernest Falgout, III, appeals his convictions and 11,520-month sentence for 32 counts of producing child pornography, in violation of 18 U.S.C. § 2251(a). I On appeal, Falgout argues that his indictment charged him with duplicative counts because most of the counts in the indictment charged him with essentially the same offense. However, a knowing and voluntary guilty plea waives an argument that the indictment was duplicitous. United States v. Fairchild, 803 F.2d 1121, 1124 (11th Cir.1986). Therefore, Falgout waived his duplicitousness argument by pleading guilty to the counts in the indictment. II Falgout next argues that his 11,-520-month sentence was unreasonable because, during sentencing, the district court considered evidence that was not a proper part of the record, and did not give sufficient weight to the mitigating evidence that Falgout presented. He also argues that it was unreasonable for the district court to impose his sentences consecutively and not concurrently. We evaluate the instant sentence as effectively imposing a life sentence. See U.S.S.G. § 5G1.2(d), discussed infra at 6-7; see also infra at 9 n. 1. We conclude that Falgout’s challenge to the sentence must fail. We review a sentence for unreasonableness under a “deferential abuse-of-discretion standard.” Gall v. United States, 552 U.S. 38, 128 S.Ct. 586, 591, 169 L.Ed.2d 445 (2007). If a defendant fails to object to facts that are contained in the pre-sentence investigation report (“PSI”), he is deemed to have admitted those facts. United States v. Bennett, 472 F.3d 825, 833-34 (11th Cir.2006). A sentence is proeedurally unreasonable if the district court failed to calculate or incorrectly calculated the guidelines, treated the guidelines as mandatory, failed to consider the 18 U.S.C § 3553(a) factors, selected a sentence based on clearly erroneous facts, or failed adequately to explain the chosen sentence. Gall, 522 U.S. at -, 128 S.Ct. at 597. A sentence is substantively unreasonable “if it does not achieve the purposes of sentencing stated in § 3553(a).” United States v. Pugh, 515 F.3d 1179, 1191 (11th Cir.2008). The burden of establishing that the sentence is unreasonable in light of the record and the § 3553(a) factors lies with the party challenging the sentence. United States v. Talley, 431 F.3d 784, 788 (11th Cir.2005). Section 3553(a) provides that district courts must consider, inter alia, (1) the applicable guideline range; (2) the nature and circumstances of the offense; (3) the history and characteristics of the defendant; (4) the need for the sentence imposed to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense; (5) the need for adequate deterrence to criminal conduct; (6) protection of the public from further crimes of the defendant; and (7) the need to avoid unwarranted sentencing disparities. 18 U.S.C. § 3553(a). “The weight to be accorded any given § 3553(a) factor is a matter committed to the sound discretion of the district court, and we will not substitute our judgment in weighing the relevant factors.” United States v. Amedeo, 487 F.3d 823, 832 (11th Cir.2007) (quotations and alterations omitted). An example of the application of all these factors to a child pornography defendant can be seen in Pugh, where the defendant was convicted of having child pornography, and the district court gave him a significant downward variance during sentencing. 515 F.3d at 1183, 1187. The district court relied on a number of mitigating factors, including: (1) the defendant’s lack of a criminal history; (2) the fact that he did not specifically seek out child pornography; and (3) the testimony of an expert witness, who stated that the defendant primarily was addicted to adult pornography and had a low risk of recidivism. Id. at 1184-87. We concluded that the significant downward variance was substantively unreasonable, in part, because the final sentence did not afford adequate deterrence to criminal conduct, which “is particularly compelling in the child pornography context.” Id. at 1194. In addition, we found that the downward variance did not reflect the seriousness of the offense, the guideline sentencing range, and the need to protect the public from further crimes by the defendant. Id. at 1195,1200-01. Falgout’s sentence was neither procedurally nor substantively unreasonable because the district court considered multiple § 3553(a) factors and determined that a downward variance was not warranted due to the extremely egregious nature of Falg-out’s offenses. With regard to procedural unreasonableness, Falgout does not argue that the district court improperly calculated his guideline range, treated the guidelines as mandatory, or failed to explain the chosen sentence. Turning to the remaining procedural reasonableness factors, the district court explicitly considered a number of § 3553(a) factors when it was determining Falgout’s sentence: (1) the nature and circumstances of the offenses; (2) Falgout’s history and characteristics; (3) the seriousness of the offenses; and (4) the need to protect the public from further crimes committed by Falgout. Therefore, the district court did not fail to consider the § 3553(a) factors. With regard to whether the district court sentenced Falg-out using clearly erroneous facts, the facts that the district court used to sentence him came from the PSI and the accompanying images and video, none of which were objected to by Falgout. Because Falgout’s failure to object to the PSI resulted in him admitting the facts that the PSI set forth, and because he does not argue that the inferences that the district court drew from the pictures and video were clearly erroneous, the district court did not sentence him using clearly erroneous facts. See Bennett, 472 F.3d at 833-34. Therefore, Falgout’s sentence is procedurally reasonable. Turning to the issue of substantive reasonableness, the instant situation is similar to the one that this Court addressed in Pugh. Just like the expert witness in Pugh, who testified that the defendant in that case had a low risk of recidivism, Dr. Preston, in the instant case, testified that there was a possibility that Falgout could be rehabilitated. See Pugh, 515 F.3d at 1184-87. In addition, similar to the defendant in Pugh, who had no prior criminal history, Falgout was a law-abiding citizen for most of his life, and his criminal history category was I. See 515 F.3d at 1184-87. However, in Pugh, this Court found that these mitigating factors were not sufficient to justify a significant downward variance. See 515 F.3d at 1194. In the instant case, Falgout’s criminal conduct was far more egregious than the conduct of the defendant in Pugh, and, therefore, like Pugh, the mitigating factors in the instant case do not justify a downward variance. See id. Accordingly, Falgout’s sentence was substantively reasonable, and the district court did not abuse its discretion in denying him a downward variance. Section 5G1.2(d) provides for the imposition of consecutive sentences under the circumstances in this case. That section states, “If the sentence imposed on the count carrying the highest statutory maximum is less than the total punishment, then the sentence imposed on one or more of the other counts shall run consecutively, but only to the extent necessary to produce a combined sentence equal to the total punishment.” U.S.S.G. § 5G1.2(d). Here, the “total punishment” under the Sentencing Guidelines called for life imprisonment, and yet the statutory maximum for the count with the highest maximum was 30 years. Thus, the district court properly followed § 5G1.2 by imposing the sentences for multiple counts consecutively in these circumstances. United States v. Davis, 329 F.3d 1250, 1253-54 (11th Cir.2003) (upholding the imposition of consecutive sentences under § 5G1.2(d) of the Sentencing Guidelines). Ill Falgout finally argues that his sentence violates the Eighth Amendment’s ban on cruel and unusual punishment because it is grossly disproportionate to the offenses that he committed. If a sentencing issue is raised for the first time on appeal, we will review that issue only for plain error. United States v. Aguillard, 217 F.3d 1319, 1320 (11th Cir.2000). Under plain error review, there must be (1) an error, (2) that is plain, and (3) that affects substantial rights. Id. When these three factors are met, we may then exercise our discretion and correct the error if it seriously affects the fairness, integrity, or public reputation of the judicial proceedings. United States v. Olano, 507 U.S. 725, 732, 113 S.Ct. 1770, 1776, 123 L.Ed.2d 508 (1993). Review for plain error requires an error to be clear or obvious. United States v. Straub, 508 F.3d 1003, 1008 (11th Cir.2007). In a non-capital case, “the Eighth Amendment encompasses, at most, only a narrow proportionality principle,” and, therefore “successful challenges to the proportionality of sentences are exceedingly rare.” United States v. Raad, 406 F.3d 1322, 1323 (11th Cir.2005) (emphasis in the original). To determine whether a sentence violates the Eighth Amendment: a reviewing court must make a threshold determination that the sentence imposed is grossly disproportionate to the offense committed and, if it is grossly disproportionate, the court must then consider the sentences imposed on others convicted in the same jurisdiction and the sentences imposed for commission of the same crime in other jurisdictions. Id. at 1324. In the instant case, Falgout committed a number of extremely serious offenses against very young children that the district court found to be some of the worst offenses that it had ever seen. Falgout states in a very conclusory manner that his sentence was disproportionate to his crime and to other similar convictions in the district but provides no support. Because it is not obvious that Falgout’s sentence is disproportionate to his offenses, this sentence does not constitute a plain error violation of the Eighth Amendment’s bar to cruel and unusual punishment. Accordingly, we affirm the district court’s decision. AFFIRMED. . We decline to address whether an 11,520 month sentence is more than is “sufficient but not greater than necessary” as provided for in 18 U.S.C. § 3553(a). We decline to address that because Falgout's brief fails to make that argument with sufficient clarity, and also for the following reason. We readily hold in this case that a sentence that will guarantee that Falgout remains in prison for life is a reasonable sentence. Thus, the argument that we decline to address could not possibly benefit Falgout.
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3,738,601
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PER CURIAM: Rafael Omar Villegas-Martinez appeals from his judgment of conviction and sentence, based on a jury verdict finding him guilty of illegal re-entry into the United States after deportation, in violation of 8 U.S.C. §§ 1326(a), (b) (2006). In his sole claim on appeal, Villegas-Martinez challenges the district court’s admission of a warrant of deportation, claiming violation of his confrontation clause rights. We affirm. Villegas-Martinez specifically challenges the Government’s introduction, through Officer Day, of a warrant of deportation, which document reflected that VillegasMartinez held an illegal alien status at the time of his offense. The underlying basis for his objection is Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004). We review de novo the district court’s admission of alleged Confrontation Clause violations. United States v. Abu Ali, 528 F.3d 210, 253 (4th Cir.2008). We find no error in the district court’s admission of the warrant of deportation. The record was admitted as a self-authenticating public record, and hence is not considered to be testimonial hearsay under Crawford. Crawford, 541 U.S. at 56, 124 S.Ct. 1354. See also United States v. Burgos, 539 F.3d 641, 644-45 (7th Cir.2008) (collecting cases). Accordingly, we affirm Villegas-Mar-tinez’s conviction and sentence. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. AFFIRMED. . Officer Day signed and executed the warrant. . In addition, Officer Day’s presence as a trial witness subjected him to full cross-examination and satisfied any Confrontation Clause concerns, and Villegas-Martinez's complaints on appeal as to the unavailability at trial of another officer who actually witnessed Ville-gas-Martinez's departure and the failure of Officer Day to specifically testify as to the departure go to the credibility of the testimony of the testifying officer, which this court leaves to the jury to assess. See United States v. Lomax, 293 F.3d 701, 705 (4th Cir.2002); United States v. Manbeck, 744 F.2d 360, 392 (4th Cir.1984).
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115,102
|
WATERMAN, Circuit Judge. This case comes before us on a petition of the National Labor Relations Board, pursuant to section 10(e) of the National Labor Relations Act, as amended, 29 U.S.C. § 160(e), for enforcement of its order issued against respondent, Metropolitan Millwork, Inc. The order was issued on the basis of the Board’s findings that the respondent had committed unfair labor practices in violation of Sections 8(a) (1), 8(a) (2) and 8(a) (3) of the Act, 29 U.S.C. §§ 158(a) (1), 158 (a) (2), 158(a) (3). The Board adopted with some modification the findings, conclusions and recommendations of the Trial Examiner who originally heard the case; and his Intermediate Report and Recommended Order, reciting in detail the facts of this case, are attached to the Board’s decision, reported at 138 NLRB 1482. Respondent, in defending against the Board’s petition for enforcement, does not deny that it was guilty of acts which would ordinarily constitute the above mentioned unfair labor practices, and there is more than enough evidence in the record to support the Board’s conclusion that such acts were committed. Rather, respondent argues that the conduct it engaged in was in reply to a strike which was an unprotected one because the striking union failed to satisfy the requirements of Section 8(d) of the Act, 29 U.S.C. § 158(d). Section 8(d), after defining the duty to bargain, provides: “That where there is in effect a collective-bargaining contract covering employees in an industry affecting commerce, the duty to bargain collectively shall also mean that no party to such contract shall terminate or modify such contract, unless the party desiring such termination or modification— “(1) serves a written notice upon the other party to the contract of the proposed termination or modification sixty days prior to the expiration date thereof, or in the event such contract contains no expiration date, sixty days prior to the time it is proposed to make such termination or modification; “(2) offers to meet and confer with the other party for the purpose of negotiating a new contract or a contract containing the proposed modification; “(3) notifies the Federal Mediation and Conciliation Service within thirty days after such notice of the existence of a dispute, and simultaneously therewith notifies any State or Territorial agency established to mediate and conciliate disputes within the State or Territory where the dispute occurred, provided no agreement has been reached by that time; and “(4) continues in full force and effect, without resorting to strike or lock-out, all the terms and conditions of the existing contract for a period of sixty days after such notice is given or until the expiration date of such contract, whichever occurs later: “ * * * Any employee who engages in a strike within the sixty-day period specified in this subsection shall lose his status as an employee of the employer engaged in the particular labor dispute, for the purposes of sections 8, 9, and 10 of this Act, as amended, but such loss of status for such employee shall terminate if and when he is reemployed by such employer.” Despite the contentions of the respondent we find substantial evidence in the record to support the Board’s finding that the striking union complied with Section 8(d). In brief the facts follow: The respondent and Local 282, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, entered into a collective bargaining contract for the term of two years from July 1, 1959 to June 30, 1961. The contract was negotiated with Local 282 by the New York Lumber Trade Association, Inc. (hereinafter Association) which represented respondent along with about 75 other employers. Although respondent and each of the other employers, at the union’s insistence, signed individual contracts with the union identical to the one signed by the Association’s representative, there is no doubt that the Association bargained with Local 282 as agent for respondent and the other employer members of the Association. In April of 1961, well in advance of the 60 day notice period required by Section 8(d), the Association and Local 282 notified each other of the approaching termination of the contract, and each gave written notice to the appropriate Federal and State authorities. On June 9 the respondent by letter informed Local 282 that it had authorized the Association to bargain for it. On July 19, however, while negotiations between Local 282 and the Association were in progress, the respondent wrote to the union informing it that respondent was withdrawing its authorization to the Association and was planning to bargain with Local 282 by itself. By October 10 no new contract had been agreed upon and Local 282,’s employees at respondent’s plant went out on strike. We have no doubt that Local 282’s notice to the mediation authorities in April completely fulfilled any obligations Section 8(d) (3) imposed on the union at that time. Respondent argues, however, that after Local 282 had been informed of respondent’s decision to negotiate on an individual basis, the union was bound under Section 8(d) (3) to notify these same authorities that it had an individual dispute with respondent. We do not agree. When Local 282 gave timely notice to the authorities of a dispute between it and the Association, the Association represented respondent and 75 other employers and had negotiated the contract then existing. The mediation authorities were therefore put on notice of a dispute between Local 282 and all of the employers who had negotiated their contract with the union through the Association. When respondent thereafter chose to bargain on an individual basis no new notice was required. Whatever the motivations were that impelled respondent to forsake its bargaining agent and.to begin bargaining on an individual basis, it could not legitimately expect to gain another period of grace from work interruption on the theory that a new notice had to be transmitted to the mediation authorities. Respondent also argues that the notice the union gave the Association in April was defective under Section 8(d) (1) because it failed to spell out an intent to modify or terminate the existing contract. It is true that the Trial Examiner, whose findings were adopted by the Board with minor modifications, referred to the union’s notice and did not specifically state that it evinced an intent to modify or to terminate. Necessary to the decision below, however, was a finding that the appropriate notice had been given, and there is nothing in the record which indicates the contrary. Indeed, what there is in the record supports a finding that full notice was given. Both the Association and the union, after exchanging notices, gave further notice to Federal and State mediation authorities, thereby indicating a mutual awareness of the need for negotiations looking toward the formulation of a new contract. Respondent offered no evidence below tending to show any inadequacy in this notice, and belatedly raises this argument for the first time in this court. We find no merit therein. The petition of the Board is granted.
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1,306,812
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BRYSON, Circuit Judge. This case concerns the law of setoffs. The dispute began when the government made two overpayments to Applied Companies, a government contractor. Applied agreed that it was obligated to repay the money, but instead of repaying it directly, Applied sought to set off the debt against obligations the government owed to it on other contracts. The government rejected Applied’s proposals and instead discharged Applied’s debt by setting it off against the amount the government had agreed to pay Applied pursuant to a termination settlement agreement on another contract. Applied objected to the setoff and sued in the Court of Federal Claims to recover the funds that were withheld from the proceeds of the termination settlement agreement. The Court of Federal Claims rejected Applied’s challenge to the government’s setoff. Applied Cos. v. United States, 37 Fed. Cl. 749 (1997). We affirm. I This case has a complicated factual background, the details of which are set forth in the thorough opinion prepared by the trial judge. See Applied Cos., 37 Fed. Cl. at 751-55. Applied entered into several contracts with the government to supply air conditioning units. One of those contracts, Contract No. 0058, was terminated for default by the government. The Armed Services Board of Contract Appeals converted the default termination into a termination for the convenience of the government, and the parties negotiated a termination settlement agreement. Under the terms of the settlement, the government agreed to pay Applied $2,818,931.34 to resolve all claims from‘the terminated contract. The government, however, did not pay Applied that sum, but instead paid only $911,-604.11. That sum was paid to Comerica Bank, to which Applied had assigned the proceeds of Contract No. 0058 as partial collateral for a loan. The government used the remainder to offset two overpayments that the government had previously made to Applied on another contract, Contract No. C072, three years earlier. The overpayments on Contract No. C072, which were apparently the product of a computer error, resulted in a total excess payment to Applied of $1,399,005.19. Applied promptly notified the government of the overpayments, but instead of returning the money, Applied proposed several arrangements to discharge the debt by crediting the overpayments against other outstanding government obligations to Applied. The government did not accept any of Applied’s proposals, but insisted on direct repayment. Applied did not return the overpayments, and the government ultimately chose to recoup the overpayments by offsetting them against the sum the government agreed to pay Applied in connection with the settlement of Contract No. 0058. Applied protested the setoff, but the contracting officer denied the protest. Applied sought review of the government’s actions in the Court of Federal Claims, arguing that the setoff violated the terms of the settlement agreement on Contract No. 0058 and was improper for other reasons as well. The Court of Federal Claims rejected each of Applied’s arguments and granted summary judgment in favor of the government. First, the court held that the termination settlement agreement did not bar the setoff, because nothing in the agreement deprived the government oí its common law setoff right. Second, the court rejected Applied’s argument that it had previously retired its debt to the government by setting it off against obligations the government owed Applied on other contracts. The court found that Applied had “not established that at the time the government properly exercised its setoff rights [Applied] had previously exercised a valid setoff.” Third, the court held that the government’s setoff did not have to be predicated on the final decision of a contracting officer, because the government’s right to recover the overpayment was not subject to the Contract Disputes Act. Finally, the court rejected Applied’s argument that the Assignment of Claims Act of 1940, 31 U.S.C. § 3727 and 41 U.S.C. § 15, barred the government from taking a setoff against the funds in the termination settlement agreement. The “nosetoff” provision of the Assignment of Claims Act, the court explained, was intended to protect assignees and therefore was not enforceable by an assignor such as Applied. II Applied first argues that it retired the overpayment debt well before the government took its setoff, and that it did so by offsetting the overpayment debt against contract obligations the government owed to Applied under Contract No. B013, a separate contract for air conditioning units. The trial court rejected that argument, and we uphold the court’s ruling on that issue. The record of correspondence between Applied -and the government concerning the overpayment debt indicates that the matter remained unresolved until the government’s setoff of the settlement proceeds. Applied wrote four letters between April 1992 and July, 1992 notifying the government of its intention to discharge the overpayment debt by crediting it against' the government’s obligations on various contracts with Applied. In three of those letters, Applied proposed to credit the overpayments against its claim on Contract No. 0058' and asked for the government’s acquiescence in that arrangement. The government responded that it did not agree to Applied’s proposed crediting plan and demanded immediate repayment. In May 1993 the government wrote a letter informing Applied that more than $96,000 in interest had accrued on the overpayments and offering Applied the alternative of entering into an installment plan to discharge the debt. Applied responded by requesting a “Deferred . Payment Agreement,” which would have allowed the government to offset the overpayments against the settlement of various contract claims that Applied had filed against the government. Again, the government declined Applied’s proposal. On August 28, 1993, Applied sent the government the results of its “payment analysis” of two contracts, Contract No. C072 and Contract No. B013. Applied’s analysis showed that the government owed it a balance of $21,905.02 on the two contracts. Applied derived that amount by crediting the government with the original overpayment on Contract No. C072, subtracting unpaid amounts on that contract, and subtracting an additional $1,280,349.19 that Applied claimed was the "outstanding balance the government owed on Contract No. B013. In effect, Applied proposed that the overpayment be set off against amounts owed to Applied on the C072 and B013 contracts. In the Court of Federal Claims, Applied also submitted the declaration of its Chief Finaneiál Officer, Kent Fortin, who averred that he had actually made the claimed setoff between Contract No. C072 and Contract No. B013 in July 1992, more than a year before the August 1993 letter. On August 30, 1993, two days after the letter containing the payment analysis, Applied wrote the government and proposed to release ' the government from Applied’s claims oh yet another contract, Contract No. A080, “in return for which our obligation to return the alleged ‘overpayment’ will be dropped.” The government again declined Applied’s offer. Applied’s final proposal, in letters sent in May 1994 and July 1994, offered again to set off 'the overpayments against the government’s liability to Applied on Contract No. 0058, which by that time had been converted to a termination for convenience. Ultimately, of course, the government did just that by withholding the overpayment, plus interest, from the Contract No. 0058 termination settlement. After summarizing that evidence, the trial court concluded that Applied had failed to establish that it offset the overpayments under Contract No. C072 against the government’s alleged debt under Contract No. B013. We agree. Although Applied’s letters to the government consistently expressed an intention to resolve the overpayment issue through the use óf a setoff, Applied did not offer evidence sufficient to show that it had actually taken a setoff. As the Supreme Court recently explained, a valid setoff requires “(i) a, decision to effectuate a setoff, (ii) some action accomplishing the setoff, and (iii) a recording of the setoff.” Citizens Bank v. Strumpf, 516 U.S. 16, 19, 116 S.Ct. 286, 133 L.Ed.2d 258 (1995). The setoff must be permanent and result in a complete extinguishment of the other party’s debt. See Amoco Prod. Co. v. Fry, 118 F.3d 812, 818 (D.C.Cir.1997). Applied’s correspondence with the government is irreconcilable with its current contention that in mid-1992 it effected a permanent setoff that satisfied the applicable legal standard. On several occasions after 1992, Applied suggested methods of dealing with the overpayments that were entirely inconsistent with its present claim that it had already taken a setoff against Contract No. B013. At one point, the government even requested that Applied inform it of any set-offs that Applied had taken against other contracts, offering to “reduce the amount of [Applied’s] indebtedness accordingly” if subsequent investigation bore ■ out Applied’s claims. In response, Applied did not assert that it had set off the overpayments against Contract No. B013, nor did it supply records to show that any other setoff had been taken. Nor did Applied offer any accounting records ' in the trial court to support its setoff argument. To the contrary, the record of correspondence before the court, demonstrated that Applied had never acted to make its alleged setoff permanent or released the government .from its corresponding obligations under Contract No. B013. In light of the strong documentary evidence supporting the government’s contention that Applied never set off the overpayment debt against any particular contract obligation and the absence of evidentiary support for Applied’s argument, Mr. Fortin’s affidavit alone is insufficient to create a genuine issue of material fact. It is well settled that “a conclusory statement .on the ultimate issue does not create a genuine issue of fact.” Imperial Tobacco Ltd. v. Philip Morris, Inc., 899 F.2d 1575, 1581 (Fed.Cir.1990). We therefore agree with the trial court’s decision rejecting Applied’s contention that it had already set off its obligation to the government before the government exercised its setoff right against the proceeds of the termination settlement agreement. Ill Applied’s second argument is that the government violated the terms of its termination settlement agreement on Contract No. 0058 when it set the overpayment obligation off against the amount the government agreed to pay Applied under that settlement agreement. Applied argues that when the. government agreed to “pay” the full amount of the settlement agreement, it could not then reduce that sum by the amount of the setoff. The short answer to that contention is that an agreement to “pay” a certain amount does not bar the government from exercising its common law right of setoff against the agreed-to obligation. Applied could have negotiated to bar the government from exercising its setoff right against the proceeds of the termination settlement agreement, but it did not. We are aware of no principle of contract law that would justify prohibiting the government from exercising its setoff right against the settlement agreement proceeds any more than against any other obligation by the government to a party that owed the government money in return. Applied argues that the government’s action was contrary to a provision of the Federal Acquisition Regulation and must be invalidated on that ground as well. The provision in question, 48 C.F.R. § 49.109-1, states that a termination settlement agreement “shall cover any setoffs that the Government has against the contractor that may be applied against the terminated contract.” Applied contends that because the payment provision of the termination settlement agreement in this case did not reflect any setoff for the overpayment debt, the FAR provision bars the government from reducing the amount of the payment under the agreement by the amount of the overpayment debt. The government responds that the FAR provision is meant to refer only to setoffs of sums under the terminated contract, rather than to any setoff that the government may have against the contractor, from whatever source. We find the government’s interpretation of the FAR provision more persuasive. Adopting Applied’s interpretation would require the termination contracting officer to ascertain whether the contractor has any outstanding debt to the government on any other contract before concluding a settlement agreement. Leaving aside the question whether the termination contracting officer has the authority to settle debts arising from separate contracts, such a system would impose an onerous burden on the termination contracting officer, whose knowledge is generally limited to the single contract at hand. The standard termination settlement ■ agreement contained in the FAR also sup ports the government’s interpretation. The FAR provision setting forth the termination settlement agreement, 48 C.F.R. § 49.603-1, calls for the termination contracting officer to' arrive at a net settlement amount by subtracting certain deductions from the gross settlement amount. Those deductions include partial or progress payments previously made to the contractor, property disposal credits, and “other amounts due the Government under this contract.” 48 C.F.R. § 49.603-1(b) (emphasis added). The regulation makes no reference to setoffs from other contracts. The express limitation in the regulation to setoffs under the terminated contract convinces us that the FAR provision does not require termination contracting officers to include setoffs arising from different contracts between the same contractor and the government. Finally, Applied argues that both the termination contracting officer and Applied’s representative intended that the termination settlement agreement not be subject to set-offs and that by setting off the overpayment debt against the proceeds of the agreement, the government violated the intention of the parties to the agreement. The agreement, however, was integrated and contained no prohibition against setoffs. There is no reason to read an implied prohibition against setoffs into the agreement, as it is well settled that the government retains its setoff right unless there is some explicit statutory or contractual provision that bars its exercise, which is not the ease here. See United States v. Munsey Trust Co., 332 U.S. 234, 239, 108 Ct.Cl. 765, 67 S.Ct. 1599, 91 L.Ed. 2022 (1947); Marre v. United States, 117 F.3d 297, 302 (5th Cir.1997). IV Applied next contends that because it had executed an assignment of its rights to the proceeds of Contract No. 0058 to Comerica Bank prior to the settlement, the government was barred from exercising a setoff against the amount to be paid under the settlement. Applied relies on the Assignment of Claims Act of 1940, which restricts the government’s right to set off funds-that are to be paid to an assignee. See 31 U.S.C. § 3727; 41 U.S.C. § 15. In November 1994, Applied consolidated a number of existing debts into a single revolving credit loan with Comeriea Bank. Applied agreed to assign the proceeds of Contract No. 0058 to Comeriea as partial collateral for the loan. Pursuant to that agreement, Applied completed and filed a notice of assignment, which was acknowledged by the government, instructing that all payments due to Applied under Contract No. 0058 should be paid directly to Comeriea. Following the settlement agreement in March 1995, the government paid the settlement amount, less the amount subtracted pursuant to the setoff, directly to Comeriea. The bank did not challenge the government’s setoff, and Applied repaid its entire outstanding balance to Comeriea several months later. Comeriea has disclaimed any interest in this litigation. The Court of Federal Claims held that Applied could not rely on the Assignment of Claims Act, because the benefits under that statute run only to assignees. Applied admits that no reported cases have allowed an assignor to enforce an assignee’s right to prevent the government from setting off a debt owed by the assignor. Applied argues, however, that “contractors must be able to enforce their own contracts” and that Applied is entitled to prevent a setoff of the settlement proceeds of Contract No. 0058. The Assignment of Claims Act seeks to encourage the private financing of government contracts by creating specific exceptions to the general rule that forbids the assignment of claims against the government. The clause that prevents setoffs from being taken against payments to an assignee is an additional incentive to assure lenders that proceeds from government contracts may be used as a reliable source of collateral. See Central Bank v. United States, 345 U.S. 639, 643, 73 S.Ct. 917, 97 L.Ed. 1312 (1953). As the language of the statute suggests, the benefit is one that accrues to assignees. See 41 U.S.C. § 15(f) (“payments to be made thereafter to an assignee of any moneys due or to become due under such contract shall not be subject to reduction or setoff’). The protection against setoffs, moreover, is necessarily a limited one tied to the assignee’s interest in the collateral. See First Nat’l City Bank v. United States, 212 Ct.Cl. 357, 548 F.2d 928, 934-35 (1977) (“Congress did not, we think, wish to eat into the Government’s normal right of setoff against the assignor more than would be necessary to induce such monetary aid in [financing contracts].”). Comeriea’s interest in the proceeds of 'Contract No. 0058 as collateral for Applied’s loans ceased when Applied repaid its loans. The general rule is that “an assignment made as collateral security for a debt gives the assignee only a qualified interest in the assigned chose, commensurate with the debt or liabilities secured.” Beaconwear Clothing Co. v. United States, 174 Ct.Cl. 40, 355 F.2d 583, 590 (1966). The assignment in favor of Comerica was therefore released upon repayment of Applied’s debt. With the extinguishment of Comerica’s interest in the collateral, the prohibitions against setoffs in the Assignment Of Claims Act became unenforceable. The no-setoff clause confers no independent rights outside of the context of a valid assignment to secure an existing debt. See American Nat’l Bank & Trust Co. v. United States, 22 Cl.Ct. 7, 13 (1990) (“[E]ven assuming that the United States had breached a valid assignment with plaintiff, [in the absence of an outstanding debt] plaintiff would not be entitled to recover any damages.”). Consequently, the retirement of Applied’s debt to Comerica and release of the assignment of the proceeds of Contract No. 0058 mooted the attendant terms of that assignment, including the nosetoff clause. We do not need to decide whether an assignor might be able to bring suit to enforce the no-setoff provision of the Assignment of Claims Act when the debt is still outstanding and the ássignment remains in effect. For this case, it is sufficient to hold that Applied cannot seek to rescind a setoff by relying on the terms of an assignment that has already been released. Applied argues that such a result effectively penalizes it for being solvent and able to repay its debt to Comerica. Applied’s obligations, however, were not contingent on the enforceability of the no-setoff provision. Applied was required to repay Comerica whether or not the government applied a setoff against the settlement funds. In essence, Applied’s complaint is that Comerica did not pursue the remedy that was granted to it by the Assignment of Claims Act, and instead sought recovery directly from Applied. That is a choice that the law gave Comerica, and Applied cannot complain because Comerica did not exercise the option that Applied would have preferred. V Applied’s final argument is that the government’s setoff was improper because the government failed to comply with the procedures of the Contract Disputes Act, 41 U.S.C. §§ 601-613, before recouping the amount of the overpayments from the settlement. Specifically, Applied argues that the government was required to obtain a final decision from the contracting officer before taking a setoff. The “comprehensive procedures” of the Contract Disputes Act govern the resolution of contract disputes that arise between the government and contractors. See Cecile Indus., Inc. v. Cheney, 995 F.2d 1052, 1055 (Fed.Cir.1993). As Applied notes, the Act provides that “[a]ll claims by the government relating to a contract shall be the subject of a [final] decision by the contracting officer.” 41 U.S.C. § 605(a). There was no final decision by a contracting officer in this case prior to the setoff from the settlement "with Applied. Before we can conclude that the government violated the Contract Disputes Act, however, we must decide whether the setoff to recoup the erroneous overpayment can fairly be characterized as a claim “relating to a contract.” Although the Contract Disputes Act does not define the class of government claims that “relat[e] to a contract,” the Federal Acquisition Regulation describes various types of “contract debts” that may be asserted by the government. See 48 C.F.R. § 32.602. The list includes “overpayments related to errors in quantity or billing or deficiencies in quality.” 48 C.F.R. § 32.602(d). Applied claims that the computer error in this case was an overpayment related to billing and that the setoff was therefore a claim relating to that contract debt. We do not agree that a government claim arising from a computer error creates a claim relating to a contract. Congress’s decision to limit the applicability of the Act’s procedures to those claims “relating to” a contract indicates that the claim at issue must have some relationship to the terms or performance of a government contract. The overpayments resulting from the computational error in this case have no such relationship. Applied did not invoice the government for the credited amounts, nor did the government intend to pay Applied those sums for its work under the contract. Instead, as both sides agree, the additional payments appear to have resulted from the insertion of an extra digit in the checks the government sent to Applied. The government may recover erroneous payments of that kind without recourse to the procedures of the Contract Disputes Act. See Aetna Cas. & Sur. Co. v. United States, 208 Ct.Cl. 515, 526 F.2d 1127, 1130 (1975); Consortium Venture Corp. v. United States, 5 Cl.Ct. 47, 52 (1984), aff'd, 765 F.2d 163 (Fed.Cir.1985). Forcing the government to comply with the Contract Disputes Act procedures in order to reclaim an erroneous overpayment would not serve any of the purposes underlying the Act. The Contract Disputes Act was intended primarily to create opportunities for informal dispute resolution at the contracting officer level and to provide contractors with clear notice as to the government’s position regarding contract claims. See S.Rep. No. 95-1118, at 1 (1978), reprinted in 1978 U.S.C.C.A.N. 5235, 5235. Neither of those concerns are implicated in the case of over-payments such as the ones at issue in this case. There is no dispute as to the government’s entitlement to the return of the mistaken overpayments, and Applied was at all times fully aware of the government’s position regarding repayment. Accordingly, the government did not need to obtain a contracting officer’s final decision regarding its entitlement to the erroneous overpayments before setting off the debt against the settlement with Applied. AFFIRMED.
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541,536
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420 U. S. 534. Petitions for rehearing denied.
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541,010
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Correctional Superintendent. C. A. 3d Cir. Certiorari denied.
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6,130,480
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DEADY, District Judge. On November 24. 1S77, an information was filed in this court by the district attorney against Levi AY. Nelson, charging him with cutting and removing from the lands of the United States, to wit, a certain described portion of township S) south, range 39 east, in the district of Oregon, five hundred pine trees, of the value of one hundred and twenty-five dollars, for his own private advantage and profit, contrary to section 2461 of the Revised Statutes. The defendant pleaded “not guilty;” and the case was submitted to the court for .-judgment upon an agreed cáse, that was stipulated and agreed should be deemed and taken as a special verdict. The special verdict substantially finds: (1) That between January 1, 1875, and November 1, 1S77, the defendant cut and removed timber, as alleged, but that there were only one hundred and fifty of the trees, of the value of twenty-five cents each; (2) that in 1S70 the defendant took up and claimed the premises, containing about seventy acres, for the purpose of placer mining, and in August, 1872. caused the same to be duly surveyed and platted as a placer mining claim; (3) that in 1873 the defendant made due proof of the performance of the conditions necessary to entitle him to a patent from the United States for the premises, except the payment of the price fixed by law therefor, which has never been paid, and that said premises are not within any organized mining district; (4) that said premises are “placer mining ground;” and it is necessary, to successfully mine the same, to remove the trees standing thereon, and “that it is better for the purpose of such mining that the timber be removed so far in advance of the work as to give opportunity for stumps t.o rot and so be more easily disposed of;” (5) that between 1870 and 1877, the defendant, for the purpose of working the premises as a- mining claim, constructed buildings, flumes and ditches thereon to the value of two thousand five hundred dollars; and has worked said, ground continuously during the mining season of each year by employing from fifteen to twenty miners during such period; (6) that it is the business of the defendant tv -work such mining ground during the minims season, and he expects to continue the sam-i permanently; (7) that about one third of an acre of said ground is worked over each year, and that said one hundred and fifty trees were taken from about four acres of the same. Neither the information nor the special verdict states according to what meridian the township containing the locus, is nine south and thirty-nine east. But as there is but one meridian in this judicial district, the AVallamet. it must be construed as referring to that This locates the premises in Baker county, Oregon. Section 2461, supra, upon which this information is founded, is section 1 of the act of March 2, 1S31. It prohibits absolutely the cutting or removal of any timber from the public lands for any purpose “other tlian the use of the navy of the United States.” under a penalty of not less than three times the value of the timber, and imprisonment not exceeding twelve months. The pre-emption, homestead and mining law's of subsequent date which confer the right of occupation of limited quantities of the public lands upon settlers and miners for agricultural and mining purposes, and with a view’ of enabling them to obtain patents therefor, are laws upon the same subject—in pari materia—-with the timber act of 1831, and must be construed with it. It is not to be supposed that congress authorized the occupation of the public lands by the laws aforesaid for the purposes of agriculture and mining, without intending to so modify the operation of the timber act as t.o permit the occupants thereunder to cut and use the timber upon their respective claims so far as the same is necessary for the purpose for which they are occupied. By the enactment of these laws, the timber act is so far repealed. Such has been the ruling of this court in giving instruction to juries in several unreported eases. In Re U. S. v. McEntee [Case No. 15.673], the defendant was sued in the district court for Minnesota, to recover the value of timber cut by him on the public lands. The defendant justified the cutting upon the ground that he occupied the premises under the homestead act of 1862 [12 Stat. 392], The court (Nelson, J.), instructed the jury that “everything necessary for the cultivation of the land and manifesting an 'intention to make permanent occupancy and bona fide settlement, is legitimate and proper to be done. The land can be cleared and timber sold, if cut down for the purpose of cultivation; but if sale and traffic is the only reason for severing the timber, and it is not done with a view of improving the land, the intentions of the lawgiver are subverted.” The jury found a verdict for the United States. Section 2319, Rev. St. (section 1, Act May 10, 1872 [17 Stat. 91]), declares that “all valuable mineral deposits in lands belonging to the United States, both surveyed and unsurvey-ed, are hereby declared to be free and open to exploration and purchase, and the lands in which they are found to occupation and purchase by citizens of the United States,” under certain regulations as to quantity and work thereon during the period between selection and purchase. Among the conditions upon the keeping of which this right of occupation rests, is the performance of a certain amount of labor upon the premises annually. If the claim is a vein or lode, the occupant may purchase the same upon proof of the performance of the conditions precedent by paying therefor at the rate of five dollars per acre, or if. as in this case, it be a “placer,” at the rate of two dollars and fifty cents per acre. Title 22, e. C, Rev. St. It is manifest from the reading of the whole of this chapter of the Revised Statutes that in contemplation of the law this right or privilege of exploration and occupation is only given as preliminary to a purchase by the occupant, and that if it shall be ascertained that the location contains “valuable mineral deposits,” he will proceed without unnecessary delay to obtain a patent from the United States therefor, by making proof of the location and labor thereon and the payment of the purchase price therefor. But, as was held in Chapman v. Toy Long [Case No. 2.610), there is no specific provision of the law, compelling the occupant to purchase, and he may continue to hold the claim by occupation and labor, so long as he desires, and then abandon it. The defendant in this case occupies the premises under this law, and claims the right to cut and remove the timber therefrom as incidental to and in aid of his right to mine thereon. But he is not the owner of the land until he pays for it. and obtains the United States patent. It is a part of the public domain. In the meantime the defendant is occupying it under a mere license from the government, which may be revoked at any time by the repeal of the act giving it. The defendant, however, is not to be considered in default for not having paid for the land. His license under the statute to occupy and to work it as mining ground is sufficient for that purpose until withdrawn by congress, without purchasing it. But in considering the question whether this land is occupied by the defendant solely as mineral land or in whole or in part for its timber: and whether the trees in question have been cut and removed only as a necessary and convenient means of working the ground as a placer mine, and not otherwise, the fact that he has occupied it under the act of 1872. for nearly six years, as land containing “valuable mineral deposits,” without availing himself of his right to purchase it at the mere nominal price of two dollars and fifty cents per acre cannot be overlooked. If the land or the greater portion of it is of little or no value as mining ground but valuable for its timber, the defendant might occupy it for a few years until he had stripped the tract of its timber, and worked out the few acres that really contained valuable deposits, and then abandon it to the government. In the region where this land is situated timber is very scarce and valuable. The temptation to locate one hundred and sixty acres of timber land as mining ground, and by putting a few dollars’ worth of labor upon it annually, be thereby enabled to dispose of the timber upon it at from fifty to one hundred dollars an acre, is very great, and if the defendant’s construction of the law is to obtain there is nothing to prevent its being done. No proof is required as to the amount of mineral deposit in the land; and the only security against the law being used as a cover to strip the public lands of their valuable timber is to limit the right of the locator of a mining claim to the use of such timber thereon as is necessary to the actual working of such claim. Apply these suggestions to this case. The defendant has located seventy acres of land under the mining law, and occupied it as a mining claim for several years. During this time he has worked over two or three acres of the ground, and cut timber off of four other acres, and disposed of it for his private benefit—probably sold it for firewood. It is admitted that the defendant has a right to cut down or destroy the trees so fast as the earth in which they stand is dug or washed away in the process of mining; and it may also be admitted that such timber may be used or disposed of by the locator in any way that is most profitable to himself rather than to let it remain on the ground to decay. But whether the cutting of the timber is merely incidental to a bona fide mining operation, or the mining operation is a mere pretext for appropriating and disposing of the timber is a question of fact to be determined in each case by its own circumstances. But when a party goes beyond this, and removes and disposes of acres of timber in advance of his mining operations for no better reason than that “it is better” for the purpose of mining to remove the timber “so far in advance of the work as to give opportunity for the stumps to rot” before the bank on which they stand is sluiced or dug down, in my judgment, he is speculating in United States timber rather than mining for the precious metals. If the law were construed so as to permit four acres of timber to be removed to give the stumps time to rot before mining operations were commenced, that from ten, fifty, or one hundred acres might be removed for the same reason. The removal of timber from a mining claim to be justifiable should proceed pari passu with the operation of mining. Whoever wants to go further or faster than this, and for any reason appropriate the timber to his own use in advance of iiis mining operations, can only do so safely toy paying the purchase-price of the land, and becoming the owner thereof. There must be judgment for the plaintiff on the verdict. In arriving at this conclusion it is not necessary to impute to the defendant a conscious purpose to practice any of the devices which it has been shown his construction of the law would permit. They have ■only been suggested to show that the consequences of such a construction would be a material perversion and abuse of the law, and therefore it ought not to prevail. The defendant may have been honestly mistaken as to his rights, or he may have become so accustomed to the violation of the law with the apparent consent of the government, that he regarded it as of no effect. Since the settlement of this coast the law has been enforced by fits and starts, most oft-enly against the “small-fry.” The executive department, in case of the large operations at least, has usually nullified the action of the courts by arbitrary pardons, or ignored the law by compromising in advance with the trespassers in consideration of a trifling compensation, called “stumpage.” In 1864, a party who had openly taken hundreds of thousands of dollars worth of a rare and most valuable cedar timber from the public lands near Port Orford, and manufactured and sold the same in the San Francisco market, was found guilty in this court of violating the statute and fined the comparatively small sum of eighteen thousand seven hundred dollars—the smallest fine the law allowed. Shortly after, the executive department without consulting the district attorney, or having any information concerning the merits of the case except the ex parte and interested statements of the defendant, granted him a full and unconditional pardon. Under these circumstances I do not deem it expedient to punish the defendant further than the law requires. The government by its indifference and neglect to enforce the law has encouraged its violation. The defendant will be sentenced to pay a fine equal to triple the value of the timber ■cut and removed—seventy-five dollars.
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541,503
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C. A. 3d Cir. Certiorari denied.
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541,026
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C. A. 7th Cir. Certiorari denied.
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541,249
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C. A. 5th Cir. Certiorari granted, judgment vacated, and case remanded for further consideration in light of United States v. Bisceglia, 420 U. S. 141 (1975). Mr. Justice Stewart and Mr. Justice Blackmun would deny the petition. Mr. Justice Powell took no part in the consideration or decision of this petition. See also note, supra, p. 940.
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541,740
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C. A. 3d Cir. Certiorari denied.
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541,175
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C. A. 4th Cir. Certiorari denied. Mr. Justice Douglas would grant certiorari.
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541,978
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Motion of Philip M. Carden, of Nashville, Tenn., to resign as a member of the Bar of this Court is granted. It is ordered that his name be stricken from the roll of attorneys admitted to practice before the Bar of this Court. Me. Justice Douglas took no part in the consideration or decision of this matter.
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541,808
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C. A. 2d Cir. Certiorari denied.
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541,566
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Sup Ct. Wash. Motion of respondent Murray for leave to proceed in forma pauperis granted. Certiorari denied.
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541,452
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C. A. 8th Cir. Certiorari denied.
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541,780
|
C. A. 8th Cir. Motion of respondent for leave to proceed in forma pauperis granted. Certiorari denied.
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541,879
|
C. A. 9th Cir. [Certiorari granted, 420 U. S. 989.] Peter David Ehrenhaft, Esquire, of Washington, D. C., is invited to brief and argue this case as amicus curiae in support of judgment below. Mr. Justice Douglas took no part in the consideration or decision of this order.
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541,155
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Sup. Ct. 111. Certiorari denied.
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541,631
|
C. A. 1st Cir. Certiorari denied.
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541,829
|
Appeal from Sup. Ct. Va. dismissed for want of jurisdiction. Treating the papers whereon the appeal was taken as a petition for writ of certiorari, certiorari denied.
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541,848
|
C. A. 5th Cir. [Certiorari granted, 420 U. S. 907.] Motion for appointment of counsel granted. It is ordered that Ben L. Aderholt, Esquire, of Houston, Tex., a member of the Bar of this Court, be, and he is hereby, appointed to serve as counsel for respondent in this case.
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541,591
|
C. A. 5th Cir. Certiorari denied.
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541,101
|
C. A. 10th Cir. Certiorari denied.
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541,915
|
C. A. 5th Cir. Certiorari denied.
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1,306,710
|
MORRIS SHEPPARD ARNOLD, Circuit Judge. Former inmate Ramon Sanchez appeals from the district court’s grant of summary judgment to Missouri Department of Corrections (MDOC) officials in his 42 U.S.C. § 1983 action. With one exception, we conclude the district court properly entered summary judgment for the reasons it stated, and we will not address those claims. As to the Eighth Amendment claim against defendant Mike Taggart, however, we reverse the entry of summary judgment and remand to the district court for further proceedings. Although the facts are contested, we recount the facts and inferences therefrom most favorably to Mr. Sanchez, the non-moving party. See Dulany v. Carnahan, 132 F.3d 1234, 1237 (8th Cir.1997). On July 27, 1993, Mr. Taggart was the Functional Unit Manager assigned to Mr. Sanchez’s housing unit at Algoa Correctional Center (ACC). At approximately 11:15 a.m., in response to road flooding, Acting Assistant Superintendent Amile Holmes directed defendant and other supervisors to assign ACC students, including Mr. Sanchez, to emergency sandbagging. Mr. Holmes attested that because of the expediency of the situation, inmates had not been screened, and that inmates should have brought any question regarding their duty status to the supervisor’s attention. Mr. Taggart called Mr. Sanchez to his office before 11:30 a.m. and ordered him to report for sandbagging duty at 1:00 p.m. Mr. Sanchez responded that he was on “no duty status” and that housing unit documents prohibited him from participating in hard labor. Mr. Taggart, without checking the records, replied, “I’m giving you a direct order” to report for sandbagging. Shortly before 1:00 p.m., Mr. Sanchez reported for duty and was instructed to load sandbags into trucks. Between 1:45 and 2:00 p.m., he realized he had “seriously reinjured his back.” He was taken on a stretcher to the prison hospital, where he was examined by a nurse and placed on pain medication. The next day, after Mr. Sanchez experienced severe pain and numbness and was unable to stand, he was seen by a physician, who provided him crutches and muscle relaxánts in addition to the pain medication. Each housing unit maintained a file for each inmate in the unit; the files included physicians’ orders for bunk and job assignments. At the time of Mr. Taggart’s order, Mr. Sanchez’s medical condition was reflected in a July 1992 lumbar spine radiology report, which included an impression of two herniated disks; and Mr. Sanchez testified by deposition that other documents in the medical files placed him on no-duty or light-duty status because of his prior injury. A June 24 MDOC interoffice communication from “ACC-Medical” to “Classification” listed Mr. Sanchez’s “Duty Status” as “Light duty, sitting down job.” ■ Mr. Sanchez claimed that Mr. Taggart violated the Eighth Amendment’s prohibition against cruel and unusual punishment by ordering him to report for sandbagging. The district court rejected the magistrate judge’s recommendation to allow the claim to proceed, finding that Mr. Sanchez did not offer evidence establishing Mr. Taggart knew he was physically incapable of performing sandbagging work, and concluding that the order to sandbag during an emergency did not violate Mr. Sanchez’s clearly established constitutional rights, and thus Mr. Taggart was entitled to qualified immunity.. The Eighth Amendment’s prohibition against cruel and unusual punishment forbids knowingly compelling an inmate to perform labor that is beyond the inmate’s strength, dangerous to his or her life or health, or unduly painful. See Madewell v. Roberts, 909 F.2d 1203, 1207 (8th Cir.1990). The evidence here, viewed favorably to Mr. Sanchez, established that he was compelled to perform labor beyond his physical capacity that endangered his health: his previous back injury had resulted in herniated disks; the June 24 document showed he was on light-duty status; and no document showed a change in this work status by July 27. The evidence and inferences therefrom also established Mr. Sanchez told Mr. Taggart that he had a medical condition restricting his ability to work and that confirmation of his physical limitations was in his file, and Mr. Taggart failed to inquire further. We conclude this evidence of deliberate indifference was sufficient to survive summary judgment. See Farmer v. Brennan, 511 U.S. 825, 842-43 & n. 8, 114 S.Ct. 1970, 128 L.Ed.2d 811 (1994) (requisite actual knowledge of substantial risk to inmate is factual inquiry and may be inferred from circumstantial evidence; prison official “would not escape liability [under the Eighth Amendment] if the evidence showed that he merely refused to verify underlying facts that he strongly suspected to be true, or declined to confirm inferences of risk that he strongly suspected to exist”). We disagree with the district court’s conclusion that Mr. Taggart was entitled to qualified immunity in light of “emergency” conditions. Although some emergencies may warrant issuing orders without first reviewing an inmate’s physical limitations, Mr. Taggart failed to establish such circumstances here. The evidence showed Mr. Sanchez brought his physical limitations to Mr. Taggart’s attention, as Mr. Holmes attested an inmate should have done; Mr. Sanchez was ordered before 11:30 a.m. to report for sandbagging at 1:00 p.m., supporting an inference of sufficient time for Mr. Taggart to cheek his file; only students, rather than all available inmates, were ordered to participate in sandbagging; and little evidence was offered of the actual emergency circumstances. Therefore, we conclude that Mr. Taggart’s conduct was not “objectively legally reasonable,” see Munz v. Michgel, 28 F.3d 795, 799 (8th Cir.1994), and that he should not have been granted summary judgment, see Buckley v. Rogerson, 133 F.3d 1125, 1127, 1129 (8th Cir.1998) (official has burden of proving qualified immunity); Johnson-El v. Schoemehl, 878 F.2d 1043, 1048 (8th Cir.1989) (official asserting qualified immunity has burden of proving any “extraordinary circumstances”). We deny Mr. Sanchez’s motion for appointment of appellate counsel. We also deny appellees’ motion to strike and dismiss, but decline to consider new facts or legal theories raised in Mr. Sanchez’s reply brief. See French v. Beard, 993 F.2d 160, 161 (8th Cir.1993), cert. denied, 510 U.S. 1051, 114 S.Ct. 706, 126 L.Ed.2d 672 (1994). Accordingly, we reverse as to the Eighth Amendment claim against Mr. Taggart, and affirm the district court’s' judgment in all other respects.
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541,268
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C. A. 6th Cir. Certiorari denied.
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1,306,851
|
RIPPLE, Circuit Judge. In this appeal, Scott Culver seeks, review of the decision of the district court denying his motion to intervene. The underlying action was commenced by the United States in 1974 against the City of Milwaukee and it alleged that the City had discriminated against African Americans and women with respect to recruitment, hiring and promotion in the City’s police force. Mr. Culver also appeals the district court’s order modifying, temporarily, the hiring orders that it previously had entered on July 25, 1975, October 9,1975, and September 16,1976. We dismiss the appeal for want of appellate jurisdiction. Because the district court has not made a final decision on the matter of Mr. Culver’s intervention, we are without jurisdiction to hear his appeal. See 28 U.S.C. § 1291. Furthermore, because, at this juncture, Mr. Culver is neither a party nor an intervenor, he cannot appeal the district court’s underlying hiring order. I BACKGROUND A. The Underlying Litigation As we have noted already, the United States commenced this action in 1974. The government alleged that the City of Milwaukee engaged in discriminatory policies and practices against African Americans and women with respect .to recruitment, hiring and promotion in its police department. On July 25, 1975, October 9, 1975, and September 16,1976, the district court entered orders regarding the City’s employment practices (“old hiring orders”). These orders established hiring objectives for minorities and women. The old hiring orders further provided that they would remain in effect until further order of the court. On September 27,1996, twenty years after the last hiring order was entered, the United States filed a motion to modify the old hiring orders. It noted that there had been significant changes with respect to the law and to the facts since the earlier orders were entered. The City agreed that the old hiring orders should be modified but proposed an order that was slightly different from that proffered by the United States. In • July 1997, while the district court had these modifications under advisement, the City had an immediate need to hire new police officers. The United States and the City therefore jointly moved for a temporary order that would vacate the old hiring orders and permit the City to hire a number of new officers. On July 29, 1997, the district court granted this joint motion and entered a temporary hiring order that vacated the old hiring orders. This order allowed the City to hire new police officers and established temporary hiring objectives tied to the percentage of women and minorities in the relevant labor market. In October 1996, shortly after the United States filed its motion to modify the old hiring orders, Mr. Culver, then a class representative in a parallel action, moved to intervene. He asserted that, as a white male who had sought and who would seek employment with the Milwaukee Police Department, he has a direct and substantial interest in the district court’s decision on the joint motion for temporary modification. B. Holding of the District Court The district court denied Mr. Culver’s motion to intervene in this action. The court noted, specifically, that the denial was without prejudice and that its action was based on Mr. Culver’s failure to comply with Federal Rule of Civil Procedure 24(c). The court held that Rule 24(c) requires that a motion to intervene be accompanied by a pleading within the meaning of Federal Rule of Civil Procedure 7(a). The court then invited Mr. Culver to “file a motion to intervene which complies with Rules 5, 7, and 24 of the Federal Rules of Civil Procedure.” R. 33 at 2. II DISCUSSION A. Mr. Culver submits that the district court erred in its denial of his motion to intervene. In his view, the motion was in compliance with Rule 24(c). He claims that, along with his motion to intervene, he filed a motion to strike the parties’ motions to modify the old hiring orders as well as a supporting memoranda. In those submissions, Mr. Culver urged that no orders should be entered in this ease because this case was “closed” and because the parties’ proposed quota hiring was illegal. Noting that the requirements for a proposed pleading under Rule 24 should not be hypertechnical, see Piambino v. Bai ley, 757 F.2d 1112, 1121 (11th Cir.1985), cert. denied, 476 U.S. 1169, 106 S.Ct. 2889, 90 L.Ed.2d 976 (1986), Mr. Culver argues that these pleadings were sufficient to satisfy the requirements of Rule 24(e). Mr. Culver further argues that he has satisfied the requirements for intervention under Rule 24. See B.H. by Pierce v. Murphy, 984 F.2d 196, 200 (7th Cir.) (setting forth four requirements for intervention: timely application, an interest relating to the subject matter of the litigation, potential impairment of that interest by disposition of the action and lack of adequate representation of the interest by the existing parties), cert. denied, 508 U.S. 960, 113 S.Ct. 2930, 124 L.Ed.2d 680 (1993). In his view, he remains the class representative for white male applicants in LEOCARD and therefore has a direct and substantial interest in the issues involved in the current litigation—-namely, the right of the class members to be afforded equal opportunity for employment without regard to race and sex. In addition, he submits, white male applicants are not adequately represented in this litigation because both of the existing parties are seeking to perpetuate race- and sex-based hiring quotas. B. We need not, indeed we cannot, resolve all of the issues that Mr. Culver would like us to resolve at this time. As this case comes to us, we can address only a single and threshold question: Whether the district court’s order denying Mr. Culver’s intervention can now be reviewed by this court. Because we believe that the decision of the district court was not a final decision, we lack the authority to review it. We have noted that an order denying a party’s motion to intervene is not “conventionally final” because it does not “wind up the suit in the district court.” See Williams v. Katz, 23 F.3d 190, 191 (7th Cir.1994). It is well established, however, that a party whose motion to intervene has been denied may take an immediate appeal. See Brotherhood of R.R. Trainmen v. Baltimore & Ohio R.R., 331 U.S. 519, 524, 67 S.Ct. 1387, 91 L.Ed. 1646 (1947). In fact, a proposed intervenor must appeal from the denial of his motion to intervene within 30 days of that denial and may not await final judgment in the underlying action. See SEC v. Wozniak, 33 F.3d 13, 14-15 (7th Cir.1994). This “special rule” of finality is based on the fact that the proposed intervenor, having been denied the status of a party, will never be able to appeal in the underlying action unless the order denying intervention is first reversed. See Brotherhood of R.R. Trainmen, 331 U.S. at 524, 67 S.Ct. 1387; Williams, 23 F.3d at 191. In other words, despite the fact that an order denying intervention is not final with respect to all parties and all claims, the order is final wdth respect to the proposed intervenor. Nonetheless, in order to be immediately appealable, an order denying a motion to intervene must be truly final with respect to the proposed intervenor—that is, the order must rule definitively on the party’s participation in the litigation before the district court. In this case, the district court’s denial for failure to comply with the requirements of Rule 24 was, explicitly, without prejudice. The district court plainly ex pressed its intent not to reach the merits of the motion to intervene until it was properly presented. This decision by the district court did not resolve definitively whether Mr. Culver , ought to be allowed to intervene in this litigation and is therefore not a final decision within the meaning of 28 U.S.C. § 1291. See Retired Chicago Police Ass’n v. City of Chicago, 7 F.3d 584, 594 n. 11 (7th Cir.1993); see also J.I. Case Credit Corp. v. First Nat’l Bank, 991 F.2d 1272, 1275 (7th Cir.1993) (stating that a dismissal without prejudice is generally not final and appeal-able). Indeed, the record establishes that the district court expressly held that Mr. Culver could refile his motion in compliance with Rule 24(c). See Principal Mut. Life Ins. Co. v. Cincinnati TV 64 Ltd. Partnership, 845 F.2d 674, 676 (7th Cir.1988) (holding that an order dismissing without prejudice and expressly permitting refiling does not constitute a final decision). Moreover, there is no indication here that the district court was of the view that no refiling could cure the defect that it had noted in Mr. Culver’s first submission. Cf. Bieneman v. City of Chicago, 838 F.2d 962, 963 (7th Cir.1988) (“Bieneman’s ease has not ended, however, given the district court’s express identification of this issue as one needing resolution.”). Notably, at the time it denied Mr. Culver’s motion, the district court also denied the motion of the Latino Police Officer’s Association (“LPOA”) to intervene. The court’s reason for this denial was identical to the one stated in Mr. Culver’s case—failure to comply with Rule 24(c). LPOA subsequently refiled its motion, accompanied by a pleading, and its motion to intervene was granted. Although none of the parties suggested the possibility, we also have examined whether the district court’s ruling ought to be considered “final” by analogy to the treatment accorded a so-called “conditional dismissal” of a complaint. In The Three Friends, 166 U.S. 1, 17 S.Ct. 495, 41 L.Ed. 897 (1897), an admiralty case, the district court had entered an order specifying that the libel was to stand dismissed unless amended within 10 days. The plaintiff, however, did not wait for the entry of final judgment and appealed the district court’s order prior to the expiration of the 10 days. The defendant contended that the decision was nonappealable due to the lack of amendment or judgment. The Court rejected this argument and stated that the appeal itself “was an election to waive the right to amend and the decree of dismissal took effect immediately.” Id. at 49, 17 S.Ct. 495. Although it questioned the continuing vitality of the rationale of The Three Friends, this court recently allowed an appeal under similar circumstances. See Albiero v. City of Kankakee, 122 F.3d 417, 418-20 (7th Cir.1997). In Albiero, the district court dismissed Albiero’s complaint with prejudice for failure to state a claim, but allowed him 21 days to file a new complaint. Like the plaintiff in The Three Friends, Albiero did not wait for the entry of final judgment, but filed a notice of appeal on the 15th day. Compounding the confusion, the district court refused the defendants’ request to enter final judgment due to the erroneous belief that the notice of appeal prevented it from acting. This court began by noting that Albiero could have appealed after the 21st day despite the lack of a proper judgment. See Otis v. City of Chicago, 29 F.3d 1159 (7th Cir.1994) (en banc) (holding that conditional order of dismissal becomes final after the time to satisfy the condition has expired).- Accordingly, on day 22, as long as Albiero had not yet filed a new complaint, the judgment would have become final notwithstanding the lack of a formal judgment. Thus, the only question remaining was whether Albiero’s premature notice of appeal deprived the court of jurisdiction. This question did not detain the court long. Under Federal Rule of Appellate Procedure 4(a)(2), a notice of appeal filed after the court announces its decision but before final judgment is treated as filed on the date final judgment is entered. Therefore, the court treated the notice of appeal filed on day 15 as filed on day 22 and accepted jurisdiction over the appeal. The circumstances of this case are substantially different from those in The Three Friends and Albiero. In those cases, the district court ruled on the merits of the plaintiffs offered pleadings and, finding the pleadings insufficient to state a claim upon which relief could be granted, announced its intention to dismiss the action if the plaintiff did not amend its pleadings within a set time frame. Therefore, in those cases, the district court stated an intent to enter a final judgment on a set date unless the plaintiff filed a new complaint prior to that date. See Albiero, 122 F.3d at 420. By contrast, in this ease, the district court, going about the difficult task of managing complex litigation, announced no such intent with respect to Mr. Culver’s motion to intervene. Instead, the district court’s order merely stated, in essence, that it would not consider Mr. Culver’s motion until it conformed to the procedural requirements of Rule 24(c). Given the history of this litigation and of Mr. Culver’s participation in the related ease, the district court’s insistence that Mr. Culver “square corners” in his attempt to intervene in a case between the United States and the City of Milwaukee was a practical approach to case management. It is not a definitive adjudication of Mr. Culver’s right to intervene and Mr. Culver cannot unilaterally transform it into such an order. Indeed, as noted earlier, this court has held that a decision denying intervention on strictly procedural grounds is not a final judgment when the district court expressly contemplates that the putative intervenor subsequently will file a proeedurally correct motion. See Retired Chicago Police Ass’n, 7 F.3d at 594 n. 11 (7th Cir.1993). Accordingly, this case is distinguishable from The Three Friends and Albiero and is con trolled by our prior holding in Retired Chicago Police Association. Therefore, the district court’s order denying Mr. Culver’s motion to intervene without prejudice is not a final judgmént and we are without jurisdiction to hear Mr. Culver’s appeal. In reaching this result, we emphasize that, in accord with this court’s' prior precedent, see supra note 7, we do not accord talismanic importance to the fact that the district court denied Mr. Culver’s motion to intervene “without prejudice.” Instead, we look to the totality of the circumstances in determining that the district court’s order in this particular case is not final. C. Because Mr. Culver’s motion for intervention was denied, he is not a party to this ease and cannot appeal at this time the ’ district court’s temporary order modifying the old hiring orders. We have recognized repeatedly that, until a movant for intervention is made a party to an action, it cannot appeal any orders entered in the case other • than an order denying intervention. See Retired Chicago Police Ass’n, 7 F.3d at 596 n. 14; United States v. City of Chicago, 908 F.2d 197, 200 (7th Cir.1990), cert. denied, 498 U.S. 1067, 111 S.Ct. 783, 112 L.Ed.2d 846 (1991). Conclusion The district court entered an order that is not final and, indeed, anticipates, as a practical matter, further consideration by the district court of the very issue that Mr. Culver asks us to resolve now. Therefore, there is no final decision for our review. Aceordingly, the appeal is dismissed for want of appellate jurisdiction. Appeal Dismissed. . A motions panel of this court previously denied a motion to dismiss filed by the City of Milwaukee and the United States. Those parties renewed their contention before us after full briefing and we are free to revisit the issue. See Dellwood Farms, Inc. v. Cargill, Inc., 128 F.3d 1122, 1124 (7th Cir.1997); Johnson v. Burken, 930 F.2d 1202, 1205 (7th Cir.1991). "Decisions by motions panels are summary in character, made often on a scanty record, and not entitled to the weight of a decision made after plenary submission.” Johnson, 930 F.2d at 1205. . Since the filing of his motion for intervention, Mr. Culver has secured a position in the Chicago Police Department. It is not clear from the record before us whether this development renders moot Mr. Culver's participation in this litigation. That matter ought to be decided in the first instance by the district court. We express no opinion on the merits of this issue. .In order to provide a complete picture of the situation before the district court when it ruled, we shall describe briefly the other litigation that is part of the backdrop to this litigation. Mr. Culver’s motion to intervene noted that he was a plaintiff and class representative in another case pending in the Eastern District of Wisconsin, Law Enforcement Officers' Coalition Against Reverse Discrimination, Inc. & Culver v. City of Milwaukee ("the LEOCARD case”), No. 93 C 189. In that case, filed on February 25, 1993, the plaintiffs alleged that they were victims of "reverse discrimination" as a result of the City's hiring and promotional practices. On January 31, 1995, the district court (Evans, J.) certified the LEOCARD case as a class action. However, on November 15, 1995, the court (Curran, J.), sua sponte, notified the parties by order that it would reconsider the class certification order. The case was later transferred to the judge presiding over the 1974 suit brought by the United States (Reynolds, J.). Counsel informs us that, after the district court denied Mr. Culver’s intervention in this case because his requests did not conform to the procedural requirements of the Civil Rules, the following activity occurred in the LEOCARD case. Judge Reynolds, in an order dated August 27, 1997, directed Mr. Culver to file a renewed motion for class certification "with appropriate supporting documents as required by Rule 23.” On October 10, 1997, the district court denied Mr. Culver’s motion to vacate the August 27, 1997, order and held further that "on the present record, ... there is no certified class.” In December 1997, Mr. Culver moved to withdraw his individual claim in the LEOCARD case. He asserted that his individual claim was moot because he had obtained employment as a Chicago Police Officer. He then moved for judgment under Rule 54(b) of the Federal Rules of Civil Procedure and reserved his right to appeal the October 1997 order finding that there was no certified class. On December 12, 1997, the district court entered an order granting Mr. Culver's motion to withdraw his individual claim and dismissing all claims asserted by him. The district court declined to enter judgment pursuant to Rule 54(b) and noted that it had "given Culver an opportunity to file a renewed motion for class certification with the necessary supporting documents, which was not done.” In his opening brief before us in this appeal, Mr. Culver states that he will appeal the issue of class certification in the LEOCARD case when final judgment is entered. Finally, on March 31, 1998, the district court (Adelman, J.), upon agreement of all remaining parties, dismissed the LEOCARD case. In that same order, the court granted LEOCARD’s motion to intervene in this case. . Federal Rule of Civil Procedure 24(c) provides in part: (c) Procedure. A person desiring to intervene shall serve a motion to intervene upon the parties as provided in Rule 5. The motion shall state the grounds therefor and shall be accompanied by a pleading setting forth the claim or defense for which intervention is sought.... . Federal Rule of Civil Procedure 7(a) provides: (a) Pleadings. There shall be a complaint and an answer; a reply to a counterclaim denominated as such; an answer to a cross-claim, if the answer contains a cross-claim; a third-party complaint, if a person who was not an original party is summoned under the provisions of Rule 14; and a third-party answer, if a third-party complaint is served. No other pleading shall be allowed, except that the court may order a reply to an answer or a third-party answer. . In Piambino, the Eleventh Circuit held that papers which spelled out a proposed intervenor’s position on the propriety ol an injunction were sufficient. See 757 F.2d at 1121. . We note that this court has not accorded talismanic importance to the fact that a complaint, or in this case a motion, was dismissed "without prejudice.” In fact, under "special circumstances,” a complaint dismissed without prejudice nonetheless may satisfy the final judgment rule. Principal Mut. Life Ins. Co. v. Cincinnati TV 64 Ltd. Partnership, 845 F.2d 674, 676 (7th Cir.1988). "That exception applies when it is clear that the court below found that the action could not be saved by any amendment of the complaint which the plaintiff could reasonably be expected to make.” Id. (internal quotations omitted); see also Eberhardt v. O'Malley, 17 F.3d 1023, 1024 (7th Cir.1994); Farrand v. Lutheran Bhd., 993 F.2d 1253, 1254 (7lh Cir.1993); Rothner v. City of Chicago, 929 F.2d 297, 299-300 (7th Cir.1991); Willhelm v. Eastern Airlines, Inc., 927 F.2d 971, 972 & n. 1 (7th Cir.1991); LeBeau v. Taco Bell, Inc., 892 F.2d 605, 609 (7th Cir.1989); F. & H.R. Farman-Farmaian Consulting Eng'rs Firm v. Harza Eng'g Co., 882 F.2d 281, 283 (7th Cir.1989), cert. denied, 497 U.S. 1038, 110 S.Ct. 3301, 111 L.Ed.2d 809 (1990); Ordower v. Feldman, 826 F.2d 1569, 1572 (7th Cir. 1987). This exception, however, does not apply to this case; the district court specifically invited Culver to file a second motion for intervention accompanied by a proper pleading. . We note in passing that Mr. Culver's characterization of this circuit's approach to compliance with Rule 24(c) as hypertechnical is incorrect. We have stated explicitly that "we do not take an inflexible view of this rule.” See Retired Chicago Police Ass’n v. City of Chicago, 7 F.3d 584, 595 (7th Cir.1993); Shevlin v. Schewe, 809 F.2d 447, 450 (7th Cir.1987). Nonetheless, the decision “[w]hether to permit a procedurally defective motion to intervene is within the sound discretion of the district court.” Retired Chicago Police Ass'n, 7 F.3d at 595. We therefore shall not second-guess the trial court when its decision is in conformity with governing legal principles and, in terms of the facts of the case, within the range of options from which one would expect a reasonable trial judge to select. See American Nat’l Bank & Trust Co. of Chicago v. Regional Transp. Auth., 125 F.3d 420, 431 (7th Cir.1997). . In Retired Chicago Police Association, this court, in fulfilling its responsibility to investigate adequately the basis of its jurisdiction, held that ‘ the putative intervenors in that case should be permitted to appeal the denial of intervention as part of the appeal of the final judgment in the case. See 7 F.3d at 594 n. 11. We held that, although the denial of a motion to intervene is usually a final decision that must be appealed immediately, see B.H. by Pierce v. Murphy, 984 F.2d 196, 199 (7th Cir.1993), the "particular circumstances” of that case made it clear that the district court did not consider the denial to he a final ruling on the matter of intervention because it contemplated that the putative interveriors would immediately conform their pleadings to the court’s rulings. Likewise, the district court’s ruling in this case clearly indicates that the court did not consider the denial of Mr. Culver’s motion to be a final ruling on the matter of intervention, but instead contemplated that Mr. Culver would refile his motion in compliance with Rule 24(c). . The district court stated: "Scott Culver ... may, if [he] choosers] to do so, serve and file a motion to intervene which complies with Rules 5, 7, and 24 of the Federal Rules of Civil Procedure.” R. 33 at 2. . Prior to 1966, the libel served as the initiatory pleading in admiralty actions, corresponding to the complaint. . The court stated: Current rules make it impossible to carry forward the rationale of The Three Friends. Litigants no longer "elect” when the decision takes effect. Civil Rule 58 specifies how, by whom, and when, a final judgment will be entered. Notices of appeal do not play any role in its operation. Appellate Rule 4(a) makes it clear that a prejudgment notice of appeal does not halt proceedings in the district court and make "final” whatever has been accomplished so far, or surrender the opportunity to persuade the district court to reconsider; to the contrary, a premature notice of appeal is suspended while the district court finishes the matters at hand. Albiero v. City of Kankakee, 122 F.3d 417, 420 (7th Cir.1997). . Similarly, the circumstances in this case are different from those addressed by this court in Otis v. City of Chicago, 29 F.3d 1159 (7th Cir.1994) (en banc). In Otis, we held that a conditional order of dismissal becomes final after the time to satisfy the condition has expired. Like Albiero, the district court judge in Otis determined that dismissal was appropriate unless the plaintiff complied with the conditions set by the court before a certain date. By contrast, the district court in this case made no determination about the fate of Mr. Culver's motion, but instead merely deferred consideration of that motion until it conformed to the procedural requirements of Rule 24(c). . We recognize, therefore, that there may be cases in which a district court’s denial of a motion to intervene “without prejudice” constitutes a final and appealable order. For example, the circumstances would be different if a district court denied a motion to intervene on the ground that the putative intervenor’s interests were adequately protected by the existing parties but entered the denial “without prejudice” in recognition of the fact that the circumstances of the case may change such that intervention at a later date would be appropriate. Cf. San Francisco N.A.A.C.P. v. San Francisco U.S.D. Bd. of Educ., 33 F.3d 59 (9th Cir.1994) (accepting jurisdiction over putative intervenor’s appeal of district court's order denying intervention without prejudice in which district court reached the merits of the motion and ruled that, absent unforeseen changes in the underlying action, intervention would not be allowed). Such a decision on the merits of a motion to intervene would present the court with a very different set of circumstances from those we encounter today.
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1,306,446
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PAULINE NEWMAN, Circuit Judge. Scott J. Daniels appeals the decision of the United States Patent and Trademark Office, Board of Patent Appeals and Interferences, wherein the Board determined that Mr. Daniels’ design patent application was not entitled to the benefit of the filing date of an earlier copending design application, and thus that the subject matter was unpatentable for obviousness in view of an intervening publication. On June 22, 1992 Mr. Daniels, through American Inventors Corporation, filed design . patent application Serial No. 07/902,055 for a “leecher,” a device for trapping leeches. The specification consisted of seven drawings, in-eluding top (Fig.5) and bottom (Fig.6), and side views showing the leecher decorated on each side with a pattern of leaves, as in Fig. 1: While the patent application was pending the Federal Trade Commission charged American Inventors Corporation with running a deceptive invention-promotion scheme. See Federal Trade Comm’n v. American Inventors Corp., 37 U.S.P.Q.2d 1154, 1995 WL 768924 (D.Mass.1995). The Board reports the charges that American Inventors Corporation misled inventors by filing design patent applications instead of utility applications and concealing the differences between them. The Board describes evidence that clients were given a money-back guarantee that a patent would issue, and evidence that the Corporation’s draftsman would add decorative matter to the drawings to facilitate issuance as a design patent. Daniels, 40 U.S.P.Q.2d at 1397-98. On April 1, 1994 Mr. Daniels, through new counsel, filed a. continuation design application under 37 C.F.R. § 1.62, Serial No. 29/020,787, and by amendment directed the PTO’s Official Draftsman to delete the leaf pattern from the drawings. No other changes were made. The application thus contained drawings as shown below: The examiner rejected the application in view of an intervening marketing brochure showing the leecher of the parent application. This rejection would be obviated if Mr. Daniels were entitled to the priority date of the parent application in accordance with 35 U.S.C. § 120: § 120. An application for patent for an invention disclosed in the manner provided by the first paragraph of section 112 of this title in an application previously filed in the United States ... shall have the same effect, as to such invention, as though filed on the date of the prior application, The Board, describing the question as one of first impression, denied Mr. Daniels the benefit of his parent application, holding that the leecher shown in the continuing application is a “new and different” design in that a design is “a unitary thing,” and thus that the change in the drawings defeats compliance with the written description requirement of the first paragraph of 35 U.S.C. § 112: § 112 ¶1. The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the' inventor of carrying out his invention. Mr. Daniels appeals, arguing that his parent application fully discloses the leecher design of the continuing application, and thus meets the requirements of § 112 ¶ 1. DISCUSSION Entitlement to priority under § 120 is a matter of law, and receives plenary review on appeal. Racing Strollers, Inc. v. TRI Industries, Inc., 878 F.2d 1418, 1419, 11 U.S.P.Q.2d 1300, 1301 (Fed.Cir.1989) (in banc). Any disputed factual questions are reviewed on the clearly erroneous standard. In re Gosteli, 872 F.2d 1008, 1012, 10 U.S.P.Q.2d 1614, 1618 (Fed.Cir.1989). The statutory provision governing the effective filing date of the subject matter of continuing applications, 35 U.S.C. § 120, applies to design patents as to utility patents. See 35 U.S.C. § 171 (“The provisions of this title relating to patents for inventions shall apply to patents for designs, except as otherwise provided”); It was confirmed in Racing Strollers that “[t]here are no ‘otherwise provided’ statutes to take design patent applications out of the ambit of § 120 which makes no distinction between applications for design patents and applications for utility patents. ...” 878 F.2d at 1421, 11 U.S.P.Q.2d at 1302. That the law of § 120 applies to design patent applications is illustrated in the court’s rulings that design and utility patents are each entitled to claim priority from the other. See Racing Strollers, 878 F.2d at 1418, 11 U.S.P.Q.2d at 1300 (overruling contrary precedent and holding that a design patent may claim priority from a utility patent); KangaROOS, U.S.A., Inc. v. Caldor, Inc., 778 F.2d 1571, 1574, 228 U.S.P.Q. 32, 33 (Fed.Cir.1985) (holding that a utility patent may claim priority from a design patent). The common thread, and the criterion to be met, is whether the later claimed subject-matter is described in the earlier application in compliance with § 112 ¶ 1. See Transco Products, Inc. v. Performance Contracting, Inc., 38 F.3d 551, 557, 32 U.S.P.Q.2d 1077, 1081 (Fed.Cir.1994) (“an application is entitled to the benefit of the filing date of an earlier application as to common subject matter” when the requirements of § 112 ¶ 1 are met); In re Hogan, 559 F.2d 595, 604, 194 U.S.P.Q. 527, 535 (1977); In re Van Langenhoven, 59 C.C.P.A. 934, 458 F.2d 132, 136, 173 U.S.P.Q. 426, 429 (1972); In re Lukach, 58 C.C.P.A. 1233, 442 F.2d 967, 968, 169 U.S.P.Q. 795, 797 (1971). Thus the earlier application must meet the written description requirement of § 112. The test for sufficiency of the written description is the same, whether for a design or a utility patent. This test has been expressed in various ways; for example, “whether the disclosure of the application relied upon ‘reasonably conveys to the artisan that the inventor had possession at that time of the later claimed subject matter.’” Ralston Purina Co. v. Far-Mar-Co, Inc., 772 F.2d 1570, 1575, 227 U.S.P.Q. 177, 179 (Fed.Cir.1985) (quoting In re Kaslow, 707 F.2d 1366, 1375, 217 U.S.P.Q. 1089, 1096 (Fed.Cir.1983)). When the earlier disclosure is less than clear on its face, courts have explained that the prior application must “necessarily” have described the later claimed subject matter. Kennecott Corp. v. Kyocera Int’l, Inc., 835 F.2d 1419, 1423, 5 U.S.P.Q.2d 1194, 1198 (Fed.Cir.1987). In general, precedent establishes that although the applicant “does not have to describe exactly the subject matter claimed, ... the description must clearly allow persons of ordinary skill in the art to recognize that [the applicant] invented what is claimed.” In re Gosteli, 872 F.2d at 1012, 10 U.S.P.Q.2d at 1618 (citations omitted). It is the drawings of the design patent that provide the description of the invention. In re Klein, 987 F.2d 1569, 1571, 26 U.S.P.Q.2d 1133, 1134 (Fed.Cir.1993) (“usually] in design applications, there is no description other than the drawings”). Although linguists distinguish between a drawing and a writing, the drawings of the design patent are viewed in terms of the “written description” requirement of § 112. Thus when an issue of priority arises under § 120, one looks to the drawings of the earlier application for disclosure of the subject matter claimed in the later application. See Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1563, 19 U.S.P.Q.2d 1111, 1116 (Fed.Cir.1991); Racing Strollers, 878 F.2d at 1420, 11 U.S.P.Q.2d at 1301. The inquiry is simply to determine whether the inventor had possession at the earlier date of what was claimed at the later date. The leecher as an article of manufacture is clearly visible in the earlier design application, demonstrating to the artisan viewing that application that Mr. Daniels had possession at that time of the later claimed design of that article; see Vas-Cath, supra; Ralston-Purina, supra; Racing Strollers, supra; In re Kaslow, supra; and other guides to application of § 112 ¶ 1 to § 120. The leaf ornamentation did not obscure the design of the leecher, all details of which are visible in the drawings of the earlier application. The leaf design is a mere indicium that does not override the underlying design. The subject matter of the later application is common to that of the earlier application. See Transco, 38 F.3d at 557, 32 U.S.P.Q.2d at 1081. In the context of 35 U.S.C. § 171 (“design for an article of manufacture” is the subject matter of a design patent), it is apparent that the earlier application contains a description of what is claimed in the later application. See In re Gosteli, 872 F.2d at 1012, 10 U.S.P.Q.2d at 1618. The Board held that any change in the drawing defeats a priority claim for a design patent. Departing from the general rule that common subject matter is entitled to priority, the Board stated that a design is “a unitary thing,” and thus that when the design is changed it becomes a different design, and not subject to severance of any common subject matter for purposes of priority. The Board sought authority in In re Salmon, 705 F.2d 1579, 1582, 217 U.S.P.Q. 981, 984 (Fed.Cir.1983); In re Blum, 54 C.C.P.A. 1231, 374 F.2d 904, 907, 153 U.S.P.Q. 177, 180 (1967); and In re Mann, 861 F.2d 1581, 1582, 8 U.S.P.Q.2d 2030, 2031 (Fed.Cir.1988). These eases do not support the Board’s conclusion. In In re Salmon the court held that an earlier filed design application showing a chair with a square seat did not describe a later claimed design for a chair with a circular seat; thus, the earlier was not a description of the later and could not provide priority as to the later. In re Blum related to the interpretation of dotted and broken lines in a design patent, upon which the CCPA had explained that all portions of a design “are material in that they contribute to the appearance which constitutes the design.” 374 F.2d at 907, 153 U.S.P.Q. at 180. Blum did not assess priority based on the presence or absence of dotted or broken lines. And in In re Mann the court held that the display of a table at a trade show was an on-sale event as to a patent on the table design; there was no issue of § 120 or § 112. While the Board relied on these eases to deny Mr. Daniels the benefit of the filing date of his earlier application, none of these cases holds or suggests that when a later design is in fact described in an earlier application the laws governing priority do not apply. The Board was incorrect in holding that any change in the design defeats a priority claim as a matter of law. As for any application asserting a priority claim, § 120 requires that the subject matter for which priority is requested must be disclosed in accordance with the requirements of § 112. A wealth of precedent guides the application of this statute. Applying the guidance of precedent, as we have discussed, the later claimed subject matter is contained in the earlier application. The leaf ornamentation in the parent application, superimposed upon' the design of the leecher itself, does not obscure that design, which is fully shown in the parent application drawings. On the correct law, it must be concluded that Mr. Daniels possessed the invention that is claimed in the continuation application, and that he is entitled to claim priority under § 120. Mr. Daniels is entitled to the parent application’s filing date for the subject matter of the continuation, thus obviating the rejection based on the intervening publication. The Board’s decision is REVERSED. . Ex parte Daniels, 40 U.S.P.Q.2d 1394, 1996 WL 648365 (Bd. Pat.App. & Interf.1996).
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541,574
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C. A. 5th Cir. Certiorari denied.
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541,065
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C. A. 1st Cir. Certiorari denied. Mr. Justice Douglas would grant certiorari.
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541,914
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C. A. 5th Cir. Certiorari denied.
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115,233
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GIBSON, District Judge. Petitioner, Union Electric Company, seeks review of an order of the Federal Power Commission holding that Union Electric’s proposed construction of a Hydroelectric Power Plant on the East Fork of the Black River, in Reynolds County, Missouri, would affect the interests of interstate commerce, thus necessitating a license for a project from the' Commission, pursuant to the provisions of the Federal Power Act. § 23(b), 16 U.S.C.A. § 817 (Commissioner’s “Opinion No. 356” Apr. 19, 1962). Section 23(b), Part I of the Federal Power Act (16 U.S.C.A. § 817) provides in part as follows: “ * * * Any person, association, corporation, State, or municipality intending to construct a dam or other project works across, along, over, or in any stream or part thereof, other than those defined in this chapter as navigable waters, and over which Congress has jurisdiction under its authority to regulate commerce with foreign nations and among the several States shall before such construction file declaration of such intention with the Commission, whereupon the Commission shall cause immediate investigation of such proposed construction to be made, and if upon investigation it shall find that the interests of interstate or foreign commerce would be affected by such proposed construction, such person, association, corporation, State, or municipality shall not construct, maintain, or operate such dam or other project works until it shall have applied for and shall have received a license under the provisions of this chapter. If the Commission shall not so find, and if no public lands or reservations are affected, permission is granted to construct such dam or other project works in such stream upon compliance with State laws. June 10,1920, c. 285, § 23, 41 Stat. 1075; Aug. 26, 1935, c. 687, Title II, § 210, 49 Stat. 846.” Pursuant to § 23(b), the petitioner, Union Electric Company, a corporation, hereinafter referred to as “Union”, filed a declaration of its intention to construct, operate, and maintain a “high head pumped-storage electric generating station to be known as its ‘Taum Sauk Plant' ” to be located on and near the East Fork of the Black River about four miles above the confluence of the East Fork and Black River. The East Fork is non-navigable, but the Black River, into which it flows, is navigable to a limited extent below its confluence with the East Fork and flows into the White River, which in turn empties into the Mississippi. Ties and logs have been floated down the Black River and apparently flat-bottomed boat floats made on these waters. This project is to be located solely on private lands and the transmission line leading therefrom located on private right-of-way, except where crossing public roads, and no public lands or reservoirs will be occupied or flooded by the project. The project is located on the East Fork of the Black River in Reynolds County, Missouri, at an elevation of 700 feet above mean sea level, (all references to elevations are above mean sea level) and contemplates a damsite which would impound approximately 6350 acre-feet of water with a free crest spillway at 750 feet and sluice gates at points between 715 and 734 feet. This would be known as the lower pool. The drainage area upstream from the damsite is 88 square-miles. An upper reservoir is to be constructed on the top of an adjoining mountain at an elevation of more than 1500-feet. A pressure tunnel and conduit of approximately 6400 feet will connect the-upper pool or reservoir with a pumping and generating station to be located on an open channel running to the lower pool, on which will be housed two reversible-pump-turbine units, capable of generating 350,000 kilowatts. This would provide an 8-hour generating cycle, while the-pump-back operation would take about 11 hours with an average head of about 392,-000 kilowatts. The operation contemplates the use of only 4350 acre-feet of water which will-be pumped from the lower to the upper pool during hours when the demand for electricity is low, by the use of the reversible turbines as pumps, with power supplied from other available generating-units, and then allowing the water thus-stored in the upper pool to flow through-the tunnel and open channel, thus operating the turbines by water power for generation of eletricity during periods of peak demands or in emergencies. After passing through the turbines the water will discharge into the open channel to the lower pool, thus completing the cycle of operation. This type of pump-back storage pool operation is in effect a method of storing energy for use at desired times. Union is a public utility under the Federal Power Act and operates both hydroelectric and steam generating plants, selling electricity in parts of Missouri, Illinois, and Iowa over its own transmission lines by which it transmits electric energy in interstate commerce to and from Missouri, Iowa, and Illinois. All of such transmission lines are subject to the jurisdiction of the Federal Power Commission under Part II of the Federal Power Act [§§ 201-209, 16 U.S. C.A. §§ 824-824h] and the transmission line to be constructed from the Taum Sauk project will be interconnected with the interstate transmission facilities of Union. The Federal Power Commission, pursuant to § 23(b), Part I of the Federal Power Act, made an investigation of this project, held public hearings, made a finding affirming the Commission’s Staff’s conclusion “that the construction, operation and maintenance of the proposed project would affect the interest of interstate or foreign commerce” and issued an order that “Union Electric Company is required to obtain a license for its proposed Taum Sauk project works, pursuant to the provisions of the Federal Power Act.” The Commission said that “on the basis of the facts stipulated he [the examiner] found that construction of the proposed project would have an inevitable effect upon the navigable capacity of the Black River during periods of high water; and further that the project would have the capability of substantially affecting that navigability at all times” and further found; (Although he did not base his decision on this finding) “The proposed Taum Sauk Project will be constructed, operated and maintained for the development of power to supply markets not only in Missouri but also in the state of Illinois, thereby affecting the interest of interstate or foreign commerce.” The Commission in its decision adopted both findings as the basis for its order that it was necessary to obtain a license for such project. By agreement of the parties, construction was commenced and the project is now completed, Union agreeing to apply for a license from the Federal Power Commission if the Order of the Federal Power Commission is sustained by the courts. State and county consent had been obtained for the project. The conditions imposed for a license may be considered quite onerous, although in the public interest, if the interests of interstate commerce is affected. The petitioner, after filing an application for rehearing, which was denied, petitioned this Court for review of the opinion and order of the Federal Power Commission, pursuant to the provisions of § 313(b) of the Federal Power Act [U.S.C.A., Title 16 § 8251(b)] and in its petition not only takes issue on the merits of the findings and order of the Commission but contends that the Commission did not have jurisdiction to issue an order and consequently there is nothing for this Court to review. We shall first consider the jurisdictional issue. Union contends that aforesaid § 313 (b), Part III of the Federal Power Act, U.S.C.A., Title 16, § 8251(b), providing, “(b) Any party to a proceeding under this Act aggrieved by an order issued by the Commission in such proceeding may obtain a review of such order in the Circuit Court of Appeals of the United States for any circuit wherein the licensee or public utility to which the order relates is located or has its principal place of business, or in the United States Court of Appeals for the District of Columbia, by filing in such court, within sixty days after the order of the Commission upon the application for rehearing, a written petition praying that the order of the Commission be modified or set aside in whole or in part”, comprehends only a review of an order issued by the Commission and that § 23 (b) of the Federal Power Act does not authorize an order but only a finding contending that the order of the Commission in nature and subject matter is void as beyond the jurisdiction of the Commission. Union in its Declaration of Intention asked that the Commission “by order find that the interests of interstate or foreign commerce would not be affected and that public lands or reservations would not be affected by the construction and operation of the proposed project.” Also, Union’s exceptions to the examiner’s report included a proposed order reading: “IT IS ORDERED that Union * * * shall be permitted to construct, operate and maintain the Taum Sauk Project upon compliance with applicable state laws.” Union’s application for administrative rehearing raised no question as to the Commission’s jurisdiction or authority to issue an order in this case. The Commission contends, therefore, that such objection cannot be raised in this Court as the provisions of § 313(b) impose a jurisdictional restriction on the power of reviewing courts to review only such matters as shall have been presented to the Commission in an application for rehearing. The pertinent part of § 313(b) cited by the Commission reads as follows : “ * * * No objection to the order of the Commission shall be considered by the court unless such objection shall have been urged before the Commission in the application for rehearing unless there is reasonable ground for failure so to do * * The Commission further contends there is no reasonable ground for failure to raise this objection in the application for rehearing. Without making an exhaustive analysis and comment on the cases cited by the Commission, it has always been regarded as fundamental that jurisdiction over the subject matter cannot be waived by the parties by either action or lack of action. In other words, jurisdiction cannot be conferred where none exists. It, however, is not necessary for this Court to rule upon that contention for the reason that it finds that § 23(b) contemplates the issuance of an order based upon the findings and conclusions of the Commission and that such order is properly reviewable by this Court. Union contends that said § 23(b) contemplates only a finding by the Commission and that the Commission has no jurisdiction to issue an order requiring it to obtain a license. It is true that the Commission cannot make the petitioner obtain a license and construct the project, but it can impose the condition and sanction that if the project is to be constructed a license must be obtained. This is the only logical procedure for a proceeding under this Section. This Section certainly does not intend that resort to the Commission is mandatory to ascertain whether or not a license should be obtained, impose a flat prohibition against unlicensed construction if the Commission finds the project would affect interstate commerce, and at the same time permit this finding to be ignored, construction started by applicant in the face of civil and criminal penalties under §§ 314 and 316 of the Act, and thus place the burden on the Commission to sue in the District Courts for an injunction and allow the District Court to make a finding de novo on this essentially legislative matter. See United States v. Twin City Power Co., 350 U.S. 222, 224, 76 S.Ct. 259, 100 L.Ed. 240. Under Union’s theory the burden of going forward after an adverse finding and order to it would be placed on the Commission. This would affect the quantum of proof and the burden of proof would be shifted from Union to the Commission. Here the burden of going forward after an adverse order should properly be upon Union by way of a petition for review of the Commission’s findings and order. The only logical and properly expeditious method is for the Commission to issue an order based on its findings and allow a review of that order by the appropriate Court of Appeals. We find that the statute contemplates this type of proceeding. The Commission also contends that petitioner has possibly waived any objection on the jurisdictional issue and is estopped to contest the Commission’s right to take such action, because it requested the issuance of the order made, although not in the form in which it was made. As jurisdiction over subject matter cannot be waived, we find no merit in that estoppel claim. It should be noted that there are civil and criminal penalties provided in §§ 314 and 316 of the Federal Power Act for violation of the prohibition in § 23(b), which facts placed stringent legal consequences to the Commission’s determinations in these matters. The Commission’s order or determinations have been judicially reviewed under § 313(b) in the following cases: Citizens Utilities Co. v. F. P. C., 279 F.2d 1 (2d Cir. 1960), cert, denied, 364 U.S. 893, 81 S.Ct. 224, 5 L.Ed.2d 188; Montana Power Co. v. F. P. C., 87 U.S.App.D.C. 316, 185 F.2d 491 (1950), cert, denied, 340 U. S. 947, 71 S.Ct. 532, 95 L.Ed. 683; and Georgia Power Co. v. F. P. C., 152 F.2d 908 (5th Cir. 1946). These cases are all authority for its findings and determinations being “orders”, since the parties may not waive the issue of the court’s jurisdiction. Houston Natural Gas Corp. v. S. E. C., 100 F.2d 5 (4th Cir. 1938). The Citizens Utilities case (supra) was heard on petition to review an order of Federal Power Commission determining that the river was navigable and that the project in construction would require an application for license in order to be completed. It was shown that in the regular operation of the project, parts of the navigable stream would be made non-navigable. The Court also states (279 F.2d 1. c. 3): “It must always be remembered that in construing subchapter I of Chapter XII of Title 16 U.S.C.A., we are to take into consideration, not alone the condition of the stream as it is, but that ‘it is proper to consider the feasibility of interstate use after reasonable improvements which might be made.’ United States v. Appalachian Electric Power Company, 311 U.S. 377, 409, 61 S.Ct. 291, 300, 85 L.Ed. 243.” The Montana Power Company v. F. P. C. case also was reviewed by the Court of Appeals for the District of Columbia on a petition to review orders of the Federal Power Commission requiring petitioner to apply for licenses for its nine hydroelectric projects located on navigable water or occupying public lands without proper authority. The Court there in substance upheld the Commission, although the case was affirmed in part and remanded in part. In the Georgia Power case (supra) the Fifth Circuit on petition reviewed an order of the Federal Power Commission ordering petitioner if it decided to erect a hydroelectric power plant on the Oconee River in Georgia to apply for and accept a license in accordance with the terms of the Federal Power Act. In that case the constitutionality of the Act was attacked as applied to a project located on a non-navigable part of a navigable stream. The Commission’s order determined that the navigable capacity of the River below the dam would be affected and at times would render impossible any navigation around the city of Mill edgeville, the dam being located 4.3 miles upstream. The Court also held that the Commission’s findings were supported by substantial evidence and in such circumstances they would not be disturbed. The Court sustained the Commission’s finding that navigable waters were involved in the case and that the operation of the proposed project would affect adversely navigation thereon. The Court overruled the question of constitutionality with respect to petitioner’s contention that neither Congress nor the Commission had jurisdiction over non-navigable streams by referring to the cases of United States v. Appalachian Electric Power Co. (supra), Oklahoma v. Atkinson Company, 313 U.S. 508, 61 S.Ct. 1050, 85 L.Ed. 1487 and others. In all of the above cases it was assumed that the Court of Appeals had jurisdiction to review a determination of the Federal Power Commission that a license should be obtained to construct or to complete a hydroelectric project on either navigable or non-navigable tributaries, which in itself is indicative of the acceptance of the procedure here sought for review of the Commission’s order. Union strongly urges that the decision in Carolina Aluminum Co. v. F. P. C., 97 F.2d 435, (Cir. 4th 1938) is controlling. The Court there squarely held that the Commission’s decision was not a reviewable “order” because it “embodies no decision which is capable of being enforced by anyone” and, while “the statute forbids the construction of any project” after a Commission’s jurisdictional determination, “it does not authorize the Commission to enter an order forbidding the construction.” The Court’s reasoning and decision in the Carolina Aluminum case is diametrically opposed to the Supreme Court’s later ruling in Rochester Telephone Corp. v. United States, 307 U.S. 125, 1. c. 132 and 133, 59 S.Ct. 754, 1. c. 758, 83 L.Ed. 1147 (1939) which states: “Where a complainant seeks the Commission’s authority under the terms of a statute and the Commission’s action is followed by legal consequences * * *, or where the Commission’s order denies an exemption from the terms of the statute * * *, the road to the courts’ jurisdiction seems to be clear. There is a constitutional ‘case’ or ‘controversy,’ * * *; and the suit is within the express language of the Urgent Deficiencies Act in that it is one ‘to enjoin, set aside, or annul’ an ‘order of the Commission.’ * * * While the penalties may be imposed by the statute for its violation and not for disobedience of the Commission’s order, a favorable order would render the prohibitions of the statute inoperative. * * * ” Justice Frankfurter, in discussing so-called “negative” and “affirmative” orders, said “the concept of ‘negative orders’ has not served to clarify the relations between administrative bodies and the courts but has rather tended to obscure them.” (307 U.S. 1. c. 142, 59 S.Ct. 1. c. 763, 83 L.Ed. 1147) and “We conclude, therefore, that any distinction, as such, between ‘negative’ and ‘affirmative’ orders, as a touchstone of jurisdiction to review the Commission’s orders, serves no useful purpose, and insofar as earlier decisions have been controlled by this distinction, they can no longer be guiding.” (307 U.S. 1. c. 143, 59 S.Ct. 1. c. 764, 83 L.Ed. 1147) A more serious question arises in passing upon the question of whether the Commission’s determination or order is supported by substantial evidence. The reviewing power of this Court is limited to determining whether the Federal Power Commission’s findings of fact are supported by substantial evidence. § 825Í (b) states in part “The finding of the Commission as to facts, if supported by substantial evidence, shall be conclusive.” The Commission contends that it has all the constitutional power Congress possesses to regulate control of hydroelectric projects of this character, while Union contends that Congress has a right to regulate only because of its authority to regulate foreign and interstate commerce on navigable waters, although admitting that such power extended to non-navigable tributaries of a navigable river if the interests of navigation and flood control on the navigable river would be served by such project. There is no question that Congress has authority over the non-navigable tributaries of a navigable river. In State of Oklahoma v. Guy F. Atkinson Co., 313 U.S. 508,1. c. 523, 61 S.Ct. 1050, 1. c. 1058-1059, 85 L.Ed. 1487: “ * * * And it is clear that Congress may exercise its control over the non-navigable stretches of a river in order to preserve or promote commerce on the navigable portions. United States v. Rio Grande Dam & Irrigation Co., 174 U.S. 690, 703, 706, 708 [19 S.Ct. 770, 775-777, 43 L.Ed. 1136]; United States v. Utah, 283 U.S. 64, 90 [51 S.Ct. 438, 446, 75 L. Ed. 844]. It is obvious that, at least incidentally, Congress has done precisely that in this case. Congress was not unmindful of the effect of this project on the navigable capacity of the river. In authorizing it, Congress exercised all the power it possessed to control navigable waters.” It is not necessary to decide respondent’s contention that Congress has delegated to the Commission all of its constitutional authority over the construction of hydroelectric projects as the statute itself 23(b) sets forth ample jurisdiction to cover this case and at the same time leaves to state control projects on non-navigable waters where “the interests of interstate or foreign commerce would [not] be affected,” by expressly stating “permission is granted to construct such dam or other project works in such stream upon compliance with State laws.” The narrow question here presented is whether this Taum Sauk Project would affect the interests of interstate or foreign commerce. The Commission found that the interests of interstate commerce would be affected because the navigability of the Black River was affected and because the energy generated at such proposed project would be transmitted in interstate commerce by Union’s interstate transmission lines. The Commission’s order held that Congress had jurisdiction over the stream (East Fork). Union does not take issue with this finding. Admittedly Congress has taken jurisdiction over the non-navigable tributaries of navigable waters and intends to retain and exercise such jurisdiction through the Federal Power Commission where any obstruction or construction on such non-navigable tributary would affect the interests of interstate or' foreign commerce. The order in part states “ * * * In the past the Commission has limited its investigation in this regard to a determination of whether a proposed project is capable of affecting the navigable capacity of any downstream navigable waters.” The presiding examiner in this case similarly limited his decision. (Emphasis supplied). The Commission’s findings and order insofar as the issue of the effect on navigability is based upon the presiding examiner’s report, which on this issue was adopted in full and its findings and order as respects the effect on the interests of interstate commerce by reason of the electrical energy being transmitted in interstate commerce is its own conclusion. The presiding examiner made a finding that “The proposed Taum Sauk Project will be constructed, operated and maintained for the development of power to supply markets not only in Missouri, but also in the state of Illinois, thereby affecting the interests of interstate or foreign commerce” (R. 159) but expressly stated that he felt it unnecessary to decide the issue thus presented, because of his findings concerning effect upon navigable capacity. We shall first address ourselves to the consideration of the substantiality of the evidence to sustain that part of the order finding that the navigability of the Black River would be affected. This being basically a factual issue, it will be necessary to review at length the facts as stipulated and as found by the Commission, along with its conclusions deduced therefrom. In order to analyze the factual situation and the effect of the project works upon the East Fork tributary to the Black River and its subsequent effect upon the navigability of the latter, it is necessary to describe somewhat in detail the project and its method of operation. The following summary, taken from the Report in the Record, includes to a limited extent the contention of both parties. “Initially, when the project plant is first employed in the generation of electric energy it is contemplated that the upper pool will have in storage up to a maximum of 4350 acre feet. The flow of water during generation of electricity from the upper pool to the lower pool will vary depending upon the amount of water contained in the upper pool. For example, when generating at the rate of 350,000 kilowatts, the rate of flow of water from the upper pool to the lower pool will vary depending on the amount of water in the upper pool. The lower the level of water in the upper pool the greater the rate of flow from the upper pool to the lower pool. * * * ” * * * “When the upper pool is filled there would be enough water stored to permit generation at the rate of 350,000 kilowatts to produce a total of approximately 2,750,000 kilowatt hours, corresponding to a full load operation of 350,000 kilowatts for about eight hours.” (R. 87) The pump-back operation “would take about 11 hours to fill the upper pool to 4350 acre feet,” using power for the pumps at an average head of about 392,-000 kilowatts, depending upon the storage of water in the upper reservoir. The dam will have a free crest at an elevation of 750 feet and a spillway providing maximum water surface of the fiam at 763 feet, with a discharge capacity of 70,000 cubic feet per second. Union in the normal operation of the pool proposes to regulate the outflow through the dam when the water surface is at 750 feet or less by means of sluice gates capable of discharging from 2000 to 2800 cubic feet per second. Union intends to regulate the outflow through the dam to correspond to the inflow to the lower pool from feeding streams by means of sluice gates and appropriate gaging stations to record inflows and outflows. We further quote from the Report in the Record: “The Black River is downstream from the confluence of Taum Creek and the East Fork of the Black River and is part of the navigable water of the United States, being navigable from a point at the mouth of the East Fork four miles below the site of the proposed dam, to the mouth of 'the Black River.” * * # “In this case Union’s position is that the construction, operation and maintenance of the Taum Sauk project works, is capable of having only an insignificant or de minimis effect upon the navigability of the Black River. “The Staff’s position on the other hand, is that the facts agreed upon show that the project works are capable in certain circumstances of having a ‘measurable’ or ‘pronounced’ effect. The Staff’s position is that the stipulated facts and the evidentiary support found in the exhibits received reflect a capability that the project works will have a substantial effect upon the navigability of the Black River and that therefore the license provisions are applicable. * * * It is Union’s position that the ‘capability’ test advocated by the Staff is not the law. Union urges on the contrary that to establish licensing jurisdiction [on non-navigable streams] it must be shown that the construction, operation, and maintenance of the project works will have an ‘inevitable’ effect on the navigability of the Black River.” (R. 89-91) Union cites for its position United States v. Appalachian Electric Power Co., D.C., 23 F.Supp. 83, 105, and 4 Cir., 107 F.2d 769 and 790. The Supreme Court reversed the Court of Appeals’ decision dealing with this issue when it ascertained that the damsite was on a navigable stream, but Union contends the principles enumerated in the decision as it pertains to non-navigable streams would stand. United States v. Appalachian Electric Power Co., 311 U.S. 377, 61 S.Ct. 291, 85 L.Ed. 243 (1940). On this issue the Staff cites Citizens Utilities Co. v. Federal Power Commission, 2 Cir., 279 F.2d 1 (1960) and Carolina Aluminum Company, 19 FPC 704 (1958) and contends the holding in such eases to be “that where a showing is made that the construction, operation and maintenance of hydroelectric project works located on non-navigable water is capable of having a measurable effect on navigable water of the United States downstream that then the licensing provisions of the Act are applicable.” In the Citizens Utilities case, the Court of Appeals for the Second Circuit held the Commission had licensing jurisdiction for the project, even though it was constructed across the river at a point where there was a question whether the river was navigable, as the operation of the dams was capable of affecting temporarily the flow of water at a lower point in the stream, which was navigable and did so in the ordinary operations of sueh dams. The Carolina Aluminum Company case (supra) decided by the Commission held in effect that the project works were subject to the licensing provisions where “such hydroelectric development is capable of having [an effect] upon navigable capacity at points downstream.” The Taum Sauk project works is a pump-back storage project, which facilities are different from the type of hydroelectric facilities which use the potential energy in natural flows of the stream to generate electric energy and which alternately store and release the natural flows from the stream. Further quoting or summarizing from the Report in the Record: “ * * * As Union contemplates the operation water will be impounded only one time in the lower pool, causing a temporary reduction in the downstream stage and thereafter on a daily cycle the water in the lower pool will be pumped up to the upper pool and later released. “After the impounding of the water in the lower pool has been completed, it is expected by Union that water will be discharged through or over the dam in amounts equal to the inflow into the lower pool from the streams above and that, therefore, the streams below the project will not be affected by the existence or operation of the plant. On this basis it is claimed that there will be no effect on the navigability of the Black River. “The Staff, on the other hand, claims that when physical conditions are considered in connection with the construction, maintenance, and operation of the project works, particularly in regard to the drainage conditions in the Upper Black River Basin and when the water flows which have been measured over past years are considered the only reasonable conclusion to be reached is that the project works have the capability of affecting the navigability of the Black River. * * * ” (R. 94 and 95) The record shows on mathematical calculations that the flows at the proposed dam of the lower pool would: 1. Equal or exceed 50 cubic feet per second approximately 50 per cent of the time; 2. Equal or exceed 100 cubic feet per second about 25 per cent of the time; 3. Equal or exceed 200 cubic feet per second about 10 per cent of the time; 4. Have exceeded 2,000 cubic feet per second less than yz of 1 per cent of the time; and 5. Have exceeded 7,000 cubic feet per second on three occasions. “These varying flow conditions when considered together with the physical character of the project works are capable of affecting navigability on the Black River in differing degrees dependent in large part upon the flow conditions at the times being considered [the navigability of the Black River is based upon evidence showing that ties and timbers were floated down the river and that float trips had been taken by flat-bottomed boats down the river.]. In this connection, the Staff has given consideration to five situations where the proposed project works would be capable of affecting the navigability of the Black River, to wit:” a. during the filling period; b. during high flows; c. during malfunctions of facilities; d. during emergency operations of the Taum Sauk plant; and e. during average flows and normal operations of the project. (R. 95-96) During the filling period, if 50 cubic feet per second were stored taken from the average flow of 105 cubic feet per second, the lower pool would fill in approximately 63 days. The water level, at the Annapolis gage of the Black River would be reduced about one tenth of a foot and the river on the East Fork about 3.7 miles below the damsite would be reduced about one foot. This is a one-shot operation which should not be repeated. This slight diminution in flow through the filling period, in its temporary aspect and its lack of practical significance during that time is de minimis and not of substance as a basis for claiming that navigability is affected and that the Commission thus has jurisdiction. Further quoting or summarizing from the Record, during high flow periods which had occurred three times in the past, the generating cycle would add to the natural peak flow past the dam of the lower pool by increasing it from 17,600 cubic feet per second to 21,800 cubic feet per second, and the dam at the lower pool would reduce the natural stage below the dam by 0.2 feet to 0.4 feet with no plant operation. (R. 98) The pumping cycle of itself would reduce the natural stage below the dam of the upper pool by 0.8 feet but the generating cycle would increase the stage below the dam above natural stage by one foot during the high flows, such as occurred May 9-10, 1950. “During stream flows of 2,800 feet per second or less into the lower pool and for the normal cycles of generation and pumping for the projects works there would be no increase or decrease in the natural stage and flow below the project works, assuming no emergency operations, and no malfunctions of facilities. * * * ” (R. 98) The Examiner, however, engaged in these speculative considerations : “It cannot reasonably be said that the possibility of malfunction or mechanical failure does not exist in this project. There certainly exists the possibility of human or mechanical failure. In this project the possibility of such failure exists through the improper operation of stream gages, failure of the stream flow facilities to record correctly the inflows and outflows or to transmit flow information to the control points, clogging of the intake to sluiceway works, or failure of facilities. If there were malfunction during periods of flood and the generators were employed it would affect navigability severely, particularly because the effect of generation would be to add to the unusual accretion of water.” (R. 99) In another hypothetical situation the report sets forth that during a period of low flow the abrupt release of water through the sluiceway could result in the dumping of 2,000 cubic feet per second from the lower pool. This part of the Examiner’s Report concludes with the statement: “ * * * Most of the time navigability of the Black River would not be substantially affected but there will be times when it will be affected. The problem to be resolved, however, is not whether the Commission should extend its attention to situations where the effect on navigability is not always substantial or is not continuous but whether under the law navigability will be affected to a measurable degree by the maintenance, construction, and operation of the project works. Here it will be so affected.” (R. 100) The Stipulation of Facts contained the following hypothetical calculation. (R. 81-82) The abnormal situation of the lower pool being full when a generating cycle is started and where the natural flow in the East Fork is 105 cubic feet per second; the natural flow in the Black River at the Annapolis gage 582 cubic feet per second; the sluice dam is closed and not operated; and a generating cycle at a rate of 350 megawatts (average turbine discharge 6,800 cubic feet per second) is started and continues until all of the water is withdrawn from the upper pool. Assuming all of the above facts were to occur simultaneously, the lower pool would overflow over the free crest of the dam for eight hours, and the East Fork below the dam would be increased to approximately 7 feet. The Lesterville gage on the Black River would increase 5.7, cresting about nine hours after the start of the generating cycle. Between the Lesterville gage and the Annapolis gage approximately 2100 acre-feet of valley storage would operate to reduce the increase in stage at the Annapolis gage from the 5.7 feet experienced at the Lesterville gage to 3.4 feet, cresting 14% hours after the start of the generating cycle with a maximum rate of rise of approximately 0.6 feet per hour. As at the Lesterville gage the stage would subside gradually to the normal stage after the crest, and “On numerous occasions, natural conditions have caused both greater rates of rise and greater increases in stage in equal periods of time.” (R. 82) The normal operation of the project would as contemplated neither increase or decrease the natural flow on the East Fork, and, absent a malfunction of the facilities, would have no effect upon the navigability of the Black River unless the flow would exceed 2,000 cubic feet per second, which it has only done % of 1 per cent of the time and that there would be in addition a malfunction of the sluice gates, which could handle a flow of 2,800 cubic feet per second, and the lower pool full when a generating cycle is started. The malfunctioning of facilities, unless the evidence establishes such malfunctioning during the normal course of operations, should not be presumed as hypothesized by the Commission. Even under the abnormal hypothesized situations posed by the Commission, the Stipulation of Facts and the Examiner’s Report, there would be no change in the natural flow of water into the East Fork and thence the Black River if the generating cycle were stopped by Union. The pumping cycle, of course, would only reduce an abnormal high flow. In addition, as stipulated, “On numerous occasions, natural conditions have caused both greater rates of rise and greater increases in stage in equal periods of time.” (R. 82). The lengthy and complete Report of the presiding examiner, which is adopted by the Commission in its order, stresses hypothetical situations which could only be reasonably hypothesized during a period when the flow in the East Fork would exceed 2,800 cubic feet per second. Based on an 18-year record of flows, the flow at the damsite would not exceed 2,000 cubic feet per second 99% per cent of the time and has only exceeded 7,000 cubic feet per second on three occasions during that period. The sluice gates are capable of discharging 2,800 cubic feet per second so that, absent any malfunctioning of the sluice gates, we are here dealing with an analysis of what might happen less than one-half of 1 per cent of the time. To find an effect upon navigability, the examiner and the Commission then must hypothesize various malfunctions of the project during this less than % of 1 per cent of the time where either certain flood conditions or high flow conditions would prevail. (R 95 and 96) The natural effect of such high flow conditions on navigability has caused a greater rate of rises in the stream and greater increases in stage during equal periods of time as stipulated in the Record. Under these circumstances, we fail to find substantial evidence upon which to base the Commission’s finding that the navigability of the Black River would be affected. The Examiner’s Report, which was adopted in toto by the Commission on this point, gives no consideration to the requested expert opinion of the Corps of Engineers of the United States Government, which stated that “construction and operation of the applicant’s project would have no appreciable effect on the Clear-water reservoir project or navigation on the Black River.” Said letter also contained a statement “The plans of the structure are satisfactory insofar as the interests of navigation are concerned. The terms and conditions for insertion in the license in the interest of navigation are not considered necessary.” A greater part of the Commission’s order advances the novel theory that the Commission has jurisdiction over the project works by reason of the fact that the electric energy generated at such works would be transmitted in interstate commerce. This viewpoint is a complete departure from previous Commission policies. The presiding examiner was asked to pass upon this issue but did not do so, basing his recommendation for licensing on the effect of the project works on navigation downstream. The Federal Power Act originally enacted on June 10, 1920, as the Federal Water Power Act was a successor to § 18 of the Rivers and Harbors Act of 1899 and succeeding acts. Section 23(b) of the Act (16 U.S.C.A. § 817) was amended in 1935 by adding the first sentence of that Section, which prohibits all unlicensed hydroelectric projects on navigable waters in the United States. The second sentence of that Section does not prohibit unlicensed hydroelectric projects on non-navigable waters but only calls for licensing if the proposed construction would affect the interest of interstate or foreign commerce. Union contends that a proper interpretation of that part of § 23 (b) relating to non-navigable waters should be confined to the determination of whether the construction of such project would affect commerce on navigable waters, and contends that the Commission’s interpretation or determination broadening the Act to include any projects on nonnavigable waters where the electric energy therefrom is transmitted in interstate transmission lines is contrary to the construction of said Section which had been followed by the Commission itself for many years prior to the issuance of its order and opinion in this case, and further contends that such interpretation conflicts with applicable judicial decisions. Under the Rivers and Harbors Acts, an Act of Congress was necessary before a dam could be constructed in navigable waters or in a non-navigable stream if such project would constitute an obstruction to the navigable capacity of navigable waters. The Federal Water Power Act of 1920 created the Federal Power Commission and empowered it to perform the licensing functions listed in §§ 4(e) and 23(b) of the Act, theretofore exercised by Congress. The United States Supreme Court in State of Oklahoma v. Guy F. Atkinson Co., 313 U.S. 508, 61 S.Ct. 1050, 85 L.Ed. 1487, held specifically that “Congress may exercise its control over the non-navigable stretches of a river in order to preserve or promote commerce on the navigable portions,” and in authorizing such control Congress exercised all the power it possessed to control navigable waters. Union contends that the Court in United States v. Appalachian Electric Power Co., 311 U.S. 377, 61 S. Ct. 291, 85 L.Ed. 243 delineated the constitutional limit of Congress’s power to prohibit and to license water power projects founded upon its authority to regulate commerce on those waters; and, it is the interest of commerce on water and not the interest of commerce conducted by other media which must be affected by the construction of a hydroelectric project on a non-navigable stream in order to bring the licensure provisions of the Act into effect. We are not in accord with Union’s narrow construction of congressional authority over the interests of commerce on navigable waters. The Appalachian case originated by the Government seeking an injunction to enjoin construction of a dam without a license from the Federal Power Commission. The United States Court of Appeals, Fourth Circuit, in United States v. Appalachian Electric Power Co., 107 F.2d 769, adopted the restricted theory on the narrow issue of impairment of navigability on downstream capacity stating, 1. c. 790: “The plaintiff [U. S.] was not entitled to the injunction in this case unless it established an existing or presently threatened impairment of navigable capacity of the Kanawha [river]; and * * * the plaintiff must show that the injury sought to be avoided by the injunction will be necessary or practically certain, and not merely the probable, result of the acts whether intended or not.” That Court was expressly reversed by the Supreme Court on appeal, the latter Court holding, 311 U.S. 377, 1. c. 426, 61 S.Ct. 291, 1. c. 308, 85 L.Ed. 243; “In our view, it cannot properly be said that the constitutional power of the United States over its waters is limited to control for navigation. By navigation respondent means no more than operation of boats and improvement of the watérway itself. In truth the authority of the United States is the regulation of commerce on its waters. Navigability, in the sense just stated, is but a part of this whole. Flood protection, watershed development, recovery of the cost of improvements through utilization of power are likewise parts of commerce control. * * * That authority is as broad as the needs of commerce.” We believe without delineating all of them that there are other considerations such as proper development of watershed areas, flood control and proper utilization of natural resources that would have an effect upon navigability and as such would be proper items of consideration in passing upon whether the interest of foreign or interstate commerce would be affected. All of these factors relate, of course, to the development and use and continued use of the water resources of the nation. It would appear that the method of generation of electrical energy in and of itself would be of no concern to the Commission, unless the proposed project works would affect the interests of interstate or foreign commerce on the navigable waters of the United States. Admittedly, the Federal Power Commission has no control over the construction and operation of steam-generating plants that do not fall within the category mentioned in § 23(b). The Supreme Court in Utah Power and Light Co. v. Pfost, 286 U.S. 165, 52 S.Ct. 548, 76 L.Ed. 1038, in dealing with the issues raised by a state tax on the generation of electrical energy by the state of Idaho and resisted by the Power Company on the basis that its operation was in interstate commerce and hence the tax a burden thereon held that the generation of electricity was intra-state activity regardless of whether the electricity was transmitted interstate. The question there posed by the Court was: “Upon the facts of the present case is the generation of electrical energy, like manufacture or production generally, a process essentially local in character and complete in itself; or is it so linked with the transmission as to make it an inseparable part of a transaction in interstate commerce ?” # # # “While conversion and transmission are substantially instantaneous, they are, we are convinced, essentially separable and distinct operations ( [286 U.S.]. i. c. 179 [52 S.Ct. 1. c. 551, 76 L.Ed. 1038] ) * * * the gen erator and the transmission lines perform different functions, with a result comparable, * * * to the manufacture of physical articles of trade and their subsequent shipment and transportation in commerce.” (286 U.S. 1. c. 180 and 181, 52 S.Ct. 1. c. 551 and 552, 76 L.Ed. 1038) and concluded: “We are satisfied, upon a consideration of the whole case, that the process of generation is as essentially local as though electrical energy were a physical thing; and to that situation we must apply, as controlling, the general rule that commerce does not begin until manufacture is finished, and hence the commerce clause of the Constitution does not prevent the state from exercising exclusive control over the manufacture. Cornell v. Coyne, 192 U.S. 418, 428-429 [24 S.Ct. 383, 48 L.Ed. 504]. ‘Commerce succeeds to manufacture, and is not a part of it.’ United States v. E. C. Knight Co., 156 U.S. 1, 12 [15 S.Ct. 249, 253, 39 L.Ed. 325].” The Court then went on to hold that the petitioner’s production of electrical energy in Idaho was purely intra-state business and that its transmission across state lines was interstate business. In the light of the fact that the generation of electrical energy is a local or intra-state activity, we fail to see any difference between a generation of such energy by hydroelectric projects on non-navigable streams and the generation of such energy by steam plants that would support the doctrine now announced by the Federal Power Commission that the mere transmission of electrical energy in interstate lines in and of itself would give it jurisdiction to license the generating project. While the Commission, of course, has authority over the interstate transmission lines under Part II of the Federal Power Act, that power, in our opinion, is without relevancy to its authority and responsibility to deal with the matter of licensing under § 23(b), as the question of the effect of a construction project on interstate commerce must be viewed in its relation to navigable waters. The Commission’s jurisdiction thereof must logically rest upon its delegated congressional jurisdiction over the interests of commerce on navigable waters. What would happen to the Commission’s jurisdictional basis on this theory, if the energy generated is not transmitted in interstate lines or, if after a period of initial transmission, such interstate use is permanently discontinued? The basis of such jurisdiction ceases to exist, whereas, the basis of navigability once having been found to exist, continues uninterrupted. There does not appear to be any correlation between generation of electrical energy in and of itself and the interests of foreign or interstate commerce. This same issue was considered by the Court of Appeals for the Fourth Circuit in the Appalachian Electric Power Co. case (supra) where a contention was made that the Commission had jurisdiction over dams proposed to be constructed on non-navigable waters irrespective of the effect of the dam on navigable waters because the dam is intended to transmit electric power outside of the state of Virginia. There the Commission contended “Thus the primary purpose of the legislation was the control of water power development, not of navigation.” (107 F.2d 1. c. 793), which the Court answered stating “We do not think this broad construction of the Act based on the interstate commerce power, to the extent that it is dissociated from navigation, is tenable either on the basis of statutory construction or constitutional authority.” (107 F.2d 1. c. 793) and “The broad construction of the section now contended for runs counter to established legal principles. Where the interests of navigation are not involved (and where the United States does not itself possess property rights) the control of the use of the flowing water and the rights therein of riparian owners are subject to the laws of the several states. * * * If the river were federally navigable the rights of the riparian owners would of course be fully subject to the federal servitude in the interests of navigation; but the riparian owner on a non-navigable stream is entitled to reasonable use of the flowing waters (not impairing downstream navigable capacity) subject to no easement in favor of navigation; and this is a property right which cannot be taken from him without just compensation. * * * * -» * * “We therefore cannot adopt the plaintiff’s construction of section 23 that the Commission has jurisdiction over non-navigable streams under the interstate commerce clause irrespective of the interests of navigation.” (1. c. 107 F.2d 796) While the Appalachian case was reversed by the Supreme Court on the ground that the project was to be constructed on a navigable river the Court did not pass upon the Court of Appeals’ determination with respect to the application of § 23(b) to projects on non-navigable waters. The construction now contended for by the Federal Power Commission is contrary to its own published decision in the California Oregon Power Co., 13 F.P.C. 1 (1954), case where the Commission rejected as “unwarranted” a conclusion of the trial examiner that a license was required under § 23(b) because the energy generated would be transmitted in interstate commerce. The Commission there said: “As stated above, the Examiner found that proposed Project No. 2082 will and the five existing projects are utilizing water for the generation of electric energy which in turn is transmitted in interstate commerce, and he concluded that in such way they affect the interests of interstate commerce, and are therefore subject to the licensing authority of the Commission. We reject that conclusion as unwarranted under the Federal Power Act. (1. c. 13 F.P.C. 3)” Apparently the Commission had uniformly construed its authority or jurisdiction in conformity with the California Oregon Power Co. case since 1920 until its change in the present case. This represents a decided departure from its administrative construction of that statute, but, of course, would not necessarily be controlling if it did actually have jurisdiction and authority under § 23(b). It is, however, suggestive that its contention now is a novel one not based upon generally acknowledged limits of jurisdiction adhered to throughout the years. Union’s Declaration of Intention was the 212th such Declaration under § 23(b) since 1920. Of the 211 prior declarations, the Commission found a license was required in 77 cases [Federal Power Commission 41st Annual Report (1961) p. 49.] In its Forty-Second Annual Report (1962), page 23, the Commission, in commenting upon its Opinion and Order in this proceeding, stated: “Past Commission findings with respeqt to hydroelectric projects not affecting Government lands or dams have been limited to determinations of whether the projects occupied navigable waters of the United States or affected their navigable capacity.” This administrative view and construction of the Commission’s jurisdiction under 23(b) being limited to navigable waters or on non-navigable waters that would affect the navigability of navigable waters has long been known to Congress and no change having been made therein, “Under the established rule Congress must be taken to have approved the administrative construction and thereby to have given it the force of law”. Helevering v. R. J. Reynolds Tobacco Co., 306 U.S. 110, 114-115, 59 S.Ct. 423, 425-426, 83 L.Ed. 536. We, therefore, find that the Commission’s determination that it has jurisdiction of the project works solely on the ground that the electrical energy will ba transmitted in interstate commerce is unsound and not supported in law. In the situation at hand it appears from the record that the Taum Sauk Project, absent a short period of construction, would have no effect whatever upon the normal flow of the East Fork of the Black River; that in the usual and ordinary operation of the project all of the normal flow of the East Fork would flow in the usual and normal amounts below the lower reservoir of the project and hence would and could not have any effect upon the navigability of the Black River; that only in times of high abnormal flow with a malfunctioning of the facility including a continued operation of the generating cycle would the flow be increased so that possibly navigation might be affected or impaired by an increased flow into the Black River. It would thus appear that there are no factual findings supported by substantial evidence upon which to base a determination that such project would affect the interests of interstate or foreign commerce and the navigability of the Black River. The only expert opinion in the record is from the office of the Chief Engineer of the United States Corps of Engineers and it is to the contrary. The hypothetical situations propounded in the Commission’s Opinion and Order are too conjectural upon which to base the Commission’s finding of effect on navigability. Such hypothetical situations would occur only upon a combination of adverse circumstances coupled with malfunctioning and inept operation that should not be presumed. In addition “on numerous occasions, natural conditions have caused both greater rates of rise and greater increases in stage in equal period of time” (R. 82) than the hypothetical conditions propounded by the Commission. The Commission’s theory of jurisdiction based solely on interstate transmission of electrical energy generated at the project is unsound and not warranted under the law. This project is not without regulation, as both the state of Missouri and the county of its location have certain regulatory rights which we must presume will be properly administered. The project itself is local in character and intra-state in its operation of generating electrical energy and upon the evidence contained in the record would not have any effect upon the navigability of the Black River nor would the interests of interstate or foreign commerce be affected. If in the operation of the project it later develops at any time in the future that the navigability of the Black River is impaired or threatened to be impaired, the Commission would have authority under § 4(g) of the Act to issue an appropriate order, including an order to prevent further operation of the project without a license. Section 4(g) of the Act empowers the Commission “(g) Upon its own motion to order an investigation of any occupancy of, or evidenced intention to occupy, for the purpose of developing electric power, public lands, reservations, or streams or other bodies of water over which Congress has jurisdiction under its authority to regulate commerce with foreign nations and among the several States by any person, corporation, State, or municipality and to issue such order as it may find appropriate, expedient, and in the public interest to conserve and utilize the navigation and waterpower resources of the region. [16 U.S.C.A. § 797(g)]” Under that Section orders have been issued by the Commission requiring the proprietor of an existing project to apply for a license for maintenance and operation of the project. And such orders have been upheld. Pennsylvania Water & Power Co. v. Federal Power Commission (1941), 74 App.D.C. 351, 123 F.2d 155; Montana Power Company v. Federal Power Commission (1950), 87 U.S. App.D.C. 316, 185 F.2d 491. This proceeding, setting aside the Commission’s order and findings would have no effect upon a later proceeding under § 4(g) as this decision is based solely on the record made in this case. If evidence is later adduced upon which to base a finding of effect upon the navigability of the Black River, the Commission could make a finding and issue an order in accordance therewith and any substantial evidence showing an effect upon the navigability of the Black River would suffice to meet the proper legal standards. We, therefore, hold that the order, and the findings and conclusion of the Commission upon which it is based is set aside as erroneous in law and unsupported by substantial evidence. . The Federal Power Act prescribes certain of the terms and conditions to be included in licenses for water power projects. Among the conditions prescribed are the following: “1. That each license shall be limited to a period of fifty years — Section 6 of Federal Power Act, 16 U.S.C.A. 799; “2. That after twenty years of operation, surplus earnings ‘in excess of a specified reasonable rate of return upon the net investment’ of the licensee shall be maintained as a reserve which the Commission may order held until the end of the license period or applied in reduction of net. investment — Section 10(d), 16 U.S.C.A. 803(d); “3. That the licensee shall pay a reasonable annual charge ‘in an amount to be fixed by the Commission’ — Section 10(e), 16 U.S.C.A. 803(e); “4. That the United States may acquire the project at or after the end of the license period upon payment of the net investment of the licensee not to exceed the fair value — Section 14, 16 U.S.C.A. 807; “5. That the accounts and records of the licensee shall be kept in accordance with rules and regulations of the Commission — -Section 301 (part III of the Act), 16 U.S.C.A. 825; “6. That the Commission may fix rates of depreciation and may prescribe what charges are to be treated as depreciation charges — Section 302 (part III), 16U.S.C.A. 825a; “7. That the licensee shall file annual and other periodic and special reports — Section 304 (part III), 16 U.S. C.A. 825c.” The statute also authorizes the Commission to require that additional conditions be incorporated in the license — Section 10(g), 16 U.S.C.A. 803(g). . “During stream flows of 2800 feet per second or less into the lower pool and for the normal cycles of generation and pumping for the project works there would be no increase or decrease in the natural stage and flow below the project works, assuming no emergency operations, and no malfunctions of facilities.” (R. 98) . “Exhibit 10 18 August I960 “Chairman Federal Power Commission Washington 25 D.C. “Dear Mr. Chairman: “The Commission’s letter dated 30 June 1960 requested comments and recommendations in regard to the application for license filed by Union Electric Company for proposed hydroelectric project No. 2277 to be located on East Fork of Black River in Missouri. “The proposed dam would be located approximately 15 miles upstream from the upper limit of the Corps of Engineers’ Clearwater Reservoir project and about 85 miles above the head of an authorized navigation project (inactive) on the Black River. Construction and operation of the applicant’s project would have no appreciable effect on the Clear-water Reservoir project or navigation on the Black River. “The plans of the structures are satisfactory insofar as the interests of navigation are concerned. Terms and conditions for insertion in the license in the interest of navigation are not considered necessary. “One copy of the application is returned as requested. Sincerely yours, /s/ ROBERT M. TARBOX ROBERT M. TARBOX, Colonel, Corps of Engineers, Assistance Director of Civil Works for Southwestern Divisions.” . Pertinent parts of the record are: “The Examiner stated that he felt it unnecessary to decide the issue thus presented because of his findings concerning effect upon navigable capacity. Although he did not base his decision thereon, he did make the following finding of fact: “The proposed Taum Sauk project will be constructed, operated and maintained for the development of power to supply markets not only in Missouri but also in the state of Illinois, thereby affecting the interests of interstate or foreign commerce.” (R. 159) “A similar argument was advanced by staff and rejected by the Circuit Court in United States v. Appalachian Power Co., 107 F.2d 769 (4th Cir., 1938), at the same time that that court endorsed a narrow concept of navigability. The Circuit Court was reversed on this latter ground by the United States Supreme Court at 311 U.S. 377 [61 S.Ct. 291, 85 L.Ed. 243] (1940) in a way which made it unnecessary to decide issues presented only in connection with non-navigable streams. This is the first time that the Commission itself has decided the issue, whether an effect on the interests of interstate commerce other than an effect on navigable capacity is sufficient to require the licensing of projects on non-navigable waters under the mandate of Section 23 (b). Although it may be technically unnecessary to the decision in this case, an issue of such importance must not be allowed to go unresolved any longer since there can be little doubt that this country in the years ahead will become overwhelmingly more dependent upon the maximum development of its water resources in all their uses. ❖ $ $ $ $ “In view of these facts, we cannot hold as requested by Union that ‘the interests of interstate commerce’ in Section 23(b) are limited to ‘effect upon navigable capacity.’ On the contrary, we hold that the development of power for interstate transmission and use is such an effect upon the interests of interstate commerce within the meaning of Section 23 (b) that a project proposed for that purpose, which is to be constructed in and will utilize non-navigable waters over which Congress has jurisdiction under the commerce clause, must be licensed. If the water resource is one over which Congress has jurisdiction and if the water resource has the potential of affecting interstate commerce in any manner, it is our duty to license its use to preserve the rights of the people in the resource. In this case, the proposed development of power for interstate transmission and use is sufficient evidence of the East Fork’s potential to affect interstate commerce to cause us to require a license, even if it were not shown that downstream navigable capacity will be affected. We concur, however, in the conclusion of the Examiner that the Commission has license jurisdiction because of effect on downstream navigable capacity.” (R. 162-163)
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115,002
|
CAMERON, Circuit Judge. This appeal raises the questions whether the Respondent, The General Tire and Rubber Company, failed to bargain in good faith in violation of § 8(a) (5) and (1) of the National Labor Relations Act, 29 U.S.C. §§ 151 et seq., and whether Respondent committed an unfair labor practice by discharging and refusing to reinstate several employees in violation of § 8(a) (3) and (1) of the Act. The National Labor Relations Board has filed this petition to enforce its order of January 15, 1962 2against Respondent, an Ohio corporation operating a plant in Odessa, Texas. Respondent began operating this newly built plant in Odessa, Texas in October, 1957, and the facts touching the alleged failure to bargain will be taken up first. The Company’s operating procedures, wages and other conditions of employment for hourly personnel were contained in a pamphlet published by the Company known as the Redbook. The Company employed in September, 1957 an industrial relations manager to study and recommend changes in the Redbook. After some study of the Redbook, the manager proposed several changes. However, during this time the Union began organizational activities and the Company felt it would be unwise to make unilateral changes in the Redbook practices as long as the prospect of bargaining with the Union existed. January 28, 1960, the International Union of Operating Engineers, Local 826-AFL-CIO, won a Board-conducted election, and it was, on February 5, 1960, certified by the Board as the bargaining representative of the production and maintenance employees and laboratory technicians at the Odessa plant. The parties bargained from March 17 to September 14, 1960, meeting eighteen times without reaching a final agreement. The Union presented its only written proposal at the opening conference on March 17th, wherein it wanted to change many of Respondent’s Redbook practices and also to institute new practices. During the first four meetings the parties discussed the Union’s demands, its justification for the demands, and the Company’s initial position with respect to the various demands. Beginning April 20th at the fifth meeting, the Company made a series of counter offers to the Union. The Company supported its proposals and arguments with facts which were not in general denied by the Union. The Company’s first proposal sought to maintain its Redbook practices or to reach a compromise between the Red-book and the Union demands. The series of proposals offered by the Company were thereafter discussed in detail by both sides. Following the initial counter-proposals, the Company made numerous written and oral changes in its counter-proposals, adjusting its demands in an effort to reach a form acceptable to the Union. There were thirty-eight instances where Respondent adjusted its proposals in striving to induce the Union to agree. Gradually, the Company lowered its initial proposals, reducing the Red-book benefits until there was only a slight difference between the Redbook and what the Union had originally proposed. During this negotiation, the Company made numerous concessions to the Union beyond what its Redbook had originally provided. As the result of these discussions, concessions and reasonable arguments, the parties made substantial progress towards reaching an agreement. Based upon the facts above outlined, the Examiner found that the Company had been guilty of § 8(a) (5) violations, based chiefly upon the Company’s refusal to agree to a dues check-off clause in the contract. We do not think the conclusion of the Examiner was justified by substantial evidence. There is no disagreement between the parties as to the applicable law. On the other hand, the evidence clearly shows, in our opinion, that the employer here did enter and carry on discussions with respect to collective bargaining “with an open and fair mind, and a sincere purpose to find a basis of agreement touching wages and hours and conditions of employment.” The Company was no novice in conducting negotiations such as those involved in this record, and neither was the Union. The Company repeatedly stated that it would not agree to a dues check-off clause, contending that the collection of dues was a Union obligation. The Company started out with a written memorandum of its employee relationships as it desired them to be. It retreated from a large number of the provisions of the Redbook. It made counter-proposals both in writing and orally, and discussed fully each and every contention of the Union, throughout making known its attitude with respect to them. The reduction by the Union of its “must” items from seventy-nine to four shows that it was making use of these items as aids to bargaining, and it is apparent that the Union did not, in most instances, expect to induce the employer to give up its convictions and practices as to them. The same is true of the dues check-off clause. We think that the conclusion of the Examiner that the Company was not open and sincere in its effort to come to terms with the Union is without basis in the evidence. The fact is that the Union is the party which abandoned negotiations and resorted to the coercive device of a strike. The Company, on the other hand, suffered an actual strike, thus emphasizing its honest adherence to the basic principles relied on by it through the bargaining sessions. The Company’s willingness to go into actual strike conditions and the contrasting prompt abandonment of the strike tended to demonstrate sincerity on the part of the Company and that the Union was resorting to bluffing tactics throughout the negotiations. We are of the opinion, therefore, that the finding by the Examiner that the Company had refused to bargain collectively in good faith with the Union was not justified by any substantial evidence in the record and was based upon speculation and suspicion. We think, moreover, that the action of the majority of the Board in affirming the findings and conclusions of the Examiner on this aspect of the complaint was not based upon substantial evidence. We are impressed with the analysis of the evidence and the conclusions of the dissenting member of the three-man panel, and we reproduce in the margin excerpts from the dissenting opinion. Likewise, we think that the action of the majority of the Board in reversing the findings and conclusions of the Examiner as to the alleged § 8(a) (3) violations were not based upon substantial evidence. Respondent, earlier in the year and in keeping with its established practice, contracted with the H. B. Stone Construction Company to furnish supplemental labor for construction work in vacation relief. The Union discussed this agreement during the bargaining period, and did not object to it. During the strike the Company contracted with the Dresser Engineers Company for supplemental labor; and when Dresser began furnishing certain temporary manpower, the Respondent and Stone canceled their contract. As a result of the cancellation, five men employed under the Stone contract were not permitted in the plant. About a month after the strike, Respondent informed Dresser that these five men were available for work and, as a result, Dresser employed them. The General Counsel failed to support the allegations in its complaint, as amended, that Alfredo Do La Cruz Julian Campos, Jose Garcia, Thomas Mo reno, and Jesus Alvarez were discriminated against in violation of § 8(a) (3) when they were denied entrance to Respondent’s plant because Respondent had canceled its contract with Stone. We feel that a majority of the Board was in error when it held that these men were participating in an unfair labor practice strike and were entitled to reinstatement upon their conditional application to return to work. Some of these alleged discriminatees were included within the bargaining unit. It should also be noted that the status of these individuals was established by agreement which the Respondent had with Stone. This agreement provided that Stone, for a stated compensation including wages and overriding percentage, was to furnish Respondent with laborers. Pursuant to this agreement, Stone hired these five men, placed them on his payroll and set them to work at Respondent’s plant. While at work they were under the Respondent’s control to the extent that they could be discharged. The Trial Examiner and the Board found these men to be employees of the Respondent. We do not think it necessary to decide this precise issue. The mere act of refusing re-employment is not enough to sustain the § 8(a) (3) charge. Anti-union discrimination is the essential ingredient. There is no evidence that the contract with Stone was used either before or during the strike as an anti-union weapon or a sham. The Stone contract was canceled on September 21, the day before the strike ended. Stone, the immediate “employer” of these five men no longer had any responsibility for supplying labor. If the contract was fully effective to make the laborers employees of Stone, rather than Respondent, the refusal to allow them in the plant was unquestioned. But if, as argued, under the total circumstances the men were for purposes of the Labor Relations Act employees of Respondent, there is ■nothing to show that failure of Respondent to recognize such “rights” to employment was anything more than a mistaken judgment on what is, at best, a difficult, troublesome legal question for even the most skilled. There was no evidence in the record that the Respondent’s actions resulted from discriminatory motives. It should be noted that the Respondent, after the strike, referred these men to Dresser for similar employment. The petition for enforcement of the Board’s order is denied. . 135 NLRB No. 28. , The Company agreed to such items (among others) as (1) a complete grievance procedure to be concluded by arbitration; (2) a more liberal funeral leave provision; (3) a more liberal qualification period for jury service pay; and (4) to maintain earnings for a week when temporarily transferred. . Globe Cotton Mills v. N. L. R. B., 5 Cir., 103 F.2d 91, 94; N. L. R. B. v. Whittier Molls Co, 5 Cir., 111 F.2d 474; N. L. R. B. v. Athens Mfg. Co., 5 Cir., 161 F.2d 8; N. L. R. B. v. Reed & Prince Manufacturing Co., 118 F.2d 874; N. L. R. B. v. Griswold Manufacturing Co., S Cir., 106 F.2d 713, 723. . “First, with respect to my colleagues holding that the Respondent violated Section 8(a) (5) of the Act, I do not believe that the record here warrants finding that the Respondent refused to bargain in good faith. The record shows that representatives of the Respondent and the Union first met on March 17, 1960, and that 17 negotiating sessions were held thereafter. Throughout these sessions the Respondent submitted proposals and counter-proposals in an effort to arrive at a contract. Evidence of the Respondent’s good faith bargaining efforts is found in the progress made during these negotiating sessions. For example, at the eighth meeting held on May 24, I960, the Union presented a list of 79 ‘must’ items, which it maintained had to be included in the contract. Through the give and take of bargaining, the Union’s second ‘must’ list, which was presented at the twelfth session on June 23, 1960, was reduced to 46 items. Through further negotiations, the ‘must’ list was reduced to 26 items as of the sixteenth session held on September 7, 1960, and the Respondent, at the next meeting held on September 13, 1960, offered to compromise on nine of these items. “I would find, therefore, that while the bargaining negotiations between Respondent and the Union were hard and long, the Respondent bargained in good faith.”
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115,007
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PER CURIAM. Plaintiffs allege that defendant has infringed Patent No. 2,835,874, relating to the design and construction of electrical interference suppression filters. For the reasons stated in Judge Dooling’s thorough opinion below, 213 F.Supp. 723 (E.D.N.Y.1962), we find that the patented device was anticipated by the Tobe-Deutschmann filter 1547, 35 U.S.C. § 102, that there is not present in the patentees’ work sufficient invention to satisfy the standard of 35 U.S.C. § 103, and that on both these grounds plaintiffs’ patent is invalid. We thus find it unnecessary to determine whether plaintiffs had placed their filter on sale and in public use more than a year before the patent application was filed. Judgment affirmed.
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6,135,862
|
THE COURT decided, nem. con., that the scienter must be proved; and the circumstances that the letter was not sealed, and that the defendant declared that he thought it was a legal notice, were for the consideration of the jury in deciding whether the defendant knew it was a challenge.
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6,135,681
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BENEDICT, District Judge. The prisoner, upon conviction, was sentenced to be imprisoned for twelve months. The sentence, as has been usual in this district, did not fix the place of confinement, and, accordingly, the sentence has been executed in Ludlow street jail, that jail being the one hitherto used for the temporary confinement of prisoners in this district Ten months of the term of imprisonment having expired, the prisoner now applies to be discharged, upon the ground, that, by virtue of the act of March 3d, 1875 (18 Stat 479), he is entitled to a deduction from the time of his imprisonment of five days during every month, no charge of misconduct having been sustained against him during his imprisonment. An examination of the terms of the act of March 3d, 1875, shows, that the deduction there provided for can be allowed only to persons confined in a state which has no system of commutation for its own prisoners. The state of New York has a system of commutation for its own prisoners (Laws 1863, c. 415, and Laws 1864, c. 321), and therefore, the deduction of five days per month, prescribed by the act of 1875, cannot be allowed. The fact that the state system of commutation does not allow any deduction to prisoners confined in jails does not affect the question. There is still a state system of commutation, and the fact of the existence of such a system takes the case out of the scope of the act of 1875, without regard to the particular provisions of that system. To avoid a second application, I may say, that, although the prisoner is not entitled to the deduction allowed by the act of 1875, I am of the opinion he will be entitled to the deduction of one month, allowed by section 5543 of the Revised Statutes, upon the cer» tificate and approval required by that section. The words, “state jail or penitentiary,” used in that section, are not to be considered as 'intended to limit the provision to jails supported by the state at large, if, in any state, there are such jails, as distinguished from the common jails kept by the counties of the state, by virtue of state laws. They refer to the jails and penitentiaries within a state, whether state, city or county institutions, which are permitted by the state to be used for the confinement of the prisoners of the United States. Laws N. Y. 1847, c. 460, § 16. Ludlow street jail, in the city of New York, is, therefore, a state jail, within the meaning of section 5543.
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12,117,193
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WASHINGTON, Circuit Justice (charging Jury). As something has been said, by the counsel on each side, respecting the authority of the master of a vessel to correct his seamen, and the duty of submission by the latter, it may not, perhaps, be time misemployed, to make some observations upon these subjects, although not necessarily involved in the questions which arise under the present prosecution. The master has an absolute authority on board of his ship; and his orders, .if not unlawful, are, and must be, imperative. Submission is amongst the first duties of the seamen; and their deportment to the master ought to be respectful. He is justified in inflicting moderate correction on the mariners, for disobedience of orders, and for impertinent language and behaviour. Although it would be, in general, more dignified and more prudent, to avoid inflicting personal chastisement on a seaman for offensive language, yet the law does not condemn him for doing so; it is an indulgence to human infirmity, rather than a justification. The seaman, in such a predicament, may endeavour to escape from it; and if pursued, or if he is otherwise exposed to a repetition of such treatment, he may lawfully resist, in such manner as to protect himself against injury. If the master make use of an unlawful weapon, or the seaman is otherwise exposed to apparent danger of life or limb, he may lawfully resort to any species of defence necessary to avert the danger. In the case of U. S. v. Sharp [Case No. 16,264], this doctrine was fully explained. Having made these general observations, we proceed to the consideration of the first count in the indictment; which is, for confining the master. The evidence on the part of the prosecution is, that after the master had struck at Smith, with a rope of dangerous size, which Smith laid hold of in order to escape the blow, the master struck him with his fist, which Smith returned; and having seized each other, they fell on the deck; and the master, having the ascendency, placed his knee on the breast of Smith; and, in that situation, mutual blows were exchanged, (Smith having hold of the master’s collar,) until Boyd, another of the seamen, desired the master not to strike Smith again; upon which he quitted Smith, and ordered all the seamen, who, to the number of eight or ten, had come aft on the quarter deck, to go forward. The witnesses further prove, that, whilst Smith was down, he called to his comrades more than once, and asked if they would see him so treated; that they were ordered by the master to go forward, which they refused to do, until the master had called for his cutlass, and was in a situation to enforce his order. The defendants’ witnesses deny that Smith struck the master, or laid hold of him, so as to confine him; some of them deny, also, that Smith called for the aid of his comrades, or that they were ordered by the master to go forward, until he had risen from the deck and called for his cutlass; when they obeyed. Upon .this evidence, it is for you to say, whether the captain was at any time confined by Smith. That Smith, after he was seized by the master, and until he was released, was himself confined, is certain. Nevertheless, if the captain’s situation was forced upon him by Smith, if he was so firmly held by Smith that he could not extricate himself, then the defendant is guilty under this count;, because, it has repeatedly been decided in this court, that if the master be placed under re-' straint by his seamen, or by any one of them, for any space of time, however short, whether it be by manual force, or by menace and intimidation, this is, in construction of law, a confinement U. S. v. Sharp [supra]; U. S. v. Bladen [Case No. 14,606]; U. S. v. Smith [Id. 16,337]. If, on the other hand, the master was not so restrained, the insolence of Smith, his return of the captain's blows, however culpable such conduct would render him, and his resistance of the blows he received, would not amount to this offence. One of the witnesses stated, that he and the captain thought it prudent, for some nights after this affray, to keep watch in the cabin, and to be armed. If this was so, and you should be of opinion, that the conduct of the defendants and their associates rendered that measure prudent; and if also, the captain, in consequence of any threatened danger from the seamen, was prevented from the free exercise of all his privileges in every part of the ship, then these circumstances would amount to a constructive confinement; otherwise not. But unless this, in your opinion, was the fact; there is no evidence whatever to convict Coombs upon this count, as he had no personal conflict with the master, which can be construed into a confinement of him. As to the other count, for endeavouring to make a revolt: What constitutes a revolt, has never been decided by this court. On the contrary, we have always recommended it to the jury, to acquit the accused on counts for making, or endeavouring to make, a revolt. But a most respectable and learned judge of the supreme court (U. S. v. Smith [supra]) has defined it to be an endeavour to excite the crew to overthrow the lawful authority of the master and officers of the ship. Wishing to have this point decided by the supreme court, we shall request the jury, in case they should be of opinion that the defendants are guilty of endeavouring to make a revolt, according to this definition, to find them guilty, subject to the opinion of the court upon the facts of the case. The jury found the defendants not guilty.
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114,994
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PER CURIAM. The plaintiff-appellant came into existence as the result of a single transaction merging prior corporations. It would fractionate that single transaction into taxable and non-taxable parts in order to minimize the stock issue and transfer taxes imposed by §§ 4301 and 4321 of the Internal Revenue Code of 1954. The fact that the end might have been accomplished by two separate transactions only one of which would subject the plaintiff-appellant to tax is beside the point. See Founders General Corp. v. Hoey, 300 U.S. 268, at page 275, 57 S.Ct. 457 at page 460, 81 L.Ed. 639 (1937), in which the Court rejected a taxpayer’s suggestion that he might have attained his purpose by a form of transaction which would not have subjected him to stamp taxes saying: “The suggestion, if true, furnishes no reason for relieving him of tax when, for whatever reason, he chooses a mode of dealing within the terms of the Act. [citation of eases omitted] To make the taxability of the transaction depend upon the determination whether there existed an alternative form which the statute did not tax would create burden and uncertainty.” We affirm on the opinion of the court below. 200 F.Supp. 261 (1963). Judgment will be entered affirming the judgment of the District Court.
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12,117,113
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THE COURT (CRANCH, Chief Judge, not sitting in the case) permitted the defendant to appear without special bail.
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6,129,889
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LIVINGSTON, Circuit Justice. Whether the United States are entitled to the priority, which it is the object of their bill to establish, and which is the first question arising out of the pleadings, is one of no difficulty, considering the decisions which have already been made on the fifth section of the act, to provide more effectually, for the settlement of accounts between the United States and re- eeivers of public money, passed the 3d March, 1797. The words of this section, as far as they bear on the present case, are, that “where any revenue officer, or other person, hereafter becoming indebted to the United States, by bond or otherwise, shall become insolvent, the debt due the United States shall be first satisfied; and the priority hereby established shall be deemed to extend, as well to cases in which a debtor, not having sufficient property to pay all his debts, shall make a voluntary assignment thereof, as to cases in which an act of legal bankruptcy shall be committed.” The debt of Blanche to the United States being admitted, as also the execution by him of the deed, bearing date the 20th of May, 1816, it remains only to examine the character of this instrument, and the situation of the grantor at the time of its execution. If he had not then sufficient property to pay all his debts, and if it were a voluntary assignment of his property—which has been decided to mean all the debtor’s property—the right of preference in the United States must necessarily follow. It was argued by all parties as if it were necessary, that the assignment should appear to be for the benefit of all the creditors of the insolvent. This would be necessary if these bonds were for the payment of duties, in which ease the assignment must not only be voluntary, but for the benefit of creditors, which words are not found in the act which governs the present case—But if the counsel are right and the court be mistaken in this respect, and the assignment, to give rise to the priority here claimed, ought to be for the benefit of creditors or of all the creditors, there well be no difficulty in fixing on it this characteristic also. That the assignment, although for a valuable consideration, was voluntary within the meaning of the act of congress, that is, made freely and without any legal compulsion, is not denied. There is some controversy whether it included all the property of the debtor, without which, under the decision in the case of the United States against Hoe and others, a priority would not attach, unless indeed it should appear, that for the purpose of evading the provisions of the law, a trifling part of the estate had been omitted. If the court had nothing for its guide but the assignment itself, it would not be a very forced construction of the instrument, taken altogether to regard it as a conveyance of all the debtor’s property. It is professedly so of all his personal estate, without any exception, and it also comprises, as appears by the recitals, all his real estate in New-Jersey and New-York. This taken in connexion with the object of the assignment, would leave but little room to suppose that there might be lands elsewhere than in the states of New-York and New-Jersey, which were not included in this deed. But whatever doubt might otherwise rest on this part of the case, it is dispelled by the following testimony produced by the United States, who have very properly taken on themselves the burthen of proving the fact; the deed not being as explicit as it might have b.een. Besides other witnesses who were well acquainted with the situation of Blanche, and who establish the fact, in a manner which ought to be satisfactory, the debtor himself has been examined as a witness,—and settles beyond controversy, that the deed did cover the whole of his property. It is objected that Blanche is interested: but whatever feeling he may have, it must in point of interest be unimportant to him whether the United States succeed in this suit, and if they do, whether they are paid out of the estate assigned to Mott, Vanderbilt, and Coulter, or out of the private property of the latter. If the United States fail in this action, he continues their debtor—if they be paid out of the assigned property, his debt to Mott and Williams will be revived pro tanto; and if the plaintiffs are paid out of the assets in the hands of Coulter’s executors, he will become a debtor to the amount of such payment to his estate. It is equally clear, if that be necessary to be proved, from the testimony of Blanche, and the terms of the assignment, that when he made it. he had not sufficient property to pay all his debts. All the allegations of the complainants being thus admitted or proved, which were necessary to bring their ease within the meaning of the act of the 3d of March, 1797—nothing would remain but for the court to make a decree pursuant to the prayer of their bill. But it is supposed by the counsel of the administrator of John Mott, and of his surviving partner Williams, that, instead of making them account immediately for the trust property of Blanche, a decree should be made in favour of the United States, in the first instance against the estate of Coulter, and leave the executors of his will to their remedy for reimbursement, if they have any, against Mott and Williams; or that if a decree be made against Mott and Williams in favour of the complainants, one should at the same time pass in their favour and for their indemnity against the estate of Coulter. It has been argued that the United States should have their remedy in the first place against the estate of Coulter, because he is a party to the deed of assignment, and thereby consented to postpone the debt for which he was surety, to that of Mott and Williams. It is also said in favour of such a decree, that there being two funds, out of which the United States can be paid, and but one from which Mott and Williams can have satisfaction, they have a right to compel the complainants to resort in the first instance to, and exhaust the one on which they can have no claim. A defendant who asks of a court of chancery not to touch the only fund to which he can resort, while there is another one out of ■ which the complainant can obtain satisfaction, ought to show not only that he has a clear and indisputable title, which will be respected in equity, to the fund which he de sires may be held sacred for his use, but that there are in reality two funds, of which an election can be made; and that by such election no injustice will be done to any of the other parties before the court. Thus where one person has two mortgages on different estates, and another has a mortgage only on one of them, nothing is more reasonable than to force him who holds the two mortgages to proceed first against that estate on which the other has no security—and to leave the other untouched in case the first estate be sufficient to satisfy him. There were not only two funds, but they were both before the court, and the title of neither party was liable to any doubt, nor could the mortgagor have any objection to such a decree. It would, therefore, have been most manifestly unjust to have acted otherwise. The first answer then, to this course of proceeding on the present occasion is, that the two funds here spoken of, that is, the property mentioned in the deed of assignment or its proceeds, and the estate of Coulter, admitting it sufficient to pay the debt, are not both before the court, so as to justify any decree against the latter. Although it may be collected from the proceedings that Coulter was a co-debtor with Blanche to the United States, and that he may have property enough to pay the debt, nothing would be more unjust or improper than to make a decree against his estate, under the present bill, which, notwithstanding its general prayer, most manifestly confines any relief that may be afforded, to such as the United States may be entitled to out of the estate of Blanche, in consequence of the execution of the assignment by him before-mentioned. Coulter’s representatives, therefore, have not been called upon, nor have they had an opportunity of contesting the right of the complainants to a decree against his estate. Nor have they been put on their guard by any intimation or allegation in the bill to dispute the grounds on which two of their co-defendants have placed the propriety of such a decree. If the United States had sought by their bill a decree against the estate of Coulter, on any other ground than as one of the trustees in the deed of assignment, a demurrer might have been interposed, their remedy on the judgment confessed by the executors, being clearly a remedy at law, unless for the purpose of discovery, they had thought proper to bring the executors into a court of chancery. It is not enough to put the executors of his will on their defence, that the suggestion has been made in a separate answer of one or more of the defendants. Thus far the court has proceeded on the supposition, that there are two funds before it out of which satisfaction may be had. But non constat that Coulter has left any es-. tate at all;—nor, if he has, that any of it remains in the hands of the executors of his will; nor, that they are able, if they have inadvertently admitted assets by their plea in New Jersey, to pay so large a sum, or any part of it. It is believed that a court of chancery has in no ease prevented a party, who had a clear and undoubted right, from proceeding against a particular fund to which another might also claim a title, although a subordinate one, without presenting to it another equally certain, if not as productive. In the present case, therefore, it would be unjust to delay the United States by a decree which might prove illusory, against an estate which might not produce a cent; when they ask for and have a right to receive payment out of a fund to which as far as it extends, the law has given them a title. But if the reasoning of the court thus far be incorrect, there are other obstacles in the way of such a decree as is sought for by Mott and Williams. If Coulter has agreed, by being a co-trustee with Mott and Vanderbilt in the deed of assignment, that this property should first be applied to the payment of the debt of Mott and Williams; if this distribution be deranged by operation of law, and the decree of a court—it does, not follow that he would be bound to find other property to satisfy Mott and Williams, or to indemnify them for what they might thus lose. Still less evident is it that the United States, or this court, are under an obligation to pursue any course, which should have for its object the securing to Mott and Williams indirectly the very benefit under this assignment which the law has taken from them—and the more especially as the instrument on its very face, avows the intention of -creating a preference in their fa-vour to the prejudice of the government, and against the policy and provision of all the laws which have been passed on this subject. Would not such a course of decision encourage rather than discountenance similar attempts? But there is another objection to such a decree, which if not conclusive of itself, is entirely satisfactory to my mind. It is admitted by all, that the debt due by Coulter is only as the surety of Blanche. Would not then a decree, operating in the first instance on the estate of the surety, if any such there were, and abstaining from the fund of the principal debtor, until the former were exhausted, be pregnant with injustice, and at variance with the whole course of chancery proceeding? It is no answer to this difficulty to say, that the surety by his own act has justified this mode of proceeding. Such assent, may have been given on a belief that the property assigned would pay both debts, not meaning, however, to guaranty the payment of Mott and Williams, if the United States should think fit, notwithstanding .this arrangement, to assert their priority. At any rate, before such conclusion be drawn, if it ever can be, the executors of Coulter’s will should have an opportunity of controverting in a suit with Mott and Williams, matters which they have not been called upon in this suit to take any notice of; and which, for any thing that yet appears, may defeat their right to any relief against him. But as it is intended to leave these parties to litigate either here or elsewhere, as they may be advised, it is not intended to express an opinion on any claim that Mott and Williams may set up against the estate of Coulter, to make good their loss by this suit, or on any defence which his executors may interpose to such claim. I only mean to say, that in the present suit, they are entitled to no relief against the estate of Coulter; and this being my view of the subject, I shall make the following decree. This cause came on to be heard on the bill, answers; replication, and depositions, and was argued by the district attorney for the United States, by Hoffman and Wheaton for the defendants Mott and Williams, and by David B. Ogden, Grillen, and Haight for the defendants Casparus Prior and Josiah Hornblower, executors of the last will and testament of William Coulter, deceased. Whereupon this court doth order, adjudge, and decree, that the monies brought into court by the defendants, Uriah R. Scribner and John Hitchcock, be paid to the complainants, in part satisfaction of their demand against the defendant, Noel Blanche. And it is further ordered, adjudged, and decreed, that it be referred to William Ironside to ascertain and report what sum will remain due to the complainants, on the several bonds mentioned in their bill, as being executed by the defendant, Noel Blanche, by the said William Coulter, and by Jeremiah Vanderbilt, after crediting thereon, the sum which has been brought into court as aforesaid, and which is, by this decretal order, directed to be paid to the complainants. And it is further ordered, adjudged, and decreed, that the said William Ironside do also ascertain and report what property was conveyed by the deed of assignment in the pleadings mentioned, bearing date the 20th day of May, in the year of our Lord 1816, that is to say:— All the particulars, whether real or personal, of which the same consisted, and what part or parts thereof have been sold by the trustees therein named, or by either of them, and to whom, and for what prices, and what sums of money have been received by the said trustees, or by either of them, under and in virtue of the said deed of assignment, and how the same have been applied, and what part of the estate, real or personal, granted by the said deed, remains unsold, or in the hands of the said trustees, or either of them, and what is the value thereof. And also, that the said William Ironside report, whether there were any and what encumbrances, and of what kind and nature, and to what extent, on any part of the real estate mentioned in the said deed of assignment; and whether any and what part of such estate has been sold in virtue thereof. And it is further ordered, that in taking the said account, the said William Ironside may examine on oath, the district attorney for the Southern district of New-York, or any of either of the defendants, as well as any other person or persons. And any further direction or decree is reserved until the coming in of the said report.
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6,131,675
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BLATCHFORD, District Judge. This suit is brought by the United States against a case containing certain “bottles of imitation sparkling wine,” seized as forfeited under the internal revenue laws. The information sets forth, “that the contents of the said bottles contained in the said case of imitation sparkling wine, were then and there wines, liquors or compounds, known or denominated as wine, and were made by a certain manufacturer of imitation sparkling wine or champagne, to wit, by J. N. Blum, at his manufactory of such wines in the city of New York, by the direct injection of carbonic acid gas, by a wholly me chanical process, into wines made from grapes grown in the United States, not in and as a part of the process of fermentation and manufacture of said last mentioned wines, but as a new and additional process of manufacture, by using such wines (the same being already the completely fermented juice of said grapes), with said carbonic acid gas injected therein i as aforesaid, to make a new product known as and being an imitation sparkling wine or champagne;” and “that the said wines, liquors or compounds, known or denominated as wine, and made in imitation of sparkling wine or champagne, as aforesaid, and found and seized as aforesaid, were subject then and there, and when made as aforesaid, to tax, by the statute of the United States in such case made and provided and, when found and seized as aforesaid, the same had been sold by the said manufacturer thereof, and had been removed from his said manufac-tory, without having on the said bottles containing the same any stamps affixed denoting the tax thereon, nor has any tax in any manner ever been paid on said wines, liquors or compounds, contrary to the form of the statute of the United States in such case provided, whereby, and by force of the statute of the United States in such case provided, the said contents of the said bottles, and the said bottlec and case, became and are forfeited to the United States.” The claimant demurs generally to the information. The 4Sth section of the act of July 20th, 3SG8, as amended by the 12th section of the act of June 6th, 1872 (17 Stat. 240), imposes a tax, per bottle or package (to be collected by affixing a stamp on each bottle or package containing the article, by the person manufacturing it, before removal from the place of manufacture), “on all wines, liquors or compounds known or denominated as wine, and made in imitation of sparkling wine or champagne, but not made from grapes grow* in the United States.” The information in this case states that the article seized is known or denominated as wine, and is made in imitation of sparkling wine or champagne. The information does not state that the article is not made from grapes grown in the United States. The tax is not imposed on an article made from grapes grown in the United States. The information aims to aver, argumentatively, that, inasmuch as the article was made in imitation of sparkling wine or champagne, “by the direct injection of carbonic acid gas, by a wholly mechanical process, into wines made from grapes grown in the United States not in and as a part of the process of fermentation and manufacture of said last mentioned wines, but as a new and additional process of manufacture, by using such wines (the same being already the completely fermented juice of said grapes), with said carbonic acid gas injected therein as aforesaid, to make a new product known as, and being, an imitation sparkling wine or champagne,” it was, therefore, not made from grapes grown in the United States. But, the information avers that grapes grown in the United States were made into wines, and that such wines were the completely fermented juice of said grapes, and that the wines so made were afterwards converted into an imitation of sparkling wine by the additional mechanical process of directly injecting carbonic acid gas into them. It further says that, by such process, the article seized was “made,” and that such process was a process of “manufacture,” and was used to “make” a new product, being the article in question, and that the article, when so made, is an imitation sparkling wine, and is “made” in imitation of sparkling wine. The information. therefore, substantially avers, that the article in question was made from grapes grown in the United States. If so made, it was not taxable. It is urged, that the expression, in the statute, “made from grapes grown in the United States,” means, made by the natural process of fermentation, and that the article is not, in the sense of the statute, “made in imitation of sparkling wine or champagne,” “from grapes grown in the United States,” if the carbonic acid gas is injected into the wine directly by mechanical means, instead of being created in the wine by the process of fermentation taking place therein. The word “made” occurs, in the clause in question, in two places. But there is no warrant for saying that that word can have a different meaning attached to it, where it occurs in the one place, from what it has where it occurs in the other. The tax is imposed, in terms, “on all wines, liquors or compounds, known and denominated as wine, and made in imitation of sparkling wine or champagne, but not made from grapes grown in the United States.” When the article is put into such a condi-i ion as to imitate sparkling wine, it is spoken of as “made” and as “made in imitation.” Whatever the process by which the imitation is produced, the article is not “made in imitation” until the process is finished. If, therefore, it is an article made- from grapes grown in the United States, it cannot be any the less an article made from such grapes because the process of making it into an article in imitation of sparkling wine was performed upon it after it was in a condition to be already called an article made from grapes grown in the United States, though not yet in a condition to be called an imitation of sparkling -wine. The word used in both instances is “made.” I understand the information in this case to aver that the claimant took an article which was properly nothing but a wine made from grapes grown in the United States, and was not otherwise a liquor or compound, and was a completely fermented juice of such grapes, and was nothing else, and that he did nothing to it but directly inject into it carbonic acid gas by a wholly mechanical process; and 1 cannot come to any other conclusion than that, within the words of the clause in question, the product, when made, by such process, to be an imitation of sparkling wine, must be regarded as made from grapes grown in the United States. The section in question evinces a clear design to relieve from taxation certain articles made from grapes grown in the United States, and to impose a tax on certain articles not made from grapes grown in the United States. All that is intended now to be decided is, that the article described in the information, as above understood, is not taxable. The article is not understood to be a compound, otherwise than as it is a compound of a wine which is the completely fermented juice of the grape, with carbonic acid gas. What other compounds, known as wine, and made in imitation of sparkling wine, could be considered as made from grapes grown in the United States, and so not taxable, it will be sufficient to decide, as the cases arise. There must be judgment for the claimant on the demurrer, with leave to the informants to amend their information.
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114,981
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BLACKMUN, Circuit Judge. The Tax Court has upheld the Commissioner’s determination of a deficiency in the federal income tax of James M. Pierce Corporation for its fiscal year ended June 30, 1957. Judge Mulroney’s decision, not reviewed by the full court, is reported at 38 T.C. 643. The taxpayer has petitioned for review. The initial issue before us concerns the includability in gross income of the amount of prepaid magazine subscriptions unexpired in the taxable year during which the publication was sold and the subscription liability was assumed by the purchaser. The Commissioner originally determined deficiencies in tax for each of the taxpayer’s fiscal years 1954 to 1957, inclusive. These were attributable, almost in their entirety, to claimed surtax for improper accumulation of surplus, under § 102(a) of the Internal Revenue Code of 1939 for fiscal 1954, and to claimed accumulated earnings tax, under § 531 of the 1954 Code for the other taxable years. Only in an amendment to his answer did the Commissioner propose a further and additional deficiency for fiscal 1957 attributable to the unexpired subscriptions. The Tax Court decided the accumulation issue in favor of the taxpayer. No cross petition for review has been filed by the Commissioner. Consequently the accumulation issue and taxes for fiscal 1954 to 1956, inclusive, are not before us. Helvering v. Pfeiffer, 302 U.S. 247, 250-251, 58 S.Ct. 159, 82 L.Ed. 231 (1937). The court, however, decided the subscription issue in favor of the Commissioner and held that there was a deficiency in the taxpayer’s fiscal 1957 income tax in the amount of $222,788.96. It is this result which is under attack here. The taxpayer is an Iowa corporation organized in 1902 for the purpose of taking over an existing publishing business established by its founder. It published in Des Moines a farm newspaper called The Iowa Homestead. It sold subscriptions to this paper for fixed terms beyond one year with advance payment made by the subscriber. In September 1929 the taxpayer sold, under contract, its real estate, machinery and equipment and all assets relating to its job printing business and to the newspaper to the Wallace Publishing Company, publisher of another farm newspaper called Wallaces’ Farmer. This purchaser combined the two papers into one and published it under the name of Wallaces’ Farmer and Iowa Homestead. Wallace, both before and after the purchase, had a business practice of selling a perpetual subscription. The subscription could be redeemed by the subscriber, his heirs, or assigns, at any time after one year for nine-tenths of the purchase price. Upon the sale of a perpetual subscription Wallace allocated on its books one-tenth of the price to earned income for the then current taxable year and nine-tenths to a perpetual subscriptions reserve account. If the subscription was redeemed, that reserve, of course, was debited accordingly. In 1931 Wallace became delinquent under its purchase contract with the taxpayer. Foreclosure proceedings were instituted. A receiver was appointed. Finally, in December 1935, the taxpayer, at a sheriff’s sale, purchased all Wallace’s property used in the operation of its business. The taxpayer bid in the property for $1,013,000 and assumed Wallace’s liabilities including those for unexpired subscriptions. It then continued the publication of the combined newspaper. The taxpayer, however, sold no perpetual subscriptions. The taxpayer filed its income tax returns on the accrual method of accounting. Since 1919 it had reported as income only an aliquot part of its prepaid subscriptions in each year and carried the balance in an unearned subscription reserve account. This was a method employed by many publishers. It found official sanction in I.T. 3369, 1940-1 C.B. 46, for accrual basis publishers, such as the taxpayer, who had consistently followed the practice over a period of years. This reporting method, however, was denied to new publishers and others. In June 1957 the taxpayer’s shareholders, in contemplation of the provisions of § 337 of the 1954 Code, adopted a plan of complete liquidation. This plan complied with Iowa law. Under Iowa Code, § 491.56, I.C.A. the taxpayer continues appropriately to act for the purpose of winding up its affairs. On June 27 the shareholders approved an offer of The Prairie Parmer Publishing Company, an Illinois corporation, to purchase the business. By the sale agreement, effective June 28, Prairie paid the taxpayer $1,406,789 in cash and also assumed “ * * * the obligation of Pierce to publish ‘Wallaces’ Parmer and Iowa Homestead’ and to carry out in accordance with their terms all subscription contracts in force as of the date of closing for the unexpired period of the subscriptions”. On June 28, the balance in the taxpayer’s reserve for unearned subscriptions was $396,019.31, and that in its reserve for perpetual subscriptions, taken over entirely from Wallace, was $40,340.25. These totaled $436,359.56. This figure was taken into account as an adjustment in the amount of the cash paid by Prairie. The taxpayer did not report any part of its unearned and perpetual subscription reserves, theretofore untaxed, as income for fiscal 1957. These are the amounts which the Commissioner determined were includable. The issue therefore is the proper income tax handling of these reserves. The Tax Court held, pp. 655-657 of 38 T.C., that they were includable in their entirety in fiscal 1957. It reasoned that when Prairie assumed these liabilities the taxpayer realized income accordingly; that the need for holding the unearned subscriptions in a reserve account then no longer existed; that the taxpayer was released from its liability to its subscribers; that this was the appropriate time to restore the prepayments to income ; and that if this were not done the •amounts would escape tax altogether. It drew an analogy to the bad debt reserve eases and it found support in the 1958-enacted § 455 of the 1954 Code. It summarily dismissed, p. 658, as having no merit, taxpayer’s secondary argument that it had paid Prairie to assume the liabilities under the subscription contracts and hence was entitled to a deduction for that payment. We agree with the Tax Court’s holding that, technically, the reserves were includable in gross income and taxable for fiscal 1957. We disagree, however, with its dismissal of the taxpayer’s secondary argument. We hold, instead, that, under the facts of this case, the inclusion is in effect nullified by an offsetting deduction equal to the amount by which the gross sale price to Prairie was reduced by Prairie’s assumption of the subscription liabilities, and that this is so whether there is a “payment” by the passing of dollars back and forth or whether only the net cash amount is transferred. 1. The income aspect. Perhaps it is now settled that, for taxable years ending prior to 1958, a taxpayer-publisher’s receipt of cash subscriptions prepaid for more than one year normally would constitute taxable income for the year of receipt despite the taxpayer’s being on the accrual system. Schlude v. Commissioner, 372 U.S. 128, 132-135, 83 S.Ct. 601, 9 L.Ed.2d 633 (1963); American Auto. Ass’n v. United States, 367 U.S. 687, 81 S.Ct. 1727, 6 L.Ed.2d 1109 (1961); Popular Library, Inc., 39 T.C. 1092, 1098 (1963). See Automobile Club v. Commissioner, 353 U.S. 180, 188-190, 77 S.Ct. 707, 1 L.Ed.2d 746 (1957). Cf. Beacon Publishing Co. v. Commissioner, 218 F.2d 697 (10 Cir.1955), and the Supreme Court’s refusal, footnote 20, p. 189 of 353 U.S., pp. 712, 713 of 77 S.Ct., 1 L.Ed.2d 746, to pass upon the correctness of that decision. But, and in any event, this result did not ensue for Pierce because of the sanction by I.T. 3369, supra, of the taxpayer’s long continued contrary practice. It would therefore seem logically to follow that, when the reasons for the establishment of the reserves and their tax deferral cease to exist, the taxability which had been deferred should forthwith mature. We so hold and do so with the following observations: (a) Both reserves were set up by the taxpayer as a matter of realistic accounting recognition of the taxpayer’s obligations and liabilities. It made sense tax-wise, too, to defer the inclusion of prepaid subscriptions in income until the obligations with attendant expenses were being fulfilled. As has been noted, the tax authorities went along with this. It makes equal sense, however, that, when the taxpayer’s obligations and liabilities terminate, the continuance of the reserves and of the tax deferral should also cease. This took place in fiscal 1957, the year of the sale to Prairie and its assumption of the subscription obligations. All this is practical accounting and practical tax treatment. It is not a matter of the receipt of income through Prairie’s assumption of liabilities; it is a matter of income inclusion by the rightful cessation of income deferral. (b) We find precedent in the bad debt cases. Where additions to a reserve for bad debts have been effected, with deductions from gross income, and then the need for the reserve ceases, the amount of the reserve at that time is includable in gross income. West Seattle National Bank of Seattle, 33 T.C. 341, 343-44 (1959), aff’d 288 F.2d 47 (9 Cir.1961); Arcadia Sav. & Loan Ass’n v. Commissioner, 300 F.2d 247 (9 Cir.1962); Citizens Fed. Sav. & Loan Ass’n of Cleveland v. United States, 290 F.2d 932 (Ct.Cls. 1961); Ira Handelman, 36 T.C. 560, 565 (1961); Geyer, Cornell & Newell, Inc., 6 T.C. 96, 100 (1946). Although a bad debt reserve is neither an asset nor a liability and although it concerns deductions with past tax benefit, as contrasted with the obligation character and deferral-of-income aspect of subscription reserves, we feel that the tax consequences are indistinguishable and that the result must be the same for both. (c) We find precedent, too, in Boston Consol. Gas Co. v. Commissioner, 128 F. 2d 473 (1 Cir.1942). This case concerned a reserve for refundable cash deposits required in advance from utility customers and another reserve for unconsumed portions of 25^ meter collections made in advance of gas deliveries. When the taxpayer’s general ledger was adjusted downward to conform with a new and detailed customers’ ledger, the resulting credits to surplus were held to be taxable income in the year of adjustment. This conclusion was tied to the elimination, to that extent, of the necessity for the reserves. The situation closely parallels and corresponds, we feel, to the one before us. Other cases of similar tenor which are helpful and indicative are Wichita Coca Cola Bottling Co. v. United States, 152 F.2d 6, 8 (5 Cir.1945), cert, denied 327 U.S. 806, 66 S.Ct. 964, 90 L. Ed. 1031 (deposits for beverage bottles and eases); Fidelity-Philadelphia Trust Co., 23 T.C. 527, 528-531 (1954) (reserve for unclaimed dormant deposits); Roxy Custom Clothes Corp. v. United States, 171 F.Supp. 851, 145 Ct.Cl. 602 (1959) (writeoff of liability for cost of goods purchased when seller failed to present a bill); Chicago, R. I. & P. Ry. v. Commissioner, 47 F.2d 990 (7 Cir.1931), cert, denied 284 U.S. 618, 52 S.Ct. 7, 76 L.Ed. 527 (railroad’s overcharges resulting from errors in fare computations, and uncashed checks and vouchers); Charleston & W. C. Ry. v. Burnet, 50 F.2d 342 (D.C.Cir.1931) (wages uncollected by employees). Cf. Northwestern States Portland Cement Co. v. Huston, 126 F.2d 196, 198 (8 Cir.1942). (d) Some statutory history lends support. Section 452 of the 1954 Code had no counterpart in prior tax statutes. It authorized, at a taxpayer’s election, a method of deferring prepaid business income. It contained a provision, parallel to that in § 455(b), to the effect that when a taxpayer’s liability with respect to the prepayment ceased the amount theretofore deferred was to be reported as income. Section 452 was repealed the following year. 69 Stat. 134. This statute, its short life, and its repeal because of the Treasury’s insistence that it would have a disastrous impact upon the rev enue, were all noted and commented upon in the majority and dissenting opinions in American Auto. Ass’n v. United States, supra, pp. 694-698 and 703-711 of 367 U.S., pp. 1730-1733 and 1735-1739 of 81 S.Ct., 6 L.Ed.2d 1109, and again in the opinions in Schlude v. Commissioner, supra, pp. 134-135 and 139-140 of 372 U.S., pp. 604, 605 and 607 of 83 S.Ct., 9 L.Ed.2d 633. The repeal of § 452 was followed by the enactment three years later of § 455 with its application limited to prepaid subscriptions. Thus, while there was no deferral statute in being in 1957, it is evident that in the mind of Congress, as it formulated these statutes, there was an association of necessary taxation with the cessation of the reason for deferral. We think the same philosophy has valid and like application to income deferral under I.T. 3369. (e) This taxable result is, of course, not avoided because of the tax free liquidation provisions of § 337 utilized by the taxpayer in 1957. The income component here is not part of the capital transaction. Commissioner v. Kuckenberg, 309 F.2d 202, 205-206 (9 Cir.1962), cert, denied 373 U.S. 909; West Seattle National Bank of Seattle v. Commissioner, supra, p. 50 of 288 F.2d 47; Central Bldg. & Loan Ass’n, 34 T.C. 447, 450-451 (1960); Ira Handelman, supra, p. 567 of 36 T.C. (f) It is no answer to this result to say that the taxpayer’s liability for future delivery of the newspaper was not absolutely terminated upon the sale to Prairie and, indeed, could not be because of the taxpayer’s specific assumption in 1935 of Wallace’s obligations and because of its direct contractual obligations to its own subscribers. It is true that a subscriber could make a refund demand upon the taxpayer. We think, however, that this was improbable in view of the taxpayer’s liquidation and particularly because such a demand would likely be made on Prairie as the then publisher rather than on the taxpayer as the former one. Furthermore, if a demand were made upon the taxpayer it would then have a right to reimbursement from Prairie or, if that were not collectible, a loss deduction, for what it might be worth, in the year of payment. It has long been said that “Taxation is an intensely practical matter * * * ”. Farmers Loan & Trust Co. v. Minnesota, 280 U.S. 204, 212, 50 S.Ct. 98, 100, 74 L.Ed. 371 (1930); Tyler v. United States, 281 U.S. 497, 503, 50 S.Ct 356, 74 L.Ed. 991 (1930) ; Lethert v. Culbertson’s Cafe, Inc., 313 F.2d 506, 516 (8 Cir.1963); Helvering v. Cannon Valley Milling Co., 129 F.2d 642, 647 (8 Cir.1942); St. Louis Union Trust Co. v. Burnet, 59 F.2d 922, 927 (8 Cir.1932). It is our view that, as a practical matter, and despite theoretical continuing liability, the sale to Prairie extinguished the reasons, tax and otherwise, for the subscription reserves. Boston Consol. Gas Co. v. Commissioner, supra, p. 475 of 128 F.2d; Fidelity-Philadelphia Trust Co., supra. pp. 530-531 of 23 T.C.; Chicago, R. I. & P. Ry. v. Commissioner, supra, p. 992 of 47 F.2d. Cf. Commissioner v. Hansen, 360 U.S. 446, 79 S.Ct. 1270, 3 L.Ed.2d 1360 (1959). In deciding this phase of the issue we have not overlooked the rule that, because the subscription issue was brought into the case by the Commissioner only by way of new matter pleaded in the amendment to his answer, the burden of proof with respect to that issue is upon the Commissioner and not upon the taxpayer. Tax Court Rules of Practice, Rule 32; Helvering v. Terminal R. R. Ass’n, 89 F.2d 739, 742 (8 Cir.1937); Commissioner v. Hofheimer’s Estate, 149 F.2d 733, 737 (2 Cir.1945); Commissioner v. Erie Forge Co., 167 F.2d 71, 74 (3 Cir. 1948); Commissioner v. Fleming, 155 F. 2d 204, 205 (5 Cir.1946); Athens Roller Mills, Inc. v. Commissioner, 136 F.2d 125, 128 (6 Cir.1943). We feel, however, that this burden, so far as the evidence is concerned, has very definitely been met. 2. The deduction aspect. If property subject to a mortgage or other liability for which the owner is personally liable is sold for cash, the seller and the purchaser have a number of choices. The purchaser may pay the gross amount and the seller may then apply part of the purchase cash in payment of the existing obligation. Or the purchaser may accept the property subject to the obligation, assume the debt, and pay it off according to its terms, the assumption then constituting part payment of the overall price. United States v. Hendler, 303 U. S. 564, 566, 58 S.Ct. 655, 82 L.Ed. 1018 (1938); Crane v. Commissioner, 331 U. S. 1, 13, 67 S.Ct. 1047, 91 L.Ed. 1301 (1947). See Douglas v. Willcuts, 296 U.S. 1, 9, 56 S.Ct. 59, 101 A.L.R. 391 (1935). Or the purchaser may place his own mortgage of equal amount on the property and have tlie principal of the new mortgage applied in satisfaction of the old. In each of these cases the seller acquires something he did not have before : he either is relieved entirely of his personal obligation or he is placed in a position of ultimate secondary, rather than primary, liability with respect to it. And the amount of the cash purchase price he receives, net, has been reduced accordingly. This taxpayer’s posture with respect to the subscription reserves is comparable. By Prairie’s assumption of the obligations which those reserves represented, the taxpayer’s cash received on the sale of the business was reduced. This is just as much an out-of-pocket payment by the taxpayer as if it had first received the gross amount from Prairie and then repaid Prairie cash equal to the amount of the reserves. It is just as much an out-of-pocket payment by the taxpayer as if, in fiscal 1957, it had used other available cash of its own and on its own initiative refunded the subscribers the amounts of their unearned or redeemable subscriptions. This either would constitute a deductible business expense under § 162(a) or it would operate in reduction, and here, by reason of identity of amounts, in elimination, of the income includable with the cessation of the need for the reserves. In either case, the result is the same. Cf. Bressner Radio, Inc., 28 T.C. 378, 384 (1957), as to that taxpayer’s fiscal year 1951, reversed as to other years, 267 F.2d 520 (2 Cir.1959). Here again, and by authority of the cases cited above, this is not a part of the larger capital transaction which is tax free under § 337. This, we think, is the simple answer to the tax accounting problem which has afforded the parties and ourselves so much difficulty in this litigation. There has been some comment about Prairie’s income tax situation in 1957. That, however, is another taxpayer and not this one. We venture to observe only that if Prairie was on the accrual system and also was entitled to the benefit of I.T. 3369, any income it may have realized in 1957 is offset by its deferment. The decision of the Tax Court is therefore reversed and the case is remanded for reeomputation of the taxpayer’s income tax for its fiscal year 1957 in accordance with the views herein expressed.
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6,133,651
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THE COURT, however (nem. con.), said, that in the case of U. S. v. Pittman [Case No. 16,053], in Alexandria, at April term, 1828. they had required that he should be arraigned at the bar. in the criminal dock, as in other cases of felony, and that in future they should adhere to the established rule and practice.
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6,133,698
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LEAVITT, District Judge. The declaration in this case avers, that on September 9, 1851, Sophia B. Williamson, and on the 12th of September, in said year, William Harding, together with one Pickett, as to whom the process is returned not served, entered into a recognizance before Nathan Guilford, a justice of the peace for Hamilton county, by which they acknowledged themselves jointly and severally to owe the United States the sum of two thousand dollars, on the condition that the said Tickett should fail to appear before the district court of the United States, next to be held for the Southern district of Ohio, to answer to a charge of feloniously stealing from the mail of the United States. The declaration then avers that the said Pickett did not appear, and that the recognizance was duly forfeited, whereby the United States became entitled to said sum of two thousand dollars. The defendant, Harding, appeared by his counsel, and having craved oyer of the recognizance, has demurred generally to the declaration. It is on this demurrer that the question now to be decided is presented. No brief has been filed, nor any authority cited, by counsel on either side. • After a good deal of examination the court has not been able to find any decided cases bearing on the point raised by this demurrer. The question presented is. whether the recognizance, as to the defendant, Harding, is valid and obligatory. The facts, as they appear from the recognizance, and as averred in the declaration, are that on the 9th of September, Pickett, the accused person, and the said Sophia B. Williamson, appeared before the justice and signed the recognizance, acknowledging themselves jointly and severally to owe the sum before stated, on the condition set forth. To this the justice of the peace annexed his certificate, in the following words: “Taken and acknowledged before me, this 9th of September, 1S54, Nathan Guilford, Justice of the Peace.” On the 12th of September the defendant, Harding, appeared and signed the recognizance; and the justice thereupon added a memorandum, as follows: “Signed by William Harding, this 12th day of September, 1854, and acknowledged before me, N. Guilford, J. P.” The name of Harding was not, however, inserted in the body of the recognizance. It is not necessary to decide whether Harding is liable, on the facts as they are before the court, to a separate suit, as on a recognizance entered into by him at a time subsequent to that by which the other parties became bound. The question immediately arising on this demurrer is, whether the recognizance on which this suit is brought, by fair legal construction, imports a joint liability on the part of Harding with the other parties, so that he may be joined with them in this suit. My reflections on this point have led me to the conclusion that there is no such liability, and that the demurrer to the declaration must be sustained. It is clear that the recognizance entered into by Pickett and Williamson, on the 9th of September, and certified by the justice, was a perfect and Valid instrument. It was an acknowledgment of a joint and several liability on the condition set forth. This acknowledgment, without the signature of the parties, with the certificate of the justice, was all. that was required to make the recognizance valid and obligatory. There is no statutory provision, either of the United States or of the state of Ohio, requiring the parties to sign a recognizance. Harding’s name does not appear in the recognizance as one of the parties making the acknowledgment; and he is not otherwise connected with it than by the fact that he appeared on a subsequent day and put his name to it. The memorandum of the justice, that Harding appeared on the 12th of September and signed the recognizance and acknowledged such signing, did not make him a party to the instrument. It was, no doubt, competent for the justice to have taken a separate recognizance from him; and this would have been the correct course of procedure. But, without his name in the body of the instrument, his signature to the recognizance, at a subsequent day, did. not make him a party to it. and thereby create a joint and several liability with the other parties. As before intimated, it may be that the certificate of the justice as to such signing might, by a very liberal construction, be deemed sufficient evidence that he did enter into a separate recognizance, but does not connect him with the instrument, already perfect and complete in itself, as a party to it. j The demurrer to the declaration must be sustained.
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115,040
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SWAN, Circuit Judge. This action was commenced in November 1962 in the Supreme Court of New York for the County of New York. The defendant caused it to be removed to the court below on the ground the claim asserted is one “arising under the * * * laws of the United States,” namely, 15 U.S.C.A. § 78p(b). After defendant had filed its answer, plaintiffs moved for summary judgment, and appellee moved to dismiss the complaint. Plaintiffs’ motion was denied and the complaint was dismissed for failure to state a claim upon which relief can be granted. Plaintiffs have appealed. The Securities and Exchange Commission as amicus has filed a brief supporting the plaintiffs’ appeal. Plaintiff Gilson owns shares of stock of defendant, a New York corporation. Levy, the other plaintiff, is an attorney whom Gilson employed on a contingent fee basis to discover whether directors and other “insiders” of the defendant corporation had made “short swing” profits recoverable by the corporation pursuant to 15 U.S.C.A. § 78p(b). By letter dated April 10, 1962, Mr. Levy informed the corporation that certain directors whom he named, had made “short swing” profits and he requested the corporation to institute suit to recover them. The letter also stated that unless the corporation should institute such action before May 31, 1962, his client would sue on the defendant’s behalf. The defendant did file suit, and recovered from its officers without a trial some $56,000 in settlement of the claim. Shortly thereafter the plaintiffs brought the present action to recover expenses and legal fees in the alleged amount of $15,-000. The complaint contains two counts. Gilson is the plaintiff in count 1; Levy in count 2. Count 1 alleges that Gilson owns common stock of defendant; that he employed Levy to make the investigation and to request defendant to bring suit with the result above described; that defendant “has knowingly received, accepted and retained the benefits of the services so rendered by plaintiff, Gilson, through his attorney, Levy”; and that Gilson “seeks no personal benefit or recovery but brings this action to recover the expenses contingently incurred by him in an amount of the reasonable value of the legal services rendered by his attorney, Levy, and solely for the purpose of paying for such services.” Section 16(b) of the Securities and Exchange Act of 1934, 15 U.S.C.A. § 78p (b) provides: “Suit to recover such profit may be instituted * * * by the owner of any security of the issuer in the name and in behalf of the issuer if the issuer shall fail or refuse to bring such suit within sixty days after request * * During the sixty-day period plaintiff Gilson had no authority to sue on behalf of the corporation, and since he incurred no liability to Levy in engaging him to request suit by the corporation, it would logically seem to follow that count 1 alleges no facts which entitle Gilson to any recovery from the defendant. However, Dottenheim v. Emerson Electric Mfg. Co., 77 F.Supp. 306 (D.C.E.D.N.Y.) is directly to the contrary. There a stockholder of the defendant engaged an attorney upon a contingent fee basis to investigate whether one of the defendant’s directors had made “short swing” profits recoverable by the corporation, and demanded that the corporation bring suit to recover them. It recovered them without suit, and the stockholder then sued to recover the expenses of counsel “contingently undertaken and incurred.” Recovery was allowed. The principle of the Dottenheim case, so far as we are informed, has never been questioned. It was cited with approval by Judge Weinfeld in Henss v. Schneider, 132 F.Supp. 60, 63 (D.C.S.D. N.Y.); by Judge Ryan in Magida v. Continental Can Co., 176 F.Supp. 781, 783 (D.C.S.D.N.Y.) and by Judge Woodbury in Angoff v. Goldfine, 1 Cir., 270 F.2d 185, 190. It has also been cited with approval by commentators on section 16(b). See Loss, Securities Regulation (2d ed. 1961), 1054; also Insider Trading, 66 Harv.L. Rev. 385, 422. The statute is silent as to attorney’s fees. In Smolowe v. Delendo Corporation, 2 Cir., 136 F.2d 231, at page 241, where a stockholder brought a successful suit under section 16(b), we recognized that reimbursement of attorney’s fees was required by equitable considerations, and noted also that “ * * * in many cases * * * the possibility of recovering attorney’s fees will provide the sole stimulus for the enforcement of § 16(b) * * The case at bar is unique in that both Gilson and Levy, each as a plaintiff, seek to recover an attorney’s fee for Levy’s services beneficial to the corporation. Equitable considerations require the corporation to pay a reasonable attorney’s fee. It will make no difference on which count of the complaint recovery is allowed. Of course there cannot be a double recovery by the two plaintiffs. The judgment of dismissal is reversed and the case is remanded for further proceedings in conformity with the foregoing opinion. The foregoing opinion was prepared too late to be submitted to Judge CLARK. At the conference after argument Judge CLARK voted “to reverse and remand for the fixing of reasonable fees.”
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6,135,746
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WOODS, Circuit Judge. 1. There is no ground for the idea that a marshal can receive warrants, commanding him to arrest parties therein named, and make no return thereon. He is clearly bound to make return, either that he has arrested the party against whom the warrant was issued, or that the party could not be found in bis bailiwick, or give some other excuse for not making the arrest. The oath of office prescribed for the marshal requires him to “faithfully execute all lawful precepts directed to him under authority of the United States, and true returns make.” Such, also, is the course required by the common law. The officer may retain the warrant for his own protection, but he must return to the justice what he has done in pursuance of his command: 2 Ld. Raym. 1196; Beck. Just. Arrest, 14. So, by the Code of Georgia. constables may be ruled by their respective justices’ courts, and compelled to give an account of their actings and doings. Code 1873, § 4170. What they may be ruled to do. it is their duty to do without rule. The idea that a ministerial officer may pocket a warrant issued to him by lawful authority, and refuse to make any return, or give any reason for not executing it, is, in my judgment, without any foundation, at either the common law, or in the statutes of the United States. The marshal may, it is true, make his return to the commissioner before whom he takes his prisoner for examination, but he must make a return to him. If the person against whom the warrant issues cannot be found, a return of that tact should; be made to the commissioner who issues the warrant. By a rule of this court, adopted June 10, 1878, every commissioner of the court is required, at the close of every fiscal year, to file in the office of the clerk of the court a report of all warrants issued by him during the year, stating against whom and on whose affidavit issued, and stating how many, and which of said warrants have been executed, etc. Clearly, it is impossible for the commissioner to comply with this rule, if the marshal refuses to make return of the warrants placed in his hands; or if he has made return of the warrant to another commissioner, before whom he has taken the prisoner, and re-' fuses, when officially inquired of by the commissioner who issued the warrant, to state that fact. Under this rule, it clearly becomes the duty of the marshal to give to the commissioner at least a report of his act-ings and doings under the warrant placed in his hands. 2. The second question presented by the answer of the marshal to the rule, is, whether the district attorney has authority to take commissioners’ warrants from the hands of the marshal, in order to determine whether they should be executed or not. I can find no statute law or usage which confers such a power on the district attorney. The Revised Statutes of the United States (section 1014) expressly confer on any justice or judge of the United States, and on the commissioners'of the circuit court, power to arrest, imprison or bail offenders against the laws of the United States, agreeably to the usual modes of process against offenders in the state where the arrest is made. This power, conferred on the commissioners by this section, is precisely the same as that conferred on the justices of the United States supreme court and the judges of the circuit courts. It is not made subject to the -supervision of the marshal or district attorney. The judge or the commissioner acts on his own responsibility, and is not accountable to, or subject to the control of either of these officers. If the district attorney has no authority to suppress a warrant issued by the chief justice of the United States, he cannot interfere with the warrant of a circuit court commissioner, for both derive their powers from precisely the same law. As well said by Justice Field, in U. S. v. Schumann [Case No. 16,235]: “The commissioner is made a magistrate of the government, exercising functions of the highest importance to the administration of justice. He is an examining and committing magistrate, bound to hear all complaints of the commission of any public offense against the laws of the United States in his district, to cause the offender to be arrested, to examine into the matters charged, and to commit for trial or to discharge from arrest, according as the evidence fails or tends to support the accusation. For the faithful discharge of his duty in these particulars he alone is accountable. He has no divided responsibility with any other officer of the government, nor is he subject to any other’s control.” And in the case from which this citation is made, Justice Field held that even after the offender was arrested and the case was under examination before the commissioner, the district attorney had no absolute power to dismiss the proceeding. Much less has he power to suppress a warrant before arrest. If the district attorney can suppress a commissioner’s warrant after it is issued and before it is executed, he can forbid the commissioner to issue the warrant. If he has this supervision of the conduct of the commissioners, he has the same over the conduct of the circuit justices and the circuit and district judges, and can forbid them to issue warrants, although, in their judgment, the warrants should issue. Such a power will hardly be claimed for the district attorney. and yet such a power is' the logical sequence of what is claimed for him on this hearing. No claim that the power is exercised by the district attorney, to prevent abuses or control expenses, can justify it. The power does not exist in that officer, and it would be a most dangerous power, and liable to the greatest abuses, if it did. We have been referred to sections 83S and 3164 of the Revised Statutes, as warrant for the action of the district attorney in this case. A glance at section 831 will show that it has no reference to criminal proceedings, and an examination of both sections will show that neither confers on the district attorney any supervision over circuit court commissioners, or the warrants issued by them. In my judgment, the answers of the marshal to the rule are insufficient. It is his duty to execute all warrants, that lawfully come to his hands, and to mate due return thereof, and the officer issuing the warrant is entitled to know what is done under it. As both the marshal and district attorney have acted in this matter in the highest good faith, and from .a sense of duty only, it will not be necessary to do more than to pass an order requiring the marshal to make return to the commissioner of his actings and doings under the warrant against Wesley Scroggins. And it is so ordered.
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115,243
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PER CURIAM. This is an appeal from a judgment dismissing the complaint herein on the ground that the cause of action was barred by the statute of limitations. Appellant's decedent was fatally injured in an accident occurring in Washington, D. C., on September 15, 1960. As a result of her husband’s death, appellant filed suit within one year of the accident in the United States District Court for the District of Columbia. The complaint in that suit was dismissed by the court on jurisdictional grounds. Subsequently and within two years of the accident (September 14, 1962) the same suit was commenced in the District Court for the Southern District of Ohio. The appellees in this latter proceeding filed motions to dismiss, contending the cause of action in the State of Ohio was barred by the applicable statute of limitations of the District of Columbia. The appellant thereupon, on leave of court, amended her complaint by mere reference to the earlier District of Columbia suit. Her amended complaint did not materially alter the basic allegations of the original complaint before the Ohio District Court. Following the aforesaid amendment, appellees renewed their motions to dismiss which were sustained. It is from this judgment that the within appeal is taken. In the hearing below, the parties and the trial judge treated the District of Columbia statute of limitations for wrongful death actions as controlling. The applicability of the District of Columbia statute is not challenged on this appeal. Appellant’s primary contention here seems to be that the amended complaint embraces not only a wrongful death action, but is broad enough to cover an action under the survival statute of the District of Columbia, which includes a three-year statute of limitations. In her prayer for relief before this appellate court, appellant seeks to have the District Judge’s action in dismissing the complaint set aside in order that she might be “permitted to amend her complaint to set forth clearly her cause of action under the survivorship section.” Nowhere has appellant contended she was denied opportunity to amend her complaint in the District Court. In fact, the District Judge expressly granted her time within which to file an amended complaint. Appellant did so amend, but, as stated, in no way indicated her intent to rely on the aforementioned survival statute. Inasmuch as the appellant did not raise the contention in the trial court that this was a survival action, the District Judge will not now be charged with error in dismissing her complaint. Such an issue cannot be raised for the first time on appeal. Meyer v. W. R. Grace & Co., 290 F. 785 (C.C.A.7,1923); Weiss v. Duro Chrome Corporation, 207 F.2d 298 (C.A.8, 1953); Walker v. Felmont Oil Corporation, 262 F.2d 163 (C.A.6, 1958), cert, denied 361 U.S. 840, 80 S.Ct. 61, 4 L.Ed.2d 78. It follows that the District Judge, having committed no reversible error, is in all things affirmed. . District of Columbia Code, Section 16-1202. “Every such action (wrongful death) shall be brought by and in the name of the personal representative of such deceased person, and within one year after the death of the party injured.” . District of Columbia Code, Section 12-101. “On the death of any person in whose favor or against whom a right of action may have accx-ued for any cause prior to bis death, said right of action shall survive in favor of or against the legal representative of the deceased: Provided, however, that in tort actions, the said right of action shall be limited to damages for physical injury except for pain and suffering resulting therefrom.” . District of Columbia Code, Section 12-201.
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115,073
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WATERMAN, Circuit Judge: This is a petition to review a cease and desist order of the Federal Trade Commission issued after the Commission had determined that certain advertising practices of petitioners violated Section 5(a) (1) of the Federal Trade Commission Act, 15 U.S.C. § 45(a) (1). The petitioners are Country Tweeds, Inc., a New York corporation engaged in the manufacture of ladies’ cashmere coats and other clothing products, and the corporation’s president, Marcus Weisman. In early 1958 Country Tweeds, which does not itself manufacture the cashmere fabric used in its coats, began purchasing its requirements of cashmere from a new supplier, Cashmere Products, Ltd. Country Tweeds had formerly purchased its cashmere from Einiger Mills, Inc., but changed suppliers because it believed that the cashmere produced by Einiger was no longer the best on the market. Petitioners called the new fabric “Country Tweeds El Elegant Cashmere.” Petitioners submitted two samples of cashmere fabric to the United States Testing Company. One sample, the fabric formerly purchased from Einiger, it labeled “Best Quality Cashmere produced to date”; the other sample, the new fabric it was then using, it labeled “Country Tweeds El Elegant Cashmere.” The testing company subjected the samples to three comparative tests requested by petitioner: (1) an abrasion test; (2) a breaking load test; (3) a dry cleaning test. A two page report was then submitted to petitioners setting forth the results of the tests and in this report the testing company designated the samples by the designations given them by petitioners. The report was on the official letterhead of the testing company, and it was signed by two of its officials. After receiving the report petitioners altered it and in so doing reduced its size to one page. It was then sent, in its altered form, to petitioners’ dealers throughout the United States. At the same time petitioners also furnished to the dealers a brochure, which included the following information: “Q. How do I know El Elegant cashmere is my best buy? A. Recent tests by U. S. Testing, the world’s largest independent laboratory, proclaimed El Elegant the best money could buy.” The report as thus altered and distributed contained a reproduction of the testing company’s official letterhead and the two signatures which were on the original report, but the body of the original report was changed. The petitioners changed that portion of the testing company’s report dealing with the dry cleaning test by merely printing the testing company’s stated results without the introductory material which had appeared in the original report explaining in detail the manner in which the test was conducted. The portion of the altered report that dealt with the other two tests eliminated even more. In the original report the testing company had set forth the results it had reached for the abrasion test in terms of the number of abrading cycles necessary to produce a given degree of wear for each sample. The report set forth that “Country Tweeds El Elegant Cashmere” had withstood 715 cycles, while “Best Quality Cashmere produced to date” had withstood only 673. The testing company inserted in its report, immediately after the statement of this result in its tests, the following “Comment”: “Test results indicate no significant difference in abrasive resistance between the two submitted samples. It is noted that there is no significant difference in ‘roughing up’ in the intermediate stages of wear.” In the altered report petitioners omitted this qualifying statement and expressed the test results in the following language: “Country Tweeds’ El Elegant 100% Cashmere lasts 6.3% longer than Best Quality Cashmere produced to date.” The results of the breaking load test were expressed by the testing company in its original report in terms of a given number of test pounds. Numerals indicating the measure of the results for each sample were set forth for both “warp” and “filling.” The numerals for “Best Quality Cashmere produced to date” were 29.6 for “warp” and 14.5 for “filling.” The numerals for “Country Tweeds El Elegant Cashmere” were 28.5 and 22.7 for these two categories. The report as altered by petitioners described the test results in the following terms: “Country Tweeds’ El Elegant 100% Cashmere proves 56.5%' stronger than Best Quality Cashmere produced to date.” This 56.5% figure accurately represents only the percentage of difference between the original test results that dealt with “filling.” The percentaje figure does not take into account the difference in original test results for “warp,” a difference which showed that “Best Quality Cashmere produced to date” performed better in this regard than “Country Tweeds El Elegant Cashmere.” On the basis of these facts, undisputed by petitioners, the Commission concluded that petitioners had violated Section 5 of the Federal Trade Commission Act by falsely representing: (1) That the United States Testing Company, prior to the comparative tests conducted on both samples, had already found one of the fabrics to be the best quality cashmere produced up to that time; (2) That “Country Tweeds El Elegant Cashmere” was in fact 56.5% stronger than another fabric subjected to a breaking load test; and (3) That the altered test report which was circulated was an authentic reproduction of the report originally submitted to petitioners by the United States Testing Company. The record amply supports the conclusions of the Commission that petitioners made representations which were false, misleading, and deceptive. Petitioners, admitting that the altered report was not an authentic facsimile of the original report, contend that it was a fair summary of the original, framed in less technical terms. We find it impossible to accept this contention. Even if we were convinced (which we are not) that framing the test results in percentage terms did not cause the test results to appear more favorably to the fabric petitioners were interested in promoting, we would still be compelled to refuse to hold the altered report a fair summary. In the original report the testing company, immediately below the formal statement of the abrasion test results, had explained that the results were to be interpreted as evidencing no significant difference between the two fabrics tested. Petitioners chose to delete this important qualifying statement from the altered report which they distributed, simply stating that the fabric they were then using would last 6.3% longer than the other fabric. Thus, though the testing company had stated in the original report that the fabrics tested showed no signifi cant difference when subjected to the abrasion test, petitioners chose to attribute to the company the opinion that one of the fabrics tested would last longer than the other. What petitioners did in “summarizing” the results of the breaking load test was even more misleading. The test which was conducted involved two aspects, one dealing with “warp” and one dealing with “filling.” The figures in the original report favored the fabric petitioners were interested in with respect to “filling,” but showed that the other fabric had performed slightly better in the “warp” test. The percentage figure published in the altered report was one which presented the difference between the performance of the two fabrics with respect to “filling” only. We agree with the Commission that this publication went beyond the mere misrepresentation of a testimonial or an endorsement; it amounted to a direct misrepresentation of the quality of petitioners’ cashmere. A national testing company had given petitioners a report setting forth the comparative performance of two fabrics as a result of tests conducted at the behest of petitioners. Petitioners, in advertising one of those fabrics, made representations about it which were not supported by the test results they had received. The Commission also found that petitioners had falsely represented that the testing company had previously tested one of the fabrics and had found it to be the best quality produced up to that time. Petitioners, when they submitted the competing fabric to the testing company, labeled it “Best Quality Cashmere produced to date.” In their original report the testing company, as petitioners could well anticipate, designated the samples by the names petitioners had given them when the samples were submitted for testing, and petitioners carried over these names into the altered test report. The Commission was correct in concluding that the report distributed by petitioners, which labeled the competing product tested as “Best Quality Cashmere produced to date,” falsely represented that the testing company had previously tested the fabric and had found it to be of the best quality up to that time. Publication of the results of the comparative performance of these two fabrics in three tests carried with it the implication that the one labeled “Best Quality Cashmere produced to date” had previously been subjected by the testing company to a battery of tests that had established that quality, tests that were at least similar to those being then reported. Admittedly no prior tests had been conducted. That the public was not misled in this particular by any alteration of the original test report, but as a consequence of petitioners’ original labeling of the fabrics which it failed to change when passing the test results on to the public, did not soften the fact that petitioners published representations which were misleading and deceptive. Moreover, it would be immaterial if petitioners honestly believed the competing fabric was the best produced up to the time they shifted to the other fabric, or even if this was in fact so; for petitioners were found to have misrepresented the findings of the testing company by their publication, irrespective of the quality of the competing fabric. Petitioners also argue that they are saved by certain additional information which appeared in the altered report. They point to the statement at the top of the published report, which also appeared in the original report, which identified the two fabrics tested: “Two samples of fabric sampled and identified by Client as below. Order No. 4424 dated 2/4/58.” Petitioners also note that the capitalization used in the label “Best Quality Cashmere produced to date” should have prevented the public from being misled. But, as the Commission correctly stated, it is immaterial that a given phrase considered technically may be construed so as not to constitute a misrepresentation. Kalwajtys v. F. T, C., 237 F.2d 654 (7 Cir. 1956), cert, denied. 352 U.S. 1025, 77 S.Ct. 591, 1 L.Ed.2d 597 (1957). What is important in determining whether a statement is misleading is the over-all impression it tends to create on the public. Murray Space Shoe Corp. v. F. T. C., 304 F.2d 270 (2 Cir. 1962). Statements susceptible of both a misleading and a truthful interpretation will be construed against the advertiser. Id. 304 F.2d at 272; United States v. Ninety-Five Barrels of Vinegar, etc., 265 U.S. 438, 443, 44 S.Ct. 529, 68 L.Ed. 1094 (1924). We are of the opinion that the Commission could legitimately conclude that the over-all impression created by the published report was deceptive and misleading. Moreover, whatever doubts one might have had about the Commission’s conclusion on this issue are dispelled when note is taken of the statements made in the brochure which petitioners circulated at the same time as they circulated their report. In that brochure petitioners stated that “recent tests by U. S. Testing Company, the world’s largest independent testing laboratory, proclaimed El Elegant cashmere the finest money could buy.” This could only be interpreted as meaning that the testing company, before conducting the comparative tests which allegedly proved that petitioners’ fabric was better than the other sample tested, had been satisfied that the other sample was the best quality cashmere up to that time. Petitioners also contend that the complaint filed by the Commission was inadequate to apprise them of the Commission’s disapproval of the particular trade practices that the proof and findings ultimately developed. We find no merit to this contention. There was no fatal variance between the complaint and the proof and findings. Petitioners were given adequate notice of the deceptive practices which the Commission ultimately found they had committed. See Standard Distributors, Inc. v. F. T. C., 211 F.2d 7 (2 Cir. 1954). Petitioners claim that these proceedings were not in the public interest. What we have said heretofore would seem effectively to dispose of this make-weight. They also suggest that inasmuch as they had ceased their illegal conduct prior to the issuance of the complaint the Commission was thereby deprived of the power to issue a cease and desist order. Although persuasive of a less harsh order than otherwise, this change in their policies does not wholly absolve petitioners. See Giant Food, Inc. v. F. T. C., 322 F.2d 977 (D.C. Cir. 1963). We come now to a consideration of the order the Commission formulated. Petitioners object to the order as it now stands, more particularly to paragraph 4 thereof, on the ground that it is framed in terms which are too broad and which are not justified in the light of the Commission’s findings. The paragraph claimed to be offensive orders petitioners to refrain from “misrepresenting in any manner the quality of cashmere or other fabric in their merchandise.” We agree with petitioners that the order should be modified by striking paragraph 4. It is true that the Commission has wide discretion in its choice of remedies, and courts traditionally have ac-. corded deference to orders promulgated by the Commission. See, for example, Hoving Corp. v. F. T. C., 290 F.2d 803 (2 Cir. 1961). But though the scope of review of a Commission order is limited and the courts must recognize the necessity for Commission orders adequate to cope with the violators which it discovers, a court must still demand that there be some relation between the violations found and the breadth of the order. F. T. C. v. Mandel Bros., Inc., 359 U.S. 385, 79 S.Ct. 818, 3 L.Ed.2d 893 (1959); F. T. C. v. National Lead Co., 352 U.S. 419, 77 S.Ct. 502, 1 L.Ed.2d 438 (1957) ; N. L. R. B. v. Crompton-Highland Mills, Inc., 337 U.S. 217, 69 S.Ct. 960, 93 L.Ed. 1320 (1949); N. L. R. B. v. Express Publishing Co., 312 U.S. 426, 61 S.Ct. 693, 85 L.Ed. 930 (1941). An order is not entitled to enforcement if the court reviewing it finds that “the remedy selected has no reasonable relation to the unlawful practices found to exist.” Jacob Siegel Co. v. F. T. C., 327 U.S. 608, 613, 66 S.Ct. 758, 760, 90 L.Ed. 888 (1946). The Supreme Court, moreover, has indicated in a recent statement the importance of carefully scrutinizing orders of the Commission, and has suggested the need for the Commission’s formulating "them with sufficient specificity. F. T. C. V. Henry Broch & Co., 368 U.S. 360, 82 S.Ct. 431, 7 L.Ed.2d 353 (1962). The •Court’s pronouncement was the result of certain amendments to Section 11 of the Clayton Act, 73 Stat. 243 (1959), 15 U.S. C. § 21 (Supp. IV 1959-62), amending 38 Stat. 734 (1914), which were designed to accord to orders dealing with Clayton Act violations the same finality which has traditionally characterized orders issued under Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45. H.R. Rep.No. 580, 86th Cong., 1st Sess. (1959), U.S.Code Cong. & Adm.News 1959, p. 1804. Though refusing to sanction the modification of a broad Commission order which had been entered before the 1959 amendments, the Court was careful to note that this was not to be taken as a sign that it would approve the order under the new law. The Court then went on to say:. “The severity of possible penalties prescribed by the amendments for violations of orders which have become final underlines the necessity for fashioning orders which are, at the outset, sufficiently clear and precise to avoid raising serious questions as to their meaning and application.” 368 U.S. at 367-368, 82 S.Ct. at 436, 7 L.Ed.2d 353. It is difficult to imagine an order couched in more sweeping language than the one now before us. Petitioners, found guilty of misrepresenting the quality of their cashmere through the misuse of test results, have been ordered to refrain from misrepresenting “in any manner” the quality of their fabrics. This Court, subsequent to Hoving v. F. T. C., supra, in a series of recent cases dealing with illegal payments to buyers under Section 2(d) of the Clayton Act, as amended, 15 U.S.C. § 18(d), and Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, has not hesitated to modify broad Commission orders which went beyond the particular illegal practices found to exist. American News Co. v. F. T. C., 300 F.2d 104 (2 Cir.), cert, denied, 371 U.S. 824, 83 S.Ct. 44, 9 L. Ed.2d 64 (1962); Grand Union Co. v. F. T. C., 300 F.2d 92 (2 Cir. 1962); Swanee Paper Corp. v. F. T. C., 291 F.2d 833 (2 Cir. 1961), cert, denied, 368 U.S. 987, 82 S.Ct. 603, 7 L.Ed.2d 525 (1962). See also Vanity Fair Paper Mills, Inc. v. F. T. C., 311 F.2d 480, 487 (2 Cir. 1963), where the court, though refusing to accept some modifications proposed by petitioner, nevertheless did narrow the order to make it “somewhat better related to * * * [petitioner’s] offending while still sufficiently prohibiting ‘variations on the basic theme.’ ” The principles which prompted this court in the above cases to narrow Commission orders apply with equal force here, though the violation to which the instant order is directed is deceptive advertising. The First Circuit, on two occasions, has been critical of Commission orders directed to deceptive advertising and labeling which were, in some respects, less broad than the order now before us. Korber Hats, Inc. v. F. T. C., 311 F.2d 358 (1 Cir. 1962); Colgate-Palmolive Co. v. F. T. C., 310 F.2d 89 (1 Cir. 1962). We think it advisable again to note that petitioners in this case have ceased to engage in the advertising practice which prompted the order, and voluntarily did so well before the Commission filed its complaint. Cessation of the offending activity, with the likelihood that the petitioner will not again resume it or a related activity, has been one factor which courts have considered in limiting broad Commission orders. Grand Union Co. v. F. T. C., supra, 300 F.2d at 100; Swanee Paper Corp. v. F. T. C., supra, 291 F.2d at 838. The order will be enforced with paragraph 4 thereof deleted.
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POWELL, Associate Justice: The primary question presented is whether appellant, Mercantile-Safe Deposit & Trust Company (“Mercantile”), may be held liable to a beneficiary of the last will and testament of one of its trust customers, where liability is premised on Mercantile’s failure to advise the testatrix of its knowledge that the proposed bequest would be legally ineffective. We must also consider whether the district court erred (i) in excluding from the jury’s consideration evidence that the plaintiff’s adult children benefited as a result of the settlement of related litigation, and (ii) in admitting certain expert testimony calculating plaintiff’s loss. As we think Mercantile lawfully was found liable, and also agree with the rulings of the district court, we affirm. I Margaret Curry Chaplin, whose last will and testament is power of appointment over assets left to her, in trust, by her father, Henry M. Curry. Though originally unrestricted, this power was significantly limited when, acting on the advice of tax counsel, Mrs. Chaplin executed a partial release in 1946. As amended by the 1946 release, Mrs. Chaplin’s testamentary power of appointment could be exercised only in favor of her “descendants ... including adopted children_” In the event Mrs. Chaplin failed to exercise this power, her father’s will required the trust assets to be distributed, upon her death, to her children. Mrs. Chaplin had two children, Kitty Chaplin Spurry and Margaret (“Peggy”) Chaplin Lively, both of whom were adopted. Peggy married Richard Merrick (“Merrick”), the appellee, in 1941. The union produced four children before Peggy abandoned the family in 1954. Within a month of the ensuing divorce, Peggy married Dean Lively, by whom she later had two more children. Mrs. Chaplin’s numerous wills indicate that she became estranged from Peggy following Peggy’s divorce from Merrick. Between 1954 and 1972 , Mrs. Chaplin executed at least twenty wills or codicils that, aside from nominal bequests, made no provision for Peggy or for Peggy’s children by Deqn Lively. Wills executed before 1954, by contrast, had provided that Mrs. Chaplin’s two daughters would share her estate equally, with each receiving half the assets over which Mrs. Chaplin had appointive power and half of the residuary estate. Merrick, however, remained close to Mrs. Chaplin following the divorce, as did his children, over whom he retained custody. This relationship was reflected in Mrs. Chaplin’s wills. The evidence at trial established that Mercantile played a significant part in the planning and drafting of these wills. Mrs. Chaplin first became a customer of Mercantile’s Baltimore office in the early 1950s, when Mercantile began managing her investments pursuant to agency agreements. Over the years, Mercantile frequently advised Mrs. Chaplin in the planning of her estate, and was consistently named as sole executor and as the sole trustee of her testamentary trusts. Tr. 11-12, 612, 616-17. It maintained a “confidential file” that contained copies of the 1946 release and of Mrs. Chaplin’s various wills and codicils. Tr. 415, 628-29, 666-68. At various times, officers of Mercantile communicated with Mrs. Chaplin and with her attorney, T. Hughlett Henry, Jr. (“Henry”), concerning Mrs. Chaplin’s testamentary provisions, and wrote to Henry specifically about provisions that Mrs. Chaplin wished to include in her wills. E.g., Tr. 11, 416-17; App. 390, 439. In early 1965, Mrs. Chaplin requested Henry to prepare a will appointing the Curry trust half to Mrs. Spurry and half to Merrick. Tr. 53-54. Henry prepared a draft reflecting these instructions, but informed Mrs. Chaplin and Cecil Grasty, the Mercantile trust officer in charge of Mrs. Chaplin’s account, that the appointment to Merrick might not be effective “because ... Mrs. Chaplin’s power of appointment under her father’s Will was limited by her own partial release ‘to and among her descendants _’” App. 383; Tr. 55-58. With Mercantile’s approval, Henry sought the views of Pennsylvania counsel and was advised by letter dated June 10, 1965, that the proposed appointment to Merrick would indeed violate the 1946 release as he was not a “descendant” of Mrs. Chaplin. App. 385, 387; Tr. 54-55. In view of this advice, the draft of the 1965 will was revised to appoint the Curry trust half to Mrs. Spurry and half to Merrick’s children. Tr. 55. Mercantile’s confidential file contained copies of the foregoing correspondence, including the opinion letter of Pennsylvania counsel. Tr. 418. In April 1969, Mrs. Chaplin requested Paul Klender, a Mercantile trust officer who by then had replaced Cecil Grasty, to come to her home in Easton, Maryland, stating that she wished to make certain changes in her will. Tr. 426-27. In anticipation of this meeting with Mrs. Chaplin, Klender obtained from Mercantile’s confi dential file a copy of the then-current 1965 will, but he did not review the file or the correspondence generated in 1965 when that will was prepared. Tr. 418, 427. Merrick and Mrs. Spurry were also present at the 1969 meeting, and therefore knew that Mrs. Chaplin wanted the bulk of her estate, including trust assets over which she had appointive power, to be divided equally between them. Tr. 253, 358-59, 368-69. After reviewing each provision of the earlier will with Mrs. Chaplin, Klender recorded other changes requested by her and returned to Baltimore. Tr. 418, 605-06. Henry was not present. Tr. 11-12, 83, 359. Upon returning to his office, Klender dictated a letter informing Henry of the changes proposed by Mrs. Chaplin. Klen-der’s letter stated that these changes would “necessitate re-writing the entire will,” and directed Henry to “proceed with the provision [sic] promptly.” App. 390. Klender did not consult with any of Mercantile’s attorneys or other estate planning personnel at Mercantile concerning the appropriateness of these changes. Tr. 416, 418. Based on Klender’s letter, Henry drafted a will incorporating the requested provisions, and forwarded a copy to Klen-der for his review. See Tr. 96, 428; App. 418. With respect to Mrs. Chaplin’s power of appointment, the new will — in accord with Klender’s instructions — provided as follows: SEVENTH: All the property, real and personal, over which I have power of appointment or disposition under the Last Will and Testament of my father, Henry M. Curry, ..., as modified by partial release of power of appointment executed by me, dated August 28, 1946, ..., and which at the time of my death is held in trust by Mellon National Bank and Trust Company, ..., hereby exercising said power of appointment as modified, I give, bequeath, devise and appoint in equal shares, in fee simple and absolutely and free of any trust unto my daughter, KITTY C. SPURRY, and to my son-in-law, RICHARD L. MERRICK.... In the event that my son-in-law, RICHARD L. MERRICK, shall not be living at the time of my death, I give, devise and bequeath the half-share of said property otherwise payable to him to such of his descendants, who are descendants of my daughter, Margaret, then living, in equal shares per stirpes. App. 394-95. The will further recited that Merrick, though referred to as Mrs. Chaplin’s son-in-law for the purpose of identification, was no longer married to Peggy. App. 411. Neither Henry nor Klender questioned the validity of appointing trust assets to Merrick, and Mrs. Chaplin executed her new will in their presence as subscribing witnesses on June 25, 1969. Tr. 419; App. 411-12. Klender duly placed a copy of the will in Mercantile’s confidential file, where it remained until Mrs. Chaplin’s death. Mrs. Chaplin died on November 29, 1981. Tr. 107, 646. Her will was offered for Maryland probate by Mercantile, which was designated in the will as the sole executor and sole trustee of all testamentary trusts created thereby. See Tr. 646; App. 393, 395, 396, 398, 411. Mellon Bank, N.A. (“Mellon Bank”) was advised of Mrs. Chaplin’s exercise of her power of appointment over the trust created by her father’s will. Mellon Bank questioned the validity of the exercise of the power because Merrick was not a “descendant” of Mrs. Chaplin as required by the 1946 release. In May 1982, Mellon petitioned the Court of Common Pleas of Allegheny County, Pennsylvania, for directions as to the appropriate distribution of the trust. Tr. 255; App. 423. Merrick, his four adult children, and Peggy’s guardian ad litem were joined as parties. Mercantile was not a party. Tr. 255; App. 496. Merrick conceded that he was not an eligible appointee. See Tr. 256; App. 473. See also Henry’s Exh. 43. He and his children contended, however, that Merrick should be treated as if he had predeceased Mrs. Chaplin. This treatment would allow the share purportedly appointed to Merrick to pass to his children under the alternative provision of Mrs. Chaplin’s will, a result they argued would do as little violence to Mrs. Chaplin’s testamentary design as it was possible under the circumstances. App. 428, 458, 474; Henry’s Exh. 43. On July 13, 1983, the Court of Common Pleas rendered a decision rejecting these contentions. It held instead that the entire appointment failed.and that, in default of a valid appointment by Mrs. Chaplin, the original terms of her father’s will dictated that the trust assets pass to her two adopted daughters. App. 430-31. In February 1985, Merrick commenced this diversity action in the United States District Court for the District of Maryland against Henry and his law firm, charging them with negligence in drafting Mrs. Chaplin’s will without consulting the 1946 release. App. 5, 8. The complaint was later amended to add a negligence claim against Mercantile, grounded in its failure to inform Mrs. Chaplin that the attempted appointment of the trust assets would be ineffectual. Merrick’s children, who initially were also plaintiffs in the suit, were voluntarily dismissed before trial. The case was submitted to the jury following five days of testimony. After the jury retired, but before the verdict was returned, Henry and his firm reached a settlement with Merrick pursuant to which he was paid $300,000. The jury returned a verdict against all defendants, jointly and severally, in the amount of $500,000. This appeal followed. On appeal, Mercantile advances numerous contentions that may be viewed as raising three principal grounds for reversal. The thrust of the first of these is that Mercantile owed no duty of care to Merrick and that, even if it did, its failure to identify the invalidity of the appointment provision of the will cannot be deemed a breach of any such duty. Mercantile further argues that the district court erred in admitting into evidence an incomplete account of the Pennsylvania proceedings. Finally, Mercantile contends that the testimony of Merrick’s economic expert impermissibly overstated Merrick’s loss. We shall discuss each of these contentions in turn. II In this diversity action, we look primarily to Maryland law. Under the relevant Maryland precedents, two alternative principles appear to govern whether a party to a contract owes to a non-party a duty to exercise due care in the discharge of his contractual undertakings; and, accordingly, whether the non-party injured by the negligent performance of a party’s promise or undertaking may sue the party in tort. See generally Jacques v. First National Bank, 307 Md. 527, 534-35, 515 A.2d 756 (1986); 3 F. Harper, F. James, & O. Gray, The Law of Torts, § 18.5, at 705, 709-10 & n. 24 (2d ed. 1986). Where the party’s failure to exercise due care creates a risk of personal injury, the principal determinant of duty is foreseeability. By contrast, where the risk created is one of economic loss only, as in the instant case, Maryland courts generally require an “intimate nexus” between the party and the non-party as a condition to the imposition of tort liability. See Weisman v. Connors, 312 Md. 428, 445-46, 540 A.2d 783 (1988); Jacques, 307 Md. at 534-35, 515 A.2d 756. “This intimate nexus is satisfied by contractual privity or its equivalent.” Jacques, 307 Md. at 534-35, 515 A.2d 756. See also William Iselin & Co., Inc. v. Landau, 71 N.Y.2d 420, 425, 527 N.Y.S.2d 176, 522 N.E.2d 21 (1988) (“the noncontractual party must demonstrate a relationship ... ‘sufficiently approaching privity.’ ”) (citation omitted). Consistent with their decision to extend tort duties to parties in contractual privity or its equivalent, the Maryland courts have recognized that such duties may extend to a third party beneficiary of a contract. See Flaherty v. Weinberg, 303 Md. 116, 130-31, 492 A.2d 618 (1985) (an attorney owes a duty of care to a non-client where the latter is the third party beneficiary of the attorney’s contract with the client). See also Glanzer v. Shepard, 233 N.Y. 236, 238-39, 135 N.E. 275 (1922). To establish the existence of the requisite duty under this theory, the non-party plaintiff must show that a party actually intended to benefit him, and that the promisee’s intent to confer upon him this benefit “was a direct purpose of the transaction or relationship.” Flaherty, 303 Md. at 130-31, 492 A.2d 618. See also Marlboro Shirt Co. v. American District Telegraph Co., 196 Md. 565, 569, 77 A.2d 776 (1951) (“[I]t must clearly appear that the parties intended to recognize him as the primary party in interest and as privy to the promise. An incidental beneficiary acquires by virtue of the promise no right against the promisor or the promisee.”). If the third party beneficiary proves the remaining elements of a negligence cause of action, he may recover against the promisor in tort. See Flaherty, 303 Md. at 131, 492 A.2d 618. In light of the foregoing, it is clear that if Merrick was a third party beneficiary of Mercantile’s undertaking to provide estate planning services to Mrs. Chaplin, then Mercantile’s duty to exercise due care in rendering these services would run not only to Mrs. Chaplin but to Merrick as well. Mercantile advances, however, four arguments in support of its contention that this theory could not properly result in its liability to Merrick under the circumstances of this case. First, Mercantile argues that it never formally contracted to plan Mrs. Chaplin’s estate. Claiming it served as a mere “go between” in conveying her testamentary instructions to Henry, Mercantile insists its only contractual obligation was to manage her investments pursuant to agency agreements. Second, Mercantile contends that, in any event, Merrick was no more than an incidental beneficiary of its undertaking to assist Mrs. Chaplin in planning her estate. There was no intention on its part to benefit Merrick, Mercantile claims. Third, Mercantile argues that the district court’s instructions concerning Merrick’s claim that he was owed a duty as a third-party beneficiary were materially incomplete. Finally, Mercantile asserts that even if it owed Merrick a duty of care, its failure to recognize the legal insufficiency of the attempted appointment cannot constitute a breach of this duty. In Mercantile’s view, the question of validity was one of law and it was unauthorized to practice law. Therefore, only Mrs. Chaplin’s attorney, Henry, had a duty to identify the invalidity, and he alone should be held solely responsible for Merrick’s loss. We find these arguments unpersuasive. A We think the evidence amply warranted a finding that Mercantile’s contractual relationship with Mrs. Chaplin was not limited strictly to managing her investments. The jury was not required to believe that Mrs. Chaplin summoned Mercantile’s officers to her Easton home from Baltimore — a 61-mile journey — solely for the ministerial task of conveying her instructions to her lawyer, who after all was her friend and next-door neighbor. Tr. 89. Further, Henry testified that Mercantile advised Mrs. Chaplin over a period of several years on the planning of her estate, and that he was routinely instructed by Mercantile concerning her testamentary designs. Tr. 11-12. There was also evidence that Mercantile assisted in the actual drafting of her wills. E.g., Tr. 617; App. 439. The jury easily could have believed that Mercantile furnished these services to ensure that Mrs. Chaplin designated Mercantile as her executor and trustee under her will. Serving - as the fiduciary of a large estate can be highly remunerative. Banks and trust companies with trust or fiduciary departments customarily provide estate planning services without making a contemporary charge. Mercantile apparently was paid contemporarily by Mrs. Chaplin only for managing her agency account, and Klender testified to Mercantile’s practice of “accommodating” its agency customers in order to secure their estate and trust business. See Tr. 421-22, 629. By virtue of Mercantile’s undertaking to provide estate planning advice to Mrs. Chaplin in consideration of being named the fiduciary under her will and testamentary trusts, an implied contractual relationship existed between them that was broader than the formal contract governing their agency relationship. B We find no merit in Mercantile’s contention that Merrick was only an incidental beneficiary of its relationship with Mrs. Chaplin. It cannot be disputed that Mrs. Chaplin intended that Merrick be a primary beneficiary of her estate and Mercantile knew this. Klender’s 1969 letter to Henry specifically instructed him to draft a provision appointing the Curry trust assets “absolutely in equal shares to Kitty Spurry and Richard Merrick or their descendants if they are deceased.” App. 390. Mrs. Chaplin’s intent is equally explicit in the will itself. See App. 394-95; Guy v. Liederbach, 501 Pa. 47, 61, 459 A.2d 744 (1983). Further, Mercantile cannot now claim that it was not also its intention to benefit Merrick. As we have already noted, there was an implied contractual relationship between Mercantile and Mrs. Chaplin pursuant to which Mercantile was to render estate planning services in consideration of being named the fiduciary under her will. On the facts of this case, Mercantile knew that Merrick was to be a primary beneficiary of these services. C We also reject Mercantile’s claim that the district court’s instructions were erroneous. The jury was instructed on the third-party beneficiary question as follows: The claim by Mr. Merrick against Mercantile-Safe Deposit and Trust Company arises from a contractual relationship between Mercantile and Margaret Curry Chaplin. If you find from a preponderance of the evidence that Mr. Merrick was what is termed a third-party beneficiary of that contract and that his loss and damage flowed from a breach of that contract, then you shall find in favor of Mr. Merrick against Mercantile-Safe Deposit and Trust. Mr. Merrick is a third party beneficiary of the contract between Mrs. Chaplin and Mercantile, if you find from a preponderance of the evidence that the parties to the contract intended a portion of the contract to be for his benefit. In order for Mr. Merrick to prevail on this theory, you must find by a preponderance of the evidence that Mrs. Chaplin and Mercantile intended to recognize him as a primary party in interest. App. 326-29. Mercantile complains that this formulation of the theory departed from Marlboro Shirt Co. v. American District Telegraph Co., 196 Md. 565, 77 A.2d 776 (1951), and Mackubin v. Curtiss-Wright Corp., 190 Md. 52, 57 A.2d 318 (1948), by failing to require explicitly that the jury find that Merrick (i) was a direct beneficiary rather than an incidental one, and (ii) that he was privy to the promise. It is extremely unlikely that the jury could have concluded that Merrick was only an incidental beneficiary after finding, as required by the district court’s instruction, that both parties “intended a portion of the contract to be for [Merrick’s] benefit ... [and] intended to recognize him as a primary party in interest.” Nor can we see how Mercantile could have been prejudiced by the court’s failure to require a finding that Merrick was “privy to” or knew of the agreement, since it is not disputed that he was fully aware of the relationship between the testatrix and Mercantile and of her testamentary intentions. Indeed, Merrick was present at the April 1969 meeting when Mercantile was advised by Mrs. Chaplin as to her testamentary wishes. Supra, at 1097. D Finally, we also disagree with Mercantile’s argument that it cannot be held liable for failing to alert Mrs. Chaplin to the ineffectiveness of the appointment because it is not authorized to practice law. Mercantile’s duty to exercise due care under the circumstances surrounding the drafting of Mrs. Chaplin’s last will did not require it to perform any legal analysis or to give legal advice. The legal issue had been identified and resolved in 1965 when Henry alerted Mercantile to the likelihood that Merrick would not qualify as Mrs. Chaplin’s “descendant” and when, with the knowledge and approval of Mercantile, Henry secured the written opinion of Pennsylvania counsel confirming Merrick’s ineligibility. We express no view as to the possible extent of Mercantile’s liability under Maryland law on facts different from these. Here, however, Mercantile’s files contained copies of the opinion letter of Pennsylvania counsel, and Mercantile must be charged with knowledge of the conclusion set forth therein. As noted above, Merrick’s ineligibility was not a secondary or relatively unimportant part of Mrs. Chaplin’s testamentary intent. As the jury found, she intended that Merrick be a primary beneficiary, and Mercantile knew this. III Mercantile also questions certain of the district court’s evidentiary rulings. The district court admitted into evidence the decision of the Pennsylvania court awarding the Curry trust assets to Peggy and Mrs. Spurry in equal shares, but it refused to admit documentary evidence that this ruling was appealed and that the parties ultimately settled. Under the terms of the Pennsylvania settlement, half of the trust assets were distributed to Mrs. Spurry. Merrick’s children, who were adults, received 22.5% of the other half in cash. The balance was placed in a trust for Peggy’s benefit, with distribution upon her death to her six children, including her four children by Merrick, in equal shares. Mercantile contends that the exclusion of this evidence violated Federal Rule of Evidence 106 because it suggested—contrary to the facts—that Peggy received the funds intended for Merrick, and erroneously precluded the jury from off-setting the children’s recovery against Merrick’s damages. Rule 106 provides that “[w]hen a writing ... or part thereof is introduced by a party, an adverse party may require the introduction at that time of any other part or any other writing ... which ought in fairness to be considered contemporaneously with it.” This Rule is designed to avoid creating a misleading impression by taking a statement out of its proper context, or otherwise conveying a distorted picture to the jury by the selective introduction of documents that are part of a comprehensive whole. See United States v. Jamar, 561 F.2d 1103, 1108-09 (4th Cir.1977); 1 J. Weinstein & M. Berger, Weinstein’s Evidence, ¶ 106[03] (1986). Cf. 7 Wigmore, Wigmore on Evidence § 2110, at 648 (Chadbourne rev. 1978). In the circumstances of this case, however, evidence concerning the settlement of the Pennsylvania litigation, though arguably helpful to an understanding of the entire picture, was not germane to the jury’s assessment of Merrick’s damages and was properly excluded pursuant to Rule 403. Merrick received nothing in the settlement and, indeed, never contended that the appointment in his favor was valid. Although his adult children did receive cash and an interest in the trust created for their mother’s benefit, the record does not support the conclusion that their recovery was in any way intended to compensate Merrick for his loss. On the contrary, the record supports the conclusion that the children shared in the settlement in consideration for their willingness to compromise their own independent legal claim to the trust assets — a claim that was inconsistent with a recovery by Merrick and rested on their status as alternative appointees under Mrs. Chaplin’s will. We see no legal basis for imputing to Merrick a recovery by the alternative appointees solely because they happen to be his children. To be sure, Merrick consented to the settlement, and doubtless was happy that his children received something on account of their claims. The value of a parent’s satisfaction in these circumstances, however, is wholly speculative. It also is likely that the jury, if allowed to consider the settlement award to the adult children, would have been confused as to a legal question — namely, whether there should be an off-set against Merrick’s claim in this case. The likelihood of jury confusion was especially strong in light of the factual complexities that the case otherwise necessarily placed before the jury. The district judge reasonably could have concluded that evidence of a settlement that provided no payment to Merrick would have been improper. We cannot say, on this record, that in so doing the district court abused the broad discretion vested in it by Rule 403. We are not persuaded to the contrary by Mercantile’s reliance on certain deposition testimony given by Merrick in the present litigation. Before his children were dismissed from this suit against Mercantile, Merrick testified that if his children recovered “in this case” the value of the share of the trust appointed to him, then he should not recover anything. App. 251. Mercantile argues that this deposition testimony, which the district court also excluded, indicates that Merrick himself viewed his interests as identical to those of his children, and militates against the district court’s decision to exclude the earlier settlement. We disagree. Merrick’s deposition testimony in this case cannot change the fact that his children recovered in the Pennsylvania litigation on account of their own legal claims. In any event, Mercantile mischaracterizes the true import of this testimony. It simply reflected Merrick’s correct understanding that his interests in this litigation were adverse to those of his children, who also were plaintiffs at the time of the deposition. Their interests were adverse because Merrick could recover against Mercantile only if he could persuade the jury that, had Mrs. Chaplin been advised of the ineffectiveness of the 1969 appointment, she would have restructured her estate to ensure that he received a sum equal to half the value of the trust. Under Merrick’s theory, Mrs. Chaplin would have taken this compensating bequest out of the share of the residuary estate otherwise left to Mrs. Spurry, and she would have appointed the entire trust to Mrs. Spurry instead. Merrick’s children, on the other hand, could prevail only to the extent they could persuade the same jury that Mrs. Chaplin’s bounty would have been redirected toward them, and away from Merrick. As the district court correctly understood, Merrick’s deposition testimony merely recognized that the jury that was to hear this case would award him no recovery to the extent it chose to credit his children’s theory of the case. See App. 251-52. The testimony had nothing to do with the Pennsylvania litigation, and cannot reasonably be characterized as an admission by Merrick that he benefited from the settlement in that case. Moreover, once the children were dismissed from this case, Merrick’s deposition testimony became irrelevant. We see ho abuse of discretion in the district court’s decision to exclude the testimony. IV Mercantile questions the action of the district court in allowing the jury to consider certain testimony by Merrick’s economic expert, Peter Newman. As we have already noted, Merrick’s theory of damages was that, had Mrs. Chaplin been advised of the ineffectiveness of the appointment in her 1969 will, she would have fashioned an alternative estate plan that would have increased his share of the residue by an amount equal to half the value of the trust assets. This value (half of the total value of the trust) was fixed at $309,-944 as of the date in 1982 when Mellon Bank filed its final account, shortly before petitioning the Pennsylvania court for directions. Newman testified that this sum would have increased to $400,000 by early 1983, assuming a rate of appreciation comparable to that experienced by the New York Stock Exchange Composite Index during that same time. Newman then relied on several alternative investment assumptions, and estimated that by the time of trial, in September of 1987, the value of Merrick’s half of the trust assets would have increased to approximately $656,000. Mercantile argues that it is entitled to a new trial because Newman’s testimony was based on unrealistic assumptions. But Newman was qualified as an expert without objection, and he was cross-examined at length. Moreover, Mercantile chose not to call its own expert to give testimony contrary to Newman’s estimates. The jury chose to credit Newman’s testimony substantially, as it awarded $500,000 against all defendants. We see no reason to disturb its judgment. See, e.g., International Wood Processors v. Power Dry, Inc., 792 F.2d 416, 431 (4th Cir.1986). Finally, Mercantile questions the propriety of permitting Newman to testify concerning the present value of Merrick’s loss; The theory underlying this contention is that Newman’s discussion of the appreciation that would have occurred in the sum owed to Merrick from the time of the loss to the date of judgment must be considered a form of prejudgment interest on that sum. Mercantile argues that such an award is impermissible in a tort action for an unliquidated amount. In Mercantile’s view, the amount of Merrick’s loss could not be deemed liquidated because the value of the alternative bequest posited by Merrick’s theory of damages could not have been known with certainty until the date of judgment. We think that, to the extent Mercantile is correct in characterizing the appreciation in the sum owed to Merrick as prejudgment interest, the award clearly was proper. Under Maryland law the general rule is that prejudgment interest should be left to the discretion of the jury, or the trial court when sitting without a jury. See I. W. Berman Properties v. Porter Brothers, Inc., 276 Md. 1, 18-19, 344 A.2d 65 (1975). See also Bituminous Construction, Inc. v. Rucker Enterprises, Inc., 816 F.2d 965, 969 (4th Cir.1987). While Mercantile correctly notes that prejudgment interest is generally not recoverable in tort actions, such an award may be allowed where the damages sustained are liquidated. See Taylor v. Wahby, 271 Md. 101, 112-13, 314 A.2d 100 (1974). This qualification applies, and interest may be recovered, even where the damages sustained “while not liquidated in the strict sense of the term” are otherwise “readily ascertainable” before the entry of judgment. Robert C. Herd & Co. v. Krawill Machinery Corp., 256 F.2d 946, 952-53 (4th Cir.1958), aff'd, 359 U.S. 297, 79 S.Ct. 766, 3 L.Ed.2d 820 (1959). See also Taylor v. Wahby, 271 Md. at 112-13, 314 A.2d 100 (noting that, despite the usual tort rule, interest may be recovered in a tort action for the conversion of chattels where the goods converted have a “readily ascertainable market value”). We think Merrick’s loss was adequately liquidated within the meaning of these precedents. The value of the trust in 1982, when Mellon Bank filed its final account, was readily ascertainable. If Newman’s estimates as to appreciation in this value are viewed as prejudgment interest, the pertinent inquiry is whether the 1982 value of the trust assets furnished a reliable yardstick by which to measure Merrick’s damages. We think it did, setting his claim apart from cases involving “bodily harm, emotional distress, or similar intangible elements of damages.... ” Robert C. Herd & Co., 256 F.2d at 952. Accordingly, we do not think the district court erred in leaving this question to the sound discretion of the jury. V We conclude that, in all the circumstances, the jury was warranted in finding that Mercantile breached a duty of care it owed to Merrick. We also conclude that the district court did not abuse its discretion in excluding evidence of the Pennsylvania settlement or in permitting the recovery of prejudgment interest. Accordingly, we affirm the judgment of the district court. . Mrs. Chaplin executed her last will on June 25, 1969. This will was subsequently amended by three codicils respectively dated June 30, 1970, September 30, 1970, and September 5, 1972. App. 413-16. After 1972, no further changes were possible because Mrs. Chaplin’s health deteriorated and she became disoriented. Trial Transcript ("Tr.") 108. The three codicils to Mrs. Chaplin’s 1969 will are not in issue in this case. . In pertinent part, the amended complaint alleged that 18. Mercantile Safe-Deposit and Trust Company owed a duty through its contractual and fiduciary relationship with Mrs. Chaplin and breached it by failing to inform her that Richard L. Merrick did not qualify under her power of appointment. 19. T. Hughlett Henry owed a duty through his contractual relationship with Mrs. Chaplin and breached it by failing to inform her that Richard L. Merrick did not qualify under her power of appointment. 21. Had Margaret Curry Chaplin known that she could not appoint a portion of the Curry Trust to her son-in-law, Richard L. Merrick, she would have restructured her bequests to carry out her intent to leave Richard L. Merrick one-half of the property over which she had power of disposition, which consisted of her personal estate and the Curry Trust. But for the negligence of T. Hughlett Henry, Jr., acting in his capacity as a partner in Henry, Hairston & Price, and the negligence of Paul Klender and other agents of Mercantile-Safe Deposit and Trust Company, acting in their capacity as financial advisors, Mr. Merrick would have received the equivalent of one-half of the trust corpus pursuant to the clear intent of Mrs. Chaplin. App. 18-19. . In developing this doctrine, the Maryland Court of Appeals relied heavily on the leading opinions of Judge Cardozo in Glanzer v. Shepard, 233 N.Y. 236, 135 N.E. 275 (1922), and Ultramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441 (1931). See Weisman, 312 Md. at 446-47, 540 A.2d 783; Jacques, 307 Md. at 535-36, 515 A.2d 756. In Glanzer, a group of public weighers was held liable to a buyer of beans for negligence in certifying the weight of certain beans, notwithstanding that the weighers had been engaged and paid only by the seller. A duty was owed to the buyer because its use of the weighers’ certificates "was not an indirect or collateral consequence of the actions of the weighers. It was a consequence which, to the weighers’ knowledge, was the end and aim of the transaction.... Growing out of a contract, [the duty] has none the less an origin not exclusively contractual. Given the contract and the relation, the duty is imposed by law.” Glanzer, 233 N.Y. at 238-39, 135 N.E. 275. In Ultramares, the New York Court of Appeals held that public accountants who carelessly prepared and certified a balance sheet for a corporation could not be held liable in negligence to a factor who made loans to the corporation in reliance upon the balance sheet. Judge Cardozo distinguished Glanzer on the ground that the bond between the weighers and the buyer "was so close as to approach that of privity, if not completely one with it," as had been attested by the Glanzer court's statement that the same result would have obtained if the case had been analyzed under contract rules governing third party beneficiaries. Ultramares, 255 N.Y. at 182-83, 174 N.E. 441. By contrast, ”[n]o one would be likely to urge that there was a contractual relation, or even one approaching it, at the root of any duty that was owing from [the accountants] to the indeterminate class of persons who, presently or in the future, might deal with [the corporation] in reliance on the audit.” Id. . As the Maryland courts had recognized before Flaherty, the plaintiff who qualifies as a third-party beneficiary has the more traditional choice of recovering on the contract. See Prescott v. Coppage, 266 Md. 562, 296 A.2d 150 (1972); Kirgan v. Parks, 60 Md.App. 1, 8-9, 478 A.2d 713 (1984) (reading Prescott as limited to actions based upon contract), cert. denied, 301 Md. 639, 484 A.2d 724 (1984). Cf. Glanzer, 233 N.Y. at 241, 135 N.E. 275 (noting that tort liability of defendant could be restated as "a phase or an extension” of the rule governing contract claims by third party beneficiaries). . The jury also had before it certain letters written to Mrs. Chaplin by Mercantile's officers. On June 24, 1965, one day after Mrs. Chaplin executed her 1965 will, Grasty wrote her that As I indicated to you, I shall have an estimate prepared to indicate how your estate might work out and the respective beneficial interests. With this before us, we can consider whether any further adjustments are indicated in favor of Dick. Henry's Exh. 19. On June 29, 1970, Klender wrote to Mrs. Chaplin concerning her last will as follows: It has been one year since you executed your Last Will and Testament and it may be well for you to review same [sic ] to see if any changes need to be made. I have no suggestions to make, but if you would like me to go over the Will with you, I will be glad to do so. Merrick's Exh. 32. We think these letters further undermine Mercantile’s claims that it played no role in planning Mrs. Chaplin’s estate and that it acted, at her request, as a mere messenger between her and Henry. . In addition to instructing the jury on Merrick’s possible status as a third party beneficiary as a source of Mercantile’s tort duty toward him, the district court instructed the jury that a tort duty could arise alternatively from a gratuitous undertaking to act for Merrick's benefit. The jury was instructed that if it found that Mercantile voluntarily undertook to provide estate planning or will-drafting services to Mrs. Chaplin in 1969, this undertaking would furnish an alternative source of its duty to those who foreseeably could be damaged by the negligent performance of this undertaking. Mercantile objects to this instruction on the ground that Mercantile, as a party to a contract, " ‘owefd] no duty”’ to others “'for which it may be made responsible in action in tort for negligence, if it does not perform its contract.’ ” Brief for Appellant (quoting Marlboro Shirt, 196 Md. at 571-72, 77 A.2d 776). The Maryland Court of Appeals has apparently disapproved of this language in Marlboro Shirt, at least to the extent it implies that the rights created by the contract furnish the exclusive basis for recovery by non-parties for the tortious performance of the contract. See Council of Co-Owners Atlantis Condominium Inc. v. Whiting-Turner Contracting Co., 308 Md. 18, 29-30, 517 A.2d 336 (1986). In accordance with our usual practice in diversity cases where state law is uncertain, see, e.g., Pittman v. Wilson County, 839 F.2d 225, 229 n. 8 (4th Cir.1988); Jaffe-Spindler Co. v. Genesco, Inc., 747 F.2d 253, 257 n. 5 (4th Cir.1984), we defer to the district court’s reasonable conclusion that its instruction correctly resolved this ambiguity in Maryland law. We also are unpersuaded that the district court erred in failing to define “negligent performance” in connection with this instruction. The concepts of negligence and ordinary care were otherwise adequately explained to the jury. We think that the instructions, taken as a whole, adequately informed the jury of the controlling legal principles. See Spell v. McDaniel, 824 F.2d 1380, 1385 (4th Cir.1987). . In any event, the instruction given by the district court comports with the more recent statement of the third party beneficiary doctrine in Flaherty, where the Maryland Court of Appeals omitted any mention of this requirement. We defer to the district court’s choice of this precedent as the basis for its instruction. . Of course, a lawyer may not delegate his professional duty to another. See, e.g., Fund of Funds, Ltd. v. Arthur Andersen & Co., 567 F.2d 225, 234 (2d Cir.1977). But this elementary principle has no relevance on the facts presented here. In the usual circumstances surrounding the drafting of a will, a testatrix will meet with both legal and estate planning advisors to determine how best to fulfill her intentions. The responsibility for errors of law in this situation would of course normally rest with the lawyer. In view of the unusual facts of this case, Mercantile’s duty to exercise care in planning Mrs. Chaplin's estate was independent from the duty owed by Mrs. Chaplin’s attorney. Where, as here, the negligence of two persons, acting independently, combine to produce the injury complained of, neither can escape liability on the ground that his or its negligence was not the sole cause of the injury. See Mehlman v. Powell, 281 Md. 269, 276, 378 A.2d 1121 (1977). See also Morgan v. Cohen, 309 Md. 304, 310-11, 523 A.2d 1003 (1987). The fact that Henry was negligent in failing to recognize the invalidity of the appointment does not immunize Mercantile from liability where its own files contained information that explicitly revealed the legal barrier to fulfillment of Mrs. Chaplin’s known wishes through the appointment of Merrick. . Rule 403 provides, in pertinent part, that "evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.” . We do not agree with Mercantile’s argument that Rule 106 required the introduction of the settlement even if such evidence was otherwise not admissible. Brief for Appellant 38-39 (citing United States v. Sutton, 801 F.2d 1346, 1368 (D.C.Cir.1986)). While substantial authority contradicts the general proposition on which Mercantile relies, see, e.g., U.S. Football League v. National Football League, 842 F.2d 1335, 1375-76 (2d Cir.1988) (hearsay); United States v. Costner, 684 F.2d 370, 373 (6th Cir.1982); United States v. Burreson, 643 F.2d 1344, 1349 (9th Cir.) (hearsay), cert. denied, 454 U.S. 830, 1d02 S.Ct. 125, 70 L.Ed.2d 106 (1981), we o not think that, even if otherwise correct, this broad assertion applies where inadmissibility is grounded on Rule 403. See E. Cleary, McCormick on Evidence § 56, at 145-46 & n. 9 (3d ed. 1984); C. Wright & K. Graham, Federal Practice and Procedure: Evidence § 5078, at 378 (1977). Unlike other exclusionary rules, Rule 403 does not explicitly provide that it is subject to other evidentiary provisions. Moreover, the common law rule of completeness, of which Rule 106 is an expression, see Advisory Committee Note, did not require the introduction of unduly prejudicial material. See C. Wright & K. Graham, supra, at 373. Indeed, the "fairness" standard prescribed by Rule 106 strongly suggests the appropriateness of the type of inquiry more specifically required by Rule 403. See id. at 378.
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BARNES, Circuit Judge: This is a petition for review of a decision of the Tax Court in favor of the Commissioner. 38 T.C. 723. The Tax Court had jurisdiction of the cause under Section 6213. This court has jurisdiction of this petition pursuant to Section 7482. The taxpayer, Thomas Kerr, owned all of the stock of two corporations. On October 24,1955, he transferred the stock of one to the other for a note with face value of $50,000. There are two issues: (1) Was the $50,000 note taxable to him as a distribution essentially equivalent to a dividend under §§ 302, 304, and other related sections of the 1954 Code? (2) If we answer this question in the affirmative, are §§ 302 and 304 constitutional? I — FACTS In 1947, taxpayer organized the Helix Milling Company (hereinafter “Helix”) for the purpose of engaging in the business of milling and selling flour. All of the outstanding stock of Helix was acquired by taxpayer in exchange for the mill property, and taxpayer has been the corporation’s president, chief executive officer, and a director, since the date of incorporation. After its incorporation and until early 1955, Helix was operated by succeeding unrelated corporations under an arrangement whereby the latter corporations handled the financing and operation of Helix in return for a share of the profits. In early 1954, in an effort to improve and stabilize its income and to expand its operations, Helix commenced construction of a modern grain elevator as an adjunct to its flour mill. To finance this facility, Helix borrowed $200,000 from the United States National Bank of Portland (“bank”) on a ten-year loan secured by a first mortgage on the grain elevator. The taxpayer gave his personal guaranty as an additional security for the construction loan. Toward the latter part of 1954 a corporation (Cargill, Incorporated) which had been operating and financing Helix stated that it planned to withdraw its support, and taxpayer made banking arrangements to secure funds to liquidate the debts which Helix owed the withdrawing corporation. In order to obtain loans from the bank, taxpayer executed personal notes totalling $150,000 and pledged as security for the loans his expected inheritance from the estate of a deceased relative. After taxpayer received the money from the bank, he loaned it to Helix in return for five percent demand promissory notes. Due to the fact that several months elapsed between the time Helix first purchased the wheat and the time it received the proceeds from the sale of its flour, Helix usually found itself in a tight working-capital position. Thus, Helix found it necessary to borrow money from the bank for working-capital purposes. The bank considered Helix as a marginal credit risk, and required personal guaranties from the taxpayer for most of the loans. In January, 1955, taxpayer was faced with the loss of his employment with Cargill, Inc., which had been operating and financing Helix, and he realized that he would have to seek other means of livelihood. Taxpayer then organized the Kerr Grain Corporation (hereinafter “Kerr Grain”) for the purpose of engaging in the grain brokerage and grain storage business. All of the outstanding stock was acquired by taxpayer for $50,000 in cash, and at all times pertinent to this proceeding taxpayer has been the president and the chief executive officer of the company. In forming Kerr Grain, taxpayer was hopeful that the corporation would be able to obtain business from the Federal Government, and he was aware that in the absence of such business the corporation would experience difficulty. Following its organization, Kerr Grain, lacking sufficient working capital to finance its operations, was forced to seek outside financing. The bank extended it a credit ceiling of $150,000, and as in case of Helix, and for the same reasons, the bank required the personal guaranty of the taxpayer as security. Helix also advanced various sums to Kerr Grain, and paid its office expenses until August 1955. As of June 30, 1955, Helix had an earned surplus of $130,051. For the fiscal year ended June 30, 1955, Helix sustained a net loss of $12,198.89, and taxpayer alleges that Helix continued to sustain losses up to and including October of 1955. Kerr Grain got off to a shaky start, and sustained a net loss of $1,886.40 for its first fiscal period which ended June 30, 1955 (the first six months of operation), but soon began to improve and as of October 1955, it had a net profit of $113,-393.38. On October 24, 1955, following discussions with his attorneys, accountants, and with representatives of the bank, taxpayer submitted a proposal to the board of directors of Helix providing for the sale of his stock in Kerr Grain to Helix for $50,000. The board voted to accept taxpayer’s proposal. Following the acceptance, taxpayer conveyed all the outstanding stock of Kerr Grain to Helix and received, in return, a promissory note for $50,000 payable in installments of $10,000 per year and bearing interest at the rate of five per cent on the unpaid balance. The note was secured by a pledge to taxpayer of the Kerr Grain stock. Taxpayer’s basis for the stock on October 24, 1955, was $50,000. The stock had a book value on that date in excess of $100,000 and a fair market value in excess of $50,000. Helix’ earned surplus then was in excess of $50,000. At the board meeting of October 24, 1955, taxpayer also informed the directors of Helix that the bank had granted Helix an open line of credit in the amount of $100,000 and a $50,000 additional line of secured credit. At no time did the bank request that taxpayer transfer his Kerr Grain stock to Helix or that the two companies be consolidated. Nor did the bank require the transfer as a condition precedent to future financing. However, representatives of the bank did agree with taxpayer during earlier discussions that the contemplated stock transfer “may have ‘certain advantages —both credit-wise and tax-wise’.” After the stock sale, the bank continued to require taxpayer’s personal guaranty on all operating loans it made, both to Helix and to Kerr Grain. Following the sale of Kerr Grain stock to Helix, no curtailment of either corporation’s activity was undertaken. In fact, following the sale, Kerr Grain expanded its business quite materially while Helix maintained its business on a fairly even keel until 1957 when it, too, expanded its operations. Neither Helix nor Kerr Grain declared or paid a dividend prior to December 14, 1955. On December 14, 1955, Kerr Grain declared and paid a dividend of $33,500 to Helix. On the same date Helix paid an identical dividend to taxpayer, charging it to an account designated as “Notes Payable to Thomas Kerr.” (Taxpayer alleges that the note payable referred to here was not the $50,000 note received by petitioner in exchange for the Kerr Grain Corporation stock, but, as shown by Exhibit 5-E, was one of the notes representing part of the $150,000 loaned to Helix by the bank through taxpayer.) Kerr Grain also declared a dividend in the amount of $16,500 on June 27, 1956. On the same day the board of directors of Helix passed resolutions providing for the payment of bonuses totalling $13,500 to several of the Helix employees. No statement or information was submitted on taxpayer’s income tax return for the year 1955 with regard to the transfer of the Kerr Grain stock to Helix. (Ex. 1-A.) The Commissioner’s determination that the $50,000 of notes received by the taxpayer from Helix was taxable as dividend income was sustained by the Tax Court. This appeal followed. II — THE LAW Relevant sections of the Code. In general, a distribution of property by a corporation to the extent of its earnings and profits is treated as a dividend and is includible in the shareholder’s gross income. Sections 316(a) and 301(a) and (c). An exception to this general rule is found in § 302(a) and (b) dealing with distributions in redemption of stock. Under § 302(b) (1) a redemption is not includible in gross income as a dividend if the redemption is “not essentially equivalent to a dividend.” Thus, it the redemption qualifies under this exception, the distribution is treated as payment in exchange for stock under § 302(a), and since stock is generally a capital asset, the gain would be treated as a capital gain. On the other hand, if the redemption does not qualify under this exception oi § 302(b), then § 302(d) provides that the redemption shall be treated as a distribution of property to which § 301 applies and be taxed at ordinary income rates. Ordinarily a redemption occurs when a corporation acquires its stock from a shareholder in exchange for property. Section 317(b). However, in 1954 Congress added a new provision to the Code, § 304(a) (l), which was designed to expand the provisions of § 115(g) of the 1939 Code (relating to stock redemptions essentially equivalent to dividends) so as to include cases of so-called “brother-sister” corporations. That section provides that, for purposes of § 302, if one or more persons are in control of each of two corporations, and in return for property, one of the corporations acquires stock in the other corporation from the person or persons so in control, then such property shall be treated as a distribution in redemption of the stock of the acquiring corporation. In this case, taxpayer was in control of both corporations, and one of the corporations purchased his stock in the other corporation, so this transaction was covered by § 304(a) (1). Yet, the transaction results in capital gain treatment if the exception of § 302(b) (1) applies, Thus the first basic question is whether this sale of Kerr Grain stock by taxpayer to Helix was “not essentially equivalent to a dividend.” ill — SCOPE OF REVIEW The law on the issue of the scope of review is not as clear as one would desire. Since the inquiry is to a great extent a factual one, most courts of appeal hold that the ultimate decision will be sustained if supported by substantial evidence, or if not clearly erroneous. Cf. Ballenger v. United States, 4 Cir. 1962, 301 F.2d 192, 196 and note 8 (citing cases). Whether all courts actually apply that test in practice is probably doubtful. Most opinions do not indicate whether, after the test is enunciated, it is actually followed. This court has indicated in Earle v. Woodlaw, 1957, 245 F.2d 119, 122, cert. den. 354 U.S. 942, 77 S.Ct. 1400, 1 L.Ed.2d 1537, that it takes a wider view of the scope of its review of decisions of the Tax Court. This wider view sees determinations as to whether a certain transaction is essentially equivalent to a dividend as a mixed question of law and fact, if not purely a conclusion of law. Of course, all courts agree that the findings of fact of the trial court will be sustained unless clearly erroneous or unless not supported by substantial evidence. IV — TESTS TO BE APPLIED The words “not essentially equivalent to a dividend” are words of art. They are not further defined by Congress. However, in enacting § 302(b) (1), Congress intended that the test for determining whether a redemption was “essentially equivalent to a dividend” should be the same as the test utilized in interpreting and applying the same words in § 115(g) (1) of the 1939 Code S.Rep.No. 1622, 83d Cong., 2d Sess., p. 234 (3 U.S.C. Cong. & Admin. News (1954) 4621, 4870). What was the test under § 115(g) (1) of the 1939 Code, and what is the test the courts have been using since in applying § 302(b) (1) ? The wording of § 302(b) (1) is “not essentially equivalent to a dividend.” The question thus in each case “is one of equivalents, and, if that is present, distribution is taxable.” Earle v. Woodlaw, supra, 245 F.2d p. 129. Most, if not all the circuits, have considered the “net effect” of the transaction to be the single most important consideration. Within the “net effect” test are two positions. One position, held in the second and third circuits, we describe, for convenience, as a “strict net effect test.” If the shareholder ends up in the same position he would have if the acquiring corporation had declared and paid a $50,000 dividend, the transaction is, under the strict net effect test, essentially equivalent to a dividend. Under this test, the business purpose, motive and plans of the parties involved are irrelevant. Of course, if the strict net effect test is adopted and applied here, the decision of the Tax Court would be affirmed because the result here is just the same as would have resulted if Helix had declared a dividend. The second view is the “flexible net effect test” which has been adopted by most courts. These have recognized that “most of (the cases arising under Sec. 115(g)) [and under § 302(b) (1)] are of little value in the determination of the question instantly presented, for the reason that each depends for its solution upon its peculiar facts.” Earle v. Woodlaw, supra, 245 F.2d at 126 (citing cases). However, under § 115(g) certain “judicial criteria” have been laid down which have proved useful in coming to a conclusion. This court listed and adopted these criteria in Earle v. Woodlaw, supra, 245 F.2d at 126, and in Pacific Vegetable Oil Corporation v. Commissioner, 9 Cir. 1957, 251 F.2d 682, following and citing the leading opinion of Flanagan v. Helvering, 1940, 73 App.D.C. 46, 116 F.2d 937, 939. In the case at bar the Tax Court adequately listed the following criteria as relevant to this case: “Did the corporation adopt any plan of contraction of its business activities ; did the transaction actually result in a contraction of the corporation [sic] business; did the initiative for the corporate distribution come from the corporation or the shareholders; was the proportionate ownership of stock by the shareholders changed; what were the amounts, frequency, and significance of dividends in the past; was there a sufficient accumulation of earned surplus to cover distribution or was it partly from capital; and was there a bona fide corporate business purpose for the distribution?” (38 T.C. at 730.) The Tax Court found for the Commissioner on each of these criteria. The Court found that prior to the stock transaction Helix had never paid a cash dividend, and that at the time of the transaction, Helix had accumulated earnings and profits available for the payment of dividends. Of course, the proportionate ownership was not changed because taxpayer continued to own all of the Helix stock and, under § 318(a) (2) (C), he continued also to constructively own all of the Kerr Grain stock. The Tax Court found that the business of the two corporations had not contracted but had expanded, although the taxpayer alleges, and the Commissioner concedes (Brief, p. 22), that this criterion is not very significant in the instant situation. The Tax Court further found that the “initiative for the stock transaction came from petitioner.” Taxpayer alleges that this finding has no support in the record. His point seems to rest on the contention that the record shows, and the Commissioner admits (Brief, p. 23, note 12), “that the transaction had its beginning in the advice of business, law and tax advisors, and from the Bank.”. The Commissioner asserts that since we have here solely owned corporations, any advice can (or perhaps even must) be deemed personal to the taxpayer, and thus the Tax Court’s finding is correct. This makes sense. The criterion of; “initiative” asks only whether it was the shareholder, or the corporation, which, initiated the transaction. It is hard to believe that in a solely owned corporation, initiative can come from the corporation as an entity rather than from the sole shareholder. Any other belief would fly in the face of reality. The finding of the Tax Court on this point seems not clearly erroneous. Taxpayer places his main reliance in this appeal on his assertion that the transaction “was undertaken to achieve a material and substantial corporate business purpose.” Taxpayer claimed below and claims here that the creation of a parent-subsidiary relationship between Helix and Kerr Grain strengthened the credit position of the two corporations, facilitated the free flow of cash between the corporations, and enabled the corporations to conserve cash in taxes through the filing of consolidated returns. Concerning the strengthening of the credit position of the two companies, the Tax Court pointed out that Helix had been given much credit already by the bank. The Court continued: “[T]he bank had not requested the stock transfer as a condition precedent to future financing. Furthermore, petitioner offered no evidence that Helix or Kerr Grain were, in fact, unable to obtain adequate financing for their operations from the Portland bank prior to the stock transfer. While the acquisition of Kerr Grain stock may have to some degree ultimately resulted in a strengthening of the credit position of Helix, we have not been persuaded that this was a motivating force for the transfer. Our lack of belief in petitioner’s contention becomes even stronger when we observe that after the sale of stock to Helix the Portland bank still required petitioner’s personal guaranty on its loans to both companies.” (38 T.C. at 731.) Taxpayer claims' that this finding of the Tax Court was clearly erroneous. Taxpayer points out that the two corporations continually were in need of credit, that the general loan officer of the bank testified that a stronger credit position exists in parent-subsidiary than in brother-sister situations; that credit would be also strengthened by the tax savings obtained by filing consolidated returns ; that it is sound and prudent business practice to strengthen one’s credit position before one’s credit is otherwise cut off; and that several cases have held that the improvement of credit position defeated a charge of dividend equivalence. Taxpayer cites Jones v. Griffin, 10 Cir. 1954, 216 F.2d 885 (preferred, stock with dividend arrearages redeemed to obtain bank loan at small interest rate and for other reasons); Bona Allen, Jr., 1940, 51 BTA 260 (corporation’s indebtedness to shareholders reduced by partial redemption in order to obtain bank loan at low interest; the bank insisted that the indebtedness be reduced); and Isaac C. Eberly, 1951,10 CCH Tax Ct. Mem. 1157, which is in point with similar facts. In answer to these contentions of the taxpayer, the Commissioner contends that the only advantage a parent-subsidiary relationship has over a brother-sister relationship is that if the parent defaults on a loan, the lender can go against the stock of the subsidiary. The Commissioner points out that in this situation the bank could have obtained more effective security by having the taxpayer pledge the Kerr Grain stock. Taxpayer replies that the pledge device has special problems of foreclosure. The Commissioner also points out that the strengthening of credit argument can be used in any and every brother-sister redemption, and if successful, could thus “sap Section 304 of its vitality.” Taxpayer replies to this that not every corporation has the credit and cash problems that Helix and Kerr Grain had. Considering these opposing allegations and the points made by the trial judge, we cannot conclude that the trial judge erred in finding that the strengthening of credit argument, in itself, was not a sufficient corporate business purpose to put the transaction within the exception of § 302(b) (1). This is especially true when one considers the facts that (1) the trial judge was able to observe the bank officer on the stand when he testified; (2) that almost every company needs or could need a stronger credit position; and (3) that at least two circuits have found that the strengthening of credit is not a valid reason for avoiding ordinary income treatment in redemptions. Cf: Bradbury v. Commissioner, 1 Cir. 1962, 298 F.2d 111; United States v. Fewell, 5 Cir. 1958, 255 F.2d 496. Moreover, if Helix was so concerned about its credit, why did it issue notes instead of stock to the taxpayer? The issuance of notes would make its credit standing worse instead of better. A bank would ordinarily prefer the cushion of an additional common stock issue to the issuance of notes by a corporation, with their priority over stock. As to the taxpayer’s argument that the transaction would improve the cash flow between the corporations, the Tax Court said: “Lastly, aside from his bare assertion, the petitioner has not shown how under the circumstances of this case the transfer of Kerr Grain’s stock to Helix facilitated the free flow of cash between the corporations.” (38 T.C. at 731-732.) In reply to this, taxpayer points out that there is evidence in the record, and the Tax Court found, that Kerr Grain paid two dividends to Helix. Taxpayer also points out that when consolidated returns are filed, there is no income tax on the intercorporate dividends, as opposed to the regular fifteen per cent tax of § 243. However, such facilitation of the free flow of cash is always a result of brother-sister redemptions. Many if not all corporations have working capital problems, especially the small, closely held corporations with which § 304 is concerned. One can read the statement of the Tax Court as meaning that even though dividend advantages exist, the taxpayer has not carried his burden of proof of showing that the circumstances of this case are different from other “brother-sister” redemptions. It is thus very doubtful whether the purported business purpose of facilitating cash flow should, in and of itself, take the transaction out of the ordinary income category. Taxpayer urges a strong point proving a substantial business purpose in emphasizing that the two corporations obtained an immediate tax savings of $31,022.53 in 1956 and $14,499.43 in 1957 by filing consolidated returns rather than separate returns for those years. The Tax Court found; “Petitioner contends and this Court recognizes that the filing of consolidated returns by affiliated corporations often permits certain tax savings. For this reason, we are of the opinion that there may have been a minimal bona fide business purpose in the stock transfer.” (Emphasis added. 38 T.C. at 732.) The Tax Court added in a footnote: The petitioner offered no evidence as to the amount or significance of the savings that the corporations purportedly hoped to obtain from the filing of consolidated returns. Consequently this Court can only speculate as to the relative materiality of this advantage and in so doing we tend to bear most heavily against petitioner since he carries the burden of proof.” (Emphasis added. 38 T.C. at 732, n. 9.) The Tax Court apparently overlooked these corporate returns in using the words “no evidence.” Taxpayer suggests that this court can take judicial notice of the substantiality of the tax savings obtained by the filing of consolidated returns. We need not do this, because the savings are part of the record. Tax savings of $45,521.96 in two years for these two corporations are obviously substantial, compared to the “sale” price of $50,000. The question of substantiality would thus not have to be remanded to the Tax Court for further consideration, were we to hold the tax savings alone a sufficient reason to find a business purpose. The question is: Did Congress intend that the provisions of §§ 302 and 304 could be avoided any time a corporation with substantial losses acquired a corporation with substantial gains? If so, large loopholes would be created in those sections. Oftentimes taxpayers who own the stock of two or more corporations have loss as well as gain corporations. These taxpayers could obtain cash from these corporations without realizing ordinary income, even though they retained sole control of both corporations, just by selling the stock of one to the other. But even if the loophole only existed in the sale of gain to loss corporations, and then only when the tax savings were substantial, the loophole would still be a large one in the statutory scheme of Congress of §§ 302 and 304. Furthermore, the savings would not be so substantial in the long run as the figures might indicate because the taxpayer received notes which in face value surpassed the value of these savings in the first two years; almost in one year. If the corporations really needed these savings as badly as the taxpayer alleges, it would not have immediately issued good faith notes. Instead, it would have issued stock. Even though the savings were more immediate than the payment by the corporation on the notes, there is no indication that the two corporations were in dire need of cash. And they apparently could have obtained it from the bank, had they needed it badly. Moreover, the Tax Court in its opinion pointed out that: “[T]he mere existence of a single bona fide business purpose will not of itself conclusively determine that the transaction does not result in the essential equivalent to a taxable dividend. United States v. Fewell, 255 F.2d 496 (C.A. 5, 1958) [discharge shareholder's debt by redemption to improve credit]; Bradbury v. Commissioner, 298 F.2d 111 (C.A. 1, 1962) [redemption to cancel debt to shareholder to get bank loan], affirming a Memorandum Opinion of this Court; Kessner v. Commissioner, 248 F.2d 943 (C.A. 3, 1957), affirming per curiam 26 T.C. 1046 (1956) [does not really so hold]; Genevra Heman, supra [32 T.C. 479 (1959), affirmed 283 F.2d 227 (8th Cir. 1960)] [two shareholders; one dies and his debt to corporation ended by redemption of his preferred shares]; Neff v. United States, 305 F.2d 455 (Ct.Cl.1962) [redemption of some shares to be resold to raise capital for corporation].” (38 T.C. at 732.) To the same effect is Ortmayer v. Commissioner, 7 Cir. 1959, 265 F.2d 848, 853. Moreover, after an exhaustive re view of the cases,' the fourth circuit stated: “In the case of a prorata redemption of stock especially, any business justification must be indeed compelling to overcome the ‘net effect' test which points to a tax avoidance scheme.” Ballenger v. United States, 1962, 301 F.2d 192 at pp. 199-200. Considering the facts of this case, it' does not seem that the purposes which allegedly motivated this transaction are “compelling,” nor in the terms of the first circuit in Bradbury v. Commissioner, supra, 298 F.2d at 119, are these purposes “conspicuously countervailing considerations.” Furthermore, the words of Judge Learned Hand are relevant to the significance of business purposes: “[W]e think that Commissioner v. Estate of Bedford, supra, 325 U.S. 283, 65 S.Ct. 1157 [89 L.Ed. 1611], has authoritatively overruled the doctrine that the distribution of accumulated earnings in the cancellation or redemption of shares can never be ‘essentially equivalent’ to the payment of a dividend, if the shares were originally issued for a bona fide corporate purpose: i. e. for a purpose other than to evade taxation.” Kirschenbaum v. Commissioner of Internal Revenue, 2 Cir. 1946, 155 F.2d 23, 24, cert. den. 329 U.S. 726, 67 S.Ct. 75, 91 L.Ed. 628. Summing up petitioner’s case, of the three purported business purposes, the first two are extremely weak, and the third has its faults. Thus even in aggregate, there is serious doubt whether these are sufficient to constitute a business purpose which would move a court to allow the taxpayer to escape ordinary income treatment here. Apparently the cases which discuss the business purpose criterion believe that if there exists a substantial business purpose for the transaction, this negates or at least weakens a conclusion that there was an intent to bail out earnings and profits via the redemption of stock. There are many cases which discuss business purpose, and taxpayer cites nineteen cases for the proposition that: “In almost every instance where it was found that the redemption transaction was not essentially equivalent to a dividend, a bona fide business purpose was found to exist.” (Opening Brief, p. 24.) In eighteen of those cases, at least one of the following factors was emphasized by the court: (1) the shares of the taxpayer involved were all redeemed; (2) the redemption was not pro rata; (3) there was a contraction of the corporate business; (4) lenders insisted that the shareholders do something which insistence prompted the redemption; (5) the stock was redeemed to avoid possible friction with other parties; (6) preferred shares with dividend arrearages were redeemed to end the arrearages; (7) shares were redeemed so as to be available for sale to a key employee who demanded some shares; (8) the redeemed shares had been originally issued to cancel a debt and at the time of the issue there was manifested an intention to redeem the shares. (This latter purpose was not considered substantial enough in Ballenger v. United States, supra.) Some of these distinctions obviously are more substantial than others. It is conceivable that some courts might find for the taxpayer on the facts here present. However, the opinions most favorable to taxpayer’s position were appellate decisions affirming trial court opinions. This facts alone sheds substantial doubt on the applicability of the eighteen cases to the case at bar when before us on appeal on a question of fact after an adverse decision to taxpayer below. There thus remains substantial doubt whether most of the courts which decided the cited cases would go so far as to allow taxpayer here to escape ordinary income treatment. One case cited by taxpayer is very similar to the present case and deserves mention. Isaac v. Eberly, 10 CCH Tax Ct. Mem. 1157 (1951) holds that a pro rata redemption of some of the shares of a corporation to cancel one-half of a shareholder’s indebtedness to the corporation was not essentially equivalent to a dividend under § 115(g) of the 1939 Code because credit was the lifeblood of the corporation, the credit standing of the corporation would be improved even though credit was not immediately needed but because prudent business practice dictated planning ahead, and because there was no cash available to pay a dividend. One Tax Court memorandum opinion is not enough in itself to move this court to decide in favor of taxpayer, especially (1) when there is a substantial doubt as to the aid which the transaction here gave to the credit standing of the corporation, and (2) when the transaction increased rather than decreased the indebtedness of the corporation to the shareholder. It must be remembered that the business purpose of a transaction is only one of the criteria to be considered in the weighing process of the flexible net effect test. It must be remembered that the other criteria already discussed weigh against the taxpayer. The final criterion, and by far the most important, is the net effect of the transaction : the result. It is not the “strict” test, because other criteria are considered also, but it is necessary to closely approach the “strict” test because the courts attach by far the most weight to this criterion. In Hirsch v. Commissioner, 9 Cir., 124 F.2d 24, 29, this court stated that the purpose of the transaction to secure favorable interest rates at the bank was irrelevant because “the statute is aimed at the result.” In Earle v. Woodlaw, supra, this court stated: “Some of the earlier cases, emphasizing that a question of fact is involved, also urge that the intent of the directors of the corporation is to be considered. * * * But later cases place the emphasis on the effect of the distribution as that which controls, and not the intent nor the motives, either of the taxpayer or the corporation.” 245 F.2d at 129. Emphasis on net effect is even more important where the corporations are solely owned, as here. “[S]inee it often happens that the corporation is closely held and the stockholders and corporate officers are the same people, courts following the second approach [flexible] find it almost impossible to untangle the various purposes to say with any assurance that the redemption was justified by a legitimate business purpose. Recourse in such circumstances should be to the factors emphasizing the net effect of the transaction if the statute is to be reasonably applied.” Ballenger v. United States supra, 301 F.2d at 198. Accord, Bradbury v. Commissioner, supra. The Tax Court followed a flexible test, but placed the heaviest emphasis on the net effect of the transaction. The Court said: “Under the ‘net effect’ test, all factors are to be considered. * * * After considering all the factors in this case, it is the opinion of this Court that the practical effect of the stock transfer was the same as if Helix had declared and paid a dividend to petitioner.” (38 T.C. at 732.) There can be no question that the result of this transaction is to the taxpayer the same as it would have been if Helix had declared and paid a dividend. Taxpayer received the notes and he still retained 100%' of both corporations. As the district court stated in Radnitz v. United States, S.D.N.Y. 1960,187 F.Supp. 952, affirmed per curiam 294 F.2d 577: “After the dust has settled, one finds the plaintiffs and their fellow stockholders as firmly ensconced in their tricorporate positions as was true prior to the stock transaction, with admittedly no true diminution of interest or control, despite their transfers of stock.” (187 F.Supp. at 958. Quoted with approval in United States v. Collins, 1 Cir. 1962, 300 F. 2d 821 at 824-825.) Taxpayer alleges that there is a difference between a person’s owning the stock of “X” corporation and his owning the stock of “Y” corporation which in turn owns the stock of “X” corporation. That is true, as a factual and technical matter, but the Congress “in its wisdom” has decided that the differences are not as great as the similarities, and thus, under § 318(a) (2) (C), the taxpayer is constructively presumed to own the Kerr Grain stock even though it is actually owned by Helix. A further contention of taxpayer can be disposed of by a quotation from the district court opinion in Radnitz, supra: “Plaintiffs urge the court that Congress sought merely to prevent those distributions which reduced corporate assets from escaping dividend equivalence liability; that since Tylon received assets it did not previously own, viz., stock in New Jersey Turner Hall, in return for the cash payments made to plaintiffs and others, no corporate assets of Tylon were depleted. However, to subscribe to these contentions would serve to frustrate the corporate tax policy exemplified by the inclusion of Section 304 in the 1954 Internal Revenue Code and to impute to Congress a limited purpose therein unwarranted by the terms of the Code or its legislative background.” Radnitz v. United States, supra 187 F.Supp. at p. 959; quoted with approval in United States v. Collins, supra, 300 F.2d at 824. In Phelps v. Commissioner, 1 Cir., 1957, 247 F.2d 156, 158, this court, in finding that the taxpayer received a taxable dividend, pointed out that although the purported business purpose could have been accomplished other than by a method similar to a dividend, “[t]he net result of the plan adopted, however, was the transfer of accumulated earnings and profits to Phelps and Howell.” In Ballenger v. United States, supra 301 F.2d at 199-200, the court stated in reply to the contention that there were legitimate business reasons for the transaction, “Nevertheless, these objections could be remedied without at the same time effecting a distribution of corporate earnings at capital gains rates. The taxpayer could as readily have caused the preferred stock to be exchanged for common stock * * *.” Where a shareholder picks a “sale” device rather than a “stock for stock” device, an appearance of tax avoidance is given. A taxpayer should not be allowed to avoid the statutory scheme when he could have accomplished all the business purposes he purports to have wished to accomplish, without in effect obtaining a dividend. We affirm the Tax Court. Y — CONSTITUTIONALITY Taxpayer contends that if §§ 304 and 302 are found to be applicable to this transaction such as to tax the taxpayer at ordinary income rates, such application is unconstitutional under Article I, Section 9, Clause 4 of the Federal Constitution which prohibits a direct property tax unless apportioned among the states. Taxpayer claims that this is just a return of the taxpayer’s investment, which cannot be taxed as “income” under the Sixteenth Amendment, citing Southern Pacific Co. v. Lowe, 1918, 247 U.S. 330, 38 S.Ct. 540, 62 L.Ed. 1142; Commissioner v. Meyer, 6 Cir. 1943, 139 F.2d 256. Also, Bowers v. Kerbaugh, 1926, 271 U.S. 170, 46 S.Ct. 449, 70 L.Ed. 886. The argument that this transaction was just a return of an investment, is difficult to accept. After the transaction, taxpayer still retained control of the Kerr Grain stock, and to all intents and purposes he still owned it, this time its being held indirectly through Helix and not held directly by him. In literal terms he did give up certain rights attendant to direct control of the shares, but realistically he could, through his control of Helix, still deal with Kerr Grain as he pleased. Under these circumstances it is difficult to agree that taxpayer gave up his investment. This transaction looks, as we have decided, much more like a payment of surplus earnings than a return of an investment. Taxpayer endeavors to equate this transaction with the sale of an asset, such as a warehouse, to Helix. Yet, could not Congress make such a transfer taxable, just as § 304 makes a transfer of certain stock taxable, at ordinary income rates? It seems that Congress could, because the only practical effect of such a sale of a warehouse is that the taxpayer receives cash and he still owns or controls the asset which he purportedly sold. Taxpayer asserts that if the promissory note is but a return of his investment and not a dividend, then tax on it would be unconstitutional. But if it were not a dividend, and hence an investment (contrary to the holding of the Tax Court below), the constitutionality issue would never be and need not be reached. Thus, as the government brief states, nothing is added to the case by the constitutionality argument. Taxpayer replies that his constitutional argument is intentionally misunderstood because “the mere labeling of the distribution as a dividend does not make it so.” We agree. But the Tax Court did more! It not only found as a matter of fact and law the distribution was not income, it was a dividend, or the equivalent thereof. This does more than call it a dividend, it makes it the equivalent of one. Further, any court, other than the Supreme Court, should not find unconstitutional a statute (or its equivalent) which has been on the books for many years, except in the clearest of cases. Kronberg v. Hale, 9 Cir. 1950, 180 F.2d 128 at 131, cert. den. 339 U.S. 969, 70 S.Ct. 987, 94 L.Ed. 1377. We hold the provisions attacked are constitutional. On the petition for review, the decision of the Tax Court for respondent Commissioner of Internal Revenue is Affirmed. . All references to sections are to the Internal Revenue Code of 1954 unless otherwise noted. . Barbara Kerr, tbe wife of Thomas, is involved in this suit only because they filed a joint return. Thomas is thus referred to here as the taxpayer. . “§ 302. Distributions in redemption of stock “ (a) General rule. — If a corporation redeems its stock (within the meaning of section 317(b)), and if paragraph (1) * * * of subsection (b) applies, such redemption shall be treated as a distribution in part or full payment in exchange for the stock. “(b) Redemptions treated as exchanges. “(1) Redemptions not equivalent to dividends. — Subsection (a) shall apply if the redemption is not essentially equivalent to a dividend.” (Taxpayer admits that § 302(b) (2-4) is inapplicable. Opening Brief, p. 13.) . “§ 304. Redemption through use of related corporations “(a) Treatment of certain stock purchases.— “(1) Acquisition by related corporation (other than subsidiary). — For purposes of sections 302 and 303, if— “(A) one or more persons are in control of each of two corporations, and “(B) in return for property, one of the corporations acquires stock in the other corporation from the person (or persons) so in control, then (unless paragraph (2) applies) [which it does not here] such property shall be treated as a distribution in redemption of the stock of the corporation acquiring such stock. In any such case, the stock so acquired shall be treated as having been transferred by the person from whom acquired, and as having been received by the corporation acquiring it, as a contribution to the capital of such corporation.” . S.Rep.No. 1622, 83d Cong., 2d Sess. p. 239 (3 U.S.C.Cong. and Adm.News (1954) 4621, 4876), reads in part: “As in the House bill, the principle of section 115 (g) (2) is expanded to include cases of so-called ‘brother-sister corporations.’ The effect of the operation of section 304 is to characterize as redemptions distributions which are cast in the form of sales. The distributions in redemption shall be examined for taxability subject to the rules of section 302 * * . Northrup v. United States, 2 Cir. 1957, 240 F.2d 304; Radnitz v. United States, S.D.N.X.1960, 187 F.Supp. 952, affirmed per curiam 294 F.2d 577 (2 Cir. 1961). . Kessner v. Commissioner, 248 F.2d 943 (3 Cir. 1957) ; Boyle v. Commissioner, 187 F.2d 557 (3 Cir. 1951), cert. den. 342 U.S. 817, 72 S.Ct. 31, 96 L.Ed. 618; Smith v. United States, 121 F.2d 692 (3 Cir. 1941). Also see Rives, J., dissenting in Commissioner v. Sullivan, 210 F.2d 607, 612 (5 Cir. 1954), who would apparently adopt this strict test. . Taxpayer contends that the strict net effect goes too far, but his arguments are less than convincing. . Although, as taxpayer points put, notes rather than cash were distributed here, the weight of case law favors treating such notes as cash. . It is true, as taxpayer contends (Opening Brief, pp. 40-41), that the Commissioner here is thus contending that Helix exists for dividend purposes hut not for control purposes. However, this latter contention seems sound because the ownership of Kerr Grain by Helix rather than by taxpayer lacks much in the way of any real or practical consequence. United States v. Collins, 1 Cir. 1962, 300 F.2d 821, 824. Besides, that is what Congress intended to do in § 304.
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RE, Chief Judge. Plaintiff, Jean Spalding, individually and as the administrator of the estate of her deceased son, Ford Spalding, sued in the United States District Court for the Western District of Missouri, to recover on a life insurance policy on a stallion. She appeals from an order which denied recovery and granted summary judgment in favor of defendants, Agri-Risk Services and Traders Insurance Company. Defendants assert that, since the stallion had been “operated upon for castration,” the insurance policy ceased to cover the insured animal. Plaintiff contends that defendants’ failure to cancel the policy and return the premium payments, during a 4-month period when defendants were made aware of the facts which led to the humane destruction of the animal, raises issues of waiver or estoppel sufficient to defeat a motion for summary judgment. The question presented on this appeal is whether, under Missouri law, there is a material question of fact sufficient to defeat a motion for summary judgment as to whether the insurance company, by its silence or inaction, has either waived its rights, or is estopped from asserting a condition of the insurance contract which provides for the cancellation of the coverage if the insured animal is castrated. Since we hold that the record, when viewed in a light most favorable to plaintiff, raises questions of material fact as to either waiver or estoppel, as alleged by plaintiff, we reverse. I. THE FACTS On November 10, 1983, Ford Spalding, a resident of Virginia, submitted an application for a $20,000 life insurance policy on his stallion, “Wind ’Un Sugar,” to defendants, Traders Insurance Company and its managing agency, Agri-Risk Services. The application form, which was signed by Ford’s mother, Jean, provided that “no operation is to be performed on any insured animal without the WRITTEN consent of the company unless the operation is necessary, as a result of a peril insured by the policy.” (emphasis in original). The policy application was granted, and, on December 6, defendants issued a policy to Ford Spalding for a 1-year period beginning on November 17, 1983. Condition 6 of the insurance policy provided that: In the event of an animal being operated upon for castration or spaying this Insurance shall cease to cover such animal at midnight, local standard time, immediately prior to the day of the operation. Plaintiff contends that neither she nor her son ever received a copy of the insurance policy. In January 1984, Wind ’Un Sugar was castrated or “gelded.” On May 15, 1984, Wind 'Un Sugar was diagnosed as suffering from an unrelated central nervous system disease. From May 15 until September 24 the horse was treated by the Spald-ings’ veterinarian, Dr. Daniel Flynn. Defendants’ claims adjuster, Livestock Adjusters, Inc., was in contact with both the Spaldings and the defendants during this period. Livestock Adjusters forwarded several reports to the defendants on the condition of Wind ’Un Sugar. All of the correspondence referred to Wind ’Un Sugar as a “gelding.” On August 24, 1984, Livestock Adjusters dispatched Dr. R. Reynolds Cowles, Jr., a veterinarian, to Orange, Virginia, to examine the horse. In August, both Dr. Flynn and Dr. Cowles recommended that the horse, which showed no signs of improvement, be destroyed for humane reasons. Livestock Adjusters, acting on behalf of the defendants, consented to the destruction, and on September 24, 1984, the animal was humanely destroyed. On October 11, Ford Spalding filed a claim under the insurance policy. On January 17, 1985, Livestock Adjusters notified Ford Spalding that because Wind ’Un Sugar had been gelded in violation of Condition 6 of the insurance policy, the policy had been cancelled on midnight of the day before the operation. On March 4, 1985, defendants sent a check to Ford Spalding for reimbursement of unearned premiums. On February 19, 1987, alleging that defendants were estopped from asserting the forfeiture or cancellation of the insurance policy, plaintiff sued in the Western District of Missouri. The district court rejected plaintiff’s estoppel argument, and stated that “plaintiff has failed to prove that any question exists as to whether castration is an operation.” Spalding v. Agri-Risk Servs., No. 87-0151-CV-W-8, slip op. at 9 (W.D.Mo. Oct. 8, 1987). The district court held that defendants were entitled to summary judgment because the Spaldings’ “breach of a material part of the insurance contract allowed defendants to void the contract.” Id. at 9-10. II. DISCUSSION Summary judgment is to be granted when “there is no genuine issue as to any material fact and * * * the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). In Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), the Supreme Court clarified the proper application of summary judgment when it stated that “the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Id. at 322, 106 S.Ct. at 2552. In determining whether a party moving for summary judgment has made a showing that there are no triable issues of fact, a court must view all inferences to be drawn from the underlying facts “in the light most favorable to the party opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962)); see also Butler v. MFA Life Ins. Co., 591 F.2d 448, 451 (8th Cir.1979). Since summary judgment is a determination of law rather than fact, we need not defer to the district court’s conclusions and reverse only if clearly erroneous, but rather, may review the matter de novo. See Caiola v. Carroll, 851 F.2d 395, 398 (D.C.Cir.1988) (citing Nepera Chem. Inc. v. Sea-Land Serv. Inc., 794 F.2d 688, 699 (D.C.Cir.1986)). On appeal, plaintiff contends that defendants’ silence, notwithstanding a 5-month series of communications and correspondence which referred to Wind ’Un Sugar as a gelding, together with its retention of premiums paid during this period, “estops” the defendants from asserting that the gelding of the animal in January 1984 resulted in the cancellation of the insurance coverage pursuant to Condition 6 of the policy. Estoppel is founded upon equitable concepts of conscience and good faith. Because of one’s conduct, words, or silence, a party may be estopped or barred from asserting a legal right, if, under the circumstances, its assertion would cause a manifest injustice. The terms “waiver” and “estoppel” are not synonymous. Nevertheless, in insurance law, since the result of their application is the same, they are often used interchangeably. A “waiver” is “an intentional relinquishment of a known right * * *.” Bartleman v. Humphrey, 441 S.W.2d 335, 343 (Mo.1969). The term “estoppel,” however, “refers to an abatement raised by law of rights and privileges of the insurer where it would be inequitable to permit their assertion.” 16B J. Appleman, Insurance Law and Practice 491 (1981). The equitable doctrine of estoppel requires “that the injured party relied on the conduct of the insurer or was misled by it to his prejudice.” Martinelli v. Security Ins. Co., 490 S.W.2d 427, 433 (Mo.Ct.App.1972). In circumstances similar to those presented in this case, in which an insurer, through its conduct, has implied that its right to forfeiture or cancellation will not be asserted, and the insured has undergone substantial expense in relying on the insurer’s conduct, the Missouri courts have held that the insurer has “waived” its right to assert the forfeiture. Only a few cases need be mentioned to illustrate the clear and consistent policy of the courts of Missouri. In Mangelsdorf v. Pennsylvania Fire Ins. Co., 224 Mo.App. 265, 26 S.W.2d 818 (1930), the insured sought to recover under an accident insurance policy after a sprinkler malfunction caused damage to seeds stored in his warehouse. After the accident, the insurer’s agent instructed the insured to remove the seeds from the warehouse and take affirmative steps to salvage them. In complying with the agent’s instructions, the insured incurred substantial expense. Subsequently, asserting that the insured had breached the contract by, among other things, not properly maintaining his warehouse, the insurer denied the claim. Affirming a jury verdict for the insured, the court stated that: if the insurer, in its negotiations or transactions with the insured, after knowledge of the facts which would otherwise work a forfeiture of the policy, requires the insured, in compliance with the provisions of the policy, to do some act or acts by which trouble or expense is incurred, the right to insist upon a forfeiture will be thereby waived. Id. at 271-72, 26 S.W.2d at 821; see also Daniel v. Aetna Life Ins. Co., 225 Mo.App. 357, 364-65, 36 S.W.2d 688, 692 (1931) (insurer “waives” defense of insured’s failure to pay premiums on life insurance policy when, after death of insured, plaintiff beneficiary incurs expense in complying with insurer’s directions to provide proof of insured’s death); Tinsley v. Aetna Ins. Co., 199 Mo.App. 693, 704-05, 205 S.W. 78, 79-80 (1918) (insurer “waives” defense of insured’s breach of contract provisions on a fire and accident insurance policy on a boat, when insurer directs insured, in accord with a contract provision, to undergo substantial expense in towing and mooring the damaged boat); Shearlock v. Mutual Life Ins. Co., 193 Mo.App. 430, 439, 182 S.W. 89, 92 (1916) (insurer “waives” statute of limitations defense when, with knowledge that insured’s claim is time-barred, insurer supplies insured with claims form and “encourage[s] or induce[s] [the insured] to go to substantial expense in furnishing the proofs of loss or otherwise * * * ”); Myers v. Maryland Casualty Co., 123 Mo.App. 682, 687, 101 S.W. 124, 126 (1907) (insurer “waives” defense of insured’s failure to give timely notice of injury on accident insurance policy when insurer supplies insured with a claims form after receiving late notice, thereby giving the insured “the right to rely on the implied assurance contained in such conduct * * * Jean Spalding contends that she and her son relied on the fact that from May to September, 1984, during which time they incurred expenses in caring for Wind ’Un Sugar, neither the defendants nor their claims adjuster ever informed them that the gelding of the horse in January 1984 would have been asserted as a forfeiture of the policy. She contends that the defendants were put on notice of the gelding since all correspondence with their claims adjuster referred to “Wind 'Un Sugar” as a gelding. Surely, the defendants cannot claim ignorance of the meaning of the word “gelding.” Taking the facts in a light most favorable to the plaintiff, it is clear that the affidavits raise questions of material fact that, if determined in plaintiff’s favor, would show that the Spaldings relied on defendants’ silence or inaction. On May 15, 1984 the Spaldings informed the defendants’ claims adjuster, Livestock Adjusters, of the inception of Wind 'Un Sugar’s central nervous system disorder. A representative of Livestock Adjusters interviewed Ford Spalding on May 17. On May 29, Livestock Adjusters submitted its first report to the defendants. This report specifically noted that Wind ’Un Sugar was a gelding. Livestock Adjusters also talked with Dr. Flynn, the veterinarian attending Wind ’Un Sugar, and obtained a medical report from him, which was forwarded to the defendants on July 18. It is noteworthy that both the medical report, and Livestock Adjuster’s accompanying cover letter, described Wind ’Un Sugar as a gelding. On August 21, 1984, Livestock Adjusters sent Dr. Cowles, a veterinarian, to examine Wind ’Un Sugar. After having received Dr. Cowles’ report which detailed the worsening condition of the animal, Livestock Adjusters consented and agreed to the humane destruction of Wind ’Un Sugar. On October 24, 1984 Livestock Adjusters dispatched Dr. Cowles’ report to the defendants. Both Dr. Cowles’ report and Livestock Adjuster’s accompanying cover letter, once again, described the insured horse as a gelding. From May to September, 1984, the defendants not only did not inform the Spald-ings that the insurance policy had been cancelled, but they also retained all premium payments made during this period. It was not until January 17, 1985, more than 2 months after Ford Spalding submitted his claim, that the defendants notified the Spaldings that the policy had been can-celled retroactively. Furthermore, the defendants did not return the “unearned” premiums to the Spaldings until March 4, 1985. Giving the plaintiff the benefit of all reasonable inferences to be drawn from the facts, the conclusion is inescapable that the Spaldings could have relied on the defendants’ silence or inaction in continuing the treatment of Wind 'Un Sugar. As stated in the Mangelsdorf case, “if the insurer * * *, after knowledge of the facts which would otherwise work a forfeiture of the policy, requires the insured * * * to do some act or acts by which trouble or expense is incurred, the right to insist upon a forfeiture will be thereby waived.” Mangelsdorf, 224 Mo.App. at 271-72, 26 S.W.2d at 821. Clearly, therefore, there are questions of fact as to whether the Spaldings relied on the defendant’s inaction, and continued to treat Wind ’Un Sugar on the assumption that the insurance policy was still in effect notwithstanding the gelding. If these factual questions are resolved in favor of the plaintiff, under Missouri law, the defendants will be deemed to have “waived” their right to assert that the gelding of Wind ’Un Sugar resulted in a forfeiture or cancellation of the policy pursuant to Condition 6 of the insurance policy. Much attention and effort has been devoted by the parties to whether the castration or gelding of Wind ’Un Sugar was an operation within the meaning of the insurance application or policy. The defendants contend that the district court properly granted their motion for summary judgment because the plaintiffs have failed to raise any question of fact that the gelding was not an “operation” within the meaning of both the application and the insurance policy. However, since under the law of Missouri, there exist material questions of fact as to whether the defendants have “waived” their -right to assert the forfeiture or cancellation provision, the court need not consider the defendants’ argument as to what constitutes an “operation.” III. CONCLUSION On the record presented the court holds that there are questions of material fact, which, when viewed in a light most favorable to the plaintiff, establish that the Spaldings could have relied on the failure of the defendants or their claims adjuster, from May to December, 1984, to inform them that the gelding of Wind ’Un Sugar in January 1984, effected a forfeiture or cancellation of the insurance policy. Since the granting of summary judgment by the district court was inappropriate, we reverse.
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114,964
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BOREMAN, Circuit Judge. Appellant, Ernest Franklin Alexander, and one Robinson were charged in a two-count indictment with violations of the laws relating to the postal service. The first count charged that Alexander and Robinson had taken from an authorized depository for mail matter a letter addressed to Sammie W. Woodall, 205 North Franklin Road, Greenville, South Carolina, containing a United States Treasury check made payable to the addressee. The second count charged the possession of the particular Treasury check which was the “contents” of the letter addressed to Sammie W. Woodall, with knowledge that the same had been stolen, taken or abstracted from an authorized depository for mail matter. Alexander entered a plea of not guilty as to both counts and alone was tried before a jury. Upon his motion, the first count was dismissed as to him and the jury returned a verdict of guilty as charged in the second count. Defendant did not testify in his own defense. The admission, over objection, of certain evidence is challenged on appeal. We think that the defendant is entitled to a new trial. It is uncontroverted that on the fourth day of February, 1963, two Greenville County Sheriff’s deputies, in response to a telephoned tip from an undisclosed source, proceeded to a point on Furman Road in Greenville County, South Carolina, where they spotted Alexander and his co-indictee, Robinson, walking along the roadway. Robinson undertook to run away from the officers but was apprehended within a short distance and a check, not here involved, was taken from his person. Alexander offered no resistance and, at the officer’s request, took a seat in the rear of the sheriff’s car. McCall, one of the deputies, testified that while the other deputy was struggling with Robinson he saw Alexander, who was then seated in the sheriff’s car, drop or throw a check out of the car. McCall stated that he retrieved the check and subsequently turned it over to McClure, a government postal inspector who was called in after Alexander and Robinson were taken to the sheriff’s office. There was no direct proof of the material allegations of the indictment. The Government relied entirely upon circumstantial evidence to prove that the check which Alexander had in his possession had been contained in a letter which was taken from an authorized depository for mail matter. A substantial part of that evidence was the testimony of Mrs. Sammie W. Woodall, a widow lady who lived approximately three-quarters of a mile from the spot where Alexander and Robinson were apprehended. She testified that she received each month from the United States a Social Security check made payable to her in the amount of $106.20; that the check came to her by United States mail and was delivered to the mailbox at her residence on the third day of each month, but when the third fell on Sunday the check was always delivered on Monday, the fourth; that on Monday, the fourth day of February, 1963, she left her home in the morning and upon her return in the afternoon the check which she was expecting to receive that day was not in the mailbox; that a check payable to her in the amount of $106.20 was subsequently delivered to her and she cashed it at a store; that she had never given cmy check to the defendant, Alexander. There was no direct evidence to show that the check, or a letter in which it was contained, had been stolen or taken from Mrs. Woodall’s mailbox. Over timely objection by the defense, several government witnesses were permitted to testify as to the terms of the check and a copy of the check was admitted in evidence. The first witness presented by the Government was C. V. McCall, Special Deputy Sheriff for Greenville County. In addition to his account of the circumstances of the arrest, McCall testified that when shown the check which he, McCall, had given the postal inspector, Alexander admitted having had it in his possession and throwing it from the car. Officer McCall described the check as follows: “It was to Sammie W. Woodall, 205 North Franklin Road, Greenville, South Carolina.” The postal inspector, Earl W. McClure, was the second government witness. He testified that after the defendant’s arrest he went to the sheriff’s office where he obtained from the arresting officers the cheek which Officer McCall had retrieved; that he showed the check, which he described as addressed to Sammie W. Woodall in the amount of $106.20, to Alexander who admitted having dropped the check out of the police car ; that he subsequently caused the check to be delivered to the payee, Mrs. Sammie W. Woodall, with instructions to cash it; that while the check was in his possession he, McClure, attempted to have a copy made of it with a thermofax machine; that the machine did not reproduce the name and address of the payee and he typed those terms on the copy. The copy prepared by the postal inspector was admitted in evidence and the terms were read to the jury by the inspector. The next witness called by the Government was Officer Shirley of the Green- ville County Sheriff’s office. After refreshing his memory from notations which he had made, he testified that, in his presence, the defendant admitted to Postal Inspector McClure that he had had in his possession a check which the witness described as payable “to Sammie W. Woodall, 205 North Franklin Road, Greenville, S. C., in the amount of $106.20.” The envelope from which the check was allegedly taken was not produced and apparently was not found. The check itself, although described in detail in the indictment, was not offered in evidence. The record indicates that the check was delivered to the alleged payee and, pursuant to instructions given by the postal inspector, was cashed by her. In the normal course of banking operations the check would have reached the drawee in Birmingham, Alabama.- There is nothing in the testimony to show that the cheek could not have been produced at the trial. It is the defendant’s contention that the admission of the copy and the parol evidence to show the terms of the check, without the production of the check itself or a reasonable explanation of the Government’s failure to produce it, violated the “best evidence rule” and constituted prejudicial error. The Government concedes that there was no sufficient foundation laid for the introduction of secondary evidence; it argues, however, that the evidence objected to was introduced to show the identity of a specific physical object, namely, the cheek, and hence its admission was not violative of the best evidence rule. It has often been stated as a universal rule of evidence that the best evidence that is obtainable in the circumstances of the case must be adduced to prove any disputed fact. See, e. g., 1 Jones, Evidence § 199 (4th ed. 1938); 20 Am.Jur., Evidence § 403 (1958). Although the rule apparently enjoyed a broader application at one time, see IV Wigmore, Evidence § 1177 (3d ed. 1940), it is now generally recognized that the “best evidence” phrase denotes only the rule of evidence which requires that the contents of an available written document be proved by introduction of the document itself. 6 So limited, there is no question as to the meaning of the rule. As stated in 20 Am.Jur., Evidence § 406 (1958): “Where proof is to be made of some fact which is recorded in a writing, the best evidence of the contents of the writing consists in the actual production of the document itself. Any proof of a lower degree is secondary evidence which will be received as proof only where nonproduction of the writing is properly accounted for. The contents of a written instrument may not, as a general rule, be proved by parol, unless the failure to produce the paper itself is accounted for. The principle is controlling in every case wherein it is sought to prove the contents of written instruments of any kind whatsoever. * * * ” As defined by McCormick, the rule is that “in proving the terms of a writing, where such terms are material, the original writing must be produced, unless it is shown to be unavailable for some reason other than the serious fault of the proponent.” McCormick, Evidence § 196 (1954). It would seem that this case, involving as it does secondary evidence of a writing, without any explanation of the failure to produce the writing itself, is within the mandate of the best evidence rule. The Government argues, however, that the rule is not applicable here because the,purpose of the Government in offering the evidence was only to identify the check found in Alexander’s possession. With this contention we cannot agree. It is true, as the Government urges, that the best evidence rule is aimed only at excluding evidence which concerns the contents of a writing and testimony as to other facts about a writing, such as its existence or identity, may be admissible. As stated in IV Wigmore, Evidence § 1242 (3d ed. 1940): “[T]he rule applies only to the terms of the document, and not to any other facts about the document. In other words, the rule applies to exclude testimony designed to establish the terms of the document, and requires the document’s production instead, but does not apply to exclude testimony which concerns the document without aiming to establish its terms: * * *.” Here, however, the very purpose of the evidence objected to was to establish the terms of the check. The identity of the check could be established only by proof of its terms; the cheek was not described merely in general terms as a physical object, such as “a check” or “a Government check,” but instead its terms were set forth with particularity; indeed the copy purported to include its every characteristic. It is clear that the Government’s primary purpose was to prove the terms of the check in accordance with the indictment which set forth those terms in detail, including the serial number, symbol, amount and the name and address of the payee. Moreover, the terms of the check, if properly proved, would tend to establish that the check which Alexander had in his possession was the same check which Mrs. Woodall should have received and which should have been delivered to her mailbox. Without proof of its terms, there was virtually nothing in the record to connect the check with the mails or its possession with the offense charged. The terms of the cheek were vitally material to the Government’s case. A careful examination of certain cases cited by the Government convinces us that they do not support the Government’s position. In Chambless v. State, 94 Okl.Cr. 140, 231 P.2d 711 (1951), the defendant was convicted of the unlawful possession of intoxicating liquor. At the trial of the case, police officers testified that they had seen a federal liquor license bearing the name of the defendant on the wall of a filling station where the intoxicants were found. Subsequently, a certified copy of the license was admitted in evidence. The court, after pointing out that it had recently held that officers could testify to the fact that they had seen a liquor license, stated at 231 P.2d 713, “but we have not permitted them to testify concerning the contents of the license as the license itself would be the best evidence of what it contained.” Thus, the court determined that the admission of testimony concerning the contents of the license was error but held that the error had been rendered harmless by the subsequent production of a certified copy. Also, in State v. Pappas, 195 Wash. 197, 80 P.2d 770 (1938), the evidence concerned a federal liquor license. In a prosecution for the unlawful possession of liquor, the raiding officers testified that they had seen a federal liquor license on defendant’s premises but did not testify as to its contents. The court, holding that the testimony was properly admitted, stated: “The license, or stamp, was thus a part of the furnishings with which the place was equipped and, being a physical thing, was capable of identification and description by the officers and agents who saw it.” 80 P.2d at 771. Thus, the court treated the license as a physical object not within the scope of the best evidence rule. Significantly, however, the court went on to state: “If the license be considered in the aspect of a written document, then it is to be noted that the testi mony of the officers was not with respect to its terms, but only with respect to its existence or identity. The rule requiring the production of written instruments or documents applies only to the terms and not to the existence of such documents.” 80 P.2d at 771. We think inapposite also the case of Chicago & N. W. Ry. Co. v. Green,. 164 F.2d 55 (8th Cir. 1947), relied upon by the Government. There a brakeman sued the railroad company for injuries sustained in a derailment. The plaintiff was allowed to testify that the train had received a “slow order” when passing through a certain town near the accident. He stated further that the order directed' the train to proceed slowly for one and one-half miles. After holding that the trial court erred in refusing a certain instruction requested by the defendant, the court turned to a consideration of asserted errors in the admission of evidence. At 164 F.2d page 63, concerning the testimony that a “slow order” had been received, the court stated: “TO' make reference to a document by its common designation, even though the designation may in some measure be a characterization of the contents, is elementarily not a violation of the best evidence rule.” The court recognized that plaintiff’s counsel had gone further and actually elicited testimony concerning the contents of the order, but it pointed out that the defendant had not objected to the evidence until after it was in and and that the contents of the slow order were again brought out on cross-examination without objection. Thus, although acknowledging that “the contents of a written order regulating the operation of a railroad train, the violation of which is relied on as negligence, ordinarily are within the application of the best evidence rule,” the court held that it was within the discretion of the trial judge “to allow testimony, which is not the best evidence, to stand, where opportunity to object has existed but is not exercised until after the testimony is given.” 164 F.2d at 63. It is well settled that an objection by the party against whom the secondary evidence is offered is necessary to bring the best evidence rule into operation. 1 Jones, Evidence § 202 (4th ed. 1938). Another case cited by the Government, United States v. Calamaro, 137 F.Supp. 816 (E.D.Pa.1956), is of similar import. There the defendant, a pickup man in a numbers operation, was indicted and convicted of failing to pay the special gambler’s tax imposed by the Internal Revenue Code. He moved for a judgment of acquittal and alternatively for a new trial, assigning as error, inter alia, the admission of testimony of police officers pertaining to the numbers slips taken from his possession, without the production of the slips themselves. The arresting officers had testified that they had taken from the possession of defendant 48 sheets of paper which were three inches wide and seven inches long, and that there were 1800 notations of three-digit numbers followed by dashes and other numbers on the papers. The officers characterized the sheets as “banker slips.” The District Court found no error in the admission of the testimony. Significantly, however, the court emphasized that “ * * * The government was required to prove only that the slips had existed, that they were numbers slips, and that the defendant had been carrying them. The government had no burden and mad,e no attempt to prove the specific contents of the slips. Consequently, the best evidence rule has no application to the problem presented by the failure to produce the numbers slips in the present case. * * * ” 137 F.Supp. at 818-819. (Emphasis supplied.) On appeal the District Court’s decision in the Calamaro case was reversed but on other grounds. Of the other cases cited by the Government, only one, Banovitch v. Commonwealth, 196 Va. 210, 83 S.E.2d 369 (1954), involved testimony concerning the terms of a written instrument. There the terms were not in issue and the court stated only that the testimony was not secondary evidence. It is correct, as the Government asserts, that the cases cited support the proposition that oral testimony may be allowed to establish the existence or identity of a written document. But it is significant that each of those cases indicates that the testimony may not go so far as to include the terms of the writing. Such a conclusion is strengthened by a consideration of the purpose of the best evidence rule. The real purpose of, and reasons for, the best evidence rule are well stated by Dean Wigmore: “These reasons are simple and obvious enough, as dictated by common sense and long experience. They may be summed up in this way: (1) As between a supposed literal copy and the original, the copy is always liable to errors on the part of the copyist, whether by wilfulness or by inadvertence; this contingency wholly disappears when the original is produced. Moreover, the original may contain, and the copy will lack, such features of handwriting, paper, and the like, as may afford the opponent valuable means of learning legitimate objections to the significance of the document. (2) As between oral testimony, based on recollection, and the original, the added risk, almost the certainty, exists, of errors of recollection due to the difficulty of carrying in the memory literally the tenor of the document.” IV Wigmore, Evidence § 1179 (3d ed. 1940). Little reflection upon the reasons for the rule is required to note its applicability in the present case. Here the indictment alleged the terms of the check with particularity and the Government undertook to prove those terms as circumstantial evidence of the unlawful possession of the check as charged in the second count of the indictment. Any error in such proof could easily have been of significant legal consequence. Consider, for example, the effect of a witness’s failure to notice, or a reproducing machine's failure to copy, an indorsement on the back of the check. We are convinced that it was for the purpose of avoiding the possibility of such errors as might have occurred here that the best evidence rule was formulated. As pointed out by Wigmore, “where a document is referred to as identical with or the same as another document, or as helping to identify some transaction or some other physical object, the question is a difficult one; and the ruling will depend upon whether in the case in hand greater emphasis and importance is to be given to the detailed marks of peculiarity or to the document as a whole regarded as an ordinary describable thing.” Here the emphasis was clearly and of necessity on the “detailed marks of peculiarity” which the check bore. The Government could not have sustained its burden by merely showing that the defendant had a Government check in his possession; proof was required to establish that the check which the defendant possessed was, to his knowledge, contained in a letter which had been stolen, taken or abstracted from the mail. The prosecution was obviously aware of the fact that in the absence of proof of the specific terms and contents of the check its case must fail. We believe the evidence went beyond that which is permissible for the purpose of identifying a physical object. As between a written instrument and a copy or parol description thereof, the rule operates to accept the former and exclude the latter. As to its contents, the writing is certain; any oral description thereof necessarily involves the frailties of human recollection and any copy, the hazards of faulty duplication. In addition, there exists the possibility of prejudice or interest influencing either the testimony of a witness or the accuracy of the copy. Given a choice between the two, the law accepts the certain and rejects the uncez*tain. The defendant is entitled to a new trial. Alexander assigns as error the suggestions of the District Court as to calling certain witnesses and the participation by the court in the examination of such witnesses. Having noted error in admitting secondary evidence of the contents of the check, we need not consider this contention except to point out that the participation by the court was limited to an effoz-t to establish a proper foundation for the introduction of secondary evidence of the check’s contents. Since it is conceded here that a sufficient foundation was not laid, any error in this respect would not be prejudicial. Reversed and remanded. . 18 U.S.C. § 1708 (1958). . The two counts of the indictment are as follows: “COUNT I “On or about February 4, 1963, in the Greenville Division of the Western District of South Carolina at Greenville, South Carolina, LEONARD LEE ROBINSON and ERNEST FRANKLIN ALEXANDER did steal, take and abstract from and out of an authorized depository for mail matter, to wit, the mail box of Sammie W. Woodall located at 205 North Franklin Road, Greenville, South Carolina, a letter then and there addressed to Sammie W. Woodall, 205 North Franklin Road, Greenville, South Carolina, containing U. S. Treasury Check No. 32,913,837, Symbol No. 3491 in the amount of $106.20 payable to Sammie W. Woodall. “COUNT II “On or about February 4, 1963, in the Greenville Division of the Western District of South Carolina, at Greenville, South Carolina, LEONARD LEE ROBINSON and ERNEST FRANKLIN ALEXANDER unlawfully had in their possession U. S. Treasury Check No. 32,-913,837, Symbol 3491 in the amount of $106.20 payable to Sammie W. Woodall, said check being the contents of a letter addressed to Sammie W. Woodall, 205 North Franklin Road, Greenville, South Carolina, knowing the same to have been stolen, taken, and abstracted out of an authorized depository for mail matter.” . McClure further testified that when asked where he got the check, Alexander answered, “It should be obvious.” . From an examination of the copy of the check which was admitted in evidence, it appears that the date, amount and other figures were also typed on the face of the copy. . See, e. g., Meyers v. United States, 84 U.S.App.D.C. 101, 171 F.2d 800 (1948), cert, denied, 336 U.S. 912, 69 S.Ct. 602, 93 L.Ed. 1076 (1949); Herzig v. Swift & Co., 146 F.2d 444 (2d Cir. 1945) ; McCormick, Evidence § 195, at 409 (1954); IV Wigmore, Evidence § 1181 (3d ed. 1940). But cf. Watson v. United States, 224 F.2d 910 (5th Cir. 1955). . 236 F.2d 182 (3d Cir. 1956), aff’d, United States v. Calamaro, 354 U.S. 351, 77 S.Ct. 1138, 1 L.Ed. 1394 (1957). . IV Wigmore, Evidence § 1244 (3d ed. 1940).
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6,134,994
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WASHINGTON, Circuit Justice (charging jury). That, upon the first indictment, the jury must be satisfied, ■ not only that the assault was committed after the 3d of March, 1S25, when the act of congress was passed; but that the intention with which the assault was made was to take the life of the. person assaulted. If the jury should believe that it was made with intent merely to give pain, or to torture the person assaulted, however cruelly, the defendant cannot be found guilty; unless they are also satisfied that the intention was to kill, that being the offence stated in the indictment. Upon the second indictment, the offence may be committed, although no actual, physical force was used in putting the mate on shore; as if he left the ship under a well grounded fear of danger to his life from the defendant if he continued on board to perform the return voyage. Mere general ill treatment by the ■ defendant, committed on the mate, on the outward voyage, would not amount to that kind of moral force which would bring the case within the tenth section of the act of congress of March 3, 1825, c. 65 [4 Stat. 115]. The jury acquitted the defendant, on both indictments.
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115,266
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JERTBERG, Circuit Judge. Before us'is an appeal from a judgment of the United States District Court for the Southern District of California dismissing a petition for habeas corpus filed by appellant. Said petition for writ of habeas corpus was filed in the District Court after an adverse decision by the United States Commissioner following a hearing pursuant to the provisions of 18 U.S.C. § 3184. Following such hearing the Commissioner found as a fact, “that the evidence presented is sufficient under 18 U.S.C. § 3184 to sustain the charges under the provisions of the treaty, and" concluded “that the defendant should be surrendered to the proper officials of Mexico.” From such findings and con elusion the Commissioner ordered “that the defendant stand committed to the custody of the United States Marshal without bail until the surrender shall be made.” Jurisdiction of the Commissioner to hear extradition matters is based on said Commissioner’s Order of Appointment dated February 28, 1959, and pursuant to the provisions of Title 18 U.S.C. § 3184 and the Treaty of Extradition between the United States of America and the Republic of Mexico, ratification exchanged April 22, 1899, proclaimed April 24, 1899 [31 Stat. 1818], amended by supplemental convention effective July 11, 1926 [44 Stat. 2409], again amended by supplemental convention effective April 14, 1941 [55 Stat. 1133.] The District Court had jurisdiction to entertain appellant’s petition for writ of habeas corpus pursuant to the provisions of Title 28 U.S.C. § 2241 (a). This Court has jurisdiction to entertain- this appeal under the provisions of Title 28 U.S.C. § 2253. The extradition complaint filed February 1,1960, as amended April 12, 1960, charges in essence that appellant is duly and legally charged with having committed in Mexico the crimes of falsification of the official acts of the Government or public authority and the uttering or fraudulent use of the same; and embezzlement of public funds by a pub-lie officer or depository, while employed by Petróleos Mexicanos, an agency of the Government of Mexico, in the capacity of superintendent of the District of Poza Rica, the State of Vera Cruz, Mexico, during the years 1957 and 1958. i • x The amended extradition complaint further charges that the appellant has been found outside the boundaries of the said Mexico; that a warrant for the arrest of appellant cannot be served in Mexico; and that the appellant has sought asylum within the jurisdiction of the United States of America and may be found in the State of California, City of Redondo Beach; and that said appellant is not a citizen of the United States of America. Prior to the hearing before the United States Commissioner, appellant moved the Commissioner for an order authorizing the taking of depositions of certain persons residing in Mexico. Following denial of said motion by the Commissioner appellant applied to the United States District Court for a writ of mandamus or, in the alternative a motion for an order directing the Commissioner to make an order authorizing the taking of the depositions. The District Court denied the application and motion. Upon appeal to this Court the appeal was dismissed. Merino, Appellant v. Hocke, United States Commissioner, United States Marshal, Appellees, reported 289 F.2d 636 (9th Cir. 1961). Following the hearing by the Commissioner under the provisions of 18 U.S.C. § 3184, appellant renewed his application for a Writ and Order to the District Court. Following denial of the renewed application and motion by the District Court, appeal from such denial was taken to this Court. The appeal was dismissed by this Court in Merino, Appellant, v. Hocke, et al., Appellees, No. 18271 of this Court, 324 F.2d 687 (9th Cir. 1963). The Treaty of Extradition between the United States of America and the Republic of Mexico, as amended, in pertinent part provides as follows: ARTICLE II of the Treaty of February 22 1809 [gl stat_ 1818] provides in pertinerLt part: Persons shall be delivered up, according to the provisions of this eonvention, who shall have been charged with> or convicted of, any of the following crimes or offenses: "1. * * * tx‘ "2. * * * "3. * * * "4. * * * "5. * * * "6. * * * "7. * * * “8. * * * “9- * * * “10. The forgery, or falsification of the official acts of the Government or public authority, including courts of justice, or the utterance or fraudulent use of any of the same. «44 * * •» «42 * * * “13. Embezzlement or criminal malversation of public funds committed within the jurisdiction of either party by public officers or depositaries. «44 * * * “45 * * *» ARTICLE III of the same Treaty provides in pertinent part as follows: “Extradition shall not take place in any of the following cases: “1. When the evidence of criminality presented by the demanding party would not justify, according to the laws of the place where the fugitive or person so charged will be found, his or her apprehension and commitment for trial, if the crime or offense had been there committed. “2. When the crime or offense charged shall be of a purely political character. “3. When the legal proceedings or the enforcement of the penalty for the act committed by the person demanded has become barred by limitation according to the laws of the country to which the requisition is addressed.” ARTICLE VIII of the same Treaty provides in pertinent part as follows: “Requisitions for the surrender of fugitives from justice, under this present convention, shall be made by the respective diplomatic agents of the contracting parties, or, in the event of the absence of these from the country or from its seat of government, they may be made by superior consular officers. “If a person whose extradition is asked for shall have been convicted of a crime or offense, a copy of the sentence of the court in which he was convicted, authenticated under its seal, with attestation of the official character of the Judge by the proper executive authority, and of the latter by the minister or consul of the respective contracting party, shall accompany the requisition. “When, however, the fugitives shall have been merely charged with a crime or offense, a similarly authenticated and attested copy of the warrant for his arrest in the country where the crime or offense is charged to have been committed, and of the depositions upon which such warrant may have been issued, must accompany the requisition as aforesaid. “Whenever, in the schedule of crimes and offenses of article 2nd, it is provided that surrender shall depend on the fact of the crime or offense charged being punishable by imprisonment or other corporal punishment according to the laws of both contracting parties, the party making the demand for extradition shall furnish, in addition to the documents above stipulated, an authenticated copy of the law of the demanding country defining the crime or offense, and prescribing' a penalty therefor. “The formalities being fulfilled, the proper executive authority of the United States of America, or of the United Mexican States, as the case may be, shall then cause the apprehension of the fugitive, in order that he or she may be brought before the proper judicial authority for examination. If it should then be decided that, according to the law and the evidence, the extradition is due pursuant to the terms of this convention, the fugitive may be given up according to the forms of law prescribed in such cases.” 18 U.S.C. § 3184 provides: “§ 3184. Fugitives from foreign country to United States. “Whenever there is a treaty or convention for extradition between the United States and any foreign of government, any justice or judge the United States, or any commissioner authorized so to do by a court of the United States, or any judge of a court of record of general jurisdiction of any State, may, upon complaint made under oath, charging any person found, within his jurisdiction, with having committed within the jurisdiction of any such foreign government any of the crimes provided for by such treaty or convention, issue his warrant for the apprehension of the person so charged, that he may be brought before such justice, judge, or commissioner, to the end that the evidence of criminality may be heard and considered. If, on such hearing, he deems the evidence sufficient to sustain the charge under the provisions of the proper treaty or convention, he shall certify the same, together with a copy of all the testimony taken before him, to the Secretary of State, that a warrant may issue upon the requisition of the proper authorities of such foreign government, for the surrender of such person, according to the stipulations of the treaty or convention; and he shall issue his warrant for the commitment of the person so charged to the proper jail, there to remain until such surrender shall be made.” 18 U.S.C. § 3190 provides: “§ 3190. Evidence on hearing “Depositions, warrants, or other papers or copies thereof offered in evidence upon the hearing of any extradition case shall be received and admitted as evidence on such hearing for all the purposes of such hearing if they shall be properly and legally authenticated so as to entitle them to be received for similar purposes by the tribunals of the foreign country from which the accused party shall have escaped, and the certificate of the principal diplomatic or consular officer of the United States resident in such foreign country shall be proof that the same, so offered, are authenticated in the manner required.” The hearing provided for by Section 3184 consumed approximately two weeks. On behalf of the appellee there was received in evidence, properly and legally authenticated, documents consisting of the petitions for the arrest of appellant for the offenses set forth in the amended complaint, warrants for the arrest of appellant, depositions in support of the warrants of arrest to which there were annexed many documentary exhibits, certifications as to the existence in the laws of Mexico of the offenses set forth in the amended complaint, and certifications as to the creation and the status and powers of Petróleos Mexicanos. In addition to the receipt in evidence of all of the foregoing documents, including the depositions of Mexican citizens whose testimony relate to the facts and circumstances surrounding the commission by the appellant of the offense charged in the amended complaint, there was also received into evidence on behalf of appellee the testimony of a member of the Bar of the Republic of Mexico, and a faculty member of the Law School of the University of Mexico, who qualified as an expert on the law of Mexico. The evidence received on behalf of appellant consisted of documentary exhibits, the testimony of appellant, the testimony of two citizens of Mexico, and the testimony of the Foreign Law Librarian of the Los Angeles County Law Library who qualified as an expert on the laws of Mexico. The District Court ordered that all exhibits and the transcript of proceedings held before the United States Commissioner to be received in evidence in the habeas corpus hearing. The pertinent provisions of the Criminal Code of the Republic of Mexico relating to the offenses set forth in the amended complaint are: “ARTICLE 219: To the person who commits the crime of peculation there shall be applied from six months to twelve years of imprisonment, a fine from ten to three thousand pesos, and destitution from em ployment or trust, and inhabilitation for from two to six years.” “ARTICLE 220: Every person entrusted with the public service— of the State or an autonomous organization, commits the crime of peculation, even though it be in commission for a limited time and without his having the capacity of an official, who, for personal or alien uses, diverts, from their purpose, money, securities, real estate or any other thing pertaining to the State, to an autonomous organization, or to an individual, if for reasons of his capacity he should have received them in administration, in deposit or for any other cause.” “ARTICLE 243: The crime of forgery of public or private documents shall be punished with reclusion in jail for six months to three years and the fine of fifty to one thousand pesos.” “ARTICLE 244: The crime of forgery of documents is committed by any one of the following means: “I. — By affixing a false signature or flourish, even though it be imaginary, or altering a true one. “II. — By unduly profiting from another’s signature or flourish in blank, drawing up an obligation, a liberation or any other document that may jeopardize the property, the honor, the person or the reputation of another, or cause some prejudice to society, to the State or to a third party. “III. — By altering the context of a true document, after it has been concluded or signed, if this should change its sense respecting any circumstance or point that is substantial thereto, whether adding, amending or erasing in all or in part one or more words or clauses, or varying the punctuation. “IV.' — By varying the date or any other circumstance relative to the time of the execution of the act expressed in the document. “V. — By attributing to himself by the person who draws up a document, or attributing the person in whose name he draws it, a name or an investiture, quality or circumstance which he does not possess, or that it is necessary for the validity of the act concerned. “VI. — By writing a document in terms that change the convention executed in a diverse one, wherein the statement or profession of the grantor, the obligations which he purported to contract, or the rights which he should have acquired are changed. “VII. — By altering clauses or statements, or asserting as true facts which are false, or as confessed those which are not, if the document whereon they are written down should be drawn up in order to make them appear as a proof thereof. “VIII. — By issuing a supposed testimony of documents that do not exist ; taking it from another existing one that lacks the legal requisites, falsely supposing that it has them; or from another that does not lack them, but adding or suppressing in the copy something which means a substantial deviation. “IX. — By altering an expert translator or paleographer the contents of a document when translating or deciphering it.” On this appeal, appellant specifies as errors that the District Court erred: 1. In applying an incorrect standard to determine the sufficiency of the evidence presented to the United States Commissioner; 2. In failing to find the United States Commissioner abused his discretion in finding the evidence sufficient to certify appellant extraditable and failing to find there was no showing before the Commissioner of probable cause to believe that appellant committed any offense within the treaty with the Republic of Mexico; 3. In failing to find either the matters presented before the United States Commissioner taken as a whole, establish that the statute of limitations of the Republic of Mexico had run on the offenses charged, or that the offenses charged against appellant did not fall within the Extradition Treaty; and 4. In failing to find appellant had been denied due process of law and a fair hearing before said United States Commissioner by said Commissioner’s refusal to authorize the taking of depositions in the Republic of Mexico. On this appeal it is not questioned that the United States Commissioner had jurisdiction to conduct the hearing provided for by 18 U.S.C. § 3184. Appellant’s contention that the District Court applied an incorrect standard in determining the sufficiency of the evidence presented to the United States Commissioner to support his order of extradition is based on the District Court’s statement that the test was “whether there was any evidence warranting the finding of probable cause to believe the accused was guilty.” In this connection the District Court stated: “Upon an examination of the transcript this court is satisfied that there was evidence before the Commissioner upon which he could come to the conclusion that there was probable cause to believe that defendant should be held to answer the charge.” In our view the test laid down by the District Court, in the above quoted statements of the District Court, to determine the sufficiency of the evidence which was before the United States Commissioner is correct. In Fernandez v. Phillips, 268 U.S. 311, at page 312, 45 S.Ct. 541, at page 542, 69 L.Ed. 970 (1925), the Supreme Court stated: “The alleged fugitive from justice has had his hearing and habeas corpus is available only to inquire whether the magistrate had jurisdiction, whether the offense charged is within the treaty and, by a somewhat liberal extension, whether there was any evidence warranting the finding that there was reasonable ground to believe the accused guilty.” To the same effect see Bingham v. Bradley, 241 U.S. 511, 516-517, 36 S.Ct. 634, 60 L.Ed. 1136 (1916); McNamara v. Henkel, 226 U.S. 520, 523, 33 S.Ct. 146, 57 L.Ed. 330 (1913); and Cleugh v. Strakosch, 109 F.2d 330, 333 (9th Cir. 1940). Appellant contends that the decision of the Supreme Court in Townsend v. Sain, 372 U.S. 293, 83 S.Ct. 745, 9 L.Ed. 2d 770 (1963) “represents a drastic departure from the rules which heretofore appeared to limit the power of Federal Courts to review factual determinations in habeas corpus proceedings.” Townsend involved a habeas corpus Federal Court hearing in which the prisoner, who had been convicted following trial in the State Court, claimed a deprivation of rights under the Constitution of the United States. We believe such case to be inapposite in the field of international extradition. It is clear to us that the offenses set forth in the amended complaint are offenses defined and made punishable under the provisions of the Criminal Code of the Republic of Mexico, and are offenses set forth in the Extradition Treaty existing between the United States and Mexico. The expert witnesses differed in their opinions as to whether or not Petróleos Mexicanos is an agency or authority of the Government of Mexico; whether or not its funds are public funds; whether or not its acts are governmental; and whether or not appellant as Superintendent of Petróleos Mexicanos in the District of Poza Rica was or was not a public officer. Such conflicts were resolved by the Commissioner adversely to the contentions of appellant. The credibility of witnesses and the weight to be accorded their testimony are within the province of the Commissioner. From our review the competent evidence of criminality in the record is sufficient to have justified, according to the laws of the State of California, appellant’s apprehension and commitment for trial if the offenses set forth in the amended complaint had been committed in the State of California. The weight and sufficiency of the evidence was for the determination of the Commissioner. Cleugh v. Strakosch, supra. r _ . , [4] The expert witnesses also differed m their opinions as to the period of the statute of limitations under the Crmnnal Code of the Republic of Mexico The law appears to be well settled that m the absence of treaty Provisions, the statute of limitations may not be raised m extradition proceedings Hatfield v. ?Auay> 8J- J58’, 8?í i1St Mir‘ 1937); First National City Bank of New York v. Anstegmeta, 287 F.2d 219, at 227 (2nd Cir. 1960). Attention is called to the provisions of paragraph 3 of Article III of the Treaty, which provides that extradition shall not take place when the legal proceedings, or the enforcement of the penalty for the act committed by the person demanded “has become barred by limitation according to the laws of the country to which the requisition is addressed.” The statute of limitations on Federal crimes in the United States is five years for noncapital offenses. 18 U.S.C. § 3282. Section 799 of the Penal Code of California provides that there is no time within which a prosecution for the embezzlement of public monies and the falsification of public records must be commenced, and such prosecution may be commenced at any time after the discovery of the crime. The record reveals that the appellant was relieved from his duties as Superintendent for Petróleos Mexicanos of the District of Poza Rica on December 28, 1958, and was apprehended in the County of Los Angeles, State of California, on February 1, 1960. The Commissioner did not err in concluding that iprosecution of the offenses set forth in the amended complaint was not barred by the statute of limitations, Finally appellant argues that he was denied due process of law and a fair hearing before the Commissioner because of the Commissioner s refusal to authorize the taking of depositions in Mexico. It is to be noted that the proceedings against appellant were in the nature of a preliminary hearing, and the purpose of the proceedings was not to determine ^ guilt of the appellant of tbe offenses get forth in tbe amended compiaint beyond a]J reasonable doubt but only to determine that the offenses had been committed and tbat there wag probable C£mge for bdief tbat tbe appeilant Committed them. It is also to be noted that appellant was permitted to testify in his Qwn bebalf and ^ there ig in tbe rec. ord ^ testimony of two live witnesses from Mexico who gave testimony on behalf of appellant. Appellant has cited no authority resting in the Commissioner to comPel the takin® of depositions in Mexico or, if authorized, that such order would have had any legal effect in Mexico. In seeking the order for the taking of the depositions appellant cites in the points and authorities submitted to the District Court, Rule 15(a), Federal Rules of Criminal Procedure, Rule 26, Federal Rules of Civil Procedure, 28 U.S.C. § 1781 and 18 U.S.C. § 3191. Rule 15(a) provides for defense depositions under certain situations in the course of Federal prosecutions and provides that the appropriate motion must be made “after the filing of an indictment or information * * Such rule does n°t provide for the use of defense depositions at preliminary examinatl0If furthermore, Rule 54(b) (5) of said rules Provides that the said rules of Criminal Procedure ‘are not applicable to ^tradition and rendition of fugiz ve ’ Rule 26, Federal Rules of Civil Procedure provides for the taking of depositions in civil actions. Appellant cites no authority that such rule is applicable to the field of international extradition, ro im m-n on tt ci ^ o [8-10] Title 28 U.S.C. § 1781 pro- , . ,, TT ., , , vides that a court of the United States , ,, , . may issue letters rogatory or a commis- .... , ... . „ . sion to take depositions m foreign coun- ,. f ... . , tries. There is nothing m the record ..... „ . , , , ,, to indicate appellant request* letters rogatory of a court of the United States. Title 18 U.S.C. § 3191 provides: “§3191. Witnesses for indigent fugitives “On the hearing of any case under a claim of extradition by a foreign government, upon affidavit being filed by the person charged setting forth that there are witnesses whose evidence is material to his defense, that he cannot safely go to trial without them, what he expects to prove by each of them, and that he is not possessed of sufficient means, and is actually unable to pay the fees of such witnesses, the judge or commissioner hearing the matter may order that such witnesses be subpenaed; and the costs incurred by the process, and the fees of witnesses, shall be paid in the same manner as in the case of witnesses subpenaed in behalf of the United States.” It appears that the statute is designed to secure, on behalf of .indigent fugitives, the attendance of resident witnesses at the hearing provided for by the provisions of 18 U.S.C. § 3184, and not witnesses residing in a foreign country since the attendance of witnesses residing in a foreign country would not be compellable by subpoenas. Furthermore, the statute requires the filing of an affidavit by the person charged, that he is not possessed of sufficient means and is actually unable to pay the fees of such witnesses. No such affidavit was filed in tlm instant case. See Jimenez v. Aristeguieta, 311 F.2d 547 (5th Cir. 1962). Finally, in support of his contention that he was denied due process of law and a fair hearing by the Commissioner’s refusal to authorize the taking of depositions in the Republic of Mexico, appellant cites many decisions of the courts of California wherein the rights of persons accused of crime in that state have , , , . ,, ... , . . , been expanded m the pretrial and trial . .. „ - stages. Also cited are the following de- . . . n , Wl. „ cisions of the Supreme Court: Elkins v. United States, 364 U.S. 206, 80 S.Ct. 1437, 4 L.Ed.2d 1669 (1960) ; Jencks v. United States 353 U.S. 657, 77 S.Ct. 1 LEd.2d 1103 (1957) ; Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963). In our view the principles set forth in the cases relied upon are not applicable to a preliminary examination in an international extradition case. See Oteiza y Cortes v. Jacobus, 136 U.S. 330, 10 S.Ct. 1031, 34 L.Ed. 464 (1890). The order appealed from is affirmed,
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6,134,277
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WASHINGTON, Circuit Justice (charging jury). That the prisoner went from the British seventy-four to the shore, with an intention to procure provisions for the use of the enemy, is incontestibly proved, and, indeed, is not denied by his counsel. If this constituted the crime of treason, me motives which induced him to attempt the commission of it. and by which there are the strongest reasons to believe he was most sincerely actuated, would certainly palliate the enormity of it. But the law does not constitute such an act treason, even although these motives had not existed; and, although intentions and feelings as disloyal as ever stained the character of the most atrocious traitor, were proved against the prisoner. Can it be seriously urged, that if a man, contemplating an adherence to the enemy, by supplying them with provisions, should walk towards the market-house to purchase, or into his own fields to slaughter whatever he might find there, but should, in fact, do neither one or the other of the intended acts, he has committed an overt act of adhering to the enemy? Certainly not. All rests in intention merely, which our law of treason in no instance professes to punish. Carrying provisions towards the enemy, with intent to supply them, though this intention should be defeated on the way, would be very different from the act of going in search of provisions for such a purpose, and stopping short before any thing was effected, and whilst all rested in intention. In such a case, the motives which induced the prisoner to use his exertions to procure provisions, would take from his conduct every possible imputation of disloyalty and disaffection to his country. The intention to procure the means of effecting the liberation of himself and his fellow-prisoners, had it even been carried into execution, would have been an honest and generous one; even although the law should not have excused the act. If the object of the prisoner was to break his parole, after he had got to land, and to escape; it is one which would not meet our approbation. We can never be the apologist of disingenuous conduct, let who will practise it; and we are firmly of opinion, that nations, as well as individuals, will always find their best interests to be promoted by fidelity to their engagements, and by manifesting a disposition, too proud to descend to artifices to deceive even an enemy. But, although, as moralists, we cannot approve of an intention in the prisoner to violate the promise he had plighted to the enemy, yet, as judges, we must pronounce, that by doing so, he would have offended against no law of his country. But, if the intention of the prisoner was to procure provisions for the enemy, by uniting with him in acts of hostility against the United States dr its citizens, which is chiefly pressed against him by the district attorney; then, indeed, it must be admitted, that his progressing towards the shore, was an overt act of adhering to the enemy, although no act of hostility was in fact committed. But how stands the evidence as to this fact. The only witness who proves any thing in relation to such an intention, is the black man who was applied to by the prisoner, to conduct him to some place where bullocks might be procured; and he states, that the prisoner told him that the flag was only to be used, in case it should be necessary to shield the party against superior numbers. Now, this is so highly improbable, that it is fair to conclude, that the witness must have misunderstood what the prisoner said to him. The prisoner could not have been ignorant of what every person must know, that no officer, in any army, would dare to violate a flag of truce, by attempting, under any circumstances, to use it as a cover for acts of hostility. No officer would expose himself to the punishment which the laws of war would compel his superiors to inflict upon him, and which it would be their interest not to disregard, if they meant, on any future occasion, to claim the immunities annexed to a flag of truce. But it is denied, that this vessel, during her passage to the shore, or during her stay near to it, hoisted the flag, or appeared to seek its protection. The evidence of the same black man to this effect, is flatly contradicted by the pilot, who was on board during the whole time; and who declares, that it was flying at the mast-head during her passage to, at and from the shore; and that many American vessels, which passed her, and who might otherwise have been seized as good prize, were suffered to proceed without inquiry or molestation. In short, during the whole time that this party was absent from the ship of war, all was peace with them. But what seems almost to conclude this point, is the official declaration of Commodore Beresford to the governor of Delaware, that this vessel went to the shore under the protection of a flag, with a view to purchase provisions. Now, this evidence is not to be discredited by saying that it proceeded from an enemy; because, all civilized nations are bound to give credit to the official declarations of the commander of the enemies’ forces. There is no American, who would not feel a just indignation, if a British officer should venture to question the veracity of an American commanding officer, in relation to a fact which he stated officially as being within his own knowledge. There is no doubt, that accompanying the flag by armed men, was an irregularity; and Commodore Beresford very properly censures the officer who commanded the party, for carrying arms. Nevertheless, no act of hostility was attempted, nor is there the slightest reason to believe, that any was meditated by the- prisoner, or by any of the party. NOTE. It being the wish of the counsel for the prisoner, to try fairly all the charges which could be brought against him, to prevent his being sent to Delaware to be tried again, for the treasons alleged to have been committed in that state, no observations were made in the charge, upon the form of the eighth and ninth counts in this indictment; but the case was considered in the same manner, as if they had charged the prisoner with an intention to procure provisions by force, leaving the prisoner to move in arrest of judgment, if a verdict had been found against him. Upon the whole, it is the opinion of the court, gentlemen, that the undertaking of the defendant to procure provisions from the shore, for the use of the enemy, and his proceeding to the shore with this intent, as laid in the eighth and ninth counts in the indictment, did not amount to overt acts of treason. The jury, without leaving the bar, found a verdict of not guilty.
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115,079
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PER CURIAM. Appellant is presently in federal custody at San Pedro, California, serving a prison term upon a conviction of a violation of the Dyer Act, 18 U.S.C.A. § 2312. He was convicted on September 9, 1960, in a California Superior Court for a violation of California Penal Code § 470, and began serving a term in the state prison therefor. During the time appellant was incarcerated in the state prison he was indicted in the United States District Court, on August 9, 1961, for the Dyer Act violation. The State of California released appellant on parole on November 28, 1961. He was taken into custody by the United States, entered a plea of guilty to the federal charge on December 11, 1961, and was sentenced on January 2, 1962 to the term from which he now seeks relief. He filed an Application for Writ of Habeas Corpus” on January 21, 1963, the denial of which is the basis for this appeal. Appellant first contends that his five year federal sentence should be reduced by the seventeen months he had previously served in the custody of the State of California for his state conviction. In so contending he does not rely on the terms of his federal sentence, but claims that as a general proposition of law, “concurrent jurisdiction must result in concurrent sentence.” This contention has no merit. The state sentence imposed here could not have in any case been concurrent with the federal sentence, because the state sentence was completed before the federal sentence was entered. “Concurrent” sentences are to be served at the same time. To sustain appellant’s contention would call for a holding that he had served seventeen months of his federal sentence before said sentence was entered. Appellant next contends that the delay between his indictment and his plea of guilty in the trial court, slightly over four months, deprived him of his right to a speedy trial. We agree with the reasoning of the trial court in rejecting this contention. It said: “The indictment was returned within the period of limitations and no effort is shown on the part of petitioner to speed trial or to object to prosecution on this ground, nor is prejudice shown to have resulted. Therefore, petitioner cannot successfully attack the judgment on the ground that there has been a failure to provide a speedy trial as guaranteed by the Sixth Amendment of the Constitution of the United States. Glenn vs. United States, 303 F.2d 536, 543 (5th Cir., 1962); United States vs. Kaye, 251 F.2d 87, 90 (2d Cir., 1958); Morland vs. United States, 193 F.2d 297, 298 (10th Cir., 1951).” It is further contended that the trial court’s denial of the application should be reversed because appellant was not given a hearing and was not present when his petition was denied. When the merits of such an application can be determined on the record before the court, a hearing is not required nor is the presence of the petitioner necessary. The questions presented by the petition could be readily resolved by reference to the record, there being no controverted issues of facts. Affirmed. . Since appellant is a federal prisoner, it would seem that 28 U.S.C.A. § 2255, rather than habeas corpus, is the appropriate remedy. However, since the application was filed in the district of sentencing, which is also the district of imprisonment, such an error in the form of tbe plea for relief can be disregarded. Ray v. United States, 295 F.2d 416 (10th Cir. 1961), cert, denied 369 U.S. 875, 82 S.Ct. 1146, 8 L.Ed.2d 278 (1962). . Cain v. United States, 271 F.2d 337 (8th Cir. 1959); 28 U.S.C.A. § 2255.
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6,133,868
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THE COURT refused to permit his confession, made under those circumstances, to be given in evidence. Verdict, not guilty.
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6,131,074
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THOMPSON, Circuit Justice. This case comes up on a writ oi error to the district court of the United States for the Southern district of New-York, on a judgment in fa-vour of the defendant in error. The suit in the court below, was an action of debt, against the defendant as sheriff of the city and county of New-York, for the escape of one Joseph Wilson, a prisoner committed to his custody on a capias ad satisfaciendum, at the suit of the United States. Wilson, after his commitment, was not permitted to go at large, nor did the alleged escape take place, until he had duly entered into bond for the jail liberties pursuant to the law of the state of New-York; and the only questions which arise here are, whether the sheriff was authorized to take such bond and set the prisoner at liberty’, and whether such bond, haying been assigned to the plaintiffs. an action can be sustained against the sheriff for the escape. Congress, by a resolution of the 23d of September, 1789, recommended to the legislatures of the several states, to pass laws making it the duty of the keepers of their jails to receive and safe keep therein, all prisoners committed under the authority of the United States, until they should be discharged by due course of the laws thereof, under the like penalties, as in the case of prisoners committed under the authority of such states respectively. The state of New-York, in 1801 (1 Laws N. Y. 208. K. and R. revision), passed a law making it the duty of the sheriffs of the several cities and counties of the state, to receive into their respective jails, and safely keep, all prisoners who shall be committed to the same, by virtue of any process to be issued under the authority of the United States; and in case any prisoner should escape out of the custody of any sheriff or keeper to whom such prisoner might be committed, such sheriff or keeper is made liable to the like actions and penalties, as he would have been, had such prisoner been committed by virtue of any process issuing under the authority of the state. By an act of congress passed the 6th of January, 1800 (3 Laws [Bior. &. D.] 301 [2 Stat. 4]) it is provided “that persons imprisoned on process issuing from any court of the United States, as well at the suit of the United States, as at the suit of any person or persons in civil actions, shall be entitled to like privileges of the yards or limits of the respective jails, as persons confined in like cases on process from the courts of the respective states are entitled to. and under the like regulations and restrictions.” These laws and the resolution of congress are in pari materia, and to be construed together. The object of congress was to obtain permission from the respective states, to have the use of their jails for the safekeeping of prisoners committed under process from the courts of the United States. This state granted this permission, and congress adopted the state laws as to the privileges of the yards and limits of the jails, to be allowed to such prisoners. Under the act of congress, Wilson had a right to demand of the sheriff to be admitted to the privilege of the limits in the same manner as if he had been committed on process from a state court, and we must look to the state law to ascertain what that right was; and by that law (1 Rev. Laws. 429) it is expressly made the duty of the sheriff, to permit any prisoner who shall be in custody on civil process only, to go at large within the limits of the jail liberties, provided he gives a bond with sufficient sureties, in double the amount of the sum for which he is confined; conditioned to remain a true and faithful prisoner, and not to escape or go without the limits of the liberties of the jail until discharged by due course of law. Such bond was duly made and delivered to the sheriff; and he no longer had any authority over the person of Wilson, to prevent his going at large wherever he pleased. The sheriff however is not exonerated from an action for the escape, should the prisoner go without the limits, and he must look to his bond for indemnity. Such bonds however are made assignable, and it is made the duty of the sheriff, upon the request of the party at whose suit the prisoner was confined, to assign the bond to such party who is authorized to bring a suit thereon as assignee of the sheriff. If the party does not choose to take an assignment of the bond, but bring an action against the sheriff for the escape, the court where the suit is prosecuted is authorized to stay the proceedings, until the sheriff shall have had a reasonable time to prosecute the bond. The bond in the present case was duly assigned to the plaintiffs, and the assignment accepted by the district attorney of the United States for the Southern district of New-York, he being authorized so to do by the secretary of the treasury, and the escape for which the sheriff was prosecuted took place after such assignment and acceptance. It is not pretended on the part of the plaintiffs that in the state courts, under like circumstances, an action could be sustained by a private person, against the sheriff for the escape. But it is contended: 1. That the laws of the United States do not authorize the taking of bonds for the privilege of jail liberties. 2. That the sheriff was bound to accept the prisoner Wilson, when offered to be surrendered, and by refusing so to do, made himself liable for the subsequent escape. Neither of these positions appears to me tenable. The state laws on this subject would not be obligatory upon the courts of the United States, unless such laws had been adopted by the United States; but I think they have been so adopted. It cannot be necessary where the laws of the United States adopt and sanction any state law or practice, to incorporate the detailed provisions of such law or practice; a- general reference thereto is sufficient. The act of congress of the 6th of January. 1800. is very general in its provisions, and seems obviously intended to adopt the state law in all respects, so as to place prisoners confined under process from the courts of the United States, on the same footing with those confined on process from the state courts. The words of the act are very broad—“shall be entitled to like privileges of the yards or limits.” Prisoners under United States process have by the express provision of this act a right to demand the liberty of the limits. And what is the sheriff to do? Would it not be false imprisonment in him to refuse this liberty? The act does not to be sure by detailed provisions point out the duty of the sheriff in such ease, but refers him to the state laws to ascertain what he is to do; and declares that the privilege is to be granted, “under the like regulations and restrictions” as to prisoners confined in like eases on process from the state courts; and that, as has been already shown, is to admit the prisoner to the privilege of the limits of the jail on his giving the bond and sureties as directed by the statute, which bond must have the same legal effect, as in like cases of prisoners under state process. Any other interpretation would fall short of what was obviously the intention of congress. So long as the state jails were to be used for the United States’ prisoners under United States process, it was highly fit and proper they should be dealt with as prisoners under state process. The state officers would then know and understand their duty, and not be likely through ignorance of the law' to expose themselves to penalties and consequences not understood. And the law of this state subjects the sheriff in case of escape to the like actions and penalties, as he would have been subject to had such prisoner been committed by virtue of process under the authority of the state. The whole duty of the officer is imposed by the state law', and he is entitled to the protection of that law for his indemnity. No law of the United States could compel him to receive a prisoner arrested under process from the courts of' the United States. It was by virtue of the state law that Wilson was received in custody; if not, he was received without authority; and the plaintiffs must look to their own officer, the marshal, for the escape: but no such consequence is involved in the case. The law of the state made it the duty of the sheriff to receive Wilson into the jail of New-York; and the United States law. not only authorized, but made it his duty to admit the prisoner to the privileges of the jail limits, and under the like regulations and restrictions as prisoners confined on process from the state courts are admitted. This was by taking bond with sureties as has been done in this case, and all the other provisions attached to such bond follow of course. It becomes assignable at the request of the party plaintiff in the suit. The act of congress of the Cth of January, 1800, extends in terms to prisoners confined on process issuing from courts of the United States, as well at the. suit of the United States as other persons in civil actions, and the law of this state makes the bond assignable to the party in the suit. The United States are the plaintiffs, and the assignment to them is no doubt valid. If they are competent to bring a civil suit, the cause of action must be vested in them, and they are as competent to take a bond or an assignment as a natural person. The record in the suit against Wilson is not before me, and the present case does not show what was the cause of action. It is fairly to be presumed that it was an action under the direction and control of the secretary of the treasury, or he would not have undertaken to give any authority to accept the assignment of the bond to the sheriff. The United States must necessarily act by some agent, and must be bound by the acts of their authorized agents. I must therefore assume that the assignment of the bond for the jail liberties has been accepted by the plaintiffs. The plaintiffs were not bound to take an assignment of the bond. They might- have resorted to the sheriff for the escape, and left him to look to his bond for indemnity; but having voluntarily taken the assignment, they have waived their remedy against the sheriff; he is chargeable with no negligence or misconduct. There was no escape until after the bond had been assigned; and it would be the extreme of injustice to make -the sheriff responsible, after the plaintiffs had taken from him all the means in his hands to indemnify himself. It was suggested on the part of the plaintiffs in error, that the term “process” in the act of congress of the 6th of January, 1800, does not extend to executions, but is to be restricted to mesne process. For this construction however there can be no foundation. The term is broad enough to embrace all process upon which a party is imprisoned, and there is no reason why it should not be taken in this general sense; and this construction is fortified by the provision in the second section, which is applicable only to cases where the imprisonment is on execution, and the term is then qualified and called process of execution. 2. It remains only to inquire in the second place, whether the defendant, by refusing to receive Wilson in custody when offered to be surrendered by his surety, has made himself responsible for the escape, and upon this question no doubt can be entertained. The sheriff, after having taken the bond for the limits, lost all authority and control over the prisoner except in one single event, which was. if he should discover to his satisfaction, that the bail taken was insufficient; the law then authorizes him to confine the prisoner in jail, until other good and sufficient bail for the liberties be offered. The sheriff had therefore no authority to receive the prisoner or to detain him in custody, unless the bail was insufficient. Such is the plain and obvious construction of the act, and the one that has been given to it by the supreme court of this state, in the case of Sullivan v. Alexander, 19 Johns. 233. But admitting that the surety miglit, in exoneration of himself surrender the principal in any case, it must be done whilst the sheriff has possession and control over the bond. In the present case the offer to surrender was after the assignment of the bond, which being made assignable by law the sheriff had parted with all his interest in, and control over it. The whole right and interest in the bond had become vested in the plaintiffs, which the sheriff could not devest by any act of his. I am accordingly of opinion that the judgment of the court below must be affirmed.
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